1 February 2016 | Millennium bcp earnings release as at 31 December 2015 |
Profitability and efficiency Back to profits Business performance Healthy balance sheet Asset quality Lower delinquency and reinforced coverage Capital and liquidity Reinforced to European benchmarks levels |
887.9 million in 2015, reflecting a 16.6% increase in net interest income and lower operating costs (-3.7%, including an 7.0% reduction in Portugal). Operating efficiency improved further, as cost to core income* decreased to 55.5%.
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* Core income = net interest income + net fees and commission income; Core net income = core income - operating costs.
** Includes the impact of the new DTAs regime for capital purposes according with IAS.
1/16
BANCO COMERCIAL PORTUGUÊS, S.A.,
a public company (sociedade aberta)
having its registered office at Praça D. João I, 28, Oporto, registered at the Commercial Registry of Oporto,
with the single commercial and tax identification number 501 525 882
and the share capital of EUR 4,094,235,361.88
INVESTOR RELATIONS
Rui Coimbra
Phone +351 211 131 084
investors@millenniumbcp.pt rui.coimbrafernandes@millenniumbcp.pt lmonteiro@millenniumbcp.pt
MEDIA CONTACT
Erik T. Burns
Phone +351 211 131 242
Mobile +351 917 265 020
erik.burns@millenniumbcp.pt cintia.barbas@millenniumbcp.pt
31 Dec. 15 | 31 Dec. 14 | Change 15 / 14 | |
Balance sheet | |||
Total assets | 74,885 | 76,361 | -1.9% |
Loans to customers (gross) | 55,438 | 57,168 | -3.0% |
Total customer funds (1) | 66,176 | 64,739 | 2.2% |
Balance sheet customer funds | 53,850 | 52,593 | 2.4% |
Customer deposits | 51,539 | 49,817 | 3.5% |
Loans to customers, net / Customer deposits (2) | 102% | 108% | |
Loans to customers, net / Balance sheet customer funds | 97% | 102% | |
Results | |||
Net income | 235.3 | (226.6) | |
Net interest income | 1,301.6 | 1,116.2 | 16.6% |
Net operating revenues | 2,503.5 | 2,292.5 | 9.2% |
Operating costs | 1,106.5 | 1,149.6 | -3.7% |
Loan impairment charges (net of recoveries) | 833.0 | 1,107.0 | -24.7% |
Other impairment and provisions | 161.3 | 209.3 | -22.9% |
Income taxes | |||
Current | 99.7 | 101.0 | |
Deferred | (43.3) | (198.7) | |
Profitability | |||
Net operating revenues / Average net assets (2) | 3.2% | 2.8% | |
Return on average assets (ROA) (3) | 0.5% | -0.1% | |
Income before tax and non-controlling interests / Average net assets (2) | 0.5% | -0.3% | |
Return on average equity (ROE) | 5.3% | -6.5% | |
Income before tax and non-controlling interests / Average equity (2) | 7.7% | -5.1% | |
Credit quality | |||
Overdue loans and doubtful loans / Total loans (2) | 9.4% | 9.6% | |
Overdue loans and doubtful loans, net / Total loans, net (2) | 3.4% | 3.8% | |
Credit at risk / Total loans (2) | 11.3% | 12.0% | |
Credit at risk, net / Total loans, net (2) | 5.4% | 6.3% | |
Impairment for loan losses / Overdue loans by more than 90 days | 86.7% | 83.1% | |
Efficiency ratios (2)(4) | |||
Operating costs / Net operating revenues | 44.0% | 51.7% | |
Operating costs / Net operating revenues (Portugal) | 41.1% | 53.7% | |
Staff costs / Net operating revenues | 24.4% | 28.6% | |
Capital (5)(6) | |||
Common equity tier I phased-in) | 13.3% | 11.7% | |
Common equity tier I fully implemented | 10.2% | 7.8% | |
Branches | |||
Portugal activity | 671 | 695 | -3.5% |
Foreign activity | 671 | 678 | -1.0% |
Employees | |||
Portugal activity | 7,459 | 7,795 | -4.3% |
Foreign activity | 9,724 | 9,845 | -1.2% |
(1) Adjusted, in December 2014, from the effect related to the classification of Millennium bcp Gestão de Activos as discontinued operations. | |||
(2) According to Instruction from the Bank of Portugal no. 16/2004, as the currently existing version. | |||
(3) Considering net income before non-controlling interests. | |||
(4) Excludes the impact of specific items: gains from the sale of the shareholdings associated with non-life insurance business (Euro 69.4 million in 2014) and restructuring costs and other (Euro 5.8 million in 2015). | |||
(5) According with CRD IV/CRR. | |||
(6) Includes the impact of the new DTAs regime for capital purposes according with IAS. |
Considering the commitment agreed with the Directorate-General for Competition of the European Commission (DG Comp) regarding the Bank's Restructuring Plan, in particular the implementation of a new approach to the asset management business, and in accordance with IFRS 5, the activity of Millennium bcp Gestão de Activos was classified as discontinued operations during 2013.
From this date onwards, the impact on results of these operations were presented on a separate line item in the profit and loss account, defined as "income arising from discontinued operations" with no change at balance sheet level from the criteria as that of the financial statements as at 31 December 2014. However, following the sale of the total shareholding in Millennium bcp Gestão de Activos, in May 2015, its assets and liabilities are no longer considered from this date onwards.
The net income of Millennium bcp amounted to Euro 235.3 million in 2015, showing a favourable evolution compared to a net loss of Euro 226.6 million recorded in 2014, reflecting the pursuit of the objectives set out in the Strategic Plan, supported by the recovery of profitability in Portugal and the development of the international activity.
Net income in 2015 was determined by the lower level of impairment losses and provisions charges, together with the positive performance of net interest income and net trading income, in spite of the fourth quarter of 2015, which was penalised by the booking of extraordinary contributions in the amount of Euro 28.3 million in Bank Millennium in Poland related with the bankruptcy of a bank and the contribution for the Mortgage Loans Restructuring Fund, and Euro 31.4 million associated with the Single Resolution Fund in the activity in Portugal.
In the activity in Portugal, net income reached Euro 44.2 million, an improvement of Euro 431.5 million from the amount posted in 2014, supported by the lower level of impairment losses and provisions charges and the 14.3% increase of banking income that benefited from net interest income performance.
Net income in the international activity, excluding the impacts of discontinued operations and the increase of non-controlling interests related with the sale of 15.4% of the shareholding of the subsidiary Bank Millennium in Poland in the first quarter of 2015, decreased 3.7% compared with 2014, influenced by the contribution of the subsidiary in Poland that was conditioned by the above-referred extraordinary impacts.
Net interest income stood at Euro 1,301.6 million in 2015, an increase of 16.6% over the Euro 1,116.2 million registered in 2014, mainly boosted by the positive performance of the activity in Portugal.Net interest income in Portugal amounted to Euro 711.3 million in 2015, compared to Euro 527.0 million in 2014, driven by the sustained reduction of term deposits costs, materialised in a 73 basis points decrease in 2015, together with a lower cost related to CoCos, induced by the early repayment made during 2014 in the amount of Euro 2,250 million.
In the international activity, net interest income, excluding exchange rate impact, increased by 1.2% in 2015, totalling Euro 595.9 million, on the back of the improvement of loans to customers and deposits volume registered in the operations in Angola and Mozambique.
Net interest margin in 2015 stood at 1.91%, compared with 1.56% in 2014. Excluding the cost of CoCos impact, net interest margin reached 2.01% in 2015 and 1.81% in 2014.
AVERAGE BALANCES | Euro million | ||||
31 Dec.15 | 31 Dec.14 | ||||
Amount Yie | ld % | Amount | Yield % | ||
Deposits in banks | 3,284 | 0.82 | 3,254 | 1.17 | |
Financial assets | 10,659 | 2.75 | 12,236 | 3.41 | |
Loans and advances to customers | 53,251 | 3.62 | 55,068 | 3.81 | |
Interest earning assets | 67,194 | 3.34 | 70,558 | 3.62 | |
Discontinued operations (1) | 107 | 398 | |||
Non-interest earning assets | 9,827 | 9,580 | |||
77,128 | 80,536 | ||||
Amounts owed to credit institutions | 10,797 | 0.66 | 12,217 | 0.67 | |
Amounts owed to customers | 50,510 | 1.16 | 48,715 | 1.65 | |
Debt issued | 5,318 | 3.47 | 8,550 | 3.79 | |
Subordinated debt | 1,837 | 6.71 | 3,335 | 7.23 | |
Interest bearing liabilities | 68,462 | 1.41 | 72,817 | 1.99 | |
Discontinued operations (1) | 1 | 323 | |||
Non-interest bearing liabilities | 3,111 | 3,027 | |||
Shareholders' equity and non-controlling interests | 5,554 | 4,369 | |||
77,128 | 80,536 | ||||
Net interest margin | 1.91 | 1.56 | |||
Net interest margin (excl. cost of CoCos) | 2.01 | 1.81 | |||
Note: Interest related to hedge derivatives were allocated, in December 2015 and 2014, to the respective balance sheet item. | |||||
(1) Includes the activity of the subsidiaries in Romania (in 2014) and of Millennium bcp Gestão de Ativos, as well as the respective consolidation adjustments. |
The performance of net commissions in 2015 reflects the 3.2% increase in commissions related to the banking business, induced by higher credit and guarantees-related commissions, both in Portugal and in the international activity, as well as the favourable effect associated with the decreased cost of the guarantee by the Portuguese State to debt securities issued, in spite of the decrease in cards and transfers-related commissions, penalised by the reduction of interchange fees in Poland. The commissions associated with financial markets decreased 4.0%, influenced by the lower level of securities transactions.
Net trading income reached Euro 595.4 million in 2015, from the Euro 442.2 million registered in 2014, driven by the gains related with Portuguese sovereign debt securities in Portugal and the higher foreign exchange results in Angola and Mozambique. Other net operating income was negative by Euro 121.8 million in 2015, compared to Euro 11.4 million accounted in 2014, influenced by the booking of a Euro 69.4 million gain, in 2014, related to the disposal of the shareholding in subsidiaries that operated in the area of non-life insurance.The activity in Portugal includes the costs related to the contributions for the banking sector, for the Deposit Guarantee Fund and for the Single Resolution Fund, for which a Euro 31.4 million contribution was made in the fourth quarter of 2015.
The international activity reflects the booking of the extraordinary contribution for the Deposit Guarantee Fund of Euro 24.6 million due to the bankruptcy of a Polish bank and Euro 3.7 million for the Mortgage Restructuring Fund in Poland.
Banco Comercial Português SA issued this content on 01 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 01 February 2016 18:12:04 UTC
Original Document: http://ind.millenniumbcp.pt/pt/Institucional/investidores/Documents/ApresentacaoResultados/2015/EarningsMillenniumbcp_4Q15.pdf