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1Q2013 Results Presentation (Unaudited Figures)
7th May 2013
1Q2013 Results Presentation 1
Foreword: Macroeconomic highlights
7 May 2013
Global economic activity remained moderate and uneven in the 1st quarter of 2013, with higher growth in the US and in the main emerging markets contrasting with a recession in the Euro Area (-0.3% QoQ, after -0.6% in the previous quarter). Besides the impact of restrictive fiscal policies and private sector deleveraging, economic activity in the Euro Area continued to be penalised by high levels of political uncertainty, associated with the financial crisis in Cyprus and, to a lesser extent, with the inconclusive result of the general elections in Italy.
This context of higher uncertainty led to an increase in financial market volatility and to a deterioration in market sentiment in the Euro Area at the end of the 1st quarter. This was visible in the retreat of the main equity indices, particularly impacting the financial sector, and in an increase in periphery Government Bond spreads vs. Germany. However, the absence of significant contagion from Cyprus, the appointment of a new Government in Italy and the prospect of stronger support from monetary policy in the main developed economies allowed for a stabilisation in market sentiment already in the 2nd quarter, with favourable impacts on sovereign spreads and equity indices.
In Portugal, the 1st quarter was marked by the return of the sovereign to the medium and long term debt market, with a 5 year syndicated issue of Eur 2.5bn. This reflected the improved perception of external investors regarding the ongoing economic and financial adjustment. Results of this adjustment include a return to surplus in external accounts (0.4% of GDP in 2012), the strengthening of financial sector stability, important structural reforms (around 90% of the MoU measures implemented or under implementation) and a significant improvement in the structural primary budget balance (from -6% to +0.2% of GDP between 2010 and 2012). Portugal complied with the public deficit target imposed by the “Troika” for the 1st quarter of 2013.
GDP is expected to have contracted again in the 1st quarter (around -0.2% QoQ and -3.5% YoY), reflecting the short term negative impacts of fiscal consolidation and private sector deleveraging, as well as a weaker external demand (particularly from Europe). GDP is still expected to fall around 2.3% in 2013, with unemployment rising to around 18% of the labour force. Most indicators, however, suggest a stabilising trend in economic activity along 2013 and 2014.
1Q2013 Results Presentation
BES continues to strengthen its Balance Sheet, with a steady deleverage, a significant liquidity buffer, increased provisions reserve and a solid capital base. This strict financial discipline places the Bank in a favourable position to benefit from the improvement in business conditions expected later in the year
2
The current business environment continues very challenging for Portuguese Banks, conditioned by 10 consecutive quarters of declining GDP in Portugal and by the implementation of the Economic and Financial Adjustment Programme. In this difficult context, Balance Sheet management continued to be the main priority.
The strict financial discipline followed by BES during the last 2 years was mantained in 1Q13. The Bank continues to deleverage its Balance Sheet, with LTD ratio reaching 129% in March 2013, on track to achieve the 120% level recommended for 2014. During this quarter alone, BES increased its deposit base by 8% or Eur 2.9bn, which demonstrates Clients’ confidence in the Bank. Additionally, BES ranked 1st among top 5 Portuguese Banks on the European Consumer Satisfaction Index survey, which also shows BES’ strong domestic franchise. Since June 2010, when BES started to implement this deleverage plan, the deposit base already increased 43% or Eur 11.3bn, which together with a reduction in the loan portfolio translated into a 69 p.p. decline in LTD ratio. As a result, funding structure continued to improve considerably, with deposits and bancassurance products now representing 63% of the funding mix.
After the re-opening of the wholesale debt markets for the Portuguese banks back in November 2012 by BES, in January the Bank issued Eur 500mn senior unsecured debt with 5 years maturity and a coupon of 4.75% (which compares favourably with the Eur 750mn 3Y senior unsecured issued 3 months earlier with a coupon of 5.875%). Also on the funding & liquidity front, BES redeemed Eur 1.0bn from the 1st LTRO in January. Net use of ECB liquidity facilities now stands at Eur 7.9bn (considerably below the peak of Eur 13.7bn in June 2012) with the current ECB eligible pool of repoable assets providing a substantial liquidity buffer that covers MLT maturities for over 3 years.
7 May 2013
1Q2013 Results Presentation 3
The domestic recession continues to impact asset quality. BES maintains a very conservative and prudent risk management policy, having reinforced on-B/S provision reserve to 5.5% of gross loans. Cost of risk in the quarter stood at 1.46% (vs. 1.17% a year ago), leading to a 26% increase in credit provisions charge. Reflecting BES conservative credit policy, a significant part of the loan book is covered by real guarantees, allowing the Bank to increase its recovery rates by executing them. In this process, foreclosed assets are conservatively valued, as demonstrated by the Eur 97mn sales in the quarter without the need for further impairments.
1Q13 P&L reflects the current difficult environment, with deleverage and provisions reinforcement driving net income to a Eur 62mn loss in the quarter. Forecasted improvement of macro conditions along with the expected recovery in banking income and the cost cutting programme that BES is implementing (targeting cost savings of ca. Eur 100mn during 2013-2015) should allow results to recover in the coming quarters, particularly in the 2H13.
Capital preservation continues to be a top priority. BoP and EBA Core Tier I remained stable at 10.5% and 9.9% respectively, comfortably above both minimum regulatory requirements. BES has been reinforcing its solvency levels without the use of any public funds, allowing the Bank to maintain its strategic independence.
All in all, management continues to focus on proactively addressing current challenges with a strict financial discipline. BES’ Balance Sheet continues to be strengthened and is now more solid and balanced, placing the Bank in a favourable position to benefit from the improvement in business conditions expected later in the year.
7 May 2013
BES continues to strengthen its Balance Sheet, with a steady deleverage, a significant liquidity buffer, increased provisions reserve and a solid capital base. This strict financial discipline places the Bank in a favourable position to benefit from the improvement in business conditions expected later in the year
1Q2013 Results Presentation 4
Table of contents
I. Funding & Liquidity: Deleverage plan continues, with LTD reaching 129% driven by strong deposits growth. High level of repoable assets provides a significant liquidity buffer
II. Asset Quality: Conservative and prudent risk management, with strong B/S provision reserve to cope with current macroeconomic conditions in Portugal
III. 1Q13: BES continued to strengthen its B/S, with deleverage and provisions reinforcement pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
7 May 2013
1Q2013 Results Presentation
Mar-10 Dec-10 Dec-11 Jun-12 Dec-12 Mar-13
Net use of ECB BES' Redemptions - Issues
5
Evolution of net ECB use and BES redemptions net of issues (*)
(Eur bn)
(*) Includes ST and MLT redemptions, net of issues
Eur 10.8n
+8.2bn
A A1
A- A2
BB- Ba3
BB Ba2
S&P Moody’s
The liquidity gap was covered internally through deleverage (increase of deposits, sale of international loans an
cash flow generation)
BB- Ba3
S&P: - 7 notches / Moody’s: - 8 notches
0.0
5.3
15.8
19.5 18.5
-0.3
3.9
8.7
13.7
6.9
18.7
7.9
+18.7bn
BB- Ba3
BES redeemed Eur 20.3bn of wholesale debt, o.w. Eur 13.7bn MLT and Eur 6.6bn ST.
In November 2012, BES re-opened wholesale debt markets for Portuguese Banks, with a Eur
750mn senior unsecured issue.
In the last 2 quarters, BES was able to place 3 MLT issues amounting c. Eur 1.6bn
Net use of ECB amounts to Eur 7.9bn, with Eur 9.3bn in LTRO’s and Eur 1.4bn in deposits.
During 1Q13, BES redeemed c. Eur 1.0bn the 1st LTRO
7 May 2013
With markets closed for Portuguese banks between 2Q10 and 4Q12, BES implemented a deleverage plan that allowed it to cover internally a liquidity gap of Eur 10.8bn. During the last 3 years, BES redeemed Eur 18.7bn of wholesale debt (*), currently using only Eur 7.9bn of ECB facilities
1Q2013 Results Presentation 6
198%
171% 165% 163% 155% 146% 141% 135%
147% 142% 137% 129%
137% 130% 131% 130% 125% 122% 119% 117% 124% 122% 120% 113%
1H10 9M10 FY10 1Q11 1H11 9M11 FY11 1Q12 1H12 9M12 FY12 1Q13 Target YE14
Loans to Deposits Ratio Loans / On-BS Customer Funds
*
Transformation Ratio
120%
-69 p.p.
-9 p.p.
* Calculated according to BoP definition for Funding and Capital Plan. 7 May 2013
Domestic LtD : 130%
International LtD : 125%
The LTD ratio maintained a downward trend, reaching 129% in Mar.13, as a result of the strict deleverage plan the Bank implemented in the 2H2010, representing a reduction of 69 p.p.
1Q2013 Results Presentation 7
Gross Loan Portfolio Evolution
(EUR bn; excludes securitised credit)
- 2.1bn - 4%
+0.3bn +1%
Jun.
10
Sep.
10
Dec
.10
Mar
.11
Jun.
11
Sep.
11
Dec
.11
Mar
.12
Jun.
12
Sep.
12
Dec
.12
Mar
.13
50.8 51.2 51.0
53.4 52.8 52.6
51.7 51.7 52.0 51.2
50.4
7 May 2013
51.3
Jun.
10
Sep.
10
Dec
.10
Mar
.11
Jun.
11
Sep.
11
Dec
.11
Mar
.12
Jun.
12
Sep.
12
Dec
.12
Mar
.13
+ 11.3 bn + 43%
+1.4 bn + 4%
33.2 32.8
36.0
26.1
29.9 30.8 30.5 32.0
33.9 34.2 34.5
37.4
Total Deposits Evolution
(EUR bn)
51.7 51.0 50.8 49.9 49.7 49.9 49.0 48.7 48.7 48.2 47.7 48.4
Net Loans
QoQ: +0.9bn (2%)
Domestic +0.3bn
International +0.6bn
QoQ: +2.9bn (8%)
Domestic +1.3bn
International +1.6bn
LTD reduction was achieved through both a decrease in the loan portfolio (-4% or Eur 2.1bn since Jun.10) and a strong deposits base growth (+43% or Eur 11.3bn since Jun.10). During 1Q13 deposits increased by Eur 2.9bn (+8%), at a higher pace than loans (Eur 0.9bn or 2%)
1Q2013 Results Presentation 8
Loans per segment – YoY Growth Rate
(%)
Breakdown of Domestic Loans
+0.3 bn +1%
10.6 10.5 1.9 1.8
25.7 26.2
Dec.12 Mar.13
38.2 38.5
Breakdown of International Loans
Corporates: +490mn
7 May 2013
Other Ind.: -90mn Mortgage: -140mn
(EUR bn; gross loans excluding securitised credit)
-2.0
-2.4
-4.1 -3.9
-1.2
-0.6
-2.2
-0.7
2.1
-1.3 -1.0
-2.3 -1.6
0.6
Mar
.12
Apr.1
2
Mai
.12
Jun.
12
Jul.1
2
Aug.
12
Sep.
12
Oct
.12
Nov
.12
Dec
.12
Jan.
13
Feb.
13
Mar
.13
Mortgage Corporates Total
-1.3
+0.6 bn +5%
0.5 0.5 0.7 0.7
11.0 11.5
Dec.12 Mar.13
12.2 12.8
Corporates: +570mn
Other Ind.: +40mn Mortgage: +5mn
(EUR bn; gross loans excluding securitised credit)
After the sale of international loans in 2010-2011, deleverage on the asset side is now being driven by mortgages. BES continues to support domestic companies and exporting SME’s
Loans to Portuguese exporting SME’s increased 7% since Jun.10
1Q2013 Results Presentation 9
Total Customer Funds
(EUR bn)
Households Deposits: BES vs System
(%)
Deposits – average rate evolution (stock)
7 May 2013
(Jan.11 = Base 100)
36.0 34.5 37.4
5.0 4.8 5.5
5.3 5.2
13.3 11.4
11.1
Mar.12 Dec.12 Mar.13 Deposits Life Insurance
Other On /BS Funds Off B/S Funds
54.7 56.2 58.5
+2.3 bn +4%
+3.8 bn +7%
Jan.11 Aug.11 Mar.12 Oct.12
137%
Mar-13
BES (households) BoP (deposits in the system)
Jul.11 Oct.11 Jan.12 Apr.12 Jul.12 Oct.12 Jan.13
3Q11: 3.34%
4Q11: 3.49%
1Q12: 3.44%
2Q12: 3.07% 3Q12:
2.98%
4Q12: 2.72%
1Q13: 2.88%
Backed by strong growth in deposits and by BES Vida, On-B/S Customer funds increased 15% YoY (Eur 6.0bn) or 6% QoQ (Eur 2.6bn), demonstrating Client’s confidence in BES
On B/S Customer
Funds
Eur 47.4bn
+ 6.0bn (+15% YoY )
+2.6bn (+6% QoQ)
105%
Mar-13
1Q2013 Results Presentation
Retail Private banking
Other Customer
Funds
Total
10
Customer Funds (Retail and Private Banking) – YtD Growth
(EUR bn)
A strong domestic franchise has been key to continue to increase Retail and Private Banking Customer funds in Portugal (Eur 0.9bn or 3.4% QoQ). Additionally, BES ranked 1st among top 5 Portuguese Banks on the ECSI survey, improving from 5th in 2005
European Consumer Satisfaction Index
7 May 2013
68.0 69.5 71.0 71.8 75.5
BES Bank 1 Bank 2 Bank 3 Bank 4
69.1 69.2 70.2 71.7 73.3
Bank 3 Bank 2 Bank 1 Bank 4 BES
2005
2012
(ECSI; %)
1st 0.7 0.1
0.9
Retail and Private Banking customer funds are outperforming the market, clearly demonstrating Clients’ confidence in BES franchise
0.1
+3.4% in the quarter
(+14% annualized)
Deposits
1Q2013 Results Presentation
10% 11% 10% 11% 12% 11%
36% 46% 55% 59% 53% 56%
8% 7% 54% 43% 35% 30% 27% 25%
2%
-8% -11% -15% -8% -11%
2009 2010 2011 Mar.12 2012 Mar.13
Equity Deposits Bancassurance MLT Funds Treasury Gap (net interbank deposits)
11
The deleverage plan and the strong deposits growth led to a significant improvement in BES’ funding mix. Deposits and bancassurance products represent 63% of the funding structure (+27 p.p from YE09), while MLT wholesale funds only account for 25% (-29 p.p. from YE09)
Evolution of Funding mix
(%)
Share of customer funds in funding mix increased significantly, currently representing 63% of the funding structure
Note: ECB included in the Treasury Gap.
Deposits
+
Bancassurance
63%
7 May 2013
1Q2013 Results Presentation 12
2013 MLT maturities are concentrated in the first half of the year. BES annual MLT refinancing needs for the next 4 years (2013 – 2016) are on average Eur 1.9bn, which compares with Eur 3.9bn on average in 2011-2012
Medium and Long Term Debt maturing in 2013
(EUR bn; Total Eur 1.6bn)
Includes the exchangeable notes linked to EDP and to
Bradesco
During 2013, BES has Eur 1.6bn of MLT redemptions, o.w. Eur 0.9bn were already repaid
0.7
0.2
1Q13 2Q13 3Q13 4Q13
4.3
3.4 3.2
0.4
2011 2012 2013 2014 2015 2016
Medium and Long Term Debt maturity profile
(Eur bn)
already repaid
Average: Eur 1.9bn
Average: Eur 3.9bn
2013-2016 MLT annual redemptions are much lower than in 2011-2012
0.0 0.0
already repaid
0.7
0.9
1.6 2.3
0.7 0.9
7 May 2013
1Q2013 Results Presentation
8.7
12.1
13.7
6.9 7.9
Dec. 11 Mar. 12 Jun. 12 Dec.12 Mar.13
13
The use of ECB liquidity facilities amounts to Eur 7.9bn as of March.13. Repoable assets provide a significant liquidity buffer, covering MLT maturities for over 3 years
BES ECB exposure (net)
(EUR bn)
1) Pre-haircuts. Includes repo’ed assets
Total Repoable Assets1
(EUR bn)
15.0
20.5 19.4
22.4
18.9
24.2 22.3
25.4
Dec. 11 Mar. 12 Dec.12 Mar.13
+ 1.0bn
BES use of ECB liquidity facilities (net)
(EUR bn)
ECB
Use
Dec
.12
Dep
osits
MLT
Issu
ance
s
MM
(1)
Oth
ers
Loan
s
Bon
ds a
nd E
quity
CD
's a
nd C
P's
MLT
Red
empt
ions
(2)
ECB
Use
Mar
.13
> 1 year: Eur 9.2bn < 1 year: Eur 0.1bn Deposits: Eur 1.4bn
Total
ECB Eligible
6.9
-2.9 -0.5
-1.0
0.9
0.3 3.2
-1.1 7.9
Inflows: 4.5 Outflows: 5.5
7 May 2013
- 4.2bn
1) Financial facilities decrease 2) Includes repurchases
-0.1
1Q2013 Results Presentation 14
1 404 3 169
4 373 3 815
2 983 2 909
1545
1618
1177
467 900
3931
Dec.11 Mar.12 Jun.12 Sep.12 Dec.12 Mar.13
European Sovereign Exposure
(Eur mn)
2 949
4 787 5 550
4 283
T-Bills
Bonds
Maturity: > 1y
26% 53% 77% 93%
Mar.13 includes Eur 1 482mn from BES Vida Dez-11 Mar-12 Jun-12 Set-12 Dez-12 Mar-13
2.8
5.8
14.5 12.8
After the increase of the Portuguese sovereign book during 1H12, BES exposure to public debt decreased in the 2H12 to Eur 3.9bn or 4.9% of net assets. In the 1Q13, BES increased its sovereign exposure again through T-Bills, taking advantage of a significant liquidity position
3 883
81% 7.0
3.7
7 May 2013
6.4
3.1
6 840
64%
Portuguese Yield Curve
(%)
3M 6M 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y
14.5 15.0
12.8
10.0
13.7 11.3
3.7 5.0 7.0 Dec-12
Mar-12 Dec-11
6.4 Mar-13
3.1 5.1
Portuguese Government Bond yields
(%)
1Q2013 Results Presentation 15
The European sovereign exposure in Mar. 13 is concentrated in Portuguese and Spanish debt, the majority accounted in the AFS portfolio
Total
o.w. BES o.w. BES Vida
T-Bills Bonds T-Bills Bonds
Portugal 3 985 1 585 1 007 - 1 394
Spain 2 176 1 755 420 - -
Italy 650 592 - - 58
Germany 5 - - - 5
Ireland 25 - - - 25
Greece 0 - - - -
Total 6 840 3 931 1 427 - 1 482
Total 4Q12 3 883 900 1 376 - 1 607
European Sovereign Exposure
< 1Y 36%
1Y to 5Y 30%
> 5Y 33%
Maturity profile of the European Sovereign Exposure
(Eur mn) (%)
Breakdown of European Sovereign Exposure by portfolio
(%)
AFS 90%
HTM 2% Trading
3%
At the end of Mar.13, BES had a potential gain in its consolidated European sovereign debt portfolio of c. Eur 120mn
Fair value 4%
7 May 2013
Includes Eur 1.5bn
in 18 months T-bills
1Q2013 Results Presentation
BES re-opened the wholesale debt markets for Portuguese banks in Nov.12, having also issued USD 450mn of Exchangeables with Bradesco shares in Dec.12. In the 1Q13 BES issued Eur 500 mn senior unsecured debt, increasing the amount raised since the last quarter of 2012 to c. Eur 1.6bn
BES senior unsecured 5 7/8 Nov-15
Amount: Eur 750m
Tenor: 3 years
Coupon: 5.875%, Fixed, Annual
Issue/re-offer price: 99.665
Spread at re-offer: MS + 540bp
Listing: Luxembourg Stock Exchange
Order book: Eur 2.7bn
Investors: c. 225, mainly international
Others 11%
UK 42%
Franc. 23%
Port. 13%
Italy 6%
Swtz 5%
Fund Mngs 64%
Hedge funds 13%
Banks 8% Priv.
Banks 8%
Insur. 7%
Geographical distribution: Investor Type:
BES senior unsecured 4 3/4 Jan-18
Amount: Eur 500m
Tenor: 5 years
Coupon: 4.75%, Fixed, Annual
Issue/re-offer price: 99.349
Spread at re-offer: MS + 404bp
Listing: Luxembourg Stock Exchange
Order book: > Eur3.0bn
Investors: > 280, mainly international
Others 19%
UK 38%
Franc. 7%
Port. 13%
Spain 8%
Italy 6%
HK 5%
Switz. 7%
Fund Mngs 64%
Hedge funds 10%
Banks 26%
Priv. Banks
8%
Insur. 7%
Geographical distribution: Investor Type:
16 7 May 2013
1Q2013 Results Presentation 17
Table of contents
I. Funding & Liquidity: Deleverage plan continues, with LTD reaching 129% driven by strong deposits growth. High level of repoable assets provides a significant liquidity buffer
II. Asset Quality: Conservative and prudent risk management, with strong B/S provision reserve to cope with current macroeconomic conditions in Portugal
III. 1Q13: BES continued to strengthen its B/S, with deleverage and provisions reinforcement pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
7 May 2013
1Q2013 Results Presentation 18
Sect
or
Bre
akdo
wn
Geo
grap
hic
Bre
akdo
wn
Corporate 73.5%
(Eur 37.6bn)
Consumer & Other 5.0% (Eur 2.6bn)
Mortgage 21.5%
(Eur 11.0 mM)
14.8%
12.1%
11.4%
8.6%
7.9%
6.5%
6.2%
5.9%
% of Total Credit Portfolio
Services
Const. & Public Works
Real estate
Whol. & Retail
Other Manuf.
Fin. Inst.
Other Sectors1
T&C
Domestic 75.1%
(Eur 38.5bn) International
24.9% (Eur 12.8bn)
11.2%
6.5%
3.9%
1.3%
1.2%
0.9%
Spain
USA
Brazil
Other
UK
Angola
Credit Portfolio as of March 2013 (Eur 51.3bn Gross Loans)
Excludes securitised credit
% of Total Credit Portfolio
1 Represents a composite of other sectors of the economy none representing more than 3% per se.
Corporate lending represents the bulk of the loan portfolio with no significant concentration per sector. International loans account for 24.9% (Eur 12.8bn) of credit portfolio
7 May 2013
1Q2013 Results Presentation
4.8
3.6
2.6
2.1 2.2 2.2 2.3 2.0 1.9 1.7 1.6
2.2
3.2 3.4
4.6 5.3
5.8 6.3 6.3
6.7
'97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11
19
As widely expected, the recession in Portugal continues to impact asset quality. Despite the increase, and notwithstanding BES’ overweight in corporate lending, NPL levels continue to be significantly lower than sector average
BES Overdue Loans Ratio* Evolution vs Portuguese System
Source: BES and BoP. February 2013 * Overdue loans + 30 days
Consumer & Other
Mortgage
Corporate
System
BES
Overdue loans continue to increase, reflecting the deterioration of macroeconomic conditions
Total Overdue Loans/Gross Loans System Total Overdue Loans/Gross Loans BES
1Q12
System data as of Fev. 2013; Source: BoP
2Q12
3Q12
3.2 2.4
2.3 1.9 1.8
2.1 2.1 1.9
1.5 1.3 1.2 1.3 1.8
2.1
3.0 3.5
3.7
4.3
(%)
10.3%
2.1%
12.1%
5.9%
0.9%
7.6% 4Q12
4.2
7 May 2013
1Q13
4.9
1Q2013 Results Presentation
4.3% 4.9%
10.1%
2008 2009 2010 2011 Mar-12 Jun-12 Sep-12 2012 Mar-13
20
On B/S provision reserve continues to be reinforced, reaching 5.5% of gross loans or Eur 2.8bn. Overdue loans +90 days and credit at risk increased to 4.3% and 10.1% respectively, with a coverage of 127% and 55%
BES On-BS Provisions Reserve Evolution of Credit at Risk ratio
(Eur mn) (%)
Provisions as % of Gross Loans
2.38% 3.07% 3.38% 4.23%
Overdue loans
+ 90 days
Overdue loans
+ 30 days
Credit at Risk*
127%
Coverage (excluding collaterals and guarantees)
112% 55%
4.45%
(*) According to Instruction 23/2011 of Bank of Portugal. Credit at risk includes: a) total value of credit with capital or interest past due by 90 days or more; b) other restructured credit, where the principal or interest payments were past due by more than 90 days and have been capitalized or refinanced without full coverage by collaterals or the interest fallen due have not been fully paid by the debtor and c) credits of an insolvent or bankrupt debtors.
4.76%
+24%
On BS provisions reserve increased
to 5.51%
5.07%
1 148
1 552
1 777
2 167 2 271
2 435 2 577
5.34%
2 692
6.6% 7.2%
7.9%
9.3% 9.4% 10.1%
Dec. 11 Mar. 12 Jun. 12 Sep. 12 Dec. 12 Mar. 13
Overdue and Credit at Risk ratios
(%)
7 May 2013
2 823
5.51%
1Q2013 Results Presentation 21
Table of contents
I. Funding & Liquidity: Deleverage plan continues, with LTD reaching 129% driven by strong deposits growth. High level of repoable assets provides a significant liquidity buffer
II. Asset Quality: Conservative and prudent risk management, with strong B/S provision reserve to cope with current macroeconomic conditions in Portugal
III. 1Q13: BES continued to strengthen its B/S, with deleverage and provisions reinforcement pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
7 May 2013
1Q2013 Results Presentation 22
Net interest income down in 1Q13, driven by deleverage, low interest rates and lower contribution from sovereign portfolio. For the coming quarters, lower cost of deposits, the gradual turnaround in Angola and the new T-Bills portfolio should allow NII to recover
Consolidated NII Domestic NII
(Eur mn; %) (Eur mn)
271 272
331 307 295 313 299
274 222
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
7 May 2013
125 164 188 168
197 222 217 187
128
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
International NII
(Eur mn)
-24.7%
NII in 1Q13 was impacted by i) the deleverage of the B/S; ii) record low interest rates; iii) lower contribution of the sovereign debt portfolio and
iv) non-performing loans.
Asset repricing offset increasing cost of
deposits
Sov. portfolio drove NII up, compensating
sharp Euribor decline
NII impacted by lower contribution from Sov. Debt and by record low Euribor
147 107
143 139 97 91 83 87 94
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
NII to improve with gradual recovery in Angola and
growth in countries
such as Spain or
Mozambique
Lower contribution of Angola to NII
Gradual recovery of Angola
NII to be reverted with lower rates of
deposits, improved
credit mix and positive
contribution of T-bills
1Q2013 Results Presentation 23
Non interest income stable YoY, with Fees & Commissions impacted by the cost of GGB’s and non recurrent gains booked in 1Q12 and Capital markets & Other benefiting from gains in interest rate
Fees & Commissions
(Eur mn)
7 May 2013
206 202 172
1Q12 4Q12 1Q13
-16.8%
28
228
60
1Q12 4Q12 1Q13
>100%
Capital Markets & Other
(Eur mn)
28 60
206 172
295 222
Mar.12 Mar.13
Capital Mkts & ther Fees & Commissions NII
Banking Income
(Eur mn)
Fees & Commissions
down YoY, impacted by the cost of GGB’s (*)
and non recurrent fees booked in
1Q12
(*) Government Guaranteed Bonds
Capital Markets & Other results up YoY, driven by
interest rate gains
-14%
Non interest income:
Eur 234 mn
Non interest income:
Eur 232 mn
-1%YoY
455
529
1Q2013 Results Presentation 24
Domestic operating costs
International operating costs
(Eur mn)
(Eur mn)
Operating costs remain under control (excluding new consolidations, costs are 1.7% up YoY, driven by international operations). BES will implement a cost cutting programme during 2013-2015 that is expected to produce cost savings of c. Eur 100mn in the period
Operating costs *
(Eur mn)
1Q12 4Q12 1Q13 YoY QoQ
Staff 143.1 159.1 145.6 1.7% -8.4%
Admin. 102.2 117.2 108.9 6.6% -7.1%
Dep. 26.6 27.6 26.0 -2.4% -5.8%
Total 271.9 303.8 280.5 3.2% -7.7%
New consolidations - - 3.9 - -
Total (l-f-l) 271.9 - 276.6 1.7% -
Like-for-like costs (excluding the impact of new consolidations)
only 1.7% up YoY, driven by International
operations.
BES will implement a cost cutting
programme during 2013-2015 that
should allow cost savings of c. Eur
100mn
Cost cutting measures
already producing results in
Portugal. Like-for-like costs down 1.4%
YoY
Outside Portugal, costs
reflect the expansion of international operations
7 May 2013
272 304
281
1Q12 4Q12 1Q13
+3.2%
188 198 190
1Q12 4Q12 1Q13
+0.7%
84 106 91
1Q12 4Q12 1Q13
+8.6%
1Q2013 Results Presentation 25
Credit provisions increased 25% YoY as a result of the current macro conditions in Portugal (cost of risk up to 1.46% in 1Q13 vs.1.17% in 1Q12). Other provisions include Eur 34mn for foreclosed assets
Credit Provisions & Cost of Risk Total Provisions
(Eur mn)
Cost of Risk
(Eur mn; %)
7 May 2013
80 95 84 94
81
225
148 147 149
203
267
196 187
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
0.71 0.62 0.63 0.71 1.74 0.63 1.14 1.15 1.59 1.17 2.11 1.56 1.46
2010 67 bps
2011 117 bps
2012 162 bps
149 196 187
42
251
53
1Q12 4Q12 1Q13
Securities & Other Credit
+25.6%
4Q12 includes provisions related to disposals of credit portfolios of
construction and real estate sectors to restructuring funds and a one-off
provision in Angola
Includes Eur 34.2mn for foreclosed
assets
1Q2013 Results Presentation 26
(EUR million) 1Q12 4Q12 1Q13 YoY QoQ
+ Net Interest Income 294.5 273.7 221.9 -25% -19%
+ Fees and Commissions 206.5 202.1 171.8 -17% -15%
= Commercial Banking Income 501.0 475.8 393.7 -21% -17%
+ Capital Markets & Other Results 27.8 227.6 61.6 > 100% -73%
= Banking Income 528.8 703.5 455.3 -14% -35%
+ Insurance Premiums an Costs 0.0 0.8 -1.7 - -
- Operating Costs 271.9 303.8 280.5 3% -8%
= Net Operating Income 256.9 400.4 173.2 -33% -58%
- Net Provisions 190.7 447.1 240.1 26% -46%
= Income Bef. Taxes and Minorities 66.2 -46.7 -66.9 - -
- Taxes 25.3 -14.4 0.2 - -
o.w. Special tax on banks 7.8 7.0 6.5 - -
- Minority Interests 29.3 -38.0 -5.1 - -
= Net Income 11.6 5.7 -62.0 - -
7 May 2013
1Q13 P&L reflects the current macro, market and regulatory difficult environment. BES continued to strengthen its B/S, with deleverage and provisions reinforcement pressuring net income. Forecasted improvement of macro conditions along with expected improvement in NII should allow results to recover in the coming quarters, particularly in the 2H13
1Q2013 Results Presentation 27 7 May 2013
Spain – Main highlights Angola – Main highlights
(+2)(+1)
During 1Q13, BES Spain continued to grow organically:
Deposits: + Eur 1.1bn (+52% YtD)
AuM’s: + Eur 0.2bn (+12% YtD)
# of Clients: + 7,055 (+49% (1) YtD)
# of Branches: +5 (Barcelona, 2 in Madrid, Palma de Mallorca and Logroño), during the first 4 months of 2013. BES is currently studying new openings for 2H13 (10 potential branches already identified)
(1) >= Eur 50k
30 branches and 7
corporate centres
In 1Q13, BES Angola started to implement its new business
plan:
Focus on new business segments:
Corporate: oil companies; SME’s
Individuals: affluent
Multiply by 6 the current number of Clients
Expand branch network: double current number of
branches, with the opening of ca. 50 new branches /
corporate centres in the next 2 years
New commercial strategy: implementation of a new
marketing and communication model
Multichannel approach: internet banking, mobile banking,
call center, cards, POSs, ATMs
During 1Q13, BES continued to expand its international activity. BES Spain presented strong growth in deposits and number of Clients, while BES Angola started to implemented its new strategic plan
1Q2013 Results Presentation
1Q12 1Q13
28
Investment Banking: Capital Markets on the spotlight
Banking Income: Eur 63.4mn (+6.3% YoY)
NII 29%
Fees & Commissions
48%
Capital Markets 23%
1Q12 1Q13
59.7 63.4
International contribution
Net Profit: Eur 3.9mn (-35.6% YoY)
100% -13%
International contribution 57% 71%
6.0
3.9
Domestic Market: Leading the most important bond issues The Bank acted as Joint Lead Manager on REN (Eur 300mn) and BES’ (Eur 500mn)
bond issues, as Sole Lead Manager on GALP’s bond issue (Eur 110mn), as Global Coordinator on Mota-Engil’s public bond offering (Eur 175mn) and as Sole Bookrunner on the share placement of a 1.9% stake in REN (Eur 23.3mn).
The Bank advised the private equity company Explorer Investments on the sale of 100% of Probos – Plásticos, S.A. (EV of Eur 75mn).
The Bank ranked #2 in the Portuguese brokerage market, ending 1Q13 with a 8.1% accumulated market share.
International activity: Expanding to investment banking in India In India, the Bank has obtained the merchant banking license.
In Brazil, the Bank acted as Lead Manager on the R$ 120mn debentures issue by Unidas and as Joint Bookrunner on the R$ 420mn debentures issue by Santo Antônio Energia. The Bank concluded the financial advisory to IE Madeira on the structuring of long term financing resources for the construction and operation of 2,375 kms of transmission lines (R$ 2.5bn), acting as Joint Bookrunner on the R$ 350mn debentures issue by IE Madeira.
In the UK, the Bank acted as Joint Bookrunner on the USD 26.4mn IQE shares block trade placing.
In Poland, the Bank was Joint Bookrunner on the sale of a 12.25% stake on PKO Bank Polski through an accelerated bookbuilding of existing shares, a transaction worth PLN 5,243.8mn (Eur 1,255mn).
In Spain, the Bank ranked #8 in the Madrid Stock Exchange with a 5.0% market share at the end of the 1Q13.
7 May 2013
1Q2013 Results Presentation 29
Table of contents
I. Funding & Liquidity: Deleverage plan continues, with LTD reaching 129% driven by strong deposits growth. High level of repoable assets provides a significant liquidity buffer
II. Asset Quality: Conservative and prudent risk management, with strong B/S provision reserve to cope with current macroeconomic conditions in Portugal
III. 1Q13: BES continued to strengthen its B/S, with deleverage and provisions reinforcement pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
7 May 2013
1Q2013 Results Presentation
7.9 9.2 9.4
10.5 10.5
0
2
4
6
8
10
12
Dec. 10 Dec. 11 Mar. 12 Dec. 12 Mar. 13
30
Core Tier I stable at 10.5% as of Mar.13, with a risk weight of 76% reflecting BES’ conservative risk profile. Capital preservation continues to be a top priority
Solvency Ratios (%)
(BoP)
In the last 2 years, BES significantly reinforced its Core Tier I ratio, without the use of any public funds. RWA’s decreased 10% during this period, despite the impact of IRB pro-cyclicality, which together with the debt / equity exchange offer concluded in
Dec.11 and the rights issue concluded in May. 12 allowed the Bank to reach a 10.5% BoP Core Tier I ratio.
RWAs (Eur bn) RWA / TA (%)
Eur 68.8bn 82.2%
+110 bps
Eur 65.4bn 81.5%
Eur 64.6bn 79.1%
Eur 61.7bn 78.0%
Core Tier I
Notes: BIS II IRB corresponds to calculations based on IRB Foundation for credit risk and standardised approach for operational risk. Preliminary data as of Mar-13 RWA / TA excludes BES Vida, which for regulatory purposes is not fully consolidated
7 May 2013
Eur 61.8bn 76.3%
1Q2013 Results Presentation 31
Core Tier I Ratio comfortably above both BoP and EBA minimum requirements, without the use of any public funds allows BES to maintain its strategic independence
Solvency Ratios Risk weighted assets and Capital
Eur bn Mar. 12 Dec. 12 Mar. 13 (1)
RWA (BoP) 64,587 61,651 61,753
… Banking book 58,451 56,454 56,119
… Trading book 2,198 1,503 1,940
… Oper. Risk 3,938 3,694 3,694
Net Assets (2) 81,264 79,117 80,929
RWA / TA 79.1% 78.0% 76.3%
Total Capital 6,967 6,963 6,910
… Core Tier I 6,067 6,471 6,510
ow deductions AFS: 143 52 37
… Tier I 6,185 6,442 6,436
... Tier II and Other 782 521 474
(%)
BoP EBA
RWA’s (Mar 2013)
Eur 61 753mn
EBA Jun/2012 minimum
requirement: 9%
BoP Dec/2012 minimum requirement: 10%
10.5%
9.9%
(1) Preliminary data (2) Regulatory definition: excludes BES Vida
7 May 2013 Notes: BIS II IRB corresponds to calculations based on IRB Foundation for credit risk and standardised approach for operational risk. Preliminary data as of Mar-13 RWA / TA excludes BES Vida, which for regulatory purposes is not fully consolidated
1Q2013 Results Presentation 32
Table of contents
I. Funding & Liquidity: Deleverage plan continues, with LTD reaching 129% driven by strong deposits growth. High level of repoable assets provides a significant liquidity buffer
II. Asset Quality: Conservative and prudent risk management, with strong B/S provision reserve to cope with current macroeconomic conditions in Portugal
III. 1Q13: BES continued to strengthen its B/S, with deleverage and provisions reinforcement pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
7 May 2013
1Q2013 Results Presentation 33
Backed by a strict financial discipline and a consistent strategy deployed over the years, BES has been proactively addressing the though macro, market and regulatory challenges by strengthening the Balance Sheet. The Bank is in a favourable position to benefit from the expected improvement in business conditions later in the year
Balance Sheet Management
Funding & Liquidity
Solvency
Deleverage plan: LtD decreased 69 p.p. since mid 2010 to 129% in Mar.13, on track to reach 120% by YE14. Deposits increased 8% or Eur 2.9bn during 1Q13, above the credit portfolio growth of 2% or Eur 0.9bn Decrease of ECB use from the peak in Jun.12. Repoable assets provide a significant liquidity buffer, covering over 3 years of MLT maturities After re-opening wholesale debt markets for Portuguese Banks back in Nov.12, BES tapped the market again in Jan.13 with a Eur 500mn senior unsecured issue. Taking advantage of a comfortable liquidity position, BES repaid Eur 1bn of the 1st LTRO in Jan 13. BES increased its sovereign exposure in 1Q13 through T-Bills, taking advantage of a significant liquidity position. Sovereign debt portfolio with substantial potential gains
Capital preservation as one of BES´ top priorities. Core Tier I of 10.5% and 9.9% according to BoP and EBA, comfortably above minimum regulatory requirements.
Asset Quality On BS provision reserve of Eur 2.8bn or 5.51% of gross loans. BES continues to pursue a conservative risk management approach, with reinforced provision reserve as a cushion to overcome expected asset quality deterioration in Portugal
1Q13 Results
NII pressured by deleverage, low interest rates and lower contribution from sovereign portfolio. For the coming quarters, lower cost of deposits and the gradual turnaround in Angola should allow NII to recover BES is implementing a cost cutting programme during 2013-2015 that should allow cost savings of c. Eur 100mn in the period
Lower banking income together with strong provisioning effort led to a net loss in the quarter NII recovery, easing in the provisioning effort and cost cutting measures should allow profitability to recover in the coming quarters, particularly in the 2H13
7 May 2013
Recessionary environment
1Q2013 Results Presentation 34
Table of contents
I. Funding & Liquidity: Deleverage plan continues, with LTD reaching 129% driven by strong deposits growth. High level of repoable assets provides a significant liquidity buffer
II. Asset Quality: Conservative and prudent risk management, with strong B/S provision reserve to cope with current macroeconomic conditions in Portugal
III. 1Q13: BES continued to strengthen its B/S, with deleverage and provisions reinforcement pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
7 May 2013
1Q2013 Results Presentation 35
(EUR million) 2007 2008 2009 2010 2010 Restated*
2011 2012 YoY
+ Net Interest Income 953.7 1,086.2 1,200.8 1,164.0 1,164.0 1,181.6 1,180.5 -0.1%
+ Fees and Commissions 643.4 636.2 717.9 806.9 806.9 790.5 828.4 4.8%
= Commercial Banking Income 1,597.1 1,722.4 1,918.8 1,970.9 1,970.9 1,972.1 2,008.9 1.9%
+ Capital Markets Results 363.6 228.8 389.0 369.0 369.0 268.4 698.5 -
+ Other results 40.5 -63.0 141.7 63.9 63.9 -290.3 -129.0 -
= Banking Income 2,001.2 1,888.1 2,449.4 2,403.9 2,403.9 1,950.2 2,578.4 32.2%
+ Insurance Premiums and Costs - - - - - - 0.7 -
- Operating Costs 950.7 1,001.6 1,055.7 1,169.5 1,123.1 1,129.2 1,149.1 1.8%
= Net Operating Income 1,050.5 886.5 1,393.7 1,234.4 1,280.7 821.0 1,430.0 74.2%
Net Op. Income ex-Mkts & Other 646.4 720.8 863.1 801.4 847.8 842.9 859.8 2.0%
- Net Provisions 262.9 375.9 708.8 533.6 533.6 848.3 1,199.4 41.4%
= Income Bef. Taxes and Minorities 787.6 510.6 684.9 700.8 747.1 -27.3 230.6 -
- Taxes 152.5 83.5 109.8 43.8 43.8 -31.1 110.8 -
o.w. Special tax on banks - - - - - 30.5 27.9 -8.5%
- Minority Interests 28.0 24.9 53.0 146.5 146.5 112.5 23.7 -78.9%
= Net Income 607.0 402.3 522.1 510.5 556.9 -108.8 96.1 -
Consolidated Income Statement: recent profitability hampered by macro environment leading to high provision charges
(*) 2010 staff costs restated due to the change of the accounting policy related to emplyees long term benefits, which are now accounted in Other Comprehensive Income 7 May 2013
1Q2013 Results Presentation 36
Quarterly consolidated income statement*
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 YoY QoQ
+ Net Interest Income 253.7 292.7 346.2 271.4 271.3 271.5 331.4 307.3 294.5 313.1 299.2 273.7 221.9 -25% -19%
+ Fees and Commissions 191.8 197.8 215.5 201.8 189.6 213.3 195.2 192.4 206.4 245.6 174.3 202.1 171.8 -17% -15%
= Commercial Bkg Income 445.5 490.5 561.7 473.2 460.9 484.8 526.6 499.7 500.9 558.7 473.5 475.8 393.7 -21% -17%
+ Capital Markets Results 97.1 97.8 46.2 128.1 100.4 244.7 33.7 -110.5 39.2 189.3 206.4 263.4 92.6 136% -65%
+ Other Results 12.7 -1.9 0.2 52.9 -35.9 15.7 -33.9 -236.1 -11.4 -86.4 4.6 -35.8 -31.0 172% -13.5%
= Banking Income 555.3 586.4 607.9 654.2 525.3 745.2 526.4 153.2 528.8 661.6 684.5 703.4 455.3 -14% -35%
+ Insurance Premiums and Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.1 -1.2 0.8 -1.7 - -
- Operating Costs (restated) 257.6 282.5 279.0 303.9 281.0 276.4 272.8 298.9 271.9 287.6 285.8 303.8 280.5 3% -8%
Note: Amort. actuarial diff. eliminated 11.6 11.6 11.6 11.6 11.3 11.3 11.4 - - - - - - - -
= Net Operating Income 297.7 303.9 328.9 350.3 244.3 468.8 253.6 -145.7 256.9 375.1 397.5 400.4 173.2 -33% -58%
- Net Provisions 115.1 123.7 112.0 182.8 103.1 366.5 191.0 187.6 190.7 235.6 326.0 447.1 240.1 26% -46%
= Income Bef. Tax & Min. 182.6 180.2 216.9 167.5 141.3 102.3 62.6 -333.4 66.2 139.5 71.5 -46.7 -66.9 - -
- Taxes 30.2 -8.6 33.1 -10.8 29.9 -21.0 30.2 -70.1 25.3 90.1 9.7 -14.4 0.2 - -
… Income Tax 34.8 6.7 18.8 -0.5 13.3 50.7 0.4 7.7 41.0 3.8 41.6 48.8 43.7 6% -11%
… Deferred Taxes -4.6 -15.3 14.3 -10.3 9.0 -79.4 22.2 -85.4 -23.5 80.1 -38.9 -70.2 -49.9 112% -29%
… Special Tax 0 0 0 0 7.6 7.6 7.6 7.6 7.8 6.2 7.0 7.0 6.5 -16% -7%
- Minorities 21.7 14.1 49.0 61.7 39.1 16.9 39.2 17.4 29.3 35.4 -3.1 -38.0 -5.1 - -
= Net Income 130.7 174.7 134.8 116.6 72.3 106.4 -6.8 -280.6 11.6 13.9 64.9 5.7 -62.0 - -
Cost to Income 46.4% 48.2% 45.9% 46.5% 53.5% 37.1% 51.8% -. 51.4% 43.5% 41.8% 43.2% 61.6%
Cost to Income ex-Markets 57.8% 57.6% 49.7% 64.2% 61.0% 57.0% 51.8% 59.8% 54.3% 51.5% 60.4% 63.9% 71.3%
(*) The change in the accounting policy related to emplyees long term benefits, now accounted in Other Comprehensive Income, led to a restatement of the staff costs line in 2010 and in the first three quarters of 2011 7 May 2013
1Q2013 Results Presentation 37
Income statement: domestic and international
Domestic International
(EUR million) 1Q12 1Q13 YoY % Total Consolidated 1Q12 1Q13 YoY % Total.
Consolidated
+ Net Interest Income 197.3 127.5 -35.4% 57.5% 97.2 94.4 -2.9% 42.5%
+ Fees & Commissions 142.8 122.6 -14.2% 71.3% 63.6 49.2 -22.6% 28.7%
= Commercial Bkg Inc. 340.1 250.0 -26.5% 63.5% 160.9 143.7 -10.7% 36.5%
+ Capital Mkts & Other 21.3 77.2 - - 6.5 -15.6 - -
= Banking Income 361.5 327.3 -9.5% 71.9% 167.4 128.1 -23.5% 28.1%
+ Insurance premiums and costs - -1.7 - - - - - -
- Operating Costs 188.4 189.8 0.8% 67.7% 83.5 90.7 8.5% 32.3%
= Net Oper. Income 173.1 135.7 -21.6% 78.4% 83.8 37.4 -55.3% 21.6%
- Net Provisions 165.3 207.4 25.4% 86.3% 25.4 32.8 29.3% 13.7%
… credit 126.4 166.0 31.3% 88.7% 22.5 21.2 -6.0% 11.3%
… securities 1.9 14.2 - 76.8% 0.0 4.3 - 23.2%
… other 37.0 27.2 -26.5% 78.7% 2.8 7.3 - 21.3%
= Inc. pre-Tax&Min. 7.8 -71.6 - - 58.5 4.6 -92.1% -
- Taxes & Minorities 19.1 -5.2 - - 35.6 0.3 -99.3% -
= Net Income -11.3 -66.4 - - 22.9 4.4 -80.9% -
Cost to Income 52.2% 58.3% 5.9pp 49.9% 70.8% 20.9pp
Cost to Income ex-Markets 55.4% 75.9% 20.5pp 51.9% 63.1% 11.2pp
7 May 2013
1Q2013 Results Presentation 38
Quarterly domestic income statement*
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 YoY QoQ
+ Net Interest Income 136.8 184.9 171.8 117.7 124.8 164.4 188.2 168.4 197.3 222.1 216.6 187.2 127.5 -35% -32%
+ Fees and Commissions 149.3 147.8 163.1 149.8 134.2 163.7 150.6 151.5 142.8 133.2 131.2 125.9 122.6 -14% -3%
= Commercial Bkg Income 286.1 332.7 334.9 267.4 259.0 328.1 338.8 320.0 340.1 355.3 347.8 313.2 250.0 -26% -20%
+ Capital Mkts & Other Results 98.9 89.2 34.8 186.0 61.8 252.1 -7.1 -340.7 21.3 83.9 183.6 209.7 77.2 262% -63%
= Banking Income 385.0 421.9 369.7 453.5 320.9 580.2 331.7 -20.8 361.4 439.2 531.4 522.9 327.3 -9% -37%
+ Insurance Premiums and Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.1 -1.2 0.8 -1.7 - -
- Operating Costs (restated) 195.1 215.8 207.2 222.1 200.0 197.6 190.8 205.1 188.5 199.3 196.0 198.1 189.8 1% -4%
= Net Operating Income 189.9 206.1 162.5 231.4 120.9 382.6 140.9 -226.5 173.0 240.9 334.2 325.5 135.8 -22% -58%
- Net Provisions 92.8 101.4 90.7 145.5 90.7 335.1 174.7 178.1 165.3 213.6 300.8 293.8 207.3 25% -29%
= Income Bef. Taxes and Min. 97.1 104.7 71.8 85.9 30.2 47.5 -33.8 -404.6 7.7 27.3 33.3 31.7 -71.5 - -
- Taxes 16.3 -20.5 6.7 -18.4 14.2 -30.5 18.0 -90.9 14.3 71.1 -16.8 25.9 0.9 - -
- Minorities -1.8 -1.5 0.4 25.1 -0.2 -1.1 2.4 -2.4 4.7 -2.4 -1.2 -4.0 -6.1 - -
= Net Income 82.6 126.7 64.7 79.2 16.2 79.1 -54.2 -311.3 -11.3 -41.5 51.3 9.8 -66.4 - -
Cost to Income 50.7% 51.1% 56.0% 49.0% 62.3% 34.1% 57.7% - 52.1% 45.4% 36.9% 37.9% 58.3% 6pp 20pp
Cost to Income ex-Markets 68.2% 64.9% 61.9% 83.1% 77.2% 60.2% 56.5% 64.1% 55.4% 56.1% 56.4% 63.3% 75.9% 20pp 13pp
(*) The change in the accounting policy related to employees long term benefits, now accounted in Other Comprehensive Income, led to a restatement of the staff costs line in 2010 and in the first three quarters of 2011 7 May 2013
1Q2013 Results Presentation 39
Quarterly international income statement
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 YoY QoQ
+ Net Interest Income 116.9 107.8 174.4 153.7 146.6 107.1 143.2 138.9 97.2 90.9 82.5 86.5 94.4 -3% 9%
+ Fees and Commissions 42.5 50.0 52.4 52.0 55.3 49.6 44.6 40.9 63.6 112.3 43.1 76.2 49.3 -23% -35%
= Commercial Bkg Income 159.4 157.8 226.8 205.8 201.9 156.7 187.9 179.8 160.9 203.3 125.7 162.7 143.7 -11% -12%
+ Capital Mkts & Other Res. 10.9 6.7 11.4 -5.0 2.5 8.4 7.0 -5.9 6.5 19.1 27.5 18.0 -15.6 - -
= Banking Income 170.3 164.5 238.2 200.7 204.4 165.1 194.8 173.9 167.4 222.4 153.1 180.7 128.1 -23% -29%
- Operating Costs 62.5 66.7 71.8 81.8 81.0 78.9 82.0 94.3 83.5 88.2 89.8 105.7 90.7 8% -14%
= Net Operating Income 107.8 97.8 166.4 118.9 123.4 86.2 112.8 79.9 83.8 134.2 63.3 75.0 37.4 -55% -50%
- Net Provisions 22.3 22.3 21.3 37.2 12.4 31.3 16.4 9.6 25.4 22.1 25.1 153.4 32.8 29% -79%
= Income Bef. Taxes & Min. 85.5 75.4 145.1 81.7 111.0 54.9 96.4 70.3 58.5 112.2 38.2 -78.4 4.6 -92% -
- Taxes 13.9 12.0 26.4 7.4 15.7 9.4 12.2 20.8 10.9 19.1 26.5 -40.3 -0.7 - -
- Minorities 23.5 15.6 48.6 36.6 39.3 18.0 36.9 19.8 24.5 37.9 -1.9 -34.0 0.9 - -
= Net Income 48.1 48.0 70.1 37.6 56.0 27.3 47.3 29.8 22.9 55.3 13.6 -4.1 4.4 -81% -
Cost to Income 36.7% 40.5% 30.1% 40.9% 39.6% 47.8% 42.1% 54.1% 49.9% 39.6% 58.6% 58.5% 70.8%
Cost to Income ex-Markets 39.2% 42.3% 31.6% 39.8% 40.1% 50.3% 43.6% 52.4% 51.9% 43.4% 71.4% 65.0% 63.1%
7 May 2013
1Q2013 Results Presentation 40
Strategic triangle income statement: Africa, Brazil and Spain
Africa* Brazil Spain Strategic Triangle
(EUR million) 1Q12 1Q13 YoY 1Q12 1Q13 YoY 1Q12 1Q13 YoY 1Q12 1Q13 YoY
+ Net Interest Income 46.2 42.4 -8% 14.9 13.2 -12% 21.9 20.7 -6% 83.0 76.3 -8%
+ Fees and Com. 23.1 9.7 -58% 10.0 6.9 -31% 12.7 11.6 -8% 45.8 28.2 -38%
= Com. Bkg Income 69.3 52.1 -25% 24.9 20.1 -19% 34.6 32.3 -7% 128.8 104.5 -19%
+ Markets & Other 11.8 -5.2 -144% -1.9 -3.0 57% 0.8 1.6 107% 10.7 -6.6 -
= Banking Income 81.1 46.9 -42% 23.0 17.1 -26% 35.3 33.9 -4% 139.4 97.9 -30%
- Operating Costs 25.6 29.9 17% 9.7 10.0 3% 21.4 21.6 7% 56.7 61.5 8%
= Net Op. Income 55.5 16.9 -69% 13.3 7.1 -47% 13.9 12.3 -11% 82.7 36.3 -56%
- Net Provisions 7.0 16.8 139% 0.6 2.5 - 9.1 17.3 90% 16.7 36.6 119%
= Income Bef. Tax & Min. 48.5 0.2 - 12.7 4.6 -64% 4.8 -5.0 - 66.0 -0.2 -
- Taxes & Min. 34.8 2.2 - 5.7 3.2 -43% 0.1 -1.2 - 40.6 4.2 -90%
= Net Income 13.6 -2.1 - 7.0 1.4 -80% 4.7 -3.8 - 25.3 -4.5 -
Cost to Income 31.6% 63.9% 42.0% 58.3% 60.7% 63.7% 40.7% 62.8%
* Comprising Angola, Cape Verde, Mozambique and Libya
7 May 2013
1Q2013 Results Presentation 41
Brazil: Quarterly income statement
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 YoY QoQ 2011 2012 YoY
+ Net Interest Income 12.5 14.0 12.8 14.0 14.1 10.7 13.6 14.4 14.9 20.0 14.0 12.3 13.2 -12% 7% 52.7 61.2 16.0%
+ Fees and Commissions 6.8 7.9 13.9 8.5 10.1 11.9 6.9 3.2 10.0 7.2 3.5 6.4 6.9 -31% 8% 32.2 27.1 -15.8%
= Commercial Bkg Income 19.3 21.9 26.7 22.4 24.2 22.6 20.5 17.7 24.9 27.2 17.5 18.7 20.1 -20% 7% 84.9 88.3 3.9%
+ Capital Markets & Other -2.8 0.2 7.8 -3.2 -1.8 3.0 -1.8 2.7 -1.9 -9.2 -4.9 -3.2 -3.0 - - 2.1 -19.2 -
= Banking Income 16.5 22.1 34.5 19.2 22.4 25.5 18.7 20.4 23.0 17.9 12.6 15.5 17.1 -26% 10% 87.0 69.1 -20.6%
- Operating Costs 8.5 8.9 9.6 10.2 9.6 10.3 9.3 11.8 9.7 10.7 10.5 10.9 10.0 3% -9% 41.0 41.8 2.0%
= Net Operating Income 8.0 13.2 24.8 9.1 12.8 15.2 9.4 8.5 13.3 7.2 2.1 4.6 7.1 -47% 55% 46.0 27.3 -40.7%
- Net Provisions 2.6 -0.1 1.4 1.2 1.5 1.6 0.0 -1.5 0.6 -0.2 1.1 0.5 2.5 - - 1.6 1.9 19.8%
= Income Bef. Taxes & Min. 5.4 13.3 23.4 7.9 11.3 13.6 9.4 10.1 12.7 7.5 1.0 4.1 4.6 -64% 12% 44.4 25.3 -42.9%
- Taxes & Minority Interests 2.3 6.0 7.8 1.8 5.6 5.6 4.4 8.2 5.7 4.2 1.4 2.9 3.2 -43% 10% 23.9 14.2 -40.5%
= Net Income 3.1 7.3 15.7 6.1 5.7 8.0 5.0 1.8 7.0 3.2 -0.3 1.2 1.4 -80% 17% 20.4 11.1 -45.8%
Cost to Income 51.6% 40.2% 28.0% 55.8% 42.7% 40.4% 49.7% 58.0% 42.0% 59.7% 83.3% 70.4% 58.3% 16pp -12pp 47.1% 60.5% 13.4pp
Assets 1,962.4 2,340.5 2,301.5 2,672.2 2,755.7 2,711.4 2,502.1 2,645.7 2,425.7 2,711.6 2,392.3 2,440.0 2,966.2 22% 22% 2,645.7 2,440.0 -7.8%
7 May 2013
1Q2013 Results Presentation 42
Angola: Quarterly income statement
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 YoY QoQ 2011 2012 YoY
+ Net Interest Income 48.7 38.6 116.1 92.3 86.8 57.3 92.3 87.1 44.8 33.7 30.6 32.1 41.2 -8% 29% 323.5 141.2 -56.3%
+ Fees and Commissions 5.8 7.5 6.3 6.0 6.2 6.3 5.8 5.9 20.8 73.6 7.8 21.9 6.4 -69% -71% 24.1 124.1 -
= Commercial Bkg Income 54.4 46.1 122.4 98.3 93.0 63.6 98.0 93.0 65.6 107.3 38.5 54.0 47.6 -27% -12% 347.6 265.3 -23.7%
+ Capital Mkts & Other 11.2 3.9 -0.5 8.8 5.3 -1.8 9.4 -1.1 8.8 3.4 20.8 2.7 -6.4 - - 11.9 35.7 -
= Banking Income 65.6 50.0 121.9 107.1 98.3 61.8 107.5 91.9 74.4 110.7 59.2 56.7 41.2 -45% -27% 359.5 301.0 -16.3%
- Operating Costs 14.9 17.6 19.2 20.0 19.2 16.5 20.8 23.6 22.4 22.5 24.9 36.3 26.3 18% -28% 80.1 106.1 32.4%
= Net Operating Income 50.7 32.4 102.7 87.1 79.2 45.3 86.7 68.3 52.0 88.2 34.4 20.3 14.9 -71% -27% 279.4 195.0 -30.2%
- Net Provisions 2.3 3.0 3.8 14.2 4.7 5.1 7.4 10.7 7.0 12.4 14.1 104.2 16.8 140% -84% 27.9 137.7 -
= Income Bef. Taxes & Min. 48.4 29.5 98.9 72.9 74.4 40.2 79.3 57.6 45.1 75.8 20.3 -83.9 -1.9 -104% -98% 251.5 57.3 -77.2%
- Taxes & Minority Interests 30.4 18.6 63.1 46.6 47.3 25.6 50.3 36.6 32.6 48.1 20.9 -75.9 1.0 -97% -101% 159.8 25.6 -84.0%
= Net Income 18.0 10.8 35.8 26.3 27.1 14.6 29.0 21.0 12.5 27.7 -0.6 -8.0 -2.9 -123% -63% 91.7 31.7 -65.5%
Cost to Income 22.8% 35.2% 15.7% 18.6% 19.5% 26.7% 19.4% 25.7% 30.0% 20.3% 42.0% 64.1% 63.8% 33.8pp -0.3pp 22.3% 35.2% 12.9pp
Total Assets 4,775.5 5,520.8 5,211.6 5,923.9 6,210.1 5,992.8 6,880.8 6,867.0 6,778.5 7,625.3 7,915.4 7,970.7 8,431.4 24% 6% 6,867.0 7,970.7 16.1%
Total Credit (Gross) 1,966.9 2,443.1 2,553.9 2,823.6 3,029.4 3,221.2 3,579.5 3,946.3 4,061.9 4,558.3 4,898.2 5,382.1 5,745.4 41.4% 6.8% 3,946.3 5,382.1 36.4%
Equity 303.1 369.0 419.0 485.7 526.9 556.1 653.6 721.3 734.2 844.6 820.9 762.7 774.0 5% 1% 721.3 762.7 5.7%
7 May 2013
1Q2013 Results Presentation 43
Spain: Quarterly income statement
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 YoY QoQ 2011 2012 YoY
+ Net Interest Income 24.5 23.9 21.7 24.5 25.4 22.3 20.5 21.7 21.9 22.1 21.1 23.6 20.7 -6% -12% 89.8 88.6 -1.3%
+ Fees and Commissions 14.6 12.8 12.8 11.1 12.5 12.7 12.3 14.0 12.7 12.0 11.5 11.5 11.6 -8% 2% 51.5 47.6 -7.6%
= Commercial Bkg Income 39.1 36.7 34.5 35.6 37.9 34.9 32.8 35.7 34.6 34.1 32.5 35.0 32.3 -6% -8% 141.3 136.2 -3.6%
+ Capital Markets & Other 1.6 1.4 2.2 -0.5 5.1 2.5 -0.1 0.8 0.8 11.1 11.4 -0.7 1.6 107% - 8.4 22.6 -
= Banking Income 40.7 38.1 36.7 35.1 43.0 37.5 32.7 36.5 35.3 45.1 44.0 34.3 33.9 -4% -1% 149.7 158.7 6.1%
- Operating Costs 23.1 21.0 22.0 22.7 22.3 20.3 21.1 21.9 21.4 21.1 20.6 22.1 21.6 1% -3% 85.6 85.3 -0.4%
= Net Operating Income 17.5 17.2 14.6 12.4 20.7 17.2 11.6 14.6 13.9 24.0 23.4 12.2 12.3 -11% 1% 64.1 73.5 14.7%
- Net Provisions 14.6 11.1 10.7 8.8 13.3 16.9 14.4 11.1 9.1 16.9 9.4 18.7 17.3 90% -7% 55.6 54.1 -2.8%
= Income Bef. Taxes & Min. 2.9 6.0 3.9 3.5 7.4 0.2 -2.7 3.5 4.8 7.1 14.0 -6.5 -5.0 - - 8.4 19.4 -
- Taxes & Minority Interests 0.4 0.5 1.8 1.0 1.6 -0.6 -1.0 -1.4 0.1 1.2 3.7 -1.5 -1.2 - - -1.4 3.6 -
= Net Income 2.5 5.6 2.1 2.6 5.8 0.8 -1.7 5.0 4.7 5.9 10.3 -5.0 -3.8 - - 9.9 15.8 60.0%
Cost to Income 56.9% 55.0% 60.1% 64.7% 51.9% 54.1% 64.5% 60.1% 60.7% 46.8% 46.8% 64.6% 63.7% 3pp -1Pp 57.2% 53.7% -3.5pp
Credit (Gross) 4,156.1 4,197.7 4,111.7 4,093.7 3,736.4 3,690.5 3,564.8 3,495.1 3,371.5 3,347.2 3,194.4 3,258.7 3,343.7 -1% 3% 3,495.1 3,258.7 -6.7%
Cost of Risk (bp) 141 bp 105 bp 103 bp 60 bp 142 bp 178 bp 161 bp 115 bp 94 bp 183 bp 107bp 138bp 130bp 36bp -6pp 155bp 132bp -23bp
Assets 6,029.4 5,722.3 5,527.0 5,498.4 5,502.6 4,792.0 4,874.2 5,302.5 5,139.2 5,013.0 4,654.5 4,652.6 5,601.3 9% 20% 5,302.5 4,652.6 -12.3%
7 May 2013
1Q2013 Results Presentation 44
UK: Quarterly income statement
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 YoY QoQ 2011 2012 YoY
+ Net Interest Income 20.5 19.0 15.2 12.9 12.8 9.7 9.6 7.8 7.8 7.0. 8.7 6.8 8.8 13% 30% 40.0 30.2 -24.3%
+ Fees and Commissions 6.5 11.3 5.7 13.3 18.4 8.5 13.0 5.7 12.2 8.6 11.4 23.7 12.4 1% -48 45.6 55.9 22.5%
= Commercial Bkg Income 26.9 30.3 20.9 26.2 31.1 18.2 22.6 13.6 20.0 15.6 20.1 30.5 21.1 6% -31% 85.5 86.1 0.7%
+ Capital Markets & Other -0.3 0.8 1.2 -10.8 -7.2 0.6 -2.6 -8.7 -4.8 6.9 -0.7 11.2 -7.2 - - -17.9 12.5 -
= Banking Income 26.7 31.1 22.2 15.4 24.0 18.9 20.0 4.8 15.2 22.5 19.3 41.6 13.9 -8% -67% 67.6 98.7 45.8%
- Operating Costs 4.4 4.4 4.9 13.1 18.3 17.5 18.7 17.3 13.5 14.8 14.3 13.7 12.9 -5% -6% 71.8 56.4 -21.5%
= Net Operating Income 22.2 26.7 17.3 2.3 5.7 1.3 1.3 -12.5 1.7 7.6 5.0 28.0 1.1 -37% -96% -4.2 42.3 -
- Net Provisions -0.2 3.6 6.1 11.5 -4.3 7.6 -6.2 -14.7 8.9 -7.6 0.0 26.7 -3.9 - - -17.6 28.0 -
= Income Bef. Taxes & Min. 22.4 23.1 11.2 -9.1 10.0 -6.3 7.5 2.2 -7.2 15.3 4.9 1.2 4.9 - 294% 13.4 14.3 6.9%
- Taxes & Minority Interests 1.9 2.2 2.9 -6.7 -0.2 -3.6 -4.0 2.6 -5.0 1.7 0.0 -1.6 -4.2 - - -5.3 -4.9 -6.0%
= Net Income 20.5 20.9 8.3 -2.5 10.2 -2.7 11.5 -0.4 -2.1 13.5 5.0 2.9 9.1 - 219% 18.6 19.2 3.2%
Cost to Income 16.5% 14.0% 22.0% 84.9% 76.2% 92.9% 93.5% - 88.9% 66.0% 74.2% 32.9% 92.4% 3.5pp 59.5pp 106.2% 57.2% -49.0pp
Credit (Gross) 2,814.4 2,986.9 2,979.7 2,699.1 2,349.2 2,122.5 2,079.1 1,930.5 2,122.5 2,051.3 2,100.7 2,028.1 1,994.5 -6% -2% 1,930.5 2,028.1 5.1%
7 May 2013
1Q2013 Results Presentation 45
Quarterly Net Interest Income
(NIM
in b
p; Q
uarte
rly F
igur
es)
315
335
300
250
254
293
346
271
271
272
331
307
295
313
299
274
222
193 199171
141 141161
190
152156155
187 174171179 170157
128
0
50
100
150
200
0
50
100
150
200
250
300
350
400
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
423
406
395
375
380
401
397
437
454
455
507
546
562
540
553
585
550
3,583,383,25
3,023,033,082,983,3 3,55 3,55
3,924,22
4,524,294,354,65
4,45
Credit NII (LHS, Eur mn) Credit Margin (RHS, %)
-47
-36
-39
-41
-52
-57
-66
-110
-136
-129
-146
-173
-206
-202
-218
-216
-236
-0,74-0,59-0,61-0,66-0,83-0,88-0,97
-1,45-1,78-1,64-1,78 -2,0
-2,39-2,38-2,63-2,53-2,66
Deposits NII (LHS, Eur mn) Deposits Margin (RHS, %)
Credit Margin Deposit Margin
Quarterly Net Interest Income & NIM Euribor 3M (quarterly average) (%)
2.01
1.31
0.87 0.72 0.66 0.69
0.87 1.02 1.09
1.41 1.56 1.50
1.04 0.70
0.36 0,20 0.21
75
95
115
135
155
175
195
0
0.5
1
1.5
2
2.5
3
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
7 May 2013
1Q2013 Results Presentation 46
Net Interest income & Net Interest Margin (quarterly)
1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 (EUR million)
Avrg Balance Interest Yield Avrg
Balance Interest Yield Avrg Balance Interest Yield Avrg
Balance Interest Yield Avrg Balance Interest Yield
Interest Earning Assets 68,597 926.6 5.48 70,059 921.4 5.28 69,790 891.7 5.07 69,345 830.8 4.75 70,059 797.5 4.61
... Loan Portfolio 50,430 692.0 5.57 50,487 627.1 4.98 50,402 598.8 4.71 49,924 609.3 4.84 50,154 575.8 4.66
... Securities and Other 18,167 234.6 5.24 19,571 294.3 6.03 19,388 293.0 6.00 19,421 221.4 4.57 19,905 221.7 4.52
Other non interest earning assets 1,388 - - - - - - - - - - - - - -
Total 69,985 926.6 5.37 70,059 921.4 5.28 69,790 891.7 5.07 69,345 830.8 4,75 70,059 797.5 4.61
Interest Bearing Liabilities 69,985 632.1 3.66 69,510 608.3 3.51 67,089 592.6 3.50 65,767 557.1 3.36 66,909 575.6 3.49
... Deposits 34,981 296.3 3.44 34,050 260.9 3.07 33,016 248.4 2.98 33,809 232.1 2.72 35,855 254.3 2.88
... Other Liabilities 35,004 335.8 3.89 35,461 347.4 3.93 34,073 344.2 4.01 31.959 324.9 4.03 31,054 321.3 4.30
Other non interest bearing liabilities - - - 549 - - 2,700 - - 3,578 - - 3,150 - -
Total 69,985 632.1 3.66 70,059 608.3 3.48 69,790 592.6 3.37 69,345 557.1 3.19 70,059 575.6 3.33
NII / NIM 294.5 1.71 313.1 1.79 299.2 1.70 273.7 1.57 221.9 1.28
Average Euribor 3M 1.04 0.70 0.36 0.20 0.21
7 May 2013
1Q2013 Results Presentation 47
Quarterly fees & commissions
(1) Includes trade finance and letters of credit (2) Includes Brokerage (3) Includes discretionary management
(EUR million)
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 YoY QoQ 2011 2012 YoY
Account Management Fees 19.6 21.2 21.6 22.4 19.4 19.6 20.0 22.1 19.3 19.9 20.1 19.6 18.7 -3% -5% 81.1 79.0 -3%
Commissions on Loans 27.1 32.6 35.8 35.3 23.8 27.7 24.9 27.9 29.1 22.7 27.2 26.4 27.2 -7% 3% 104.4 105.4 1%
Trade Finance & Exp. related (1) 27.6 16.3 35.0 15.4 12.3 21.4 32.9 18.6 19.4 24.1 23.3 21.1 17.1 -12% -19% 85.4 87.9 3%
Corporate & Project Finance 13.9 17.2 22.8 15.6 15.0 21.9 10.8 12.0 15.9 9.1 8.1 8.6 11.9 -25% 38% 59.6 41.6 -30%
Guarantees 18.1 23.6 22.1 28.4 25.6 36.9 30.8 39.2 29.9 39.0 33.4 37.2 36.7 22% -2% 132.6 139.6 5%
Securities related fees (2) 15.6 12.1 8.4 14.8 29.6 22.6 19.5 18.2 18.4 19.0 17.5 18.5 19.3 5% 4% 89.9 73.4 -18%
Asset Management (3) 25.2 24.7 25.9 26.1 23.7 25.0 21.2 15.9 19.9 18.6 19.7 27.7 21.3 7% -23% 85.8 85.9 0%
Cards 8.9 9.8 10.5 10.8 9.7 10.0 10.2 11.1 10.0 10.4 10.6 25.7 8.4 -16% -67% 40.9 56.7 38%
Bancassurance 13.0 17.0 13.5 12.9 11.7 10.2 10.3 2.7 19.1 8.4 8.8 11.4 5.7 -70% -50% 34.9 47.6 36%
Factoring 2.2 1.9 2.2 2.1 1.9 2.0 2.2 2.2 1.8 1.6 2.0 2.2 1.8 0% -20% 8.3 7.6 -8%
Other 20.6 21.3 17.8 17.8 16.8 16.1 12.7 22.1 23.6 72.8 3.7 3.7 3.8 -84% 3% 67.7 103.7 53%
Total Fees & Commissions 191.8 197.8 215.5 201.8 189.6 213.3 195.4 192.1 206.4 245.6 174.3 202.1 171.8 -17% -15% 790.5 828.4 4.8%
Commissions related to the issuance of Government Guaranteed Bonds are included in “Other”
7 May 2013
1Q2013 Results Presentation 48
Quarterly capital markets results
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2011 2012
Interest Rate, Credit & FX 48.7 -0.6 58.1 -133.7 50.5 7.6 164.2 -47.2 80.9 239.5 243.6 261.0 86.0 175.1 825.0
… Interest rate 14.4 3.0 -9.5 22.0 37.8 5.5 46.4 -36.5 58.1 221.9 236.0 265.3 87.4 53.2 781.3
… Credit 18.3 -32.3 44.7 -147.7 8.4 14.3 99.6 19.0 23.3 -13.2 -14.8 37.2 -5.9 141.3 32.5
… FX & Other 16.0 28.7 22.9 -8.0 4.3 -12.2 18.2 -9.1 -0.5 30.8 22.4 -41.5 4.5 -19.4 11.2
Equity 48.4 98.4 -12.1 261.8 49.9 237.0 -130.3 -63.3 -41.7 -50.0 -37.2 2.4 6.7 93.3 -126.5
… Trading 45.2 32.7 -19.6 144.9 45.6 100.3 -131.5 -88.8 -78.4 -113.8 -7.6 0.7 4.8 -74.4 -199.1
… Income from securities 3.2 65.7 7.5 116.9 4.3 136.7 1.2 25.6 36.7 63.9 -29.6 1.7 1.9 167.7 72.6
Capital market results 97.1 97.8 46.0 128.1 100.4 244.6 33.9 -110.5 39.2 189.4 206.4 263.4 92.7 268.4 698.5
Provisions for Securities 16.4 16.0 4.8 39.4 0.6 55.8 5.3 11.6 1.9 16.9 13.7 74.1 18.5 73.3 106.6
Capital Markets net of Provisions for securities 80.7 81.8 41.2 88.7 99.8 188.8 28.6 -122.1 37.3 172.5 192.7 189.3 74.2 195.1 591.9
7 May 2013
1Q2013 Results Presentation 49
49
27
2
84
109
64
36
3
24
-1
15
88
2835
25
51 50 54 53 55
19
3526
51
84
13
46
80 82
44
66 6873
196
39
55
72
155
-14
16
48
124
108
109
97 98
46
128
100
245
34
-4
39
189
206
263
93
1Q99
2Q99
3Q99
4Q99
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2 Quarterly capital markets results
Quarterly history of capital markets results since 1999
(EUR mn)
Excludes the one-off impact of Eur 107mn related to the
partial transfer of the pension fund to the Social Security
7 May 2013
1Q2013 Results Presentation 50
Quarterly equity accounted earnings and other results
Equity Accounted Earnings and Other Results (Quarterly)
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Equity Accounted Earnings 8.6 12.2 8.4 8.0 4.1 8.8 -9.5 -178.6 3.4 3.8 1.5 -0.5 1.8
… BES Vida 4.8 2.2 5.3 3.2 2.9 -0.2 -12.6 -183.3 -0.2 3.0 - - -
… Other 3.8 1.7 11.4 4.8 1.2 9.0 3.1 4.7 3.6 0.8 1.5 -0.5 1.8
Other Results, ow 4.1 -14.1 -16.5 44.9 -40.0 6.9 -24.5 -57.5 -14.8 -90.3 3.1 -35.3 -38.5
… Results from sale other assets -0.6 -2.6 1.9 35.4 -38.6 -7.2 -23.0 -21.0 -10.4 -14.6 -9.5 -23.3 -6.3
Total Equity Accounted & Other 12.7 -1.9 0.2 52.9 -35.9 15.7 -33.9 -236.1 -11.4 -86.4 4.6 -35.8 -36.7
Equity Accounted Earnings and Other results (Accumulated)
(EUR million) 3M10 6M10 9M10 FY10 3M11 6M11 9M11 FY11 3M12 6M12 9M12 FY12 3M13
Equity Accounted Earnings, ow 8.6 20.8 29.2 37.2 4.1 12.9 3.4 -175.2 3.4 7.2 8.8 8.3 1.8
… BES Vida 4.8 7.0 12.3 15.5 2.9 2.7 -9.9 -193.2 -0.2 2.8 2.8 2.8 -
Other Results, ow 4.1 -10.0 -26.5 18.4 -40.0 -33.1 -57.5 -115.1 -14.8 -105.1 -102.0 -137.3 -38.5
… Results from sale of other assets
4.1 -10.0 -26.5 18.4 -40.0 -33.1 -68.8 -89.9 -10.4 -25.0 -34.4 -57.7 -6.3
7 May 2013
1Q2013 Results Presentation 51
Quarterly other results: Reconciliation between IFRS P&L and Presentation
Quarterly
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Other Results (IFRS), ow 16.1 -11.2 -5.1 -13.4 36.0 127.2 190.7 3.9 30.2 -46.0 4.7 40.0 -39.1
… Fees 10.7 8.2 12.6 6.2 9.0 9.3 7.7 6.4 10.1 7.9 7.8 8.7 8.8
… Capital Markets 0.8 -8.1 -7.6 -29.1 36.0 111.4 192.1 41.5 32.3 27.9 -8.7 -29.7 -14.9
… Special Tax on Banks - - - - -7.6 -7.6 -7.6 -7.6 -7.8 -6.2 -6.9 -7.0 -6.5
… Other 4.6 -11.4 -10.0 9.5 -1.4 14.1 -1.4 -13.8 -4.4 -75.7 12.6 -12.0 -26.5
Accumulated
(EUR million) 3M10 6M10 9M10 FY10 3M11 6M11 9M11 FY11 3M12 6M12 9M12 FY12 3M13
Other Results (IFRS), ow 16.1 4.9 -0.2 -13.6 36.0 163.2 353.9 357.8 30.2 -15.8 -11.1 -51.1 -39.1
… Fees 10.7 18.9 31.5 37.7 9.0 18.3 26.0 32.4 10.1 18.0 25.8 34.5 8.8
… Capital Markets 0.8 -7.3 -14.9 -44.0 36.0 147.4 339.5 381.0 32.3 60.2 51.5 21.8 -14.9
… Special Tax Banks - - - - -7.6 -15.2 -22.9 -30.5 -7.8 -14.0 -20.9 -27.9 -6.5
… Other 4.6 -6.8 -16.8 -7.3 -1.4 12.7 11.3 -25.1 -4.4 -80.1 -67.5 -79.5 -26.5
7 May 2013
1Q2013 Results Presentation 52
Breakdown of operating costs*
Quarterly Operating Costs (EUR million)
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 YoY QoQ 2011 2012 YoY
Staff costs 133.2 142.4 143.8 162.4 147.4 142.4 148.2 149.5 143.1 148.4 148.3 159.1 145.6 1.7% -8.5% 587.5 598.9 1.9%
…Remunerations 108.1 116.3 113.0 128.5 116.0 111.9 117.5 126.2 114.7 119.0 118.9 131.2 116.2 1.3% -11.4% 471.6 483.8 2.6%
…Pension Benefits (restated) 8.7 9.0 13.5 13.1 6.8 6.2 6.8 2.9 4.8 4.7 5.7 3.3 5.0 4.2% 51.5% 22.7 18.5 -18.5%
…LT service benefits & Other 16.5 17.2 17.3 20.9 24.6 24.3 23.9 20.3 23.6 24.7 23.7 24.6 24.4 3.4% -0.8% 93.1 96.6 3.8%
Admin costs 100.6 113.3 109.9 117.2 107.5 107.9 98.1 120.3 102.2 112.0 110.8 117.2 108.9 6.6% -7.1% 433.8 442.1 1.9%
Depreciation 23.7 26.8 25.3 24.3 26.1 26.2 26.5 29.1 26.6 27.1 26.8 27.5 26.0 -2.3% -5.5% 107.9 108.8 0.1%
Total Operating Costs 257.5 282.6 279.1 303.9 280.9 276.5 272.8 298.9 271.9 287.5 285.8 303.8 280.5 3.2% -7.7% 1,129.2 1,149.1 1.8%
(*) The change in the accounting policy related to employees long term benefits, now accounted in Other Comprehensive Income, led to a restatement of the staff costs line
in 2010 and the first three quarters of 2011
7 May 2013
1Q2013 Results Presentation 53
Breakdown of quarterly operating costs: domestic* and international
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 YoY QoQ 2011 2012 YoY
Domestic
Staff costs 96.1 105.1 103.6 115.6 101.1 99.1 100.2 94.8 94.7 97.9 97.6 99.5 94.7 - -4.8% 395.2 389.7 -1.4%
…Remunerations 73.0 82.2 75.7 87.0 72.8 71.6 71.6 74.4 68.8 71.0 70.7 75.0 68.7 -0.2% -8.4% 290.4 285.5 -1.7%
…Pension Benefits 7.8 8.0 12.4 12.7 5.8 5.3 6.0 1.9 4.0 3.8 4.9 1.7 4.0 - - 19.0 14.4 -24.2%
…LT service benefits & Other 15.3 14.9 15.5 15.8 22.4 22.1 22.7 18.5 21.9 23.1 22.0 22.8 22.0 0.5% -3.5% 85.7 89.8 4.8%
Admin costs 79.6 89.3 84.7 86.8 78.6 78.6 70.4 89.1 73.9 82.1 79.3 79.3 76.7 3.8% -3.3% 316.7 314.6 -0.7%
Depreciation 19.3 21.6 18.9 19.6 20.3 20.0 20.2 21.1 19.8 19.4 19.2 19.4 18.4 -7.0% -5.2% 81.6 77.7 -4.8%
Domestic Operating Costs 195.0 215.9 207.3 222.0 199.9 197.6 190.8 205.1 188.4 199.4 196.0 198.2 189.8 0.7% -4.2% 793.5 782.0 -1.4%
International
Staff Costs 37.2 37.4 40.2 46.8 46.3 43.3 48.0 54.7 48.4 50.5 50.7 59.6 51.0 5.4% -14.4% 192.3 209.2 8.8%
…Remunerations 35.2 34.1 37.2 41.4 43.2 40.3 45.9 51.9 45.8 48.0 48.2 56.3 47.5 3.7% -15.6% 181.3 198.3 9.4%
…Pension Benefits 0.8 1.0 1.1 0.4 0.9 0.8 0.8 1.1 0.8 0.9 0.8 1.5 1.1 37.5% -26.7% 3.6 4.1 11.1%
… LT service benefits & Other 1.1 2.3 1.9 5.0 2.2 2.2 1.3 1.8 1.7 1.6 1.7 1.8 2.4 41.2% 33.3% 7.5 6.9 -9.3%
Admin costs 21.0 24.0 25.2 30.4 28.9 29.3 27.8 31.1 28.3 29.9 31.5 37.9 32.2 13.8% -15.0% 117.1 127.6 8.9%
Depreciation 4.3 5.3 6.4 4.7 5.8 6.2 6.2 8.0 6.8 7.7 7.6 8.2 7.5 10.3% -8.5% 26.2 30.3 15.7%
International Operating Costs 62.5 66.7 71.8 81.9 81.0 78.9 82.0 93.8 83.5 88.1 89.8 105.7 90.7 8.6% -14.2% 335.6 367.1 9.4%
(*) The change in the accounting policy related to employees long term benefits, now accounted in Other Comprehensive Income, led to a restatement of the staff costs
line in 2010 and the first three quarters of 2011
7 May 2013
1Q2013 Results Presentation 54
Quarterly provisions
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 YoY QoQ 2011 2012 YoY
…Credit 80.0 94.5 83.6 93.7 80.9 224.6 147.8 147.4 149.0 203.0 266.9 196.0 187.1 26% -5% 600.6 814.8 35.7%
cost of risk (bp) 62 71 63 71 63 174 114 115 117 159 210 156 146 29bp -10bp 117 162 45bp
… Domestic 60.1 71.6 64.1 62.9 70.1 197.4 132.4 138.3 126.4 181.4 247.4 168.5 166.0 31% -1% 538.2 723.8 34.5%
cost of risk (bp) 59 69 62 61 68 191 128 137 126 183 254 176 172 46bp -4bp 133 190 57bp
… International 19.9 22.9 19.5 30.8 10.7 27.2 15.4 9.0 22.5 21.6 19.4 27.5 21.2 -6% -23% 62.4 91.0 45.9%
cost of risk (bp) 74 78 68 110 40 104 59 33 82 75 66 90 66 -16bp -24bp 58 75 17bp
…Securities 16.4 16.0 4.8 39.4 0.6 55.7 5.3 11.6 1.9 16.9 13.7 74.1 18.5 - - 73.3 106.6 45.4%
…Other 18.7 13.2 23.6 49.7 21.6 86.1 37.9 28.6 39.8 15.8 45.4 177.1 34.5 - - 174.4 278.0 59.4%
Total Provisions 115.1 123.7 112.0 182.8 103.0 366.5 191.0 187.6 190.7 235.7 326.0 447.2 240.1 26% -46% 848.3 1,199.4 41.4%
… Domestic 92.8 101.4 90.7 145.5 90.7 335.1 174.7 178.1 165.3 213.6 300.8 293.8 207.4 25% -29% 778.6 973.5 25.0%
… International 22.3 22.3 21.3 37.2 12.4 31.3 16.4 9.6 25.4 22.1 25.1 153.4 32.8 29% -79% 69.8 225.9 -
Note: Detailed credit provisions and asset quality data in following slides
7 May 2013
1Q2013 Results Presentation 55
Quarterly taxes: domestic and international
(EUR million) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Domestic
Income Tax 26.0 2.9 1.7 2.1 5.7 43.6 8.0 5.9 38.3 -0.4 16.5 62.4 27.9
Deferred taxes -9.8 -23.5 5.0 -20.5 0.8 -81.7 2.4 -104.5 -31.8 65.3 -40.3 -43.5 -33.4
Banking sector special tax - - - - 7.6 7.6 7.6 7.6 7.8 6.2 7.0 7.0 6.5
Total domestic taxes 16.2 -20.5 6.7 -18.4 14.2 -30.5 18.0 -91.0 14.3 71.1 -16.8 25.9 0.9
International
Income Tax 8.7 3.8 17.0 -3.8 7.5 7.2 -7.6 1.8 2.7 4.2 25.1 -13.6 15.8
Deferred taxes 5.2 8.2 9.5 10.0 8.2 2.3 19.8 19.1 8.3 14.8 1.4 -26.7 -16.5
Total international taxes 13.9 11.9 26.6 7.3 15.7 9.5 12.2 20.9 11.0 19.0 26.5 -40.3 -0.7
Consolidated
Income Tax 34.7 6.7 18.7 -1.7 13.2 50.8 0.4 7.7 41.0 3.8 41.6 48.8 43.7
Deferred taxes -4.6 -15.3 14.5 -10.5 9.0 -79.4 22.2 -85.4 -23.5 80.1 -38.9 -70.2 -49.9
Banking sector special tax - - - - 7.6 7.6 7.6 7.6 7.8 6.2 7.0 7.0 6.5
Total taxes 30.1 -8.6 33.3 -11.1 29.9 -21.0 30.2 -70.1 25.3 90.1 9.7 -14.4 0.2
7 May 2013
1Q2013 Results Presentation 56
Quarterly balance sheet: assets
(Eur mn) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep12 Dec 12 Mar 13 YoY QoQ
Cash & deposits at central banks 2,115 1,943 847 931 1,252 1,085 1,015 1,090 1,527 1,646 1,183 1,378 1,410 -8% 2%
Deposits with banks 509 501 555 558 671 538 610 581 562 723 617 681 511 -9% -25%
Financial assets held for trading 4,041 5,966 4,300 3,942 3,398 3,007 3,458 3,435 3,885 3,904 3,994 3,925 4128 6% 5%
Financial assets at FV 2,653 1,611 1,618 1,424 1,525 1,063 1,487 1,964 2,096 3,194 3,059 2,822 2,780 33% -2%
Financial assets AFS 9,058 10,115 11,642 11,775 10,777 10,925 12,137 11,483 12,438 14,298 12,025 10,755 13,559 9% 26%
Loans and advances to banks 6,635 3,570 2,596 4,245 3,765 3,439 4,049 3,283 2,288 2,084 2,520 5,427 3,093 35% -43%
Loans and adv. to customers 49,898 51,674 51,032 50,829 49,862 49,718 49,933 49,043 48,713 48,741 48,234 47,706 48,443 -1% 2%
(Provisions) (1,609) (1,682) (1,725) (1,777) ( 1,790) (1,983) (2,101) (2,167) (2,271) (2,435) (2,577) (2,692) (2,823) 24% 5%
Held to maturity investments 2,664 2,757 2,606 2,459 2,349 2,252 2,092 1,541 1,183 1,310 972 942 921 -22% -2%
Hedging derivatives 486 533 524 447 296 329 435 510 468 485 483 517 450 -4% -13%
Non current assets held for sale 440 486 636 575 605 637 674 1,647 1,827 2,164 2,176 3,278 3,489 91% 7%
Investment property - - - - - - - - - 385 394 442 395 - -11%
Other tangible assets 712 746 792 809 780 798 823 852 834 865 947 932 971 16% 4%
Intangible assets 135 153 153 234 230 221 223 230 227 485 515 555 548 142% -1%
Investments in assoc. Companies 872 852 868 962 961 961 948 807 858 577 587 581 583 -32% -
Current income tax assets 18 25 29 99 99 108 40 29 31 38 21 25 23 -25% -5%
Deferred income tax assets 191 237 220 283 292 377 375 712 714 665 672 729 779 9% 7%
Reinsurance Technical Prov. 3 3 4 2 - -52%
Other assets 3,670 3,705 3,719 4,083 3,886 4,704 4,467 3,031 3,614 3,724 3,464 2,994 2,859 -21% -5%
…Direct & Indirect Insur. Debtors 9 8 1 9 - -
... Other assets 3,670 3,705 3,719 4,083 3,886 4,704 4,467 3,031 3,614 3,715 3,456 2,994 2,850 -21% -5%
Total Assets 84,098 84,874 82,137 83,655 80,746 80,162 82,767 80,237 81,265 85,292 81,866 83,691 84,946 5% 2%
7 May 2013
1Q2013 Results Presentation 57
Quarterly balance sheet: liabilities
(Eur mn) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 YoY QoQ
Amounts owed to central banks 4,222 8,996 6,654 7,965 8521 9,673 11,422 10,014 13,316 14,356 11,224 10,893 9,947 -25% -9%
Financial liabilities held for trading 1,736 2,169 2,275 2,088 1,875 1,895 2,113 2,125 1,943 2,167 2,187 2,122 1,949 - -8%
Deposits from banks 7,302 7,112 6,215 6,381 7,199 5,961 6,170 6,239 4,950 5,767 5,072 5,089 5,592 13% 10-
Due to customers 26,522 26,082 29,923 30,819 30,545 31,972 33,854 34,206 35,959 32,765 33,240 34,540 37,417 4% 8%
Debt securities 33,062 29,451 25,643 24,110 20,742 19,907 18,649 18,453 15,116 15,615 15,108 15,433 14,582 -4% -6%
Hedging derivatives 215 241 214 229 217 230 225 239 182 184 118 125 162 -11% 29%
Investment Contracts - - - - - - - - - 1,844 2,655 3,414 3,293 - -4%
Non current liabilities held for sale 26 35 43 5 5 5 5 141 141 165 156 176 176 25% -
Provisions 172 180 192 215 212 207 200 190 166 186 215 237 230 39% -3%
Technical provisions - - - - - - - - - 1,817 1,668 1,577 1,532 - -3%
Current income tax liabilities 126 97 84 25 27 25 24 45 46 44 78 221 207 - -6%
Deferred income tax liabilities 70 92 94 116 110 79 94 111 115 136 163 154 151 31% -2%
Other subordinated loans 2,306 2,306 2,311 2,292 2,327 1,578 1,158 961 946 834 839 840 835 -12% -1%
Other liabilities 1,219 1,197 1,226 1,935 1,603 1,642 1,950 1,321 1,996 1,887 1,384 1,146 1,187 -41% 4%
… Direct and Indirect Insurance Creditors - - - - - - - - - 11 25 2 21 - -
… Other liabilities 1,219 1,197 1,226 1,935 1,603 1,642 1,950 1,321 1,996 1,876 1,359 1,144 1,166 -42% 2%
Total Liabilities 76,978 77,959 74,874 76,179 73,386 73,175 75,863 74,045 74,875 77,768 74,107 75,958 77,261 3% 2%
7 May 2013
1Q2013 Results Presentation 58
Quarterly balance sheet: equity
(Eur mn) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 YoY QoQ
Shareholders' Equity 6,686 6,243 6,446 6,474 6,738 6,274 6,132 5,713 5,769 6,837 7,022 6,967 7,066 23% 1%
Share capital 3,500 3,500 3,500 3,500 3,500 3,500 3,500 4,030 4,030 5,040 5,040 5,040 5,040 25% -
Share premium 1,086 1,085 1,085 1,085 1,085 1,085 1,085 1,082 1,082 1,067 1,069 1,070 1,069 -1% -
Other capital instruments - - - 270 269 269 269 30 29 29 29 29 29 - -
Treasury stock (25) (25) (25) - (1) (1) (1) (1) (1) (11) (9) (7) (1) 11% -86%
Preference shares 600 600 600 600 600 456 409 212 199 193 193 193 193 -3% -
Fair value reserve 326 60 292 ( 10) (33) (383) (467) (1,086) (900) (821) (632) (687) (710) -21% 3%
Other reserves and retained earnings 1,198 1,023 993 979 1,317 1,322 1,337 1,447 1,330 1,340 1,330 1,329 1,445 9% 9%
Net Profit for the period / year 119 282 405 511 61 156 138 (109) 12 25 90 96 (62) - -
Minority interests 315 390 412 541 562 583 634 588 609 663 647 669 682 12% 2%
Total Equity 7,120 6,915 7,263 7,476 7,361 6,987 6,904 6,192 6,389 7,525 7,759 7,733 7,685 20% -1%
7 May 2013
1Q2013 Results Presentation 59
Quarterly loan portfolio (including securitised)
(EUR million) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 YoY QoQ
Loans to Individuals 17,728 17,775 17,651 17,630 17,378 17,280 17,089 17,202 16,883 16,751 16,489 16,433 16,240 -3.8% -1.2%
… ow Mortgages 14,933 14,981 14,894 14,808 14,695 14,634 14,527 14,486 14,305 14,184 14,039 13,805 13,667 -4.5% -1.0%
… Domestic 14,429 14,484 14,398 14,325 14,222 14,160 14,044 13,951 13,783 13,648 13,507 13,270 13,126 -4.8% -1.1%
… International 504 497 496 483 473 474 483 535 522 536 532 536 541 3.6% 1.0%
… ow Other 2,794 2,794 2,757 2,822 2,683 2,646 2,562 2,715 2,578 2,567 2,450 2,628 2,573 -0.2% -2.1%
… Domestic 2,461 2,451 2,428 2,468 2,348 2,305 2,228 2,130 2,013 1,952 1,849 1,937 1,844 -8.4% -4.8%
… International 333 343 329 354 335 341 334 586 565 615 601 691 729 29.1% 5.5%
Corporate Lending 37,136 38,823 38,278 38,083 37,319 37,409 37,877 36,885 36,923 37,197 37,043 36,637 37,650 2.0% 2.8%
… Domestic 27,164 27,990 27,701 27,734 27,441 27,764 28,159 27,160 27,038 26,777 26,344 25,656 26,144 -3.3% 1.9%
… International 9,972 10,833 10,577 10,349 9,878 9,645 9,718 9,725 9,885 10,420 10,700 10,981 11,505 16.4% 4.8%
Loan portfolio 54,864 56,597 55,929 55,713 54,697 54,689 54,965 54,087 53,806 53,948 53,533 53,070 53,889 0.2% 1.5%
… Domestic 44,054 44,925 44,427 44,527 44,011 44,229 44,431 43,241 42,834 42,376 41,700 40,862 41,114 -4.0% 0.6%
… International 10,810 11,673 11,403 11,187 10,686 10,460 10,534 10,846 10,972 11,572 11,833 12,208 12,775 16.4% 4.7%
Int as % total 20% 21% 20% 20% 20% 19% 19% 21% 20% 21% 22% 23% 24%
Considering the outstanding amounts of securitised credit. Securitised credit only includes domestic loans.
7 May 2013
1Q2013 Results Presentation 60
Quarterly gross loan portfolio (excluding securitised)
(EUR million) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 YoY QoQ
Loans to Individuals 14,371 14,532 14,479 14,523 14,333 14,292 14,157 14,326 14,095 13,979 13,768 13,762 13,617 -3.4% -1.0%
… ow Mortgages 11,576 11,739 11,722 11,701 11,650 11,646 11,595 11,610 11,496 11,411 11,317 11,134 11,044 -3.9% -0.8%
… Domestic 11,072 11,242 11,225 11,218 11,177 11,172 11,112 11,075 10,975 10,875 10,785 10,598 10,503 -4.3% -0.9%
… International 504 497 496 483 473 474 483 535 522 536 532 536 541 3.6% 1.0%
… ow Other 2,794 2,794 2,757 2,822 2,683 2,646 2,562 2,716 2,599 2,567 2,450 2,628 2,573 -1.0% -2.1%
… Domestic 2,461 2,451 2,428 2,468 2,348 2,305 2,228 2,130 2,034 1,952 1,849 1,937 1,844 -9.4% -4.8%
… International 333 343 329 354 335 341 334 586 565 615 601 691 729 29.1% 5.5%
Corporate Lending 37,137 38,823 38,279 38,083 37,319 37,409 37,876 36,885 36,889 37,197 37,043 36,637 37,650 2.1% 2.8%
… Domestic 27,164 27,990 27,701 27,734 27,441 27,764 28,159 27,160 27,003 26,777 26,344 25,656 26,144 -3.2% 1.9%
… International 9,972 10,833 10,577 10,349 9,878 9,645 9,717 9,725 9,885 10,420 10,700 10,981 11,505 16.4% 4.8%
Loan portfolio 51,507 53,355 52,757 52,606 51,652 51,701 52,033 51,211 50,984 51,176 50,811 50,399 51,267 0.6% 1.7%
… Domestic 40,697 41,682 41,354 41,420 40,966 41,241 41,499 40,365 40,012 39,604 38,978 38,191 38,491 -3.8% 0.8%
… International 10,810 11,673 11,403 11,187 10,686 10,460 10,534 10,846 10,972 11,572 11,833 12,208 12,775 16.4% 4.7%
Int as % total 21% 22% 22% 21% 21% 20% 20% 21% 21% 23% 23% 24% 25%
7 May 2013
1Q2013 Results Presentation 61
Quarterly asset quality indicators
Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13
Overdue Loans >90 days / Gross Loans 1.67% 1.70% 1.90% 1.95% 2.17% 2.35% 2.60% 2.74% 2.96% 3.30% 3.75% 3.90% 4.34%
Coverage of Overdue Loans > 90 days 187.5% 184.9% 172.5% 173.0% 159.4% 163.0% 155.0% 154.5% 150.3% 144.0% 135.3% 136.9% 126.8%
Overdue Loans >30 days / Gross Loans 1.94% 1.90% 2.07% 2.10% 2.38% 2.59% 2.85% 3.02% 3.48% 3.73% 4.18% 4.34% 4.92%
Mortgage (>30d) 0.86% 0.82% 0.84% 0.80% 0.84% 0.82% 0.85% 0.84% 0.83% 0.86% 0.87% 0.92% 0.94%
Consumer (>30d) 3.59% 3.64% 4.14% 4.08% 4.46% 4.55% 4.87% 4.98% 5.40% 6.01% 6.61% 7.44% 7.61%
Corporates (>30d) 2.16% 2.09% 2.30% 2.36% 2.27% 3.00% 3.33% 3.56% 4.18% 4.45% 5.02% 5.15% 5.90%
Coverage of Overdue Loans >30 days 160.7% 166.3% 157.8% 160.6% 145.4% 148.3% 141.6% 140.2% 127.8% 127.6% 121.5% 123.2% 112.0%
Provisions for Credit / Total Gross Loans 3.12% 3.15% 3.27% 3.38% 3.47% 3.83% 4.04% 4.23% 4.45% 4.76% 5.07% 5.34% 5.51%
QoQ Provision Charge 62 bp 71 bp 63 bp 71 bp 63bp 174bp 114bp 115bp 117bp 159bp 210bp 156bp 146bp
… Domestic 59 bp 69 bp 62 bp 61 bp 68bp 191bp 128bp 137bp 126bp 184bp 254bp 176bp 172bp
… International 74 bp 78 bp 68 bp 110 bp 40bp 104bp 59bp 33bp 82bp 75bp 66bp 90bp 66bp
7 May 2013
1Q2013 Results Presentation 62
1,67% 1,70%1,90% 1,95%
2,17% 2,35%2,60% 2,74%2,96%
3,30%3,75% 3,90%
4,34%
188% 185%173% 173%
159% 163%155%155% 150% 144%
135% 137%
127%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
1,03%
0,23%
0,74%0,37%
1,23%0,88%
1,29%0,91%
2,05%
1,26%
1,90%
0,83%
2,98%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Overdue loans ratios and coverage
Total Overdue Loans Ratio (+30d) & Coverage (%)
Net New Entries as % of Performing Loans
(quarterly annualised) Quarterly Write Offs (Eur mn)
Overdue Loans +90 days Ratio & Coverage (%)
22.8 20.0 14.1 34.8 30.0
1,9% 1,9% 2,1% 2,1% 2,4% 2,6% 2,9%3,0%3,5% 3,7% 4,2% 4,3%
4,9%
161% 166% 158% 161%145% 148% 142% 140%
128% 128% 122% 123%112%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
5.0 16.4 50.5 21.8 24.2 17.5 36.6
7 May 2013
26.9
1Q2013 Results Presentation 63
Quarterly asset quality indicators: Domestic and International
(EUR million) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13
Gross Loans 51,509.2 53,355.1 52,757.0 52,606.1 51,652.1 51,700.5 52,033.5 51,210.8 50,984.4 51,175.5 50,810.9 50,398.7 51,266.8
…Domestic 40,697.3 41,682.3 41,354.3 41,419.6 40,966.3 41,240.9 41,499.2 40,364.8 40,012.4 39,603.8 38,978.1 38,191.1 38,491.4
… International 10,809.8 11,672.8 11,402.7 11,186.5 10,685.8 10,459.7 10,534.3 10,846.1 10,972.9 11,571.8 11,833.8 12,207.7 12,775.4
Total Overdue Loans (> 30 d) 1,001.3 1,011.4 1,093.4 1,106.7 1,231.5 1,337.1 1,483.4 1,545.6 1,776.5 1,908.0 2,121.5 2,185.4 2,521.3
…Domestic 812.4 837.4 900.9 913 1018.7 1,101.1 1,213.5 1,236.7 1,488.6 1,582.0 1,764.0 1,810.5 2,119.1
… International 189.0 174.0 192.5 193.3 212.8 236.0 269.9 308.9 287.9 326.0 357.5 375.0 402.2
Overdue Loans > 90 days 858.0 909.3 1,000.1 1,027.1 1,122.7 1,216.2 1,355.2 1,403.3 1,510.8 1,690.8 1,904.9 1,966.0 2,226.9
…Domestic 719.0 764.6 833.1 850.4 931.7 996.0 1,101.3 1,123.2 1,242.3 1,407.5 1,566.1 1,652.0 1,853.1
… International 139.0 144.7 167.9 176.7 191.0 220.2 253.9 280.1 268.5 283.4 338.8 314.0 373.8
Total Credit Provisions (BS) 1,608.9 1,681.5 1,725.3 1,777.0 1,790.1 1,982.6 2,100.6 2,167.4 2,271.2 2,434.7 2,577.1 2,692.3 2,833.4
…Domestic 1,367.1 1,421.9 1,469.2 1,494.7 1,516.3 1,694.8 1,798.7 1,865.9 1,935.9 2,082.4 2,204.7 2,297.9 2.434.6
… International 241.8 259.6 256.0 282.3 273.8 287.8 301.8 301.6 335.2 352.3 372.4 394.4 388.8
7 May 2013
1Q2013 Results Presentation 64
Quarterly asset quality indicators: Domestic and International
Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13
Overdue Loans >90 days / Gross Loans 1.67% 1.70% 1.90% 1.95% 2.17% 2.35% 2.60% 2.74% 2.96% 3.30% 3.75% 3.90% 4.34%
…Domestic 1.77% 1.83% 2.01% 2.05% 2.27% 2.41% 2.65% 2.78% 3.10% 3.55% 4.02% 4.33% 4.81%
… International 1.29% 1.24% 1.47% 1.58% 1.79% 2.11% 2.41% 2.58% 2.45% 2.45% 2.86% 2.57% 2.93%
Coverage of Overdue Loans > 90 days 187.5% 184.9% 172.5% 173.0% 159.4% 163.0% 155.0% 154.5% 150.3% 144.0% 135.3% 136.9% 126.8%
…Domestic 190.1% 186.0% 176.4% 175.8% 162.7% 170.2% 163.3% 166.1% 155.8% 148.0% 140.8% 139.1% 131.4%
… International 174.0% 179.4% 152.5% 159.5% 143.3% 130.7% 118.9% 107.7% 124.8% 124.3% 109.9% 125.6% 104.0%
Overdue Loans >30 days / Gross Loans 1.94% 1.90% 2.07% 2.10% 2.38% 2.59% 2.85% 3.02% 3.48% 3.73% 4.18% 4.34% 4.92%
…Domestic 2.00% 2.01% 2.18% 2.21% 2.49% 2.67% 2.92% 3.06% 3.72% 3.99% 4.53% 4.74% 5.51%
… International 1.75% 1.49% 1.69% 1.73% 1.99% 2.26% 2.56% 2.85% 2.62% 2.82% 3.02% 3.07% 3.15%
Coverage of Overdue Loans >30 days 160.7% 166.3% 157.8% 160.6% 145.4% 148.3% 141.6% 140.2% 127.8% 127.6% 121.5% 123.2% 112.0%
…Domestic 168.3% 170.4% 163.1% 163.7% 148.8% 153.9% 148.2% 150.9% 130.1% 131.6% 125.0% 126.9% 114.9%
… International 127.9% 149.2% 133.0% 146.0% 128.6% 121.9% 111.8% 97.6% 116.5% 108.1% 104.2% 105.2% 96.7%
7 May 2013
1Q2013 Results Presentation 65
Quarterly and accumulated credit provision charge & net new entries
(EUR million; % annualised) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
P&L Credit Provisions Quarter 80.0 94.5 83.6 93.7 80.9 224.6 147.8 147.4 149.0 203.0 266.9 196.0 187.1
… Domestic 60.1 71.6 64.1 62.9 70.1 197.4 132.4 138.3 126.4 181.4 247.4 168.5 166.0
… International 19.9 22.9 19.5 30.8 10.7 27.2 15.4 9.0 22.6 21.5 19.4 27.5 21.2
As % Loan Portfolio (bp) 62 bp 71 bp 63 bp 71 bp 63bp 174bp 114bp 115bp 117bp 159bp 210bp 156bp 146bp
… Domestic 59 bp 69 bp 62 bp 61 bp 68bp 191bp 128bp 137bp 126bp 183bp 254bp 176bp 172bp
… International 74 bp 78 bp 68 bp 110 bp 40bp 104bp 59bp 33bp 82bp 75bp 66bp 90bp 66bp
P&L Credit Provisions Accumulated 80.0 174.5 258.1 351.8 80.9 305.4 453.2 600.6 149.0 352.0 618.9 814.8 187.1
… Domestic 60.1 131.7 195.8 258.7 70.1 267.5 399.7 538.2 126.4 307.9 555.3 723.8 166.0
… International 19.9 42.8 62.3 93.1 10.7 37.9 53.5 62.4 22.6 44.1 63.5 91.0 21.2
As % Loan Portfolio (bp) 62 bp 65 bp 65 bp 67 bp 63bp 118bp 116bp 117bp 117bp 138bp 162bp 162bp 146bp
… Domestic 59 bp 63 bp 63 bp 62 bp 68bp 130bp 128bp 133bp 126bp 155bp 190bp 190bp 172bp
… International 74 bp 73 bp 73 bp 83 bp 40bp 71bp 68bp 58bp 82bp 76bp 72bp 75bp 66bp
Net new entries as % Performing Loans
... Quarterly net new entries 103 bp 23 bp 74 bp 37 bp 123bp 88bp 129bp 91bp 205bp 126bp 190bp 83bp 298bp
... Accumulated net new entries 103 bp 61 bp 66 bp 59 bp 123bp 105bp 113bp 109bp 205bp 166bp 175bp 153bp 298bp
Quarterly Write Offs (Eur mn) 28.8 20.0 14.1 34.8 30.0 5.0 16.4 50.5 21.8 24.2 17.5 36.6 26.9
7 May 2013
1Q2013 Results Presentation 66
Quarterly customer funds
(EUR million) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 YoY QoQ
Deposits 26,522 26,082 29,923 30,819 30,545 31,972 33,854 34,206 35,959 32,765 33,240 34,540 37,417 4.1% 8.3%
… Sight 7,053 7,974 7,929 8,676 8,145 8,466 8,730 8,573 9,119 8,521 8,927 10,458 10,718 17.5% 2.5%
… Term 19,469 18,108 21,994 22,143 22,401 23,506 25,124 25,633 26,840 24,244 24,313 24,082 26,699 -0.5% 10.9%
Life Insurance Products - - - - - - - - - 3,661 4,323 4,991 4,825 - -3.3%
Certificates of Deposits 8,626 5,834 3,653 1,749 2,006 1,650 1,573 644 652 773 619 612 493 -24.4% -19.4%
Debt Securities placed with Clients 6,460 5,924 5,596 6,326 5,747 5,988 5,273 5,820 4,804 5,226 5,111 4,642 4,692 -2.3% 1.1%
On-BS Customer Funds 41,609 37,841 39,171 38,894 38,298 39,610 40,699 40,670 41,415 42,425 43,293 44,785 47,427 14.5% 5.9%
Off-BS Funds 18,985 18,006 17,763 17,094 17,715 16,522 14,788 13,714 13,260 9,976 10,918 11,403 11,090 -16.4% -2.7%
Total 60,594 55,847 56,934 55,988 56,013 56,132 55,487 54,383 54,675 52,401 54,211 56,188 58,518 7.0% 4.1%
… Domestic 41,728 40,375 43,969 43,147 41,732 42,351 42,057 42,479 41,572 38,683 40,322 42,694 43,495 4.6% 1.9%
… International 18,865 15,472 12,965 12,841 14,281 13,781 13,430 11,905 13,103 13,718 13,889 13,494 15,023 14.7% 11.3%
% total 31% 28% 23% 23% 25% 25% 24% 22% 24% 26% 26% 24% 26%
(1) The increase of Life Insurance Products reflects the full consolidation of BES Vida from 2Q2012.
(1)
7 May 2013
1Q2013 Results Presentation 67
Quarterly off-BS customer funds
(EUR million) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 De c 12 Mar 13 YoY QoQ
Mutual Funds 5,179 4,709 4,620 4,459 5,437 5,038 4,629 4,633 4,717 4,724 4,731 5,115 5,348 13.4% 4.6%
… Domestic 3,044 2,732 2,659 2,406 2,585 2,267 2,051 2,381 2,463 2,535 2,602 2,896 3,142 27.6% 8.5%
… International 2,135 1,977 1,961 2,053 2,852 2,772 2,578 2,252 2,254 2,189 2,129 2,219 2,206 -2.1% -0.6%
Real Estate Funds 1,328 1,439 1,429 1,375 1,356 1,329 1,297 1,203 1,144 1,111 1,102 1,076 1,070 -6.5% -0.6%
… Domestic 1,251 1,353 1,350 1,291 1,275 1,249 1,209 1,110 1,052 1,013 1,005 982 973 -7.5% -0.9%
… International 77 86 79 84 81 80 88 93 92 98 97 93 96 4.6% 3.0%
Pension Funds 2,707 2,639 2,643 2,655 2,673 2,687 2,555 2,155 1,809 1,772 1,798 1,783 1,908 5.5% 7.0%
… Domestic 2,569 2,486 2,508 2,522 2,539 2,448 2,332 1,933 1,580 1,554 1,572 1,551 1,670 5.7% 7.7%
… International 138 153 135 133 134 239 223 222 229 218 226 233 238 4.0% 2.4%
Bancassurance (Domestic) 5,846 5,716 5,705 5,374 4,805 4,315 3,794 3,478 3,292 89 86 90 96 n.m. 7.2%
Other (2) 3,925 3,503 3,366 3,231 3,444 3,153 2,513 2,245 2,298 2,280 3,202 3,339 2,669 16.1% -20.1%
… Domestic 3,437 3,053 2,930 2,801 2,638 2,349 1,874 1,684 1,746 1,755 2,759 2,886 2,188 25.3% -24.2%
… International 488 450 436 430 806 804 639 561 552 525 443 453 481 -12.8% 6.1%
Total Off-BS Funds 18,985 18,006 17,763 17,094 17,715 16,522 14,788 13,714 13,260 9,976 10,918 11,403 11,090 -16.4% -2.7%
… Domestic 16,147 15,340 15,152 14,394 13,842 12,627 11,260 10,586 10,133 6,946 8,024 8,404 8,069 -20.4% -4.0%
… International 2,838 2,666 2,611 2,700 3,873 3,895 3,528 3,128 3,127 3,030 2,895 2,998 3,022 -3.4% 0.8% (1) The decrease of Bancassurance funds reflects the full consolidation of BES Vida. Life Insurance Products are included in On Balance Sheet customer funds as from 2Q2012.
(2) Other includes off-BS structured products, discretionary management and venture capital
(1)
7 May 2013
(1)
1Q2013 Results Presentation 68
Quarterly solvency ratios
(EUR million) Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13
RWA (BoP) 67,063 67,191 67,210 68,802 68,576 66,431 66,715 65,385 64,587 63,844 63,295 61,651 61,753
…Banking Book 59,092 59,115 59,642 60,610 60,214 59,482 60,524 59,705 58,451 58,081 57,419 56,454 56,119
…Trading Book 4,303 4,408 3,900 4,219 4,389 2,976 2,218 1,742 2,198 1,825 1,938 1,503 1,940
…Oper. Risk 3,668 3,668 3,668 3,973 3,973 3,973 3,973 3,938 3,938 3,938 3,938 3,694 3,694
Total Capital 7,104 7,516 7,393 7,798 7,838 7,577 7,038 6,970 6,967 7,118 7,021 6,963 6,910
Core Tier I 5,276 5,300 5,303 5,416 5,395 5,445 5,380 6,020 6,067 6,725 6,770 6,471 6,510
Tier I 5,405 5,668 5,589 6,040 6,033 6,127 6,020 6,171 6,185 6,683 6,651 6,442 6,436
Tier II and Other 1,699 1,857 1,807 1,758 1,805 1,517 1,018 799 782 435 370 521 474
Hybrid Capital 600 600 600 920 920 775 729 245 233 226 226 226
As % Tier I 11% 11% 11% 15% 15% 13% 12% 4% 4% 3% 3% 3% 3%
Core Tier I (%) 7.9% 7.9% 7.9% 7.9% 7.9% 8.2% 8.1% 9.2% 9.4% 10.5% 10.7% 10.5% 10.5%
Tier I (%) 8.1% 8.4% 8.3% 8.8% 8.8% 9.2% 9.0% 9.4% 9.6% 10.4% 10.5% 10.4% 10.4%
Total (%) 10.6% 11.2% 11.0% 11.3% 11.4% 11. 5% 10.6% 10.7% 10.8% 11.1% 11.1% 11.3% 11.2%
Notes: BIS II IRB corresponds to calculations based on IRB Foundation for credit risk and standardised approach for operational risk. Preliminary data as of Mar 2013. 7 May 2013
1Q2013 Results Presentation 69
Available for Sale Portfolio – main equity holdings potential gains & losses
(EUR million) Acquis.
Value Stake (%) 2010 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
EDP 173.8 2.38% -49.9 0.0 -20.1 -30.1 -24.1 -8.5 -10.1 11.0 24.5 34.7
PT 346.7 10.04% -7.3 -28.7 -146.8 -200.9 -151.0 -117.2 -99.8 -0.4 -10.7 1.1
BMCE 81.0 2.69% 7.3 6.3 5.2 6.2 5.7 5.5 -1.3 -10.5 -3.6 -10.6
Total 601.5 120.3 112.6 -161.7 -224.8 -169.4 -120.2 -111.2 0.1 10.1 25.2
Potential Gains and Losses
7 May 2013
1Q2013 Results Presentation 70
Table of contents
I. Funding & Liquidity: Deleverage plan continues, with LTD reaching 129% driven by strong deposits growth. High level of repoable assets provides a significant liquidity buffer
II. Asset Quality: Conservative and prudent risk management, with strong B/S provision reserve to cope with current macroeconomic conditions in Portugal
III. 1Q13: BES continued to strengthen its B/S, with deleverage and provisions reinforcement pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
7 May 2013
1Q2013 Results Presentation
Important progress has been achieved in the financial rebalancing of the economy.
Ongoing structural transformation in the economy should contribute to a higher potential growth over the medium term.
The financial sector is showing strong resilience and the social and political environment remains stable, in spite of a rise in austerity fatigue. Activity is still contracting, but leading indicators point to a stabilising trend in activity in 2H 2013 and in 2014.
Progress in the Adjustment Programme has contributed to improving financial conditions and to the reopening of long term debt markets.
71 7 May 2013
1Q2013 Results Presentation
-14
-12
-10
-8
-6
-4
-2
0
2
4
61953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008
Perc
ent
72
Programme implementation is translating into a rapid rebalancing of the Portuguese economy. The combined current and capital account balance reached a surplus in 2012, with the contribution of every sector in the economy
Sources: INE, ES Research.
External Balance (Net external financing needs (-) / capacity (+) of the economy, % GDP)
Net financing needs (-) / capacity (+) by sector (% GDP)*
Latest data for 2012 * Savings – investment.
4Q 2011 3Q 2012
0.4
ALCO 4.1
-5.2
-0.1
-4.4
6.4
-3.0
3.4
-6.4-8
-6
-4
-2
0
2
4
6
8
Households Non-Financial Corporations
Financial Sector General Government
2011
2012
2012
7 May 2013
1Q2013 Results Presentation 73
This is the result of a strong improvement in the trade balance, resulting from a contraction in imports and from a favourable and resilient performance of exports
Sources: INE, Bank of Portugal, ES Research. 7 May 2013
1Q2013 Results Presentation 74
Portugal has been expanding its relevant market to fast growing emerging markets in Africa, Asia and Latin America
Sources: INE, ES Research.
Top 5 merchandise exports
Top 5 services exports
Portuguese merchandise exports to selected countries
(%) Weight merchandise
exports, % Growth merchandise exports, %
Growth February 2013/12 Weight February 2013 ( ) February 2012
Morocco
Brazil
Angola
United Kingdom
Spain
Poland
Germany
France
Mozambique
USA
Japan
China
1.6
1.5
5.9
5.4
23.3
0.9
12.5
12.0
0.6
4.3
0.3
1.1
48.4
15.4
14.1
5.4
1.5
-1.6
-3.5
-3.8
-12.1
-16.5
-18.9
-30.5
(1.1)
(1.3)
(5.3)
(5.2)
(23.4)
(0.9)
(13.2)
(12.7)
(0.7)
(5.2)
(0.4)
(1.6)
(2013 February , weight, %)
Transportation Vehicles
Mineral Fuels
Machinery and electrical equipment
Common Metals
Machinery and mechanical appliances
6.3
8.1
8.6
9.6
11.0
0 5 10 15
Total Y-o-Y
Growth:
2%
(2013 February , weight, %)
Travel
Transportation
Other Business Services
Construction services
Computer and information services 3.0
3.0
19.0
31.7
35.0
0 10 20 30 40
7 May 2013
1Q2013 Results Presentation 75 Sources: INE, Bank of Portugal, ES Research.
Extra-EU exports already represent more than 30% of total exports. Also, the profile of Portuguese exports has been changing, with an increase in the weight of higher added value goods and services
Portuguese Exports Profile (2000 - 2012)
(EUR bn)
Total: 3.9%
5.8% Goods
-0.3% Services
%Δ 2012/11
Portuguese Exports (Goods and Services) Breakdown, Intra-EU and Extra-EU (2000-2012, weight, %)
2%
27.2 31.1 38.8 31.7 37.3 42.9 45.3 9.8 12.2
17.9 16.3
17.6 19.2 19.1
2000 2005 2008 2009 2010 2011 2012
Services
Goods
79.2 79.5 74.5 74.8 73.9 72.9 69.6
20.8 20.5 25.5 25.2 26.1 27.1 30.4
2000 2005 2008 2009 2010 2011 2012
EXTRA-EU
INTRA-EU
%Δ 2013/12
(Goods,February)
7 May 2013
1Q2013 Results Presentation
1.56
0.89 0.86
0.510.37 0.37 0.32 0.27 0.22 0.17
Ango
la
China US
A
Nethe
rland
s
Vene
zuela
Unite
d King
dom
Fran
ce Italy
Braz
il
Moro
cco
1.80
1.05
0.680.54
0.34 0.34 0.31 0.31 0.24 0.19
Mine
ral F
uels
Mach
inery
and
mech
anica
l ap
plian
ces
Comm
on M
etals
Misc
ellan
eous
Fin
ished
Prod
ucts
Food
and D
rinks
Mach
inery
and
electr
ical
equip
ment
Agric
ultur
e
Chem
icals
Rubb
er
Plas
tics
January-December, 2012 vs. 2011 January-December, 2012 vs. 2011
76
Main contributions to merchandise exports growth in 2012
Sources: INE, Bank of Portugal, ES Research.
Main contributions to merchandise exports growth, by country (p.p.)
Main contributions to merchandise exports growth, by sector (p.p.)
Total Y-o-Y Growth in 2012: 5.8%
Total Y-o-Y Growth in 2012: 5.8%
7 May 2013
1Q2013 Results Presentation 77
External competitiveness is also being supported by favorable developments in unit labour costs, following structural adjustments in the economy and the ongoing “internal devaluation”
Sources: BIS, Reuters Ecowin. 7 May 2013
1Q2013 Results Presentation 78 Sources: INE, ES Research.
From a different perspective, the improvement in the external balance is also a result of a deleveraging process among all sectors, with a rising trend in domestic savings
Households’ Savings Rate (% of disposable income) Domestic Savings Rate (% of GDP)
Data for year ending in each quarter. Latest data for 4Q 2012. Data for year ending in each quarter. Latest data for 4Q 2012.
5
7
9
11
13
15
17
19
21
2000200120022003200420052006200720082009201020112012
14.1
5
6
7
8
9
10
11
12
13
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
11.6
7 May 2013
1Q2013 Results Presentation 79 Sources: Bank of Portugal, ES Research.
Household deleveraging efforts are already translating into a declining trend in aggregate indebtedness
Household Indebtedness (% of Disposable Income)
Loans to Households (%, y-o-y)
Latest data for February 2013. Latest data for 2Q 2012.
0
20
40
60
80
100
120
140
1995 1997 1999 2001 2003 2005 2007 2009 2011
130.7 123.4
Housing Consumption and
Other
-10-505
10152025303540
1999 2001 2003 2005 2007 2009 2011 2013
Mortgage
Consumption
-3.6-7.6
7 May 2013
1Q2013 Results Presentation 80 Sources: IGCP, Reuters Ecowin.
A declining trend in non-financial corporations borrowing is also visible
Non-Financial Corporations Indebtedness (% GDP)
Loans to Non-Financial Corporations (%, y-o-y)
0
20
40
60
80
100
120
140
160
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Latest data for 2Q 2012.
141.2
Latest data for February 2013.
-5
0
5
10
15
20
25
30
35
1999 2001 2003 2005 2007 2009 2011 2013
%
-3.4
7 May 2013
4.8 0.7
0.96.4
0.6 5.8
Défice reportado pare efeitos do
PAEF
Concessão da ANA Reclassificações one-off (1)
Défice reportado ao Eurostat
Efeito líquido das medidas one-off (2)
Défice excluindo efeitos one-off
3.4 3.7 4.0
6.5
4.6
3.13.6
10.2 9.8
4.42
5.5
4.0
2.5
7.41
5.84
0
2
4
6
8
10
12
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
4.85
6.43
In 2012, cyclical components – particularly on the revenue side – and non-recurring effects were mostly responsible for the gap vs. the initial deficit target. This was partially compensated by a stronger than budgeted fall in operational spending. 2013 and 2014 budget deficit targets set at 5.5% and 4% of GDP, respectively
1. 2011 underlying deficit, without one-off measures (Banks’ pension funds); 2. 2011 deficit after one-off measures, and reported to Eurostat; 3. 2012 nominal deficit reported to Eurostat (includes non-recurring expenditures related to the
recapitalisation of CGD and Sagestamo). 4. 2012 underlving deficit, excluding non-recurrent effetcts. 5. Deficit reported to the Troika for the purpose of the Economic and Financial Adjustment
Programme.
Sources: Ministry of Finance, INE, ES Research. 81
2012 General Government Budget Deficit, Headline vs. Excluding One-Off Effects (% GDP)
General Government Budget deficit (% GDP)
1. Recapitalisation of CGD and Sagestamo. 2. Net effect of one-off expenditures (recapitalisation of CGD and Sagestamo) and one-off
revenues (4G auction, personal income tax surcharge, etc).
Deficit Reported for EFAP Purposes
ANA Concession One-off Reclassifications (1)
Deficit Reported to Eurostat
Net Effect of One-off Measures (2)
Deficit Excluding One-off Measures
7 May 2013 1Q2013 Results Presentation
2010 2011 2012
-7.3 -7.0
-0.4
-2.0
-1.1
0.3
-6.0 -6.0
-2.5
0.20.8
2.2
-9
-7
-5
-3
-1
1
3
2009 2010 2011 2012 2013E 2014E
In spite of the challenges in meeting the deficit targets, the commitment to fiscal consolidation has been very clear. Primary expenditure has been cut by close to EUR 11 billion in 2011-12, and the structural primary deficit has been reduced by 6.2 p.p. of GDP
Primary Balance and Structural Primary Balance (% GDP)
Sources: Ministry of Finance, INE, ESResearch. 82
Public Expenditure (EUR billion)*
47.4% of GDP
Primary Balance Structural Primary Balance
88.9 84.5
78.4
Current Primary
Expenditure
Capital Expenditure
Interest
74.2 70.7 66.1
4.8 6.9
7.3 9.9
6.8
5.1
* Vertical axis starts at EUR 30 billion.
49.4% of GDP
51.5% of GDP
7 May 2013 1Q2013 Results Presentation
1Q2013 Results Presentation 83
Portugal has complied with the relevant deficit target imposed by the Economic and Financial Adjustment Programme for the 1st quarter of 2013…
General Government’s Budget Execution, Cash Basis, January-March 2013 (EUR million, percentages)
(1) EFAP = Economic and Financial Adjustment Programme. EFAP adjustments in the 1st quarter’s Budget implementation include: Local Government debt repayments under the PAEL (the adjustment programme for Local Government); pension fund operations; guarantees, loans and capital injections.
March Year-EndTargetEUR -7 027.4 million
Deficit -21.2%
Surplus -74.1%
EUR 478.4 milhões
State
AutonomousFunds(excl. RPE)
Value
ChangeRate
ChangeRate
Value
Surplus -99.3%
EUR 3.1 milhõesSocial Security
ChangeRate
Value
Surplus+25.1%
EUR 574.0 milhõesLocal andRegional
Government ChangeRate
Value
EUR -1 852.0 million
Deficit+16.6%
Surplus -18.2%
EUR 772.5 million
Surplus -51.6%
EUR 134.7 million
Surplus-343.5%
EUR -106.5 million
EUR-1 441.2million
Vs.
EUR-7 330.0million
Deficit+58.5%
EUR -1 358.1 milhõesReclassifiedPublicEntities
((RPEs) ChangeRate
Value
Deficit +472.3%
EUR -390.0 millionEUR
-1 357.5million
Vs.
EUR-1 900.0million
Actualvs
AnnualTarget
Actualadjustedfor EFAP1 criteria
vsQuarterlyEFAP
Target
Actualvs.
Target 2013
Sources: DGO, Ministry of Finance, IMF, ES Research - NCPAMoU. 7 May 2013
1Q2013 Results Presentation 84
Fiscal consolidationmeasurespresentedinthe2013 BudgetSelectedMeasures:• Personal Income Tax: Special 3.5% tax on
taxable income;• Personal Income Tax: Reduction in the
numberof taxbrackets, from8 to 5;
• Lowerpensions (between3.5% and10%, aboveEUR 1 350).
AlternativeMeasures(underdiscussion):• Lower limits in theMinistries’ expenditure (compensation of employees, purchaseof goods and
services andother current expenditure);
• Reformulation of the special tax on unemployment subsidies and on sick leave pay;
• Aditional savings inPublic-Private Partnership renegotiations (ora special tax, if needed);
• Savings froma redistribution and rescheduling of Europeanstructural funds;
• Negotiateddismissals in theCivil Service.
Fiscal Consolidation Measures, 2011-2013(EUR billion)
9.3
4.8
2.8
MoUTarget
EUR 5.3 billion
EUR 500 million
1.3
Budget measuresrejectedbytheConstitutionalCourt• Suspension of the holiday subsidy for public
sector workers, equivalent to around 7% of annual pay; Suspension of 90% of the holiday subsidy for pensioners;
• A special tax on unemployment subsidies and on sick leave pay;
• Suspension of the holiday subsidy for contracted teaching and research staff.
- EUR 1.3 billion
+ EUR 1.3 billion
8.49.6
5.8
2011 2012 2013
… but further fiscal consolidation measures will have to be presented in a Revised Budget to compensate for the measures rejected by the Constitutional Court (EUR 1.3 billion) and for the Government’s downward revision in its 2013 growth forecast (EUR 500 million)
Sources: Ministry of Finance, IMF, ES Research - NCPAMoU. 7 May 2013
1Q2013 Results Presentation 85
The Government presented a medium term plan for fiscal consolidation, with further efforts in expenditure cuts
2013 2014 2015 2016 2017 2014/13 2015/14 2016/15 2017/16 2017-20121.Tax Revenues 24.1 24.1 24.2 24.4 24.7 0.0 0.1 0.1 0.3 1.8
Taxes on production and imports 13.2 13.3 13.5 13.7 13.9 0.1 0.2 0.2 0.2 0.2Taxes on income and wealth 10.9 10.8 10.7 10.7 10.8 -0.2 -0.1 0.0 0.1 1.6
2. Social contributions 12.0 11.9 11.4 11.1 11.1 -0.1 -0.6 -0.2 0.0 -0.5Of which: Efective Social Contributions 9.3 9.2 9.1 9.0 9.1 -0.1 -0.1 -0.1 0.0 0.0
3. Other current revenues 5.3 5.2 5.2 5.2 5.0 -0.1 0.0 0.0 -0.1 -0.14. Total current revenues (1+2+3) 41.5 41.3 40.8 40.7 40.8 -0.2 -0.5 -0.1 0.1 1.25. Intermediate consumption 4.4 4.4 4.1 4.0 3.9 0.0 -0.2 -0.1 -0.1 -0.66. Compensation of employees 10.6 9.9 9.1 8.7 8.4 -0.7 -0.8 -0.5 -0.3 -1.57. Social spending 23.9 22.7 22.1 21.7 21.3 -1.1 -0.6 -0.4 -0.4 -1.3
Of which: Pecuniary social spending 19.1 18.2 17.7 17.4 17.1 -0.9 -0.5 -0.3 -0.3 -0.98. Interest payments 4.4 4.4 4.3 4.4 4.4 0.0 0.0 0.0 0.0 0.09. Othet current expenditure (including subsidies) 2.9 2.8 2.6 2.4 2.4 -0.1 -0.2 -0.2 0.0 -0.610. Total current expenditure (5+6+7+8+9) 46.1 44.2 42.3 41.1 40.3 -1.9 -1.9 -1.2 -0.9 -4.1
Of which: Primary current expenditure (10-8) 41.8 39.9 38.0 36.8 35.9 -1.9 -1.9 -1.2 -0.9 -4.111. Gross savings (4-10) -4.7 -3.0 -1.5 -0.4 0.6 1.7 1.5 1.1 1.0 5.212. Capital revenues 1.1 0.9 0.9 0.9 0.9 -0.2 0.0 0.0 0.0 -0.413. Gross Fixed Capital Formation 1.9 1.8 1.7 1.6 1.5 -0.1 -0.1 -0.1 -0.1 -0.314. Other capital expenditure 0.0 0.2 0.2 0.1 0.1 0.2 0.1 -0.1 0.0 -1.115. Total capital expenditure (13+14) 1.9 2.0 1.9 1.7 1.7 0.0 -0.1 -0.2 -0.1 -1.416. Total revenues (4+12) 42.6 42.2 41.7 41.6 41.7 -0.4 -0.5 -0.1 0.1 0.817. Total expenditure (10+15) 48.1 46.2 44.2 42.9 41.9 -1.9 -2.0 -1.3 -0.9 -5.5
Of which: Total primary expenditure 43.7 41.8 39.9 38.5 37.6 -1.9 -2.0 -1.4 -0.9 -5.418. Budget Balance (16-17) -5.5 -4.0 -2.5 -1.2 -0.2 1.4 1.5 1.2 1.1 6.219. Primary Balance (18+8) -1.1 0.3 1.8 3.1 4.2 1.4 1.5 1.3 1.0 6.2
% GDP Change p.p.
Source: Ministry of Finance 7 May 2013
1Q2013 Results Presentation 86
* The decline in the public debt ratio in 2013 is explained by the use of the Government’s cash buffer (Public Administration deposits) to cover part of 2013’s financing needs (in 2012 those deposits represented 10% of GDP). Sources: IMF, EC, ECB, ES Research-NACPMoU
IMF’s Projections for Portugal’s public debt (% GDP)*
Portugal’s official creditors continue to see debt as sustainable
94.0
108.3
123.6 122.4 123.7 122.5
119.4 120.0 122.2 122.3 120.0 117.2
90
95
100
105
110
115
120
125
2010 2011 2012 2013 2014 2015 2016
7 May 2013
Initial MoU Scenario
5th Review
6th Review
7th Review
1Q2013 Results Presentation
-10.3-17.9
-24.7-31.9-39.5
-46.3-55.4 -58.2 -63.1 -67.4
-78.8-88.9
-96.1
-110.6-107.2 -104.9
-116.1
-140
-120
-100
-80
-60
-40
-20
0
20
40
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
% of
GDP
Banking Sector Monetary authority General GovernmentOther Sectors Total net external liabilities
87
(1) The stock of narrow net external debt stood at 99.1% of GDP at the end of 2012. Net external debt corresponds to net external liabilities excluding participation in capital and reinvested profits from FDI, shares and other participations from portfolio investment, derivatives and reserve assets. Source: Bank of Portugal.
The ongoing deleveraging is also translating into a lower stock of net external liabilities in the financial sector
Banking Sector Monet. Authorities General Gov. Other Sectors 2009 2012
-46 -12
Stock of net external liabilities of the Portuguese economy (1)
(% GDP)
2009 2012
+2 -17 2009 2012
-60 -72 2009 2012
-7 -15
The increase in net external liabilities of the General Government (and of the economy) in 2012 reflects a price effect, related to the rise in the value of Portuguese Government bonds held by non-residents, i.e. a rise in the value of Government liabilities, in spite of the declining trend in the Government’s net financing needs.
7 May 2013
1Q2013 Results Presentation
0
2
4
6
8
10
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
25
50
75
100
125
150
175
200
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
% of
GDP
88
Ample external assets provide stability in the face of a tough financing environment. Portugal is one of the main world holders of gold reserves
Portugal’s gold reserves Portugal’s gross external assets (% GDP)
9.3 172
(% GDP) (% GDP)
Sources: Bank of Portugal, INE, ES Research.
~ EUR 15 billion
7 May 2013
1Q2013 Results Presentation
Important progress has been achieved in the financial rebalancing of the economy.
Ongoing structural transformation in the economy should contribute to a higher potential growth over the medium term.
The financial sector is showing strong resilience and the social and political environment remains stable, in spite of a rise in austerity fatigue. Activity is still contracting, but leading indicators point to a stabilising trend in activity in 2H 2013 and in 2014.
Progress in the Adjustment Programme has contributed to improving financial conditions and to the reopening of long term debt markets.
89 7 May 2013
1Q2013 Results Presentation
0
2
4
6
8
10
12
14
16
1983 1987 1991 1995 1999 2003 2007 2011
90
The shift of resources away from domestic oriented, non-tradable, sectors is penalising employment and tax revenues. Lending to exporting firms is increasing, illustrating the shift in resources towards the tradable sector
Unemployment Rate (% Labour Force) Loans to Exporting Non-Financial Corporations (%, y-o-y)
Latest data for 4Q 2012 Latest data for February 2013.
Sources: INE, Bank of Portugal, ES Research.
16.9
-1
0
1
2
3
4
5
6
2010 Dec
2011 Mar
2011 Jun
2011 Sep
2011 Dec
2012 Mar
2012 Jun
2012 Sep
2012 Dec
5.3
7 May 2013
1Q2013 Results Presentation 91
The Government has presented a programme aimed at promoting economic growth based on investment in the tradable sectors, leading to stronger growth in exports
Maintargetsfor 2020
0.72
2000-2010 2020
2950
2000-2010 2020
14 17
2012 2020
1.5
3.3
2011 2020
12
2000-2010 2020
GDP grow th(Percentages)
Exports(Percentages of GDP)
66 75
2012 2020
Weight of industry in theeconomy
(Percentages)
Employment Rate(Percentages)
Ease of doing business –World Bank
(Ranking UE-27)
Investment in R&D(Percentages of GDP)
+1.3 pp +21 pp
+3 pp +9 pp
+18 ppTop 5
Areas KeyMeasuresSkills, educationand
learning
Financing
A more dynamiccorporatesector
Promotinginvestment
TaxcompetitivenessInnovationand
entrepreneurshipInternationalisation
LogisticInfrastructure
• Strengthneningthedual learningsystem(academic/professional), with thegoalofinvolving200 000 students
• Newcredit lineto exportsactivities, in theamountofEUR 1 billion(immediateavailabilityofEUR 500 million).
• Creationofa newdevelopmentbank, specialising inSME financing.
• Lowerthecostsofportsoperationsby50%.
• Reformof theCorporateIncomeTax.
• Reformof the National Interest Projects innitiative.
• Reducingbureaucracyandsimplifying licencingprocedures.
• Streamliningmergersandacquisitions.
• Allocationof50% ofEuropeanstructural fundsinthe2014-2020 Programmeto thesuppoort of competitivenessof firms.
• Lowerspreads andhighermaturitiesinSME financing(negotiationswithBanks).
• Strengthentherole ofCGD in thefinancingofeconomicactivity(EUR 1 billion in2013, EUR 2.5 billion in2014).
Sources: MEE, ES Research – NCPAMoU.
Main elements of the Government’s Programme to Promote Investment and Growth
7 May 2013
1Q2013 Results Presentation 92
• A revised Labour Code came into force in August 2012, allowing for more flexible and heterogeneous wage setting mechanisms, with stronger links to productivity gains;
• Higher labour market flexibility: lower restrictions in individual dismissals; lower severance payments (from 30 to 12 days/year of work); higher geographic mobility; implementation of working time management mechanisms (e.g. hour bank); decrease in overtime work compensation;
• Unemployment benefits with higher coverage, but lower duration (max. 18 months as a rule, from 30) and lower amounts (declining profile after 6 months). Increase in the number of workdays (e.g. elimination of holidays).
Ongoing structural reforms, aiming to reduce distortions in the housing, labour and product markets, are expected to contribute to higher growth over the medium term
Labour market reform
• Reform of the Corporate Income Tax, widening the tax base, lowering rates and simplifying benefits, with the aim of increasing competitiveness and attracting investment (to be incorporated in the 2014 Budget). In 2013, possibility of deduction of up to 70% of reinvested profits.
• Judicial system: A new Code of Civil Procedure has been approved in November 2012, improving the efficiency and increasing the speed of court procedures. A new judicial map, streamlining the court structure, has been approved and should be implemented by mid-2013.
• New Insolvency Code in force since May 2012, allowing for higher speed and simplification of corporate insolvencies and recoveries. Out-of-court settlements have been made easier. A new Competition Law (in line with EU practice) came into force in July 2012.
• Rental market reform came into force in August 2012, increasing contract flexibility and the possibility of rent adjustments (with the aim of improving labour mobility, access to housing without higher indebtedness and the absorption of excess housing supply).
• A new ports management law has been approved in Parliament in November 2012, with the aim of reducing distortions and protections and lower the ports bill for exporters by 25-30%.
Improving business environment
• Increased competition in Telecoms: Lower mobile termination rates; more competitive auction rules (e.g. 4G); Broader access of all operators to existing networks.
• Reducing excessive mark-ups and increased competition in Electricity. Convergence to market-based pricing. Choice of service supplier, with market liberalisation from January 2013.
Product market reform
7 May 2013
1Q2013 Results Presentation 93
The successful implementation of the privatisation programme underscores the attractiveness of the Portuguese economy to foreign investment and Portugal’s ability to diversify sources of capital and liquidity in a difficult funding environment
Sources: Ministry of Finance, IMF, EC, ES Research - NCPAMoU.
Privatisations timeline
• Since the start of the MoU execution, the privatisation programme has generated revenues of more than EUR 6.9 billion, already above the initial expectations of EUR 5 billion (later revised downwards to EUR 4.7 billion).
• Beyond the privatisation of the companies presented above, further actions may include: (i) concessions of urban transportation services in Lisbon and Porto, after the restructuring of the SOEs involved; (ii) disinvestment in non-core regional and local SOEs; (iii) selling of real estate assets held by Central, Regional and Local Government; (iv) extinction of Parpublica.
40%EUR
592 million
China Three Gorges
State Grid (China)Oman Oil Company
Governmentstakebeforeprivatisation
Buyer
25.7% 51.1% 100.0%100.0% 100.0% 100.0%
2012 2013
100.0%100.0%
21.35%EUR
2.7 billion
8.0% 100.0%
1%EUR
95 million
Venda em
mercado
100.0%
95%EUR
3.08 billion
Vinci
7 May 2013
1Q2013 Results Presentation 94
The Portuguese language and the Portuguese communities abroad represent an important asset to Portuguese companies, giving them a comparative advantage in their approach to several fast growing markets and their neighbouring areas
AngolaBrazil
Cape Verde
Guinea Bissau
Mozambique
Portugal
EquatorialGuinea
East Timor
Macau
Countries with relevant Portuguese communities:
India
USA
Canada
France
UK
SwitzerlandLuxemburg
NetherlandsBelgium Germany
Spain
South AfricaArgentina
Venezuela
Australia> 15 000 and < 100 000
> 100 000 and < 500 000
> 500 000 and < 1 000 000
> 1 000 000
São Tomé and Príncipe
The Portuguese language in the world - 2011
1 Data for 2010 referring to countries with Portuguese as official language. Sources: UN, IMF, ES Research.
Population GDP International Trade1
256.5 million EUR 2 225.2 billion EUR 441.9 billion 3.7% of world 4.4% of world 2% of world
7 May 2013
1Q2013 Results Presentation
Important progress has been achieved in the financial rebalancing of the economy.
Ongoing structural transformation in the economy should contribute to a higher potential growth over the medium term.
The financial sector is showing strong resilience and the social and political environment remains stable, in spite of a rise in austerity fatigue. Activity is still contracting, but leading indicators point to a stabilising trend in activity in 2H 2013 and in 2014.
Progress in the Adjustment Programme has contributed to improving financial conditions and to the reopening of long term debt markets.
95 7 May 2013
1Q2013 Results Presentation
60
70
80
90
100
110
120
Dec-2009 Sep-2010 Jun-2011 Mar-2012 Dec-2012
Portugal
Spain
Ireland
Greece
96
In response to new regulatory demands, Portuguese banks have been successfully lowering their transformation ratio…
Portuguese banking sector, Transformation Ratio (%) Banking sector deposits, Portugal vs. Other periphery economies under adjustment programmes, 2009 = 100
Sources: Bank of Portugal, INE, National Central Banks, ES Research.
Data for February 2013.
157
140128
120
2010 2011 2012 (Est) Target 2014
The reference to the 120% target has been
dropped by the Troika in the 7th assessment.
7 May 2013
1Q2013 Results Presentation 97
... with a resilient behaviour of deposits reflecting the ongoing confidence in the sector. No signs of contagion from the Cyprus crisis
Source: ECB
Deposits in the Euro Area periphery (EUR billions).
7 May 2013
2009 2010 2011 2012 2013
b i l l i o
n s
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
b i l l i o
n s
150
160
170
180
190
200
210
220
230
240
250
Ireland (LHS)
Spain (RHS)
Portugal (LHS)
Greece (LHS)
Italy (RHS)
March: Total deposits:+0.2% m-o-m Households: +0.2% m-o-m Non-Financial Corporations: +2.3% m-o-m
1Q2013 Results Presentation 98
Central Bank liquidity provision (including ELA estimates for Greece and Ireland*), EUR Billion
Exposure to the ECB is trending down
Sources: Bank of Portugal, Bloomberg, National Central Banks, ES Research.
% GDP (1) % Banks’ Assets (2)
17.5
24.6
45.7
32.9
28.7
6.5
7.3
20.8
4.5
8.6
(1) 2012 GDP; (2) Banks’ assets in Dec. 2012 (*) Ireland’s use of ELA came down from close to EUR 40 billion to zero in February 2013.
0
50
100
150
200
250
300
350
400
2007 2008 2009 2010 2011 2012 2013
EUR
Billio
n Spain(260;Mar.2013)
Greece(92.0;Mar. 2013)
Ireland(53.2;Mar.2013)
Italy(282.6;Feb2013)
Portugal(47.8; Mar. 2013)
7 May 2013
1Q2013 Results Presentation 99
Recapitalisation of Portuguese Banks EUR billion
Portuguese Banks Average Core Tier 1 Ratio (%) *
10,7% 12.1% 15.0% 11.8%
Core Tier I. Mar-13 (Dec.12 if Mar 13. not available). %
Portuguese banks have strengthened their capital ratios, going beyond the Programme’s targets
Sources: Bank of Portugal, Bloomberg, National Central Banks, ES Research.
10,7% 9.6% 9.7% 9.8%
10.5%
10.0%
BoP
EBA
1.00.2 0.5 0.45
1.6 1.3
3.0
1.1
May-12 Jun-12 Jul-12 Set-12 Jan-13
Public funds Private funds
n.a.
n.a. 9.6% 9.8% 9.9%
7.8 8.1 8.79.6
11.2 11.5
Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 (Est)
Target 2012: 10%
* Bank of Portugal criteria
7 May 2013
(1) BPI already paid Eur 0.3bn of CoCo’s and announced a further repayment of Eur 100mn, reducing State aid to Eur 0.9bn
(1)
1Q2013 Results Presentation 100
No bubble in the housing sector. Real house prices increased very moderately in Portugal in the years prior to the Euro Area debt crisis, in clear contrast with other economies
Sources: ECB, Bloomberg, Confidencial Imobiliário, ES Research.
House Prices (% y-o-y)
Residential Property, Accumulated Real Price Growth 1998-2011 (%)1
(1) Accumulated nominal house price growth minus accumulated CPI growth
7
44
76
96
Portugal Euro Area Ireland Spain -10-8-6-4-202468
1012
1996 1998 2000 2002 2004 2006 2008 2010 2012
%
-3.9-6.9
Mar. 2013
Confidencial Imobiliário
INE(Bank appraisals)
(market prices)
7 May 2013
1Q2013 Results Presentation 101
GDP is still expected to contract in 1H 2013, but most indicators are consistent with a stabilisation in activity in 2013 and 2014
Sources: Bank of Portugal, European Commission, INE, DGEG, Bloomberg. 7 May 2013
1Q2013 Results Presentation
Important progress has been achieved in the financial rebalancing of the economy.
Ongoing structural transformation in the economy should contribute to a higher potential growth over the medium term.
The financial sector is showing strong resilience and the social and political environment remains stable, in spite of a rise in austerity fatigue. Activity is still contracting, but leading indicators point to a stabilising trend in activity in 2H 2013 and in 2014.
Progress in the Adjustment Programme has contributed to improving financial conditions and to the reopening of long term debt markets.
102 7 May 2013
1Q2013 Results Presentation
02468
10121416182022
Jan. 2010Jul. 2010Jan. 2011Jul. 2011Jan. 2012Jul. 2012Jan. 2013
10Y
2Y
2.45
5.50
0.00.51.01.52.02.53.03.54.04.55.05.5
3 Aug. 2011
21 Sep. 2011
2 Nov. 2011
4 Jan. 2012
15 Feb. 2012
2 May 2012
19 Sep. 2012
16 Jan. 2013
17 Apr. 2013
103
Along with the supportive stance of the ECB (with the OMTs), the improvement in the external perception of Portugal’s adjustment has translated into a significant decline in Government bond yields
Sources: IGCP, Reuters Ecowin, Bloomberg.
Portuguese Government Bond yields in the secondary market (%)
Average yields in Treasury Bill issues (%)
3 Month
6 Month 12 Month
18 Month
2.17%
1.39%
1.51%
0.74%
Latest data for May 3rd.
April 6th 2011: Request for Official Financial Assistance
7 May 2013
1Q2013 Results Presentation 104
S&P’s sovereign rating outlook has been revised from “negative” to “stable”
Source: S&P.
Rationale for the outlook revision: The outlook revision reflects additional evidence that European institutions will continue to support Portugal's adjustment program, given the Government's commitment to budgetary and structural reforms. We therefore anticipate that Portugal's official European lenders are likely to extend their loans, thereby reducing the Portuguese government's refinancing risks and, to a lesser extent, its interest costs. At the same time, we expect official lenders to adjust Portugal's fiscal consolidation path under the program, mostly to reflect the weaker-than-previously-assumed economic activity. In our opinion, this makes Portugal's adjustment process more sustainable. The stable outlook balances our view of Portugal's near-term fiscal and economic challenges against continued multilateral support and our view of the government's strong commitment to reform. Outlook for the Rating: We could lower the ratings if Portugal's political commitment to the current structural adjustment diminishes. We could also lower the ratings if European institutions, contrary to our current expectations, back away from extending the maturity of Portugal's official debt or from their commitment to support Portugal financially, if needed, after it completes the current program. We could raise the ratings if export performance turns out to be much better than our current expectations or if investment picks up significantly. This would, in our view, support Portugal's recovery and contribute to job creation, thereby strengthening the social contract. A more robust recovery would also contribute to a faster fiscal consolidation and debt reduction path, improving Portugal's fiscal indicators.
7 May 2013
1Q2013 Results Presentation 105 Sources: IGCP, Reuters Ecowin.
The reopening of the sovereign long term debt market for Portugal is an important milestone in the gradual stabilisation of financial conditions. The 7 year extension of the maturities of the EFSF and EFSM loans will improve the debt repayment profile
Syndicated tap of the OT 4.35% due 16 October 2017 Public refinancing needs 2013-2015 (EUR million).
Issue Amount: EUR 2.5 billion
Maturity: October 2017
Yield: 4.891%
0
5
10
15
20
25
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
EUR
Billio
n
Other M/L term IMF EFSM EFSF
Total amount disbursed of official loans: EUR 64.5 billion.
Average maturity of official loans (years)*: 11.2 (EFSM:12.4; EFSF:14.4; IMF:7.3).
Estimated cost of loans (including interest and commissions): EFSM:3%; EFSF:3%; IMF:3.9%; Average EU-IMF: 3.3%
* Before the 7 year extension of maturities of the EFSM and EFSF loans, expected to be confirmed by 13th-14th May.
The extension of maturities of the EFSF and EFSM loans will allow for a smoothing of the refinancing needs profile.
7 May 2013
1Q2013 Results Presentation 106
Table of contents
I. Funding & Liquidity: Deleverage plan continues, with LTD reaching 129% driven by strong deposits growth. High level of repoable assets provides a significant liquidity buffer
II. Asset Quality: Conservative and prudent risk management, with strong B/S provision reserve to cope with current macroeconomic conditions in Portugal
III. 1Q13: BES continued to strengthen its B/S, with deleverage and provisions reinforcement pressuring bottom line
IV. Solvency: Solid capitalisation levels, with core capital comfortably above minimum regulatory thresholds of BoP and EBA. Capital preservation is top priority
V. Wrap up
Appendix 1: Detailed financial data
Appendix 2: Portuguese Economy outlook
Appendix 3: Macro forecasts Portugal, Spain, Angola and Brazil
7 May 2013
1Q2013 Results Presentation 107
Annual growth rates (%), except where indicated
Portugal: Main Forecasts 2013-2014
2007 2008 2009 2010 2011 2012E 2013F 2014F
GDP 2.4 0.0 -2.9 1.9 -1.6 -3.2 -2.3 0.4
Private Consumption 2.5 1.3 -2.3 2.5 -3.8 -5.6 -3.7 -0.7
Public Consumption 0.5 0.3 4.7 0.1 -4.3 -4.4 -3.0 -1.7
Investment 2.1 -0.1 -13.3 1.4 -13.8 -13.7 -8.2 -3.2
Exports 7.5 -0.1 -10.9 10.2 7.2 3.3 2.5 4.6
Imports 5.5 2.3 -10.0 8.0 -5.9 -6.9 -3.1 0.4
Inflation (%) 2.5 2.6 -0.8 1.4 3.7 2.8 0.9 1.2
Budget Balance (% GDP) -3.1 -3.6 -10.2 -9.8 -4.4 (7.4)* -6.4 (5.8)** -5.5*** -4.0***
Public Debt (% GDP) 68.4 71.7 83.7 94.0 108.3 123.6 122.4*** 123.7***
Unemployment (% Labour Force)*** 8.0 7.6 9.5 10.8 12.7 15.7 18.0 18.3
Current & Capital Account Balance (% GDP) -8.9 -11.1 -10.1 -9.0 -5.6 0.4 1.1 1.4
* The 4.4% reading includes the effects of the integration of the banks’ pension funds and other one-off measures. Without these effects, the deficit would be 7.4% of GDP. ** Including one-off effects related to the recapitalisation of CGD and Sagestamo, worth close to 1% of GDP. Without these and other one-off effects, the deficit would be 6% of
GDP. The Government has reported a deficit of 4.9% of GDP to the Troika for the purpose of the Economic and Financial Adjustment Programme (which includes the revenue from the concession to ANA of the airport management services).
*** Economic and Financial Adjustment Program targets. E: Estimate; F: Forecast. Sources: Bank of Portugal, INE, ES Research, European Commission, IMF, OECD.
7 May 2013
1Q2013 Results Presentation 108
Sources: INE, Bank of Spain, ES Research, European Commission.
Spain: Main Forecasts 2013-2014
Annual real growth rates (%), except where indicated. 2008 2009 2010 2011 2012E 2013F 2014F
GDP 0.9 -3.7 -0.3 0.4 -1.4 -1.5 0.6
Private Consumption -0.6 -3.8 0.7 -1.0 -2.1 -3.0 0.0
Public Consumption 5.9 3.7 1.5 -0.5 -3.7 -5.0 -1.3
Investment -4.7 -18.0 -6.2 -5.3 -9.1 -6.0 -0.2
Exports -1.0 -10.0 11.3 7.6 3.1 3.5 5.8
Imports -5.2 -17.2 9.2 -0.9 -5.0 -3.3 2.3
Inflation (%) 4.1 -0.2 2.0 3.1 2.5 2.0 1.3
Budget Deficit (% GDP) -4.5 -11.1 -9.7 -9.4 -10.6 -6.3 -5.5
Public Debt (% GDP) 40.1 53.8 61.5 69.3 86.4 94.3 98.9
Current & Capital Account Balance (% GDP) -9.2 -4.5 -4.4 -3.7 -2.4 -0.5 0.4
Unemployment (% of Labour Force) 11.3 18.0 20.1 21.6 25.0 26.6 26.1
7 May 2013
1Q2013 Results Presentation 109
Sources: IMF, Angolan Central Bank, Finance Ministry, ES Research.
Angola: Main Forecasts 2013-2014
2008 2009 2010 2011 2012E 2013F 2014F
GDP (real growth rate, %) 13.8 2.4 3.4 3.9 8.4 6.5 7.0
GDP per capita (USD, current prices) 4 671 4 082 4 329 5 305 5 873 6 033 6 292
Inflation (%) 12.5 13.7 14.5 13.5 10.0 9.4 8.4
Current Account Balance (% GDP) 12.7 -9.9 9.0 9.6 8.5 6.6 4.5
Budget Balance (% GDP) 8.9 -4.9 5.5 10.5 7.7 -3.4 4.0
Exchange Rate (USD/KZ), annual average 75.0 79.2 91.9 93.7 95.3 95.4 95.0
7 May 2013
Annual real growth rates (%), except where indicated.
1Q2013 Results Presentation 110
Sources: IBGE, Central Bank of Brazil, ES Research.
Brazil: Main Forecasts 2013-2014
2008 2009 2010 2011 2012E 2013F 2014F
GDP (real growth rate, %) 5.2 -0.3 7.5 2.7 0.9 3.0 3.0
Inflation (%) 5.7 4.9 5.0 6.5 5.8 5.9 5.7
Primary Budget Balance (% GDP) 4.0 2.0 2.7 3.1 2.4 2.3 2.7
Public Debt (% GDP) 38.0 41.5 39.2 36.4 35.1 34.8 34.0
Unemployment (% of Labour Force) 7.9 8.1 6.7 6.0 5.5 5.3 5.5
Current Account Balance (% GDP) -1.7 -1.5 -2.2 -2.1 -2.4 -2.5 -2.5
Exchange Rate (USD/BRL), annual average 1.84 1.99 1.76 1.68 1.96 2.00 1.98
SELIC Interest Rate (%, End of Period) 13.75 8.75 10.75 11.00 7.25 8.00 8.00
7 May 2013
1Q2013 Results Presentation
Disclaimer
This news release may include certain statements relating to the Banco Espírito Santo Group that are neither reported financial results nor other historical information. These statements, which may include targets, forecasts, projections, descriptions of anticipated cost savings, statements regarding the possible development or possible assumed future results of operations and any statement preceded by, followed by or that includes the words “believes”, “expects”, “aims”, “intends”, “may” or similar expressions or negatives thereof are or may constitute forward-looking statements.
By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by forward-looking statements. These factors include, but are not limited to, changes in economic conditions in individual countries in which the BES Group conducts its business and internationally, fiscal or other policies adopted by various governments and regulatory authorities of Portugal and other jurisdictions, levels of competition from other banks and financial services companies as well as future exchange and interest rates.
Banco Espírito Santo does not undertake to release publicly any revision to the forward-looking information included in this news release to reflect events, circumstances or unanticipated events occurring after the date hereof.
1Q2013 Results Presentation
Investor Relations
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