3rd Quarter Financial Results
Banco Comercial Portugues S.A.
24 October 2000
BANCO COMERCIAL PORTUGUES ('BCP')
NET INCOME UP 64.0% TO EUR 315.8 MILLION (PTE 63.3 BILLION)
FOR THE FIRST NINE MONTHS OF 2000
(Maputo, October 24, 2000): Banco Comercial Portugues (BCP, NYSE: BPC,
BCPPRA), Portugal's leading bank, today reported consolidated net income of
EUR 316 million (PTE 63.3 billion) for the first nine months of 2000, up
64.0% from pro forma net income of EUR 193 million for the same period of
1999. Earnings per share were up 18.2% to EUR 0.23 (PTE 45.8) from EUR 0.19
in the first nine months of 1999 on a comparable basis, despite the dilutive
effect arising from the share capital increases that took place during this
year. Return on equity and return on assets stood at 25.0% and 0.7%,
respectively.
The acquisitions of SottoMayor, Banco Mello and Interbanco and their
consolidation into the BCP Group by the global method during the first nine
months of 2000, as well as non-recurring items included in reported net
income for the same period of 1999, hinder a direct comparison between the
financial statements for these periods. The three Banks referred to are
globally consolidated in the Group's financials for the first nine months of
2000, with net income not attributable to the Group being deducted under
minority interests and pre-acquisition income. Additionally, in order to
allow a comparable basis with the financial statements for the first nine
months of 2000, we have prepared pro forma financial statements for the first
nine months of 1999, consolidating SottoMayor, Banco Mello and Interbanco
according to the criteria referred to above, but excluding the impact related
to the sale of shareholdings.
PROFITABILITY INDICATORS 30 Sep. 00 30 Sep.99 30 Sep. 99 Change
Pro forma 00/99
PTE EUR EUR EUR Pro forma
Net Income 63.308 315.78 192.53 392.59 64.0%
(PTE billion and EUR million)
Earnings per share 45.8 0.23 0.19 0.39 18.2%
ROE 25.0% 16.9% 31.5% -
ROA 0.7% 0.5% 1.7% -
ROA before minority interests
and pre-acquisition income 1.2% 1.0% 2.1%
'The activity of the BCP Group in the third quarter of 2000 has confirmed the
potential for growth offered by our new structure, with regards to both the
expansion of our business portfolio - the impact of very dynamic cross-
selling being particularly noteworthy - and the achievement of synergies
related to the rationalisation of operating platforms and to the optimisation
of distribution networks', commented Mr. Jardim Goncalves, Chairman and CEO
of BCP, adding: 'The BCP Group grew in terms of assets and profitability,
with retail networks and business lines more closely linked to asset
gathering - specifically mutual funds, capitalisation insurance and other
structured financial products - performing particularly well'.
Consolidated net income also benefited from growing acceptance of the Group's
offer, its increased market presence - supported by the commercial revamping
of recently acquired brands - and intensified involvement with an enlarged
customer base. The performance of some of the Group's more innovative
projects - notably Expresso Atlantico and Banco7 - is also noteworthy.
Net interest income amounted to EUR 937 million (PTE 188 billion), exceeding
by 1.5% the pro forma amount for the first nine months of 1999. The impact of
increased business volumes, particularly in relation to loans and customers'
funds, dampened the effect of a narrowing net interest margin, that stood at
2.6% (2.8% for the nine-month period ended September 30, 1999, on a similar
basis).
OPERATING INDICATORS 30 Sep. 00 30 Sep. 99 30 Sep. 99
Pro forma
Net Interest Margin 2.6% 2.8% 2.8%
Other Income/Total Income 48.7% 42.2% 45.2%
Operating Costs/Total Income 56.2% 61.2% 60.2%
Net commissions totalled EUR 427 million (PTE 85.5 billion), increasing 23.0%
from the pro forma figure for the first nine months of 1999 and leading to
high disintermediation ratios other income accounted for 48.7% of total
income, compared to a pro forma weight of 42.2% during the first nine months
of 1999. The integration of recent acquisitions and the application of BCP's
cross-selling approach to a three million large customer base are expected to
result in higher diversification of income and profitability.
Operating costs (staff costs, other administrative expenses and
depreciation), which stood at EUR 1,026 million (PTE 206 billion), confirmed
a slower rate of increase than total income, representing 56.2% of the latter
during the first nine months of 2000 (61.2% pro forma in the same period of
1999). The merger of SottoMayor into BCP and the conclusion of the
integration of its operating units and support structures in ServiBanca - the
integration of Banco Mello having already been concluded - will see expected
synergies and efficiency gains fully materialise, some of which are already
apparent in the evolution of staff costs.
The effect of the capital gains obtained through the sales of shareholdings
and of a part of the Group's treasury stock portfolio, net of taxes, was
cancelled out by the charge of a provision for increases in pension-related
responsibilities. Therefore, non-recurring transactions had no net impact on
consolidated net income.
The evolution of the main activity indicators reflected the growing
effectiveness of commercial networks that, through a wide range of
distribution channels and several brand names, offer innovative products and
services, designed to fulfil customers financial needs across the board, yet
specifically designed to each of the targeted segments. Loans to customers
amounted to EUR 39,624 million (PTE 7,944 billion) at the end of September
2000, growing 24.1% from the pro forma figure at the end of the third quarter
of 1999. Total customers' funds - amounts due to customers including
securities, assets under management and capitalisation insurance - were
positively influenced by the good performance of asset management, standing
at EUR 55,816 million (PTE 11,190 million), up 20.3% pro forma from September
30, 1999.
ACTIVITY INDICATORS 30 Sep. 00 30 Sep. 99 30 Sep. 99 Change
(PTE billion and EUR million) Pro forma 00/99
PTE EUR EUR EUR Pro forma
Total Assets 11,998 59,847 52,142 33,404 14.8%
Total Customers' Funds (1) 11,190 55,816 46,407 31,851 20.3%
Loans to Customers 7,944 39,624 31,935 22,532 24.1%
Own Funds (2) 946 4,718 5,337 3,480 -11.6%
(1) Amounts due to customers (including securities), Assets under management
and Capitalisation insurance.
(2) Shareholders' equity, Preference shares and Subordinated debt.
Loan default levels remained low, comparing favourably with September 30,
1999 figures in spite of the impact of the newly-acquired companies. Past due
loans represented 1.4% of total loans at the end of the third quarter of 2000
(1.9% a year earlier, on a similar basis), while provision coverage stood at
156.5% (pro forma of 125.4% at September 30, 1999).
LOAN QUALITY INDICATORS 30 Sep. 00 30 Sep. 99 30 Sep. 99
Pro forma
Loans more than 90 days overdue/ 1.2% 1.6% 1.1%
Total loans
Total overdue loans/Total loans 1.4% 1.9% 1.3%
Provisions/Loans more than 90 days 192.5% 147.6% 179.9%
overdue
Provisions/Total overdue loans 156.5% 125.4% 151.5%
The Group's concentration on its core business has been combined with a
strategy of selective investment in non-financial areas, important as a means
of enhancing its main business and creating shareholder value.
Capital ratios maintained comfortable levels, benefiting from the impact of
the recent transactions that increased BCP's share capital to EUR 2,043
million at the end of the third quarter of 2000 from EUR 1,000 million at
September 30, 1999. The consolidated solvency ratio, estimated in accordance
with the principles of BIS, stood at 9.1%, with Tier 1 amounting to 7.3%.
'We have concluded the integration of Banco Mello, fully retaining its
customers and business base, while the integration of SottoMayor is well
underway. We therefore have complete confidence in accomplishing our intended
plan which will be achieved through the growth of the customer base and the
Group's activity' commented Mr. Jardim Goncalves, adding 'I would also like
to emphasise our progress in Internet-related business, together with our
partners EDP and Banco Sabadell, and on the international front where the
Group has capitalised upon its skills in new markets, again with the support
of its strategic partners. NovaBank - the first financial institution to
start operating in Greece for a long time - is a clear example of this'.
For further information:
Rui Lopes Banco Comercial Portugues Tel: +35 121 321 1081
Kevin Soady/Toby Moore Citigate Dewe Rogerson Tel: +44 20 7638 9571
Cindy Lyman/
Melissa Payne-Smith Citigate Dewe Rogerson Tel: +1 212 688 6840
BANCO COMERCIAL PORTUGUES
Consolidated Balance Sheet as at 30 September, 2000 and 1999
2000 2000 1999
-------------- -------------- -------------
(Thousands of Euros) (Thousands of Escudos)
Assets
Cash and deposits at
central banks 1,074,199 215,357,595 98,959,742
Loans and advances to
credit institutions
Repayable on demand 996,177 199,715,483 105,600,797
Other loans and advances 5,206,507 1,043,810,997 566,194,807
Loans and advances to
customers 39,623,711 7,943,840,827 4,517,282,727
Securities 5,746,534 1,152,076,534 606,472,892
Treasury stock 470,013 94,229,229 96,828,195
Investments 2,255,966 452,280,656 148,015,189
Intangible assets 90,096 18,062,682 87,224,834
Tangible assets 1,203,938 241,367,813 166,027,128
Other debtors 1,056,925 211,894,388 105,688,496
Prepayments and accrued
income 2,123,124 425,648,044 198,633,165
-------------- -------------- -------------
59,847,190 11,998,284,248 6,696,927,972
============== ============== =============
Liabilities
Amounts owed to credit
institutions
Repayable on demand 481,376 96,507,249 34,988,881
With agreed maturity date 14,844,329 2,976,020,804 1,919,618,376
Amounts owed to customers
Repayable on demand 11,594,600 2,324,508,521 1,334,747,648
With agreed maturity date 16,868,549 3,381,840,450 1,721,007,057
Debt securities 8,286,238 1,661,241,614 570,845,291
Other liabilities 584,663 117,214,378 45,229,344
Accruals and deferred income 1,549,229 310,592,377 194,770,378
Provision for liabilities and
charges 711,552 142,653,458 91,018,035
Subordinated debt 1,327,451 266,130,045 149,100,948
-------------- -------------- -------------
Total Liabilities 56,247,987 11,276,708,896 6,061,325,958
-------------- -------------- -------------
Shareholders' Equity
Share capital 2,042,972 409,579,110 200,482,000
Share premium 2,634,890 528,248,041 117,820,736
Reserves and retained
earnings (2,512,927) (503,796,628) 52,371,963
-------------- -------------- -------------
Total Shareholders'
Equity 2,164,935 434,030,523 370,674,699
-------------- -------------- -------------
Minority interests 208,918 41,884,167 86,997,528
Minority interests in
preference shares 1,225,350 245,660,662 177,929,787
-------------- -------------- -------------
Total Minority
Interests 1,434,268 287,544,829 264,927,315
-------------- -------------- -------------
59,847,190 11,998,284,248 6,696,927,972
============== ============== =============
BANCO COMERCIAL PORTUGUES
Consolidated Statement of Income
for the nine months ended 30 September, 2000 and 1999
2000 2000 1999
------------- ------------- -------------
(Thousands of Euros) (Thousands of Escudos)
Interest income 2,213,470 443,760,911 231,021,335
Interest expense 1,276,590 255,933,319 117,335,102
------------- ------------- -------------
Net interest income 936,880 187,827,592 113,686,233
Provision for loan losses 177,050 35,495,424 22,498,163
------------- ------------- -------------
Net interest income after
provision for loan losses 759,830 152,332,168 91,188,070
------------- ------------- -------------
Other operating income
Income from securities 147,076 29,486,128 9,285,231
Commissions 472,934 94,814,826 53,628,935
Profit arising from
trading activity 486,339 97,502,314 37,162,270
Other income 230,963 46,303,976 26,292,928
Gains on sale of shares
of subsidiaries and
associated companies 30,195 6,053,501 74,893,803
------------- ------------- -------------
1,367,507 274,160,745 201,263,167
------------- ------------- -------------
Other operating expenses
Commissions 46,299 9,282,211 3,986,947
Losses arising from trading
activity 340,391 68,242,306 24,308,323
Staff costs 565,589 113,390,429 65,866,760
Other administrative costs 354,020 70,974,708 44,522,237
Depreciation 106,731 21,397,705 19,116,438
Other provisions 52,282 10,481,580 26,093,678
Other expenses 61,028 12,235,004 4,381,992
------------- ------------- -------------
1,526,340 306,003,943 188,276,375
------------- ------------- -------------
Income before income
taxes 600,997 120,488,970 104,174,862
Income taxes 97,150 19,476,871 8,603,509
------------- ------------- -------------
Net income 503,847 101,012,099 95,571,353
Minority interests 86,028 17,247,098 16,864,552
Pre-acquisition net income 102,041 20,457,289 -
------------- ------------- -------------
Net income for the year
attributable to the Bank 315,778 63,307,712 78,706,801
============ ============ =============