Nine Months 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 30 Sep. 00 30 Sep. 99 30 Sep. 99 Change
INDICATORS Pro forma 00/99
PTE EUR EUR EUR Pro forma
Net Income
(PTE billion and
EUR million) 63.308 315.78 192.53 392.59 64.0%
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 30 Sep. 00 30 Sep. 99 30 Sep. 99 Change
INDICATORS Pro forma 00/99
(PTE billion and PTE EUR EUR EUR Pro forma
EUR million)
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/Total loans 1.2% 1.6% 1.1%
Total overdue loans/Total loans 1.4% 1.9% 1.3%
Provisions/Loans more than
90 days overdue 192.5% 147.6% 179.9%
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'.
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
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