1st Quarter Results
Banco Comercial Portugues S.A.
22 April 2002
FOR IMMEDIATE RELEASE 22 APRIL 2002
BANCO COMERCIAL PORTUGUES ('BCP')
NET INCOME UP 4.6% TO EUR 167.6 MILLION IN THE FIRST QUARTER OF 2002
(Lisbon, April 22, 2002): Banco Comercial Portugues (BCP, NYSE: BPC, BCPPRA)
today reported consolidated net income of Euro 167.6 million in the first
quarter of 2002, up 4.6% from Eur 160.2 million in the same period of 2001.
Return on equity stood at 31.2%, with return on assets being 1.1%.
PROFITABILITY INDICATORS 1st Quarter 1st Quarter Change
2002 2001 2002/2001
Net income 167.58 160.22 4.6%
(Millions of euros)
ROE 31.2% 34.6% -
ROA 1.1% 1.1% -
1.3% 1.2% -
ROA before minority interests
'These results clearly reflect the success of BCP's domestic programme of
operating rationalisation which we concluded in 2001, with revenue synergies now
beginning to be visible amongst the Group's retail brands through the increase
of the main business variables. Domestic activity, although affected by the
evolution of credit risks and by significant changes to interest rates, was
marked by revenue growth and decreasing costs, resulting in improved efficiency
and so confirming the profitability potential of the Portuguese market, in which
we are leaders', commented Mr. Jardim Goncalves, Chairman and CEO of BCP,
adding:
'Our international activity also saw rapid expansion during the first quarter of
2002. The consolidation of BBG's profitability and the growth of NovaBank's
business volumes and efficiency, in line with our plans for the Polish and the
Greek markets, are worth noting. Profits from Eureko, which has a sound business
base, recovered from last quarter and the company has demonstrated consistent
activity growth'.
Given the current economic framework, marked by the slowdown of production and
by the poor performance of financial markets, BCP charged additional provisions
for credit risks. However, this impact was compensated for by capital gains
arising from the sale of premises, under the process of rationalisation of
real-estate assigned to operations and of non-strategic assets. In this context,
BCP also sold its shareholding in Mexico's Grupo Financiero Bital in March 2002,
with a capital gain of Eur 312,000.
The Bank's increased shareholding in NovaBank, on the one hand, and the fact
that BCP became the majority shareholder of Banco Internacional de Mocambique
after having merged it with Banco Comercial de Mocambique, on the other, led to
the full consolidation of both these institutions from the end of 2001. As these
interests were previously consolidated using the proportional method, we have
produced pro forma financial statements for the first quarter of 2001, allowing
a comparable basis with the figures now presented for the first three months of
2002.
Consolidated net interest income amounted to Eur 333 million in the first
quarter of 2002, roughly at the level of the same period of 2001, on a
comparable basis. This has benefited from increased customers' funds and loans,
and also from the Group's efforts to maintain interest margins in spite of
decreasing market interest rates from September 2001.
Other income increased, mainly as a consequence of increased cross-selling,
particularly at the SottoMayor network, and reflecting also the benefits arising
from a renewed commercial approach. Net commissions totalled Eur 125 million, up
4.9% from Eur 120 million for the first quarter of 2001, mainly influenced by
the strong performance of income related to the Group's activities abroad and of
investment banking fees. Trading gains, which amounted to Eur 44 million in the
first quarter of 2002, compared to a pro forma of Eur 36 million in the same
period of 2001, were 4.5% up from the quarterly average of 2001.
Other net operating income was up 17.4% to Eur 80 million in the first quarter
of 2002, excluding non-recurring items. This performance chiefly reflected
increased revenue from investment banking services and recoveries of written-off
loans. The non-recurring items amounted to Eur 42 million arising from the sale
of premises assigned to operations to the pension fund, under the
rationalisation of areas occupied by the Group's central services and the
optimisation of capital allocation, that also led to an increase in the fund's
assets, compensating for some of the impact of recent low returns on financial
assets, that were considerably lower than historical rates.
OTHER INCOME 1st Quarter 1st Quarter 2001 1st Quarter Change
(Millions of euros) 2002 Pro forma 2001 2002/2001
Pro forma
Net Commissions 125.5 119.6 118.4 4.9%
Of which:
- Domestic activity 114.8 109.2 109.2 5.2%
Trading Gains 43.7 36.3 32.5 20.2%
Of which:
- Domestic activity 35.3 29.2 29.2 20.8%
Other Net Operating Income (1) 79.7 67.9 67.9 17.4%
Of which:
- Domestic activity 76.4 64.6 64.6 18.3%
Other Income /Total Income (1)
- Total 46.6% 44.8% 44.5% -
- Domestic activity 47.3% 45.2% 45.2% -
(1) Excludes non-recurring transactions.
Operating costs (staff costs, other administrative expenses and depreciation)
amounted to Eur 355 million, increasing 2.9% on a comparable basis from Eur 345
million in the first three months of 2001, in spite of the impact of the growth
of the Group's operations abroad.
The Group's domestic efficiency indicators improved, as operating costs
accounted for 52.7% of total income in the first quarter of 2001, down from
54.4% in the same period of 2001. The rationalisation measures the Group has
implemented in the wake of its acquisitions in the domestic market had a
particular impact on staff costs, which decreased by 3.5% to Eur 156 million in
the first three months of 2002 from Eur 162 million in the first quarter of
2001. This performance fully reflects the impact of the staff resizing programme
implemented following the acquisitions of Banco Mello and Banco Pinto & Sotto
Mayor in 2000.
Other administrative expenses and depreciation were influenced by the costs
related to launching and developing businesses abroad, with NovaBank being worth
noting. The impact of the network rationalisation and branch closure programme
in 2000 and 2001 was fundamental to the evolution of domestic costs: other
administrative expenses increased 4.5%, slower than business, while depreciation
decreased by 1.4%.
OPERATING COSTS 1st Quarter 1st Quarter 2001 1st Quarter Change
(Millions of euros) 2002 Pro forma 2001 2002/2001
Pro forma
Staff Costs 182.8 184.6 181.6 -1.0%
Of which:
- Domestic activity 156.2 161.8 161.8 -3.5%
Other Administrative Expenses 131.4 120.8 117.9 8.8%
Of which:
- Domestic activity 110.4 105.6 105.6 4.5%
Depreciation 41.0 39.9 37.6 2.9%
Of which:
- Domestic activity 31.5 32.0 32.0 -1.4%
Operating Costs/ Total Income (1)
- Total 57.1% 57.4% 56.8% -
- Domestic activity 52.7% 54.4% 54.4% -
(1) Excludes non-recurring transactions.
Loans to customers totalled Eur 43,433 million at the end of March 2002, up 9.3%
from Eur 39,731 million at March 31, 2001, on a comparable basis. The 13.8%
increase in loans to individuals (in which mortgage loans, rising by 14.9%,
stand out) was key to this growth, as loans to companies increased by 7.7%,
reflecting the Group's strategy to decrease large exposures to some customers
resulting from its acquisitions in 2000 and to focus on low risk customers.
The performance of total customers' funds, up 7.4% to Eur 49,744 million at
March 31, 2002 from Eur 46,302 million a year earlier, was influenced by the
strong growth of capitalisation insurance and securities, reflecting the Group's
effectiveness in bancassurance, particularly in placing unit-linked insurance
products through the banking networks, and its success in creating and
distributing structured products for the retail market. The success of the
Group's new commercial model, based on units specialised by products for the
banking networks, also contributed to this performance.
ACTIVITY INDICATORS 31 Mar. 2002 31 Mar. 2001 31 Mar. 2001 Change 2002/2001
(Millions of euros) Pro forma Pro forma
Total Assets (1) 62,053 60,755 62,532 2.1%
Total Customers' Funds
- Balance Sheet 28,773 27,591 27,138 4.3%
- Assets under Management 10,570 10,193 10,193 3.7%
- Capitalisation Insurance 5,835 5,060 5,060 15.3%
- Securities 4,566 3,458 3,458 32.0%
- Total 49,744 46,302 45,849 7.4%
Loans to Customers (1) 43,433 39,731 39,629 9.3%
Own Funds (2) 6,022 5,632 5,632 6.9%
(1)Does not include securitised assets.
(2)Shareholders' Equity, Preference Shares and
Subordinated Debt.
Loan quality at the end of March 2002 was similar to that at the end of 2001,
although indicators worsened slightly from March 31, 2001. This evolution was
mainly attributable to adverse economic conditions, as the Bank maintained very
prudent criteria regarding analysis, granting, monitoring and recovery of
credit. At the end of the first quarter of 2002, past due loans accounted for
1.7% of total loans, the same level as at the end of 2001, while its coverage by
provisions amounted to 138.2% (146.3% at December 31, 2001).
LOAN QUALITY INDICATORS (1) 31 Mar. 2002 31 Mar. 2001 31 Mar. 2001
Pro forma
Total overdue loans/Total loans 1.7% 1.6% 1.5%
Provisions/Total overdue loans 138.2% 152.5% 155.6%
(1) Does not include securitised loans.
Solvency indicators maintained adequate levels, roughly in line with the end of
2001. The Bank's capacity to generate profits, together with the careful
management of risks, have led to a solvency ratio of 9.5% at the end of March
2002, according to BIS principles (9.4% at December 31, 2001), with tier one
standing at 6.4%. In accordance with the ruling of the Bank of Portugal, the
consolidated solvency ratio was 8.5% at the end of the first quarter of 2001.
'The sale of assets which we have undertaken during the first quarter was aimed
at optimising BCP's assets and at further improving the management of our
shareholdings and real-estate, in order to ensure an adequate stability of
capital and to allow us to pursue domestic growth and develop our international
operations, so accomplishing our goal of creating shareholder value', Mr. Jardim
Goncalves concluded.
For further information:
Miguel Duarte Banco Comercial Portugues Tel: +35 121 321 1081
Toby Moore/Emma Pickford Citigate Dewe Rogerson Tel: +44 20 7638 9571
BANCO COMERCIAL PORTUGUES
Consolidated Balance Sheet as at 31 March, 2002 and 2001
2002 2001
(Thousands of Euros)
Assets
Cash and deposits at central banks 1,180,476 910,809
Loans and advances to credit institutions
Repayable on demand 854,864 1,198,821
Other loans and advances 4,571,228 6,769,340
Loans and advances to customers 43,432,703 41,293,882
Securities 4,378,962 5,735,588
Treasury stock 24,217 -
Investments 2,686,713 2,467,898
Intangible assets 137,650 97,960
Tangible assets 1,184,873 1,244,887
Other debtors 1,079,834 887,763
Prepayments and accrued income 2,521,135 1,924,994
62,052,655 62,531,942
Liabilities
Amounts owed to credit institutions
Repayable on demand 470,078 490,592
With agreed maturity date 11,892,625 17,265,428
Amounts owed to customers
Repayable on demand 11,624,789 10,601,817
With agreed maturity date 17,138,905 16,526,124
Debt securities 11,566,872 9,045,978
Other liabilities 1,068,631 383,482
Accruals and deferred income 1,237,110 1,624,541
Provision for liabilities and charges 890,649 913,774
Subordinated debt 2,827,802 1,964,526
Total Liabilities 58,717,461 58,816,262
Shareholders' Equity
Share capital 2,326,715 2,269,688
Share premium 715,117 716,083
Reserves and retained earnings (1,073,800) (542,669)
Total Shareholders' Equity 1,968,032 2,443,102
Minority interests 141,035 48,482
Minority interests in preference shares 1,226,127 1,224,096
Total Minority Interests 1,367,162 1,272,578
62,052,655 62,531,942
BANCO COMERCIAL PORTUGUES
Consolidated Statement of Income
for the three months ended 31 March, 2002 and 2001
2002 2001
(Thousands of Euros)
Interest income 753,787 851,985
Interest expense 421,076 522,912
Net interest income 332,711 329,073
Provision for loan losses 92,150 50,455
Net interest income after
provision for loan 240,561 278,618
losses
Other operating income
Income from securities 41,102 45,547
Commissions 146,802 138,588
Profit arising from trading activity 88,063 124,679
Other income 137,882 83,677
413,840 392,491
Other operating expenses
Commissions 21,320 20,230
Losses arising from trading activity 44,378 92,135
Staff costs 182,810 181,572
Other administrative costs 131,446 117,915
Depreciation 41,015 37,603
Other provisions 851 222
Other expenses 16,100 15,799
437,920 465,476
Income before income taxes 216,490 205,633
Income taxes (22,521) (21,355)
Net income 193,969 184,278
Minority interests (26,392) (24,058)
Net income for the period attributable to the Bank 167,577 160,220
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