RNS Number:2500K
Banco Comercial Portugues S.A.
22 April 2003
FOR IMMEDIATE RELEASE
ARPIL 22, 2003
BANCO COMERCIAL PORTUGUES ("BCP")
EARNINGS RELEASE FOR THE FIRST QUARTER OF 2003
* Strengthened capitalisation:
- total BIS capital ratio of 11.9%, with Tier One standing at 7.3%.
- takes into account the conclusion of the Euro 931 million rights
issue, the acquisition of 100% of the share capital of Seguros e
Pensoes and the full consolidation of Bank Millennium;
* Successful rights offering:
- total relevant subscription and oversubscription requests exceeded by
153% the total amount on offer.
- created thirty thousand new shareholders and an increased
institutional participation in BCP's share capital;
* Net income for the first quarter of 2003 at Euro 95.6 million, 36.7% up
from the last quarter of 2002. Main highlights:
- Net interest margin maintained at 2.5%;
- Banking commissions up by 2.0%, excluding markets;
- Operating costs down by 6.9%. Staff and other administrative costs
down by 5.1% and by 8.0%, respectively;
- Rationalisation of total domestic banking staff, down by 112 employees
since year-end 2002.
* Focused growth of loans to customers, up by 0.8% from the end of 2002.
Special emphasis on mortgage loans (+4.6% from December 31, 2002). Consumer
credit down by 4.3%. Corporate loans stable;
* Preservation of credit quality: loans overdue by more than 90 days
accounted for 1.2% of total loans. Coverage by provisions at 166.6%;
* Total customers' funds up by 1.0% from the end of 2002. Time deposits up
by 5.9% over the same period;
* BCP's ratings affirmed at A+/F1, A-/A-2 and A1/P-1 by Fitch, Standard &
Poor's and Moody's, respectively. Fitch withdrew its negative rating watch
outlook, while Moody's changed its outlook on BCP to "stable" from
"negative", reflecting the positive impact of the rights offering.
"The significant improvement in capital levels was the main feature of the
Bank's activity in the first quarter of 2003. We successfully concluded a rights
offering, widening the shareholder base and improving BCP's share liquidity. We
consider the Bank's current capital to be adequate for our strategy, which as
previously announced, is to focus on the careful management of shareholdings
with an the emphasis on growing the profitability of our retail banking
operations. Current solvency levels already reflect the recent re-acquisition of
Seguros e Pensoes and the full consolidation of Bank Millennium, and we do not
anticipate any transaction leading to a significant consumption of existing
capital", commented Mr. Jorge Jardim Goncalves, Chairman and CEO of BCP. "We
maintain total confidence in the Bank's capacity to generate capital through
earnings and to create value through future disposals. Together with careful
management of credit risks, we believe this will enable us to preserve and
improve our capital position from current levels", he added.
The impact of the measures implemented aiming at strengthening own funds (namely
a rights issue that increased BCP's share capital by Euro 931 million at the end
of March 2003 and the Euro 700 million issue of mandatorily convertible
securities that took place at the end of 2002), was partially compensated for by
the effect of exchange rate depreciation, the full consolidation of Bank
Millennium and the acquisition of Seguros e Pensoes. In spite of these effects,
BCP still achieved a significant increase in its solvency indicators. The
solvency ratio at March 31, 2003 amounted to 11.0% in accordance with the rules
of the Bank of Portugal, while it stood at 11.9% according to BIS (Tier One
ratio of 7.3%).
REGULATORY CAPITAL (BIS) 31 Mar. 2003 31 Dec. 2002 Change
(Millions of euros) 2002-2003
Tier One Capital
- "Core" 2,665 2,072 28.6%
- Preference Shares 1,193 1,198 -0.4%
- Total 3,858 3,270 18.0%
Tier Two Capital
- Debt 3,043 2,880 5.7%
- Deductions (569) (776) -26.7%
- Total 2,474 2,104 17.6%
Total Regulatory Capital 6,332 5,374 17.8%
Risk Weighted Assets 53,038 49,885 6.3%
Ratios
- Tier One 7.3% 6.6%
- Tier Two 4.6% 4.2%
- Total 11.9% 10.8%
The consolidated net income of Banco Comercial Portugues amounted to Euro 95.6
million in the first quarter of 2003, up 36.7% from the comparable figure for
the last quarter of 2002. Return on equity stood at 17.9%, with return on assets
standing at 0.6%.
PROFITABILITY 1st Quarter 4th Quarter Change
INDICATORS 2003 2002(1) 2002-2003
Net income 95.56 69.92 36.7%
(Millions of euros)
ROE 17.9% 13.8% -
ROA 0.6% 0.4% -
ROA before minority interests 0.7% 0.6% -
(1) Excluding an additional provision charge of Euro 200 million.
"Given the current economic framework, and the deterioration that we have seen
over the last few months, the maintenance of our net interest margin is worth
highlighting. In particular as this was achieved in spite of the decrease in key
interest rates. The increase in banking commissions not related to capital
markets activities and the growth of mortgage loans are also noteworthy, and
reflect our emphasis on active management of commercial activity, aimed at
increasing business and enhancing the profitability of our customer base, in a
consistent and structured manner. This has been achieved together with our
efforts to cut operating costs, the results of which are already visible in
several areas of all the Group's companies and operating units", commented Mr.
Jardim Goncalves regarding BCP's earnings performance during the first quarter
of 2003.
The increase of the Bank's shareholding in Poland's Bank Millennium to 50.0% of
its share capital at the end of 2002 led to the full consolidation of this
institution from January 1, 2003. As this interest was previously consolidated
using the equity method, we have produced pro forma financial statements for
2003. The change to Bank Millennium's consolidation method resulted in
significant increases of total assets (+6.4%), loans to customers (+5.4%) and
total customers' funds (+5.6%).
In addition, BCP no longer consolidates its shareholding in Banco Sabadell as
from January 1, 2003. Also, following the realignment of BCP's strategic
alliance with Eureko, the Group ceased to appropriate the net income of this
company as from the second half of 2002, and acquired the whole share capital of
Seguros e Pensoes, with this acquisition being reflected in the consolidated
financial statements from March 31, 2003.
As a result of these changes, the following analysis is based on the financial
statements for the fourth quarter of 2002, which are comparable to the "pro
forma" figures now presented for the first quarter of 2003.
The increase of business volumes, notably of total customers' funds that were up
by 1.0% from the end of 2002, have contributed to a net interest income of Euro
330.2 million in the first three months of 2003, almost at the same level as
seen in last quarter of 2002 (Euro 331.2 million). Net interest income was also
favourably influenced by the impact of pricing revisions that took place in
2002. These contributed to the maintenance of the net interest margin at 2.5%,
thus compensating for the continuing decrease in key interest rates and credit
securitisation.
The Bank's very prudent provisioning policy, particularly important in the
current economic context, led to increasing charges for provisions for loan
losses, from Euro 66.4 million in the last three months of 2002 to Euro 70.5
million in the first quarter of 2003, helping to maintain a high level of
provisioning coverage of past due loans.
Net commissions amounted to Euro 124.0 million in the first three months 2003,
compared to Euro 128.1 million in the previous quarter. This aggregate increased
by 2.0% if we exclude the items related to asset management and brokerage, which
were particularly affected by the weak capital markets. Commissions not related
to capital markets were boosted by increased fees from cards, credit operations,
leasing and factoring.
Net trading gains increased to Euro 18.8 million in the first quarter of 2003
from Euro 16.9 million in the last three months of 2002, in spite of the poor
performance of capital markets, reflected in the maintenance of low foreign
exchange and securities trading results.
Other net operating income totalled Euro 68.9 million in the first quarter of
2003, benefiting from higher recoveries of overdue loans and income from sundry
services to customers related to the domestic activity.
OTHER INCOME 1st Quarter 1st Quarter 4th Quarter Change
(Millions of euros) 2003 2003 2002 2002-2003
Pro forma(1) Pro forma
Net Commissions 135.7 124.0 128.1 -3.1%
Trading Gains 28.6 18.8 16.9 11.3%
Other Net Operating Income(2) 74.6 68.9 75.1 -8.2%
(1) Includes Bank Millennium by the equity consolidation method, as applied in
2002.
(2) Excluding an additional provision charge of Euro 200 million.
Operating costs (staff costs, other administrative expenses and depreciation)
benefited from ongoing rationalisation, notably from the impact of an operating
efficiency programme that started being implemented in 2002. Consolidated
operating costs decreased 6.9% to Euro 362.4 million in the first three months
of 2003 from Euro 389.1 million in the last quarter of the previous year.
Staff costs amounted to Euro 193.5 million in the first three months of 2003,
5.1% down from Euro 203.8 million in the last quarter of 2002. This shows the
benefit from the decreased headcount and from lower pension fund charges
resulting thereof, notwithstanding the increase in salaries established by the
new Labour Agreement agreed with trade unions.
Other administrative expenses decreased by 8.0% to Euro 125.0 million in the
first quarter of 2003 from Euro 135.8 million in the last three months of 2002,
reflecting the benefits arising from the application of the operating efficiency
programme referred above.
OPERATING COSTS 1st Quarter 1st Quarter 4th Quarter Change
(Millions of euros) 2003 2003 2002 2002-2003
Pro forma(1) Pro forma
Staff Costs 218.5 193.5 203.8 -5.1%
Of which: domestic activity 166.2 166.2 175.6 -5.4%
Other Administrative Expenses 149.9 125.0 135.8 -8.0%
Of which: domestic activity 103.1 103.1 114.0 -9.5%
Depreciation 50.9 43.9 49.5 -11.3%
Of which: domestic activity 32.7 32.7 37.7 -13.2%
Operating Costs 419.3 362.4 389.1 -6.9%
Of which: domestic activity 302.0 302.0 327.3 -7.7%
(1)Includes Bank Millennium by the equity consolidation method, as applied in
2002.
Loans to customers totalled Euro 45,803 million at March 31, 2003, rising by
0.8% from Euro 45,451 million at the end of the last quarter of 2002. The Bank
kept the efforts to limit its exposure to large risks, focusing in particular on
mortgage loans, up by 4.6% from December 31, 2002. Consumer loans decreased by
4.3%, while corporate loans stabilised over the same period.
Total customers' funds amounted to Euro 47,970 million at March 31, 2003, a 1.0%
increase from Euro 47,491 million the end of 2002, particularly outstanding in
the current economic environment. This performance was mainly attributable to a
5.9% increase in time deposits.
ACTIVITY 31 Mar. 2003 31 Mar. 2003 31 Dec. 2002 Change
INDICATORS Pro forma(1) 2002-2003
(Millions of euros) Pro forma
Total Assets 66,239 62,232 61,852 0.6%
Loans to Customers 48,285 45,803 45,451 0.8%
Total Customers' Funds
- Deposits 30,214 27,754 27,098 2.4%
- Assets under Management 9,038 9,038 9,229 -2.1%
- Capitalisation Insurance 6,539 6,539 6,451 1.4%
- Securities 4,879 4,639 4,713 -1.6%
- Total 50,670 47,970 47,491 1.0%
(1)Includes Bank Millennium by the equity consolidation method, as applied in
2002.
(2)Shareholders' Equity, Preference Shares and Subordinated Debt.
Credit quality remained at the same levels as seen at the end of 2002, with
loans overdue by more than 90 days accounting for 1.2% of total loans at both
March 31, 2003 and December 31, 2002. Coverage by provisions of loans overdue by
more than 90 days remained high, standing at 166.6% at March 31, 2003 (169.0% at
December 31, 2002).
LOAN QUALITY INDICATORS 31 Mar. 31 Mar. 31 Dec.
2003 2003 2002
Pro forma(1)
Loans overdue by more than 90 days/Total loans 1.7% 1.2% 1.2%
Provisions/ Loans overdue by more than 90 days 141.8% 166.6% 169.0%
(1)Includes Bank Millennium by the equity consolidation method, as applied in
2002.
- End of announcement -
For further information:
Miguel Duarte Banco Comercial Portugues Tel: +35 121 321 1081
Catriona Cockburn Citigate Dewe Rogerson Tel: +44 20 7638 9571
BANCO COMERCIAL PORTUGUES
Consolidated Balance Sheet as at 31 March, 2003 and 2002
2003 2002
(Thousands of Euros)
Assets
Cash and deposits at central banks 953,861 1,180,476
Loans and advances to credit institutions
Repayable on demand 519,233 854,864
Other loans and advances 3,182,092 4,571,228
Loans and advances to customers 48,285,176 43,432,703
Securities 4,494,074 4,378,962
Treasury stock - 24,217
Investments 2,527,133 2,686,713
Intangible assets 185,752 137,650
Tangible assets 1,268,915 1,184,873
Other debtors 1,903,573 1,079,834
Prepayments and accrued income 2,919,339 2,521,135
66,239,148 62,052,655
Liabilities
Amounts owed to credit institutions
Repayable on demand 552,177 470,078
With agreed maturity date 12,221,564 11,892,625
Amounts owed to customers
Repayable on demand 12,854,341 11,624,789
With agreed maturity date 17,351,648 17,138,905
Debt securities 12,218,594 11,566,872
Other liabilities 692,443 1,068,631
Accruals and deferred income 2,174,118 1,237,110
Provision for liabilities and charges 1,046,942 890,649
Subordinated debt 3,115,019 2,827,802
Total Liabilities 62,226,846 58,717,461
Shareholders' Equity
Share capital 3,257,401 2,326,715
Mandatorly convertible notes 528,207 -
Share premium 674,691 715,117
Reserves and retained earnings (1,993,492) (1,073,800)
Total Shareholders' Equity 2,466,807 1,968,032
Minority interests 352,471 141,035
Minority interests in preference shares 1,193,024 1,226,127
Total Minority Interests 1,545,495 1,367,162
66,239,148 62,052,655
BANCO COMERCIAL PORTUGUES
Consolidated Statement of Income
for the three months ended 31 March, 2003 and 2002
2003 2002
(Thousands of Euros)
Interest income 795,502 753,787
Interest expense 431,490 421,076
Net interest income 364,012 332,711
Provision for loan losses 78,525 92,150
Net interest income after
provision for loan losses 285,487 240,561
Other operating income
Income from securities 11,713 41,102
Net commissions 135,721 125,482
Net income arising from trading activity 28,600 43,685
Other income 110,381 137,882
286,415 348,151
Other operating expenses
Staff costs 218,523 182,810
Other administrative costs 149,914 131,446
Depreciation 50,899 41,015
Other provisions (5,957) 851
Other expenses 35,750 16,100
449,129 372,222
Income before income taxes 122,773 216,490
Income taxes 8,805 22,521
Income after income tax 113,968 193,969
Minority interests 18,412 26,392
Net income for the period 95,556 167,577
This information is provided by RNS
The company news service from the London Stock Exchange
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