Banco Comercial Português

Good afternoon. Miguel Maia speaking. Welcome to BCP Earnings Conference Call. I will go through the highlights of our performance, followed by Miguel Braganza and Bernard Klaas, who will provide additional detail. In a context marked by high unpredictability, shaped by geopolitical challenges affecting economic agents' confidence, instability and unrest caused by the ongoing wars, and in the eurozone, a significant reduction in interest rates, BCP achieves positive progress in results and key business and financial indicators in the first half of this year. Once again, we have demonstrated disciplined capital management, constant focus on operational efficiency, commitment to customer orientation and the ability, quarter after quarter, to consistently deliver on the strategic plans we presented to the market. In the first six months, the consolidated net incomes stood at 502 million, an increase of 3.5% year-on-year, supported by a strong operational performance, having achieved an ROE of 14.3%. All our core markets, despite having different challenges, contributed positively to the results with the activity in Portugal standing out once again with a net income of 424 million, having increased 3.2% year on year. It deserves to be mentioned that the increase in net income in Portugal has been driven by the core capabilities of our business model. We have achieved higher operational revenues, although within the context of a continued reduction in interest rates over the past year, thanks to appropriate interest rate risk management and strong commercial intensity. These factors led to the expansion of business volumes, combined with a controlled cost of risk. The net income from international operations grew by 11.8% year on year, having achieved almost 147 million in the first half of 2025, with special mention to the Bank Millennium in Poland, which recorded a net income of 121 million, despite charges above 276 million still associated with the FX mortgage loan portfolio, of which 218 million were provisions. Having already a substantial amount in provisions against the risk associated with the effect mortgage loans, which provides confidence to face the future, Bank Millenium continues to develop its core competencies, expanding the franchise to attract and serve a growing number of customers in an economy that is high value creation potential. In Mozambique, the net profit in the first half was 24 million, a decrease of 48% driven by impairment and provisions. mostly related with the downgrade of sovereign debt rating that followed the country's instability between the presidential elections and the inauguration in January this year of President Daniel Schaap. Despite the additional charge of impairments in the first quarter of 2025, Millennium Beam continued to build up its strong franchise and business model, which has enabled intense commercial activity that reflected in a year-on-year increase of 3.7% in the profit before impairments and provisions. The consistent organic capital generation capacity of our business model is well reflected in BCP's strong capital position. We have capital ratios comfortably above regulatory requirements. We see Tier 1 at 16.2%, a total capital at 20.2%, which in accordance with the shareholder's remuneration policy that we present to the market, only includes 25% of the non-audited profit generated in the first half and already consider the impact of the CRR tree. The quality of our retail banking business model across our markets, based on a strong commercial skills and lasting relations with our customers led to an increase of 5.5% in customer funds and 3.5% in loan to customers. Customer funds surpassed 106 million and loans to customers stood at 60 billion at consolidated level, driven by an increase of 4.6% in portfolio, where loans to customers increased 1.8 million year on year. We also kept the trajectory of improvement in the quality of the balance sheet. In the last 12 months, we have managed to cut non-productive assets by an additional 425 million, including $336 million in NPEs and $70 million in restructuring funds. Operating in a challenging environment, our rigorous management of the balance sheet risks enabled us to also improve the cost of risk to around 30 basis points, a level well anchored below the threshold presented in the strategic plan. Overall, this was a positive first-half, which we further strengthened the franchise, the asset quality, the capital ratios, and the efficiency of the bank. In this symbiosis between excellent teams and distinctive digital competencies lays the backbone of our competitive edge, which is also reflected in the expansion of customer base. At group level, our customer base expanded 4% in the last 12 months, reaching 7.1 million, of which more than 2.8 million in Portugal. Most notably, mobile customers grew 9% during the same period, accounting for 73% of the group's customer base and 65% in Portugal, being a very good indicator of the preparation and success of BCP to tackle the opportunities in an increasingly digital market. Individual and corporate clients continue to choose Millenium as their preferred bank, and our services were again awarded with prestigious distinctions recognized by the market. Customer recognition of our digital capabilities continues to be reflected in the use they make of the app. In the first half, customers carried out 11% more transactions through the app than in the same period last year, with a significant growth in the number of transfers. This platform reinforces relevance in the effort to expand the customer base with an increase of 47% in the number of accounts opened directly in the app. The number of sales through the app increased 17% in the same period with emphasis on the sale of personal loans, which increased 42%. The convenient and end-to-end seamless experience provided by the app is driving its use by customers in their acquisition journey of solutions, fit for the essential needs, being a relevant tool to have more processes fully digital. For instance, in the sale of mortgage loans, we saw an increase of 76% in the number of customers who received their approval letters through the app, and 38% more mortgage deeds appointments were also scheduled through the app. The investment and priority we give to mobile solutions with a clear focus on customer-centric innovation means that our hub continues to lead the rankings and deserve top reviews on the most relevant platforms. Before ending over the presentation, let me give you a word on the sale of NovBank. As we have always emphasized, our strategic plan is based on organic growth. So the outcome of this matter, which we consider positive for the Portuguese financial system, does not affect our strategy and our strategic plan in any way. Our commitment has been to the bank's development focus on commercial intensity, operational efficiency and rigorous capital management, enabling BCP to position itself as a bank that generates and delivers more value. That focus has shaped our approach Creating more value is what we have been doing and what we intend to continue doing. Miguel, the floor is yours.

Good afternoon, ladies and gentlemen. As always, starting here with an overview of our income statement, we can see that in spite of the reduction in interest rates, we have been able to present a very resilient NII, both in Portugal and in Poland, as we had anticipated. A growth in commissions the mid single digit area also as we had anticipation as we had anticipated with a higher weight in portugal than in poland the operating costs are growing around 8.7 percent on a pro forma basis and 10.5 percent on a status basis basically because last year we had finished the agreement with the unions in the second half of the year uh so it only affected the accounts in half of the year, so just for this factor, 8.7%. So this means that we have been able to show, in spite of the more challenging environment in terms of interest rates, a very, very resilient profitability before impairment and provisions growing by 3% from a level that I think we all agree is quite a high level. The impairments have been reduced in our geographies, both in Portugal and in Poland, for different reasons. In Poland, there was a sale of MPLs that generated a gain in impairments because in Poland, we typically only sell the loads after they are fully impaired. And we are seeing here a reduction of the costs of livable risks in Poland compared with last year. And if we consider not only the cost that is booked in the provision line, but also the cost that is booked on the other income line and on the results of modification lines, this reduction is around one quarter, around 25%. The profit before income tax, growing 16%, and after income taxes and non-controlling interests, we see here a growth rate of 3.5%, mainly because of the high growth rate in Poland, where we have a larger stack of non-controlling interests. Just to highlight the main points, the ROE above 14%, the ROTE approaching 15%, the growth in terms of book value per share plus dividend per share reflecting the number of shares bought until 13th of June, 14.5%, and the dividend yield based on the price of last year, so the dividend yield in the last 12 months of 8.9%. In terms of group profitability, net interest margin growing 3.3%, as we had commented, with some contraction in terms of NIM from 3.08 to 2.97, and I would here like to highlight the very positive growth of the net interest income in international operations. This is mainly because but not only, but because of the interest, the NII, the lower NII generated by the credit holidays last year in Poland. So Poland, but in spite of this, even without the effect of the credit holidays, Poland would have grown 5%. And in Portugal, in spite of the reduction of interest rates, a very stable NII, as you may see Our NII has been stable in the last four quarters. Of course, last quarter there was an issue in terms of day count, because as we know, February has less months than a typical month of the year. But still, we are showing a very consistent pattern in terms of NII, both in Portugal and in Poland. Season commissions in Portugal are growing almost 7%. which I think is an important principle, including the growth of our customer base and our effort to generate profitability also in this line. In Poland, there is a higher challenge because, as you may recall, we have sold our bank assurance broker operations. This is having its impact, of course, in terms of fees when you're not correct, when you're not doing a pro forma basis. In any case, we expect as the bank develops, as time goes by, these gradually to increase. Other net operating income. We see a very positive evolution in this line. You can see in terms of Portugal the mandatory contributions being reduced by around 6 million because of a ruling a ruling of the Constitutional Court that declared one of those contributions basically unconstitutional so this is positive news and also going forward these 5 to 6 million a year that we used to have is something that we expect to continue in Poland of course as the rank becomes Normalized, we see a growth in mandatory contributions, basically adjusting the level of mandatory contributions in the bank to the normal level that it was not paying before. In terms of net trading income, there was here in Poland the mark-to-market of the participation in a payment company that the bank owned that largely explains this value. Operating costs. I would like you to highlight the cost to income of 37%. So, in consolidated level, as I commented, there is this growth of 10.5%, but adjusting for the seasonality, I would say, of the negotiation with the unions, it would be 8.7%. And in Portugal, 8.5%, adjusting for the seasonality around 5%, perfectly aligned with the guidance of meeting the budget that we had anticipated. Cost to income in Portugal, 35%, which clearly shows the resilience of our business model. Cost of risk. cost of risk around 30 basis points. As we see in Portugal, a level of 33 basis points, so hovering around 35 basis points, which I would say is close to the new normal of the bank, at least for this macro environment in which we are living right now. Cost of risk in Poland benefiting From a credit sale that I have anticipated, I would say, before credit sales, the cost of risky in Poland should go over the 40 basis points. The continued decrease in NPEs, so in spite of the low level of NPEs in several geographies in which we are, and I would like to highlight, the level of non-performing loans, really non-performing loans with more than 90 days past due, that is already around 1%, which is a very low level. And if we include the unlikely to fail, already below 3%, around 2.7%, only focus on loans. If we include securities and off-balance sheet items, also this total ratio that includes the unlikely to sell is also already below 2%. The unlikely to pay are already below 2%. And in Portugal, a further reduction of 26% year on year with the NPE loans ratio, including the unlikely to pay, only at around 2%, as we see in page 16. In our international operations, the NPE ratio, is higher, but below 5%, and this is to a large extent linked to the business model in these geographies. In Mozambique, we have a very small portfolio and very low, I would say, exposure to credit of companies. Also, a lot of it is to individuals. And in Poland, we have a high concentration also In unsecured loans, as you know, part of our strategic target is to diversify our business model also to SMEs and corporates. But in the meantime, we tend to show a higher NPE loan ratio, but still very consistent with a very healthy model because the spread of the unsecured loans is a multiple of the cost of risk. Activity. Solid activity. Customer funds growing 5.5% year on year at group level and 4.6% in Portugal in several lines. In our international business growing 7.5%. This really shows the strength of our franchise and our business model and our ability to reinforce our position both as a savings and investment house and a daily banking house. The loan portfolio growing at group level 3.4%. Here I would like to highlight the important growth in Portugal of the loan portfolio of more than 2 billion. As you see here in graph in slide 19. In the international operations quite stable. This is to some extent linked to the effort that we are doing in Poland of recalibrating, so to say, our balance sheet in Poland so as to have a business model that is more diversified and has a higher share of SMEs and micro-business and small corporates, I would say, vis-à-vis the market share in Poland. As you may recall, two years ago, one and a half years ago, we had the issue of the great holidays, and we had the issue of long-term finance ratio. We were particularly affected vis-à-vis our competitors in Poland. We wanted to converge, I would say, to a ratio of... mortgage to total credit that is more aligned with the system exactly to be a more diversified bank. In terms of capital and liquidity, stability in the capital ratio, I would say this is a particularly good news. And when considering the context of the growth of the credit portfolio, this is not something that we should expect forever, as you know. On average, we would expect our other ways to grow aligned with the growth of our portfolio, maybe even a little bit higher, because we are focusing more on the corporate and S&E business, which is typically more other way intensive. However, in this specific quarter, because of the composition of our growth, lower risk asset density of our growth, we were able to grow almost without any increase in terms of other ways, which means that we were able to appropriate the very small 25% accrual of the P&L and considering the 25% accrual mainly when we consider the last quarter together with an almost irrelevant growth of other ways. made it possible for us to actually increase our capital ratio when you compare with the 15.9 of the last quarter. But going forward, as we had commented in the context of our long-term plan, our objective is to continue to grow at this type of levels, around 5%, but with a higher risk asset density, and we should expect that a growth of credit of 5% also contributes to a higher growth of other ways and this ratio to slowly, I would say, normalize. A very strong capital position as we see here in page 22 with a leverage ratio that compares very well with the leverage ratios in the main or most of the main European economies. You see 6.4% compared with 4% in France, 5.6% in Germany, and 5.5% in Spain, which also translates in a high risk-weight density, which gives us some comfort in terms of modeling risk going forward. Morale requirements. Clearly, above minimum morale requirements, So very comfortable position as our bond investors are seeing. Also a very good performance of our credit spreads and the ability to access the market, I would say, in a normalized way. Pension fund coverage. The fund profitability. The fund profitability has been 1.6% as of June 25, so somewhat below, I would say, the reference actuarial rate. However, because of the growth of the long-term interest rates, a quite positive impact in terms of the... in terms of the liabilities, which means that we still maintain an important buffer above the minimum. You see that the pension fund has 3.3 billion of assets for liabilities of 3.05, which means that the difference around 250 million is a buffer to observe potential actual differences before having any type of impact in terms of capital. The liquidity position very robust. I will not enter into it, and I will pass the floor here to Bernardo.

Thank you, Miguel, and good afternoon, ladies and gentlemen. I will start on page 27. That's related with Portugal. where net income reached 424 million in the first half of 2025. That corresponds to an increase of 3.2% compared with the same period of last year. I think that for this favorable contribution or evolution of the Portuguese net income, it should be highlighted the increase of net operating revenues of almost 90 million and the reduction of almost 11 million on impairments and other provisions. Regarding operating costs, And as it was already explained by Miguel, on a performer basis, costs increased 5.1%. On page 28, net interest incomes to that 659 million in the first half of this year. That means 2.2% below what was recorded in the first half of 2024. But once again, I think it's important to highlight, if we do a quarter-on-quarter comparison, that the NAI increased 2.2%, and it's broadly stable, as Miguel also mentioned, over the last four quarters. And the previous one, there was a small decrease that was related with the calendar effect. Regarding year-on-year evolution, as you can show from the graph, NII decrease reflects the lower income generated by the loan portfolio that was partially offset by the increase of the performing loan book, by the reduction of interest paid on deposits, lower wholesale costs, and the positive contribution from the securities portfolio. Needs to that 2.12. at the end of June 25, which is the same level reported in March 25 when interest rates were almost 40 basis points higher than they are right now. Moving to page 29, commissions amounted to $307 million in the first half, increasing 6.7% compared with first half 24. Banking fees and commissions went up 7.7%, supported by higher bank insurance fees and by the increase of clients that have BCP as a first bank. Regarding market-related fees, there was an increase of 2.2%, mainly reflecting the higher contributions from asset management. Trading results evolved from minus 4.7 million in the first half of 24 to a positive contribution of 7 million in the first half of this year. And equity-accounted earnings were broadly stable year-on-year at the level of around 30 million euros. Other net operating income registered also an improvement. evolving from minus 25 million in the first half of last year to minus 21 million in the first half of this year, and this is mainly due to lower mandatory contributions. Going to page 30, operating costs totaled 342 million. which is 8.5 higher than the $315 million of last year. Although, as already mentioned twice, if you analyze the cost evolution on a pro forma basis, meaning that, I mean, considering the accrual of the salary increases and the variable remuneration that was booked in the second half of last year, operating costs went up 5.1%. In terms of branches, there was a small reduction, and regarding the number of employees, there was a reduction of 50 employees. Moving to page 31, which refers to asset quality, as I highlighted before, there was a sizable reduction of NPEs. NPEs reduction since June last year was above 26%, meaning almost 290 million, and it should be noticed that From the total figure of 820 million of NPs, more than 50% are other NPs, and not really 90 days past due exposures. Cost of risk stood at 33 basis points in June, which is a similar level than Q1 of this year. That compares with the stated cost of risk of 28 basis points in June 24, But as it was also mentioned, that was affected by an impermanence reversal in Q2 of 2024, which excluding these effects, these effects cost of risk would have stood at 52 basis points in the first half of last year. Now moving to page 32, which looks at the NP coverage breakdown. As you can see, total coverage of NP is to above 140%. NP coverage by loan loss reserves at 94%, and here I should also highlight that the total coverage for companies stood at 134%. On page 33, that shows the evolution of foreclosed assets and corporate restructuring funds. Net value of foreclosed assets stood at 46 million. That compares with 66 million one year ago, meaning a reduction of more than 29% or a decrease of almost 20 million. Regarding corporate restructuring funds, exposure at the end of June stood at 323 million. That compares with 393 million in June 24. Now on page 34, in terms of total customer funds, we reach in Portugal 72.3 billion, an increase of 4.6% compared with June last year. On-balance sheet funds stood at 56.5 billion, reflecting an increase of 4% year-on-year. And off-balance sheet funds went up almost 10%, meaning an increase of 1.4 billion compared with June 24. In terms of the gross loan book, it stood at 41.5 billion in June 25, an increase of 4.6% from previous year. And these increases reflect the strong performance on loans to individuals where mortgages registered an increase of 8%. And in terms of corporate lending, it should be highlighted the positive trend that becomes even more visible in the quarter-on-quarter comparison where loans to companies registered an increase of 5%. Going to page 35. it is possible to see the new loans origination by segment and the recognition of BCP as a main bank for Portuguese companies. Performing loans in Portugal went up 5.5%, meaning an increase of more than 2.1 billion. Loans to individuals grew 8% year on year, with a relevant contribution for mortgages that increased 8.2%. And here, once again, it must be highlighted, the performing loans to companies that increased 2.5% year on year. But as I said before, on a quarter-on-quarter comparison, exposure to companies went up 5%. Now, in terms of international operations, and on page 37, results from international activity went up 11.8% to 146.6 million. Dynamics were different in Poland and Mozambique. Bank Millenium in Poland net profit stood at 121 million in the first half of 25, up 43% from previous year, while Millenium in Mozambique recorded the net profit of almost 24 million. That is lower than the amount recorded the year before. And as I mentioned, and as it was mentioned in Q125, the decrease was related with a downgrade of the sovereign debt leading to an increase on financial assets impairments. Moving to page 38, which refers to Bank Millennium, net income went up more than 43%, but profitability continued to be impacted by costs related with CHF mortgage loans. If we exclude this specific effect, net income grew 6.9% compared with the same period of last year, and would have stood above €380 million. Net operating revenues up 13.6% and operating costs, including mandatory contributions, up 15%. If we exclude mandatory contributions from costs, increase of the cost base was 11%. C2.1. And total capital at 13.8 and 15% respectively are clearly above the minimum requirements despite the quarter on quarter reduction related with the application of CRR3 in the second quarter of this year. And the fact that Bank Milenio is not considering in their first half capital figures, the earnings of the first half results. Considering the first half 25 net income, CQ1 and total capital ratios stood at 15 and 16.8, respectively. On page 39, some detailed information about Bank Millennium, NII increased 32 million compared with the first half of last year. NEEM stood at 4.18, which compares to 4.32 in the first half of 24. And it is important to highlight that National Bank of Poland cut interest rates by 50 basis points in May, and already in July, another additional cut of 25 basis points. Fees and commissions were down 5%, and the reduction was mostly related, as Miguel said, with bank assurance commissions that are expected to be recovered over the year and somehow align with the expectations in terms of volume growth. Trading contribution for P&L from Bank Millenium was influenced by the revaluation of the stake that Bank Millenium has in the local company. And mandatory contributions went up 51 million compared with the first half of 24. As you know, Bank Millenium started to pay the banking tax in June 24 after exiting the recovery plan. Moving to page 40, related with asset quality, cost of risk to that 21 basis points. That compares with 50 basis points in June 24th. And as it was already mentioned on the presentation of Bank Millennial, in the second quarter, cost of risk of the Polish subsidiary was impacted by the sale of NPLs. Non-performing loans more than 90 days past due stood at 2.1%, and coverage by loan loss reserves of non-performing loans stood at 153%. On page 41, customer funds in Bank Millenium grew 6.7% year-on-year. Off-balance sheet funds grew more than 34%, and total deposits 4.5%. In terms of loans, gross books stood at $18 billion, which is slightly lower than in June 2024. Mortgage loans decreased 4%, and personal loans went up almost 4%. And regarding companies, where Bank Millennium has a strong focus, exposure to companies increased more than 6.5% compared with June of last year. On page 42, regarding FX mortgage, it's worth mentioning the continued reduction of the CHF portfolio, which showed a reduction of 31% since June 24 and by 10% since March 25. CHF loan book at the end of June 25 represented only 1.1% of the loan portfolio, which compares with 2.4% one year ago. Cumulative provisions for legal risks to that $1.74 billion, representing 142% of the CHF mortgage portfolio. It is also possible to see, once again in this slide, the downward trend of the new court claims and the capacity and focus of Bank Millennium in reaching amicable settlement. This is another quarter where agreements with CHF, agreements regarding CHF mortgage loans with clients were above new individual lawsuits. Turning to page 43, which regards to now to Mozambique, to Millennium Beam, performance in Mozambique was impacted by the downgrade of sovereign debt ratings, leading to additional impairments on financial assets. at the end of last year and the first quarter of this year, and as a consequence, the net income decreased from $46 million in June 24 to almost $24 million in June 25. Net operating revenues went up almost 7%, and costs registered an increase of around 10% compared with previous year, and this could be also partially explained by the increase in terms of the number of employees. Capital ratios stood at a very high level, and it stood at the end of June at 37.2. Moving to page 44, NII went up more than 9%. And for this evolution, there was a contribution, let's say, from the reduction in the local currency requirements for non-remunerated cash reserves that has been applied since January 25. was broadly stable above 8%. Commissions registered a negligible decrease of 2.5% and other income that includes mostly the contribution from the trading line on the Mozambique operation went up more than 4%. On page 45, regarding asset quality, non-performing loans 90 days past due stood at 3.6%. That compares with 3.8% one year ago. And coverage, it's above last year at the level of 125%. Regarding volumes on page 46, you can see in Mozambique that customer funds increased 6%, driven mostly by the increase on demand deposits and loans to customers registered an increase of almost 4%, supported by the growth on personal loans As you can see, it was also registered a decrease in terms of loans to companies. And thank you for your attention. Before we move to Q&A, we'll turn to Mr. Miguel Braganza for some final remarks.