BANCO BPI S CONSOLIDATED EARNINGS (NET PROFIT) 1ST HALF OF 2005

Transcrição

1 BANCO BPI, S.A. - Sociedade aberta Capital Social: euros; Pessoa Colectiva n.º Matrícula na Conservatória do Registo Comercial do Porto, sob o n.º Sede: Rua Tenente Valadim, n.º 284, Porto, Portuga BANCO BPI S CONSOLIDATED EARNINGS (NET PROFIT) 1ST HALF OF 2005 (unaudited accounts) Net profit rises by 22% to EUR million (EPS: +22.2% to 14.3 cents) Profit before taxes grows 34% to EUR million Net interest income up 6.7% Commissions increase 6.3% Net operating revenue grows 10.6% Administrative overheads, depreciation and amortisation increase 1.7% (0.8% in the domestic activity) Efficiency ratio improves from 61% to 56% Loans to customers climb 7% Total customer resources advance 9.2% Number one position in mutual funds and capitalisation insurance new subscriptions with a market share of 25% Non-performing loans ratio (in arrears for more than 90 days) situated at 1.1% Provisioning cover for non-performing loans stands at 148% Capital adequacy ratio at 11.9%, Tier I at 7.5%; core capital at 6.1% Oporto, 21 July 2005 Net profit of EUR million BANCO BPI (Euronext Lisbon - Reuters BPIN.IN; Bloomberg BPIN.PL) posted a consolidated net profit of EUR million for the first six months of 2005, which corresponds to an improvement of 22% when compared with the same period of Earnings per share (Basic EPS) advanced to 14.3 euro cents (+ 22.2% relative to the same period of 2004). Contents Page 1. Income statement 4 2. Profitability, efficiency, loan quality and solvency 5 3. Results by geographical area 5 4. Income 7 5. Productivity and operating efficiency 8 6. Provisions and impairments Equity-accounted results of subsidiaries Loans and resources Quality of the loan portfolio Financial investments Pension obligations Own funds and own funds requirements 17 Annexes 18 Banco BPI 1st half 2005 consolidated results 1/19

2 Profit before taxes grows 34% to M. Consolidated profit before taxes grew from M. in the first six months of 2004 to in the first half to 2005, corresponding to a 34% change. Net operating revenue up 10.6% Consolidated net operating revenue grew by 10.6% ( M.) when compared with the first half of As regards its main components, net interest income rose by 6.7% ( M.), commissions by 6.3% (+ 7.9 M.) and profits from financial operations by 36.3% ( M.). Administrative overheads, depreciation and amortisation increase 1.7% Consolidated administrative overheads, depreciation and amortisation in the first six months of 2005 were1.7% (0.8% in the domestic activity) higher than in the first half of 2004 (excluding non-recurrent costs of 11 M. associated with early retirements concluded in this period). Personnel costs registered a yearon-year rise of 2.0%. OSS increased by 2.8% while depreciation and amortisation declined 4.9%. Improved efficiency the ratio of administrative overheads, depreciation and amortisation as a % of net operating revenue improved from 61% in the first half of 2004 to 56% in the same period of Loan portfolio expands 7% The loan portfolio posted growth of 7% relative to June Home loans grew by 7.6%, while loans to small businesses were up by 11.3% (both when compared with June 2004). Total customer resources up 9.2% Total customer resources grew by 9.2% relative to June 2004, reflecting primarily the 90% increase ( M.) in resources taken via capitalisation insurance business managed by BPI Vida. Number one position in mutual funds and capitalisation insurance new subscriptions with a market share of 25% In the first half of 2005 BPI occupied the leading position in the sale of unit trust fund and capitalisation insurance. New business contracted in the period January to June 2005 totalled M., placing BPI in first place by a wide margin in the sale of these products with a market share of 25%. Loan portfolio s improved quality In June 2005, loans in arrears for more than 90 days as a % of the customer loans portfolio stood at 1.1% and the respective provisioning cover at 148% (1.2% and 158%, respectively in June 2004). Tier I at 7.5% At the end of June 2005, the capital adequacy ratio was situated at 11.9% and Tier I at 7.5%, as calculated using Bank of Portugal criteria. Banco BPI 1st half 2005 consolidated results 2/19

3 Transition to International Accounting Standards Banco BPI s consolidated financial statements at 30 June 2005 (unaudited) were prepared in conformity with the International Accounting Standards (IAS / IFRS) in force on this date. With the object of ensuring comparability, the financial statements at 30 June 2004 were converted to IAS/IFRS (proforma IAS / IFRS). This information was not checked by the external auditors. The financial statements at 30 June 2004, originally recorded and reported according to the Bank of Portugal s rules then in force (PCSB Plano de Contas para o Sistema Bancário), are also presented for reference. Principal limits to comparability of information The regulations which impose the adoption of the IAS/IFRS with effect from 1 January 2005 also require the presentation of comparative information for 2004, except as regards Standards 32 (accounting for and information on financial instruments) and 39 (recognition and measurement of financial instruments). Thus the comparability between the financial statements at 30 June 2005 and 30 June 2004 suffers from the following limitations: According to the IAS, Commissions relating to loan operations are deferred over the life of the operation; according to the PCSB rules, they are recorded at the time the relevant operations are contracted; Under the IAS, contrary to under the PCSB, both unrealised gains and losses on the portfolio of securities available for sale are now recorded in the balance sheet under shareholders equity. All the hedging derivatives and financial assets and liabilities connected therewith are disclosed at fair value. The IAS introduce the concept of loan impairment, as calculated by discounted cash flow methods and at estimated realisable value. The PCSB standards required the setting aside of specific provisions (according to the ageing of the defaulting loan) and a general provision for performing loans. Banco BPI 1st half 2005 consolidated results 3/19

4 1. Income statement Income statement PCSB 30 Jun Jun. 04 (Proforma) IAS / IFRS 30 Jun. 05 M. % Net interest income (narrow sense) % Gross profit from insurance % Income from securities (variable yield) (8.3%) Net interest income % Commissions and other similar income (net) % Operating income and charges - (3.3) (0.5) % Recovery of loans written-off % Trading profits (net) % Net Operating Income from Banking % Personnel costs % Early retirements costs (100.0%) Other administrative expenses % Depreciation of own fixed assets (4.9%) Administrative Overheads and Depreciation (2.6%) Operating profit % Depreciation of operating lease assets Provisions and loan impairments (20.3%) Other impairments and provisions (1.0) Extraordinary items (net) (17.9) Profits before taxes % Corporate income tax % Equity-accounted results of subsidiaries (10.9%) Minority shareholders' share of profit 4.5 (0.0) Net Profit % Banco BPI 1st half 2005 consolidated results 4/19

5 2. Profitability, efficiency, loan quality and solvency According to the Bank of Portugal Notice 16/2004 PCSB IAS 30 Jun Jun.04 proforma 30 Jun.05 Operating income from banking and results of equity accounted subsidiaries / average total assets (ATA) 1 3.5% 3.5% 3.5% Profit before taxation and minority interests / ATA 1 0.9% 0.8% 1.0% Profit before taxation and minority interests / average shareholders equity (including minority interests) % 13.4% 27.4% Personnel costs / operating income from banking and results of equity accounted subsidiaries Administrative overheads, depreciation and amortisation / operating income from banking and results of equity accounted subsidiaries Loans in arrears for more than 90 days + doubtful loans / loan portfolio (gross) Loans in arrears for more than 90 days + doubtful loans, net of specific loan provisions / loan portfolio (net) 32.7% 34.0% % 58.6% 59.0% % 1.3% 1.2% 1.2% 0.4% 0.6% 0.6% Total capital ratio (according to Bank of Portugal rules) 10.4% 11.9% Tier I (according to Bank of Portugal rules) 6.9% 7.5% 1) 2004 figure adjusted for the reversal of the goodwill written-off of SIC s consolidation against reserves. 2) Excluding early retirement costs. ATA = Average total assets. 3. Results by geographical area Earnings from domestic activity advances by 21.9% to 87.8 M. Net profit from domestic activity climbed to 87.8 M., representing an improvement of 21.9% ( M.) when compared with the first six months of Net profit from international activity meanwhile rose from 15.9 M. in the first six months of 2004 to 19.4 M. in the same period of 2005 (+22.6%). Earnings from domestic activity represented 82% of consolidated net profit for the first half of 2005, while international banking activity contributed with 18%. Banco BPI 1st half 2005 consolidated results 5/19

6 Income statement for the domestic and international activity Domestic activity 1 International activity 2 PCSB IAS / IFRS PCSB IAS /IFRS 30 Jun Jun. 04 proforma 30 Jun. 05 % 30 Jun Jun. 04 proforma 30 Jun. 05 % Net interest income (narrow sense) % % Gross profit from insurance % Income from securities (variable yield) (8.3%) Net interest income % % Commissions and other similar income (net) % % Operating income and charges - (2.3) (0.1) 96.3% - (1.0) (0.4) 61.1% Recovery of loans written-off % Trading profits (net) % (9.5%) Net Operating Income from Banking % % Personnel costs % % Early retirements costs (100.0%) Other administrative expenses % % Depreciation of own fixed assets (6.4%) % Administrative Overheads and Depreciation (3.6%) % Operating profit % % Depreciation of operating lease assets Provisions and loan impairments (28.3%) % Other impairments and provisions (2.8) % Extraordinary items (net) (17.7) (0.1) Profits before taxes % % Corporate income tax % % Equity-accounted results of subsidiaries (2.6%) (70.7%) Minority shareholders' share of profit 4.5 (0.0) % Net Profit % % 1) Commercial banking in Portugal, provision of banking services to emigrant communities, Madrid branch, investment banking and participating interests. 2) International activity comprised the activity of Banco de Fomento in Angola and the appropriation of the results corresponding to the 30% holding in BCI Fomento in Mozambique. Banco BPI 1st half 2005 consolidated results 6/19

7 Capital allocation and results by business areas in 1 st half 2005 Commercial Banking Investment Banking Domestic activity Shareholdings and other International Activity BPI (consolidated) Capital allocated (adjusted) 86.0% 1.2% 3.0% 9.8% 100% Net profit (adjusted) Note: In determining the capital allocated to each domestic business area, it is assumed that each one uses the exact same amount of capital as the domestic activity as a whole average capital employed. In this manner, the amount of capital allocated to each area is calculated by multiplying the weighted assets by the quotient between shareholders equity and the domestic activity weighted assets. Whenever the shareholders equity of a business area is more (or less) than the allocated capital, it is assumed that there has been a redistribution of capital, whereby that area s contribution is adjusted by the costs (revenue) resulting from the increase (decrease) in outside resources by virtue of the capital reallocation. The return generated by each area results from the quotient between the adjusted contribution and the capital allocated to the area. 4. Income Net interest income rises 6.7% Consolidated net interest income rose 6.7% relative to the same period of 2004, that is, M. In domestic activity, net interest income increased by 5.8 M. (+2.5%) when compared with the first half of This reflects the increase in narrow net interest income of 4.2M. (+ 2.0%) and the higher margin of 2.8 M. earned by BPI Vida on capital insurance written (+ 60.5%). Net interest income from international activity registered expressive growth of 10.9M. (+55.2%). Commissions and other income 6.3% higher Consolidated commissions (net) were 6.3% higher than in the same period of Commissions earned from domestic activity increased by 4.6% (+ 5.4 M.) relative to the same period of 2004, while those generated by international activity rose by 32.0% (+ 2.5 M.) Commissions and other net income Domestic activity PCSB 30 Jun Jun. 04 proforma IAS 30 Jun. 05 M. % Commercial banking (net) % Investment banking (net) % Domestic activity % International activity % Total consolidated (net) % Banco BPI 1st half 2005 consolidated results 7/19

8 It is worth highlighting the increases in Commercial Banking net commissions associated with loans and guarantees, +7.2% (+ 2.4 M.), cards, +6.0% (+ 1.4 M.), unit trust (mutual) funds, capitalisation insurance and pension funds +6.9% (+ 1.4 M.) and insurance broking: +4.8% (+ 0.3 M.). For their part, Investment Banking commissions were 8.0% (+ 1.0 M.) higher than in the first half of Of note in this domain was the higher commission income derived from the unit trust (mutual) funds, capital insurance and pension funds (+ 5.6%; or M.), asset management and advisory services (+ 50%; or M.) and consultancy and valuation services (+ 41%; or M.). Commissions derived from international activity climbed by 32.0% (+ 2.5 M.) relative to the same period of Profits from financial operations up 36.3% Profits from financial operations (trading activity) increased by 36.3% ( M.) relative to the first half of 2004 to 46.9 M. The main contributions to this improvement came from the gain of 17.0 M. on the sale of the equity holding in Auto-Estradas do Oeste (which operation was concluded and reflected in the accounts for the 1st quarter of 2005) and the gains from foreign corporate bonds of 5.4 M. (down by 12.3 M. on the first half of 2004), both relating to domestic activity, and the gains (essentially currency related) generated by international activity of 10.6 M. (- 1.1 M. vis-à-vis the first six months of 2004). Non-performing loan recoveries of 9.6 M. In the first six months of 2005, recoveries of arrear loans and interest previously provided for and written off amounted to 9.6 M., which corresponds to an increase of 4.0 M. relative to the corresponding period of Productivity and operating efficiency Net operating revenue up 10.6%; administrative overheads, depreciation and amortisation rise 1.7% When compared with the first half of 2004 (excluding the costs of early retirement accords), consolidated administrative overheads, depreciation and amortisation posted an increased of 1.7% in the first six months of This increase in costs, coupled with the 10.6% rise in income, meant that the indicator administrative overheads, depreciation and amortisation as a percentage of net operating revenue registered a favourable trend, from 60.9% in the first half of 2004 to 56.0% in the same period of Banco BPI 1st half 2005 consolidated results 8/19

9 Administrative overheads, depreciation and amortisation in domestic activity (excluding early retirement costs in 2004) registered an increase of 0.8%. In domestic activity, personnel costs rose by 1.2% (+ 1.7 M.), despite the impact of the 2.5% salary review in Outside supplies and services relating to domestic activity registered an increase of 1.8% (+ 1.4 M.) relative to the first half of In domestic activity, depreciation and amortisation decreased by 6.4% (- 1.2M.). In international activity, administrative overheads, depreciation and amortisation were 21.9% up (+ 2.4 M.) on the first half of 2004, reflecting the strong growth of Banco de Fomento Angola activity. Administrative overheads, depreciation and amortisation Domestic activity PCSB 30 Jun Jun. 04 proforma IAS 30 Jun. 05 M. % Personnel costs % Other administrative expenses % Depreciation of own fixed assets % Administrative overheads and depreciation in the domestic activity Administrative overheads and depreciation in the international activity Subtotal (administrative overheads and depreciation, excluding early retirements costs) % % % Early retirements costs % Administrative overheads and depreciation (consolidated) % Ratios (consolidated): Administrative overheads and depreciation as % of net operating revenue Personnel costs as % of operating income from banking and results of equity accounted subsidiaries2 60.1% 60.9% 56.0% % 34.0% 31.5% - - Administrative overheads, depreciation and amortisation as % of operating income from banking 58.6% 59.0% 54.6% - - and results of equity accounted subsidiaries 2 1) Excluding early retirement costs. 2) Calculated in accordance with Bank of Portugal Instruction 16/2004 Banco BPI 1st half 2005 consolidated results 9/19

10 6. Provisions and impairments BPI Group Provisions and impairment Domestic activity International activity BPI Group (consolidated) PCSB IAS PCSB IAS PCSB IAS Provisions for loans For securities and other 30 Jun.04 Jun.04 proforma Jun.05 M. 30 Jun.04 Jun.04 proforma Jun.05 M. 30 Jun.04 Jun.04 proforma Jun ( 2.8) ( 1.0) M. Total Loan provisions and impairments down 20.3% Loan provisions (net of reversals) and impairments totalled 36.1 M. in the first six months of 2005, which corresponds to a decrease of 20.3% when compared with the figure of 45.3 M. in the same period of Loan provisions in 2004 were calculated based on Bank of Portugal criteria (specific and general provisions in accordance with Notices 3/1995 and 8/2003). In 2005, the amount of the impairment was arrived at taking into account the estimated loss and period to recovery. In 2005, the provisions calculated on the basis of Bank of Portugal criteria (specific and general provisions in accordance with Notices 3/1995 and 8/2003) amounted to 32.9 M. Other impairments and provisions Impairments and other provisions for securities and other purposes amounted to 29.0 M in the first six months of This figure includes securities impairments of 28.8 M. (of which 24.3 M. refers to the shareholding in Portugal Telecom and 4.0 M. to the shareholding in Impresa). In terms of the IAS, the impact of an unfavourable trend in the market price of a participating interest in respect of which an impairment has already been recorded, as regards that portion which exceeds the possible accumulated positive amount in the fair value reserve, must be recorded as an impairment and not as a negative fair value reserve. BPI had already recorded as an impairment as at the IAS transition date the unrealised losses on the Portugal Telecom and Impresa equity holdings. Banco BPI 1st half 2005 consolidated results 10/19

11 7. Equity-accounted results of subsidiaries The results of the subsidiaries consolidated using the equity method amounted to 12.0 M. in the first half of 2005 ( 13.4 M., in the first half of 2004). The main contribution came from the companies operating in the insurance area, with earnings of 8.2 M. in the first six months of 2005 ( 7.0 M. at Allianz Portugal and 1.2 M. at Cosec). It should be noted that equity-accounted results in international activity refer to the attributable earnings associated with the 30% participating interest in BCI Fomento in Mozambique. Results of equity-accounted subsidiaries PCSB IAS 30 Jun.04 Jun. 04 proforma Jun. 05 Domestic activity 04/05 (, M. ) Insurance companies Allianz Portugal Cosec BPI Vida BPI Pensões Viacer SIC Other ( 0.1) ( 0.2) Domestic activity International activity Total consolidated Banco BPI 1st half 2005 consolidated results 11/19

12 8. Loans and resources Consolidated loan portfolio expands by 7% At the end of June 2005, the consolidated loan portfolio amounted to EUR 19.6 billion. The home loan portfolio grew by 7.6% while loans to small businesses climbed by 11.3% (both relative to June 2004). Loans to Customers (main components) Domestic activity PCSB IAS 30 Jun.04 Jun.04 proforma Jun.05 % Jun.04 / Jun.05 Loans to individuals % Mortgage loans % Other loans to individuals % Small businesses % Loans to companies and institutionals % Other % Domestic activity (net) % International activity (net) % Consolidated loan portfolio (net) % 1) Does not include interests and other amounts to receive / to pay. Growth of 9.2% in customer resources Total customer resources continue on their upward trajectory, posting year-on-year growth of 9.2% in June With the full consolidation of BPI Vida as a result of the adoption of the IAS, capitalisation (unit linked) insurance (previously recorded as off-balance sheet items) is now recognised in the balance sheet, thereby altering the composition of resources. In domestic activity, total customer resources rose by 8.6% (+ 1.6 Bi.) when compared with June Balance sheet resources in domestic activity expanded by a year-on-year 6.5% and basically reflects the 90% growth ( M.) in capitalisation insurance managed by BPI Vida. Off-balance sheet resources (unit trust funds, PPR and PPA) in domestic activity registered year-on-year growth of 4.8% (+ 209 M.). Banco BPI 1st half 2005 consolidated results 12/19

13 Leadership in the subscriptions of unit trust funds and capitalisation insurance with a market share of 25% In the first half of 2005 BPI occupied the leading position in the sale of unit trust fund and capitalisation insurance. New business contracted in the period January to June 2005 totalled M., placing BPI in first place by a wide margin in the sale of these products with a market share of 25%. In international activity, deposits grew by 29.0% (+ 160 M.) relative to June Customer resources Domestic activity On-balance sheet resources PCSB IAS 30 Jun.04 Jun.04 Dec. 04 Jun.05 % Jun.04 / Jun.05 Customers deposits % Bonds placed with Customers % Preference shares placed with Customers Capitalisation insurance and PPR (BPI Vida) % On-balance sheet resources % Off-balance sheet resources % Domestic activity % International activity % Total Customer resources % 1) Total customer resources corrected by duplication of balances (deposits and bonds held by investment funds). Banco BPI 1st half 2005 consolidated results 13/19

14 9. Quality of the loan portfolio Non-performing loans provisioning cover at 148% At 30 June 2005, the ratio of customer loans in arrears (consolidated) for more than 90 days stood at 1.1% and the respective provisioning cover at 148%. The ratio of non-performing loans (in accordance with the criterion laid down in Bank of Portugal lettercircular) which, besides loans in arrears for more than 90 days, also includes doubtful debts deemed to be overdue for provisioning purposes, was situated at 1.2% at the end of June 2005 and the relevant cover at 144%. When taking into consideration loans in arrears for more than 30 days in June 2005, the corresponding indicator stood at 1.3%. Provisioning cover for non-performing loans was situated at 124%. Quality of the loan portfolio PCSB IAS 30 Jun.04 Jun.04 Jun.05 Ratio of loans in arrears for more than 90 days (%) 1.2% 1.2% 1.1% Provisioning cover (loans in arrears +90d) 159% 158% 148% Ratio of loan-performing loans 1,2 (%) 1.3% 1.2% 1.2% Provisioning cover (non-performing loans) 149% 148% 144% Non performing loans, net of specific provisions 3, as a % of the loan portfolio net of provisions 2 0.4% 0.6% 0.6% Ratio of loans in arrears for more than 30 days (%) 1.3% 1.3% 1.3% Provisioning cover (loans in arrears +30d) 143% 142% 124% 1) Non-performing loans = loans in arrears for more than 90 days + doubtful debts, reclassified as being in arrears for provisioning purposes. 2) Calculated according to Bank of Portugal Instruction no. 16/ ) Specific provisions for loans in arrears and for doubtful loans. In the first half of 2005, the non-annualised increase in loans in arrears for more than 90 days plus write-offs represented 0.24% of the loan portfolio. It should be mentioned that, if loan recoveries are deducted from the increase in loans in arrears for more than 90 days plus write-offs, the nonannualised figure for the first half of 2005 becomes 0.20% of the loan portfolio. Banco BPI 1st half 2005 consolidated results 14/19

15 Evolution of loans in arrears (more than 90 days) PCSB IAS Dec. 00 Dec. 01 Dec. 02 Dec. 03 Dec Jun.05 Performing loan portfolio Loan in arrears for more than 90 days Write-offs [A] Increase in loan in arrears, adjusted by writeoffs As % of loan portfolio % 0.13% 0.72% 0.44% 0.32% 0.24%* [B] Recovery of loans in arrears written-off [C=A-B] Net credit loss (3.9) As % of loan portfolio % 0.01% 0.63% 0.35% 0.24% 0.20%* *Non-annualised. 1) Performing loan portfolio in the beginning of the year. 10. Financial investments At the end of June 2005, the unrealised gains on financial investments recorded in the portfolio of equities available for sale amounted to 56.9 M., and are disclosed in the positive fair value reserve in the same amount. Equities portfolio available for sale % capital held Price Book value Fair value reserve (in ) (fair value) Potential capital gains / (losses) BCP 3.2% Cofina 6.6% Ibersol 6.3% Portugal Telecom 1.7% Impresa 8.4% Other Total Banco BPI 1st half 2005 consolidated results 15/19

16 11. Pension obligations The transition to IAS gave rise to an increase in the amount of pension obligations of M. at 31 December At 30 June 2005, pension obligations in the amount of M. were 84% covered by pension fund net assets of M., resulting in a shortfall in cover to meet obligations of M. In the first quarter of 2005, BPI has already made extraordinary contributions to the pension fund of 64.3 M. At 30 June 2005, and in conformity with the IAS requirements, the amount of the 10% corridor envisaged to accommodate the fund s negative variances (actuarial and income) and the impact resulting from changes to the actuarial assumptions, was M. On that date, there was an accumulated negative balance within the corridor of 53.5 M. The corridor s unutilised margin available for accommodating any future actuarial losses was M. Funding of pension obligations PCSB IAS 31 Dez Dec Jun.05 Pension obligations Pension funds Funding of pension obligations 95.3% (1) 81.1% 84.3% Maximum corridor Corridor amount utilised (accumulated) Available margin Pension fund return 7.5% 7.5% 8.3% 2 1) At 31 Dec.04, the funding of obligations recognised in the balance sheet (amount of obligations taking into consideration disability decreases of 83 M. at 31 Dec.04) was situated at 100.3%. 2) Annualised return. Banco BPI 1st half 2005 consolidated results 16/19

17 12. Own funds and own funds requirements At the end of June 2005, the own funds requirements ratio calculated according to the Bank of Portugal s rules, was situated at 11.9% 1 and Tier I at 7.5%1. The preference shares represented 18.3% of Tier I. BPI carried out its first securitisation operation in April The amount of the securitised portfolio was 500 M., composed of some debts owed by SME's. This operation constituted the first SME debt securitisation operation with effective assignment launched on the market by a Portuguese institution. It falls within Banco BPI s strategy of boosting its capacity to become involved in the SME segment, while at the same time permitting the Bank to diversify its funding sources, as well as optimising the management of its capital. Own funds and own funds requirements According to Bank of Portugal rules 30 Jun Dec Jun.05 Basis own funds Core capital Preference shares Complementary own funds, deductions and supplementary own funds Total own funds Own funds requirements Risk weighted assets Own funds requirements ratio 10.4% 9.8% 11.9% Tier I 6.9% 6.5% 7.5% Core capital 5.5% 5.1% 6.1% Preference shares as a % of Tier I 20.4% 21.5% 18.3% 1) Own funds requirements x 12.5 Contact for Analysts and Investors Investor Relations Officer Ricardo Araújo Tel.: (351) Fax: (351) investor_relations@bpi.pt 1) Calculated in accordance with Bank of Portugal Instruction 16/2004. Banco BPI 1st half 2005 consolidated results 17/19

18 Annexes Consolidated income statement PCSB 30 Jun Jun. 04 (Proforma) IAS / IFRS 30 Jun. 05 M. % Net interest income (narrow sense) % Gross profit from insurance % Income from securities (variable yield) (8.3%) Net interest income % Commissions and other similar income (net) % Operating income and charges - (3.3) (0.5) % Recovery of loans written-off % Trading profits (net) % Net Operating Income from Banking % Personnel costs % Early retirements costs (100.0%) Other administrative expenses % Depreciation of own fixed assets (4.9%) Administrative Overheads and Depreciation (2.6%) Operating profit % Depreciation of operating lease assets Provisions and loan impairments (20.3%) Other impairments and provisions (1.0) Extraordinary items (net) (17.9) Profits before taxes % Corporate income tax % Equity-accounted results of subsidiaries (10.9%) Minority shareholders' share of profit 4.5 (0.0) Net Profit % Banco BPI 1st half 2005 consolidated results 18/19

19 Consolidated balance sheet PCSB IAS / IFRS 30 Jun Jun. 04 proforma 30 Jun. 05 % Assets Cash and deposits at central banks % Amounts owed by credit institutions % Loans and advances to credit institutions 1, , % Loans and advances to Customers 18, , , % Loan portfolio 18, , , % Interests and other % Financial assets held for dealing 1, , , % Financial assets available for sale 1, , % Hedging derivatives % Investments in associated companies and in subsidiaries excluded from the consolidation % Other tangible assets % Intangible assets % Tax assets % Other assets % Total assets 23, , , % Liabilities and shareholders' equity Central banks' resources % Credit institutions' resources 3, , , % Clients' resources and other loans 12, , , % Debts evidenced by certificates 4, , , % Technical provisions - 1, , % Financial liabilities associated to transferred assets Hedging derivatives Provisions % Tax liabilities % Preference shares % Other subordinated loans % Other liabilities , , % Share capital % Share premium account and reserves % Treasury stock % Net profit % Minority interests % Total liabilities and shareholders' equity 23, , , % Banco BPI 1st half 2005 consolidated results 19/19