Consolidated Results 1 st Half 2018 Unaudited financial information Investor Relations Office Date – 27/07/2018
Agenda 1 Highlights 2 Results 3 Balance Sheet 4 Asset Quality 5 Liquidity 6 Capital 2
Highlights 3
Highlights CGD concludes Recapitalization Plan and advances in the Strategic Plan implementation Recapitalization Plan concluded (4,944 M € ) with Tier 2 issuance in June 2018 Net income reaches 194 M € (-50 M € in June 2017), resulting in a ROE of 5.7% (1) Core Income (Margin + Commissions) at CGD Portugal up 8% Core operating income increases 30% over 1st half 2017, benefiting from the rise of net interest margin in (2) Portugal and commissions, together with lower operating costs Continued improvement in asset quality, with NPL ratio reduction (10.5%, -3.0 pp vs. 1H2017) and reinforced coverage Capital ratios denote CGD’s strong capital position CGD advances in Digital Banking, with 2 million of active customers, representing 46% of total market share of (3) domestic Internet Banking users (1) Current activity ROE = (net income + non-recurring costs + non-controlling interests) / Shareholders ' equity (average of 13 monthly observations); Annualized value. (2) Core operating income = Interest margin + Net Commissions - Current operating costs. (3) According to the results of the Basef Internet Banking study (average of 2017) conducted by Marktest company. 4
Highlights Recapitalization Plan concluded with Tier 2 issuance in June 2018 M € 4 January 2017 End of March 2017 Share Capital increase in kind by the Issuance of AT1 State, using 49% of Parcaixa SGPS, S.A. 500 499 Phase 1 Executed Phase 2 945 4 January 2017 Executed Share Capital increase in € 4,944 Million kind by the State using the End of March 2017 CoCos subscribed in 2012 Share Capital increase in cash, subscribed by 2.500 the State 500 21 June 2018 Phase 3 Issuance of Tier 2 securities, Executed with cost below expectations 5
Highlights Strategic Plan - CGD on the right track to 2020 Strategic Plan Targets > 9% 5,7% > 5% 2018 Management Return on Equity Targets (1) (ROE) >5% 2018-03 Execution Target 2018 Target 2020 2018-06 Execution < 58% (2) 51% (2) < 43% 2018 Management Recurrent Targets Cost-to-Income <55% 2018-03 Execution Target 2018 Target 2020 2018-06 Execution 10,5% < 7% 2018 Management n.a. NPL Ratio Targets <10% 2018-03 Execution Target 2018 Target 2020 2018-06 Execution 14,0% > 14,0% 2018 Management 12,0% CET1 Phased-In Targets >13.5% 2018-03 Execution Target 2018 Target 2020 2018-06 Execution (1) Current activity ROE = (net income + non-recurring costs + non-controlling interests) / Shareholders ' equity (average of 13 monthly observations); Annualized value; 6 (2) Target for the Domestic Business.
Highlights Digital Banking: Building the Future CGD Active Customers Market Share Caixadirecta Logins Others Others Direct 0.4 M 54% 54% 2 M Portugal customers CGD PT (2017 Average) CGD App 46% CGD Portugal 46% 1.5 M Leader with more than twice the Adaptation to customer needs: + 130,000 customers vs. Jun. 17 number of users of 2 nd placed bank* increasing use of the App Sustainable and always available 120 features Simple and fast * According to Basef Internet Banking study (2017 average) conducted by Marktest. 7
Highlights Agencies start to review CGD’s rating… DBRS CGD Rating Actions – 1 st Half 2018 Moody's FitchRatings DBRS: Outlook from Negative to Positive Moody’s: Upgrade from B1 BBB (low) BBB (low) BBB (low) to Ba3 Positive Outlook BB- Ba3 Ba3 BB- Stable B1 Outlook Negative Negative Stable Stable Positive Positive Outlook Outlook Outlook Outlook Outlook Outlook 2017-12 2018-02 2018-06 2018-07 Long Term Senior Debt Rating 8
Highlights Relevant Events CGD Clients Caixa Account and Customer Relationship • Jun 2018: > 1,350,000 accounts (+410 thousand since • +80 thousand customers with a dedicated Caixa Azul December 2017); relationship manager and launch of Caixa Platinum service model targeting upper affluent clients; • 11% increase YoY in revenue from Multicare health • CGD Portugal’s total active clients reaches 3.8 million in June 2018, insurance; including 26,000 new clients on the first half; • Increased levels of relationship with customers, mainly through • Suitability of the service to the client profile with over 230 thousand investment solutions – Funds and Financial Insurance – Non- customers with a remote relational management; financial insurance and cards. • Leadership in main retail segments with emphasis on university students with 56% market share; • Launch of the second Mobile Agency in the first half 2018 extending its coverage to a total of 33 locations. “Fora da Caixa” Conferences Investment Banking and Credit • After 10 conferences in 2017, 7 events were held in the 1 st half of 2018: Castelo Branco, Aveiro, Lisboa, Évora, • Caixa BI: “ Best Investment Bank in Portugal ” by Porto, Beja and Setúbal; Global Finance and EMEA Finance; • Topics covering Technology, Innovation, Real estate, CGD: 1 st place in Portugal in the Top 1000 World • Tourism and Culture; Banks 2018 ranking (154 th worldwide) by The • More than 4,000 CGD customers involved. Banker. 9
Highlights Relevant Events Corporate business Individuals and Families • Strong growth in new financing for individuals and • Caixa offers a wide range of medium and long-term families based on optimization of the sales process and financial solutions to support SME investment: EIB, EIF, improved customer service; IFD, PME Investimento, Turismo Portugal and SPGM; • Partnership for mortgage loans with over 1,600 real estate agents • Close of the first € 150 million tranche of the EIB Credit Line with of which around 300 are new protocols; an additional of € 150 million tranche available; • Launch of “Caixa Casa Eficiente ” promoting energy efficiency and • Significant role in the placement of State protocol lines particularly the use of renewable energy in residential buildings. on the “ Linha Capitalizar ”; • “Caixa Invest Inovação ” promoting the development of innovating projects; • Launch of recognition program “Caixa TOP”. Commercial practice • Improved planning and frequency in client contacts based on a new sales practice aligned with commercial budget with initiatives focused on Mutual Funds Market Leader products and strategic services. • 33% market share (Jun 2018); • Caixagest: Best domestic fund house and fixed income multi asset, by Morningstar. 10
Results 11
Results 1 st half of 2018 confirms progress of CGD’s profitability... M € 194 52 5.7% 5.3% -171 -348 -395 -488 -579 -1,860 (1) ROE Current Activity (2) ROE 2011 2012 2013 2014 2015 2016 2017 2018-06 2018-06 Consolidated Net Income (1) ROE = (net income + non-controlling interests) / Shareholders ' equity (average of 13 monthly observations); Annualized value (2) Current activity ROE = (net income + non-recurring costs + non-controlling interests) / Shareholders ' equity (average of 13 monthly observations); Annualized value 12
Results Net Interest Income with positive evolution in Portugal, despite interest rate environment… M € 6% 2% CGD Portugal Consolidated Year- on -year: 2% 1H 2018 vs 1H 2017 619 332 606 306 303 300 297 297 26 191 183 184 178 175 172 593 1Q 2Q 3Q 4Q 1Q 2Q 2017-06 2018-06 2017 2018 Net Interest Income, excl. FX Quarterly Net Interest Income (1) Impact on BCGA and BNU Macao (1) Consolidated figures on comparable basis, considering BCG Espanha, BCG Brasil and CGD Investimentos CVC as a non-current asset held for sale. Mercantile Bank Holdings was already reclassified as such. 13
Results Net Interest Margin improving… M € Consolidated Activity - Net Interest Margin (%) Domestic Activity - Retail Net Interest Margin (%) 1.05% 1.32% 1.36% 1.34% 1.55% 1.57% 1,241 773 1,040 611 396 593 2016 2017 2018-06 2016 2017 2018-06 Total Net Interest Income Total Net Interest Income Domestic Activity Consolidated Activity 14
Results …and Net Fees and Commissions benefit from the Strategic Plan implementation M € CGD Portugal 13% 10% 13% Consolidated Year- on -year: 1H 2018 vs 1H 2017 181 160 Securities and Asset 15 +26% Management 239 12 24 218 18 Bancassurance +32% 181 160 84 69 Cards, Payments and +22% Other Credit & Guarantees -4% 62 59 2017-06 2018-06 2017-06 2018-06 Net Fees and Commissions Net Fees and Commissions (Consolidated and CGD Portugal) (CGD Portugal) 15
Results Total Operating Income influenced by Net Trading Income, Core Operating Income improved… M € 2% -6 593 12 239 51 593 239 2018-06 889 832 +17M € -12M € -12M € +21M € -167M € 824 2017-06 606 24 218 218 1,042 606 218 -23 Total Operating Income Total Core Operating Income Net fees and commissions Net interest income Net trading income Other Operating Income Income from equity instruments 16
Results Lower recurrent Operating Costs at consolidated level… M € 2017-06 2018-06 12% 13% 33% 14% (1) (1) (1) (1) Non recurrent costs 602 61 516 51 376 327 61 49 541 179 465 158 315 2 278 47 32 Employee Other administrative Depreciation and Total costs expenses amortisation Operating Costs – Consolidated Activity (1) Excluding non-recurrent costs. 17
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