BES Group Presentation BES Group Presentation A successful history of long term sustainable growth July 2014
Agenda History & Ownership Structure I. General Overview II. Current Challenges & Key Financials III. IV. Wrap-up Wrap up IV 1
BES foundations trace back to the 19th century. With 145 years of history, BES has always maintained a relevant role in Portugal After the creation of the Espírito Santo Group returns 2000 and 2001 mark the first name Banco Espírito Santo steps of the “strategic triangle”: to Portugal establishing BIC in 1920 the Bank merged BES strengthens its position in ( Banco Internacional de with Banco Comercial de Spain, enters a partnership with Crédito) in partnership with Lisboa creating BESCL Lisboa creating BESCL Banco Bradesco in Brazil and Banco Bradesco in Brazil and Crédit Agricole and ESSI Crédit Agricole and ESSI creates BES Angola (1937) (1986) 1869 2014 … … 00’s – the new millennium 30’s 80’s The The Today 145 years of history creating value for shareholders, clients and employees Beginning … … 2009 - 2011 70’s 90’s BESCL is Epírito Santo Group regains nationalised within nationalised within L Largest Portuguese t P t control of BESCL during re- the Nationalisation Bank by market cap BES reinforces presence in Africa: privatisation process (1991- program in and net assets, in acquisition of a 40% stake in 1992). Portugal after 1974 portugal, with 19.7% Aman Bank (Libya) and 25.1% In the following years, the Revolution. market share direct Bank consolidates its E Espírito Santo í it S t domestically and stake in Moza Banco, in presence in Portugal and family rebuilds its pursuing a focused Mozambique (increased to 49% in scopes of activities, while financial interests international 2013); establishes a partnership expanding its geographical abroad and creates expansion (present in for a leasing co in Algeria; presence in Spain (BES Spain, the Espírito Santo 25 countries in 4 establishment of BES Cabo Verde 1992 ) and Macao (BESOR, 1992 ) and Macao (BESOR, Group (GES) continents) (BESCV) 1995 ) Lat Am Russia Crisis European sovereign WW I WW II 9/11 Crisis LTCM bailout debt crisis Privatization Dot.com Subprime Great Nationalisation Depression bubble 2
BES is a unique story of organic growth in the Portuguese market, where the banking sector has been in a consolidation process since the 80s 1985 1986 … 1988 1989 1990 1991 … 1993 … 1995 1996 … 2000 … 2005 … 2014 BES BIC merger BIC into BES i t BES CGD CGD BNU Group BCP Champalimaud BPSM BCP acquires Group acquires BPSM BPSM BPA BPA BCP acquires BCP acquires José de Mello Name changed BPA SFP Group Banco to Banco Mello BCP acquires acquires SFP UBP Mello Mello Santander BCI Acquires BCI Banesto BTA Champalimaud Santander Acquires BTA Group acquires Acquires BTA & CPP BTA & CPP CPP BPI Name changed BPI acquires BFN to BFE BBI & BFE BPI acquires q BFB BFB BFB 3
The Bank successful story of organic growth had different stages: during the 90’s the Bank focused on its domestic business; in the following decade BES expanded its activity abroad and more recently the focus has been on BS management ti it b d d tl th f h b BS t BES Strategy: Main events 2010-... The 90’s: 2000-2010 Focus on B/S & integrated Domestic focus International expansion International approach Market liberalization (e.g.: Mature market in Portugal Challenging environment: mortgages) Macro Opportunities abroad Favourable environment (declining Regulatory Definition of the strategic focus Markets interest rates, GDP growth, EU / EEC) , g , ) (“strategic triangle”) ( strategic triangle ) Macro recovery driven by exports M&A activity “ Rebranching ” of the Portuguese banking system supported by strong Spain: expansion to corporate market growth g business Deleverage e e e age Angola: creation of BESA Stronger capital base Brazil: Partnership with Bradesco Depressed profitability Organic growth and BESI New business plans for Loan portfolio growth Diversification of income stream Diversification of income stream International business International business Leverage and strong profits Access to markets Ex Exports ta takes o off Note: pictures from “The Economist” 4
BES has been developing a strong and sustained franchise, which has been consistently expanding # Branches # Employees + 548 + 548 branches 788 10.216 9.018 145 Int. 629 2.845 Int. 6.426 643 Dom 7.371 Dom. 240 .... .... .... .... 1992 2000 2013 1992 2000 2013 # Clients Market Share (domestic market) (million) (%) Corporate banking: 25.5% + 800,000 800 000 +2.3x clients 19.7% 16.1% 2.2 1.6 1 4 1.4 8 5% 8.5% .... .... .... .... 1992 2000 2013 1992 2000 2013 International Activity Data Domestic Activity Data 5
BES strong franchise, developed since the reprivatisation, has been key to build a relevant market position Net Assets Evolution Gross Credit Evolution Deposits Evolution (EUR mn) (EUR mn) (EUR mn) CAGR 92/13: 20.0% Abs. : + Eur 78.9bn CAGR 92/13: 22.1% 80 608 80,608 Abs. : + Eur 49.0bn CAGR 92/13: 18.6% Abs. : + Eur 35.4bn 49,722 36,831 33,936 21,789 16,160 753 1,103 1,742 1992 1992 2000 2000 2013 2013 .... .... 1992 1992 .... 2000 2000 .... 2013 2013 .... .... 1992 2000 2013 BES is the Portuguese second BES maintains a balanced support Deposits growth demonstrates largest listed bank by net assets to the economy clients confidence in BES 6
A supportive shareholder base has been key to implement a long term consistent strategy in the domestic business as well as in BES international expansion BES main shareholders 17 June 2013 Espírito Santo Espírito Santo Crédit Agricole Financial 14.6% 20.1% (3) Group 3.9% 2.1% Bradesco PT 4.65% (1) 2.27% (2) 4.7% 4.2% Capital Silchester BlackRock Baupost Research • BES free float currently stands at 59.3% (1) BlackRock’s stake announced on 8 July 2014 (2) Baupost stake announced on 10 July 2014 (3) ESFG stake announced on 14 July 2014 Notes: Silchester - UK based investment management firm with more than €15bn AuM (primarily from US institutional clients) Capital Research and Management (CRMC) - U.S. based investment adviser that manages the American Funds family of mutual funds of Capital Group. BlackRock, Inc. - U.S. based multinational investment management corporation based in New York City. It is one of the world's largest asset managers with AuM totaling USD 3.67 trn Baupost – U.S. (Boston,) based investment advisory and hedge fund management 7
Agenda History & Ownership Structure I. General Overview II. Current Challenges & Key Financials III. IV. Wrap-up Wrap up IV 8
Conservative management and long term value creation focus have allowed BES to build a strong domestic franchise, complemented with a growing international presence. BES is currently the largest Portuguese Bank net assets p y g g BES domestic position BES relative size Largest listed Portuguese Bank by Net Assets 1st largest private financial institution in Portugal 1st largest private financial institution in Portugal by net assets (EUR 82.8 billion at 31 March 14); Strong market position with an average market share of 19.7% in the Portuguese banking market Bank1 Bank1 Bank1 Bank1 Bank2 Bank2 Bank2 Bank2 (25.5% in the corporate business) 2.2mn Clients worldwide Net Net Eur 82.8bn Eur 82.8bn Eur 82.3b Eur 82.3bn Eur 42.0bn Eur 42.0bn Assets: Assets: BES solvency ratios – BIS III BES International footprint (CRD IV / CRR) 11 4% 11.4% +1.6% 10.5% +1.6% +0.9% 9.8% 8.0% 8% (min. regulatory threshold) Mar.14 Rights DTA's* Pro issue Forma Mar.14 Rights Pro Forma Mar.14 issue Mar.14 24 countries in 4 continents Fully Phased in implemented * Estimated impact from ppotential DTA´s forbearance, 9
BES is a premier banking franchise in Portugal complemented by a highly successful international presence Solid and Consistent Business Model Commercial Activity Commercial Activity Geographic Exposure Geographic Exposure Domestic business Domestic business Retail R t il Private Banking Banking Strong domestic business model with consistent increase in the market share Corporate Banking & Asset Institutional Management Clients International business Focused on the Strategic Triangle, International composed by Africa (especially Angola Investment Commercial and Mozambique), Brazil and Spain Banking Banking B Banking ki Service excellence and permanent focus on each client needs Service excellence and permanent focus on each client needs 10
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