CGD Consolidated results

28 Jul 2017

1st Half 2017 (*)
(Unaudited financial information)

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Highlights

Following the completion of phases 1 and 2 of the Recapitalisation Plan agreed between the Portuguese state and the European Commission (DG Comp), in 1st quarter 2017, permitting a capital increase of €4.4 billion, CGD’s phased-in capital ratios totalled 12.7% (CET 1) and 14.6% (total ratio) at 30 June 2017.
CGD is now totally concentrated on the effective implementation of its Strategic Plan 2020, which will permit the structural transformation of its efficiency and profitability levels.
The evolution of CGD’s activity in the 1st half, globally in line with the Strategic Plan’s initial projections appear to indicate that the prospects of complying with the objectives set for the end of 2017 will be met.
In first half 2017 its core1 operating result amounted to €303 million, fuelled by the growth of net interest income and reduction of recurrent operating costs.
Net interest income, benefiting from the large 27% reduction of €212 million in funding costs, was up 18% by €101 million over 1st half 2016 to €656 million.

Total operating income was up 57% by €419 million year-on-year, to €1,154 million. Positive contributions were made by net interest income (€101 million) and income from financial operations (€325 million).

(EUR Million)

CGD Consolidated Results
	2016-06	2017-06	Y-o-Y Change
Net interest income	555	656	18%
Results from services & commissions	224	225	0%
Income from fin. operations	-49	276	-
Total operating income	735	1.154	57%
Operating costs	627	638	2%
Recurrent operating costs⁽¹⁾	607	577	-5%
Net core operating inc. before imp.⁽¹⁾	173	303	76%
Credit impairment (net)	302	55	-82%
Provisions & other impairments (net)	26	344	-
Net income	-205	-50	-

⁽¹⁾Excluding the non-recurring costs related to the 2016 and 2017 early retirement program and the termination program by mutual agreement.

Cost-to-income (excluding non-recurrent costs) was down to 50% in the half year as a consequence of the referred to good performance of the recurrent operating costs and income components. Cost-to-core income which excludes income from financial operations was 66%.
The net result for the half year, impacted by non-recurrent costs of €366 million was a negative €50 million.
Positive evolution of CGD’s asset quality in 1st half 2017, with NPE2 and NPL3 ratios of 10.7% and 13.6% (12.1% and 15.8% last December). In both cases the impairment coverage is 52.1%.
Credit at risk down to 9.8% at 30 June 2017 against 10.5% in December 2016, with impairment coverage of 76.7%.
The cost of credit risk for the semester of 0.16%, confirms the expected downwards trajectory across the year, following the assessment of assets value exercise performed at the end of 2016.
CGD’s balance sheet across the period was impacted by the referred to recapitalisation operations, as the main reason behind the €2,461 million increase of net assets over December 2016.
The loans-to-deposits ratio of 87% in June 2017 reflected CGD’s strong resilience of customer base even in an environment of very low interest rates on deposits.
Total customer resources from domestic operations were up 3% by €2,254 million over December 2016 to €69,532 million, strongly influenced by the €1,397 million increase of customer deposits.
CGD therefore maintained its leading position in the domestic market with 27% of total deposits in May 2017 and 31% of individual customers’ deposits.
CGD maintained a highly comfortable liquidity position with an LCR (liquidity coverage ratio) of 222% with total financing from the ECB remaining stable at €3,497 million, less than 4% of total assets.
The phased-in and fully implemented CET1 ratios in June were 12.7% and 12.5% with a phased-in Tier 1 and Total ratios of 13.7% and 14.6%, respectively.
CGD had ADI (available distributable items) of €1.8 billion at this date (around 33 times the annual cost of its current AT1 issuance) with a 2.8% surplus on the level of its MDA (Maximum Distributable Amount) restrictions considering the current gaps of Tier 1 and Tier 2 and with a 4.5% surplus if considering those gaps fulfilled with future issuance.

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¹ Net interest income + Results from services and commissions – Recurrent operating costs
² NPE - Non performing exposure (as defined by EBA)
³ NPL - Non performing loans (as defined by EBA)

(*) The June 2016 values have been restated, considering Mercantile Bank Holdings, Ltd. as a non-current asset held for sale.

Caixadirecta

Caixadirecta

CGD Consolidated results

1st Half 2017 (*)
(Unaudited financial information)

CGD Consolidated results

1st Half 2017 (*)(Unaudited financial information)

1st Half 2017 (*)
(Unaudited financial information)