CGD Consolidated Operations

5 Nov 2020

3^rd Quarter 2020

(unaudited accounts)

CGD releases 1st quarter consolidated results

Consolidated net income totals €392 M. Preventative impairment reinforcement impacts recurring results (€342 M), down 29% over 2019.

Highlights

Response to the Covid-19 pandemic impacts the results of the first nine months of 2020. CGD reinforces support to families and companies with growth in new mortgage loan operations and an increase in the corporate loan portfolio.

Consolidated net income for first nine months of 2020 was down 39% over the same period 2019 to €392 million, equivalent to a ROE of 6.6% (down by a year-onyear 4.2 p.p.).

This amount includes an extraordinary gain of €51 million (after tax) arising from actuarial gains in liabilities with post-employment benefits (pension fund and medical plan). Current net income of €342 million was therefore down 29% over the current income in first nine months of 2019. ROE stood at 5.8%;

The cost of credit risk totalled 0.29% owing to a €220 million increase of impairment and provisions in anticipation of the effects of the Covid-19 pandemic; Recurring operating costs, down 6% over September 2019, reflected improved efficiency levels as shown by the recurring cost-to-income ratio of 49%¹ in terms of domestic activity;

Customer deposits were up €5.3 billion in the first nine months of 2020. This was essentially on account of the resources taken by CGD Portugal, fuelled by higher levels of household savings and showing our customers’ trust in Caixa;

The corporate credit stock in Portugal (excluding the construction and real estate sectors) grew 9.8% across the first nine months of 2020, strengthening the support for corporates.

CGD maintained the trend of increasing its mortgage loans production share, which reached 21% between January to August (24% considering only the month of August). The annual output growth reached 4% over the same period of 2019;

Improvement of asset quality, with the non-performing loans (NPL) ratio decreasing to 4.2% which, together with impairment increases resulted in an NPL ratio net of impairment of 0.5% (considering all credit impairments);

Capital ratios reached 17.2% in core capital (CET1) and 19.8% in total capital, both above the average for eurozone banks.

DISCLAIMER

– The financial statements have been prepared on the basis of the International Financial Reporting Standards (IFRS) as adopted in the European Union in accordance with Regulation (EC) No. 1606/2002 of the European Council and of the Parliament of July 19 and provisions of Decree-Law No. 35/2005 of February17. The financial information reported is unaudited.

– The financial metrics in this presentation refer to September 30, 2020, unless otherwise stated. These may be estimates subject to revision. Solvency ratios include net income for the period.

– The year 2020 has been marked by the COVID-19 pandemic. As a consequence of the spread of the disease, with confirmed cases in more than 200 countries and territories, exceptional measures have been taken to contain it, including the restrictions on mobility of the population, the closure of national borders and conditioning in a wide range of economic activities. Several countries lifted their lockdown restrictions in the second part of the half year, enabling a resumption of economic activity albeit subject to the application of limitations on different sectors. Consequently diverse economic indicators have confirmed a sharp deceleration of worldwide economic activity, making a global recessionary scenario a certainty and the only doubts regard its levels of depth and duration as well as future recovery scenarios.

Impacts, albeit uncertain, are naturally expected on the group’s activity. Their extent will be contingent upon a multiplicity of factors such as the depth of the economic crisis, its length, the economic sectors most affected and the type and impact of the monetary and fiscal policy measures adopted and to be adopted by the diverse European Union central banks in the future.

In light of these uncertainties, and based on the information available at this time, CGD estimated and recognized in its financial statements for the period ending on September 30, 2020 its best estimate of the financial effects of this pandemic, including the valuation of financial assets and the measurement of expected losses in the loan portfolio, which will be subject to continuous monitoring and reassessment.

– This document is intended for general information only and does not constitute investment recommendation or professional guidance and may not be construed as such.

– This document is an English translation of the Portuguese language document “Press Release - Resultados Consolidados Primeiros 9 meses de 2020”. In the event of any inconsistency, the original version prevails.

Press Release -Read or Download here the full version.
Presentation - Read or Download CGD Consolidated Results presentation.

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⁽¹⁾ Excluding non-recurring costs.

Caixadirecta

Caixadirecta

CGD Consolidated Operations

3^rd Quarter 2020

(unaudited accounts)

CGD Consolidated Operations

3rd Quarter 2020

(unaudited accounts)

3^rd Quarter 2020