CGD Group Consolidated Operations

2 Feb 2018

4th Quarter 2017^(*) (unaudited accounts)

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CGD’s Strategic Plan 2020 on the right track, successfully completing the year 2017, based on business evolution, capital and liquidity, allowing the return to profits.

Highlights

Successful implementation of CGD’s Strategic Plan 2020, in 2017, resulting in an improvement in its levels of efficiency and profitability and leading to a net income of €52 million.

Special reference should be made to the following, in 2017:

The positive 19% increase of €201 million in net interest income to €1,241 million.
The 3% growth of net commissions over 2016.
The net trading income increase €139 million, over the preceding year, to €216 million.
The significant 38% increase of €541 million in total operating income to €1,965 million, deriving from the evolution of the above components.
The 7% reduction of €79 million in recurrent operating costs over 2016.
The low costs of credit risk in 2017, €86 million of impairements (0.13% of the loan stock).

(EUR Million)

CGD Consolidated Results
CONSOLIDATED ACTIVITY	2016-12	2017-12	Y-o-Y Change
Net interest income	1 040	1 241	19%
Net fees & commissions	450	465	3%
Net trading income	77	216	182%
Total operating income	1 423	1 965	38
Recurrent operating costs⁽¹⁾	1 151	1 072	-7%
Net core operating inc. before imp.⁽¹⁾	338	634	87%
Provisions and impairments	2 999	677	-77%
Net income from current activity ⁽¹⁾	-1 827	661	-
Net income	-1 860	52	-

Core operating income (1) in 2017, fuelled by the growth of net interest income and reduction of recurring operating costs was up 87% to €634 million in the period.
Cost-to-income (excluding non-recurring costs) was down to 53% in 2017 as a consequence of the good performance referred to in the recurring operating costs and income components. Cost-to-core income, which also excludes net trading income, was 63%.
Net income for 2017, impacted by nonrecurring costs of €609 million, was €52 million.
Total non recurrent costs, a net amount of 609 M€ and 32 M€ in 2017 and 2016, are related to staff reduction programmes, international and domestic operations restructuring and disposals costs and as well as the application of IAS 29 to the activity in Angola with an impact of €30 million.
CGD’s asset quality evolved positively in 2017, with NPE(2) and NPL(3) ratios of 9.3% and 12.1% respectively against 12.1% and 15.8% in December 2016.
NPL amount was reduced by €2.7 billion (-26%) with a coverage by impairements of 57.2% in December 2017.
The loans-to-deposit ratio of 87% in CGD’s balance sheet in December 2017 reflected the strong confidence of CGD’s customer base, even in an environment of historically low interest rates on deposits.
Total customer resources in terms of domestic activity, influenced by the favourable evolution in government bonds, mutual funds and insurance products placements were up 2% by €1,370 million over December 2016, to €68,648 million.Total customer resources in terms of domestic activity, influenced by the favourable evolution in government bonds, mutual funds and insurance products placements were up 2% by €1,370 million over December 2016, to €68,648 million.
The phased-in and fully implemented CET 1 ratios in December were both 14.0%, with phased-in Tier 1 and Total ratios of 15.1% and 15.7%, respectively, complying with the regulatory requirements.CGD therefore retained its leading position in the domestic market with a total 27% share of deposits in November 2017 (30% in the case of individual customers’ deposits).
CGD’s liquidity position remained highly comfortable with a Liquidity Coverage Ratio (LCR) of 209%. Total financing from the ECB was down €60 million over the preceding year to €3.5 billion at the end of 2017, i.e. around 3.7% of total assets.
The phased-in and fully implemented CET 1 ratios in December were both 14.0%, with phased-in Tier 1 and Total ratios of 15.1% and 15.7%, respectively, complying with the regulatory requirements.
CGD had ADI (Available Distributable Items) of €1.8 billion (around 33 times the annual cost of its current AT1 issuance) with 3.3% in excess of the level of MDA (Maximum Distributable Amount) restrictions considering the current Tier 1 and Tier 2 deficits and 5.2% if considering that such deficits will be fully cleared by future issuances.

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Presentation - Read or Download CGD Consolidated Results presentation.

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⁽¹⁾ Excluding the non-recurring costs of employee reduction programmes and costs related with the restructuring and disposal of national and international assets, as well as the application of IAS 29 to the activity in Angola, as applicable to each Profit and Loss heading, for a total amount net of tax of €609 million in 2017 and €32 million in 2016.
⁽²⁾ NPE - Non performing exposure (as defined by EBA)
⁽³⁾ NPL - Non performing loans (as defined by EBA)

^(*) The December 2016 values have been restated, 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 since December 2016. The whole analysis in this document was done comparably to the 2016 restated accounts.

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CGD Group Consolidated Operations

4th Quarter 2017^(*) (unaudited accounts)

CGD Group Consolidated Operations

4th Quarter 2017(*) (unaudited accounts)

4th Quarter 2017^(*) (unaudited accounts)