CGD Group Consolidated Operations

10 May 2018

1st Quarter 2018^(*) (unaudited accounts)

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1st Quarter 2018 confirms CGD to be on the right track, with a consolidated net profit of €68 million.

Highlights

Following the successful conclusion of the first year of the CGD 2020 Strategic Plan, CGD started 2018 with a quarter of clear progression in its path towards profitability, efficiency and asset quality.
Consolidated net income reached €68.0 million, exceeding the negative €38.6 million in the same quarter last year, and the €51.9 million obtained for the entirety of 2017.

Special reference should be made to the following:

CGD Portugal’s net interest income of €182.9 million, was up 6.1% over the same period of the preceding year despite the drop in consolidated net interest income (-1.1%), adversely impacted by foreign exchange effects.
Commissions were up 9.4% (+€9.9 million) in first quarter 2018 over the end of March 2017. In Portugal, the 13.8% increase reflect the measures of the strategic plan implemented in 2017.
The 11.3% reduction (- €30.5 million) in recurring operating costs⁽¹⁾ derived from the consistent action on employee costs (down 8.4%), general administrative costs (down 12.5%) and depreciation and amortisation (down 28.1%).
The reduced cost of credit risk of 0.22% reflecting net credit impairments of €33.4 million for the quarter.

(EUR Million)

CGD Consolidated Results
CONSOLIDATED ACTIVITY	2017-03	2018-03	Y-o-Y Change
Net interest income	300	297	-1%
Net inter. income incl. inc. from equity investm.	305	304	0%
Net fees and commissions	106	116	9%
Net trading income	79	28	-65%
Total operating income	457	434	-5%
Recurrent operating costs⁽¹⁾	269	239	-11%
Net core operating inc. before imp.⁽¹⁾	136	173	27%
Provisions and impairments	108	13	-88%
Net income	-39	68	-

The core operating result was up 27.3% over March 2017 to €173.1 million. Cost-to-core income evolved favourably, reaching 58.0%. Both indicators benefited from the already referred to growth of commissions and implementation of cost reductions.
Net income for 1st quarter 2018 was €68 million, impacted by €10.7 million from non-recurring costs net of tax.
The evolution of CGD’s asset quality was favourable, with NPLs (non performing loans) according to the EBA’s definition, down €592 million (or 7.5% over December 2017), given the positive evolution of sales, cures and recoveries.
CGD reduced its NPL by €3.3 billion in the last five quarters, down 30.9% when compared to December 2016.
The NPL ratio stood at 11.4% at the end of the quarter, with impairment and collateral coverage of 60.1% and 44.4% respectively at the same date (total coverage of 104.5%).
CGD’s activity continued to benefit from customer resources stability, which amounted to €68,868 million from domestic activity, including off-balance sheet products (investment and pensions funds, financial insurance and OTRV) which amounted to € 19,479 million.
The liquidity position at the end of March 2018 was highly favourable, with an LCR (liquidity coverage ratio) of 241.3% and providing CGD eligible assets included in the Eurosystem pool amounting to €13.5 billion.
The phased-in and fully implemented CET1 ratios, in March, were both 13.6%. The phased-in Tier 1 and Total ratios stood at 14.7% and 15.3%, respectively, easily complying with the capital requirements in force for CGD.
These capital ratios include the full impacts of the implementation of IFRS 9 (-0.25%), the phased-in ratio for 2018 (-0.06%) and the deduction of irrevocable commitments associated with mandatory contributions (-0.35%). The reduction of risk-weighted assets across the quarter produced an increase of 0.25%.
The track set by CGD to fulfill the objectives of the Strategic Plan for 2018, evidenced clear progress in the first quarter of 2018.

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

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⁽¹⁾Excluding the non-recurring costs of employee reduction programmes for a total amount of €58.0 million in 1st quarter 2017 and €58.5 million in 1st quarter 2018.

^(*) The March 2017 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 March 2017 restated accounts.

Caixadirecta

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CGD Group Consolidated Operations

1st Quarter 2018^(*) (unaudited accounts)

CGD Group Consolidated Operations

1st Quarter 2018(*) (unaudited accounts)

1st Quarter 2018^(*) (unaudited accounts)