CGD Consolidated Operations

13 May 2020

1st Quarter 2020

(unaudited accounts)

CGD releases 1st quarter consolidated results

CGD, as market leader, faces economic crisis caused by the COVID-19 pandemic with an unparalleled capital and liquidity position.

Highlights

Consolidated net income in the first quarter of 2020 was €86.2 million (down €39.9 million over the same period in 2019), equivalent to a ROE of 4.5% (down 2.1 p.p. year-on-year)

Net income includes a charge in impairments and provisions for credit guarantees in the amount of €60 million in anticipation of the consequences of the economic crisis.

It also reflects the first impacts resulting from the Covid-19 pandemic that began being felt in the second half of March. The measures resulting from the declaration of a State of Emergency originated a reduction in transactions and a decrease in demand for credit by corporates and individuals;
Cost of credit risk cost reached 7 bps as a consequence of the additional impairments, in anticipation of the pandemic impact. Without this charge, it would have stayed at the same level as of the end of December 2019: -9 bps;
Recurrent operating costs were down 4%, compared to March 2019. This results from a decrease in administrative expenses (10%) an effect of optimizing operational efficiency and from a reduction in employee costs of 3%;
CGD’s efficiency level stayed below 50% with current cost-to-income ratio at 49%⁽¹⁾;
Customer deposits were up €1.7 billion in the quarter, essentially from an increase in CGD Portugal, showing customer trust and loyalty to CGD;
The balance of corporate loans in Portugal (excluding the construction and real estate sectors) grew 2.1% in the quarter (up €186 million) with new loans reaching €1.2 billion;
New mortgage loans were up 13%, compared to the first quarter of 2019 despite signs of a slowdown in the second half of March;
Non-Performing Loans ratio decreased to 4.5%, continuing its convergence to the European banking average. The NPL ratio net of impairments reached 0.7%;
Capital ratios reached 16.6% in core capital (CET1) and 19.2% in total capital, above Portuguese and European average. The reduction to the levels of December 2019 is a consequence of the impact in fair value reserves from the lower value of public debt;

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 March 31, 2020, unless otherwise stated. These may be estimates subject to revision. Solvency ratios include net income for the period.

– The first months of 2020 have 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, drastic 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. Consequently, there is a strong deceleration in economic activity worldwide, anticipating a scenario of a global recession, with a high uncertainty regarding its depth and duration.

– Naturally, although still uncertain, impacts are expected on the Group's activity and its ability to achieve its economic and financial goals. The degree of which will depend on multiple factors, such as the depth of the economic crisis, its duration, the economic sectors that will be most affected, the nature and impact of the monetary and fiscal policy measures that the various governments and economic blocs will adopt, namely the European Union.

– In light of these uncertainties, and based on the information available at this time, it is not possible to reliably estimate the financial effects of this pandemic, including the valuation of financial and non-financial assets and the measurement of expected losses in the loan portfolio that will be prospectively recorded.

– 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 1º Trimestre 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 for employee redundancy programmes of €55,9 million in March 2019 and €61,3 million in March 2020.

Caixadirecta

Caixadirecta

CGD Consolidated Operations

1st Quarter 2020

(unaudited accounts)