Reuters: BANIF.LS
Bloomberg: BANIF PL
ISIN: PTBAF0AM0002
www.banif.pt/investidores
2015
1H2015
CONSOLIDATED RESULTS
Lisbon, 7 August 2015
Unaudited information
CONSOLIDATED RESULTS: January to June 2015
Highlights:
Positive growth
Significant improvement in business performance has
in net profits...
resulted in a net consolidated profit. Net profits for the
first half of 2015 came to 16.1 million euros. This compares
extremely favourably with the loss of 97.7 million euros
recorded for the same period of the previous year.
Significant
Improvement in net interest income, which rose 25.1%
recovery in net
year-on-year in the first half of 2015, to stand at 55.9 million
interest income
euros. This was largely the result of lower funding costs,
and commissions
particularly as regards deposits. Compared to the previous
quarter, net interest income went up by 24.5% to 31.0 million
euros.
Improvement in net commissions, which increased by
22.0% year-on-year over the first half of 2015, to 34.9
million euros. This performance reflects a business approach
focused on the core segments, the ongoing implementation of
greater commercial assertiveness and is also the result of the
amortization of Government guaranteed bonds.
Structural
Reduction
in
operating
costs,
which fell
by 24.5%
streamlining with
compared to the first half of 2014. This reduction was
a positive impact
achieved across the range of structural costs. Staff costs
in terms of cost
came down by 22.3%, general and administrative costs by
savings
27.3% and amortisations also fell by 29.0%.
Lower level of
Reduction in impairments of 62.6%, year-on-year, to
impairment over
54.0 million euros. Despite this improvement, impairments
the semester
were affected by the provisions for real estate assets
classified as Non-Current Assets Held for Sale.
2
Consolidated Results - 1H2015
Net profits of
Consolidated
16.1 million
compares favourably with the loss of 97.7 million euros
euros
recorded
for
improvement
net
the
profits
first
in
net
half
of
of
16.1
million
2014
interest
and
euros
that
reflects
the
and
net
income
commissions, the significant reduction in structural
costs and in impairments and provisions, as well as the
positive performance of the discontinued operational
units (that includes the capital gain of 49.1 million euros on
the sale of the holding in Banif Mais SGPS, S.A.).
However, it should be noted that, despite this positive
growth, net profits were adversely affected, in year-on-year
terms, by the significant fall in capital gains made on the
disposal of Portuguese public debt securities (90.7 million
euros in the first half of 2014, compared to 44.7 million euros
in the first half of 2015), and was also penalized by the higher
capital losses on the sale of real estate assets, and the higher
provisions for real estate assets (-17.8 million euros in the
first half of 2014, compared to -45.9 million euros in the first
half of 2015). Furthermore, net profits in the 1H2014 had
been positively influenced by the 38 million euros in capital
gains made on the disposal of the write-offs portfolio.
Liquidity at
Stable commercial gap, compared to December 2014, with
comfortable levels
the loans-to-deposits ratio standing at 105.8% (as opposed to
105.5% as at December 2014 and 106.7% for the first
quarter of 2015). ECB funding rose by some 175.6 million
euros between December 2014 and June 2015. However,
since December 2014 until today the exposure to ECB
decreased by around 410 million to 1,259 million euros.
Capital ratio above
As at 30 June 2015, the Common Equity Tier 1 ratio,
regulatory
calculated in accordance with the CRD IV/CRR rules (phasing
requirements
in) stood at 8,4% and the total solvency ratio at 9,4%,
above
the
minimum
levels
required
by
the
regulatory
authorities.
3
Consolidated Results - 1H2015
Key Indicators
Jun-15
Jun-14
D
116.8
189.1
-38.2%
-81.2
-107.5
-24.5%
-29.1
-120.2
-75.8%
-1.4
-17.1
-
-24.6
-8.0
-
36.4
-27.0
-
16.1
-97.7
116.5%
Jun-15
Dec-14
D
105.8%
105.5%
0.3pp
8.4%
8.4%
-
Results
Operating revenues
Operating costs
Loans impairment net of reversals and recovery
Impairment of other financial assets net of reversals and recovery
Impairment of other assets net of reversals and recovery
Income from discontinued operations
Net income
Liquidity
Loans-to-deposits ratio
Capital
Common Equity Tier 1 ratio CRD IV/CRR (phasing in)
Amounts in millions of euros.
4
Consolidated Results - 1H2015
Highlights - 1H2015
Net profit of 16.1 million euros, compared to the 97.7
million euro loss of 1H2014.
Results
Operating income: 116.8 million euros, -38.2%, year-onyear(yoy);
Net Interest Income: 55.9 million euros,
+25.1% yoy;
Net Commissions: 34.9 million euros,
+22.0% yoy;
Gains on Financial Operations: 44.5 million euros, 45.5%, year-on-year(yoy);
Other operating income: -18.9 million euros, which
compares favourably to the 33.4 million euros of the
1st half of 2014.
Operating costs: 81.2 million euros, -24.5%, (yoy);
Net provisions and impairments: 54.0 million euros, 62.6% yoy.
Loan book (net): 6.6 thousand million euros.
Balance Sheet
Total customer resources on the balance sheet: 6.5
thousand million euros.
Loan-to-deposit ratio: 105.8%.
Liquidity
Common Equity Tier 1 ratio As at 30 June 2015 the
Capital
Common Equity Tier 1 ratio, calculated in accordance with
the CRD IV/CRR rules (phasing in), and the total solvency
ratio stood at 8.4% and 9.4%, respectively.
5
Consolidated Results - 1H2015
Balance Sheet
(millions of euros)
Jun-15
Cash and balances at central banks
Dec-14
120.1
113.8
Deposits with banks
76.9
102.9
Financial assets held for trading
35.9
65.1
Financial assets at fair value through profit or loss
49.4
48.8
1,968.0
1,960.8
248.6
250.8
6,637.3
6,855.0
5.6
5.5
Available-for-sale financial assets
Loans and advances to banks
Loans and advances to customers
Held-to-maturity investment securities
Financial assets with repurchase agreements
36.1
26.9
1,502.6
2,154.7
Investment property
712.5
736.5
Other tangible assets
184.7
207.3
Non-current assets held for sale
Intangible assets
12.0
13.4
Investments in associates, affiliates and joint ventures
55.5
146.3
Current tax assets
0.8
1.6
Deferred tax assets
287.2
266.2
Other assets
176.9
169.9
Total Assets
12,110.1
13,125.5
1,669.3
1,493.7
34.4
30.4
Deposits from central banks
Financial liabilities helding for trading
Financial liabilities at fair value through profit or loss
12.8
12.8
359.8
882.5
Customer accounts and other loans
6,270.7
6,499.3
Financial liabilities
1,467.7
1,645.6
892.2
1,130.0
9.7
10.9
Deposits from banks
Non-current liabilities held for sale
Provisions
Current tax liabilities
19.5
3.9
Deferred tax liabilities
50.0
66.2
Instruments representing capital
130.3
130.2
Other subordinated liabilities
268.8
181.6
Other liabilities
228.5
234.9
11,413.7
12,322.0
1,720.7
1,720.7
Issue premiums
199.8
199.8
Revaluation reserves
-11.1
61.4
-1,245.9
-952.2
16.1
-295.4
Total Liabilities
Share capital
Other reserves and retained earnings
Profit for the period
Minority interests
Total Equity
Total Equity + Liabilities
16.8
69.2
696.4
803.5
12,110.1
13,125.5
6
Consolidated Results - 1H2015
Profit and Loss Account
(millions of euros)
Jun/15
Jun/14
Restated
D 15/14
(*)
Interest and similar income
147.8
197.0
-25.0%
Interest and similar expense
-91.9
-152.3
-39.7%
55.9
44.7
25.1%
0.4
0.8
-50.0%
34.9
28.6
22.0%
Net interest income
Dividend income
Net fees and commissions
Gains and losses in financial operations
44.5
81.6
-45.5%
-18.9
33.4
-
116.8
189.1
-38.2%
Personnel costs
-49.6
-63.8
-22.3%
Selling and General Administrative costs
-24.5
-33.7
-27.3%
-7.1
-10.0
-29.0%
35.6
81.6
-56.4%
1.1
0.8
37.5%
-29.1
-120.2
-75.8%
-1.4
-17.1
-91.8%
-24.6
-8.0
-
1.9
-5.9
-
-16.5
-68.8
76.0%
Other operating income
Operating revenue
Depreciation and amortisation
Operating Income
Provisions net of reinstatement and write-offs
Loans impairment net of reversals and recovery
Impairment of other financial assets net of reversals and recovery
Impairment on other assets net of reversals
Equity accounted earnings
Profits before tax
Taxes
Profits after tax
Income from discontinued operations
(*)
Minority interests
Net income for the period
-3.0
-0.7
-
-19.5
-69.5
71.9%
36.4
-27.0
-
-0.8
-1.2
33.3%
16.1
-97.7
116.5%
(*) Group entities Banif - Banco Internacional do Funchal (Brasil), SA, Banif Bank (Malta), PLC, Banco Caboverdiano de
Negócios (BCN) and Banif Mais SGPS are classified as discontinued operational units in the consolidated profit and loss
accounts, as at 30 June 2015 and 2014. In June 30, 2015 Açoreana Seguros was classified in this category.
7
Consolidated Results - 1H2015
Business Summary
Results
In the first half of 2015, Banif made a net profit of 16.1 million euros. This reflects the
measures being implemented under the bank's restructuring programme, which is
designed to completely reshape the business plan and ensure the bank's viability in a
highly challenging economic and regulatory environment.
Over this period, banking income came to 116.8 million euros. This income was
affected by a number of factors, including:
The 25.1% rise in net interest income, to 55.9 million euros. Despite the positive
effect of the policy of reducing deposit cost (currently at 1%), which has improved
significantly over recent quarters, due to changes made to the fundraising policy.
However, net interest income was negatively affected by the following: (i) the effect
of the fall in loan volumes, a consequence of the deleveraging of the non-financial
sectors of the economy and the lowering of spreads on loans; (ii) reference interest
rates that have remained historically low; and (iii) the cost of the interest on the
CoCos, which totalled 6.1 million euros in the first half of 2015.
An increase of 22.0% in commissions (net),
to 34.9 million euros. This positive
performance reflects a business approach focused on core segments, the ongoing
implementation of the operational efficiency drive and is also the result of the
amortization of Government guaranteed bonds.
There was a 45.5% fall in profits from financial operations, which came to
44.5 million euros. This compares with 81.6 million euros in the first half of 2014. The
decrease is largely explained by the lower capital gains made on the sale of fixed
yield Portuguese public debt securities (44.7 million euros in the first half of 2015,
compared to 90.7 million euros over the same period of 2014).
Other operating losses,which came to 18.9 million euros, compared to profits of
33.4 million euros in 1H2014. The losses recorded for the first half of 2015 are largely
the result of the capital losses sustained on the disposal of real estate assets. The
profits made in the same period of the previous year were mostly explained by the
capital gains made on the disposal of the write-offs portfolio.
8
Consolidated Results - 1H2015
Banking Income: Structure
17.7%
38.1%
43.2%
29.9%
0.3%
15.1%
0.4%
47.9%
23.6%
-16.2%
Jun-14 (*)
Jun-15
Net interest margin
Dividend income
Net fees and comissions
Gains and losses in financial operations
Other operating income
(millions of euros)
(*) Restated
Structural costs totalled 81.2 million euros for the first half of 2015. This is 24.5%
lower than in the same period of the previous year and can be attributed to the benefits
accruing from the restructuring process, particularly as regards the accelerated schedule
for branch closures and the staff reorganisation programme. This reduction was achieved
across the full range of structural costs. Staff costs came down by 22.3%, general and
administrative costs by 27.3%. Over the period, amortisations also fell by 29.0%.
Staff costs stood at 49.6 million euros for 1H2015 (that is, 22.3% lower than in
1H2014). Excluding the impact of non-recurring costs arising from the voluntary
redundancy programme, staff costs fell by 15.1% year-on-year.
General administrative costs totalled 24.5 million euros for the first half of 2015, a
year-on-year fall of 27.3%. Excluding the costs associated with the recapitalisation
process, general administrative costs fall by 26.4%, year-on-year. This decrease can be
attributed to the gains in efficiency resulting from the rationalisation and optimisation
strategy being applied to operating procedures and also to the renegotiation of contracts,
the resizing of the distribution network and the reduction in staffing levels.
Amortisations for the period totalled 7.1 million euros at the end of the first half of
the year, 29.0% less than in the previous year. This partly reflects the downsizing of
the bank’s structure and the rationalisation of our investment policy to provide a better
fit to the reshaped business model.
9
Consolidated Results - 1H2015
Net provisions and impairments for the first half of 2015 came to 54.0 million euros,
against the 144.5 million euros recorded for the same period in 2014, a year-on-year
fall of 62.6%. This figure reflects the extra provisions made for real estate assets
classified as held for sale, in the amount of 13.3 million euros (impairment of other
assets). The figures for loans impairment were much better in this half, compared to
the same period of 2014, falling by 91.1 million euros (or -75.8% yoy). This significant
YoY reduction is largely due to the extraordinary impairment related with GES exposure
booked in the 1H2014.
Profits from the discontinued operating units totalled 36.4 million euros as at the
end of the first half of 2015. This figure includes the capital gain, of 49.1 million euros,
made on the sale of the holding in Banif Mais SGPS, S.A. In the first half of 2014, this
item stood at -27 million euros. The group still has the following discontinued operational
units: Banco Banif Brasil, Banif Bank (Malta), Banco Caboverdiano de Negócios and Banif
Mais SGPS, S.A. (which was sold in 2Q2015). On 30 June, Açoreana Seguros was
classified to this category.
Net profits for the first half of 2015 came to 16.1 million euros. These compare
favourably with the loss of 97.7 million euros recorded for the first half of 2014 and
reflect the improvement in net interest income and net commissions, the
significant reduction in structural costs and in impairments and provisions as
well as the positive performance of the discontinued operational units.
However, it should be noted that, despite this positive growth, net profits were adversely
affected, in year-on-year terms, by the significant fall in capital gains made on the
disposal of Portuguese public debt securities (90.7 million euros in the first half of 2014,
compared to 44.7 million euros in the first half of 2015), the increased capital losses on
the sale of real estate assets and the higher provisions for real estate assets (-17.8
million euros in the first half of 2014, compared to -45.9 million euros in the first half of
2015). Net profits in the first half of 2014 had been positively influenced by the 38
million euros in capital gains made on the disposal of the write-offs portfolio.
10
Consolidated Results - 1H2015
Balance Sheet
Net assets stood at 12,110.1 million euros, as at 30 June 2015, 7.7% lower than at the
end of 1H2014.
Gross lending to clients came to 7,658 million euros, as at 30 June 2015, down around
3.1% compared to 31 December 2014. This fall reflects not only the lower demand for
loans in a Portuguese economy that is deleveraging but also the bank's lower exposure to
non-strategic sectors. It is also the result of an increasingly closer scrutiny of client credit
risk, with priority being given to loans to lower risk operations, as a way of improving the
quality of the balance sheet assets.
Nevertheless, it is important to note, in the context of Banif's support for Portuguese
businesses, that the bank is developing a repositioning strategy that will allow it to focus
more closely on the corporate sector (Micro and SME).
Moreover, during the first half of the year Banif focused on strengthening: i) its
positioning in the foreign trade and non-resident businesses, so that it can play an
increasingly important
role
in
the
internationalisation
of
Portuguese
companies,
particularly those in the small and medium enterprise categories, the main drivers of
development in the Portuguese economy, and ii) its relationship with Portuguese
communities abroad, by taking advantage of its foreign network, particularly the offices /
incorporated companies in the USA, Canada, Venezuela and South Africa.
11
Consolidated Results - 1H2015
Gross Lending to Customers
(million euros)
Jun-15
Dec-14
Corporate
3,154
3,292
-4.2%
Individuals
3,345
3,635
-8.0%
Mortgage Loans
2,642
2,740
-3.6%
Consumer Loans
163
338
-51.8%
Other Loans
540
557
-3.1%
D
Others
1,159
979
18.4%
Total
7,658
7,906
-3.1%
679
1,444
-53.0%
8,337
9,350
-10.8%
Discontinued units
(*) The Others item includes loans more than 30 days overdue
Deposits in the first half of 2015 totalled 6,271 million euros, a decrease of 3.5%
compared to December 2014. This can be attributed to the accelerated branch closure
programme (41 branch closures in the first semester).
Banif has continued to follow a funding cost reduction strategy that has focused the offer
on standardised savings products, rather than on term deposits with negotiated rates.
During this period, and in line with the current strategic plan, the bank is continuing to
implement a differentiated support strategy for high value private clients in the private
and affluent segments and continue its commercial support for mass market customers,
particularly in the autonomous regions. This includes a tight focus on customers in the
emigration segment.
“Off-balance sheet” resources totalled 1,748 million euros, as at 30 June 2015.
12
Consolidated Results - 1H2015
Total Customer Resources
(millions of euros)
Total on-balance sheet customer resources
Jun-15
Dec-14
6,492
6,866
-5.4%
6,271
6,499
-3.5%
221
367
-39.8%
1,748
1,718
1.7%
8,240
8,584
-4.0%
642
692
-7.2%
8,882
9,276
-4.2%
Deposits
Other liabilities
Total off-balance sheet customer resources
Total
Discontinued units
Total
D
Loan-to-Deposit Ratio
118.8%
2T14
113.9%
3T14
105.5%
106.7%
105.8%
4T14
1T15
2T15
Excluding discontinued operational units.
As at 30 June 2015, the loan-to-deposit ratio (net credit/deposits) stood at 105.8%.
Equity, before minority interests, fell by 7.4%, compared to December 2014, to stand at
679.6 million euros at the end of June 2015. This fall is largely attributable to the fall, of
72.5 million euros, in revaluation reserves (broadly attributable to the devaluation of
Portuguese public debt securities) and the net profit for the period of 16.1 million euros.
Liquidity Management
The Banif Group’s funding plan for 2015 is based on diversifying its sources of funding,
building longer average maturities for its liabilities and reducing the group’s funding
costs, namely the deposit cost currently stands at 1%.
13
Consolidated Results - 1H2015
A number of transactions took place in the first half of 2015, namely:

an issue of subordinated Tier 2 bonds, in the amount of 80 million euros and with
a maturity of 10 years, fully placed with the bank’s own clients in January.

a senior debt issue, with a maturity of 3 years and paying a fixed rate of 2.5%, in
the amount of 30 million dollars, placed with clients in February.

the placement, in March, of 336 million euros in securities (demand for which
came to 467 million euros) in relation to a securitisation operation called Atlantes
Mortgage 3, comprising mortgage loans made by Banif in Portugal. This issue has
a maturity of approximately 8 years and was placed at a cost of Euribor 3M +
1.20%.
The bank also repaid two treasury bond issues that matured on 31 May, in a total
amount of 57 million euros.
The disposal of Banif Mais SGPS, S.A., on 4 June, had a positive impact on liquidity of
540 million euros.
Since December 2014 until today the exposure to ECB decreased by around 410 million
to 1,259 million euros. In June 2015, the value of the free assets in the ECB pool stood
at 539 million euros.
30 June 2014
Total resources: 31 December 2014
6%
9%
9%
6%
5%
50%
Recursos de clientes
Bancos centrais
15%
8%
15%
52%
Dívida própria
11%
Recursos de unidades descontinuadas
14%
Capitais próprios
Outros recursos
14
Consolidated Results - 1H2015
Solvency
As at 30 June 2015, the Common Equity Tier 1 ratio, calculated in accordance with the
CRD IV/CRR rules (phasing in) stood at 8,4% and the total solvency ratio at 9,4%, above
the minimum levels required by the regulatory authorities.
15
Consolidated Results - 1H2015
Commercial network and Staffing
There were 41 fewer bank branches in Portugal in June 2015 than there were in
December 2014.
As regards staffing numbers, 2,267 people were employed by the group, as at June
2015. This compares with a staff complement of 2,733 as at December 2014, a reduction
of 17.1% (or -24% less than at the end of 1H2014, when the group had 2,980
employees). Banif S.A. (domestic business), ended the first half of 2015 with 1,802
employees which compares to 1,935 employees it had in December 2014 and 2,147 it
had at the end of the 1H2014. This translates into a fall of 7% and 16.1%, respectively.
16
Consolidated Results - 1H2015
Key Events in 2015
12 January 2015: Public offering of subscription and listing for trading of up to 80
million euros in subordinated bonds, under the basic prospectus for public offerings
for the distribution and/or listing for trading of debt securities.
30 January 2015: Announcement regarding the full early repayment of the issue of
45 million euros of Senior Fixed Yield EUR 2014/2017 Bonds and the issue of 44.4
million dollars in Senior Fixed Yield USD 2014/2017 Bonds.
3 February 2015: Public offering of subscription of up to 30,000 senior bonds, worth
up to a total of 30,000,000 USD, under the basic prospectus for public offerings for
the distribution and/or listing for trading of debt securities.
5 March 2015: Placement on the international market of an issue of 336 million euros
in securities (demand for which came to 467 million euros) in relation to a
securitisation operation called Atlantes Mortgage 3, comprising mortgage loans made
by Banif in Portugal. The issue, with a maturity of approximately 8 years, was placed
at a cost of Euribor 3M + 1.2%. Ratings of “A”, “A+” and “AA” were attributed to the
issue, by Standard & Poor’s, Fitch and DBRS, respectively.
7 May 2015: Publication of the call to the general shareholders meeting, to be held
on 29 May 2015.
25 May 2015: Announcement regarding the full early repayment of the issue of
50,000 Senior Fixed Yield USD 2013/2016 Bonds.
4 June 2015: Announcement regarding the completion of the sale of the Banif –
Banco Internacional do Funchal, S.A. holding in Banif Mais SGPS, S.A.
6 July 2015: Placement on the international market of an issue of 440 million euros in
securities (for which demand came to 543 million euros), issued by Banif’s subsidiary
Gamma – Sociedade de Titularização de Créditos, S.A. This issue related to a
securitisation operation called Atlantes SME 5, comprising mortgage loans made by
Banif in Portugal. The issue was placed at a cost of Euribor 3M + 1.2% and was
attributed an “A-” rating by Standard & Poor’s and an “A3” rating by Moody’s.
17
Consolidated Results - 1H2015
24 July 2015: The European Commission announced the opening of an in-depth
investigation into the compatibility between the support provided by the state to Banif
and European rules on state support.
4 August 2015: Publication of the call to the continuation of the general shareholders
meeting of 29 May 2015, to be held on 29 August 2015.
The Board of Directors
Banif – Banco Internacional do Funchal, SA
Limited Liability Company
Registered Office: Rua de João Tavira, 30 – 9004-509 Funchal
Share Capital: 1,720,700,000 euros
Single Registration and Corporate Taxpayer Number 511 202 008
18
Consolidated Results - 1H2015