• Consolidated Net Income: EUR906 million, a year-on-year growth of 5.9%.
• Core Operating Profit: EUR2.3 billion.
• Net Income in Portugal: EUR86 million, increased by 8.5% year on year.
• Net Income in Poland: EUR167 million, a year-on-year growth of 25%.
• Net Income in Mozambique: EUR48.5 million, a year-on-year decrease of 54%.
• Customer Funds Growth: 8% at the consolidated level, reaching EUR102.9 billion.
• NPE Ratio: Reduced to 3.2%.
• CET1 Ratio: 16.3%.
• Total Capital Ratio: 20.6%.
• Net Interest Income (NII) in Portugal: Decreased by 9% to EUR1,335 million.
• Net Commissions in Portugal: EUR588 million, a growth of 5%.
• Operating Costs in Portugal: EUR673 million, 9% higher than the previous year.
• Cost of Risk in Portugal: 31 basis points.
• Net Profit in International Operations: EUR120 million, a decrease of 8.6%.
• Net Profit in Bank Millennium (Poland): EUR167 million, a growth of 25%.
• Net Profit in Millennium bim (Mozambique): EUR48.5 million, a decrease of 54%.
• Customer Funds in Bank Millennium (Poland): Grew 11% year on year.
• Swiss Franc Mortgage Portfolio Reduction: 26% since December 2023.

• Warning! GuruFocus has detected 8 Warning Sign with BPCGY.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Banco Comercial Portugues SA (BPCGY) reported a consolidated net income of EUR906 million for 2024, marking a year-on-year growth of 5.9%.
• The bank's net income in Portugal increased by 8.5% year-on-year, reaching EUR86 million.
• Customer funds grew by 8% at the consolidated level, reaching EUR102.9 billion, indicating strong business model quality.
• The NPE ratio was reduced to 3.2%, with NPE coverage by total impairment exceeding 80%, showcasing improved asset quality.
• The CET1 ratio improved to 16.3%, and the total capital ratio reached 20.6%, reflecting a solid capital position.

Negative Points

• The Polish market continues to face challenges due to FX loans litigation, impacting banking activities with charges amounting to EUR750 million.
• In Mozambique, net income decreased by 54% year-on-year due to economic challenges and a downgrade of the public debt rating.
• Operating costs in international operations grew by 16.2%, driven by salary dynamics in Poland, which remains a hot job market.
• Net interest income in Portugal decreased by 9% due to increased deposit costs, despite higher income from customer loans and securities.
• The bank's loan portfolio growth remains stable, with no significant increase, particularly in the corporate sector in Portugal.

Q & A Highlights

Q: How much headwinds remain for state guaranteed lines in your corporate loan book in Portugal, and what are your expectations for 2025? A: We anticipate a cumulative annual growth rate of around 5% for the strategic period, although it may be somewhat backward-ended. For 2025, we expect growth in the low single-digit area, with higher growth in subsequent years.

Q: Do you think the net interest income (NII) could have reached its lowest point in the fourth quarter, and what are your expectations for 2025? A: We expect the NII to be broadly flattish in 2025 due to hedges in our book. However, there may be some volatility. For 2026 and beyond, we anticipate NII growth in the low-single-digit area, consistent with some margin compression but supported by credit growth.

Q: Can you explain the increase in costs in Portugal and Poland, and what are your expectations for cost performance going forward? A: In Portugal, costs increased due to variable compensation and salary dynamics. We expect future cost increases to align with low- to mid-single digits. In Poland, costs were influenced by strong wage inflation.

Q: What is your strategy regarding capital usage given the comfortable capital levels? A: We plan to distribute up to 75% of net income while growing risk-weighted assets (RWA) to protect and develop the bank's franchise. If we cannot generate value through growth, we may need to revisit our strategy.

Q: Could you provide more details on the provisions in Mozambique and the potential impact on future results? A: Our provisions are based on the country's rating. If Mozambique's rating deteriorates further, additional provisions may be required. However, we believe this is manageable within the consolidated balance sheet.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.