Banco Comercial Português (BCP) Q2 2024 earnings summary

Executive summary

• Net income for H1 2024 reached €485.3M, up 14.7% year-over-year, driven by strong performance in Portugal and improved risk profile.

• Portugal net income rose 16.2% to €411M; Bank Millennium (Poland) delivered €82.8M despite CHF mortgage charges; Millennium bim (Mozambique) posted €46.8M.

• Customer funds surpassed €100B for the first time, growing 8.9% year-over-year, with mobile customers up 11% to 70% of the base.

• Capital and liquidity positions remain robust, with CET1 at 16.2%, total capital ratio at 20.6%, and LCR at 296%.

• Digital transformation success: app transactions up 26% year-over-year; multiple awards for digital innovation and service quality.

Financial highlights

• Core operating profit for H1 was €1,174.1M, down 2.1% year-over-year due to higher operating costs (+10.3%).

• Net interest income grew 1.7% to €1,397.5M; commissions up 2.3% to €396M.

• Cost-to-income ratio at 35% (H1 2024); operating costs in Portugal up 3.1%, group-wide up 10.3%.

• Cost of risk improved to 34bp from 50bp year-over-year, reflecting impairment reversals.

• Customer funds in Portugal rose 4.6% to €69.1B; international operations saw a 19.4% increase to €17.7B.

Outlook and guidance

• Expectation of stable or slightly increasing earnings in Portugal for 2025, with NII stability supported by volume growth.

• Strategic plan targets cost-to-income ratio of ~40%, cost of risk at 50bp, RoE near 10%, and CET1 above 12.5%.

• Dividend payout for 2024 results to be at least 50%, with potential for higher distributions or buybacks.

• OpEx in Portugal expected to grow at mid-single digits, but net income to remain resilient.

• Bank expects continued growth in customer funds and stable asset quality, with focus on digital transformation and efficiency.