Full Year 2024 Banco Comercial Portugues SA Earnings Call

February 27, 2025

Speaker Change: Good day and thank you for standing by. Welcome to the Millennium BCP Full Year 2024 Earnings Conference Call.

At this time, all participants are in a listen-only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please advise that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mr. Miguel Maya. Please go ahead.

Miguel Maya: Good afternoon. This is Miguel Maya speaking. Welcome to BCP Earnings Conference Call. As usual, I will highlight the main aspects of our performance in 2024, and then Miguel de Bragança and Bernardo Collaço will provide more details. Last year proved to be challenging on multiple levels with a global context marked by conflict and geopolitical tensions. The economy in our core markets showed different performance. Both in Portugal and Poland recorded significant growth levels, standing out from the many European economies, having also low unemployment levels and controlled inflation. In the Polish market, the FX loans litigation continued to impact the banking activity. Those countries continued to present prospects for sustained growth. On the other hand, the economy in Mozambique was affected by the relevant reduction in activity in the last quarter in the context of tensions that erupted during the transition of the presidency.

Speaker Change: Good afternoon. This is Miguel Maia speaking. Welcome to BCP Earnings Conference Call. As usual, I will highlight the main aspects of our performance in 2024 and then Miguel Vargas and Bernard Pulas will provide more details.

Speaker Change: Last year proved to be challenging on multiple levels with a global context marked by conflict and geopolitical tensions.

Speaker Change: The economy in our core markets shown different performance, both in Portugal and Poland recorded significant growth levels, standing out from the main European economies, having also low unemployment levels and controlled inflation.

Speaker Change: In the Polish market, the FX loans litigation continue to impact the banking activity. Those countries continue to present prospects for sustained growth.

Speaker Change: On the other hand, the economy in Mozambique was affected by the relevant reduction in activity in the last quarter in the context of tensions that erupted during the transition of the presidency.

Miguel Maya: We are confident that the Mozambican people will create conditions that foster a stable institutional framework and promote economic development and social cohesion. In this context, our consolidated net income in 2024 exceeded EUR 906 million, representing a year-on-year growth of 5.9%, supported by robust commercial activity that generated a core operating profit of EUR 2.3 billion in a competitive environment with increased pressure on the net interest income in Portugal due to the increase in the cost of deposits. Our commercial activity, combined with a robust balance sheets, stronger operative efficiency, and benefiting from the normalization of the cost of risk, continues to support a firm growth trajectory of net income in Portugal, which exceeded EUR 786 million, having increased by 8.5% year-on-year.

Speaker Change: We are confident that the Muslim people will create conditions that foster a stable institutional framework and promote economic development and social cohesion.

Speaker Change: In this context, our consolidated net income in 2024 exceeded $906 million, representing a year-on-year growth of 5.9%, supported by robust commercial activity that generated a core operating profit of $2.3 billion.

Speaker Change: in a competitive environment with increased pressure on the net interest income in Portugal due to the increase in the cost of deposits.

Our commercial activity, combined with the robust balance sheets,

Speaker Change: strong operative efficiency and benefiting from the normalization of the cost of risk, continues to support a firm growth trajectory of net income in Portugal, which exceeded 786 million, having increased by 8.5% year on year.

Miguel Maya: In Poland, despite still being significantly affected by the charges with FX legal risks amounting to EUR 750 million and costs of EUR 26 million with the credit holidays, Bank Millennium recorded a net income of EUR 167 million, a year-over-year growth of 25%, confirming the bank's ability to simultaneously deal with legacy risks and expand the business activity. In Mozambique, Millennium BIM's net income was EUR 48.5 million, a year-over-year decrease of 54%, largely due to the complex context in the last quarter that I previously mentioned, which led to the downgrade of the public debt rating with the consequent constitution of provisions. It is also worth noting that the results in 2023 had benefited from a significant recovery of impairments obtained from a specific client.

Speaker Change: In Poland, despite still being significantly affected by the charges with effects legal risks amounting to 750 million and costs of 26 million with the credit holidays,

Speaker Change: Bank Millennium recorded a net income of $167 million, a year-on-year growth of 25%, confirming the bank's ability to simultaneously deal with legacy risks and expand the business activity.

In Mozambique, Millennial BEAM's net income was $48.5 million.

Speaker Change: A year-on-year decrease of 54%, largely due to the complex context in the last quarter that I previously mentioned, which led to the downgrade of the public debt rating with the consequent constitution of provisions.

Speaker Change: It is also worth noting that the results in 2023 had benefited from a significant recovery of impairments obtained from a specific client.

Miguel Maya: We have a very good and solid operation in Mozambique, a reference bank in the market, a very resilient and with high operational efficiency and based on a low risk business model, well-positioned to grow with the opportunities associated with the normalization of economic activity and the development of structural projects. In an extremely competitive environment in the various markets in which we operate, customer funds grew by 8% at the consolidated level, reaching EUR 102.9 billion, which is a clear indicator of the quality of our business models. At the same time, we continue the trajectory of improving asset quality, having made reductions of EUR 127 million in NPE and EUR 52 million in foreclosed assets.

We have a very good and solid operation in Mozambique.

Speaker Change: a reference bank in the market, very resilient and with high operational efficiency and based on a low-risk business model, well positioned to grow with the opportunities associated with the normalization of economic activity and the development of structural projects.

Speaker Change: In an extremely competitive environment in the various markets in which we operate, customer funds grew by 8% at the consolidated level, reaching more than 2.9 billion, which is a clear indicator of the quality of our business models.

Speaker Change: At the same time, we continue the trajectory of improving asset quality, having made reductions of 127 million in NPE and 52 million in foreclosed assets.

Miguel Maya: The NPE ratio was reduced to 3.2%, with NPE coverage by total impairment exceeding 80% and rising to 120% if real estate collateral is considered. A rigorous balance sheet risk management has led us to maintain a cost of risk consistently below 50 basis points. The profitability achieved is reflected in high levels of organic capital generation with a solid capital position. CET1 ratio of 16.3% and total capital ratio at 20.6%, representing an increase of 89 basis points and 72 basis points respectively, with these ratios already considering a share buyback of EUR 200 million and a payout of 50%.

Speaker Change: The NPE radio was reduced to 3.2% with NPE coverage by total impairment exceeding 80% and rising to 120 if real estate collateral is considered.

Speaker Change: A rigorous balance sheet risk management has led us to maintain a control risk cost consistently below 50 basis points.

Speaker Change: The profitability achieved is reflected in high levels of organic capital generation with a solid capital position.

Speaker Change: CE Tier 1 ratio of 16.3% and total capital ratio at 20.6%.

Speaker Change: representing an increase of 89 basis points and 72 basis points, respectively, with these ratios already considering a share buyback of $200 million and a payout of 50%.

Miguel Maya: In the previous quarter, when we presented the strategic priorities for the next cycle, we announced that one of the core dimensions would be delivering more value to shareholders with a share buyback program that will complement the dividend payout up to 75% subject to the restrictions mentioned in the plan. In this sense, we submitted a request to the supervisor to execute initial share buyback amounting to EUR 200 million, which was authorized, so we'll soon start the program. Our vitality and growth potential are well demonstrated by our ability to sustainably expand the customer base. We have almost reached the mark of 7 million customers, of which 2.7 in Portugal. The growth rate is even more noticeable at the level of mobile customers, which increased by 10% year-over-year and already reached about 5 million, of which 1.7 in Portugal.

Speaker Change: In the previous quarter, when we presented the strategic priorities for the next cycle, we announced that one of the core dimensions would be delivering more value to shareholders.

Speaker Change: with a share buyback program that will complement the dividend payout up to 75% subject to the restrictions mentioned in the plan.

Speaker Change: In this sense, we submitted a request to the supervisor to execute the initial share buyback amounting to 200 million, which was authorized, so we will soon start the program.

Speaker Change: Our vitality and growth potential are well demonstrated by our ability to sustainably expand the customer base. We have almost reached the mark of 7 million customers of which 2.7 in Portugal.

Speaker Change: But the growth rate is even more noticeable at the level of mobile customers, which increased by 10% year-on-year and already reached about 5 million, of which 1.7 in Porkville.

Miguel Maya: Mobile customers does represent 71% of our customer base, 63% in Portugal, an important indicator of our digital capabilities and the bank's readiness to meet customer expectations, who continue to distinguish us as the preferred bank of adults and the main bank for companies in Portugal. The strong focus on innovation centered on customer needs translates into increasing levels of usage and sales through the mobile channels. Last year, customers made 20% more transactions through the app, with significant increases in transfers and payments. The priority we give to investment in innovation is reflected in an increase of digital interactions and increased relevance of digital channels in sales. Sales through the app increased by 32% year on year, with a particular emphasis on the increase in savings solutions, which increased by 37%, and cards, which increased by 24%.

Mobile customers does represent 71% of our customer base.

Speaker Change: 63% in Portugal, an important indicator of our digital capabilities and the bank's readiness to meet customer expectations will continue to distinguish us as the preferred bank of us all and the main bank for companies in Portugal.

Speaker Change: The strong focus on innovation centered on customer needs translates into increasing levels of usage and sales through the mobile channels.

Speaker Change: Last year, customers made 20% more transactions through the app, with significant increases in transfers and payments.

Speaker Change: The priority we give to investment in innovation is reflected in an increase of digital interactions and increased relevance of digital channels in sales.

Speaker Change: Sales through the app increased by 32% year-on-year, with a particular emphasis on the increase in savings solutions, which increased by 37%, and cards, which increased by 24%.

Miguel Maya: Because 2024 was the year in which the previous strategic plan was formally concluded, which was fully achieved more than a year in advance before handing over to Miguel de Bragança, it is worth recalling the evolution of BCP share throughout the plan. In 2021, at the beginning of the plan, we were still dealing with economic impact of the restrictions and uncertainties resulting from the pandemic, exacerbated in Poland by the risks associated with the FX loans. During the pandemic period, BCP stock depreciated by 26%, broadly in line with the Spanish and Italian counterparts. This was followed by a period of increased instability, especially in Polish market, where credit holidays were added to greater provision efforts for FX loans, which triggered the activation of the recovery plan at Bank Millennium in 2022.

Speaker Change: Because 2024 was the year in which the previous strategic plan was formally concluded, which was fully achieved more than a year in advance,

Speaker Change: Before handing over to Miguel Braganza, it is worth recalling the evolution of BCP share throughout the plan.

Speaker Change: In 2021, at the beginning of the plan, we were still dealing with the economic impact of the restrictions and uncertainties resulting from the pandemic, exacerbated in Poland by the risks associated with the FX loans.

Speaker Change: During the pandemic period, BCP stock depreciated by 26% in line, broadly in line with the Spanish and Italian counterparts.

Speaker Change: This was followed by a period of increasing stability, especially in the Polish market where credit holidays were added to greater provision efforts for FX loans, which triggered the activation of the recovery plan at Bank Millennium in 2022.

Miguel Maya: The successful implementation of this recovery plan in Poland, along with the intense commercial activity and continuous improvement in balance sheet quality in Portugal, contributed to a significant strengthening of the balance sheet and profitability generation, which allowed the reinforcement of capital to levels comfortably above requirements, achieved exclusively through organic measures. We enter the period of normalization of the activity of the bank, with profitability levels reflected in the improvement of the risk profile and stock performance. 2023 was, thus, a year of transition in which, supported by improved profitability, especially in the Portuguese operation, we anticipated the achievement of the goals we have committed for 2024.

Speaker Change: The successful implementation of this recovery plan in Poland, along with the intense commercial activity and continuous improvement in balance sheet quality in Portugal,

Speaker Change: contributed to a significant strengthening of the balance sheets and profitability generation, which allow the reinforcements of capital to levels comfortably above requirements achieved exclusively through organic measures.

Speaker Change: We enter the period of normalization of the activity of the bank, with profitability levels reflected in the improvement of the risk profile and stock performance.

Speaker Change: 2023 was thus a year of transition in which support by improved profitability especially in the Portuguese operation, we anticipated the achievement of the goals we have committed for 2024.

Miguel Maya: We gained investment grade rating from all the main rating agencies, and BCP's stock stood out in the European sector, appreciating by more than 87% and widely surpassing the index appreciation that year, which was 20.3%. We concluded 2024 with a profitable business model, a benchmark in terms of operational efficiency, a robust balance sheet prepared to face the future with confidence, and with an ambitious strategic plan in place. As a result of the bank's trajectory, we obtained new rating upgrades, and BCP stock appreciated by 69% in 2024, again outperforming the sector, the European index sector, which appreciated by 26%. We are starting a new stage in the bank's life. We are confident that once again, we will be successful. Miguel, hand it over to you to proceed with the presentation.

Speaker Change: regained investment-grade rating from all the main rating agencies and BCP stocks stood out in the European sector appreciating by more than 87% and widely surpassing the index appreciation that year which was 20.3%.

Speaker Change: We concluded 2024 with a profitable business model, a benchmark in terms of operational efficiency.

Speaker Change: a robust balance sheet prepared to face the future with confidence and with an ambitious strategic plan in place.

Speaker Change: As a result of the bank's trajectory, we obtained new rating upgrades and BCP stock appreciated

Speaker Change: European index sector, which appreciates by 26%. We are starting a new stage in the bank's life. We are confident that once again we will be successful. Miguel, I hand it over to you to proceed with the presentation.

Miguel de Bragança: Thank you very much, Miguel. As usual, I will frame here the presentation in terms of the evolution of the bank. As you see in page 10, the net interest income of the bank evolved 0.2% with some margin compression due to the interest rate developments in several geographies, but still presenting a net interest margin above 3%. As you may see in Portugal, there was a margin compression from 2.6 to 2.2. Still a very interesting margin compression for a mature European market, which explains, to a large extent, the decrease in our NII in the high single-digit area as we had anticipated in the beginning of the year.

Thank you very much, you know

Miguel: As usual, I will frame here the presentation in terms of the evolution of the bank.

Speaker Change: As you see in page 10, the net interest income of the bank.

Speaker Change: evolved 0.2% with some margin compression due to the interest rate development in several geographies, but still above, presenting a net interest margin above 3%.

Speaker Change: still a very interesting margin compression for a mature European market which explains to a large extent the decrease in our NII in the high single digit area as we had anticipated in the beginning of the year. We always said that based on our projections

Miguel de Bragança: We always said that based on our projections, our NII in Portugal would reduce in the high single-digit area, and that's what has occurred. In the international operations, the margin increased by almost 10% in spite of some margin compression. Also, due to the high level of interest rates in the several geographies in which we are present. In terms of fees and commissions, a very positive evolution, both in Portugal and international operations, with the fees in Portugal growing in the mid-single-digit area, 5%, as we had anticipated also in the beginning of the year, and international operations at a level of 4.2%.

Speaker Change: our NII in Portugal would be, would reduce in the high single digit area and that's what has occurred.

Speaker Change: In the international operations, the margin increased by almost 10% in spite of some margin compression also due to the high level of interest rates in the several geographies in which we are present.

Speaker Change: In terms of fees and commissions, a very positive evolution, both in Portugal and international operations, with the fees in Portugal going in the mid-single-digit area, 5%, as we had anticipated also in the beginning of the year, and international operations at the level of 4.2%.

Miguel de Bragança: These fees have evolved positively, both in terms of market-related fees and commissions, which are particularly more difficult in situations in which the term deposits give a very positive yield, and in terms of banking fees and commissions. In terms of other income, here we had an extraordinary gain last year, as you may recall, to some extent due to a capital management deal in terms of sale of Millennium Financial Services, which was our insurance brokerage unit, to a strategic partner. The fact that we had this capital gain last year explains, to a large extent, the decrease that we are having this year.

Speaker Change: These fees have evolved positively, both in terms of market-related fees and commissions, which are particularly more difficult in situations in which the term deposits

Speaker Change: give a very positive yield and in terms of banking fees and commissions.

Bye.

Speaker Change: In terms of other income, here we had an extraordinary gain last year as you may recall.

Thank you.

Speaker Change: to some extent due to a capital management deal in terms of the sale of Millennium Financial Services, which was our...

Insurance brokerage

unit

Thank you.

Speaker Change: to a strategic partner, the fact that we had this capital gain last year explains.

Speaker Change: to a large extent, the decrease that we are having this year. Also, the regulatory contributions, mainly in Poland, in which we...

Miguel de Bragança: Also, the regulatory contributions, mainly in Poland, in which we somehow benefited from the fact that we were under a specific circumstance that gave us an exemption in terms of some contributions, also explains the additional costs that we have this year as in the process of normalization of the bank. I'm sorry. In terms of operating costs, we grew in the international operations at a very high level, at 16.2%, to a large extent explained by the salary dynamics in Poland. As you may know, the job market in Poland is very hot, with consecutive years of double-digit increases in terms of minimum wage. In spite of that, there is almost no unemployment in Poland, so the economy is performing very well, but it has these side effects.

Speaker Change: somehow benefited from the fact that we were under a specific circumstance that gave us an exemption in terms of some contributions also explains the additional costs that we have this year as a in the process of normalization of the bank.

Thank you.

I'm sorry.

Bye-bye.

in terms of operating costs.

We we grew in the international operations

Speaker Change: at the very high level at 16.2% to a large extent explained

Speaker Change: by the salary dynamics in Poland. As you may know, the job market in Poland is very hot with consecutive years of double-digit increases in terms of minimum wage.

Speaker Change: In spite of that, there is almost no unemployment in Poland, so the economy is performing very well.

Miguel de Bragança: In Portugal, we also have a high increase in terms of the costs, mainly in the last quarter, to a large extent explained by the overachievement of the budget. As you know, our guide, the guidance that we have given beforehand was that 2024 would be aligned with 2023. The fact that the performance was significantly higher than was anticipated in a context of many years of low variable remuneration and clearly below par total remuneration in some areas of the bank made it possible for us to converge with the market in terms of variable remuneration, incentives, bonuses, which explains also the increase in the last part of the year.

Speaker Change: It has these side effects and in Portugal we also have a high increase in terms of the costs, mainly in the last quarter, to a large extent explained.

Speaker Change: by the overachievement of the budget. As you know, the guidance that we have given on beforehand was that

Speaker Change: 2024 would be aligned with 2023, the fact that the performance was...

Speaker Change: significantly higher than was anticipated in a context of many years of low variable remuneration and clearly below

Speaker Change: par total remuneration in some areas of the bank, made it possible to us to converge with the market in terms of variable remuneration, in terms of bonuses, which explains also the increase in the last...

Miguel de Bragança: Still, and I have to stress this, the bank in Portugal is presenting a cost to income of 34% over the year, still more efficient than what we are anticipating across the curve as normal. As we all know, that we are analyzing banks for a long time, this type of cost to incomes are clearly benchmark in Europe, mainly across the cycle. Cost of risk. We are clearly benefiting from what we have done in the past in terms of cleaning up of the balance sheet and reduction of NPEs. This year was an exceptional year because we had a special recovery that affected the cost of risk of the year in Portugal at 30, decreasing from 54 to 31 basis points.

Speaker Change: part of the year. Still, and I have to stress this, the Bank in Portugal is presenting a cost-to-income of 34% over the year, still more efficient than what we are anticipating.

Speaker Change: across the curve, as normal. As we all know, that we are analyzing banks for a long time, these type of cost-to-income are clearly benchmarked in Europe, mainly across the cycle.

Cost of risk.

Speaker Change: We are clearly benefiting from what we have done in the past.

Speaker Change: in terms of cleaning up of the balance sheet and reduction of NPEs. This year was an exceptional year because we had a special recovery that affected.

Speaker Change: the cost of risk of the year in Portugal at a 30, decreasing from 54 to 31 by this point. We feel very confident that with the type of balance sheet that we have today for the foreseeable quarters.

Miguel de Bragança: We feel very confident that with the type of balance sheet that we have today for the foreseeable quarters, except in the context of, I would say, a very stressed scenario, that we will be able to have a consistent cost of risk in the next quarters below 40 basis points in Portugal. In terms of the international operations, there was also a positive evolution with a presentation of 33 basis points of cost of risk to some extent also because there is also some benefit in terms of cost of risk of the fact that we are providing for the Swiss franc mortgages that, of course, if we provide as operational risk, we do not provide as a normal credit risk, so to say.

Speaker Change: except in the in the context of I would say a very stressed scenario that we will be able to have a consistent cost of risk in the next quarters below 40 basis points.

Keep watching.

Speaker Change: In terms of the international operations, there was also a positive evolution with a presentation of 33 basis points of cost of risk.

to some extent also because...

There's also some benefit in terms of cost of risk.

of the fact that we are providing.

Speaker Change: for the Swiss franc mortgages that of course if we provide as operational risk we do not provide as as a normal credit risk so to say.

Miguel de Bragança: There is here a continuous decrease of NPEs. Right now, in terms of the hard NPE, so to say, the really non-performing loans that are already 90 days past due, at group level, we are at 1.4%. We are being able to maintain levels below 1.5% already for more than 2 years in a row. In terms of the NPE ratio, it's 3.2%. Including off-balance sheet risks and securities, we are already below 2%. This is exactly what gives us confidence in terms of the possibility to maintain a much lower cost of risk in the next quarters, much more aligned with what we are seeing in our competitors than what we had in the previous quarters.

There is here a continuous decrease of NPEs.

Speaker Change: Right now, in terms of the hard MPEs, so to say, the really non-performing loans that are already 90 days past due.

Speaker Change: At group level, we are at 1.4%, so we are being able to maintain...

levels below 1.5%.

Speaker Change: already for more than two years in a row, in terms of the NPE ratio.

Speaker Change: at 3.2% and including off-balance sheet risks and securities we are already below 2%.

Speaker Change: This is exactly what gives us confidence in terms of the possibility to maintain a much lower cost of risk in the next quarter, much more aligned with what we are seeing in our competitors than what we had in the previous quarters.

Miguel de Bragança: In terms of business activities, very importantly, the bank shows strong signs of development of the franchise, strong signs of growth in terms of funds. In terms of customer funds, a growth of 8% in terms of total customer funds. In terms of balance sheets, on balance sheet customer funds, almost, also almost 8%, 7.7%. This is both in Portugal and international operations, a very good performance, because in Portugal, we are speaking about 6% total customer funds and on-balance sheet funds, broadly, and international operations growing around 13% in terms of customer funds. Customer funds have been a very positive development of our franchise and a very important lever for the profitability of the bank, given the margin that was possible to obtain in this business.

in terms of business activities.

very importantly the bank shows

strong signs of development of the franchise.

strong signs of growth in terms of funds.

in terms of customer funds, a growth of 8%.

in terms of total customer funds.

in terms of on-balance-sheet customer funds.

Speaker Change: also almost 8 percent, 7.7 percent, and this is both in Portugal and international operations a very good performance because in Portugal we are speaking about 6 percent total customer funds and unbalanced sheet funds, broadly, and international operations growing around 13 percent in terms of customer funds.

Speaker Change: Customer funds have been a very positive development of our franchise and a very important lever for the profitability of the bank given the margin that was possible to obtain in this business.

Miguel de Bragança: On the other hand, in terms of loan portfolio, we are stable. We're not growing yet at the pace at which we would like to grow. This is to some extent also linked to less growth, mainly in the corporate area in Portugal, general corporate growth. And also because of the price discipline that we inject in all our decisions, where we always compare credit with our cost of funding and with the alternative of investing either in the ECB or in European sovereign government debt.

Speaker Change: On the other hand, in terms of loan portfolio, we are stable, we are not growing yet at the pace at which we are.

which we would like to grow.

Speaker Change: This is to some extent also linked to less growth mainly in the corporate area in Portugal, general corporate growth, and also...

Speaker Change: because of the price discipline that we inject in all our decisions where we always compare.

credit.

Speaker Change: with our cost of funding and with the alternative of investing either in the ECB or in European sovereign government debt. And we are able, we have been able to invest

Miguel de Bragança: We are able, we have been able to invest the funds obtained through the high customer funds growth that we are presenting at very attractive rates in terms of the sovereign portfolio and in terms of the ECB, sometimes at better risk return opportunities as in credit business. In terms of capital and liquidity, here comparing with the benchmark and with what the market was anticipating, we are able here to present a CET1 ratio of 16.3% already adjusted for the share buyback that represents around 50 basis points. Adjusting for the share buyback, this value would be 16.8%, which is clearly above the projections of most analysts. This has, I mean, many reasons.

the fans obtained through the high customer fans.

Speaker Change: growth that we are presenting at very attractive rates in terms of

Speaker Change: the sovereign portfolio and in terms of the ECB, sometimes at better risk-return opportunities as in credit business.

in terms of capital and liquidity.

here comparing with

with the benchmark and with what was the market.

anticipating we are able here to present.

CT1 ratio of 16.3%, already adjusted.

Speaker Change: for the share buyback that represents around 50 by this point, so adjusting for the share buyback this value would be 60.8%

which is clearly above the projections of most analysts.

Speaker Change: These have, I mean, many reasons. One is the profitability that was higher. The other that is not so good was that the credit growth that was somehow lower than what we were expecting.

Miguel de Bragança: One is the profitability that was higher. The other that is not so good was that the credit growth that was somehow lower than what we were expecting. There are these two sides of the coin. Looking forward, as you know, we have presented a plan that, in October of last year, a strategic plan that clearly states that we want to converge to a value of capital above 13.5, so with a buffer above 13.5.

So there are these two sides of the coin.

Looking forward, as you know, we have presented a plan.

that in October of last year, a strategic plan

that clearly.

Speaker Change: states that we want to convert to a value of capital.

above.

Speaker Change: 13.5 so with the buffer above 13.5 most of this growth or most of the way we want to converge

Miguel de Bragança: Most of this growth, or most of the way we want to converge to this value, as presented in the plan, is through a much higher distribution to the shareholders, the distribution of up to 75% of the net income to shareholders, with a 50% payout plus up to 25% share buyback, which we are already starting, so to say. This plan has also an important element that is a high growth of credit and the high growth of risk-weighted assets that, of course, will make the bank larger and structurally more profitable over time. This higher growth will be of RWAs and credit, will be somewhat back-ended as we are seeing it.

Speaker Change: to this value as presented in the plan is through a much higher distribution to the shareholders, a distribution of up to 75% of the net income to shareholders with a 50% payout plus a 25%.

Speaker Change: was up to 25% share by VEC which we are already starting so to say.

Speaker Change: But this plan has also an important element that is a high growth of credit and a high growth of risk-weighted assets that of course will make the bank.

larger and structurally more profitable over time.

Speaker Change: These higher roles will be of other ways and credit will be somewhat backward-ended.

Miguel de Bragança: It is normal that the capital ratio will evolve more positively, so to say, in the first quarters than in the quarters in which our RWA growth and our credit growth will be larger. An important point here that I would like to stress is that we have been doing, since the last quarter, several simulations in terms of the CRR3. It is clear, as I have already stated several times, that in terms of the credit RWAs, we do not expect any material impacts. On the other hand, in terms of the operational risk RWAs, there are still some doubts because there are still some clarifications to be obtained.

Speaker Change: as we are seeing it, so it is normal that the capital ratio will evolve more positively, so to say, in the first quarters than in the quarters in which our RWA growth and our credit growth will be larger.

Speaker Change: So, an important point here that I would like to stress.

Speaker Change: is that we have been doing, since the last quarter, several simulations in terms of the CRR3. It is clear, as I have already stated several times, that in terms of the credit RWAs, we do not expect any material impacts.

Speaker Change: On the other hand, in terms of the operational risk of RWAs, there are still some doubts because there are still some...

Miguel de Bragança: However, in terms of our best estimate as of today, mainly due to the Swiss franc risk costs in Poland, we are expecting an impact of around 50 basis points at consolidated level, which over time, as you know, this is a moving average of three years. Over time, we'll mostly fade away because as the provisions for Swiss franc decrease, this charge will also decrease. In the timeframe of our strategic plan, we do not think that this will be especially relevant. As you know, here on page 21, a very comfortable leverage ratio, also because of the type of models that we have that are quite conservative in terms of capital.

clarifications to be obtained. However, in terms of our best...

estimate as of today, mainly due to the

Speaker Change: Swiss franc risk costs in Poland, we are expecting an impact.

of around 50 basis points.

Speaker Change: consolidated level, which over time, as you know this is a moving average of three years, over time will mostly fade away because as the as the provisions for Swiss franc decrease, this is also this charge will also decrease so in the in the

Speaker Change: in the time frame of our strategic plan, we do not think that this will be specially relevant.

Yeah.

Speaker Change: As you know here in page 21, a very comfortable leverage ratio, also because of the type of models that we have that are quite conservative in terms of capital.

Miguel de Bragança: As we've seen now with the implementation of CRR3, that really points out that we have no impacts from the input floor and from the output floor and so on. With quite high RWA density, that is a testimony to the, I would say, the conservativeness of our capital models. MREL requirement clearly above the MREL. As you said, the MREL plus CBR at 29.17 as a requirement and as 34.4 as real value. In terms of our leverage ratio, almost twice the value also. Nothing to worry about in this. In terms of the pension fund, still with the coverage above 100%, which means that we still have here a buffer before any type of impact on the pension fund affect our capital.

Speaker Change: As we've seen now with the implementation of CRR3 that really points out that we have no impact from the input flow and from the output flow and so on, and with quite high RWA density that is a testimony to the conservativeness of our capital models.

Speaker Change: real value in terms of the LRE almost twice the value also.

nothing

to worry about in this.

Speaker Change: In terms of the pension fund still with the coverage above 100% which means that we still have a buffer before any type of impact on the pension fund.

affect our capital.

Miguel de Bragança: This year, contrary to last year, the fund profitability has not been particularly positive, mainly because of some parts of the equity part. On the other hand, it was not possible to match totally the evolution of the liabilities. On the other hand, with the salary pressure that we've had, the evolution of the pension fund assumptions in terms of salary have also taken their toll in terms of the growth of the liabilities. In any case, no material impact in terms of equity this year.

Speaker Change: This year, contrary to last year, the fund profitability has not...

being particularly positive, mainly.

Speaker Change: because of some parts of the equity part, on the other hand, so it was not possible to match totally the evolution of the liabilities.

On the other hand, the...

Speaker Change: With the salary pressure that we've had, the evolution of the pension fund assumptions in terms of salary have also taken their toll in terms of the growth of the liabilities. In any case, no material impact in terms of equity this year.

Miguel de Bragança: Liquidity ratios, very, very comfortable, as you see here, 342% LCR and 181% Net Stable Funding Ratio, with a very comfortable liquidity excess at ECB, more than EUR 30 billion of eligible assets, clearly above the non-guaranteed deposits and so on. Very, very comfortable situation. I'll pass now the floor here to Bernardo Collaço.

Liquidity ratios.

Speaker Change: Very, very comfortable as you see here, 342% LCR and 181% net stable funded ratio, with a very comfortable liquidity access at the ECB, more than 30 billion of eligible assets, clearly above the non-guaranteed deposits and so on.

Speaker Change: very, very comfortable situation. I'll pass now the floor here to Bogdan.

Thank you.

Bernardo Collaço: Thank you, Miguel, and good afternoon, ladies and gentlemen. I will start, as usual, on page 26, and it's regarding Portugal. As you can see, net income amounted to EUR 786 million in 2024. That corresponds to an increase of 8.5% compared with last year. For this favorable evolution, I mean, there are several effects, although I should highlight the reduction of credit impairments and other provisions verified last year that provided significant contribution for results. On page 27, net interest income, a total of EUR 1,335 million, 9% below what was recorded in 2023. As Miguel explained, there was several effects, although, we were aligned with the guidance that we provided.

Bye-bye.

Thank you, Miguel, and good afternoon, ladies and gentlemen.

Speaker Change: I will start, as usual, on page 26 and it's regarding Portugal. As you can see, net income amounted to 786 million in 2024. That corresponds to an increase of 8.5% compared with last year.

Speaker Change: For this federal evolution, I mean, there are several effects, although I should highlight the reduction of credit impairments and other provisions verified last year that provide a significant contribution for results.

Speaker Change: On page 27, net interest income totaled $1,335,000,000, 9% below what was recorded in 2023. And as Miguel explained, there were several effects, although we were aligned with the guidance that we provided.

Bernardo Collaço: This evolution of NII reflects the increase in deposit costs, partially offset by higher income from both customer loans portfolio and the securities portfolio. The increase in costs associated with deposits portfolio is related also with the evolution of interest rates, as well as, to a lesser extent, the increase in the average balance of remunerated deposits compared with 2023. NII was also impacted by the two issues of senior preferred debt that we issued last year of an amount of EUR 500 million each. Moving to page 28, net commissions totaled EUR 588 million at the end of 2024, corresponding to a growth of 5% compared to the EUR 560 million recorded in 2023.

Speaker Change: This evolution of NAI reflects the increase in deposit costs, partially offset by higher income from both customer loans portfolio and the securities portfolio.

Speaker Change: And the increase in costs associated with deposits portfolio is related also with the evolution of interest rates, as well as, to a lesser extent, the increase in the average balance of remunerated deposits compared with 2020.

Sweet.

Speaker Change: NII was also impacted by the two issues of senior preferred debt that we issued last year of an amount of 500 million each.

Speaker Change: Moving to page 28, net commissions totaled $588 million at the end of 2024, corresponding to a growth of 5% compared to the $560 million recorded in 2023.

Bernardo Collaço: Commissions related to banking business, which totaled EUR 491 million at the end of last year, and commissions related to markets, totaled almost EUR 100 million on the same period, evolved favorably from last year, which increases 4.2% and 9.5% respectively. The performance of commissions related to the banking business in the activity in Portugal was driven by the growth of commissions from the bancassurance, mainly due to the update of distribution fees. Trading results evolved from EUR 14 million in 2023 to EUR 9.1 million at the end of 2024, and equity accounted earnings from EUR 59 million to almost EUR 54 million. Now the net operating income registered a significant improvement evolving from EUR -65 million in 2023 to around EUR -25 million also negative in 2024.

Speaker Change: Commissions related to banking business which totaled 491 million at the end of last year and commissions related to markets totaled almost 100 million on the same period.

Speaker Change: evolved favorably from last year, which increases 4.2% and 9.5% respectively.

Speaker Change: The performance of commissions related to the banking business in the activity in Portugal was driven by the growth of commissions from the bank insurance, mainly due to the update of distribution fees.

Speaker Change: Trading results evolved from $14 million in 2023 to $9.1 million at the end of 2024, and equity-accounted earnings from $59 million to almost $54 million.

Speaker Change: The net operating income registered a significant improvement, evolving from 65 million negative in 2023 to around 25 million also negative in 2024. And this evolution was driven by the reduction in costs related with mandatory contributions and gains recognized with the disposal of real estate assets.

Bernardo Collaço: This evolution was driven by the reduction in costs related with mandatory contributions and gains recognized with the disposal of real estate assets. Going to page 29, operating costs totaled EUR 673 million in 2024, which is 9% higher than the EUR 660 million recorded in 2023. Evolution of operating costs in the Portuguese activity reflects the increase of 10% in staff costs and other admin costs, and the main reasons were already detailed by Miguel and includes several effects as it was mentioned. Number of branches were stable year on year, and there was a slight reduction in terms of employees compared with 2023. Moving to page 30, which refers to asset quality. As it was highlighted before, there was again a sizable reduction of NPEs.

Thank you.

Speaker Change: Going to page 29, operating costs totaled 673 million in 2024, which is 9% higher than the 660 million euros recorded in 2023.

Speaker Change: Evolution of operating costs in the Portuguese activity reflects the increase of 10% in staff costs and in other admin costs and the main reasons were already detailed by Miguel and includes several effects as it was mentioned.

Speaker Change: The number of branches was stable year-on-year and there was a slight reduction in terms of employees compared with 2023.

Thank you.

Speaker Change: Moving to page 30, which refers to asset quality, and as it was highlighted before, there was again a sizable reduction of NPs.

Bernardo Collaço: NPEs reduced more than 12% compared with last year, meaning more than EUR 134 million, 104 million out of which we reduced EUR 72 million in the last quarter, clearly showing that the bank is still committed with the NPE reduction. NPEs as of December 2024 stood below EUR 1 billion, compared with more than EUR 1.1 billion one year ago. I have to also to remind you that a large part of the NPEs are unlikely to pay and not ninety days past due. Cost of risk to that 31 basis points. As it was also mentioned by Miguel, without the impact of some reversal impairments registered in Q2 of this year, it would have stood at 43 basis points, which compares with 54 basis points one year ago.

Speaker Change: NPEs reduced more than 12% compared to last year, meaning more than $104 million out of which we reduced $72 million in the last quarter, clearly showing that the bank is still committed with the NPE reduction.

Speaker Change: NPEs as of December 24th stood below 1 billion compared with more than 1.1 billion one year ago and I have to also to remind you that a large part of the NPEs are unlikely to pay and not 90 days past due.

Speaker Change: Cost of risk stood at 31 basis points and, as was also mentioned by Miguel, without the impact of some reversal impairments registered in the second quarter of this year, it would have stood at 43 basis points, which compares with 54 basis points one year ago.

Bernardo Collaço: Now let's move to page 31, which looks at the NPE coverage breakdown. As you can see, total coverage of NPEs stood well below 100%, in fact at 138%. NPE coverage by loan loss reserves at 90%. If you look at the individuals, total coverage that have higher levels of real estate collateral stood at 100%, and for companies at 134%. On page 32, which shows the evolution of foreclosed assets and corporate restructuring funds, there was a reduction over last year. Net value of foreclosed assets stood below EUR 50 million. That compares with almost EUR 100 million one year ago, meaning a reduction of more than 51% or a decrease of more than EUR 52 million.

Speaker Change: Now, let's move to page 31, which looks at the NPE coverage breakdown. As you can see, total coverage of NPEs stood well below 100 percent, in fact, at 138 percent. NPE coverage by loan-loss reserves at 90 percent.

Speaker Change: And, if you look at the individuals, total coverage that have high levels of real estate collateral stood at 100% and for companies at 134%.

Bye.

Speaker Change: On page 32, which shows the evolution of foreclosed assets and corporate restructuring funds, there was a reduction over last year.

Speaker Change: net value of foreclosed assets to below $50 million, that compares with almost $100 million one year ago, meaning a reduction of more than 51% or a decrease of more than $52 million.

Bernardo Collaço: Regarding property sales, there was a significant reduction in the number of transactions compared with the last, with 2023, which was somehow expected due to the reduction of real estate assets in BCP balance sheet. Regarding corporate restructuring funds, exposure at the end of December stood at EUR 344 million. That compares with EUR 365 million at the end of December 2023. Now moving to page 33. Total customers reached seventy point five billion on December 2024, up from almost sixty-seven billion at the end of the previous year, driven mainly by the increase in deposits. On-balance sheet funds rose fifty-five point five billion, reflecting higher savings levels among households and companies. Off balance sheet funds increased by EUR 780 million, totaling EUR 50 million at the end of December last year.

Speaker Change: Regarding property sales, there was a significant reduction in the number of transactions compared with the last, with 2023, which was somehow expected due to the reduction of real estate assets in BCP balance sheets.

Speaker Change: Regarding corporate restructuring funds, exposure at the end of December stood at $344 million. That compares with $365 million at the end of December 2023.

Now moving to page 33.

Speaker Change: Total customers reached $70.5 billion on December 2024 up from almost $67 billion at the end of the previous year, driven mainly by the increase in deposits.

Speaker Change: On balance sheet funds rose $55.5 billion, reflecting higher savings levels among households and companies. Off balance sheet funds increased by $780 million.

Speaker Change: totaling 15 million euros at the end of December last year, and here the growth of assets under management partially offset or offset by the decline in insurance products.

Bernardo Collaço: Here, the growth of assets under management partially offset by the decline in insurance products. Gross loan books stood at EUR 38 billion, a slight decrease of 0.7% from the previous year. This reduction reflects a decrease in non-performing exposures and loans, and mainly loans to companies. However, mortgage books increased by 4% to EUR 19.5 billion. Personal loans grew 9%, reaching EUR 2.5 billion, while corporate credit decreased by 7% to EUR 16.3 billion, mostly due to the repayment of COVID loans. Going to page 34, it is possible to see new loans origination by each segment and the recognition of BCP as the main bank for Portuguese companies. Performing loans in Portugal went down just 0.3% from last year.

Speaker Change: Gross loan books to that 38 billion, a slight decrease of 0.7 from the previous year. And this reduction reflects a decrease in non-performing exposures and loans, and mainly loans to companies.

Speaker Change: However, mortgage book increased by 4% to 19.5 billion, personal loans grew 9%, reaching 2.5 billion, while corporate credit decreased by 7% to 16.3 billion, mostly due to the repayment of COVID loans.

Speaker Change: Going to page 34, it is possible to see new loans origination by each segment and the recognition of BCP as the main bank for Portuguese companies.

Performing loans in Portugal went down just

0.3% from last year.

Bernardo Collaço: Loans to individuals grew 4.6% and loans to companies due to the interest rate environment, and as I mentioned before, early repayments of COVID loans went down 6.5% compared with December last year. Now, regarding international operations on page 36. Net profit in 2024 amounted to almost EUR 120 million, 8.6% less than the EUR 131 million from the previous year. This reflects the reduction of the contributions from Millennium bim in Mozambique that offset the improved results from Bank Millennium in Poland. Bank Millennium net profit was EUR 167 million, showing a significant growth of 25% from the previous year.

Speaker Change: Loans to individuals grew 4.6% and loans to companies due to the interest rate environment. And as I mentioned before, hourly payments of COVID loans went down 6.5% compared with December last year.

Thank you.

now

Speaker Change: Regarding international operations, on page 36, net profit in 2024 amounted to almost

Speaker Change: sorry, net profit in 2024 to 120 million, 8.6 percent less than the 131 million from the previous year. And this reflects the reduction of the contributions from millennials in Mozambique that offset the improved results from Bank Millennium in Poland.

Speaker Change: Bank Millennium Net Profit was $167 million, showing a significant growth of 25% from the previous year.

Bernardo Collaço: While Millennium bim in Mozambique recorded a net profit of EUR 48.5 million at the end of 2024. That represents a decrease of almost 54% recorded one year ago. As it was mentioned already, Millennium bim performance in Mozambique was heavily affected by the country, the country's financial situation, particularly with the downgrade of the sovereign debt ratings, leading to an increase in financial asset impairments. Moving to page 37, which refers to Bank Millennium. I think that first message that must be highlighted is the formal exit of Bank Millennium from the recovery plan in June. Regarding results, net income continued to be impacted by costs related with CHF mortgage loans. If we exclude these specific effects, net income grew EUR 48 million or 7% compared with the same period of last year.

Speaker Change: While Millennium Beam in Mozambique recorded a net profit of $48.5 million at the end of 2024, that represents a decrease of almost 54% recorded one year ago.

Speaker Change: As it was mentioned already, Millennium Beam performance in Mozambique was heavily affected by the country's financial situation, particularly with the downgrade of the sovereign debt ratings leading to an increase in financial asset impairments.

Thank you.

Speaker Change: Moving to page 37, which refers to Bank Millennium, I think that the first message that must be highlighted is the formal exit of Bank Millennium from the recovery plan in June.

Speaker Change: And regarding results, net income continued to be impacted by costs related with CHF mortgage loans. And if we exclude these specific effects, net income grew 48 million or 7% compared with the same period of last year.

Bernardo Collaço: Net operating revenues down almost 11% explained by the one-off effect related with the sale of 80% of Millennium Financial Services registered in 2023. Operating costs went up 13%, mainly influenced by the strong wage inflation that we still registered in Poland. CET1 and total capital improved significantly and stood comfortable above the minimum requirements of 8.1% and 12.2%. On page 38, some detailed information about Bank Millennium. NII without credit holidays impact increased 7.2% to more than EUR 1.3 billion. That compares with EUR 1.2 billion one year ago. NIMs stood at 4.36%. That compares with 4.6% in 2023. Fees and commissions were broadly stable.

Speaker Change: Net operating revenues down almost 11 percent, explained by the one-off effect related with the sale of 80 percent of Millennium Financial Services registered in 2023.

Speaker Change: Operating costs went up 13%, mainly influenced by the strong wage inflation that is still registered in Poland.

Speaker Change: And CQ1 and total capital improved significantly and stood comfortable above the minimum requirements of 8.1% and 12.2%.

Speaker Change: On page 38 are some detailed information about Bank Millennium, NAI without credit holidays impact increased 7.2% to more than 1.3 billion that compares with 1.2 billion one year ago.

Speaker Change: NIMS stood at 4.36 percent, that compares with 4.6 in 2023.

Fees and commissions were broadly stable.

Bernardo Collaço: Other income, which also includes results booked on the trading line, were heavily impacted by the positive contribution arising from the sale of 80% of Millennium Financial Services, and on the opposite side in 2024, by the strong increase in mandatory contributions. Total costs, excluding mandatory contributions, went up 13% and were influenced by the increase of around 15% in terms of staff costs. Mandatory contributions went up EUR 54 million, and it should be noticed that Bank Millennium by exiting the recovery plan, started to pay the banking tax in June 2024. Moving to page 39, related with asset quality. Cost of risk stood at 40 basis points.

Speaker Change: Other income, which also includes results booked on the trading line that were heavily impacted by the positive contribution arising from the sale of 80% of Millennium Financial Services.

Speaker Change: and on the opposite side in 2024 by the strong increase in mandatory contributions.

Speaker Change: Total costs excluding mandatory contributions went up 13% and were influenced by the increase of around 15% in terms of staff costs.

Speaker Change: Mandatory contributions went up 54 million, and it should be noticed that Bank Millennium, by exiting the recovery plan, started to pay the banking tax in June of 2024.

work.

Moving to page 39, related with asset quality.

Speaker Change: Cost of risk stood at 40 basis points, non-performing loans and 90 days past due stood at 2.2 percent and coverage by loan loss reserves of non-performing loans stood at 149 percent.

Bernardo Collaço: Non-performing loans and 90 days past due stood at 2.2%, and coverage by loan loss reserves of non-performing loans stood at 149%. On page 40, customer funds in Bank Millennium grew 11% year-over-year. Off-balance sheet funds grew more than 35% and total deposits 9% compared with December 2023. In terms of loans to customers, gross books stood at EUR 18.1 billion. That's EUR 312 million above December 2023. Loans to individuals grew almost 1%, and loans to companies grew more than 5%.

Bye.

Speaker Change: On page 40, customer funds in Bank Millennium grew 11% year-on-year. Off-balance sheet funds grew more than 35% and total deposits 9% compared with December 2023.

Speaker Change: In terms of loans to customers, gross books to that $18.1 billion, that's $312 million above December 23. Loans to individuals grew almost 1% and loans to companies grew more than 5%.

Bernardo Collaço: On page 41, still in this topic regarding the FX mortgage portfolio, it's worth mentioning the continued reduction of the CHF mortgage portfolio, which reduced 26% since December 2023 and by 9% from the end of Q3 2024. CHF loan book at the end of 2024 represented only 1.5% of the loan portfolio, compared to 3.6% one year ago. Cumulative provisions for legal risk amounted to EUR 1.8 billion, representing more than 120% of the total mortgage loan portfolio in CHF. Reduction over last year has been driven by natural redemptions and amicable settlements with clients. I should also highlight that in Q4 2024, the amicable settlements were above the number of new claims that flow into courts.

On page 41.

Speaker Change: Still, on this topic regarding the FX Mortgage Portfolio, it's worth mentioning the continued reduction of the CHF Mortgage Portfolio, which reduced 26% since December 2023, and by 9% from the end of the third quarter of 2024.

Speaker Change: CHF loan book at the end of 2024 represented only 1.5% of the loan portfolio compared to 3.6% one year ago.

Speaker Change: Cumulative provisions for legal risk amounted to $1.8 billion, representing more than 120 of the total mortgage loan portfolio in CHF.

Reduction over last year was...

Speaker Change: was driven by natural redemptions and amicable settlements with clients. And I should also highlight that on the fourth quarter, 2024, the amicable settlements were above the number of new claims that flow into courts.

Bernardo Collaço: Costs associated with amicable settlements in Q4 reached EUR 41 million, and new court claims continued to decrease on a quarterly basis after the peak registered in the second half of 2023. Turning to page 42, which now regards Millennium bim, whose performance in Mozambique, as I mentioned before, was heavily affected by the country's financial situation, particularly with the downgrade of the sovereign debt ratings, leading to a significant increase in financial assets, asset impairments. Compared with the previous year, net profit, which include a positive impact from a reversal, from a partial reversal, it's also important to highlight. The subsidiary faced higher operational costs and operating revenues were relatively stable. Also, it should be mentioned that capital stood at 37.5%. Moving to page 43.

Speaker Change: Costs associated with amicable settlements in the fourth quarter reached 41 million.

Speaker Change: And new court claims continue to decrease on a quarterly basis after the peak registered on the second half of 2023.

Turning to page 42.

Speaker Change: Which now regards to Millennium Beam, show performance in Mozambique, as I mentioned before, was heavily affected by the country's financial situation, particularly with the downgrade of the sovereign debt ratings, leading to a significant increase in financial asset impairments.

Speaker Change: Compared with the previous year, net profit, which includes a positive impact from a reversal, from a partial reversal, it's also important to highlight.

Speaker Change: The subsidiary faced higher operational costs and operating revenues were relatively stable. Also, it should be mentioned that capital stood at 37.5%.

Speaker Change: Moving to page 43, NII in Mozambique was broadly stable and NIEM stood at almost 8 percent that compares with around 8.5 percent in 2023.

Bernardo Collaço: NII in Mozambique was broadly stable and NIM stood at almost 8%. That compares with around 8.5% in 2023. Costs went up 4% and cost to income stood at 50%. Page 44. Regarding asset quality, non-performing loans ninety days past due stood at 3.8%. Coverage stood at 110, and cost of risk at 38 basis points. That compares with over the Q3 of last year with 48 basis points. Now, the last slide regarding volumes on page 45. You can see that customer funds registered an increase of more than 7% and loans to customers a slight increase of less than 2%, meaning that the increase on loans to individuals of 21% was more than enough to compensate the decrease of loans to companies.

Speaker Change: Costs went up 4% and cost of income stood at 50%.

Page 44 regarding asset quality.

Non-performing loans 90 days past due stood at 3.8 percent.

Speaker Change: Coverage stood at 110 and cost of risk at 38 basis points that compares with over the third quarter of last year with 48 basis points.

Speaker Change: Now, the last slide regarding volumes on page 45. You can see that the customer funds registered an increase of more than 7 percent.

Speaker Change: loans to customers a slight increase of less than 2%, meaning that the increase on loans to individuals of 21% was more than enough to compensate the decrease of loans to companies that amounted around 32 million.

Bernardo Collaço: That amount is around EUR 32 million. Now let me thank you for your attention. Before we move to Q&A, I will return to Miguel for some final comments.

Speaker Change: And now let me thank you for your attention, and before we move to Q&A, I'll return to Miguel for some final comments.

Miguel de Bragança: Thank you very much. As you see, these are the values that we have presented in our last presentation of the strategic plan in October of last year. We are very satisfied that our strategic plan was well received. It's always a balance of different objectives in terms of distribution, short-term versus long-term, value creation, the amount how to distribute, the amount that distribute in dividends versus the amount that you distribute in share buybacks. As you probably have seen, the share price appreciated around 40% since the plan was announced, whereas the STOXX Europe 600 Banks has appreciated less than 30%. I take it was well received and that the execution is also being well appraised by the market.

Bye.

the plan in October of last year.

Speaker Change: We are very satisfied that our strategic plan was well received. It's always a balance of different objectives.

in terms of distribution.

Speaker Change: short-term versus long-term, value creation, the amount, how to distribute, the amount that is distributed in dividends versus the amount that is distributed in share buybacks.

As you probably have seen, the share price appreciated around

Forty percent.

since the plan was announced.

Speaker Change: whereas the Eurostoxx 600 banks has appreciated less than 30%, so I think it was well received and that the execution is also being well appraised by the market. We are of course on track for achieving these values and I will open the floor to Q&A.

Miguel de Bragança: We are, of course, on track for achieving these values, and I will open the floor to Q&A.

Operator: Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star one one again. We will now take our first question. Please stand by. The first question comes from Maksym Mishyn from JB Capital. Please go ahead. Your line is now open.

Speaker Change: Thank you. As a reminder to ask a question you will need to press star 1 1 on your telephone keypad and wait for your name to be announced. To withdraw your question please press star 1 1 again. We will now take our first question. Please stand by.

Speaker Change: And the first question comes from Max Mission from JB Capital. Please go ahead, your line is now open.

Maksym Mishyn: Hi. Good afternoon. Thank you very much for the presentation and taking our questions. I have three, all of them on Portugal. The first one is on loan book. How much headwinds remain for state guaranteed lines in your corporate loan book in Portugal, and what kind of growth should we think of after these loans amortize fully? What are your expectations for 2025, particularly? The second question is on net interest margin. It has improved in Portugal quarter-over-quarter. Do you think the NII could have reached its lowest point in Q4? What are your expectations for 2025? The last question is on other provisions. Any chance you could walk us through on what happened in the quarter in Portugal and shed some light on your expectations for 2025? Thank you.

Max Mission: How much headwinds remain for state-guaranteed lines in your corporate loan book in Portugal?

Max Mission: What kind of growth should we think of after these loans are amortized fully and what are your expectations for 2025 particularly?

Max Mission: The second question is on the net interest margin. It has improved in Portugal quarter on quarter. Do you think the NII could have reached its lowest point in the fourth quarter? What are your expectations for 2025?

Max Mission: And then the last question is on other provisions. Any chance you could walk us through on what happened in the quarter in Portugal and shed some light on your expectations for 2025? Thank you.

Miguel de Bragança: Max, thank you very much for your questions. First, as you know, in terms of our strategic plan, we have quite ambitious values in terms of growth, loan book growth in Portugal. We are speaking about loan books in terms of cumulative average growth rates, on average between 2024 and 2028 of around 5%, give or take. I'm speaking from my heart. What we do think is that it's taking somewhat longer to occur because of the full amount of market uncertainties, so to say, in terms of the European economy. The investment is not picking up as fast as was expected some quarters ago with the geopolitical uncertainties at the end of the day.

Thank you very much for your questions.

Max Mission: First, as you know, in terms of our strategic plan, we have a quite ambitious...

Max Mission: quite ambitious values in terms of loan book growth in Portugal. We are speaking about loan books in terms of cumulative average growth rates on average between 24 and 28 of around 5% give or take, I'm speaking by heart.

Max Mission: What we do think is that it's taking somewhat longer to occur because of the full of the market, of the amount of the uncertainties.

Max Mission: So to say in terms of the European economy, the investment is not picking up as fast as was expected.

Max Mission: some quarters ago with the geopolitical uncertainties at the end of the day.

Miguel de Bragança: We still maintain, so to say, in terms of cumulative annual growth rate, the 5% for the strategic period. I would say that it will be somewhat back-ended, so to say, in terms of 2025, it will probably be in the low single-digit areas. Later on it will be in the high single-digit areas. Okay. First, the NIM and the NII and so on. I mean, if the interest rate goes to more normalized levels, and we are expecting the interest rates, the Euribor rates then to land at levels around 2%, maybe a little bit below that. What is to be expected is that the NIM in Portugal will also become normal and will also converge to what is happening in other countries also.

Max Mission: So we still maintain, so to say, in terms of cumulative annual growth rate.

the 5% for the strategic peers.

Max Mission: I would say that it will be somewhat backward-handed, so to say, in terms of the 25, it will probably be in the low single-digit areas, later on it will be on the high single-digit areas.

it.

Max Mission: First, the NIM and the NAI and so on. I mean, if the interest rate goes to more, I would say, more normalized levels than we are expecting.

Max Mission: the interest rates, the arrival rates, then to land at levels around 2%, maybe a little bit below that, what is to be expected is that the NIM in Portugal will also become normal and will also converge to what is happening in other countries also.

Miguel de Bragança: The NIM that we've seen in the last years, I would say, has benefited from a level of interest rates and an inertia in terms of the way the interest rates on the asset side and on the liability side have performed. That is not, I would say, totally a steady state, so to say. I would expect the NIM over time to go mainly as interest rates go to levels of 2% to go down. Having said that about the NIM. In terms of guidance for the NII, what we are expecting for 2025 is the NII to be broadly flattish to some extent because of the hedges that we have in our book.

Max Mission: So, the NIM that we have seen in the last years, I would say, has benefited.

Max Mission: from a level of interest rates and inertia in terms of the way the interest rates on the asset side and on the liability side have performed, that is not, I would say, totally a steady state.

to say.

Max Mission: So I would expect the NIM over time to go to, mainly as interest rates go to levels of 2%, to go down. Having said that about the NIM...

Max Mission: In terms of guidance for the NII, what we are expecting for 2025 is the NII to be broadly flattish.

Max Mission: to some extent because of the of the hedges that we have in our book.

Miguel de Bragança: However, as this is explained by, I would say our hedges, and as our hedges are not micro hedges, so they are hedges of non-maturity deposits that reprice at some months and not at others. There may be some volatility in terms of the NII. However, this does not mean that for 25 we feel quite confident that it will be broadly flattish when we take the full year comparing with 24. As the credit picks up, 26, 27, 28, we expect the NII to grow in the low single-digit area, aligned with the, or consistent with some margin compression, but with the 5% credit growth, on the other hand.

Max Mission: However, if this is explained by, I would say, our hedges.

Max Mission: and our hedges are not micro-hedges, so they are hedges of non-maturity deposits that...

Max Mission: repriced at some months and not at others. There may be some volatility in terms of the NII. However, this does not mean that for 25...

Max Mission: So we feel quite confident that it will be broadly flattish.

Max Mission: when we take the full year, comparing with 2024. Then as the credit peaks up, 2026, 2027, 2028, we expect the NII to grow.

Max Mission: in the low single-digit area aligned with or consistent with some margin compression but with the five percent credit growth on the other hand. In terms of the other provisions.

Miguel de Bragança: In terms of the other provisions, this was a special year also because a part of these other provisions are linked also to the impairment, so to say. What we have in the other provisions, for instance, the provisions for real estate and for off-balance sheet credit items, so to say, guarantees and so on. Sometimes I would say an event occurs in a guarantee or there is a depreciation in a real estate asset that was foreclosed that could, there's some substitution effect between these and the impairment line. This year, as you've seen, we clearly outperformed in terms of the impairment line. The credit impairment has clearly been much better than, I mean, we all had anticipated that 32 basis points.

Max Mission: This was a special year also because a part of these are the provisions

Max Mission: are linked also to the impairment, so to say, what we have in the other provisions, for instance, the provisions for real estate.

and for off-balance sheet grade items.

Max Mission: to say guarantees and so on and sometimes I would say an event.

occurs.

Max Mission: in a guarantee or there is a there may be a depreciation in a real estate asset that was

Max Mission: foreclosed that could, that there's some substitution effect between these and the impairments line.

Max Mission: So this year, as you've seen, we clearly outperformed in terms of the impairment line, so the credit impairment.

Max Mission: It has clearly been much better than, I mean, we all anticipated that 32 basis points. A part of it was with an extraordinary recovery, but also a part of it has to do with some substitution effect with these other provisions.

Miguel de Bragança: A part of it was with an extraordinary recovery, but also part of it has to do with some substitution effect with these other provisions. Going forward, as we expect this line to drop materially. Going forward, as I had anticipated here for Portugal, we are expecting in the next quarters, except if there is some type of, I would say, disruption in Europe, which is not our base case, for the cost of risk to even be below 40 basis points. We are expecting a significant drop in terms of the other impairments. I think I have commented this.

Max Mission: Going forward, as we expect this line to drop materially. So, going forward, as I had anticipated here for Portugal.

We are expecting in the next...

Max Mission: quarters, except if there is some type of, I would say, disruption in Europe, which is not our best case.

Miguel de Bragança: I would say the COVID loans. I would not emphasize too much the COVID loans in this context because as time goes by, I mean, we had a market share that was above our natural market share in terms of COVID. Now, as these loans become more normalized, I would say we will expect to grow more or less aligned with the market. If the market prices loans, I would say economically well. Basically, we are not being framed by this. The issue here is whether, how can I say it, whether the supply and demand and whether our competitors, so to say, are willing to spend value in terms of obtaining market share, which we are not.

Max Mission: I have commented this, I would say the COVID lives, I would not emphasize too much the COVID lives in this context, because as time goes by, I mean, we had, I would say, a market share that was above the national market share in terms of COVID, now, as these lives become more normalized, I would say we will...

Max Mission: spend value in terms of obtaining market share, which we are not. So the issue here is more an issue of, at the end of the day, of what makes sense for us from a risk-returning perspective, because for us...

Miguel de Bragança: The issue here is more an issue of, at the end of the day, of what makes sense for us from a risk-return perspective. Because for us, I mean, investing in at the end of the day in sovereign debt or putting the money at ECB is always an alternative. We don't want to invest in a credit just because it is a credit. We have always to compare the additional risk that is incorporated in the credit with the additional return that we obtain from this credit. Sometimes it is more in the interest of the bank and its shareholders to invest in a deposit in the ECB and or in sovereign debt. We don't have any prejudice in this context.

Max Mission: I mean, investing at the end of the day in sovereign debt or putting the money at the ECB is always an alternative. So we are not, we don't want to invest.

in a credit, just because.

Max Mission: it is a credit. So we have always to compare the additional risk that is incorporated in the credit with the additional return that we obtain from this credit. Sometimes it is more in the interest of the bank and its shareholders to invest in a deposit in ECB or in sovereign debt, so we don't have any prejudice in this context.

Luís Pratas: Thank you very much.

Maksym Mishyn: Thank you very much.

Miguel de Bragança: Okay.

Max Mission: Thank you very much. Okay. Thank you. We will now take our next question.

Operator: Thank you. We will now take our next question. Please stand by. The next question comes from Ignacio Ulargui from BNP Paribas Exane. Please go ahead. Your line is now open.

Please stand by.

Speaker Change: And the next question comes from Ignacio Lagui from BNP Paribas Exxon, please go ahead your hand is now open.

Ignacio Ulargui: Thanks very much for the presentation and for taking my questions. I have two questions, if I may, and one clarification. If I just look to the cost performance of the bank in 2024, in Q4, there has been a bit of an increase in Portugal. Just wanted to get a bit of your thoughts, Miguel, how do you see cost will perform going forward in Portugal and Poland? The second question is on the capital front. You have flagged around 50 basis points capital impact from Basel IV. That takes us to be at 15.8%. It seems to be a very comfortable level, still well above the level that you are targeting as a minimum level in the plan.

Speaker Change: Thanks very much for the presentation. I'm for taking my questions.

Ignacio Lagui: I have two questions, if I may, and one clarification. If I just look to the cost performance of the bank in 2024, in the last quarter, there has been a bit of an increase in Portugal. I just wanted to get a bit of your thoughts, Miguel. How do you see cost will perform going forward in Portugal and Poland?

The second question is...

Ignacio Lagui: On the capital front, you have flagged around 50 basis points capital impact from Basel IV.

That takes us to be at 15.8%.

Ignacio Lagui: It seems to be a very comfortable level, it's still well above the level that you are targeting as a minimum level in the plan.

Ignacio Ulargui: Should we expect any kind of incremental usage of the capital in form of distributions or efficiency plans? How should we think about this around EUR 1 billion of excess capital that you could have, give or take, currently? A clarification on the Polish business, you have felt like that you have had contributions increasing since June. Should we take the 2024 kind of contributions level and double it up or there is some seasonality in it? Thank you.

life.

Ignacio Lagui: Should we expect any kind of incremental usage of the capital in form of...

Ignacio Lagui: distributions or efficiency plans, so how should we think about this around the billion of excess capital that you could have give or take currently, and a clarification on

Ignacio Lagui: On the policy business, you have to like that you have had contributions increasing in June. So we take the 2024 kind of contributions level and double it up, or there is some seasonality in it. Thank you.

Bye.

Miguel de Bragança: Okay. Starting with the last year, I mean, in terms of the contributions in Poland, as you know, we only exited the plan in half of the year, so it is not totally outside. The last quarter is already in steady state because these are quarterly contributions, but the full year is not in steady state. Because basically, when we were in the capital protection plan, we did not have some of the contributions. We had to pay banking tax. Okay. In terms of the other two points. In terms of costs, we had a convergence in the last quarter of the year in terms of variable compensation with our competitors in the market.

Speaker Change: Okay, starting with the last, I mean, in terms of the contributions in Poland, as you know, we only exited the plan in the half of the year, so it is not totally, I would say, the last quarters are already inside the state.

Speaker Change: because these are quarterly contributions, but the full year is not in a steady state. Because, basically, when we were in the capital protection plan, we did not have some of the contributions, we had to pay bank tax.

Speaker Change: Okay, in terms of the other two points, in terms of costs.

Speaker Change: We, I would say, we had a convergence in the last of the year in terms of variable compensation with our competitors in the market.

Miguel de Bragança: Going forward, we do not expect in Portugal the same type of cost increases that we had in this year. Going forward, what we expect is a cost increase broadly aligned, I would say, low to mid single digits going forward. That's what we are expecting going forward. In terms of the comfortable capital level, as you know, Ignacio, we have presented a plan to the market where we said that that was, I would say, a balance between different objectives, where we said that we would be delivering, I would say, a 15% dividend yield plus equity appreciation. The sum of the book value per share plus dividend yield would be around 15%.

going forward, we do not expect.

Speaker Change: Portugal, the same type of cost increases that we had in this year. So going forward, what we expect is a cost increase broadly aligned, I would say, low to mid-single digits going forward. So that's what we are expecting going forward.

Speaker Change: In terms of the comfortable capital level, as you know, Ignacio, we have presented a plan to the market.

Speaker Change: where we said that there was, I would say, a balance between different objectives, where we said that we would be delivering, I would say, a 15%...

a 15% dividend yield plus

Speaker Change: equity appreciation, so the sum of the book value per share plus dividend yield would be around 50%.

Miguel de Bragança: Where we said that we would have an ROE above 13.5%, and where we said that we would have a capital ratio above 13.5%. In order to achieve this, we wanted to develop the bank, and we would like to distribute up to 75% of the net income. Whereas, at the same time, growing other ways so as to protect and develop the franchise of the bank. This is the plan that we are implementing. Okay? This is the plan that we are implementing.

percent.

Speaker Change: where we said that we would have an ROE above 13.5% and where we said that we would have a capital ratio above 13.5% and in order to achieve this, we wanted to develop the bank and we would like to distribute up to 75% of the net income.

Speaker Change: whereas at the same time growing other ways so as to protect and develop the franchise of the bank.

This is the plan that we are implementing.

Miguel de Bragança: Of course, if within one year and a half, what we see is that we are not able to generate value by growing other ways in the way that we intend to grow, growing business and consequently other ways, of course, we have to come back to the market and review our plan. This is not what we have right now. What we have right now is a plan. We are committed in implementing the plan, and the plan is what it is. Let's see whether we can implement this plan. Of course, if the reality changes, we will have to change the plan, and we hope that we will be able to grow the business so as to find value-generating opportunities for the usage of this capital.

Speaker Change: Of course, if within one year, one year and a half, what we see is that we are not able to generate value by growing RWAs.

Speaker Change: in the way that we intend to grow, a growing business, and consequently, IWAs.

Speaker Change: Of course, we have to come back to the market and review our plan, but this is not what we have right now. What we have right now is a plan, we are committed in implementing the plan, and the plan is what it is.

Speaker Change: Let's see whether we can implement this, but of course, if the reality changes, we will have to change the plan, and we hope that we will be able to grow the business so as to find value-generating opportunities for the usage of this capital.

Miguel de Bragança: If it is not possible for whatever reason, well, we will have to recalibrate what we had to do in the past. Let's see. We just presented the plan in October, so we are trying to implement it. Okay.

Speaker Change: If it is not possible for whatever reason, we have to recalibrate what we had to do in the past.

Speaker Change: Let's see, we just presented the plan in October, so we are trying to implement it.

Bye.

Ignacio Ulargui: Thank you very much.

Miguel de Bragança: Thank you.

Thank you very much.

Operator: We will now take our next question. Please stand by. The next question comes from Noemi Peruch from Mediobanca. Please go ahead. Your line is now open.

We will now take our next question. Please stand by.

Speaker Change: And the next question comes from Noemi Peruk from Mediobanca. Please go ahead. Your line is now open.

Noemi Peruch: Good afternoon. I would like to ask three questions. The first one is on costs in Portugal. They were up 14% QoQ, and I was wondering if you could single out any one-off component that will not recur in 2025, if any. The second one is on capital evolution. If you could go through the positive capital components in Q4 other than retained earnings and if DTAs played a role here. The last one is on your common equity target, to understand how tangible that is.

Bye.

Noemi Peruk: Good afternoon. I would like to ask three questions. The first one is on cost in Portugal. They were up 14% QonQ. I was wondering if you could single out any one-off component that will not recur in 2025, if any.

Speaker Change: And then the second one is on that capital evolution. If you could...

Speaker Change: go through the positive capital components in Q4 other than return earnings and if DTA played a role here.

Speaker Change: And the last one is on your common equity target, just to make.

Noemi Peruch: I was wondering if indeed close to 13.5% is a level that you see yourself reaching if M&A or capital deployment in general is compelling enough, or would you prefer to run with a much higher, capital ratio, at any given time? Thank you.

to understand how tangible that is.

Speaker Change: I was wondering if indeed close to 13.5% is a level that you see yourself reaching if M&A or capital deployment in general is compelling enough.

Speaker Change: or would you prefer to run with a much higher capital ratio at any given time?

Miguel de Bragança: Okay. Starting with your last point. As a comment, I mean, we take our communications and our commitments to the market serious. What we said to the market is that we have a plan. We want to reach by 2028 a value of somewhat above 13.5. When you say that's above 13.5, it does not mean 300 basis points above 13.5. It's somewhat above 13.5 to allow for some buffer. We would get there by distributing 75% of the earnings and increasing the other ways. That's, at this time, what we are trying to do.

Speaker Change: Okay, starting with your last point, so as a comment, I mean, we take our communications and our commitments to the market series.

Speaker Change: What we said to the market is that we have a plan.

We want to reach by 28.

Speaker Change: a value of somewhat above 13.5, when you say it's above 13.5, it does not mean 300 basis points above 13.5, it's somewhat above 13.5 to allow for some buffer, and we would get there by distributing 75% of the earnings and increasing the RWA.

Speaker Change: And that's, at this time, what we are trying to do.

Miguel de Bragança: If at any point in time we think that for whatever reason, more risk in Europe, let's say, for whatever reason, that we should materially change our targets in terms of ROE, in terms of capital, in terms of distribution. We would previously come back to the market, but right now and present it, what is our new view. Right now this is our view, this is what we want to do, and we feel comfortable that for our business model, a capital ratio somewhat above 13.5 by the end of the plan is appropriate based on the risks that we see in front of us, based on the strength of our business model, and so on. In terms of costs, what I can tell you is the following.

Speaker Change: If at any point in time we think that for whatever reason, more risk in Europe let's say, for whatever reason, that we should materially change our targets in terms of R&D, in terms of capital, in terms of distribution.

who would previously come back to the market.

Speaker Change: But right now, and present it, what is our new view. But right now, this is our view, this is what we want to do. And we feel comfortable that for our business model.

Speaker Change: a capital ratio somewhat above 30.5 by the end of the plan is appropriate based on the risks that we see in front of us, based on the strength of our business model and so on.

Speaker Change: In terms of cost, what I can tell you is the following, the main part of the cost was salaries.

Miguel de Bragança: The main part of the costs was salaries. Okay? What I can tell you is that the increase in the base salary that we have negotiated with the unions was 3.25%. The increase in salaries together with promotions, so let's say with this, the more recurrent baseline of the salaries was around 3.7%. This is for the full year because a part of the negotiation was in 2025, we have already negotiated 2.5% in terms of increase in salary. This is the minimum increase in salaries that we will have. The remaining part was mostly explained by, I would say, direct or indirect, I would say, variable remuneration.

And what I can tell you is that the...

Speaker Change: The increase in the base salary that we have negotiated with the unions was 3.25%.

Don't...

increase in salaries together with promotions.

So, let's say it is more recurrent.

Speaker Change: baseline of the salaries was around 3.7 percent. This is for the full year, because a part of the negotiation...

And in 2025,

Speaker Change: We have already negotiated 2.5% in terms of increasing salaries. So this is the minimum increase in salaries that we will have.

The remaining part

Speaker Change: was mostly explained by, I would say, direct or indirect, I would say, variable remuneration.

Miguel de Bragança: This variable remuneration, I would not classify it as non-recurrent because, if people are able to deliver more, there are commercial incentives. If people sell more, in our case, for instance, we were able to sell much more in terms of deposits, in terms of customer funds, and so on. There, I would say it's fair, and it's motivational, of course, to have more variable remuneration. We were somewhat below our competitors in terms of variable remuneration. I would not expect, so to say, looking forward that this baseline would change.

Speaker Change: This variable generation, I would not classify it as non-recurrent, because if people are able to deliver more, there are commercial incentives, if people sell more, in our case for instance, we were able to sell much more in terms of deposits, in terms of customer funds and so on.

There I would say

It's.

it's fair, it's motivational, of course, to have more.

variable remuneration, and we were.

Speaker Change: somewhat below our competitors in terms of remuneration, so I would not expect, so to say.

looking forward.

death.

Miguel de Bragança: What I would expect is now that we have converged to the market in terms of variable remuneration, that we would, provided we perform well, of course, that we would grow, as I was commenting, in this low to mid-single digit area based on the salaries going forward. Okay?

this baseline would change.

Speaker Change: What I would expect is now that we have converged to the market in terms of remuneration, that we would provide and perform well, of course, that we would grow, as I was commenting, in this low to mid single digit area based on the salaries going forward.

Bye.

Operator: Thank you.

Noemi Peruch: Thank you.

Miguel de Bragança: In terms of capital, last quarter, it's quite easy to explain. In September, we had 16.5%. The normal P&L, including the tax elements that were not particularly relevant, by the way, this quarter, improved the capital ratio by 60 basis points. The other way, inflation, so to say, decreased the capital ratio by around 20 basis points, and the share buyback is also 50 basis points. 50, plus 50, minus 50, minus 20 gives the decrease of 20 basis points. These are the broad numbers.

Speaker Change: In terms of capital, last quarter, it's quite easy to explain, so in September we had 16.5%.

Speaker Change: So, the normal P&L, including the tax elements that were not particularly relevant, by the way, this quarter, improved the capital ratio in 60 basis points.

Speaker Change: The RWA inflation, so to say, decreased the capital ratio in around 20 basis points, and the share buyback is also 50 basis points, so 50.

Speaker Change: Plus 50, minus 50, minus 20 gives the decrease of 20 basis points, these are the broad numbers.

Bye.

Operator: Thank you. We will now go to our next question. Please stand by. The next question comes from the line of Pamela Zuluaga from Morgan Stanley. Please go ahead, your line is now open.

Fuck yeah!

Speaker Change: Thank you. We will now go to our next question. Please stand by.

Moderator: And the next question comes from the line of Pamela Zuluaga from Morgan Stanley, please go ahead, your line is now open.

Pamela Zuluaga: Hello, good afternoon. Thank you very much, and thank you for the presentation. I have a few follow-ups. On NII, do you think you have some room to cut deposit remuneration in Portugal enough to offset the delay in volume growth? On costs, also in Portugal, what exactly is driving the up to mid-single digit increase in costs that you were talking about? Finally, on capital, I'm sorry, just to make sure that I understand correctly, you're saying that the excess capital for the backward-ended growth in loans that you mentioned before, you're saving it. If everything goes according to the plan, therefore there's really limited optionality beyond the current targets. Or are you also saving a buffer for any inorganic growth options? Thank you.

Pamela Zuluaga: Hello, good afternoon. Thank you very much and thank you for the presentation. I have a few follow-ups. On NII, do you think you have some room to cut deposit remuneration in Portugal enough to offset the delay in volume growth?

Pamela Zuluaga: On costs, also in Portugal, what exactly is driving the up to mid-single-digit increase in costs that you were talking about? And finally, on capital, I'm sorry, just to make sure that I understand correctly, you are saying that the excess capital for the backward-ended growth in loans that you mentioned before.

Pamela Zuluaga: you're saving it. So if everything goes according to the plan, therefore there's really limited optionality beyond the current targets. Or are you also saving a buffer for any inorganic growth options? Thank you.

Miguel de Bragança: To say, in terms of deposits, I mean, there is always a trade-off between short-term and long-term, between acquiring customers and acquiring market share and short-term profitability. I cannot tell you there is not a headroom there. There's always a headroom there. There's always calibrations that you may do in terms of the commercial strategy. Right now, we are being very disciplined in terms of cost of deposits. When I say that I expect next year the NII to be broadly flattish, I'm already including in this NII some pass-through of the decrease of the market interest rates.

Pamela Zuluaga: So to say, in terms of deposit, I mean, there is always...

Pamela Zuluaga: There is always a trade-off between short-term and long-term, between acquiring customers and acquiring market share and short-term profitability. So I cannot tell you, that is not...

Pamela Zuluaga: headroom there. There's always a headroom there. There's always calibrations that you may do in terms of the commercial strategy.

Pamela Zuluaga: Right now, we are being very disciplined in terms of cost of deposits.

Pamela Zuluaga: And when I say that I expect next year, the NII to be broadly flattish.

Pamela Zuluaga: I'm already including in this NII some pass-through of the decrease of the market interest rate. Because, as you know, when the market interest rate goes down, the betas of deposits are typically below 1. There's always some margin compression.

Miguel de Bragança: Because as you know, when the market interest rate goes down, as the betas of deposits are typically below one, there's always some margin compression that it's partially hedged, so to say. We are incorporating this in our plan when we say that our NII will be broadly flattish. Okay? I think this is the plan. We purposely have a plan in which we are not distributing the excess capital all at once. We are distributing the excess capital as time goes by growing RWAs, so to say. This means that until 2028, we will have some excess capital, as you know, because the RWAs will take time to grow.

It's partially, it's...

Pamela Zuluaga: It's partially hedged, so to say, so we already are incorporating this in our plan when we say that our NII will be broadly fetish.

Okay, so I think this is.

to plan. Thanks for joining us.

When...

We purposely have a plan.

Pamela Zuluaga: in which we are not distributing the excess capital all at once.

Pamela Zuluaga: So, we are distributing the excess capital as time goes by, by growing RWIs.

society. So this means that until

2038, we will have some excess capital.

Pamela Zuluaga: as you know, because otherwise it will take time to grow. So this excess capital that we have during this time, of course, allows for some optionality.

Miguel de Bragança: This excess capital that we have during this time, of course, allows for some optionality. As we commented, this optionality also is a very prudent optionality, and it's an optionality that is, so to say, goes down, decreases as time goes by, because that's why we are not distributing the excess capital all at once, so to say. Having said that, this optionality may be used for many things, not necessarily for the speculation about a takeover of another bank. Optionality is there. Strategic options are there.

Pamela Zuluaga: But, as we commented, but this optionality also is a very prudent optionality and it's an optionality that...

Pamela Zuluaga: goes down, decreases, as time goes by, because that's why we are not distributing the excess capital all at once.

so to say.

Having said that...

Pamela Zuluaga: This optionality may be used for many things, not necessarily for the speculation about the takeover of another bank. So optionality is there, strategic options are there. We always said that we want organic growth.

Miguel de Bragança: We always said that we want organic growth, but of course, we have to keep in mind that, of course, it's always good to have the possibility of having some options, especially if in a period of more uncertainty and volatility where opportunities may exist. Our base case is exactly this one that we have presented to you. The cost in Portugal, I think I have already commented the mid-single digit. I mean, it is normal. If we have, with the unions already closed, an agreement of 2.5%, right? If there are always some promotions there.

Pamela Zuluaga: But, of course, we have to keep in mind that, of course, it's always good to have the possibility of having some options.

Pamela Zuluaga: especially if in a period of more uncertainty and volatility where opportunities may exist. But our base case is exactly this one that we have presented to you.

Pamela Zuluaga: The cost in Portugal, I think I have already commented the mid-single digit, I mean, it is normal if we have with the unions already closed an agreement of 2.5%.

Pamela Zuluaga: If there are always some promotions there. So when I speak about meet single digit, I mean, this goes without saying that this is more or less where we stand, so.

Miguel de Bragança: When I speak about mid-single digit, I mean, this goes without saying that this is more or less where we stand. It's the product, a natural product of the 2.5% of growth with the unions, together with some promotions and some changes also. There will be some reductions in headcount, some natural reduction in headcount. Typically, what we are seeing in the last years is that the type of profile that we need for a digital sophisticated bank also needs to hire people that are much more valuable and much more expensive, so to say.

It's a product, a natural product of.

the two and a half percent of...

Pamela Zuluaga: of growth with the unions, together with some promotions and some changes also there will be some reductions in headcounts, some natural reductions in headcounts, but typically what we are seeing in the last years is that the type of profile that we need for a digital sophisticated bank also needs to hire.

Pamela Zuluaga: people that are much more valuable and much more expensive, so to say. So typically, at least over the short term, there is not a large benefit from these.

Miguel de Bragança: That typically, at least over the short term, there is not a large benefit from this digitalization of the bank because the people that we need to hire typically have higher salaries than the people that leave the bank. It's a salary increase that explains this evolution of the costs.

Pamela Zuluaga: digitalization of the bank, because the people that you need to hire...

Pamela Zuluaga: typically have higher salaries than the people that leave the bank. So...

Pamela Zuluaga: it's the salary increase that explains this evolution of the cost.

Francisco Riquel: Thank you.

Pamela Zuluaga: Thank you.

Operator: Thank you. We will now go to our next question. Please stand by. The next question comes from the line of Francisco Riquel from Alantra. Please go ahead. Your line is now open.

Pamela Zuluaga: Thank you. Thank you. We will now go to our next question. Please stand by. And the next question comes from the line of Francisco Riquel from Alantra. Please go ahead, your line is now open.

Francisco Riquel: Yes, hello. Thank you. My first question is about deposits in Portugal. I see the mix change out of time deposits in Q4. I wonder how do you see the mix evolving during 2025? Also on the deposit costs in Portugal, where are we in Q4 and where do you see the deposit costs landing by the end of 2025? I want also to ask about fees. They came out a bit stronger than what I was expecting. I see the jump is mainly explained by market related fees. I wonder if you have booked any year-end performance or success fee. If you can comment and give guidance for fees growth in 2025. Just lastly, a clarification.

Thank you.

Francisco Riquel: Yes, hello, thank you. So my first question is about deposits in Portugal. I see the mix changed out of time deposits in Q4, so I wonder how do you see the mix evolving during 25.

Francisco Riquel: And also, on the deposit costs in Portugal, where are we in Q4, and where do you see the deposit costs landing by the end of 2025?

And then, I wanted also to ask about fees.

Francisco Riquel: they came out a bit stronger than what I was expecting. I see the jump is mainly explained by market related fees. So I wonder if you have booked any year-end performance or success fee, and if you can comment and give guidance for fees growth in 25.

Francisco Riquel: The 50 bps input from CRR 3 plus 4, is it a day one input in 2025 or will be over a longer time horizon? Thank you.

Francisco Riquel: And just lastly, a clarification, the 50 BIPs impact from CRRR3, BASEL4, is it a day one impact in 25, or will it be over a longer time horizon? Thank you.

Bye-bye.

Miguel de Bragança: Impact of operational risk. It is expected to occur in Q1 of the year. As time goes by, this will be a very important part of it, because this is related to the Swiss franc mortgage risk, we'll fight. It is, I would say, a day one impact that then we will fight. Please also keep in mind that in the meantime, we will also accrue capital, and we are a very strong capital generating unit, so to say. This is, as I'm commenting, a quite conservative scenario.

Francisco Riquel: impact of operational risk. It is expected to occur in the first quarter of the year when we, but, but

Francisco Riquel: But as time goes by, this will be a very important part of it, because...

Francisco Riquel: this is related to the Swiss franc mortgage risk, will fight. So it is, I would say, there is one impact that will fight. Please also keep in mind that in the meantime, we will also accrue capital and we are a very strong capital generating unit, so to say.

Francisco Riquel: And this is, as I'm commenting, a quite conservative scenario. I would not say it's the worst-worst case, but it's a scenario in which we...

Miguel de Bragança: I would not say it's the worst case, but it's a scenario in which we consider not, I would say, the cash costs and the realized costs of the Swiss franc mortgage risk as operational events, but where we consider the full provision as operational events. Because this would change a lot depending on how we do interpret it. Of course, we would like to have already the clarification from the EBA RTS. Unfortunately, they are not there yet, so this is something that is there, but will then fade away within the period of the plan. In terms of what we are seeing in terms of deposits.

Francisco Riquel: where we consider not, I would say, the cash costs and the realized costs of the Swiss Franc mortgage risk as operational events, but where we consider the full provisions as operational events, because this would change a lot depending on how we do interpret it.

Francisco Riquel: Of course, we would like to have had already the clarification from the EVA RTSs. Unfortunately, they are not there yet, so this is something that is there, but will then fade away within the period of the plan.

In terms of...

Francisco Riquel: of what we are seeing in terms of deposits. As interest rates go down, you see the reverse trend that we had in the past, in terms of the composition between the term deposits and demand deposits.

Miguel de Bragança: As interest rates go down, you see the reverse trend that we had in the past in terms of the composition between the term deposits and demand deposits. It is normal that we come back to a level of mix that we had for the present level of interest rates that we had in the past. Because of course, the opportunity cost, the demand deposits in Portugal are non-remunerated. What we see right now is that we have here in 2024, we have 48% of term deposits and 52% of demand deposits. For instance, at the end of 2023, we had 45%. At the end of 2022, we had 37%.

Francisco Riquel: So it is normal that we come back to a level of mix that we had for the present level of interest rates that we had in the past.

Francisco Riquel: In 2024, we have 48% of term deposits and 52% of demand deposits.

Francisco Riquel: For instance, in the end of 2023 we had 45%, in the end of 2022 we had 37%. So there is some headroom, of course, to have here a mixed change.

Miguel de Bragança: There is some headroom, of course, to have here a mixed change between term deposits and demand deposits. Because, I mean, to gain 1% or to gain 0.5%, people rather leave the money in the demand deposit account. Exactly the speed at which it will converge, I mean, it is difficult to say, but it is what it is. In terms of the total cost of deposits by the end of the year, it is already around 80 basis points. As time goes by, we expect, it's difficult to anticipate exactly the speed, but to have a beta of around 50%. The additional decreases in interest rates will, I'm sorry, will have a beta of 50% on the term deposits rate.

Francisco Riquel: between term deposits and demand deposits, because to gain 1% or to gain 0.5% people rather leave the money in the demand deposit account.

Francisco Riquel: So, exactly the speed at which it will converge, I mean, it is difficult to say, but it's going to happen.

But to have a beta

Overall the...

50% so the additional decrease in interest rate

Francisco Riquel: will, I'm sorry, will have a beta of 50% on the term deposit rate that is probably half of the portfolio. So, effectively, this will mean a beta of 25% when you consider term deposits plus demand deposits.

Miguel de Bragança: That is, broadly half of the portfolio. Effectively, this will mean a beta of 25% when you consider term deposits plus demand deposits. Okay?

Bye.

Alvaro Serrano: Okay.

Francisco Riquel: Okay.

Okay.

Miguel de Bragança: Fees.

Alvaro Serrano: Thank you. Another question on fees.

Francisco Riquel: Thank you. Another question on fees.

Thank you very much.

Miguel de Bragança: I would not point anything special out. I mean, there is always some normal business volatility. I would not highlight any special issue here. There's some seasonality sometimes in terms of fees. There are, as time goes by also, I think it's important, some customers that used to have deposits on a period of higher interest rates, they move to funds or to bank issuance products in a low interest rate scenario. As this goes by, we expect also the fees to pick up, but somehow at the expense of the margin. Our guidance that we are giving here for next year, for this year is mid-single digit, which we feel comfortable with.

Francisco Riquel: I would not point anything special out. I mean, there is always some normal business volatility. I would not highlight any special issue here. There is some seasonality sometimes in terms of fees.

Francisco Riquel: As time goes by also, I think it's important, some customers that used to have deposits

Francisco Riquel: on a period of higher interest rates, they move to funds or to bank assurance products in a lower interest rate scenario. So as this goes by, we expect also the fees to pick up, but somehow at the expense of the margin.

Thank you.

Francisco Riquel: And the guidance that we are giving here for next year, for this year, is bit-single-digit, which we feel comfortable with.

Alvaro Serrano: Thank you.

Francisco Riquel: Thank you.

Operator: Thank you. We will now take our next question. Please stand by. The next question comes from Alvaro Serrano from UBS. Please go ahead, your line is open.

Francisco Riquel: Thank you. Thank you. We will now take our next question. Please stand by.

Francisco Riquel: And the next question comes from Alvaro Fernandez from UBS. Please go ahead, your eyes are open.

Alvaro Serrano: Yeah, good afternoon, and thanks for taking my questions. I have two. First, on Novo Banco, what's your current interest in the asset and what could trigger a potential merger with them? Second, the ALCO portfolio is up 2% QoQ and 29% year-on-year. What's your ALCO strategy going forward, and what do you consider to be an adequate or normalized size? Related to this, your latest NII sensitivity to lower rates, both in Portugal and Poland. Thanks.

Speaker Change: Yeah, good afternoon and thanks for taking my questions. I have two. First on NovoBanco, what's your current interest in the asset and what could trigger a potential merger with them? And second...

Speaker Change: The Alco portfolio is up 2% QMQ and 29% year-on-year. So what's your...

Speaker Change: alcohol strategy going forward, and what do you consider to be an adequate or normalized size? And related to this, your latest NII sensitivity to lower rates, both in Portugal and Poland. Thanks.

Miguel de Bragança: In terms of NII sensitivity, I would start with this one. It is very, very low. In Portugal, it is based on the models right now, I would say closer to EUR 30 to 40 million for 100% decrease. It is quite low. In Poland, I don't have the number here with me, but it's also very, very low. Of course, this is based on theoretical model. There is the issue of the competition in the market and exactly how the term deposit prices evolve in a scenario of decreasing interest rates, which, I mean, is not only dependent on models. It's impossible to predict totally because it depends on actions by competitors.

Speaker Change: In terms of NIH sensitivity, I would start with this one.

Speaker Change: it is very very low. So in Portugal it is based on the on the models right now I would say closer to 30 to 40 million euros.

Speaker Change: But for 100% decrease, so it is quite low in Poland.

Speaker Change: I don't have here the number here with me, but it's also very, very low. So of course, this is by no theoretical model, then there is the issue of the competition in the market and exactly how the third deposit prices evolve in a scenario of decreasing interest rates.

Speaker Change: which I mean is not only dependent on models or it's not only it's impossible to predict totally because it depends on actions by competitors. But all in all I would say quite low sensitivity.

Miguel de Bragança: All in all, I would say quite low sensitivity. In terms of the ALCO portfolio, as I was commenting, I mean, the ALCO portfolio is more a consequence than an objective. We want to develop our commercial franchise and to continue to develop our commercial franchise. We clearly grew our on-balance sheet customer funds above the average of the markets. We were certainly top two in terms of growth of our on-balance sheet customer funds. For sure, top two. We think it's very important because we have an interesting margin, and it's very important to develop our business, to continue to grow. Growth is fundamental for value creation and for our strategy. Then what do we do with the funds? That's the question.

In terms of the Alco Portfolio.

Thank you.

Speaker Change: As I was commenting, the Alcove portfolio is more a consequence than an objective.

Speaker Change: So we want to develop our commercial franchise and to continue to develop our commercial franchise.

Speaker Change: We clearly, clearly grew our on-balance-sheet customer funds above the average of the markets.

Speaker Change: We were certainly top two in terms of growth of our unbalanced customer fund, for sure top two.

Speaker Change: So, and we think it's very important because we have an interesting margin and it's very important to develop our business, to continue to grow, growth is fundamental for value creation and for our strategy.

Speaker Change: And then, what do we do with the funds? That's the question.

Miguel de Bragança: We compare, so to say, investing in credit, in any specific credit, with investing in European sovereign debt. When the alternative of credit is better, we invest more in a specific credit. If it is better to invest the money that we have obtained through our customer business in sovereign debt, we invest in sovereign debt. We don't have, I would say, a target or we don't get wholesale funding or repos to invest in sovereign debt. No. The investment in sovereign debt is a consequence of our commercial strategy and of our franchise. We do not have a target, and we do not think it is unbalanced.

And we compare, so to say, investing in

Speaker Change: credit, in any specific case, with investing in European sovereign debt.

Speaker Change: And when the alternative of credit is better, we invest more in a specific credit.

Speaker Change: if it is better to invest the money that we have obtained through our customer business.

Speaker Change: in sovereign debt, we invest in sovereign debt. So it is not, we don't have, I would say, a target or we don't get wholesale funding or repos to invest in sovereign debt. No, the investment in sovereign debt is a consequence.

of our commercial strategy and of our franchise.

Speaker Change: So, we do not have a target and we do not think it is unbalanced. What is important is that the portfolio is a reasonable portfolio, is a low-risk portfolio, is a diversified portfolio and this we feel very comfortable with it.

Miguel de Bragança: What is important is that the portfolio is a reasonable portfolio, is a low risk portfolio, is a diversified portfolio, and this we feel very comfortable with it. By the way, even there is not a special concentration even in the portfolio of Republic of Portugal. It is a general, I would say, diversified portfolio. Okay? In terms of Novo Banco, what we have said is very clear. We have presented a strategy to you. Our strategy is based on value creation. We generally think that we can generate this value by developing our business organically and by distributing, I would say, the value generated by the several stakeholders, and also of course, by the investors with a distribution of 75% of the earnings.

Speaker Change: By the way, there is not a special concentration even in the portfolio of the Republic of Portugal. It is a general, I would say, diversified portfolio.

Speaker Change: In terms of Novo Banco, what we have said is very clear.

Speaker Change: So we have presented the strategy to you. Our strategy is based on value creation. We generally think that we...

Speaker Change: We can generate this value by developing our business organically and by distributing, I would say, the value generated.

Speaker Change: by the several stakeholders and also, of course, by the investors with a distribution of 75% of the earnings. So up to 75% of the earnings. So this is our strategy.

Miguel de Bragança: Up to 75% of the earnings. This is our strategy. In the meantime, of course, opportunities may arise. If an opportunity arise, and we see that it clearly generates more value for our shareholders than our previous strategy, we have to reanalyze our strategy. As of today, and of course, we would compare the value generating of this strategy with the strategy that we have presented to you, and that I would like to stress, was well received. As I would like to stress, we have presented the strategy to the market, and the share price since then increased 40%, whereas the market grew less than 30%. We feel very comfortable for ourself. It would have to be a very, very, very compelling story to make us change our strategy. I cannot say never again because one person cannot say never.

In the meantime, thank you.

Of course, opportunities may arise.

Speaker Change: If an opportunity arises and we see that it clearly generates more value for our shareholders than our previous strategy, we have to reanalyze our strategy. But as of today,

Speaker Change: And, of course, we would compare the value generating of this strategy with the strategy that we have presented to you and that I would like to stress was well-respected in all countries.

Speaker Change: As I would like to stress, we have presented the strategy to the market and the share price since then increased 40% whereas the market grew less than 30%.

Speaker Change: We feel very comfortable for us and it would have to be a very, very, very compelling story to make us change our strategy.

Speaker Change: I cannot say never again because one person cannot say never, but it would have to be really very, very compelling, would have to feel very secure that this would be very well generating for the different stakeholders.

Miguel de Bragança: It would have to be really very, very compelling. We would have to feel very secure that this would be very value generating for the different stakeholders.

Operator: Thank you. We will now go to our next question. Please stand by. The next question comes from Carlos Peixoto from Banco BPI. Please go ahead. Your line is now open.

Speaker Change: Thank you. We will now go to our next question. Please stand by. And the next question comes from Carlos Peixoto from Cajabank BPI. Please go ahead, your line is now open.

Carlos Peixoto: Yes. Hi, good afternoon. A few questions from my side as well, quick ones I think. The first one would be on Mozambique. Actually you have an equity value of your unit there is less than 6% of the overall tangible book value of the bank. But I was wondering if there is any other type of exposure, be it loans granted or deposits that might still be in Mozambique, just to have an overall overview on the exposure to that geography. The second question would be actually on deposits growth.

Yes, hi good afternoon

Carlos Peixoto: Three questions from my side as well, quick ones I think. The first one would be on Mozambique, so I see you have an equity value of your unit there is less than 6% of the overall tangible book value of the bank, but I was wondering if there is any other type of exposure, be it loans granted or deposits that might still

Carlos Peixoto: overview on the exposure to that geography. Then the second question would be actually on deposit growth. You mentioned a bit already on the costs and on the mixed evolution but I was wondering what type of growth you see in deposits both in Portugal and also in Poland for 2025. And the final question would actually just be a bit of a more generic one which is looking into the guidance that you gave us and so on.

Carlos Peixoto: You mentioned a bit already on the costs and on the mixed evolution, but I was wondering what type of growth you see in deposits both in Portugal and also in Poland for 2025. The final question would actually just be a bit of a more generic one, which is looking into the guidance data you gave us and so on. Do you think that in 2025 you can reach the roughly EUR 900 million net profit that took place in 2024? Or is that a figure unlikely to be surpassed in the short run? Thank you very much.

Carlos Peixoto: Do you think that in 2025 you can reach the roughly 900 million euros net profit that took place in 2024 or is that a figure unlikely to be surpassed in the short run? Thank you very much.

Miguel de Bragança: Just to comment. In terms of Mozambique, we have as a general philosophy in terms of the equity participations that we have to have our risk limited to the equity that we have invested in the country. This is true for Poland, this is true for Mozambique. The risk that we have is the equity that we have there. In terms of the evolution of our net profit, I mean, it's always difficult to commit in periods of so much uncertainty, mainly in periods of so much uncertainty in which we are right now. Okay. It's always difficult to commit.

Just a comment. In terms of...

Almost a week.

Carlos Peixoto: limited to the equity that we have invested in the country. So this is true for Poland, it's true for Mozambique, so the risk that we have is the equity that we have there.

In terms of the evolution of our net profit,

I mean, it's always difficult.

Carlos Peixoto: It's always difficult to commit in periods of so much uncertainty, mainly in periods of so much uncertainty in which...

Carlos Peixoto: We are right now. Okay, it's always difficult to commit, but if you ask me whether we think it is unreasonable to have in 25

Miguel de Bragança: If you ask me whether we think it is unreasonable to have in 25 a P&L that is aligned with the P&L of 24, I would say it is not unreasonable. It is certainly that I would expect to be very, very reasonable to achieve, of course. I mean, we all know the world in which we are living right now and the uncertainty that we are living right now. In the absence, I would say, of black swans, of additional black swans, I would say it's not unreasonable to expect for 25 a value aligned, in consolidated terms, aligned with the 24. In terms of what we expect for deposits.

Carlos Peixoto: a P&L that is aligned with the P&L of 24, I would say it is not unreasonable. It is certainly that I would expect to be very, very reasonable to achieve, of course.

Carlos Peixoto: I mean, we all know the world in which we are living right now, and the uncertainty that we are living right now, and in the absence, I would say, of black swans, of additional black swans.

Carlos Peixoto: I would say it's not unreasonable to expect for 2025 a value aligned, in consolidated terms, aligned with 2024.

in terms of

in terms of what we expect for deposits.

Miguel de Bragança: We expect in Portugal some low to mid single digit increase in terms of deposits, closer to the mid single digit increase in terms of deposits. Of course, it depends on the savings evolution in the country and so on, and a mid-single digit evolution in Poland. That's what we are expecting. That will give us probably values around mid-single digit evolutions at group level.

we expect in Portugal.

Carlos Peixoto: A low to mid-single-digit increase in terms of deposits, closer to the mid-single-digit increase in terms of deposits, of course it depends on the savings evolution in the country and so on, and a mid-single-digit evolution in Poland, so that's what we are expecting.

Carlos Peixoto: So, that would give us probably values around mid-single-digit evolutions at group level.

Operator: Thank you. We will now go to our question. Please stand by. The next question comes from the line of Sofie Peterzens from JP Morgan. Please go ahead. Your line is now open.

Thank you. We will now go to our next question.

Please stand by.

Speaker Change: And the next question comes from the line of Sophie Pettersen from J.P. Morgan, please go ahead. Your line is now open.

Sofie Peterzens: Thank you. Hi, this is Sofie Peterzens from JP Morgan. Just going back to Mozambique. On page 51 in the presentation, I can see that you have a bond portfolio of EUR 643 million. In Mozambique, you took around EUR 39 million of provisions in this quarter. Could you just talk about the kind of additional provisions that we could potentially expect from Mozambique in 2024, 2025, and maybe beyond that, if there is anything you can say? The second question would be on the pension fund. I can see the discount rate is now roughly 3.5%. Could you just give the sensitivity for a 25 basis point cut in the discount rate? And how do you think about the capital impact from this? The last question.

Thank you. Hi, this is Sophie from J.P. Morgan.

Speaker Change: So, just going back to Mozambique, on page 51 in the presentation I can see that you have a bond portfolio of $643 million.

Speaker Change: In Mozambique, you took around $39 million of provisions this quarter. Can you just talk about the...

Speaker Change: Got additional provisions that we could potentially expect from Mozambique in 2024, 2025 and maybe beyond that.

Speaker Change: if there is anything you can say. Then the second question would be on the pension fund. I can see the discount rate.

Speaker Change: is now roughly three and a half percent. Could you just give the sensitivity for kind of a 25 basis point cut in the discount rate and how do you think about the capital impact from this?

Speaker Change: And then the last question, I know you have talked a lot about GARF M&A.

Sofie Peterzens: I know you have talked a lot about kind of M&A, but maybe if you could just share your thoughts on cross-border M&A. Do you think BCP could potentially be a target for another bank? If you could maybe just talk about how you think about the banking union and cross-border M&A more broadly. Thank you.

Speaker Change: But maybe if you could just share your thoughts on cross-border M&A and do you think BCB could potentially be a thorough guide for...

Speaker Change: for another bank. If you could maybe just talk about how you think about the banking union and cross-border M&A more broadly. Thank you.

Miguel de Bragança: Mozambique, first I would like to stress that our business in Mozambique is a business where we have very little credit, and what we have is basically customer deposits that we then invest either in deposits at the central bank or in government debt in local currency. I think it's very important. The bank in Mozambique has no Mozambican government debt in foreign currency. That typically is the area that is more difficult to manage for countries that are facing or that may face more financial stress. Everything is in local currency, in a country that has its own central bank. I think it's important.

Speaker Change: So, Mozambique. First I would like to stress that our business in Mozambique is a business where we have very little credit.

of what we have is basically customer deposits.

Speaker Change: that we then invest either in deposits at the central bank

Speaker Change: or in government debt in local currency. I think it's very important. The bank in Mozambique has no Mozambican government debt in foreign currency. That typically is the area that is more difficult to manage for countries that are facing or that may face

Speaker Change: more financial stress. So everything is in local currency in a country that has its own central bank. So I think it's important.

Miguel de Bragança: As you know, as time goes by, the risk of debt restructuring in foreign currency or in local currency is totally different, so to say. Because, typically, in foreign currency, banks do a restructuring because they need to, when they don't have any foreign currency left. In local currency, they actually, they only do it when they want to, because they can always I mean, they have local currency by definition. Very often, of course, each case is a case, countries have to balance the benefits of some type of restructuring with the impact that this could have in the financial sector.

Speaker Change: As you know, as time goes by, the risk, the risk of

restructuring.

Speaker Change: of debt restructuring in foreign currency or in local currency is totally...

Speaker Change: It's totally different, so to say, because typically in foreign currency banks do a restructuring because they need to when they don't have any foreign currency left.

Speaker Change: In local currency, they actually, they only do it when they want to, because they can always, I mean, they have local currency by definition, and they offer, of course, each case is a case.

Speaker Change: countries have to balance the benefits of some type of restructuring with the impact that this could have in the financial sector.

Miguel de Bragança: Because if they restructure and then have to capitalize the banks because of the restructuring, this creates then, I would say it's not necessarily very value accretive for a government that does it. We take a lot of comfort from the fact that it is in local currency. Having said that, we have a model that bases the provisions on the rating of the country. As the country loses rating notches or the rating deteriorates, we have to create additional provisions. What we are seeing in Mozambique, I mean, is that the country lost two notches in terms of rating, if I'm not mistaken. This had an impact in our model, and we had to adjust this.

Speaker Change: Because if they restructure and then have to capitalise the banks because of the restructuring, this creates then, I would say, it's not necessarily very value-creative for a government that does it. So we take a lot of comfort from the fact that it is in local currency.

Speaker Change: Having said that, we have a model that bases the provisions on the rating of the country.

Speaker Change: So, as the country loses rating notches or the rating deteriorates, we have to create additional provisions.

Speaker Change: What we are seeing in Mozambique, I mean, is that the country lost two notches in terms of rating, if I'm not mistaken, so this had an impact on our model and we had to adjust this.

Miguel de Bragança: If the country loses additional notches based on the methodology, not necessarily because we expect the country to restructure or to default, we will have then also to change it. However, we do think that this is totally manageable in the context of the consolidated balance sheet of the bank and in terms of the, I mean, the risk model that we have. We are not speaking of anything that is, I mean, excessive, so to say. In any case, the bank in Mozambique has enough equity to cope with all these issues. It has a capital ratio in excess of 30%, so we don't see a problem there.

Speaker Change: If the country loses additional marches, based on the methodology, not necessarily because we expect the country to restructure or to default.

Speaker Change: we will have then also to change it. However, we do think that this is totally manageable in the context of the consolidated balance sheet of the bank and in terms of the risk model that we have, so we are not speaking of anything that is, I mean...

Speaker Change: And in any case, the banking must have enough equity to cope with all these issues. It has a capital ratio in excess of 30 percent. So we don't...

Miguel de Bragança: In terms of the discount rate, for each 25 basis points changes in the discount rate, there is broadly around EUR 100 million impact in terms of the liabilities. There is also an impact, a positive impact in terms of the assets. Because a large part of the pension fund is invested in fixed rates sovereign bonds exactly to counterbalance this. I would expect between 50% and 75% of this impact to be then counterbalance on the asset side. Okay? Depending on the positioning of the market. In terms of being a target in terms of money, we are in the market. We do not choose our shareholders. Our shareholders choose us.

see a problem there.

Speaker Change: In terms of the discount rate, for each 25 basis points changes,

Speaker Change: in the discount rate, there is broadly around 100 million impacts.

Speaker Change: in terms of the liabilities, but there is also an impact, a positive impact in terms of the assets.

Speaker Change: because a large part of the pension fund is invested in fixed-rate sovereign bonds exactly to counterbalance this. So I would expect between 50% and 75% of this impact to be then counterbalanced on the asset side.

Speaker Change: of the market. In terms of being a target in terms of money, we are in the market. We do not choose our shareholders, our shareholders choose us.

Miguel de Bragança: What we have here to do is we have to generate value, and we have to prove that the best things for, I mean, that they are in good hands, that we are able to generate a lot of value for them. If somebody makes an offer because this person thinks that it's able to generate much more value, then I would say this management team is able to do. It's up for the shareholders to decide, but we are very agnostic there. We are very professional. Our job is to be managers. Our job is to generate value for the different stakeholders and for the shareholders that elect us. That's what we are concentrated in. We do not lose one minute of our time or of sleep thinking about who may be willing to acquire BCP.

Speaker Change: So, what we have here to do is we have to generate value and we have to prove that the best thing for, I mean, that they are in good hands, that we are able to generate a lot of value for them.

if somebody makes an offer, because this person...

Speaker Change: is a thing that is able to generate much more value than I would say this management team is able to do. It's up for the shareholders to decide, but we are very agnostic there, we are very professional. Our job...

Speaker Change: is to be managers. Our job is to generate value for the different stakeholders and for the shareholders that elect us.

Miguel de Bragança: It's something for the shareholders to care about, not necessarily for ourselves. What we have to be absolutely relentlessly focused on is generating value.

Speaker Change: to acquire DCP. It's something for the shareholders to care about, not necessarily for ourselves. What we have to be absolutely and relentlessly focused on is generating value.

Sofie Peterzens: That's very clear. Thank you.

That's very clear. Thank you.

Operator 2: Thank you. In the interest of time, if you can all kindly limit yourself to two questions to give an opportunity to the other participants to ask their questions. Thank you. We are now going to proceed with our next question. The questions come from the line of Miruna Turea from Jefferies. Please ask your question. Your line is opened.

Operator: Thank you. In the interest of time, if you can all kindly limit yourself to two questions to give an opportunity to the other participants to ask their questions. Thank you. We are now going to proceed with our next question. The questions come from the line of Miruna Turea from Jefferies. Please ask your question. Your line is opened.

Speaker Change: Thank you. In the interest of time, if you can all kindly limit yourself to two questions to give an opportunity to the other participants to ask their questions. Thank you. We are now going to proceed with our next question.

Speaker Change: The questions come from the line of Miru Nataria from Jeffrey's. Please answer your question. Your line is opened.

Speaker 15: Good afternoon. Thank you for taking my questions. I have two quick ones, please. In Q4, you had a very low effective tax rate in Portugal, which I believe is due to stronger DTA utilization. Could you tell us what you expect in terms of the effective tax rate in Portugal going forward? Secondly, how should we think about the cadence for buybacks going forward? Because you're guiding for a 25% payout in buybacks per year. Is this gonna be mainly a full year thing announcement or depending on when you finish the EUR 200 million buyback that you just announced, you might be able to announce a new buyback throughout the year. Thank you.

Miruna Chirea: Good afternoon. Thank you for taking my questions. I have two quick ones, please. In Q4, you had a very low effective tax rate in Portugal, which I believe is due to stronger DTA utilization. Could you tell us what you expect in terms of the effective tax rate in Portugal going forward? Secondly, how should we think about the cadence for buybacks going forward? Because you're guiding for a 25% payout in buybacks per year. Is this gonna be mainly a full year thing announcement or depending on when you finish the EUR 200 million buyback that you just announced, you might be able to announce a new buyback throughout the year. Thank you.

Bye.

Miru Nataria: Good afternoon. Thank you for taking my questions. I have two quick ones, please. In Portugal, you had a very low effective tax rate in Portugal, which I believe is due to stronger DTA utilization.

Speaker Change: Could you tell us what you expect in terms of the effective tax rate in Portugal going forward?

Speaker Change: And then secondly, how should we think about the cadence for buybacks going forward? Because you're guiding for a 25 percent payout in buybacks per year, but is this going to be mainly a full year thing announcement, or depending on when you finish the 200 million euro buyback that you just announced, you might be able to announce a new buyback throughout the year? Thank you.

Miguel de Bragança: Okay. First, in terms of buyback, in principle, as you know, there are some regulations in terms of making sure that the buybacks do not influence unduly the market price. These buybacks have to take time, have to be executed over some months so as not to unduly influence the market price. Because of this, we do not... I mean, in principle, our objective is to have one program a year, but that then will extend, of course, for some time, in principle. So that this is at least the base case. We have just gotten the authorization from the ECB. We are still speaking with the different investment banks and brokers to see what the exact alternative.

Speaker Change: First, in terms of VIVAC in principle, as you know, there are some regulations in terms of making sure that the VIVACs do not influence unduly the market price.

Speaker Change: So, these buybacks have to take time, have to be executed over some months, so as not to unduly influence the market price, and because of this, we do not...

Speaker Change: I mean, in principle, our objective is to have one program a year, but that will extend, of course.

Speaker Change: from the ECB. We are still speaking with the different investment banks and brokers to see what the exact alternative. We expect to, over the next weeks, to start implementing this but we are in the negotiation phase, so to say, with the investment banks.

Miguel de Bragança: We expect, over the next weeks, to start implementing this, but we are in the negotiation phase, so to say, with the investment banks. In terms of the tax rate, I would have to check this because it's important. I mean, we decreased 10% our DTAs. During the year, if you take a look at the full year, I think it's important, we decreased 10% of the DTAs. We cannot look at the tax rate on a quarter-by-quarter basis, I would say, because this is influenced by what is deductible in any specific quarter.

Speaker Change: In terms of the tax rate, I would have to check this because it's important, I mean, we decreased, so our capital, we decreased 10% our DTA, so during the year.

Speaker Change: If you take a look of the full year, I think it's important, we decreased 10% of the DTAs. We cannot look at the, I would say, at the tax rate on a quarter by quarter basis.

Speaker Change: because it is influenced by what is deductible in any specific quarter. So there may be some volatility on a quarter-by-quarter base because the...

Miguel de Bragança: There may be some volatility on a quarter-by-quarter basis because the amount of costs that are not deductible or that are deductible become more relevant on a quarter-by-quarter basis. There is always some volatility going there. Having said that, and looking forward, I do think that we will be able to have in Portugal an average tax rate below 30%. Clearly below 30%, we think it is possible given the structure of our P&L. By the way, I just wanted to check this because, going back to the SVB, there is here a difference between the first SVB and the SVBs to come, so to say. We are approving now, in the next shareholders' meeting, our shareholder distribution strategy while formally approving up to 25% SVB.

Speaker Change: The amount of costs that are not deductible become more relevant on a quarter by quarter basis so there is always some volatility going there.

Having said that,

and looking forward.

Speaker Change: I do think that we will be able to have, in Portugal, an average tax rate below 30%. So clearly below 30% we think it is possible, given the structure of our P&L.

Speaker Change: By the way, I just wanted to check this because, going back to the SBB, there is here a difference between the first SBB and the SBBs to come, so to say.

Thank you.

We are approving now in the next...

shareholders meeting.

Speaker Change: our shareholder distribution strategy, while formally approving the up to 25% SBB. And so the next SBB that we will have, not the first one, will be done according to a policy already approved at the AGM, foreseen by the

Miguel de Bragança: The next SVBs that we will have, not the first one, will be done according to a policy already approved at the AGM, foreseen by the ECB, of course, and where we deduct already the 75% during the year as time goes by. Okay? It is almost sure that absent that we are not delivering on the plan, that the value in principle will be close to it, except if we are not delivering on the plan. Second issue. This first one was, so to say, a kind of one-off because we had not this in our policy. We had to seek a special authorization. That's why. Because we were not deducting the 25%, as you know, from our capital ratios before.

Speaker Change: ECB, of course, and where we deduct already the 75 percent.

during the year, as time goes by.

Speaker Change: So, it is almost sure that, absent that we are not delivering on the plan, that the value in principle will be close to it, except if we are not delivering on the plan.

Second issue, this first one.

Speaker Change: was, so to say, a kind of one-off because we had not this in our policy.

So, we have to subject a special, a special authorization.

Speaker Change: That's why, because we were not deducting the 25%, as you know, from our capital ratios before. So it was a special authorization that typically takes more time because basically it is to show, to distribute a part of the earnings that we were not deducting from our capital.

Miguel de Bragança: It was a special authorization that typically takes more time because basically it is to distribute a part of the earnings that we were not deducting from our capital. When we presented the authorization, we presented a value that we expected to be around 25% of the estimated earnings, but that had some degree of buffer just to make sure that we would not be going above the 25%, on one hand. On the other hand, I mean, the last quarter turned out to be better than what we were, in terms of P&L, initially expecting. That's why the EUR 200 million is not exactly the 25% of the earnings. I think it's important just to clarify.

So, when we present the authorization,

Speaker Change: We presented a value that we expected to be around 25% of the estimated earnings, but it had some degree of buffer just to make sure that we would not be going above the 25%.

on one hand and on the other hand I mean

Speaker Change: the last quarter turned out to be better than what we were, in terms of P&L, initially expecting.

Speaker Change: So, that's why the 200 million is not exactly the 25% of the annual. I think it's important just to clarify. We wanted to be prudent because it was the first one.

Miguel de Bragança: We wanted to be prudent because it was the first one.

Operator 2: We are now going to proceed with our next question. The question comes from the line of Hugo Cruz from KBW. Please ask your question.

Operator: We are now going to proceed with our next question. The question comes from the line of Hugo Cruz from KBW. Please ask your question.

We are now going to proceed with our next question.

Thank you.

Speaker Change: The questions come from the line of Hugo Cruz from KBW, please ask a question.

Speaker 16: Hi. Thanks for the time. I just have one more question. It's around the M&A. Some banks have been quite clear with their M&A criteria to do acquisitions. I'm thinking specifically UniCredit. I was wondering if you have certain internal criteria as well to assess any target around, for example, EPS accretion or return on investment or impact on dividends. Is there any criteria like that you could disclose? Thank you.

Hugo Cruz: Hi. Thanks for the time. I just have one more question. It's around the M&A. Some banks have been quite clear with their M&A criteria to do acquisitions. I'm thinking specifically UniCredit. I was wondering if you have certain internal criteria as well to assess any target around, for example, EPS accretion or return on investment or impact on dividends. Is there any criteria like that you could disclose? Thank you.

Speaker Change: Thanks for the time, I just have one more question, it's around the M&A, some banks have been quite clear with their M&A criteria to do acquisitions, I'm thinking specifically Unicredit. I was wondering if you have certain internal criteria as well to assess any target around for example EPS acquisition, or return on investment.

Speaker Change: impact on dividends, if there are any criteria like that that you could disclose. Thank you.

Miguel de Bragança: I mean, our criterion is very simple. At the end of the day, it has to be more equity for our shareholders than the current plan that we have that is based on organic value creation plus the share buyback. We have to compare the accretion of any acquisition and the capital impacts of any acquisition and the value accretion of acquisition, the accretion in terms of earnings and in terms of value with the one that we have in OPA. We have to compare it with the share buyback, with the earnings that we have and so on. We have to be very comfortable that this is in the best interest of shareholders, considering also the opportunity costs and the execution risks, because there are opportunity costs, of course. Let me just give you an example.

I mean, our criterion is very simple.

Speaker Change: At the end of the day, it has to be more accretive for our shareholders than the current plan that we have that is based on organic value creation plus the share buyback. So we would have to compare the accretion of any acquisition.

and the capital impact of any acquisition.

Speaker Change: and the value of Krishna, the Krishna in terms of earnings and in terms of value with the one that we have in our plan. So we have to compare it with the Shabba Habak, with the earnings that we have and so on. And we have to be very comfortable that this is...

Speaker Change: in the best interest of shareholders, considering also the opportunity costs and the execution risks, because there are opportunity costs.

Of course. Let me just give you an example.

Miguel de Bragança: If one does an acquisition, there's always some market share churn. I mean, there is always some time that you lose in terms of development of systems and digitalization to incorporate systems. There are opportunity costs. We have to consider this and to be very, very comfortable that it's in the best interest of our shareholders. This is the acid test.

Speaker Change: If one does an acquisition, there is always some market share churned. If one does an acquisition, I mean, there is always some time that you lose in terms of development of systems and digitalization to incorporate systems. So there are opportunity costs. So we have to consider this and to be very, very comfortable that it's in the best interest of our shareholders.

So, this is the YASU test.

Speaker 16: Very good. Thank you.

Hugo Cruz: Very good. Thank you.

Very good. Thank you.

Operator 2: Thank you. We are now going to proceed with our next question. The question comes from the line of Luís Pratas from Autonomous Research. Please ask your question.

Operator: Thank you. We are now going to proceed with our next question. The question comes from the line of Luís Pratas from Autonomous Research. Please ask your question.

Speaker Change: Thank you. We are now going to proceed with our next question.

Speaker Change: The questions come from the line of Louise Brackers from Autonomous Research, please ask your question.

Luís Pratas: Good afternoon. Thank you for taking my questions. I have two quick follow-ups, please. The first one is on Mozambique. Could you please confirm if we should expect any impairments in Q1 as there was another downgrade by S&P, if I'm not mistaken, a week ago? If yes, is the size similar to the one in Q4? My second question is on operating Jaws in Portugal. Shall we expect positive Jaws in Portugal for 2025? Thank you.

Louise Brackers: Good afternoon. Thank you for taking my questions. I have two quick follow-ups, please. The first one is on Mozambique. Could you please confirm if we should expect a new impairment in Q1 as there was another downgrade by FNPEA?

if I'm not mistaken, a week ago.

Louise Brackers: If yes, is the size similar to the one in Q4? My second question is on operating jails in Portugal. Shall we expect positive jails in Portugal for 2025? Thank you.

Miguel de Bragança: Can you repeat the last question?

So can you repeat the last question?

and enjoy.

Luís Pratas: One positive is basically if you expect positive Jaws in Portugal for 2025, if basically revenue growth should be higher than the cost growth that you guided, low to mid-single digit.

Thank you very much. Have a good day.

Speaker Change: One positive is basically if you expect positive results in Portugal for 2025, if basically revenue growth should be higher than the cost growth that you got at the low to mid single digit.

Miguel de Bragança: I understand. First, positive Jaws, no, we are not expecting positive Jaws, but we are expecting a resilient P&L. Let me comment a little bit on this. We are expecting that over the year, the NII will be flattish and commissions will grow mid-single digit. If costs also grow mid-single digit, I mean, if the NII is flattish, I mean the Jaws are not necessarily not positive. However, we expect to benefit materially from the cleanup and from the improvement in the strength of our balance sheet, so that we expect that in terms of impairments, provisions, other provisions and so on to have a positive evolution so that net income can be quite resilient, I would say.

Speaker Change: I understand. So, first, positive JAWS. No, we are not expecting positive JAWS, but we are expecting a resilient P&L. Let me comment a little bit on this.

Speaker Change: So, we are expecting that over the year, the NII will be flattish.

Speaker Change: and commissions will go mid-single-digit, so if costs also go mid-single-digit, I mean, if the NII flattish...

Speaker Change: improvement in the strength of our balance sheet so that we expect that in the in terms of impairments provisions other provisions and so on to have a positive evolution so that the net income can be quite resilient I would say.

Miguel de Bragança: In terms of Mozambique, as I commented to you, there is a model based on the impairment of the country. On the rating of the country, I mean, it's not up to now we are commenting the last year results, so it's not up to now to give any information on Q1 results. What I can tell you is that the recent impairment or the recent downgrade of Mozambique will not have a material impact. It will have some impact, but not a material impact in terms of the impairments at group level.

Speaker Change: In terms of Mozambique, as I commented to you, there is a model based on the impairment of the country, on the rating of the country. I mean,

It's not...

Up to now, we are commenting the last year's results.

So it's not up to now to give any information.

on Q1 results.

what I can tell you.

is that we are not...

or the reasons.

the recent impairment or the recent downgrade of Mozambique.

Speaker Change: will not have a material impact, will have some impact, but not have a material impact in terms of the impairments at group level. I would like you to recall that we only have two-thirds of the bank, and the impact of the additional downgrade is quite small, but I don't want here to give any special information

Miguel de Bragança: I would like you to recall that we only have two-thirds of the bank. The impact of these additional downgrade is quite small. I don't want here to give any special information concerning Q1.

Operator: Thank you very much.

Luís Pratas: Thank you very much.

Thank you very much.

Operator 2: We have no further questions at this time. I will now hand back to Mr. Miguel Bragança for closing remarks. Thank you.

Operator: We have no further questions at this time. I will now hand back to Mr. Miguel Bragança for closing remarks. Thank you.

Speaker Change: We have no further questions at this time. I will now hand back to Mr. Miguel Barganza for closing remarks. Thank you.

Miguel de Bragança: Okay. I really would like to thank these analyst community that is following us. We were very satisfied in presenting these results that clearly show that we are aligned with the execution of our plan, and we expect to continue to deliver on it and at least to be reflected in the evolution of our share price going forward. Please count on our full commitment in doing our best. Thank you very much.

Speaker Change: Okay, I really would like to thank this analyst community that is following us.

Speaker Change: We were very satisfied in presenting these results that clearly show that we are aligned with the execution of our plan, and we expect to continue to deliver on it, and this to be reflected in the evolution of our share price going forward. Please count on our full commitment in doing our best. Thank you very much.

Thank you.

Operator 2: This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

Operator: This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

Thank you.

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