Half Year 2025 Banco Comercial Portugues SA Earnings Call

July 31, 2025

Operator: Good day. Thank you for standing by. Welcome to the Millennium bcp First Half 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question-and-answer session. To ask a question during the session, you need to press STAR 11 on your telephone keypad. You will hear an automated message advising your hand is raised. To withdraw a question, please press STAR 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Mr. Miguel Maya. Please go ahead.

Good day, and thank you for standing by. Welcome to the Millennium BCB, first half 2025 earnings conference call at this time or participant.

And listen, only mode after the speaker's presentation, there will be the question and answer session.

To ask a question during the session. You need to press star 1, 1 on your telephone keypad. You will in here on the automatic message, advising your hand is raised.

To withdraw a question. Please. Press star 1 1 again.

Please be advised that this conference is being recorded.

Miguel Maya: Good afternoon. Miguel Maya speaking. Welcome to BCP Earnings Conference Call. I will go through the highlights of our performance, followed by Miguel Braganza and Bernard Claas, who will provide additional detail. In a context marked by high unpredictability, shaped by geopolitical challenges affecting economic agents' confidence, instability and unrest caused by the ongoing wars, and in the eurozone a significant reduction in interest rates, BCP achieved positive progress in results and key business and financial indicators in the first half of this year. Once again, we have demonstrated disciplined capital management, constant focus on operational efficiency, commitment to customer orientation, and the ability, quarter after quarter, to consistently deliver on the strategic plans we presented to the market. In the first six months, the consolidated net income stood at EUR 502 million, an increase of 3.5% year-over-year, supported by strong operational performance, having achieved an ROE of 14.3%.

I would like to hand the conference over to a speaker today. Mr. Miguel Mayer. Please go ahead.

Good afternoon, my name is speaking. Welcome to BCP earnings conference call. I will go to the highlights of our performance, followed by Miguel over again in Bernard's class. We will provide the additional details.

In the context marked by I am productivity shaped by geopolitical challenges things. Affecting economic agents, confidence in stability and rs caused by the ongoing war wars and the indoor also on a significant reduction in interest rates, BCP, achieves, positive progress in results and key business and financial indicators in the first half of this year.

Once again, we have demonstrated discipline, Capital Management, constant focus on operational, efficiency, commitment to customer orientation, and the ability quarter after quarter to consistently deliver on the Strategic plans, we presented to the market.

Miguel Maya: All of our core markets, despite having different challenges, contributed positively to the results, with the activity in Portugal standing out once again with a net income of EUR 424 million, having increased 3.2% year-on-year. It deserves to be mentioned that the increase in net income in Portugal has been driven by the core capabilities of our business model. We have achieved higher operational revenues, although within the context of a continued reduction in interest rates over the past year, thanks to appropriate interest rate risk management and strong commercial intensity. These factors led to the expansion of business volumes, combined with a controlled cost of risk.

in the first 6 months, the consolidate netting comes to the at 5002 million and increase of 3.5% year on year supported by a strong operational performance, having achieved an AOE of 14.3%

All of our core markets, despite having different challenges, contributed positively to the results with the activity in Portal standing out. Once again, with the net income of 424 million having increased 3.2% year on year,

Miguel Maya: The net income from international operations grew by 11.8% year-on-year, having achieved almost EUR 147 million in the first half of 2025, with special mention to the Bank Millennium in Poland, which recorded a net income of EUR 121 million despite charges above EUR 276 million still associated with the FX mortgage loan portfolio, of which EUR 218 million were provisions. Having already a substantial amount in provisions against the risk associated with the FX mortgage loans, which provides confidence to face the future, Bank Millennium continues to develop its core competencies, expanding the franchise to attract and serve a growing number of customers in an economy that is high value creation potential.

These factors led to the extension of this volumes, combined with the controls cost of risk.

The net income from International operations, grew by 11.8% year on year, having achieved almost 147 million in the first half of 2025, Which special mention to the bank Millennium in Poland, which recorded a net income of 121 million, despite charges above 276 million, still associated with the effects, mortgage loan portfolio of which 219 million were provisions.

Miguel Maya: In Mozambique, the net profit in the first half was EUR 24 million, a decrease of 48% driven by impairment and provisions, mostly related with the downgrade of sovereign debt rating that followed the country's instability between the presidential elections and the inauguration in January this year of President Daniel Chapo. Despite the additional charge of impairments in the first quarter of 2025, Millennium bim continued to build up its strong franchise and business model, which has enabled intense commercial activity that reflected in a year-on-year increase of 3.7% in the profit before impairments and provisions. The consistent organic capital generation capacity of our business model is well reflected in BCP's strong capital position.

Having already a substantial amount in Provisions. Again, the risk associated with the affect mortgage loans, which provides confidence to the face. The future Bank Millennium continues to develop its core, competencies expanding the franchise to attract and serve a growing number of customers in an economy that is high value creation potential.

In Miki, the net profit in the first half, was 24 million. A decrease of 48% driven by impairments and Provisions. Mostly related with the downgrade of sovereign debt writing that followed the country's instability between the presidential elections and Inauguration in January this year of President. Daniel Sharp

Despite the additional charge of impairments in the first quarter of 2025 million beam continued to build up its strong franchise and business model, which has enabled intense commercial activity that reflected in the year on year, increase of 3.7% in the prophet before impairments and Provisions.

Miguel Maya: We have capital that raises comfortably above regulatory requirements, with the CET1 at 16.2%, a total capital at 20.2%, which, in accordance with the shareholders' remuneration policy that we present to the market, only includes 25% of the non-audited profit generated in the first half and already considers the impact of the CRR3. The quality of our retail banking business model across our markets, based on strong commercial skills and lasting relations with our customers, led to an increase of 5.5% in customer funds and 3.5% in loan to customers. Customer funds surpassed EUR 106 million, and loans to customers stood at EUR 60 billion at consolidated level, driven by an increase of 4.6% in Portugal, where loans to customers increased EUR 1.8 million year-on-year. We also kept the trajectory of improvement in the quality of the balance sheet.

The consistent organic Capital generation capacity of our business model is well reflected in BCP strong Capital position.

We have Capital raises comfortably above area requirements.

With the c Tier 1 at the 16.2% at total capital capital at 20.2%, which in accordance with the shareholders and policy that we present to the market, only includes 25% of the know of dated profit generated in the first half and already considered the impact of the crr tree.

The quality of our retail. Banking business model across our markets based on a strong commercial skills and Lasting relations with our customers led to an increase of 5.5% in customer funds, and 3.5% in loan, to customers customer funds, surpassed 106 million, and launched to customers tools at 60 billion. At Consolidated level driven by an increase of 40.6% in Portal, where launch to customers increase 1.88 million year on year.

Miguel Maya: In the last 12 months, we have managed to cut non-productive assets by an additional EUR 425 million, including EUR 336 million in NPEs and EUR 70 million in restructuring funds. Operating in a challenging environment, our rigorous management of the balance sheet risks enabled us to also improve the cost of risk to around 30 basis points, a level well anchored below the threshold presented in the strategic plan. Overall, this was a positive first half, which we further strengthened the franchise, the asset quality, the capital ratios, and the efficiency of the bank. In this symbiosis between excellent teams and distinctive digital competencies lays the backbone of our competitive edge, which is also reflected in the expansion of customer base. At group level, our customer base expanded 4% in the last 12 months, reaching EUR 7.1 million, of which more than EUR 2.8 million in Portugal.

We also kept track of the trajectory of improvement in the quality of the balance sheet. In the last 12 months, we have managed to cut non-productive assets by an additional $4.256 billion in NPS and $70 million in restructuring funds.

Operating in a challenging environment, our rigorous management of the balance sheet risks. Enable us to also improve the cost of risk to around 30 basis points a level. Well, anchor below the threshold presented in the Strategic plan. Overall, this was a positive for solve, which we further, strengthened differentiates, the asset quality, the capital ratios and the efficiency of the bank.

In this same bios is between excellent teams and DC, Digital competencies.

Miguel Maya: Most notably, mobile customers grew 9% during the same period, accounting for 73% of the group's customer base and 65% in Portugal, being a very good indicator of the preparation and success of BCP to tackle the opportunities in an increasingly digital market. Individual and corporate clients continued to choose Millennium as their preferred bank, and our services were, again, awarded with prestigious distinctions recognized by the market. Customer recognition of our digital capabilities continues to be reflected in the use they make of the app. In the first half, customers carried out 11% more transactions through the app than in the same period last year, with a significant growth in the number of transfers. This platform reinforced its relevance in the effort to expand the customer base, with an increase of 47% in the number of accounts opened directly in the app.

Lays the backbone of our Competitive Edge, which is also reflected in the expansion of customer base at group level. Our customer base expanded 4% in the last 12 months, reaching 7.1 million of which more than 2.8 million in particle, most notably mobile customers grew 9% during the same periods accounting for 73% of the group's customer base and 65% in Portugal, being a very good indicator of the preparation and success of BCP, to tackle, the opportunities in an increasingly digital Market.

Individual and corporate clients continue to choose Millennial as their preferred bank, and our services were again awarded with prestigious distinctions recognized by the market.

Customer recognition of our digital capabilities continues to be reflected in use, they make off the app.

Miguel Maya: The number of sales through the app increased 13% in the same period, with emphasis on the sale of personal loans, which increased 42%. The convenient and end-to-end seamless experience provided by the app is driving its use by customers in their acquisition journey of solutions, fit for differential needs, being an irrelevant tool to have more processes fully digital. For instance, in the sale of mortgage loans, we saw an increase of 76% in the number of customers who received their approval letters through the app and 38% more mortgage deeds appointments were also scheduled through the app. The investment and priority we give to mobile solutions, with a clear focus on customer-centric innovation, means that our app continues to lead the rankings and deserve top reviews on the most relevant platforms. Before handing over the presentation, let me give you a word on the sale of Novo Banco.

App increased 13% in the same period with emphasis with the emphasis on the sale of personal loans, which increase 42% the convenient and end-to-end seamless experience provided by the app is driving us. It's used by customers in their acquisition journey of solutions, fit for the financial needs being an relevant to to have more processes. Fully digital

For instance, in the sale of mortgage loans, we saw an increase of 76% in the number of customers who received their approval letters to the app and 38% more mortgage disappointments, Warehouse of scale to the app.

The investment and priority we give to Mobile Solutions with a clear focus on customer Centric. Invasion means that our app continues to lead the rankings and the surf top reviews on the most relevant platforms.

Miguel Maya: As we have always emphasized, our strategic plan is based on organic growth. The outcome of this matter, which we consider positive for the Portuguese financial system, does not affect our strategy and our strategic plan in any way. Our commitment has been to the bank's development, focused on commercial intensity, operational efficiency, and rigorous capital management, enabling BCP to position itself as a bank that generates and delivers more value. That focus has shaped our approach. Creating more value is what we have been doing and what we intend to continue doing. Miguel, the floor is yours.

Before ending over the presentation, let me give you a word on the sale of North Bank. As we have always emphasized. Our strategic plan is based on organic growth. So the outcome of this matter which we consider the positive for the Portuguese. Financial system does not affect our strategic, our strategy, and our strategic plan, in any way.

Our commitment has been to the bank's development, focus on Commercial intensity, operational efficiency and rigorous Capital Management, enabling BCP to position itself. As a bank, that generates and delivers more value, that Focus has shaped our approach. Creating more value, is what we have been doing and what we intend to continue doing, Miguel the floor resource

Miguel Braganza: Good afternoon, ladies and gentlemen. As always, starting here with an overview of our income statement, we can see that in spite of the reduction in interest rates, we have been able to present a very resilient NII, both in Portugal and in Poland, as we had anticipated. A growth in commissions in the mid-single digit area, also as we had anticipated, with a higher weighting in Portugal than in Poland. The operating costs are growing around 8.7% on a pro forma basis and 10.5% on a stated basis, basically because last year we had finished the agreement with the unions in the second half of the year, so it only affected the accounts in half of the year. Adjusting for this factor, 8.7%.

Good afternoon, ladies and gentlemen. As always starting here with an overview of our in statements. We can see that in spite of the reduction in interest rates, we have been able to present a very resilient, uh, knee both in Portugal. And in, in Poland as we have anticipated, uh, a growth in Commissions in the mid single digit area. Also, as we had a dissipation, as we had anticipated,

Miguel Braganza: This means that we have been able to show, in spite of the more challenging environment in terms of interest rates, a very, very resilient profitability before impairment and provisions, growing by 3% from a level that I think we all agree is quite a high level. The impairments have been reduced in our geographies, both in Portugal and in Poland, for different reasons. In Poland, there was a sale of NPLs that generated a gain in impairments because in Poland we typically only sell the loans after they are fully impaired. We are seeing here a reduction of the cost of risk in Poland when compared with last year.

With a higher weight in the, in Portugal than in, in Poland, the operating costs growing around 8.7% on a performer basis, uh, and 10.5% on the status basis, basically, because last year, we had finished the agreement with the unions in the second half of the year. Uh uh, so it only affected the accounts uh in half 2 of the year. So just in for this fact that 8.7%, uh, so this means that we have been able to show in spite of the more challenging environment. In terms of interest rates, they

Uh, resilience, uh, profitability before impermanent and Provisions growing by 3% from a level that I think we all agree is quite high level.

Miguel Braganza: If we consider not only the cost that is booked in the provision line, but also the cost that is booked on the other income line and on the results of modification lines, this reduction is around one quarter, around 25%. The profit before income tax, growing 16%, and after income tax and non-controlling interests, we see here a growth rate of 3.5%, mainly because of the high growth rate in Poland, where we have a large stack of non-controlling interests. Just to highlight the main points, the ROE above 14%, the ROT approaching 15%, the growth in terms of book value per share plus dividend per share, reflecting the number of shares bought until 13 June, 4.5%, and the dividend yield based on the price of last year, so the dividend yield in the last 12 months of 8.9%.

Uh, the impairments, uh, have been reduced in our geography, is both in Portugal and in, uh, uh, in Poland for different reasons in Poland. There was, uh, a sale of npls that generated the, uh, again, in impairments. Because in Poland, we typically only sell the loans after they are fully impaired. And, uh, we are seeing here a reduction of the cost of living risks in Poland when compared with last year, and if we consider not only the cost that is booked in the provision line, but also the cost that is booked on the other income line and on the results of modification lines. This reduction is around 1 quarter around 25%, The Profit before income tax growing uh 16%. And after income taxes and non-controlling uh interests we see

Miguel Braganza: In terms of the group profitability, net interest margin growing 3.3%, as we had commented, with some contraction in terms of NIM from 308 to 2.97. I would here like to highlight the very positive growth of the net interest income in international operations. This is mainly because, but not only, but because of the interest, the lower NII generated by the credit holidays last year in Poland. Poland, but in spite of this, even without the effect of the credit holidays, Poland would have grown 5%. In Portugal, in spite of the reduction of interest rates, a very stable NII, as you may see, our NII has been stable in the last four quarters.

Year, uh, growth rate of of 3 and a half percent mainly because of the high growth rate in Poland, where we have, uh, a larger stake of non-controlling interests, just to highlight the main points. The are we above 14% the root approaching 15% the growth, in terms of book, value per share, plus TVs and per share, uh, reflecting the, uh, the number of shares bought until 13th of June for a percent and the dividend yield based on the price uh of uh last year. So I didn't in the last 12 months of 8.9%.

Miguel Braganza: Of course, last Q1, there was an issue in terms of day count because, as we know, February has less months than a typical month of the year. Still, we are showing a very consistent pattern in terms of NII, both in Portugal and in Poland. Fees and commissions in Portugal growing almost 7%, which is I think it's an important print, showing clearly the growth of our customer base and our effort to generate profitability also in this line. In Poland, there is a higher challenge because, as you may recall, we have sold our bank assurance broker operations. This is having its impact, of course, in terms of fees when you do not do a pro forma basis. In any case, we expect, as the bank develops and as time goes by, this gradually to increase. Other net operating income.

From 308 to 2.97. And I will here like to highlight the very positive. I would say the the very positive uh, growth of uh, the net interest uh, income in international operations. This is mainly because, but not only, but, because of the, uh, interest. Uh, the the knee, the lower knee generated by the great holidays last year in Poland, so Poland. Uh, but in spite of this, even without the effect of the credits holidays, it will Poland would have grown 5%. And in Portugal, in spite of the reduction of interest rates, the a stable uh in AI, as you may see. Uh, our knee has been stable in the last 4 quarters, of course, last quarter, there was an issue in terms of of the account, because, as we know, fairy has less months than a typical months of the year, but still,

We are showing a very consistent pattern in terms of knee, both in Portugal and in Poland.

season Commissions in Portugal, growing almost 7%, which is, I think it's an important Point showing clearly the growth of our customer base and our effort to, to generate profitability, also in this, in this line, uh, in in Poland, there is a, uh, a higher challenge because

Is you may recall, we have sold our bank insurance broker operations, this is having uh its impacts of course, in terms of of fees when not correct, when you not do a performer basis, in any case, uh, we expect as the bank develops as time goes by these gradually to increase.

As a net operating income.

Miguel Braganza: We see a very positive evolution in this line. As you can see in terms of Portugal, the mandatory contributions being reduced by around EUR 6 million because of a ruling of the Constitutional Court that declared one of those contributions basically unconstitutional. This is positive news. Also going forward, this EUR 5 to 6 million a year that we used to have is something that we expect to continue. In Poland, of course, as the bank becomes normalized, we see a growth in mandatory contributions, basically adjusting the level of mandatory contributions in the bank to the normal level that it was not paying before. In terms of net trading income, there was here in Poland the mark-to-market of the participation in a payment company that the bank owned that largely explains this value.

Uh, we see a very positive Evolution. Uh, in this line, uh, as you in this line, you can see in terms of portal the mandatory contributions, uh, being reduced by, uh, around, uh, 6 million because of, uh, uh, a ruling, a ruling of the Constitutional court that declared 1 of those contributions. Basically uh and constitutional. Uh, so this is positive news and also going forward this 6 5 to 6 million a year that we used to have something that we expect to continue in uh in Poland of course as the bank becomes normalized. We see a growth in mandatory contributions. Basically adjusting the level of mandatory contributions in the bank to the normal level that

Was not paying it before, in terms of net trading, there was here in Poland. The mark to Market of the participation in, in a payment company that the bank owned that largely explains this. Well,

Miguel Braganza: Operating costs, I would like here to highlight the cost to income of 37%. In consolidated level, as I commented, there is this growth of 10.5%, but adjusting for the seasonality, I would say, of the negotiation with the unions, it would be 8.7%. In Portugal, 8.5%, adjusting for the seasonality around 5%, perfectly aligned with the guidance of mid-single digit that we had anticipated. Cost to income in Portugal, 35%, which clearly shows the resilience of our business model. Cost of risk. Cost of risk around 30 basis points. As we see in Portugal, a level of 33 basis points, so hovering around 35 basis points, which I would say is close to the new normal of the bank, at least for this macro environment in which we are living right now.

Operating costs.

I would like you to highlight the cost to income of 37%. So uh, in Consolidated level as I commented, there is this growth of, uh, 10.5 but adjusting adjusting for the, uh, for the seasonality, I would say of the negotiation with the Unions. Would it would be 8.7% and in Portugal 8.5, adjusting, for the seasonality around 5% perfectly, aligned with the guidance of meeting single digits that we have a TC python cost to income in Portugal, 35%, which clearly shows the resilience of our business model.

Cost of risk.

Um, cost of risk around 30 basis points. Um, as we see

Miguel Braganza: Cost of risk in Poland benefiting from a credit sale that I had anticipated, I would say, before credit sales, the cost of risk in Poland should hover around the 40 basis points. The continued decrease in NPEs. In spite of the low level of NPEs in the several geographies in which we are, and I would here like to highlight the level of non-performing loans, really non-performing loans with more than 90 days past due that is already around 1%, which is a very low level, and if we include the unlikely to pay, already below 3%, around 2.7%, only focused on loans. If we include securities and off-balance sheet items, also this total ratio that includes the unlikely to pay is also already below 2%, the unlikely to pay already below 2%.

As we see in Portugal, uh, a level of 33 by this point. So around, hovering around 35 basis points, which I would say, is close to the, to the, to the new normal of the bank. At least for these macro environment, in which we are living right now, cost of risky in Poland, benefiting from a credit style that I have anticipated. I would say before, credit sales, the cost of risky in in Poland, should over around the the the 40 basis points.

Miguel Braganza: In Portugal, a further reduction of 26% year on year, with the NPE loans ratio, including the unlikely to pay, only at around 2%, as we see in page 16. In our international operations, the NPE ratio is higher, but below 5%, and this is to a large extent linked to the business model in these geographies. In Mozambique, we have a very small credit portfolio and very low, I would say, exposure to credit of companies. Also, a lot of it is to individuals. In Poland, we have a high concentration also in unsecured loans. As you know, part of our strategic targets is to diversify our business model, also to SMEs and corporates.

Really non-performing loans with more than 90 days past due that is already around 1%, which is a very low level uh, and uh, uh with if we include the unlikely to file is already below. 3% around 2.7% only focus on loans. If if we include Securities and off balance sheet items, also these total ratio that includes the likely to sell is also already below 2% the and like to pay already below 2% and in Portugal, a further reduction of 26% year on year with the NP loans ratio, including the next 2 pi or only at around 2%. As we see in page 16 in our International operations, then the NP ratio is is higher but below 5%, and this is to a large extent leads to the business model in this in this

Miguel Braganza: In the meantime, we tend to show a higher NPE loan ratio, but still very consistent with a very healthy model because the spread of the unsecured loans is a multiple of the cost of risk. Activity. Solid activity. Customer funds growing 5.5% year-on-year at group level and 4.6% in Portugal in the several lines. In our international business, growing 7.5%. This really shows the strength of our franchise and our business model and our ability to reinforce our position both as a savings and investment house and a daily banking house. The loan portfolio growing at group level, 3.4%. Here, I would like to highlight the important growth in Portugal of the loan portfolio of more than EUR 2 billion, as you see here in graph in slide 19. In the international operations, quite stable.

Geographies. In Mozambique, we have a very small great portfolio and, uh, uh, and very low. I would say exposure to uh to to to create of of companies are also. A lot of, it is to individuals and in Poland, we have a high concentration of also in and secured loans. As you know part of our strategic targets is to diversify our business model also to SMS and and corporates. But

In the meantime, we tend to show a higher NP loan ratio but still very consistent with a very healthy model because the spread of the ncq loans, uh, is a is a multiple of the cost of risk.

Activity. Solid activity.

Uh, customer funds growing 5 and a half percent year on year at group level, and 4.6% in Portugal. In the several lines, in our international business, growing 7 and a half percent, this really shows the strength of our franchise, and our business model, and our ability, uh, to reinforce our position. Both as a savings and Investments house in the daily ranking house.

The loan portfolio.

Miguel Braganza: This is to some extent linked to the effort that we are doing in Poland of recalibrating, so to say, our balance sheet in Poland so as to have a business model that is more diversified and has a higher share of SMEs and microbusiness and small corporates, I would say, vis-à-vis the market share in mortgages. As you may recall, 2 years ago, 1.5 years ago, we had the issue of the credit holidays, and we had the issue of long-term finance ratio. We were particularly affected vis-à-vis our competitors in Poland. We want to converge, I would say, to a ratio of mortgage to total credit that is more aligned with the system, exactly, to be a more diversified bank. In terms of capital, liquidity. Stability in the capital ratio, I would say this is particularly good news.

Uh, uh, growing at group level 3.4%, uh, here I would like to highlight the important growth, uh, in Portugal, uh, of of the loan portfolio, overall of more than 2 billion. Uh, as you see here in graph, uh, in, in 519, in in the international operations, quite stable, this is, uh, to some extent linked to the effort that we are doing in Poland of recalibrating. So to say our balance sheet in Poland. So as to, uh, have a business model more, that is more Diversified and has a, a higher

Share of, uh, uh, SNES and micro business and, and small corporates. I would say Visa v, um, the market share in, um, mortgages as you may recall, when 2 years ago, we 1 and a half years ago, we had the issue of the great holidays, and we had the issue of long-term Finance ratio. We were particularly effective. These are, the, our competitors in Poland. We want to convert, I would say to a ratio of, uh, um, mortgage to Total credit. That is more aligned with the system exactly to be a more Diversified Bank.

In terms of capital and liquidity.

Miguel Braganza: When considered in the context of the growth of the credit portfolio, this is not something that we should expect forever. As you know, on average, we would expect our RWAs to grow aligned with the growth of our credit portfolio, maybe even a little bit higher because we are focusing more on the corporate and SME business, which is typically more RWA-intensive.

Miguel Braganza: However, in this specific quarter, because of the composition of our growth and the lower risk asset density of our growth, we were able to grow almost without any increase in terms of RWAs, which means that we were able to appropriate the very small 25% accrual of the P&L and considering the 25% accrual, mainly when we consider the last quarter together with an almost irrelevant growth of RWAs, this has made it possible for us to actually increase our capital ratio when we compare with the 15.9% of the last quarter. Going forward, as we had commented in the context of our long-term plan, our objective is to continue to grow at this type of levels, around 5%, but with a higher risk asset density.

Uh stability in the capital ratio. I would say this is a particularly good news and when considered in the context of the growth of the great portfolio. Uh this is not something that we should expect forever as you as as, you know. Uh on on average, we would expect our other ways to grow a lines with the growth of our credit portfolio. Maybe even a little bit higher because we are focusing more on the corporate and SME business, which is typically more other way intensive. However, in this specific quarter, we we because of the composition of our growth and the lower

Miguel Braganza: We should expect that a growth of credit of 5% also to contribute to a higher growth of RWAs and this ratio to slowly, I would say, normalize. A very strong capital position, as we see here in page 22, with a leverage ratio that compares very well with the leverage ratios in the main or most of the main European economies. You see 6.4% comparing with 4% in France, 5.6% in Germany, and 5.5% in Spain, which also translates in a high risk weight density, which gives us some comfort in terms of modeling risk going forward. MREL requirements. Clearly above minimum MREL requirements, so very comfortable position as our bond investors are seeing. Also, a very good performance of our credit spreads and the ability to access the market, I would say, in a normalized way. Pension fund coverage.

Go see the the last quarter together with an almost irrelevant goals of other ways. This has made it possible for us to actually increase our Capital ratio, when you compare with the 15.9 of the last quarter. But going forward, as we had commented in the context of our uh, long-term plan, our objective is to continue to grow at this type of levels around the 5% the but with a higher risk asset density and we should expect that a growth of credit of 5%. Also to contribute to a higher growth of otherwise. And this ratio to, to slowly, uh, I would say normalize,

uh, a very strong Capital position as we see here in page 22 with, uh, a leverage ratio, uh, that compares very well with the leverage ratios in the main, uh, or most of the main European economies you see 6.4%, compared with 4% in in France, 5.6 in Germany, and 5, and 5, and a half in Spain, which also translates in a high risk quite density, which gives us some comfort in terms of modeling risk, going forward.

Mel requirements, clearly, uh, above minimum real requirements. So very comfortable position is our bond investors are seeing

Also, a very good performance of our credit spreads that and uh, uh, the ability to access the market, I would say in a normalized way.

Pension fund coverage.

Miguel Braganza: The fund profitability has been 1.6% as of June 2025, somewhat below, I would say, the reference actuarial rate. However, because of the growth of the long-term interest rates, a quite positive impact in terms of the liabilities of the liabilities, which means that we still maintain an important buffer above the minimum. You see that the pension fund has EUR 3.3 billion of assets for liabilities of EUR 3.05 billion, which means that the difference around EUR 250 million is a buffer to observe potential actuarial differences before having any type of impact in terms of capital. The liquidity position, very robust. I will not enter into it. Now I'll pass the floor here to Bernardo. Thank you, Miguel. Good afternoon, ladies and gentlemen. I will start on page 27 that's related with Portugal, where net income reached EUR 424 million in the first half of 2025.

Um, defend profitability. Uh, the fund profitability, uh, has been 1.6% as of June 25th below. I would say the reference actually. All right? However, uh, because of the, the growth of the long-term interest rates, quite positive impact, in terms of the, uh, the in terms of the liabilities of the, uh, of the liabilities, which means that we still maintain, uh, an important buffer above the minimum, uh, about the minimum you see that that the pension fund is has 3.3 billion of assets for liabilities of 3 3.05, which means that the difference around 250 million is a buffer to observe potential uh actual differences before.

Having any type of impact in the block capital?

Bernard Klas: Thank you, Miguel. Good afternoon, ladies and gentlemen. I will start on page 27 that's related with Portugal, where net income reached EUR 424 million in the first half of 2025. That corresponds to an increase of 3.2% compared with the same period of last year. I think that for this favorable contribution or evolution of the Portuguese net income, it should be highlighted the increase of net operating revenues of almost EUR 90 million and the reduction of almost EUR 11 million on impairments and other provisions.

The uh liquidity position, very robust. I would not enter into it and I will pass the floor here to Bernardo

Miguel Braganza: That corresponds to an increase of 3.2% compared with the same period of last year. I think that for this favorable contribution or evolution of the Portuguese net income, it should be highlighted the increase of net operating revenues of almost EUR 90 million and the reduction of almost EUR 11 million on impairments and other provisions. Regarding operating costs, as it was already explained by Miguel, on a performer basis, costs increased 5.1%. On page 28, net interest income stood at EUR 659 million in the first half of this year. That means 2.2% below what was recorded in the first half of 2024. Once again, I think it's important to highlight, if we do a quarter-on-quarter comparison, that NII increased 2.2%, and it's broadly stable, as Miguel also mentioned, over the last four quarters.

Bernard Klas: Regarding operating costs, as it was already explained by Miguel, on a performer basis, costs increased 5.1%. On page 28, net interest income stood at EUR 659 million in the first half of this year. That means 2.2% below what was recorded in the first half of 2024. Once again, I think it's important to highlight, if we do a quarter-on-quarter comparison, that NII increased 2.2%, and it's broadly stable, as Miguel also mentioned, over the last four quarters.

Okay, thank you. Miguel and good afternoon, ladies and gentlemen. Um, I will start on page 27, that that's related with Portugal where net income reached 424 million in the first half of 25 that corresponds to an increase of 3.2% compared with the same period of last year. Um, I think that for these favorable um uh contribution um or evolution of the Portuguese, net income. It should be highlighted the increase of net. Operating revenues of almost 90 million and the reduction of almost 11 million on impairments and other provisions.

Regarding operating costs. And there's, it was already explained by Miguel by Miguel on a performance basis. Um, of course, uh, increased 5.1%,

On page 28. Um, net interest incomes to that 600 and 659 million. Um, in the first half of this year, that means 2.2% below. What was what was recorded with, uh, in the first half of 2024. But once again, uh, I think it's important to highlight. If we do a quarter on quarter comparison that the knee increase 2.2%, um, and it's

Miguel Braganza: The previous one, there was a small decrease that was related with the calendar effect. Regarding year-on-year evolution, as you can show from the graph, NII decrease reflects the lower income generated by the loan portfolio that was partially offset by the increase of the performing loan book, by the reduction of interest paid on deposits, lower wholesale costs, and the positive contribution from the securities portfolio. NIMS stood at 2.12 at the end of June 2025, which is the same level reported in March 2025 when interest rates were almost 40 basis points higher than they are right now. Moving to page 29, commissions amounted to EUR 307 million in the first half, increasing 6.7% compared with first half 2024. Banking fees and commissions went up 7.7%, supported by higher bank assurance fees and by the increase of clients that have BCP as a first bank.

Bernard Klas: The previous one, there was a small decrease that was related with the calendar effect. Regarding year-on-year evolution, as you can show from the graph, NII decrease reflects the lower income generated by the loan portfolio that was partially offset by the increase of the performing loan book, by the reduction of interest paid on deposits, lower wholesale costs, and the positive contribution from the securities portfolio. NIMS stood at 2.12 at the end of June 2025, which is the same level reported in March 2025 when interest rates were almost 40 basis points higher than they are right now. Moving to page 29, commissions amounted to EUR 307 million in the first half, increasing 6.7% compared with first half 2024. Banking fees and commissions went up 7.7%, supported by higher bank assurance fees and by the increase of clients that have BCP as a first bank.

Broadly stable as Miguel also mentioned over the last 4 quarters. Uh, and and the previous 1, there was a small decrease that was related with the calendar effect.

Contribution from the security portfolio.

Names to that 2.2 at the end of June 25th when we, when interest rates were almost fully by these points higher than they are right now.

Moving to page, 29 commissions amounted to 307 million, um, in the first half, increasing 6.7% compared with first half 24.

Miguel Braganza: Regarding market-related fees, there was an increase of 2.2%, mainly reflecting the higher contribution from asset management. Trading results evolved from minus EUR 4.7 million in the first half 2024 to a positive contribution of EUR 7 million in the first half of this year. Equity accounted earnings were broadly stable year-over-year at a level of around EUR 30 million. Other net operating income registered also an improvement, evolving from minus EUR 25 million in the first half of last year to minus EUR 21 million in the first half of this year. This is mainly due to lower mandatory contributions.

Bernard Klas: Regarding market-related fees, there was an increase of 2.2%, mainly reflecting the higher contribution from asset management. Trading results evolved from minus EUR 4.7 million in the first half 2024 to a positive contribution of EUR 7 million in the first half of this year. Equity accounted earnings were broadly stable year-over-year at a level of around EUR 30 million. Other net operating income registered also an improvement, evolving from minus EUR 25 million in the first half of last year to minus EUR 21 million in the first half of this year. This is mainly due to lower mandatory contributions.

Banking fees and commissions went up 7.77%, supported by higher bank insurance fees and the increase in clients that have a BCP as their First Bank.

Regarding Market related fees. There was an increase of 2.2% mainly reflecting the higher contributions, the higher contribution from Asset Management

Trading results evolved from a loss of €4.7 million in the first half of 2024 to a positive contribution of €7 million in the first half of this year. Equity earnings were broadly stable year on year at a level of around €30 million.

Miguel Braganza: Going to page 30, operating costs totaled EUR 342 million, which is 8.5% higher than the EUR 315 million of last year, although, as already mentioned twice, if you analyze the cost evolution on a proforma basis, meaning that, I mean, considering the accrual of the salary increases and the variable remuneration that was booked in the second half of last year, operating costs went up 5.1%. In terms of branches, there was a small reduction. Regarding the number of employees, there was a reduction of 50 employees. Moving to page 31, which refers to asset quality, as I highlighted before, there was a sizable reduction of NPEs. NPEs reduction since June last year was above 26%, meaning almost EUR 290 million. It should be noticed that from the total figure of EUR 820 million of NPEs, more than 50% are other NPEs and not really 90 days past due exposures.

Bernard Klas: Going to page 30, operating costs totaled EUR 342 million, which is 8.5% higher than the EUR 315 million of last year, although, as already mentioned twice, if you analyze the cost evolution on a proforma basis, meaning that, I mean, considering the accrual of the salary increases and the variable remuneration that was booked in the second half of last year, operating costs went up 5.1%. In terms of branches, there was a small reduction.

Other net. Operating income registered also an improvement evolving from 20, minus 25 million. In the first half of last year to minus 21 million in the first half of this year. And this is mainly due to lower mandatory contributions.

Bernard Klas: Regarding the number of employees, there was a reduction of 50 employees. Moving to page 31, which refers to asset quality, as I highlighted before, there was a sizable reduction of NPEs. NPEs reduction since June last year was above 26%, meaning almost EUR 290 million. It should be noticed that from the total figure of EUR 820 million of NPEs, more than 50% are other NPEs and not really 90 days past due exposures.

Going to page 30 uh operating costs total um, 342 million uh, which is 8.5 higher than the 315 million um, of last year. Although um, if as as also already, um, mentioned twice, if you analyze the cost Evolution on a ProForm of basis, meaning that I mean, uh, considering the approval of the salary increases and the variable ration that was booked in the second half of last year. Operating costs went up 5.1%. In terms of branches, there was a small reduction and regarding the number of employees. There was a reduction of 50 employees.

Moving to page 31, which refers to, uh, asset quality. And as I liked it before, there was a sizable reduction of NPS

Miguel Braganza: Cost of risk stood at 33 basis points in June, which is a similar level than Q1 of this year. That compares with the stated cost of risk of 28 basis points in June 2024. As it was also mentioned, that was affected by an impairment reversal in Q2 of 2024, which, excluding this effect, cost of risk would have stood at 52 basis points in the first half of 2023. Now, moving to page 32, which looks at the NP coverage breakdown. As you can see, total coverage of NPEs stood above 140%, NP coverage by loan loss reserves at 94%. Here, I should also highlight that the total coverage for companies stood at 134%. On page 33, that shows the evolution of foreclosed assets and corporate restructuring funds. Net value of foreclosed assets stood at EUR 46 million.

Bernard Klas: Cost of risk stood at 33 basis points in June, which is a similar level than Q1 of this year. That compares with the stated cost of risk of 28 basis points in June 2024. As it was also mentioned, that was affected by an impairment reversal in Q2 of 2024, which, excluding this effect, cost of risk would have stood at 52 basis points in the first half of 2023. Now, moving to page 32, which looks at the NP coverage breakdown. As you can see, total coverage of NPEs stood above 140%, NP coverage by loan loss reserves at 94%. Here, I should also highlight that the total coverage for companies stood at 134%. On page 33, that shows the evolution of foreclosed assets and corporate restructuring funds. Net value of foreclosed assets stood at EUR 46 million.

NPS reduction since June last year was above 26%, meaning almost 290 million. And it should be noticed that the F that from the total figure of 820 million of NPS more than 50%, are other NPS and not really a 90 base pass, you exposures

Cost of risk, stood at 33 by these points in June.

Which is a similar level than q1 of this year that compares, um, with the stated cost of risk of 28 basis points in June 24th, that was affected by an impermanent reversal in Q2 of 2024, which excluding these effects. These effects cost of risk would have stood at 52 by these points in the first half of last last year.

Now, moving to page 32, which looks at the NP coverage breakdown. As you can see, the total coverage of NPS is above 140% NP coverage by long-loss reserves at 94%. Here, I should also highlight that the total coverage for companies is still at 134%.

Miguel Braganza: That compares with EUR 66 million one year ago, meaning a reduction of more than 29% or a decrease of almost EUR 20 million. Regarding corporate restructuring funds, exposure at the end of June stood at EUR 323 million. That compares with EUR 393 million in June 2024. Now, on page 34, in terms of total customer funds, I mean, we reached in Portugal EUR 72.3 billion, an increase of 4.6% compared with June last year. On balance sheet funds, stood at EUR 56.5 billion, reflecting an increase of 4% year-on-year. Off balance sheet funds went up almost 10%, meaning an increase of EUR 1.4 billion compared with June 2024. In terms of the gross loan book, it stood at EUR 41.5 billion in June 2025, an increase of 4.6% from previous year. This increase reflects the strong performance on loans to individuals, where mortgages registered an increase of 8%.

Bernard Klas: That compares with EUR 66 million one year ago, meaning a reduction of more than 29% or a decrease of almost EUR 20 million. Regarding corporate restructuring funds, exposure at the end of June stood at EUR 323 million. That compares with EUR 393 million in June 2024. Now, on page 34, in terms of total customer funds, I mean, we reached in Portugal EUR 72.3 billion, an increase of 4.6% compared with June last year. On balance sheet funds, stood at EUR 56.5 billion, reflecting an increase of 4% year-on-year. Off balance sheet funds went up almost 10%, meaning an increase of EUR 1.4 billion compared with June 2024. In terms of the gross loan book, it stood at EUR 41.5 billion in June 2025, an increase of 4.6% from previous year. This increase reflects the strong performance on loans to individuals, where mortgages registered an increase of 8%.

On page 33, that shows the evolution of foreclosed assets and corporate restructuring funds, net, value of foreclosed assets, to that 46 million that compares with 66 million 1 year ago. Meaning a reduction of more than 29% or a decrease of almost 20 million

Regarding corporate restructuring funds, exposure at the end of June to that 323 million that compares with 393 million in June 2 4.

Now on page 34, um, in terms of total customer funds, um, I mean, we reach in Portugal 72.3 billion and increase of 4.6% compared with June last year.

On balance sheet funds to that 56.5 billion reflecting an increase of 4% year on year and off balance sheet funds went up almost 10% meaning an increase of 1.4 billion compared with June 24.

Miguel Braganza: In terms of corporate lending, it should be highlighted the positive trend that becomes even more visible in the quarter-on-quarter comparison, where loans to companies registered an increase of 5%. Going to page 35, it is possible to see the new loan origination by segment and the recognition of BCP as a main bank for Portuguese companies. Performing loans in Portugal went up 5.5%, meaning an increase of more than EUR 2.1 billion. Loans to individuals grew 8% year-on-year, with a relevant contribution for mortgages that increased 8.2%. Here, once again, it must be highlighted the performing loans to companies that increased 2.5% year-on-year. As I said before, on a quarter-on-quarter comparison, exposure to companies went up 5%. Now, in terms of international operations, and on page 37, results from international activity went up 11.8% to EUR 146.6 million.

Bernard Klas: In terms of corporate lending, it should be highlighted the positive trend that becomes even more visible in the quarter-on-quarter comparison, where loans to companies registered an increase of 5%. Going to page 35, it is possible to see the new loan origination by segment and the recognition of BCP as a main bank for Portuguese companies. Performing loans in Portugal went up 5.5%, meaning an increase of more than EUR 2.1 billion. Loans to individuals grew 8% year-on-year, with a relevant contribution for mortgages that increased 8.2%. Here, once again, it must be highlighted the performing loans to companies that increased 2.5% year-on-year. As I said before, on a quarter-on-quarter comparison, exposure to companies went up 5%. Now, in terms of international operations, and on page 37, results from international activity went up 11.8% to EUR 146.6 million.

Improved. Bi light is the positive trend. That becomes even more visible in the quarter-on-quarter comparison where loans to companies registered an increase of 5%.

Going to page 35 and it is possible to see the new loans origination uh by segment and the recognition of BCP as a main bank for Portuguese companies.

Performing loans, in Portugal went up 5.5%, meaning an increase of more than 2.1 billion.

Loans to individuals grew 8% year on year with the relevant contribution, for mortgages that increased 8.2%. And here, once again, it must be highlighted, the Performing loans to companies that increase 2.5% year on year. But as I said before, on a quarter on quarter comparison exposure to companies went up 5%.

Miguel Braganza: Dynamics were different in Poland and Mozambique. Bank Millennium in Poland, net profit stood at EUR 121 million in the first half of 2025, up 43% from previous year, while Millennium bim Mozambique recorded a net profit of almost EUR 24 million. That is lower than the amount recorded the year before. As I mentioned, as it was mentioned in Q1 2025, the decrease was related with a downgrade of the sovereign debt, leading to an increase on financial assets impairments. Moving to page 38, which refers to Bank Millennium, net income went up more than 43%, profitability continued to be impacted by costs related with CHF mortgage loans. If we exclude this specific effect, net income grew 6.9% compared with the same period of last year and would have stood above EUR 380 million. Net operating revenues up 13.6%, operating costs, including mandatory contributions, up 15%.

Bernard Klas: Dynamics were different in Poland and Mozambique. Bank Millennium in Poland, net profit stood at EUR 121 million in the first half of 2025, up 43% from previous year, while Millennium bim Mozambique recorded a net profit of almost EUR 24 million. That is lower than the amount recorded the year before. As I mentioned, as it was mentioned in Q1 2025, the decrease was related with a downgrade of the sovereign debt, leading to an increase on financial assets impairments. Moving to page 38, which refers to Bank Millennium, net income went up more than 43%, profitability continued to be impacted by costs related with CHF mortgage loans. If we exclude this specific effect, net income grew 6.9% compared with the same period of last year and would have stood above EUR 380 million. Net operating revenues up 13.6%, operating costs, including mandatory contributions, up 15%.

Now, in terms of international operations and on page, 37 results from International activity, went up 11.8% to 146.6 million Dynamics were different in Poland and Mozambique Bank Millennium in Poland, net profits, to that 121 million in the first half of 25 at 43% from previous year. While Millennium BB, Mosin be recorded. The net profit of almost 24.

Ion that is lower than the amount recorded the year before. And as I mentioned, and I guess it was mentioned in q125. The the decrease was related with the downgrade of sub of the sovereign debt leading to an increase on financial assets impairments.

Moving to page 38 which refers to bank Millennium net income went up more than 43% but profitability continued to be impacted by costs related with CHF mortgage loans. If we exclude these specific effects uh net income grew 6.9%, compared with the same period of last year and would have to about 380 million euros.

Miguel Braganza: If we exclude mandatory contributions from costs, the increase of the cost base was 11%. CET1 and total capital at 13.8% and 15% respectively are clearly above the minimum requirements, despite the quarter-on-quarter reduction related with the application of CRR3 in Q2 of this year and the fact that Bank Millennium is not considering in their first half capital figures the earnings of the first half results. Considering the first half 2025 net income, CET1 and total capital ratios stood at 15% and 16.8% respectively. On page 39, subdetailed information about Bank Millennium, NII increased EUR 32 million compared with the first half of last year. NIMS stood at 4.18%, which compares to 4.32% in the first half of 2024.

Bernard Klas: If we exclude mandatory contributions from costs, the increase of the cost base was 11%. CET1 and total capital at 13.8% and 15% respectively are clearly above the minimum requirements, despite the quarter-on-quarter reduction related with the application of CRR3 in Q2 of this year and the fact that Bank Millennium is not considering in their first half capital figures the earnings of the first half results. Considering the first half 2025 net income, CET1 and total capital ratios stood at 15% and 16.8% respectively. On page 39, subdetailed information about Bank Millennium, NII increased EUR 32 million compared with the first half of last year. NIMS stood at 4.18%, which compares to 4.32% in the first half of 2024.

Net, operating revenues app 13.6% and operating costs including mandatory contributions at 15%. If we exclude mandatory contributions from costs, increase of the cost base was 11%

c21 and total Capital at 13.8 and 15% respectively, uh, are clearly above the minimum requirements. Despite the quarter-on-quarter reaction related with the application of cr3 in the second quarter of this year, and the fact that bank Millennial is not considering in their first half, um, Capital, um, Capital figures the earnings of the first half results, considering the first half, uh, 25 n.

Income ct1 and total Capital ratios to that 15 and 16.8 respectively.

Miguel Braganza: It is important to highlight that National Bank of Poland cut interest rates by 50 basis points in May, and already in July, another additional cut of 25 basis points. Fees and commissions were down 5%, and reduction was mostly related, as Miguel said, with bank assurance commissions that are expected to be recovered over the year and somehow align with the expectations in terms of volume growth. Trading contribution for P&L from Bank Millennium was influenced by the revaluation of the stake that Bank Millennium has in a local company. Mandatory contributions went up EUR 51 million compared with the first half of 2024, as you know, Bank Millennium started to pay the banking tax in June 2024 after exiting the recovery plan. Moving to page 40, related with asset quality, cost of risk stood at 21 basis points. That compares with 50 basis points in June 2024.

Bernard Klas: It is important to highlight that National Bank of Poland cut interest rates by 50 basis points in May, and already in July, another additional cut of 25 basis points. Fees and commissions were down 5%, and reduction was mostly related, as Miguel said, with bank assurance commissions that are expected to be recovered over the year and somehow align with the expectations in terms of volume growth. Trading contribution for P&L from Bank Millennium was influenced by the revaluation of the stake that Bank Millennium has in a local company. Mandatory contributions went up EUR 51 million compared with the first half of 2024, as you know, Bank Millennium started to pay the banking tax in June 2024 after exiting the recovery plan. Moving to page 40, related with asset quality, cost of risk stood at 21 basis points. That compares with 50 basis points in June 2024.

On page 39 and sub detailed information about Bank Millennium knee increased 32 million compared with the first half of last year means to that 4.18, which compares to 4.32 32 in the first half of 24. And it is important to highlight that National Bank of Poland, kept interest rates by 50 basis points in May and already in July another additional cut of 25 basis points.

Fees and commissions were down 5%, and the reduction was mostly related, as Miguel said, to bank insurance commissions that are expected to be recovered over the year. Um, and somehow align with the expectations in terms of volume growth.

Trading contribution. Uh for p&l from Bank Milan, he was influenced by the revaluation of the sake that back Millennia, has in The Local Company and mandatory contributions went up um 51 million compared with the first half of 24 as as you know, the bank, the bank Milan you started to pay the banking tax in June 24th after exit to the recovery plan.

Miguel Braganza: As it was already mentioned and on the presentation of Bank Millennium, in Q2, cost of risk of the Polish subsidiary was impacted by the sale of NPLs. Non-performing loans, more than 90 days past due, stood at 2.1%, and coverage by loan loss reserves of non-performing loans stood at 153%. On page 41, customer funds in Bank Millennium grew 6.7% year-on-year. Off balance sheet funds grew more than 34%, and total deposits 4.5%. In terms of loans, gross books stood at PLN 18 billion, which is slightly lower than in June 2024. Mortgage loans decreased 4%, and personal loans went up almost 4%. Regarding companies, where Bank Millennium has a strong focus, exposure to companies increased more than 6.5% compared with June last year.

Bernard Klas: As it was already mentioned and on the presentation of Bank Millennium, in Q2, cost of risk of the Polish subsidiary was impacted by the sale of NPLs. Non-performing loans, more than 90 days past due, stood at 2.1%, and coverage by loan loss reserves of non-performing loans stood at 153%. On page 41, customer funds in Bank Millennium grew 6.7% year-on-year. Off balance sheet funds grew more than 34%, and total deposits 4.5%. In terms of loans, gross books stood at PLN 18 billion, which is slightly lower than in June 2024. Mortgage loans decreased 4%, and personal loans went up almost 4%. Regarding companies, where Bank Millennium has a strong focus, exposure to companies increased more than 6.5% compared with June last year.

Moving to page 40, relate with related with asset quality, a cost of this to that 21 by these points. That compares with 50 by these points. In June 24th already mentioned and on the presentation of Bank Millennial uh the SEC in the second quarter cost of risk of the Polish subsidiary was impacted by the sale of of npls.

On page 41, customer funds in Bank Milan grew by 6.7%, while year-on-year balance sheet funds increased by more than 34%, and total deposits grew by 4.5%.

In terms of loans, gross books, to that $18 billion, which is slightly lower than in June 2024.

Mortgage loans decrease uh 4% and personal loans went up, uh almost 4% and regarding companies, where Bank Millennium has a strong Focus. Um, exposure to companies increased more than 6 and a half percent compared with June of last year.

Miguel Braganza: On page 42, regarding FX mortgage, it's worth mentioning the continued reduction of the CHF portfolio, which showed a reduction of 31% since June 2024 and by 10% since March 2025. CHF loan book at the end of June 2025 represented only 1.1% of the loan portfolio, which compares with 2.4% one year ago. Cumulative provisions for illegal risks stood at EUR 1.74 billion, representing 142% of the CHF mortgage portfolio. It is also possible to see, once again in this slide, the downward trend of the new court claims and the capacity and focus of Bank Millennium in reaching amicable settlements. This is another quarter where agreements regarding CHF mortgage loans with clients were above new individual lawsuits.

Bernard Klas: On page 42, regarding FX mortgage, it's worth mentioning the continued reduction of the CHF portfolio, which showed a reduction of 31% since June 2024 and by 10% since March 2025. CHF loan book at the end of June 2025 represented only 1.1% of the loan portfolio, which compares with 2.4% one year ago. Cumulative provisions for illegal risks stood at EUR 1.74 billion, representing 142% of the CHF mortgage portfolio. It is also possible to see, once again in this slide, the downward trend of the new court claims and the capacity and focus of Bank Millennium in reaching amicable settlements. This is another quarter where agreements regarding CHF mortgage loans with clients were above new individual lawsuits.

On page 42 regarding the effects of the mortgage, it's worth mentioning the continuous reduction of the CHF portfolio, which shows a reduction of 31% since June 24th and by 10% since March 25th.

CHF loan book at the end of June. Um, 25 representative only 1.1% of the loan portfolio um which Compares with 2.4% 1 year ago.

Cumulative, Provisions for legal risks to that 1.74 billion representing 142% of the CHF mortgage portfolio.

Miguel Braganza: Turning to page 43, which regards now to Mozambique, to Millennium bim, performance in Mozambique was impacted by the downgrade of sovereign debt ratings, leading to additional impairments on financial assets at the end of last year and the first quarter of this year. As a consequence, the net income decreased from EUR 46 million in June 2024 to almost EUR 24 million in June 2025. Net operating revenues went up almost 7%, costs registered an increase of around 10% compared with previous year. This could be also partially explained by the increase in terms of the number of employees. Capital ratios stood at a very high level, it stood at the end of June at 37.2%. Moving to page 44, NAI went up more than 9%.

Bernard Klas: Turning to page 43, which regards now to Mozambique, to Millennium bim, performance in Mozambique was impacted by the downgrade of sovereign debt ratings, leading to additional impairments on financial assets at the end of last year and the first quarter of this year. As a consequence, the net income decreased from EUR 46 million in June 2024 to almost EUR 24 million in June 2025. Net operating revenues went up almost 7%, costs registered an increase of around 10% compared with previous year. This could be also partially explained by the increase in terms of the number of employees. Capital ratios stood at a very high level, it stood at the end of June at 37.2%. Moving to page 44, NAI went up more than 9%.

It is also possible to see once again in this in this slide. Um, the downward trend of the new court claims and the capacity and focus of Bank Millennium in reaching amicable settlements. This is another quarter where agreements with CHF agreements regarding CHF, mortgage loans with clients, what about new individuals, uh lawsuits,

Turning to page 43, which regards to now to MOS and big to Millennium beam performance in Mosen Beek. Was impacted by the downgrade of sovereign debt ratings leading to additional impairments on financial assets at the end of last year and the first quarter of this year. And as a consequence, the net income decreased from 46 million in June 24th to almost 24 million in June 25.

Net, operating revenues went up almost 7% and cost registered an increase of around 10% compared with previous year. And these could be also partially explained by the increase. In terms of the number of employees Capital ratios through that. A very high levels and each tool at the end of June at 37.2,

Miguel Braganza: For this evolution, Millennium BIM, there was a contribution, let's say, from the reduction in the local currency requirements for non-remunerated cash reserves that has been applied since January 2025. NIM was broadly stable, above 8%. Commissions registered a negligible decrease of 2.5%. Other income that includes mostly the contribution from the trading line on the Mozambique operation went up more than 4%. On page 45, regarding asset quality, Non-Performing Loans, 90 days past due, stood at 3.6%. That compares with 3.8% one year ago. Coverage, it's above last year at a level of 125%. Regarding volumes on page 46, you can see in Mozambique that customer funds increased 6%, driven mostly by the increase on demand deposits, and loans to customers registered an increase of almost 4%, supported by the growth on personal loans.

Bernard Klas: For this evolution, Millennium BIM, there was a contribution, let's say, from the reduction in the local currency requirements for non-remunerated cash reserves that has been applied since January 2025. NIM was broadly stable, above 8%. Commissions registered a negligible decrease of 2.5%. Other income that includes mostly the contribution from the trading line on the Mozambique operation went up more than 4%. On page 45, regarding asset quality, Non-Performing Loans, 90 days past due, stood at 3.6%. That compares with 3.8% one year ago. Coverage, it's above last year at a level of 125%. Regarding volumes on page 46, you can see in Mozambique that customer funds increased 6%, driven mostly by the increase on demand deposits, and loans to customers registered an increase of almost 4%, supported by the growth on personal loans.

Moving to page 44 and I went up more than 9%. And for this Evolution um, me lady beam. There was a, a contribution let's say from the reduction, um, in the local currency requirements for non-remunerated cash reserves, um, that has been applied since January 2 5,

Was brought with stable above 8% commissions, registered, and negligible decrease of 2.5%. And other income that includes mostly, uh, the contribution from the trading line on the Mosen League operation. Went up more than 4%

On page 45 um regarding asset, quality non-performing loans, 90 days past due to that. 3.6% that compares with 3.8%, 1 year ago and coverage. Its uh, above last year at the level of 125%.

Regarding volumes on page. Uh, 46, you can see um in mozeek that customer fans, increase 6%.

Miguel Braganza: As you can see, there was also registered a decrease in terms of loans to companies. Thank you for your attention. Before we move to Q&A, we'll return to Mr. Miguel Braganza for some final remarks. As usual, here, we present the key metrics of our plan. As you may see, we are clearly on track to deliver on our plan. The business volumes behaving very positively, clearly on track to achieving business volumes above EUR 190 billion by 2028. In terms of number of customers also, and number of customers also with a high share of mobile that will enable us to serve them with high quality and in a cost-efficient way. The cost to the community tier one ratio behaving also very favorably and consistently with a high ROE, clearly above the targets that we have set. I will open now the floor to Q&A.

Bernard Klas: As you can see, there was also registered a decrease in terms of loans to companies. Thank you for your attention. Before we move to Q&A, we'll return to Mr. Miguel Braganza for some final remarks. As usual, here, we present the key metrics of our plan. As you may see, we are clearly on track to deliver on our plan. The business volumes behaving very positively, clearly on track to achieving business volumes above EUR 190 billion by 2028. In terms of number of customers also, and number of customers also with a high share of mobile that will enable us to serve them with high quality and in a cost-efficient way. The cost to the community tier one ratio behaving also very favorably and consistently with a high ROE, clearly above the targets that we have set. I will open now the floor to Q&A.

Driven mostly by the increase on demand, deposits and Loans. To customers register, an increase of almost 4% supported by the growth on personal loans. As as you can see, this was also registered a decrease in terms of, uh, loans to companies

And uh, thank you for your attention before we move to Q&A, I will return to Mr. For some final remarks,

Miguel Braganza: Thank you very much. Thank you so much, dear participants. As a reminder, if you wish to ask a question, please press star 11 on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star 11 again. Please, Tamba will compile the Q&A roster. This will take a few moments. Now we're going to take our first question. It comes from Ioulan of Ignacio Ulargui from BNP Paribas Exane. Ioulan, is it open? Please ask your question. Thanks. Good afternoon. Thanks very much for the presentation and for taking my questions. I have 2 questions, if I may, and one follow-up and one clarification. The first one is on NII. How should we think about Portuguese NII after the performance of Q2? Do you see it? We have seen already the bottom?

Operator: Thank you very much. Thank you so much, dear participants. As a reminder, if you wish to ask a question, please press star 11 on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star 11 again. Please, Tamba will compile the Q&A roster. This will take a few moments. Now we're going to take our first question. It comes from Ioulan of Ignacio Ulargui from BNP Paribas Exane. Ioulan, is it open? Please ask your question.

Uh, I will open all the floor to to q and I thank you very much.

And wait for a name to be announced to withdraw a question. Please, press star 1 1 again, please, standby, will come back, the Q&A roster. This will take a few moments.

And now we're going to take our first question.

Ignacio Ulargui: Thanks. Good afternoon. Thanks very much for the presentation and for taking my questions. I have 2 questions, if I may, and one follow-up and one clarification. The first one is on NII. How should we think about Portuguese NII after the performance of Q2? Do you see it? We have seen already the bottom?

And it comes from Land office from BNP. Parable exam. Your line is open, please ask your question.

Miguel Braganza: Do you think, Miguel, the mid-single-digit growth expectation for 2026 that you flagged last quarter is still valid? Second question is on capital. You have had a very good performance on capital. You have still a very big buffer above 13.5% target that you have. I mean, how should we think about the use of that capital? I know that you have said that the plan has been that you had a plan based on organic growth. Is it reasonable? When should we have a reasonable view when this capital could be distributed or used in any way? Finally, 1 clarification on the tax rate evolution. I mean, looking to the tax rate, it's very low in Portugal. How should we think about it going forward?

Ignacio Ulargui: Do you think, Miguel, the mid-single-digit growth expectation for 2026 that you flagged last quarter is still valid? Second question is on capital. You have had a very good performance on capital. You have still a very big buffer above 13.5% target that you have. I mean, how should we think about the use of that capital? I know that you have said that the plan has been that you had a plan based on organic growth. Is it reasonable? When should we have a reasonable view when this capital could be distributed or used in any way? Finally, 1 clarification on the tax rate evolution. I mean, looking to the tax rate, it's very low in Portugal. How should we think about it going forward?

Um, thanks. Good afternoon, and thanks very much for the presentation. And for taking my questions, I have 2 questions if I may and 1 follow up and on a clarification. So, the first 1 is on, um, knee. How should we think about Portuguese? And I, I after the performance of 2, do you see it? Um, we have seen already the bottom and um, using Miguel, the meeting single digit, growth expectation for 26. Um, so that just like last quarter is um, still valid.

Second question is on Capital, um you have um had a very good performance on Capital. You have a still, a very big buffer with a 30 above 13 and a half Target that you have. I mean, how should we think about the use of that capital? I know that you have said that the plan, um, has been, um, that you had a plan based on organic growth. Um, is it reasonable when, when should we have a reasonable view when this capital,

Miguel Braganza: Also wanted to get a bit of your sense of the implications from the recent plans of the Portuguese government to reduce the tax rate in Portugal from 20% to 17%. Thank you. Okay. Thank you very much. Starting with the last question about the tax rate, the type of tax rate that we are seeing in Portugal, we think they are consistent, and we can expect this type of tax rate on the mid-20s going forward, ex this evolution that we are seeing of the potential changes to the tax rate in Portugal. First, there is a proposal on our parliament, as some of you may know, of reduction of the tax rate from 20% to 17% in 3 years, but already legislated, so to say. There is a reduction of 1% a year so as to reach 17%.

Miguel Braganza: Also wanted to get a bit of your sense of the implications from the recent plans of the Portuguese government to reduce the tax rate in Portugal from 20% to 17%. Thank you.

Miguel Braganza: Okay. Thank you very much. Starting with the last question about the tax rate, the type of tax rate that we are seeing in Portugal, we think they are consistent, and we can expect this type of tax rate on the mid-20s going forward, ex this evolution that we are seeing of the potential changes to the tax rate in Portugal. First, there is a proposal on our parliament, as some of you may know, of reduction of the tax rate from 20% to 17% in 3 years, but already legislated, so to say. There is a reduction of 1% a year so as to reach 17%.

That could be distributed um or used um in any way. Um and finally, 1 clarification on the tax rate Evolution. I mean 1, um, look into the tax rate, it's a very low in Portugal. Um, how should we think about it, going forward. And also wanted to get a bit of your sense of the implications from the recent plans of the Portuguese government to reduce the tax rate in, Portugal from 20% to 70%,

Thank you.

Okay, thank you. Thank you very much.

Uh, starting starting with the last question, uh, uh, about the tax rate, the, the type of tax rate that we are seeing in Portugal. We think they are consistent and we can expect this type of tax rates on the on the me 20s. Uh, going forward X. This is uh, uh Evolution that we are seeing um of the

Miguel Braganza: Once we get there and as we went there, we would expect a proportional reduction on our tax rate of 1 percentage point a year because this is almost I'm speaking about the Portuguese operations. This is almost automatic. This is good news. I would hear first, of course, having a 3% reduction on taxes for our profitability is good news because this translates immediately into a higher profitability and a higher profit and consequently, in principle, into a higher valuation. Nevertheless, there is a short-term impact in terms of DTAs and in terms of capital. We don't expect this to have an impact necessarily in terms of profitability.

Potential changes to the to the tax rate in Portugal. So first, uh, there is a, a proposal on our Parliament as some of you may know of reduction of the tax rate from 20% to 17% in 3 years, but already legislated. So to say, so there is a reduction of 1% a year. Uh, so that. So as to reach 17%, once we get there and as we went there, we would expect, uh, a proportional reduction on our tax rate of

Of 1 percentage point a year because this is almost, I'm speaking about the Portuguese operations. This is almost automatic

Um, and that this is good news. So I was here. First, of course, having 3% with action on taxes for, uh, our profitability is good news because this translates immediately into, uh, High profitability and the higher profit and, uh, and consequently in principle into a higher valuation. Um,

Miguel Braganza: If this law is approved and in spite of this being good news from a value standpoint, in terms of capital, we would expect, because of the reduction of DTAs, something around, give or take, around 15 basis points of reduction in terms of capital. Nevertheless, it's much less in terms of impact than what we would expect in terms of the impact or in terms of valuation of the bank. In terms of capital, as we have presented the plan, it is a four-year plan, a plan until 2028.

Nevertheless, there is a shorter impact in terms of of DTI and in terms of of capital. So we don't expect this to have an impact necessarily in terms of profitability. But uh if this law is approved and in spite of this being a good news, from a very interesting point in terms of capital, we would expect, uh, because of the reduction of dtas something around give or take around 15 basis points of reaction in terms of of capital. So, I think. Uh, but nevertheless, it's much less in terms of impact than what you would expect in terms of the impact in terms of evaluation of the bank.

in terms of capital,

Miguel Braganza: The base of our plan is growth both in terms of customer funds and in terms of credit, a growth in terms of credit that we expect to have a carrier more or less around 5% in Portugal a year, in Poland maybe a little bit more than that, but changing, so to say, somewhat the mix into a portfolio with a somewhat higher risk-weighted asset density because we want to focus more and more in our two main geographies, in the SMEs and corporate business, so with a higher risk-weighted asset density. This means higher RWA consumption. As we move forward, our plan is to allocate this capital or this generated capital to growth, to organic capital growth. This quarter, but we cannot see it every quarter, we were able to grow exactly this 5%.

As we have presented, the plan, it is. It was a, it is a 4 year plan, a plan until 28 and the base of our plan is growth growth. Both in terms of, uh, customer funds and in terms of credit, uh, a growth in terms of credit that we expect to have a car more, or less around 5%. Some in, in Portugal year, in Poland, maybe a little bit more than that.

Um, but changing. So, to say somewhat the mix into, um,

Miguel Braganza: Of the deals and of the origination that we had this quarter and of the amount of government-guaranteed credit that we had this quarter and of the risk profile that we have originated this quarter, we were able to grow credit without, I would say, the proportional impact in terms of RWAs, which is very positive. Going forward, looking until 2028, what I would expect is that our growth in RWAs will be somewhat larger than our growth in capital. This means that by distributing 75% of our profits every year through dividends and through share buybacks, this means that we will converge, I would say, to a CET1 ratio comfortably above 13.5%. This is our plan. If for whatever reason the environment changes and we are not able to grow, of course, we have to come back to you and present another plan.

Not higher risk, created as a density because we want to focus more and more in our 2 Main geographies in the in the smes and corporate business. So with a higher risk asset density, so this means higher other consumption. So as we move forward, our plan is to allocate this capital or this generated Capital to uh uh, to growth to organic Capital Growth, uh, these quarters. But we cannot see it every quarter. We were able to grow exactly this 5% but of the deals and of the origination that we have this quarter, and of the amount of, uh, government guarantees, uh, created that, we have this quarter, and of the risk profile that we have originated this quarter. We were able to grow, uh, uh, credits without I would say

The proportional impact is, uh, otherwise very positive. But going forward, looking until 2028, what...

I would expect is that our growth in are the blue eyes will be somewhat larger than our growth in capital. And this means that by Distributing 75% of our, um, of our profits, every year through, uh, dividends and through share IX,

This means that uh we will converge, I would say to uh ct1 ratio comfortably above 13 and a half percent and this is our plan.

Miguel Braganza: As of today, this is the plan, and we are delivering on the plan. In terms of NII, the message here for this year, both for Portugal and Poland, is a message of stability of NII, of resilience of the NII, which is in a scenario of decrease of interest rates. Looking to 2026, I would say, in Poland, in spite of a further reduction in interest rates, we would expect the margin in Poland to continue relatively resilient. In Portugal, what we would expect, even if the ECB rate goes to as low as 175, but based on the foreign rates, that then starting next year, our NII will start growing, I would say, low to mid-single digits in Portugal, consistent with the growth of the business volumes of 5% and a marginal contraction.

For whatever reason, the environment changes and we are not able to grow, of course, we have to come back to you and present another plan. But as of today, this is the plan and we are delivering on the plan.

In terms of knee. The message here for this year, both for Portugal and Poland is a message of stability of knee of resilience of the knee. Which

And she's in a scenario of decrees of interest rates.

Miguel Braganza: In Portugal, what we would expect, even if the ECB rate goes to as low as 175, but based on the foreign rates, that then starting next year, our NII will start growing, I would say, low to mid-single digits in Portugal, consistent with the growth of the business volumes of 5% and a marginal contraction. To make a long story short, NII, resilience in Portugal, resilience this year, and some growth next year.

Uh, looking to 26. I would say in Poland, uh, in spite of the further reduction, uh, in interest rates, uh, uh, we would, we would expect the, uh, the, the margin in, in Poland, to continue relatively resilient,

Miguel Braganza: To make a long story short, NII, resilience in Portugal, resilience this year, and some growth next year. Thank you very much. Thank you. Now we're going to take our next question. It comes from Álvaro Fernández from UBS. Ioulan, is it open? Please ask your question. Yeah. Hi. Good afternoon. Thanks for taking my questions. I have two. First, we have seen a strong acceleration in corporate lending in Portugal. What has driven this performance? What are your expectations for coming quarters? Is the EUR 18 billion book you have right now sustainable towards your end, or should we see a reversal? Second, CHF provisions in H1 have declined 8% year-over-year and just 2% compared to the second half of 2024, so not significantly. My question is, how do you see the second half of this year relative to the first?

Uh in Portugal, what we would expect even if the uh the ECB rights goes to as low as 175. But based on the foreign rights that then starting next year our Knee will start growing. Uh, I would say low to meet single digits in in Portugal consistent with the growth of the business volumes of 5% and a marginal margin contraction. So to make a long story short,

Ignacio Ulargui: Thank you very much.

Knee resilience in Portugal, resilience this year, and some growth next year.

Operator: Thank you. Now we're going to take our next question. It comes from Álvaro Fernández from UBS. Ioulan, is it open? Please ask your question.

Thank you very much.

Thank you.

Now, we're going to take our next question.

Álvaro Fernández: Yeah. Hi. Good afternoon. Thanks for taking my questions. I have two. First, we have seen a strong acceleration in corporate lending in Portugal. What has driven this performance? What are your expectations for coming quarters? Is the EUR 18 billion book you have right now sustainable towards your end, or should we see a reversal? Second, CHF provisions in H1 have declined 8% year-over-year and just 2% compared to the second half of 2024, so not significantly. My question is, how do you see the second half of this year relative to the first? Also, if you could give a bit more color on 2026. Thanks.

And it comes to land of Alvaro. Fernandez from UBS yolen is open, please ask your question.

Yeah. Hi. Good afternoon and thanks for taking my questions. I have 2

First, uh, we have seen a strong acceleration in corporate lending in Portugal. So what had driven this performance? What are your expectations for coming quarters? And

Miguel Braganza: Also, if you could give a bit more color on 2026. Thanks. We think that corporate lending growth around the mid-single digits is sustainable. I cannot commit that every quarter this will be gradual because mainly when you speak about corporate loans and about the larger SMEs, there is always some bulkiness there. We do think it's sustainable. We have a pipeline for this. We are seeing also some interest right now, finally, also in line with the second-order effects of the PRR, of the funds that come from Europe and the investment in several projects, there are second-order effects. We feel comfortable in Portugal that this type of growth rates year-on-year of mid-single digits are sustainable. In terms of the P&L for the rest of the year, the guidance that we have given is maintained.

Is the 18th you have right now sustainable towards your end, or should we see, uh, a reversal in second CHF? Provisions in H1 have declined 8% year on year and just 2% compared to the second half of 2024. So no, not significantly. So my question is, uh, how do you see the second half of this year relative to the first? And also, if you could give a bit more color on 2026. Uh, thanks.

Miguel Braganza: We think that corporate lending growth around the mid-single digits is sustainable. I cannot commit that every quarter this will be gradual because mainly when you speak about corporate loans and about the larger SMEs, there is always some bulkiness there. We do think it's sustainable. We have a pipeline for this. We are seeing also some interest right now, finally, also in line with the second-order effects of the PRR, of the funds that come from Europe and the investment in several projects, there are second-order effects. We feel comfortable in Portugal that this type of growth rates year-on-year of mid-single digits are sustainable. In terms of the P&L for the rest of the year, the guidance that we have given is maintained.

So we think that a corpus, a Corporate Landing uh, a Corporate Landing. Uh, growth is around the mid single digits is sustainable. So I cannot commit that every quarter. This will be gradual because mainly when you speak about corporate loans and uh about the large s SNES, there is always some, some bulkiness

That. But we do think it's sustainable. We have pipeline for this, uh, we are seeing also some interest right now. Finally, uh, also

Miguel Braganza: I would say a resilient NAI. Our NAI has been quite stable. We think that in spite of a further reduction in interest rates, we will continue to have a resilient NAI, a mid-single-digit fees and commissions line evolution, which we think is also still possible, a mid-single-digit cost evolution, and a cost of risk hovering around the 35 basis points. We think all this guidance maintains its validity. Okay. Thank you. Now we're going to take our next question. The question comes from Maksym Mishyn from JB Capital. Ioulan, is it open? Please ask your question. Hello. Good afternoon. Thanks for the presentation and taking our questions. I have three. The first one is a follow-up on loan book growth. Given your comments on mid-single-digit growth for corporate loan book, you're growing 8% in mortgages and consumer.

Álvaro Fernández: Okay.

Operator: Thank you. Now we're going to take our next question. The question comes from Maksym Mishyn from JB Capital. Ioulan, is it open? Please ask your question.

Growth rates year on year of mid single digits as sustainable in terms of of the p&l for the rest of the year. Uh, the guys that we have given uh is maintained so I would say a resilient and I so has been quite stable we think that in spite of our further is actually interest rates. We will continue to have resilience and AI uh amid single digit fees and commissions, line Evolution, which we think is is also still possible amid single digit cost Evolution and uh, a cost of risk of rig around the 35 basis points. I think all these uh, uh, guidance, uh, maintains is validity

Okay.

Thank you.

Now, we'll go and take.

Action.

Maksym Mishyn: Hello. Good afternoon. Thanks for the presentation and taking our questions. I have three. The first one is a follow-up on loan book growth. Given your comments on mid-single-digit growth for corporate loan book, you're growing 8% in mortgages and consumer. What should we expect for overall loan book growth in 2025? Maybe you can grow on top of the mid-single digit guidance. The second one is on fees. They delivered a notable surprise in Portugal. I was wondering if you expect momentum to continue in the coming quarters and what was the driver of the performance. The final question is on other provisions. They were almost absent in Portugal and just wanted to update the expectations for the rest of the year. Thank you.

And the question comes flying off Max Mission from JB capital. Yolen is open. Please ask your question.

Miguel Braganza: What should we expect for overall loan book growth in 2025? Maybe you can grow on top of the mid-single digit guidance. The second one is on fees. They delivered a notable surprise in Portugal. I was wondering if you expect momentum to continue in the coming quarters and what was the driver of the performance. The final question is on other provisions. They were almost absent in Portugal and just wanted to update the expectations for the rest of the year. Thank you. Okay. Starting with the other provisions. The other provisions, as a trading line, by the way, are by its own nature more hard to predict because these other provisions are linked to risks that are more difficult to model and harder to predict. This was effectively, as you commented, a good month in terms of other provisions.

Um hello. Good afternoon. Thank you for the presentation and taking our questions. I have 3. The first 1 is a follow-up on lombo growth given your comments and meet single digit growth for corporate long book. You're growing 8% in mortgages and consumer. What should be expect for overall Lumber growth in 2025, maybe you can grow on top of the mid single digit Guidance. The second 1 is on fees, they deliver the notable surprise in Portugal and I was wondering if you expect momentum to continue in the coming quarters and what was the driver of the performance.

And then the final question is on other provisions. They were almost absent in Portugal and just wanted to update the expectations for the rest of the year. Thank you.

Miguel Braganza: Okay. Starting with the other provisions. The other provisions, as a trading line, by the way, are by its own nature more hard to predict because these other provisions are linked to risks that are more difficult to model and harder to predict. This was effectively, as you commented, a good month in terms of other provisions. The type of guidance that we have been giving of around EUR 10 to 15 million per quarter, I would not change it because it is difficult to anticipate what can go wrong.

Miguel Braganza: The type of guidance that we have been giving of around EUR 10 to 15 million per quarter, I would not change it because it is difficult to anticipate what can go wrong. Just based on the magnitude of our balance sheet of the risks, the operational risks, and not only that are linked to our model, we think it is prudent to assume that, I would say, across the cycle, I would say this type of other provisions are the reasonable ones. In terms of loan book and fees and commissions, up until now, there is always some bulkiness in this area. Let me tell you, for instance, in the fees and commission line, there are some fees that are being recurrent. They are not recurrent every quarter.

Miguel Braganza: Just based on the magnitude of our balance sheet of the risks, the operational risks, and not only that are linked to our model, we think it is prudent to assume that, I would say, across the cycle, I would say this type of other provisions are the reasonable ones. In terms of loan book and fees and commissions, up until now, there is always some bulkiness in this area. Let me tell you, for instance, in the fees and commission line, there are some fees that are being recurrent. They are not recurrent every quarter.

Okay, starting with the other Provisions. The other Provisions as the trading line. By the way are by its own nature. Uh, more hard to predict because these are Provisions are linked to risks that uh uh uh more difficult to model and and targeted to predict. So we this was effectively as you comment a good month in terms of the provisions, but the type of guys that we have been giving of around 10 to 15 million per quarter. I, I will not change it because it is difficult to to anticipate what, what can go wrong and just based on the, on the magnitude of our balance sheet, and our buy into those of our, uh, of of the risks. The, the the operational. Risks are not only that, that are linked to our model, we think it is prudent to assume that, uh, I would say across the cycle. I would say this type of other Provisions are, uh, are

There were, there was double ones in terms of um loan book and the fees and commissions.

Miguel Braganza: There were some fees, for instance, that had to do with incentive fees from Visa that are paid once a year. This means that we cannot assume that the full value of the increase in terms of fees and commissions is totally recurrent for the year. For the time being, we are maintaining a mid-single digit guidance, albeit maybe with a slight positive bias in the sense that if the markets perform well, there will be more asset management fees and investment fees, basically. That is, I would say, a slight positive value, but it's still early days to say whether the markets will perform well or not and whether there will be an accrued interest for investments and asset management products. I would say the same goes also for the loan book. The 5% increase year on year, we think it makes sense.

In until now, uh, uh, uh, there's always some, some bulkiness in this area. Let me tell you, for instance, in the, in the fees and commission. Line for that, there are some fees that being recurrent, they're not recurrent, uh, every quarter. So, they were there was some fees for instance, that had to do with incentive fees from Visa that are paid once a year. So, uh, this means that we cannot assume that the full, uh, value of the of the increase in terms of fees and commissions is total recurrent for for the year. So, for the time being, we are maintaining the, the emit, single digit guidance of it. Maybe with a slight positive, a slight positive bias in the sense that if the markets perform. Well, there will be more Asset Management fees and investment fees. Basically, that is, I would say a slight positive value, but it's still early days to say whether the markets will perform well or not. And where

Miguel Braganza: There is always some bulkiness there, mainly when we speak about corporates. There is also, of course, a trade-off between growth and price, which, I would say, on the short term, there is probably an excessive growth has even a negative impact in terms of NIM. So we are very prudent in terms of pricing. We do think that this type of growth is sustainable and accrues value to our shareholders. At this point in time, we would maintain this type of guidance in the mid-single-digit area. Thank you very much. Thank you. Now we're going to take our next question. It comes from Francisco Riquel from Alantra. Ioulan, is it open? Please ask your question. Thank you for taking my questions to follow-ups. In fact, first one is on the margin dynamics and the resilient NIM in Portugal that you mentioned.

In a cruise interest for, uh, Investments and asset management products. And I would say, the same goes also for the for the loan book. Uh, the 5% increase year on year. We think it makes it makes sense. There's always some bulkiness there. Mainly when we speak about carpets. Uh, there is also, uh, of course, a trade-off between growth and and price, which

Maksym Mishyn: Thank you very much.

I would say on the short term there is probably an excessive growth has even a negative impact in terms of uh of an AI. So we are very prudent in terms of of pricing, we do think that this type of growth is sustainable and the cruise value to to our shareholders at this point in time would maintain this type of the of guidance in the mid single digit area.

Operator: Thank you. Now we're going to take our next question. It comes from Francisco Riquel from Alantra. Ioulan, is it open? Please ask your question.

Thank you very much.

Thank you.

Francisco Riquel: Thank you for taking my questions to follow-ups. In fact, first one is on the margin dynamics and the resilient NIM in Portugal that you mentioned. If you can elaborate a little bit more, please, on the evolution between the customer spread and the NIM, and in particular, the cost of deposits, front book versus back book dynamics. Also now that you are accelerating growth in loans, front book versus back book dynamics there would be useful. Second is also a follow-up in the corporate loan growth, this mid-single digit growth that you think is sustainable. I mean, we know demand in mortgages is strong, but corporate loan book has been lagging in your case. The question is, what has changed? You previously mentioned that you were impacted by the repayment of COVID lines. Is that fading now? Where do you see corporate loan demand coming from, mainly? Thank you.

And it comes to land of Francisco recal from alantra. Your line is open, please. Ask your question.

Yes.

Feels to follow up.

Miguel Braganza: If you can elaborate a little bit more, please, on the evolution between the customer spread and the NIM, and in particular, the cost of deposits, front book versus back book dynamics. Also now that you are accelerating growth in loans, front book versus back book dynamics there would be useful. Second is also a follow-up in the corporate loan growth, this mid-single digit growth that you think is sustainable. I mean, we know demand in mortgages is strong, but corporate loan book has been lagging in your case. The question is, what has changed? You previously mentioned that you were impacted by the repayment of COVID lines. Is that fading now? Where do you see corporate loan demand coming from, mainly? Thank you. Okay. Starting with the corporate loan book, yes, you're right.

In fact, first 1 is on the margin Dynamics and the name resilient named in Portugal that you mentioned if you can elaborate a little bit more, please on the evolution between the customer spread and the and the name and in particular uh the cost of deposits from book versus back book, Dynamics and also now that you are accelerating growth in loans also from book versus back book Dynamics, there would be useful.

And uh, second is also follow up in the corporate long growth. This mid single digit growth that you think is sustainable.

Miguel Braganza: Okay. Starting with the corporate loan book, yes, you're right. I mean, in the last years, we were very, very successful in terms of the COVID lines, the COVID-guaranteed lines. The other point of this success is that some of these loans were contracted for safety reasons, for prudential reasons by the customers. Effectively, as the COVID issues did not materialize to the degree that people were concerned about, basically, they have repaid the loans because it was to some of them, it was almost an insurance loan.

So this, uh, we I, I mean, we know demanding mortgages is a strong but, uh, we uh, corporates, um, corporate long book has been lagging in your, in your case. So the question is, what has changed? Uh, uh, so, uh, you previously mentioned that you were impacted by the repayment of Co lines, is that fading now? So where do you see corporate loan demand? Uh, coming coming from mainly. Thank you.

Miguel Braganza: I mean, in the last years, we were very, very successful in terms of the COVID lines, the COVID-guaranteed lines. The other point of this success is that some of these loans were contracted for safety reasons, for prudential reasons by the customers. Effectively, as the COVID issues did not materialize to the degree that people were concerned about, basically, they have repaid the loans because it was to some of them, it was almost an insurance loan. This success that we have was then counterbalanced, I would say, by a negative dynamics when these loans were repaid. In the meantime, this was good business. We made, I would say, an interesting profitability for our bank and for our shareholders, and our customers were adequately served. As you said, I mean, now that this is fading away, this is also helping the situation.

Miguel Braganza: This success that we have was then counterbalanced, I would say, by a negative dynamics when these loans were repaid. In the meantime, this was good business. We made, I would say, an interesting profitability for our bank and for our shareholders, and our customers were adequately served. As you said, I mean, now that this is fading away, this is also helping the situation.

Okay, starting starting with the the corporate loan book. Um yes you're right. I mean in the last years we were very very successful in terms of the the coid lines the co 19 lynes but the other point of this success is that some of these loans were contracted for safety reasons, for potential reasons, why the customers, and they effectively, as the co, uh, issues did not materialize to the degree that people were, uh, were concerned about. Basically, they they have repay the loans because it was amazing to, to some of them. It was almost an insurance, an insurance loan. So these success that we have was the encounter balance, I would say by a negative Dynamics when these loans were repaid. But in the meantime this was good business. Uh, who who we made? Uh, I would say an interesting profitability for our bank and for our shareholders, and

Miguel Braganza: This is one situation. The other issue is, as these European lines and as these European investments become or are materialized, so to say, we see customers trying to access this type of lines. We see the customers of these customers also trying to prepare themselves for this type of lines. This explains, to some extent, this renewed interest in terms of loans. All in all, for the time being, except if there is, I would say, a major macrocrisis in Europe, which is clearly not our base case scenario, we'll feel confident that this is a trend that will continue. In terms of the deposits, we do have a deposit just here, check here. Typically, we have been showing, I would say, a VITA slightly below 50%.

Our customers were adequately served as you said. I mean, now that this is fighting away, this is also helping the situation. So this is 1 situation. The other, the other issue is uh as this uh European lines. And there's these European Investments become um

Or Army allies. So, to say, we see customers, trying to access this type of lines. We see the customers of these customers. Also trying to prepare themselves for this type of lines and uh uh uh this explains to some extent, these renewed interest in terms of uh uh uh of loans. So all in all for the time being, except if there is, I would say a major, a major macro macro crisis in the of the in Europe, which is not clearly not. Our, our base case scenario, we feel confidence that this is uh, a trend that is that will continue, um, in terms of, um,

Um, the the deposits. Uh, we do have uh, a deposit.

Just here, check here.

Miguel Braganza: As the interest rate goes down, I would say, in terms of deposits, our deposit cost, in terms of term deposits, goes down, but only by around 50% of this value. I think this is the best way to approach it because in this scenario of decreasing interest rates, it is the best way to approach because, of course, as interest rate goes down, mainly when we speak about deposits, the deposit pricing, of course, in a scenario of decreasing interest rates, the front book is lower than the back book, but not by as low as the amount of the decrease in the arrival rates. On the other hand, in terms of the spreads, we are seeing.

Typically typically our uh, we have been showing, I would say uh a Vita uh uh slightly slightly below 50%.

So if the interest rate goes down, I would say in terms of deposits, our, uh, our deposit cost.

Uh, in terms of time deposits goes down but only by around 50% of this value. So I think this is the, the best way to approach it because in this scenario of decreasing interest rates, is it is, uh,

It is the best way to approach because of course as interest rate goes down. Uh many when you speak about deposits, the loan. Uh uh I'm sorry the deposit pricing of course, in a scenario of decreasing interest rates the front book is lower than the back book but not by as low as the uh as the amount of of the decrease in the arrival rates. On the other hand, in terms of, um,

Miguel Braganza: Resilience in terms of asset spreads, we are, so to say, hedging the fact that most of our current accounts are non-remunerated and the fact that we have a VITA of 50% with a portfolio of government debt and with a portfolio of interest rate swaps that allows us, even in spite of this reduction in interest rates, to maintain a very resilient margin. I would say that the hedging of our balance sheet is what allows us to maintain the NAI in spite of the fact that our current accounts are fixed rate at zero and in spite of the fact that our term deposits have a VITA of around slightly below 50%. I think this is the best way to explain it.

In terms of asset spreads. And we are so to say hedging, uh, uh the fact that most of our current accounts are non-runner and the fact that we have a beta of 50% with a portfolio of government debt and with a portfolio of interest rate swaps, that allows us even in spite of these reduction in interest rates to maintain a very resilient margin. So I would say that our, uh, the hedging of our balance sheet is what allows us

Miguel Braganza: This is what will allow us to have or is allowing us already for four quarters in a row to have a very resilient margin. Going forward, once the interest rate hits its bottom, we expect by the end of this year to start growing in terms of NII aligned with the business volume growth. Thank you. Now we're going to take our next question. The question comes from Carlos Peixoto from CaixaBank. Ioulan, is it open? Please ask your question. Yes. Hi, good afternoon. A couple of questions from my side as well.

To, uh, maintain the knee in spite of the fact that our current accounts are fixed right at zero, and in spite of the fact that our term deposits have, uh, a beta of around 30 below 50%. I think this is the best way to explain it.

Operator: Thank you. Now we're going to take our next question. The question comes from Carlos Peixoto from CaixaBank. Ioulan, is it open? Please ask your question.

And this is what will allow us to have or is allowing us already for 4 quarters. In a row to have a very resilient margin and going forward. Uh, uh, once the interest rate, it's it's bottom. We expect by the, by the end of this year to start growing in terms of, uh, uh, of knee aligned with the business solving growth,

Thank you. Thank you. Thank you. Now, we're going to go next question.

Carlos Peixoto: Yes. Hi, good afternoon. A couple of questions from my side as well. The first one, or that would actually be on capital, the first one would be in terms of DTAs, how much deductions from DTAs do you still have in how much DTAs are being deducted to CET1 right now. What is the base at which you believe that the deduction can come down as you use the stock of DTAs? Still related with that, looking into off-balance sheet DTAs, which I believe you still have somewhat of a significant amount, are there any changes in your view regarding the recoverability of those DTAs? What I'm meaning here is whether you can start bringing back to the balance sheet some of those.

And the question comes on of color special from kaisha Bank yolen is open please ask a question.

Miguel Braganza: The first one, or that would actually be on capital, the first one would be in terms of DTAs, how much deductions from DTAs do you still have in how much DTAs are being deducted to CET1 right now. What is the base at which you believe that the deduction can come down as you use the stock of DTAs? Still related with that, looking into off-balance sheet DTAs, which I believe you still have somewhat of a significant amount, are there any changes in your view regarding the recoverability of those DTAs? What I'm meaning here is whether you can start bringing back to the balance sheet some of those.

Miguel Braganza: Just to follow up on the capital distribution that you were discussing before, I was just running here quick maths, I was running the numbers with a 6% growth per annum in RWAs and a 25% retention on net profit, and let's say net profit around EUR 1 billion. The fact is that I would still be getting to something closer to 15% CET1 ratio at the end of the business plan rather than closer to the 13.5% that you mentioned there. Are there any missing pieces here in terms of CET1 evolution, any relevant ones that we should bear in mind, or are you just being conservative on your expectations on capital? Thank you very much.

Carlos Peixoto: Just to follow up on the capital distribution that you were discussing before, I was just running here quick maths, I was running the numbers with a 6% growth per annum in RWAs and a 25% retention on net profit, and let's say net profit around EUR 1 billion. The fact is that I would still be getting to something closer to 15% CET1 ratio at the end of the business plan rather than closer to the 13.5% that you mentioned there. Are there any missing pieces here in terms of CET1 evolution, any relevant ones that we should bear in mind, or are you just being conservative on your expectations on capital? Thank you very much.

Yes. Uh, hi. Good afternoon. Um, a couple of questions from from my side as well. Um, first 1 or they would actually be on on Capital. Uh, the, the first 1 would be, uh, in terms of ctas how much, uh, deductions from dtac still have in in, uh, how much are being deducted to see T1 right now, uh, and what is the pace at which you believe, uh, that that deduction can can can can can come down, uh, as you use, uh, the stock of dtas. Um, and then still, and still related with, with, with that, uh, looking into of balance sheet etas, whichever DC still have a, a lot of a significant amount. Uh, are there. Are there any changes in, in your view regarding the recoverability of those etas? Or what I'm meaning here is the whether you can, you can start bringing back the balance sheet, some some of those. Um, and then just to follow up on the, on the capital, uh, in capital distribution that you

Discussing before I was just running here quick maths but I was I was running a numbers with a 6% growth period in in rwas in a 25% uh retention on on net profit. And let's say, net profit around 1 1 billion. The fact that I I would still be getting to something closer to, uh, 15% cd1 ratio at the end of, of the business plan, rather than the, the then closer to the 13 and a half that you mentioned. There, are there any, any missing pieces here in terms of the city you want Evolution and irrelevant ones that we should bear in mind? Or or or are you just being conservative on the on the on your expectations on capital? Thank you very much.

Miguel Braganza: Starting with our last question, as you see in our page 48 where we have presented our targets, there is a reason why we said that we want to have a CET1 ratio above 13.5. It's not at 13.5. It's above 13.5, okay? The ratio is more than 13.5. It's not 13.5. Of course, there is a buffer above 13.5 that we want to get. This is part of the answer. The other part of the answer is the RWA density.

As you see in our page for T8 where we have presented our targets. There is a reason why we said that we want to have a CTU and ratio above that enough, it's not active enough it's above, okay? So the the ratio is more than 13 enough. It's not set enough,

Miguel Braganza: As we grow in businesses, including in Poland, where we almost have very little in terms of SME credit and corporate credit, but also to some extent in Portugal, with a higher RWA density and with less reliance on mortgages, the growth of RWAs will tend to be higher than the growth in terms of credit. This is a part of the answer. In terms of the, you will see, by the way, in very much detail, we will publish our semi-annual report, I'm sorry, end of first week of August. You will see a lot of information and a very intensive note in terms of tax loss carry forwards about DTAs. I'm seeing here the note now in front of me.

So, of course, there's a buffer above 13 and a half the that you want to get. So, this is part of the answer. The other part of the answer, is the other way density, so, uh, as we grow, uh, in in in businesses, including in Poland, where we almost have, uh, we have very little in terms of,

And corporate credit, but also to some extent in Portugal with a higher density and and with less Reliance on mortgages, the growth of the white will tend to be higher than the, uh, than the growth in terms of credit. So this is the uh, a part of the answer.

in terms of,

in terms of the the, uh,

You, you will see, by the way, in very much detail. We will publish our, um, our, our semiannual report. Uh, and I'm sorry end of first week of August,

a lot of information and a very intensive note in terms of uh, uh,

Miguel Braganza: One, two, three, four, five, six, seven, eight, nine pages of a note that we are very transparent and we explain this in very much detail. If you want to read over your holidays, I think it will make a very interesting reading. In any case, what I would like to highlight is, yes, we do continue to have off-balance sheet DTAs. These off-balance sheet DTAs are slightly below EUR 800 million, and they have, to be more exact, EUR 772 million, and they have not changed since December. This is an important point. Secondly, it is possible that as time goes by, we recognize a part of these DTAs, mainly in the context, if the law is approved, of a lower tax rate in Portugal.

Text forwards about etas. I I'm seeing here the the note now in front of me, 1 2 3 4 5 6 7 8

9 pages of a note that we are very transparent as we explained this in very much detail. And if you want to read over your holidays, I think it will make a very interesting reading. But, um, in any case, what I would like to highlight,

Miguel Braganza: If the risk of the tax rate or the event of the tax rate coming down materializes, this, of course, has a negative impact on DTAs, a positive impact in terms of valuation. We may, so to say, recognize a part of these DTAs to immunize this impact because it makes sense. In terms of the guaranteed DTAs, what we have in June of this year is EUR 1.24 billion, which have been reduced by around EUR 100 million since December. What we are seeing here, we are seeing more or less, I would say, a rhythm of reduction of guaranteed DTAs of around EUR 100 million for each half year. If you want, EUR 200 million per year, this has been more or less the rhythm at which we have been amortizing, so to say, these guaranteed DTAs.

Is yes, we do. Continue to have, uh, off balance sheet, VTS. Uh, these off balance sheet, BTS are slightly below, uh, 800 million and they have to be more exact 7 772 million and they have not changed since, uh, December. So this is an important Point. Um, it is secondly, uh, it is possible that as time goes by, we we recognize a part of this DTI mainly in the context, if the law is approved of a lower uh tax rate in Portugal. So if the tax rate uh if the risk of the tax rate can or is called the event of the tax rate coming down materializes, uh this of course has a a a negative impact

On the toss, a positive impact in terms of valuation. Uh, we met so to say recognize a part of the DTI is to in to immunize this impact, because it makes it makes sense. Um, in terms of the guarantees, uh, DTI

uh,

What we have in June, in June, uh, of this year is 1.24 billion, uh, which have been reduced by around 100 million, uh, since uh, since December. So, what we are seeing here, we are seeing more or less. I would say a risk of reduction of guaranteed, DTI of around 100, uh, million per, uh, uh, for for each half year or if you want, uh, 200 million per year, this has been more or less been the reason at which we have been, uh, uh, amortizing. So to say this guaranteed DTI,

Miguel Braganza: You have a lot of information in the annual report. Sorry, just one thing. I was actually referring to the amount of DTAs that is actually being deducted from CET1 and the principal that is being deducted. No, no, no, no, no. No, I'm commenting the amount of DTAs that are guaranteed and count as capital. The amount of DTAs that are deducted from capital as of today are the tax loss carry forwards, which I would have to check, is around EUR 100 million. I'm sorry. The amount that is deducted are the tax loss carry forwards. The amount that is guaranteed as capital are the guaranteed DTAs, certo. Thank you, Carlos. Now we're going to take our next question. The next question comes from Noemi Peruch from Mediobanca. Ioulan, is it open? Please ask your question. Good afternoon.

Carlos Peixoto: Sorry, just one thing. I was actually referring to the amount of DTAs that is actually being deducted from CET1 and the principal that is being deducted.

But you have a lot of information in in the general report.

Miguel Braganza: No, no, no, no, no. No, I'm commenting the amount of DTAs that are guaranteed and count as capital. The amount of DTAs that are deducted from capital as of today are the tax loss carry forwards, which I would have to check, is around EUR 100 million. I'm sorry. The amount that is deducted are the tax loss carry forwards. The amount that is guaranteed as capital are the guaranteed DTAs, certo.

I just want to think I was actually referring to the amount of ctas that is actually being deducted from ct1. And the no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no. The I I'm, I'm affect I'm, I'm commenting the amount of thetas that are guarantees and count as capital. The amount of DTA is that are deducted from uh, uh,

From Capital as of today as a tax loss.

Carry forwards which uh, I would have is around 100 million.

I'm sorry.

Operator: Thank you, Carlos. Now we're going to take our next question. The next question comes from Noemi Peruch from Mediobanca. Ioulan, is it open? Please ask your question.

So the amount that is deducted are the are the tax forward. The amount that is gained Capital are the guaranteed? Yes. So

thank you, Carlos.

Now, we're going to take our next question.

And the next question comes to land of Nomi peruke from uh, Medio Bank is open, please ask your question.

Noemi Peruch: Good afternoon. I have a clarification on the tax rate. Shall we understand that 15 basis points you mentioned, basically EUR 60 million?

Miguel Braganza: I have a clarification on the tax rate. Shall we understand that 15 basis points you mentioned, basically EUR 60 million? Noemi, I'm sorry, the connection is very poor. I'm sorry, I don't know if you can either speak closer to the mic or speak louder. Yes, is that better? Yes, much better. Thank you. Okay. I just would like to ask a clarification on the tax rate. You mentioned 15 basis points, basically EUR 60 million. Shall we increase temporarily the 25% tax rate by this EUR 60 million in the next three years? I've understood correctly that you may have set such an impact with the tax loss carry forward write-up, perhaps. My second question is on capital. Again, I understand that organic growth is the priority, but the buffer above 13.5 is really meaningful.

Miguel Braganza: Noemi, I'm sorry, the connection is very poor. I'm sorry, I don't know if you can either speak closer to the mic or speak louder.

Uh, good, good afternoon. I have a clarification on the tax rate. Uh, so um, shall we understand that 15 beeps you mentioned. So basically 60 million

Noemi Peruch: Yes, is that better?

Miguel Braganza: Yes, much better.

No me not. Know me. I I'm trying to the connection is very poor. I'm sorry. I don't know if you can even speak closer to the mic or yes. Is that better?

Noemi Peruch: Thank you. Okay. I just would like to ask a clarification on the tax rate. You mentioned 15 basis points, basically EUR 60 million. Shall we increase temporarily the 25% tax rate by this EUR 60 million in the next three years? I've understood correctly that you may have set such an impact with the tax loss carry forward write-up, perhaps. My second question is on capital. Again, I understand that organic growth is the priority, but the buffer above 13.5 is really meaningful. I was wondering if there is a chance that you might be in a position to reconsider your distribution policy with the full-year results or maybe if that's too early. Then in here, in terms of strategy, would you see M&A options in your current markets, or would you consider entering a new market, perhaps? Thank you very much.

Yes, much better much better thank you. Okay, so, um just would like to ask a clarification on the tax rate, you measure 15 bits. So basically, 60 million, uh, shall we? Um, increase temporarily uh the 25% tax rate by this 760 million in the next 3 years.

And I understand correctly that you may have set, such an impact with the tax loss, carry forward right up up, perhaps.

Miguel Braganza: I was wondering if there is a chance that you might be in a position to reconsider your distribution policy with the full-year results or maybe if that's too early. Then in here, in terms of strategy, would you see M&A options in your current markets, or would you consider entering a new market, perhaps? Thank you very much. We try not to be victims of what some consultants call the paralysis by analysis. We have moments to plan and moments to execute, okay? We were planning during six months. We developed a plan. We had all the governance around the plan. We created a consensus around the plan. Now we are in execution mode, so to say. We're not in planning mode. Of course, life may change. Something may become dramatically different.

My second question is on Capital. Uh, again, I I understand that organic growth is the priority. Um, uh, but the buffer like above, uh, uh, 13.5 is is really meaningful. So I was wondering if there is a chance that you might be in a position to reconsider your uh distribution policy uh with the FIA results or maybe if that's too early.

Miguel Braganza: We try not to be victims of what some consultants call the paralysis by analysis. We have moments to plan and moments to execute, okay? We were planning during six months. We developed a plan. We had all the governance around the plan. We created a consensus around the plan. Now we are in execution mode, so to say. We're not in planning mode. Of course, life may change. Something may become dramatically different.

And then in here in terms of strategy, would you um would you see a MMA options in your current markets or would you consider entering a new market? Uh perhaps, thank you very much.

so,

We try not to be victims of what some Consultants call the paralysis by analysis.

So, we have moments.

To plan.

And moments to execute. Okay, so we we were planning during 6 months, we develop a plan, we had all the governance around the plan,

We created the consensus around the plan. Now we are in execution mode. So to say we are not in planning mode.

Miguel Braganza: If you ask me whether I think it is reasonable for the environment to change so much until year-end that we will have to reconsider our plan, I would say it's highly unlikely. Of course, nobody can foresee the future. I would say that until year-end, unless there is something very extraordinary that I don't think it's in the base case of anybody, I think it's highly unlikely. Of course, nobody can totally forecast the future, but it's highly unlikely. Let's see next year whether we are growing at the pace that we expect. In this context, let's see. Let's see. We will reconsider. Of course, this is not a decision of any single person. This has to come through all the governance structure of an institution. We have to engage with the different stakeholders, shareholders. We will listen to you as we always do.

Uh, of course, life may change. So something you may become dramatically different, but if you ask me, whether I think it is really reasonable for the environment.

To change so much until your end that we will have to reconsider our plan.

I would say it's highly unlikely. Of course, nobody can foresee the future, but I would say that until year end, unless there is something very extraordinary that I don't think it's in the best case of anybody. I think it's highly unlikely. Uh, of course, nobody can totally forecast the future but it's highly likely. Uh, let's see. Next year, whether we are growing at the pace that we expect

Miguel Braganza: To the moment, what we are focusing on is on delivering in the plan. In terms of the tax rates for Portugal, the tax rate in Poland is a little bit more complicated because of the fact that the Swiss franc mortgage costs are not tax deductible. The cost of contributions is not tax deductible, these weigh a lot in the Polish assets. I will not enter too much into it. There is an interesting explanation on it on the Q&A of our Polish bank CFO. I will refer to it, but then we can also take it by side. Commenting to Portugal, what we are seeing is the following. We are presenting a tax rate of around 25%. Last year, we had a tax rate, an effective tax rate, of around 26%.

And in this context, let's see, let's see, we will reconsider. Of course, this is not a decision of any single person. This has to, to come through all the governance structure of an institution we have to, to, to engage with the different, uh, stakeholders stakeholders, we will listen to you as we always do but, uh, to the moment what we are focusing on is on delivering in uh, in the plan.

In terms of the of the tax rate for Portugal, the tax rate in Poland is a little bit more more complicated because of the fact that the Swiss franc mortgage costs are not tax deductible the, the the, the cost, uh, of contributions is not taxes active and these weight a lot in the, in the, in the Polish assets. So I will not enter too much into it, but there is an interesting explanation on, on it, on the, uh, uh, on the Q&A of our polish or Bank C CFO. So I would refer to it, but then we can also take take it by side, but but commenting to Portugal. What we are seeing is the following. We are presenting

a tax rate of

around 25%.

Miguel Braganza: We think that going forward, this is something that we can assume as, I would say, a new normal, absent tax rate change, okay. This is where we stand right now, okay. If there is a tax rate change, we have to see it in detail, and if the tax rate goes down by 1%, 2%, 3%, this would probably have a proportional effect in terms of this tax rate. Let's see exactly what are the details of it. I would expect, if the tax rate change, the effective income tax rate also to change. This is what I would like here to highlight. The other question, I don't know exactly what was the other question that you asked, but maybe we can then take it offline to clarify it. I was wondering the 15 BIPS of common equity impact in terms of CET1. This one.

Last year we had a tax rate and effective rate tax rate of around 26%.

and we think that going forward,

this is something that we can assume as I would say. A new normal absence, uh, uh, a tax rate change. Okay? This is where we stand right now, okay?

if there is a tax rate change,

we have to see it in detail. And if the tax rate goes down by 1 2 3%, this would probably have a proportional effect in terms of this tax rate. Let's see exactly what are the uh the details of it. But I would expect if the tax rate change, the effective income tax rate also to change. So this is the what I would like here to highlight.

uh, the other question, I don't know exactly what what was the other uh,

Miguel Braganza: Okay, okay. Let me just say, the law is in the Parliament, but has not been approved yet. By the way, last year, the government tried to come up also with a similar solution. I would remind you that the government does not have the majority in the Parliament. The second largest party at the time did not agree with this measure, and it was finally not approved. The law that the government party is presenting to the Parliament, but that we don't know whether it will be approved or not, foresees a reduction in the tax rate in 3 years of 3%, okay? If this happens, this will have two impacts.

The, the question that you asked, but but maybe we can then take it off of life to clarify. Um, I was wondering the 15 bits of common Equity impact in terms of, okay, okay, okay, let me just okay, so if we

if there is,

That I would say this is the the law is in the parliament, but the law has not been approved yet.

SEC and the second largest party at the time. Uh uh uh, did not agree with this measure and it was finally not approved. But the law that the, the main the government party is presented to the parliament, the that we don't know whether it will be approved or not forces a reaction in the tax rate in 3 years or 3%.

Okay.

If this is, if this happens.

Miguel Braganza: The first and the largest one in terms of valuation is the one that I had commented, that is a reduction of the effective tax rate over the period. In principle, it goes without saying that it's better for the shareholders and for the companies to have a lower tax rate than to have a higher tax rate. You should not forget this. The net impact is positive. It reflects immediately in terms of the P&L and in terms of the distribution and so on. 3% more profits is, in principle, around 3% more value, I would say. This is the one that we have commented. There is another impact. There is, I would say, a short-term impact that is the reduction of the value of the DTAs, okay?

This will have 2 impacts.

The first and the largest 1 in terms of valuation is the 1 that I had commented that is a reaction of the effective tax rate of over the period.

Uh, in principle, it's, it goes without saying that. It's better for the shareholders and for the, the companies to have a lower tax rate than to have a higher tax rate. So you should not forget this. So it's a, the, the, the net impact is is positive. So, uh, it reflects immediately in terms of the pnl and in terms of the distribution and so on. So 3%, more profits is in principle around, 3%, more value, I would say. So this is

The 1 that we have commented.

Then there is another impact. There is a, I would say, a shorter impact

Miguel Braganza: The reduction of the value of the DTAs, of course, if the tax rate is lower, the DTAs are worth less. This reduction of the value of the DTAs, to the extent that these DTAs count as capital, has some impact in the capital ratio. This impact is not very large, mainly when we consider it in the context of the value that may be generated by the reduction of the tax rate, but is around 15 basis points, okay? Sorry, I have a few clarifications to ask. Are these 15 BIPS to be taken every year for 1 percentage point of a lower corporate? It depends on how the final law is worded, I would say.

That is the reaction of the value of the DTI. Okay? The reduction of the value of the DTI, of course if if the tax rate is lower then yes, I was less.

Noemi Peruch: Sorry, I have a few clarifications to ask. Are these 15 BIPS to be taken every year for 1 percentage point of a lower corporate?

These reduction of the value of the DTI uh to the extent that is Theta is count as capital to the extent that it is called, the capital has some impact in the capital ratio. This impact is not very large mainly when we consider it in the context of the value that may be generated by the reaction of the text, right? But is around 15 basis points.

Okay.

Miguel Braganza: It depends on how the final law is worded, I would say. It is possible that if the law clearly states that the tax rate goes to 17%, it depends on how the law is worded. If the law clearly states the new tax rate is 17%, but there is a transitional period, it has to be taken upfront. If the law states the new tax rate is 1 percentage point below the current tax rate, but we intend to reduce it over time 1 percentage point per year, it would be over a three-year period.

And uh sorry I just I have a few clarification to ask are these 15 bits to be taken every year for 1 percentage point of a lower.

Miguel Braganza: It is possible that if the law clearly states that the tax rate goes to 17%, it depends on how the law is worded. If the law clearly states the new tax rate is 17%, but there is a transitional period, it has to be taken upfront. If the law states the new tax rate is 1 percentage point below the current tax rate, but we intend to reduce it over time 1 percentage point per year, it would be over a three-year period. Thank you. Thank you. Now we're going to take our final questions for today. It comes from Borja Ramírez from Citi. Ioulan, is it open? Please ask your question. Hello. Good afternoon. Thank you very much for taking my questions. I have a couple of quick follow-up questions, please.

It depends on how the final law is is is worth it. I would say, but it is possible that if if the law clearly states that the the tax rate goes to 17%,

It depends on how the law.

If the law clearly states, the new tax rate is 17%. But there is a transitional period. It has to be taken up front.

Noemi Peruch: Thank you.

If the law states that the new tax rate is 1 percentage point below the current tax rate, but we intend to reduce it over time, 1 percentage point per year, it would be over the 3-year period.

Operator: Thank you. Now we're going to take our final questions for today. It comes from Borja Ramírez from Citi. Ioulan, is it open? Please ask your question.

Thank you.

Going to take our final questions for today.

Borja Ramírez: Hello. Good afternoon. Thank you very much for taking my questions. I have a couple of quick follow-up questions, please. Firstly is on the hedging portfolio in Portugal, which I understand was EUR 40 billion national in Q1. I would like to ask if there's any changes in the size, the average maturity, and the yield, also if you see any opportunity to further reprice. My second question would be on Poland, if you could give a bit more detailed guidance on the NII developments in 2025 and 2026 based on the current curve. Lastly, on the RWA growth, if understood well, it will be higher than the loan growth. Could you give a bit more precise indications on the RWA growth in 2025 and 2026, please?

And it comes to land of bharam M, from City, your line is open, please ask a question.

Hello, good afternoon. Thank you very much for taking my questions.

Miguel Braganza: Firstly is on the hedging portfolio in Portugal, which I understand was EUR 40 billion national in Q1. I would like to ask if there's any changes in the size, the average maturity, and the yield, also if you see any opportunity to further reprice. My second question would be on Poland, if you could give a bit more detailed guidance on the NII developments in 2025 and 2026 based on the current curve. Lastly, on the RWA growth, if understood well, it will be higher than the loan growth. Could you give a bit more precise indications on the RWA growth in 2025 and 2026, please? Starting with your last question, I mean, we have our own objectives. One thing is the objective. The other thing is what exactly will be possible and what is the reality, so to say.

I have a couple of quick. Follow-up questions, please.

firstly is on the hedging portfolio in Portugal, uh, which

I understand was 40 billion Euro National in q1.

I would like to ask if there's any changes in the size and the, the average maturity and the and the yield. Uh, and also, if you, if you see any opportunity to further reprise,

And then my uh second question would be uh on on Poland if you could give it a more detailed guidance on the knee. Developments.

Miguel Braganza: Starting with your last question, I mean, we have our own objectives. One thing is the objective. The other thing is what exactly will be possible and what is the reality, so to say. What I can tell you is that, on average, we will try to focus more on the SME and on the corporate market that has a higher RWA growth, almost twice than, I'm sorry, RWA weight than the RWA of mortgages. When we go the more granular we get, the more difficult it is to be absolutely precise on what will occur in exactly one quarter. We don't think it's very useful because the reality is so, I mean, it's by its own nature quite uncertain. What we should expect is an RWA growth that is higher than the RWA than the credit growth. I would not go much to go above it.

Uh, in 20129 and 2026 based on the current curve. And, uh, lastly, on the on the other leg growth, uh, it understood. Well, it will be higher than the long rows, uh, but could you give a bit more precise indications on the, on the other leg growth in 2025 and 2026, please?

Uh, starting with your last question.

I mean.

Miguel Braganza: What I can tell you is that, on average, we will try to focus more on the SME and on the corporate market that has a higher RWA growth, almost twice than, I'm sorry, RWA weight than the RWA of mortgages. When we go the more granular we get, the more difficult it is to be absolutely precise on what will occur in exactly one quarter. We don't think it's very useful because the reality is so, I mean, it's by its own nature quite uncertain. What we should expect is an RWA growth that is higher than the RWA than the credit growth. I would not go much to go above it.

We have our own objectives, but 1 thing is the objective. The other thing is what exactly, what will be possible and what is the reality. So, to say, what I can tell you is that on average, we will try to focus more on the SME and on the corporate side, and on the corporate Market, that has a higher as a wide growth almost twice. Then the, the way, I'm sorry or other way, wait, uh, then the other way of mortgages

Miguel Braganza: In terms of our interest rate hedging risk and so on, in terms of our hedging of our interest rate risk, we do have a portfolio that is composed of three parts, I would say, of government debt, of unhedged, I would say, fixed-rate loans, typically consumer loans or mortgages that have at least an initial period that is fixed rate, and interest rate swaps. We have these three elements. A part of our hedging of interest rate has to do also with our commercial activity. These have not changed very materially since we published our annual report. You will see also some more detailed information in our semi-annual report that we will publish at the end of the first week of August. These have not changed very much. What I can tell you is the following.

Difficult. It is to be absolutely precise on what we will occur in exactly 1 quarter. And we don't think it's very useful because the, the reality is so, uh, and it's by its own nature, quite uncertain. So, what we should expect is another legal that is higher than the rwa than the than the great growth. And I will would not go uh uh much to go to go about it.

um, in terms of

In terms of the, uh, uh, uh, our interest rates, uh, hedging risk and so on. Uh, in terms of our, in our hedging of our interest rate risk. Uh, we do, we do have a portfolio that is composed, uh, of 3 Parts, I would say of government that

of uh, unhatched I would say, fixed rate, loans, typically,

Uh, Consumer loans.

Or uh, mortgages that have at least an initial period that is, uh, that is fixed, right? And

Interest rate swaps. So we have these 3 elements. So a part of our hedging of interest rate has to do also with our commercial activity.

Miguel Braganza: The EUR 80 billion that you comment is not the correct way to look at it because this is only the swap part. It includes the swaps other than the swaps that we do to cancel the impact of these swaps. As of 2025, I would say the value of these three legs, I would say, and they are more or less one-third each, is around EUR 40 billion, speaking by heart. We have the non-remunerated demand deposits around EUR 28 billion. We have a value of fixed rate that is in excess of the demand deposits. This excess is to compensate the fact that the term deposits, so to say, which are around EUR 25 billion, have a beta of around 50%.

Uh, these have not changed very materially since uh, since last uh since we published our annual report, you will see. Also some more detailed information in our in our semiannual report that we will publish at the end of the first week, uh, of August. But these have not, uh, this have not, uh, changed very much. But what what I can tell you is, is the following, uh, the 80 billion that you comment is.

Is not the correct way to look at it because this is only the swap part.

That includes the swaps. And then the cons, the swaps that we do to cancel the impact of of these swaps. So, uh, uh, as of 25, I would say the value of these 3 legs, I would say. And they are more or less 1. Third each uh, is around 40 billion. They were taking by heart.

Uh, and we have the non-immune writers, uh, demand deposits, uh, around 28 billion.

Miguel Braganza: The way to look at it, the simplest way to look at it, is we have a portfolio of fixed-rate instruments, so to say, that hedges us for the fact that our current account are fixed rate at 0, and our term deposits are not totally floating-rate instruments, but have a fixed-rate component. This is exactly what is making it possible for us to have a very resilient interest NII so that, in spite of the reduction of the Euribor, we have been able to present in Portugal already for four quarters in a row a very stable NII. We expect it to continue so for the foreseeable quarters in 2025.

So, we have a value of fixed rate that is in excess of the demand deposits. And so, these axis is to compensate the fact that the term deposits. So to say, which are around 25 billion, have a be a beta of 25 of of around 50%. So so the way to look at it, the simplest way to look at it is we have a portfolio of uh, of fixed rate instruments, so to say that Hedges us.

Um,

For the fact that our current account are fixed right at zero and our term deposits are not totally floating rate instruments but has a fixed rate component and this is exactly what is making it possible for us.

Miguel Braganza: Assuming that the ECB rate goes to 1.75 at its lower level, that to start to increase because then the part of the absorption of the decrease in interest rates will already have flown through or passed through our NII. In Poland, it is similar. In Poland, we also have fixed-rate instruments. We also have a portfolio of government debt. Our NII, as you see, has been very resilient and continues to be very resilient. We expect, until the end of this year, to continue this trend. Okay. Next question, please. Yes, we can turn off the questions for today. I would now like to hand the conference over to Mr. Miguel Maya for any closing remarks. Okay. It's me, Albrecht Ganse. We are very pleased to show you these results. Clearly, the market has received them very well.

To have a very resilient interest in AI. So that in spite of the reduction of the URI, we have been able to present in Portal already for, for, uh, for 4 quarters in a row. This type of, uh, knee and we expect it to to continue. So, um, for the foreseeable, uh, quarters in 25, and then, uh, assuming that the, um, uh, the ECB, right?

Goes to 1.75 at its lower level, then to start to increase. Because then the, the part of the absorption of the decreasing, interest rates will already have flown through pass through our knee in Poland. It is similar in Poland. We also have fixed rate instruments. We also have, uh, uh, uh, portfolio of government debt and our interests our knee. As you see, has been very, very resilient continued and continues to be very resilient and we expect until the end of this year is to continue uh, this this trend

um,

okay.

Operator: Yes, we can turn off the questions for today. I would now like to hand the conference over to Mr. Miguel Maya for any closing remarks.

Next question, please.

Operator: Okay. It's me, Albrecht Ganse. We are very pleased to show you these results. Clearly, the market has received them very well. We really would like here to commit to you that we are fully on track to deliver on our plan, a plan based on a very robust business model that translates into a very robust profitability. Thank you very much.

For today, I would like to hand the conference over to Mr. Miguel Mayor for any closing remarks.

Okay. Uh, it's it's

Miguel Braganza: We really would like here to commit to you that we are fully on track to deliver on our plan, a plan based on a very robust business model that translates into a very robust profitability. Thank you very much. This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

We are very pleased to show you uh, these results. Clearly the market has received them very well. We, uh, really would like here to commit to you. That we are fully on track to deliver on our plan. A plan based on a very robust business model that translates into a very robust profitability. Thank you very much.

Today's conference call, thank you for participating. You may now or disconnect have a nice day.

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