Banif - SGPS, SA

Banif Financial Group

PRIVILEGED INFORMATION on the activities and results of Banif – SGPS, SA

3rd Quarter 2007

(Unaudited figures)

Banif - SGPS, SA Public limited company Registered Offices: Rua de João Tavira, 30 – 9004 509 Funchal Share Capital: 250.000.000 Euros Companies Registry and Corporate Person no.: 511 029 730 1. OPERATIONS AND RESULTS OF THE BANIF FINANCIAL GROUP IN THE 3RD QUARTER OF 2007

During the first nine months of 2007, Banif SGPS, SA, the Banif Group holding company, recorded consolidated net profits of 64.7 million euros, representing an increase of 21.9% over the same period in the previous year.

Balance Sheet Analysis

The net assets of the Banif Financial Group stood at 10,182 million euros at the end of September 2007, up by 18.1% when compared with the end of the 3rd quarter of 2006.

Total customer lending (gross) stood at 8,387 million euros, corresponding to growth of 20.4% over the figure at 30 September 2006. At the same time, the ratio of overdue credit to total lending rose from 2.01% to 2.08%, whilst the ratio of credit impairment to total lending held firm at 2.3%.

Customer deposits stated on the balance sheet grew by 19.1% in relation to 30 September 2006, standing at 7,085 million euros. Off-balance sheet deposits reveal significant growth in assets under management, up from 1,531 million euros, at 30 September 2006, to 2,129 million euros at 30 September 2007, representing growth of 39.1%. This increase in customer deposits is due in good measure to rapid growth in the number of Banif Group sales outlets, up from 359 to 423 from the end of the 3rd quarter of 2006 to the same date in 2007 (the number of bank branches in grew from 226 to 266), and also to robust growth in the number of the Group’s banking customers, thanks to campaigns for new customers undertaken by Banif – Banco Internacional do Funchal, SA and to the policy of expansion and diversification into new distribution networks.

The Banif Financial Group recorded growth in equity (after minority interests) of 11.3%, due to profits from 2006 not distributed and profits recorded up to 30 September 2007 of 520.9 million euros.

Income Statement Analysis

The Banif Financial Group recorded operating income of 298.9 million euros up to the end of the 3rd quarter of 2007, representing growth of 23.7% over the same period in the previous year. Income breaks down into the following main components:

- The financial margin, which includes earnings from securities, increased by 12.9% thanks to strong growth in the Group’s lending operations, combined with a slight reduction in the financial brokerage margin; - Other net income, which includes commissions and other earnings from banking services and operations, were up by 35.8%, meaning that it now accounts for 30.3% of Operating Income (as compared with 27.6% in the first nine months of 2006); - Despite the unrest in the debt and credit markets during the 3rd quarter of the year, profits on financial operations stood at 19.1 million euros, representing growth of 161.7% in relation to the same period in the previous year, due largely to the realization of capital gains on the disposal of holdings by Banif – Banco de Investimento (Brasil).

Operating costs, which include overhead and personnel costs, totalled 173.5 million euros, up by 25.2% on the same period in 2006, whilst net provisions/impairment for the period was down by 24.6%, at 23.4 million euros.

In 2007, the Banif Financial Group has opened 31 new branches in Portugal and 3 in Brazil. The costs incurred in the period under analysis as a result of this expansion of the branch network in Portugal and Brazil, together with the expense of advertising campaigns to bring in new banking customers, which in both cases have been borne in full during the period, account for nearly all of the significant increase in operating costs recorded over the period.

Modernization of technology within the Group has also added to operating costs, especially with the updating of technological networks and projects underway. These include the Basle II Programme, which is proceedings in accordance with the master plan drawn up for the Banif Financial Group, with significant impacts throughout the Group in the fields of technology, change management and in the business areas themselves, where significant efforts are being made to extend uniform advanced risk management methodologies to all Group undertakings.

The Banif Financial Group recorded consolidated operating cash flow of 125.3 million euros (up by 21.7% on the previous period), whilst the cost to income ratio (operating costs + depreciation / operating income) was down from 63.2%, in the 3rd quarter of 2006, to 61.4%, in the same period in 2007, despite expansion in branch networks and the heavy costs described above.

In the insurance sector, premiums written by Banif Financial Group are up by 2.0% in volume, in comparison with the same period in 2006, with a total value of 275.5 million euros.

In view of the net profit of 64.7 million euros recorded by the Banif Financial Group at 30 September 2007, ROE stood at 19.5% as compared to 17.7% in the same period in the previous year), whilst ROA rose to 0.9% (as against 0.83% in the same period in 2006). Both ratios were annualized and calculated at average values for Group equity and assets.

During the course of 2007, the Banif Financial Group has acquired holdings in Banca Pueyo - Spain (33.32%), in Banco Caboverdiano de Negócios – Cape Verde (46%), and in Bankpime - Spain (27.5%), representing total investment of 88.2 million euros. During the final quarter of 2007, the Group will open Banif Bank () Plc., in an operation which is currently being implemented. In October, the Banif Financial Group opened commercial and branches in London. The branches will operate in retail banking for residents, trade finance business, property finance and the capital markets (equity and debt).

The following companies and institutions made a leading contribution to the third quarter consolidated net profit of the Banif Financial Group: - Banif – Banco Internacional do Funchal, SA (net profit, on an IAS basis, of 33.4 million euros); - Banco Comercial dos Açores, SA (net profit, on an IAS basis, of 8.4 million euros); - Companhia de Seguros Açoreana, SA (individual net profit of 14.0 million euros, and a contribution to consolidated profits of 6.7 million euros); - Banif – Banco de Investimento, SA (with an overall contribution to consolidated profits from the investment banking operations of the Banif Financial Group of 11.4 million euros). - Banif – Banco Internacional do Funchal (Cayman), Ltd (net profit of 3.8 million euros); - Banif – Banco Internacional do Funchal (Brasil) (net profit of 3.5 million euros). - Banca Pueyo (net profit of 7.2 million euros, and a contribution to consolidated profits of 2.4 million euros);

Lisbon, 31 October 2007

THE BOARD OF DIRECTORS COMPARATIVE ANALYSIS Banif Financial Group '000 Euros

Balance sheet 30-09-2007 30-09-2006 Absolute % variation variation 1 Net assets 10.182.064 8.622.726 1.559.338 18,1% 2 Lending (gross) 8.387.131 6.966.637 1.420.494 20,4% 3 Customer deposits (balance sheet) 7.085.223 5.947.553 1.137.670 19,1% 4 Equity (1) 520.948 468.215 52.733 11,3%

Income statement 30-09-2007 30-09-2006 Absolute % variation variation 5 Financial margin (including earnings on equity instruments) 189.191 167.557 21.634 12,9% 6 Profits on financial operations (net) 19.144 7.315 11.829 161,7% 7 Other income (net) 90.517 66.653 23.864 35,8% 8 Operating revenue 298.852 241.525 57.327 23,7% 9 Personnel costs 98.519 79.279 19.240 24,3% 10 Overheads 75.008 59.274 15.734 26,5% 11 Cash flow 125.325 102.972 22.353 21,7% 12 Depreciation in the period 19.710 14.166 5.544 39,1% 13 Provisions and impairment (net) 23.364 31.004 -7.640 -24,6% 14 Equity method 9.363 9.269 94 1,0% 15 Pre-tax profit 91.614 67.071 24.543 36,6% 16 Taxes (current and deferred) 18.589 11.564 7.025 60,7% 17 Minority interests 8.340 2.459 5.881 239,2% 18 Consolidated income for the period 64.685 53.048 11.637 21,9%

Other indicators 30-09-2007 30-09-2006 Absolute % variation variation 19 Insurance premiums (total) 375.449 367.997 7.452 2,0% - Life 248.439 242.922 5.517 2,3% - Non-life 127.010 125.075 1.935 1,5% 20 Assets under management (in million euros) 2.129 1.531 598 39,1% 21 Overdue credit / Total lending 2,08% 2,01% - - 22 Credit impairment / Total lending 2,3% 2,3% - - 23 ROE 19,5% 17,7% - - 24 ROA 0,95% 0,83% - - 25 Pre-tax profit and minority interests / Average net assets 1,34% 1,05% -- 26 Operating revenue / Average net assets 4,38% 3,79% -- 27 Pre-tax profit and minority interests /Average equity (including minority interests) 22,2% 17,9% - - 28 Operating costs + Depreciation / Operating revenue (2) 61,4% 63,2% - - 29 Personnel costs / Operating revenue (2) 32,6% 32,8% - -

(1) Less minority interests

(2) These ratios exclude non-financial and auxiliary activities. Operating revenues include profits on investment in associates excluded from consolidated accounts.