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Banco BPI 1st Half 2009 This page was intentionally left blank. Report This page was intentionally left blank. Index REPORT Leading business indicators 4 Introduction 5 Governing bodies 7 Shareholders 8 Financial structure and business 9 Distribution channels 12 Human resources 13 Background to operations 14 Domestic commercial banking 22 Bancassurance 29 Asset Management 30 Investment banking 33 Private Equity 37 International banking activity 38 Financial review 41 Risk management 76 Rating 109 Banco BPI shares 110 FINANCIAL STATEMENTS AND NOTES Consolidated financial statements 113 Notes to the consolidated financial statements 119 Declaration 265 Audit Report issued by the Auditor registered with the CMVM 266 Leading business indicators (Consolidated figures in millions of euro, except where indicated otherwise) 30 Jun. 08 30 Jun. 09 Δ% Net total assets 39 745.2 43 531.8 9.5% Assets under management2 12 293.0 10 075.0 (18.0%) Business volume3 66 123.8 67 802.6 2.5% Loans to Customers (gross) and guarantees4 33 599.1 33 472.7 (0.4%) Total Customer resources 32 524.7 34 329.9 5.6% Business volume3 per Employee5 (thousands of euro) 6 999 7 200 2.9% Net operating revenue 529.4 565.7 6.9% Net operating revenue (1st half 2008 adjusted)1 602.4 565.7 (6.1%) Net operating revenue per Employee5 (thousands of euro) 56 60 6.6% Net operating revenue per Employee (1st half 2008 adjusted)1 64 60 (6.4%) Operating costs / Net operating revenue6 64.6% 61.4% Operating costs / Net operating revenue (1st half 2008 adjusted)1 56.7% 61.4% Net profit 9.1 89.0 880.2% Net profit (1st half 2008 adjusted)1 167.5 89.0 (46.9%) Adjusted data per share (euro)7 Net profit7 0.01 0.10 768.2% Net profit (1st half 2008 adjusted)1 0.21 0.10 (52.9%) Book value7 1.89 1.89 0.2% Weighted average no. of shares (in millions)7 791.4 893.5 12.9% Return on average total assets (ROA) 0.05% 0.6% ROA (1st half 2008 adjusted)1 0.9% 0.6% Return on Shareholders’ equity (ROE)8 1.1% 9.1% ROE (1st half 2008 adjusted)1 20.9% 9.1% Loans in arrears for more than 90 days / Customer loans 1.1% 1.7% Loan impairments (in the balance sheet) / Customer loans 1.4% 1.6% Loan impairments, deducted from recovery of loans written off (income statement) / Customer loans 0.18% 0.37% Cover of pension obligation 104.7% 99.4% Shareholders’ Equity9 1 680.5 1 687.8 0.4% Ratio of own funds requirements10 11.2% 11.4% Tier I10 7.6% 8.9% Core Tier I10, 11 6.7% 8.1% Closing price (euro) 2.64 1.82 (30.9%) Stock market capitalisation at period end 2 371.5 1 638.0 (30.9%) Retail branches12 (number) 828 876 5.8% Corporate and institutional centres network13 (number) 58 64 10.3% BPI Group staff complement14 (number) 9 448 9 417 (0.3%) 1) Banco BPI’s 1st half 2008 consolidated net profit includes two negative non-recurrent impacts (after taxes): (i) loss on the sale of the shares in Table 1 Banco Comercial Português (BCP) and impairment charges set aside on the BCP investment of 157.4 M.€; and (ii) costs with early retirements of 1.1 M.€. Excluding these non-recurrent impacts, the net profit from the domestic activity in the 1st half 2008 was 109.1 M.€ (vs. -49.4 M.€, as reported) and the consolidated net profit was 167.5 M.€ (vs. 9.1 M.€ as reported). The above table presents the indicators relating to efficiency, profitability, earnings and earnings per share after eliminating the abovementioned impacts. 2) Unit trust (mutual) funds, Retirement Savings Plans (PPR) and Equities Savings Plans (PPA), capitalisation insurance, guaranteed-capital and limited-risk bonds, assets under discretionary management and advisory mandates of Private Banking Clients and institutional Clients and assets of pension funds under management (including the Group’s staff pension funds). 3) Loans, guarantees and total Customer resources. 4) To ensure comparability, securitised mortgage loans written off from the balance sheet were added back (gross balance of 1 081 M.€ in June 2008, 989 M.€ at the end of 2008 and 943 M.€ in June 2009). 5) Number of Employees of the companies which are consolidated in full. 6) Personnel costs (excluding costs with early-retirements), outside supplies and services, depreciation and amortisation as percentage of net operating revenue. 7) Corresponds to net profit and shareholders’ equity (excluding minority interests) divided by the weighted average number of shares (end-of-semester number in the case of the indicator “book value per share”), with the number of shares adjusted by the capital increase which took place in June 2008. 8) In the ROE calculation, the average Shareholders' equity (excluding minority interests) was taken into account and the revaluation reserves were excluded. 9) Excludes minority interests. 10) Calculated in accordance with Bank of Portugal rules governing minimum own funds requirements. 11) Core capital corresponds to basis own funds, before deductions relating to equity interests in credit institutions and insurance undertakings, and excludes preference shares. 12) Includes traditional branches, housing shops, investment centres and automatic shops in Portugal, branches in Angola, investment centres in Angola and branches in Paris. 13) Distribution network specialising in serving companies, 1 Project Finance centre, Institutionals, the branch in Madrid and corporate centres in Angola. 14) Group staff complement in the domestic activity and in the international activity. Includes term Employees and temporary workers, and excludes bursaries. 4 Banco BPI | 1st half 2009 report Introduction BPI’s activity in the 1st half of 2009 was conducted In the 12 months ended 30 June 2009, BPI was able, in against one of the most gruelling international backdrops a particularly adverse economic context, to ensure high in living memory for the banking business. capitalisation levels, to maintain a comfortable level of resources and liquidity, to reduce and control risk levels The effects of the international global financial crisis and to strengthen Customer relations. which erupted in the 2nd half of 2007 and intensified during the course of 2008, remained present in the 1st Capital. As concerns capital, at the end of June 2009 six months of 2009, having experienced a critical period BPI had a total ratio of 11.4%, which corresponds to between September 2008 and March 2009 with the ratios for Tier I capital of 8.9% and core Tier I capital of significant deterioration in credit market conditions (fruit 8.1%. of a widespread loss of confidence) and the steep plunge in the equity markets. Liquidity. On the liquidity front, the Bank presents a comfortable situation: The drop in global economic activity since the outbreak of the crisis was extraordinarily swift and far-reaching, ᭿ Customer resources continued to represent the principal leading to the biggest drop in the world economy’s gross source of funding. The strong expansion in on-balance domestic product since World War II. As a very open sheet Customer resources has fully funded the increase economy to trade flows with its community partners, the in lending, not only in domestic operations but also in Portuguese economy strongly reverberated the European international activity; economy’s slowdown. The Bank of Portugal’s most recent forecasts point to a 3.5% fall in Portuguese GDP in ᭿ In banking activity in Angola, BFA boasts an extremely 2009, the biggest of the last 35 years, and a contraction liquid balance sheet: the Customer loans / on-balance of 0.6% in 2010. Private consumption and investment sheet resources ratio stood at 34%; recorded a sharp drop – which translated into a significant contraction in demand for credit –, ᭿ Total potentially-available financial resources at the end unemployment in the economy rose and interest rates of June totalled 5.9 Bi.€, corresponding to the sum of: sank to historically-low levels, all of which resulted in a challenging economic landscape for the banking industry. ᭿ assets eligible for funding at the European Central Bank available for immediate use of 4.2 Bi.€; The economic scenario in Angola was also less favourable in the first six months of 2009. Angola’s economy, which ᭿ potential issue guaranteed by the Portuguese State of had managed to remain virtually immune to the 1.7 Bi.€; international financial turmoil, ended up being affected by the current global economic situation via the fall in the oil ᭿ this sum exceeds the volume of medium and long-term price and the cutback in OPEC production quotas. The fall debt repayments to be made by the end of 2013 of 5.3 in exports gave rise to increased pressure on the balance of Bi.€; payments current account and to an expressive decline in foreign exchange reserves, thus forcing the Angolan ᭿ BPI did not resort to the issue of the State-backed government to act with a view to cooling domestic demand. debt. The lower exports and the deceleration in the robustness of domestic activity were responsible for the Angolan Finance Ministry revising downwards the economic growth projection for 2009, while international organisations’ forecasts point to a real drop GDP in 2009, with a probable upswing in growth expected to occur in 2010. Report | Leading business indicators and Introduction 5 Risks. The Bank’s non-performing loan ratios present a For their part, the positive effects of the measures good relative level despite the increase in risk levels in adopted by the Bank reflected themselves in a slower the economy, at the same time as cover for overdue loans and/or incomplete manner: the adjustment of credit is adequate.

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