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A. Basis of presentation
Banco Comercial Portugu\u00eas, S.A. (the \u2018Bank\u2019) is a private capital bank, established in Portugal in 1985. It started
operating on 5 May 1986, and these consolidated financial statements reflect the results of the operations of the Bank
and all its subsidiaries (together referred to as the \u2018Group\u2019) and the Group\u2019s interest in associates, for the years ended
on 31 December 2023 and 2022.
In accordance with Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002, and
Bank of Portugal Notice no. 5/2015 (which revoked Bank of Portugal Notice no. 1/2005), the Group\u2019s consolidated
financial statements are required to be prepared, since 2005, in accordance with International Financial Reporting
Standards (IFRS) as endorsed by the European Union (EU). IFRS comprise accounting standards issued by the
International Accounting Standards Board (IASB), as well as interpretations issued by the International Financial
Reporting Interpretations Committee (IFRIC) and its predecessor bodies. The consolidated financial statements and the
accompanying notes were approved on 25 March 2024 by the Bank's Board of Directors and are presented in thousands
of euros, rounded to the nearest thousand.
All the references in this document related to any normative always report to the respective current version.
The consolidated financial statements for the year ended on 31 December 2023 were prepared for the purpose of
recognition and measurement, in accordance with the IFRS approved by the EU that are effective on that date.
These consolidated financial statements are a translation of the financial statements originally issued in Portuguese. In
the event of discrepancies, the Portuguese version prevails.
A1. Comparative information
The Group has adopted IFRS and interpretations mandatory for accounting periods beginning on or after 1 January 2023.
The accounting policies were applied consistently to all entities of the Group and are consistent with those used in the
preparation of the financial statements of the previous period, except for the changes resulting from the adoption of
IFRS 17 - Insurance Contracts with reference to 1 January 2023. IFRS 17 establishes the principles for the recognition,
measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 - Insurance Contracts. IFRS 17
outlines a general model, which is modified for insurance contracts with direct participation features, described as the
variable fee approach. The general model is simplified if certain criteria are met by measuring the liability for
remaining coverage using the premium allocation approach. The general model uses current assumptions to estimate
the amount, timing and uncertainty of future cash flows and it explicitly measures the cost of that uncertainty. It takes
into account market interest rates and the impact of policyholders\u2019 options and guarantees.
As the Group owns 49% of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., which is dedicated to the management
of life insurance and pension funds, on 1 January 2023 Millenniumbcp Ageas made the simultaneous adoption of IFRS 9 -
Financial Instruments and IFRS 17 - Insurance Contracts. It opted for the possibility given to Insurance Companies to
defer the application of IFRS 9, since the combined implementation with IFRS 17 would minimize the distortion of
results.
Initial application of IFRS 17 and IFRS 9 requires comparative information. Therefore, Millenniumbcp Ageas made the
transition exercise on 1 January 2022, and the impacts resulting from its implementation are detailed in note 59.
Application of IFRS 17 \u2013 Insurance Contracts, and IFRS 9 - Financial Instruments by Millenniumbcp Ageas Grupo
Segurador, S.G.P.S., S.A.
In order to ensure the comparability of information, the Group made the appropriate adjustments in the 2022
consolidated balance sheet and income statement, as detailed in note 59.
The Group's financial statements were prepared under the going concern assumption, the accrual-based accounting
regime and under the historical cost convention, as modified by the application of fair value for derivative financial
instruments, financial assets and liabilities at fair value through profit or loss and financial assets at fair value through
other comprehensive income. Financial assets and liabilities that are covered under hedge accounting are stated at fair
value in respect of the risk that is being hedged, if applicable. Other financial assets and liabilities and non-financial
assets and liabilities are stated at amortised cost or historical cost. Non-current assets and disposal groups held for sale
are stated at the lower of carrying amount or fair value less costs to sell. The liability for defined benefit obligations is
recognised as the present value of the past liabilities with pensions net of the value of the fund's assets.
The preparation of the financial statements in accordance with IFRS requires the Board of Directors, under advice of
the Executive Committee, to make judgments, estimations and assumptions that affect the application of the
accounting policies and reported amounts of assets, liabilities, income and expenses. The estimations and associated
assumptions are based on historical experience and other factors that are believed to be reasonable under the
circumstances and form the basis for making the judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these estimations. The issues involving a higher
degree of judgment or complexity or for which assumptions and estimations are significant are presented in note 1.Y.
B. Basis of consolidation
As from 1 January 2010, the Group began to apply IFRS 3 (revised) for the accounting of business combinations. The
changes in the accounting policies resulting from the application of IFRS 3 (revised) are applied prospectively.
The consolidated financial statements now presented reflect the assets, liabilities, income and expenses of the Bank
and its subsidiaries (the Group), and the results attributable to the Group financial investments in associates.
B1. Investments in subsidiaries
Subsidiaries are entities controlled by the Group (including structure entities and investment funds). The Group controls
an entity when it holds the power to direct the relevant activities of the entity, and when it is exposed, or has rights,
to variable returns from its involvement with the entity and can take possession of these results through the power it
holds over the relevant activities of that entity (de facto control). The financial statements of subsidiaries are included
in the consolidated financial statements from the date on which control commences until the date on which control
ceases.
Accumulated losses are attributed to non-controlling interests in the respective proportion, implying that the Group can
recognise negative non-controlling interests.
On a step acquisition process resulting in the acquisition of control, the revaluation of any participation previously
acquired is recorded against the profit and loss account when goodwill is calculated. On a partial disposal resulting in
loss of control over a subsidiary, any participation retained is revalued at market value on the sale date and the gain or
loss resulting from this revaluation is booked against the income statement.
B2. Investments in associates
Investments in associated companies are registered by the equity method from the date that the Group acquires
significant influence until the date it ceases to exist. Associates are those entities in which the Group has significant
influence but not control over the financial and operating policy decisions of the investee. It is assumed that the Group
has significant influence when it holds, directly or indirectly, more than 20% or of the voting rights of the investee. If
the Group holds, directly or indirectly, less than 20% of the voting rights of the investee, it is presumed that the Group
does not have significant influence, unless such influence can be clearly demonstrated.
The existence of significant influence by the Group is usually evidenced in one or more of the following ways:
-representation on the Board of Directors or equivalent governing body of the investee;
-participation in policy-making processes, including participation in decisions about dividends or other distributions;
-material transactions between the Group and the investee;
-interchange of the management team;
-provision of essential technical information.
The consolidated financial statements include the part that is attributable to the Group of the total reserves and
results of associated companies accounted on an equity basis. When the Group\u2019s share of losses exceeds its interest in
the associate, the carrying amount is reduced to zero and recognition of further losses is discontinued, with exception
of the part in which the Group incurs in a legal obligation to assume these losses on behalf of an associate.
B3. Goodwill
Business combinations are accounted under the purchase method. The acquisition cost corresponds to the fair value,
determined at the acquisition date, of the assets given and liabilities incurred or assumed. Costs directly attributable
to the acquisition of a subsidiary are recorded directly in the income statement.
Positive goodwill arising from acquisitions is recognised as an asset carried at acquisition cost and is not subject to
amortisation, however, it is subject to impairment tests. Goodwill arising from the acquisition of subsidiaries and
associates is defined as the difference between the cost of acquisition and the total or corresponding share of the fair
value of the net assets and contingent liabilities acquired, depending on the option taken.
Negative goodwill arising from an acquisition is recognised directly in the income statement of the period in which the
business combination occurs.
Goodwill is not adjusted due to changes in the initial estimation of the contingent purchase price, being the difference
recorded in the income statement or in equity, when applicable.
According to IFRS 3 \u2013 Business combinations, if the initial accounting of a business combination is not concluded until
the end of the first financial reporting period in which the combination occurs, it is recorded at the respective
provisional values. These provisional values can be adjusted over the measurement period, which can\u2019t exceed a year
since the acquisition date. Over this period, the Group should retrospectively adjust the amounts recognised previously
on the acquisition date, to reflect newly obtained information about facts and circumstances that existed at the
acquisition date and that, if they were known by then, would have impacted the measurement of the amounts
recognised at that date.
During this period, the Group should also recognise additional assets and liabilities in the case of obtaining new
information about facts and circumstances that existed at the acquisition date and that, if they were known by then,
would have resulted in the recognition of those assets and liabilities at that time.
The recoverable amount of the goodwill registered in the Group's asset is assessed annually in the preparation of the
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. Impairment
losses are recognised in the income statement. The recoverable amount is determined based on the higher of the asset
value in use and the market value after deducting selling costs, calculated using valuation methodologies supported by
discounted cash flow techniques, considering market conditions, the time value of money and the business risks.
B4. Purchases and dilution of non-controlling interests
The acquisition of non-controlling interests that do not impact the control position of a subsidiary is accounted as a
transaction with shareholders and, therefore, no additional goodwill resulting from this transaction is recognised. The
difference between the acquisition cost and the fair value of non-controlling interests acquired is recognised directly in
reserves. On this basis, the gains and losses resulting from the sale of controlling interests that do not impact the
control position of a subsidiary are always recognised against reserves.
B5. Loss of control
The gains or losses resulting from the dilution or sale of a financial position in a subsidiary, with loss of control, are
recognised by the Group in the income statement.
B6. Investments in foreign subsidiaries and associates
The financial statements of foreign subsidiaries and associates of the Group are prepared in their functional currency,
defined as the currency of the primary economic environment in which they operate or the currency in which the
subsidiaries obtain their income or finance their activity. In the consolidation process, assets and liabilities, including
goodwill, of foreign subsidiaries are converted into euros at the official exchange rate on the balance sheet date.
Regarding the investments in foreign operations that are consolidated under the full consolidation or equity methods,
exchange differences, between the conversion to euros of the equity at the beginning of the year and its value in euros
at the exchange rate on the balance sheet date in which the consolidated accounts are reported, are recognised against
\u201cReserves - exchange differences\u201d. The changes in fair value resulting from instruments that are designated and
qualified as hedging instruments related to foreign operations are recorded in equity under \"Reserves and retained
earnings\". Whenever the hedge is not fully effective, the ineffective portion is accounted against profit and loss of the
year.
The income and expenses of these subsidiaries are converted to euros at an approximate rate of the rates on the dates
of the transactions, using a monthly average considering the initial and final exchange rates of each month. Exchange
differences from the conversion to euros of the profits and losses for the reporting period, arising from the difference
between the exchange rate used in the income statement and the exchange rate prevailing at the balance sheet date,
are recognised in \"Reserves and retained earnings - exchange differences resulting from the consolidation of Group's
companies\". The exchange rates used by the Group are detailed in note 54.
On disposal of investments in foreign subsidiaries for which there is loss of control, exchange differences related to the
investment in the foreign operation and to the associated hedge transaction previously recognised in reserves are
transferred to profit and loss, as part of the gains or loss arising from the disposal.
The Group applies IAS 29 \u2013 Financial reporting in hyperinflationary economies in financial statements of entities that
present accounts in functional currency of an economy that has hyperinflation. In applying this policy, non-monetary
assets and liabilities are adjusted based on the price index from the date of acquisition or the date of the last
revaluation until 31 December 2021. The restated values of assets are reduced by the amount that exceeds their
recoverable amount, in accordance with the applicable IFRS.
Equity components are also updated considering the price index from the beginning of the period or date of the
contribution if it is earlier.
When the classification as a hyperinflationary economy is applied to associated companies, its effects are included in
the Group's financial statements by applying the equity method of accounting on the financial statements restated in
accordance with the requirements of IAS 29. The effects of the application of IAS 29 with impact on capital items are
recognised against the item \"Reserves and retained earnings\".
In accordance with the requirements provided in IAS 29, Angola was considered as a hyperinflationary economy until 31
December 2018. This classification is no longer applicable as of 1 January 2019.
B7. Transactions eliminated on consolidation
The balances and transactions between Group's companies, as well as any unrealised gains and losses arising from these
transactions, are eliminated in the preparation of the consolidated financial statements. Unrealised gains and losses
arising from transactions with associates and jointly controlled entities are eliminated in the proportion of the Group's
investment in these entities.
C. Financial instruments (IFRS 9)
C1. Financial assets
C1.1. Classification, initial recognition and subsequent measurement
At the initial recognition, financial assets are classified into one of the following categories:
\u2013 \u201cFinancial assets at amortised cost\u201d;
\u2013 \u201cFinancial assets at fair value through other comprehensive income\u201d; or,
\u2013 \u201cFinancial assets at fair value through profit or loss\u201d.
The classification is made taking into consideration the following aspects:
\u2013 the Group's business model for the management of the financial asset; and,
\u2013 the characteristics of the contractual cash flows of the financial asset.
Business Model Evaluation
With reference to 1 January 2018, the Group carried out an evaluation of the business model in which the financial
instruments are held at portfolio level, since this approach reflects how assets are managed and how that information
is made available to management bodies. The information considered in this evaluation included:
\u2013 the policies and purposes established for the portfolio and the practical operability of these policies, including how
the management strategy focuses on receiving contractual interest, maintaining a certain interest rate profile,
adjusting the duration of financial assets to the duration of liabilities that finance these assets or on the realization
of cash flows through the sale of the assets;
\u2013 how the performance of the portfolio is evaluated and reported to the Group's management bodies;
\u2013 the evaluation of the risks that affect the performance of the business model (and of the financial assets held under
this business model) and the way these risks are managed;
\u2013 the remuneration of business managers, i.e., in what way the compensation depends on the fair value of the assets
under management or on contractual cash flows received; and,
\u2013 the frequency, volume and sales periodicity in previous periods, the reasons for these sales and the expectations
about future sales. However, sales information should not be considered individually, but as part of an overall
assessment of how the Group establishes financial asset management objectives and how cash flows are obtained.
Financial assets held for trading and financial assets managed and evaluated at fair value by option are measured at
fair value through profit or loss because they are not held either for the collection of contractual cash flows (HTC), nor
for the collection of cash flows and sale of these financial assets (HTC and Sell).
Evaluation if the contractual cash flows correspond to Solely Payments of Principal and Interest (SPPI)
For the purposes of this assessment, \"principal\" is defined as the fair value of the financial asset at initial recognition.
\"Interest\" is defined as the counterparty for the time value of money, for the credit risk associated with the amount
owed over a given period and for other risks and costs associated with the activity (e.g., liquidity risk and
administrative costs), as well as for a profit margin.
In the evaluation of the financial instruments in which contractual cash flows refer exclusively to the receipt of
principal and interest, the Group considered the original contractual terms of the instrument. This evaluation included
the analysis of the existence of situations in which the contractual terms can modify the periodicity and the amount of
the cash flows so that they do not fulfil the SPPI condition. In the evaluation process, the Group considered:
\u2013 contingent events that may change the periodicity and the amount of the cash flows;
\u2013 characteristics that result in leverage;
\u2013 terms of prepayment and extension of maturity;
\u2013 terms that may limit the right of the Group to claim cash flows in relation to specific assets (e.g., contracts with
terms that prevent access to assets in case of default \u2013 non-recourse asset); and,
\u2013 characteristics that may change the time value of money.
In addition, an advance payment is consistent with the SPPI criterion if:
\u2013 the financial asset is acquired or originated with a premium or discount in relation to the contractual nominal value;
\u2013 the prepayment represents substantially the nominal amount of the contract plus accrued contractual interest, but
not paid (may include reasonable compensation for prepayment); and,
\u2013 the prepaid fair value is insignificant at initial recognition.
C1.1.1. Financial assets at amortised cost
Classification
A financial asset is classified under the category \"Financial assets at amortised cost\" if both of the following conditions
are met:
\u2013 the financial asset is held within a business model whose objective is to hold financial assets in order to collect their
contractual cash flows; and,
\u2013 its contractual cash flows occur on specific dates and are solely payments of principal and interest on the principal
amount outstanding (SPPI).
The \"Financial assets at amortised cost\" category includes loans and advances to credit institutions, loans and advances
to customers and debt instruments managed based on a business model whose purpose is to receive their contractual
cash flows (government bonds, bonds issued by companies and commercial paper).
Initial recognition and subsequent measurement
Loans and advances to credit institutions and loans and advances to customers are recognised at the date the funds are
made available to the counterparty (settlement date). Debt instruments are recognised on the trade date, that is, on
the date the Group accepts to acquire them.
Financial assets at amortised cost are initially recognised at fair value plus transaction costs and are subsequently
measured at amortised cost. In addition, they are subject, at their initial recognition, to the measurement of
impairment losses for expected credit losses (note C1.5), which are recognised in \"'Impairment of financial assets
measured at amortised cost\".
Interest of financial assets at amortised cost is recognised under \"Interest and similar income\", based on the effective
interest rate method and in accordance with the criteria described in note C3.
Gains or losses generated at the time of derecognition are registered in \"Gains/(losses) arising from derecognition of
financial assets and liabilities not measured at fair value through profit or loss\".
C1.1.2. Financial assets at fair value through other comprehensive income
Classification
A financial asset is classified under the category of \"Financial assets at fair value through other comprehensive income\"
if both of the following conditions are met:
\u2013 the financial asset is held within a business model whose objective is both to collect its contractual cash flows and
to sell this financial asset; and,
\u2013 its contractual cash flows occur on specific dates and are solely payments of principal and interest on the principal
amount outstanding (SPPI).
In addition, at the initial recognition of an equity instrument that is not held for trading, nor a contingent retribution
recognised by an acquirer in a business combination to which IFRS 3 applies, the Group may irrevocably choose to
classify it in the category of \"Financial assets at fair value through other comprehensive income\" (FVOCI). This option is
exercised on a case-by-case basis and is only available for financial instruments that comply with the definition of
equity instruments provided in IAS 32 and cannot be used for financial instruments whose classification as an equity
instrument under the scope of the issuer is made under the exceptions provided in paragraphs 16A to 16D of IAS 32.
Initial recognition and subsequent measurement
Debt instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. Changes in the fair value of these financial assets are
recognised against other comprehensive income and, at the time of their disposal, the respective gains or losses
accumulated in other comprehensive income are reclassified to a specific income statement item designated \"Gains or
losses on derecognition of financial assets at fair value through other comprehensive income\u201d.
Debt instruments at fair value through other comprehensive income are also subject from their initial recognition to the
measurement of impairment losses for expected credit losses (note C1.5). Impairment losses are recognised in the
income statement under \"Impairment of financial assets at fair value through other comprehensive income\", against
\u201cOther comprehensive income\u201d, and do not reduce the carrying amount of the financial asset in the balance sheet.
Interest, premiums or discounts on financial assets at fair value through other comprehensive income are recognised in
\"Interest and similar income\", based on the effective interest rate method and in accordance with the criteria described
in note C3.
Equity instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. The changes in the fair value of these financial assets
are recognised against \u201cOther comprehensive income\u201d. Dividends are recognised in the income statement when the
right to receive them is attributed.
Impairment is not recognised for equity instruments at fair value through other comprehensive income, and the
respective accumulated gains or losses recognised in \u201cFair value changes\u201d are transferred to \u201cRetained earnings\u201d at the
time of their derecognition.
C1.1.3. Financial assets at fair value through profit or loss
Classification
A financial asset is classified in the category \"Financial assets at fair value through profit and loss\" if the business model
defined by the Group for its management or the characteristics of its contractual cash flows do not meet the conditions
described above to be measured at amortised cost or at fair value through other comprehensive income (FVOCI).
In addition, the Group may irrevocably designate a financial asset at fair value through profit or loss that meets the
criteria to be measured at amortised cost or at FVOCI at the time of its initial recognition if this eliminates or
significantly reduces an inconsistency in measurement or recognition (accounting mismatch), that will otherwise arise
from measuring assets or liabilities or recognising their gains and losses in different bases.
The Group classified \"Financial assets at fair value through profit and loss\" in the following items:
a) \u201cFinancial assets held for trading\u201d
These financial assets are acquired with the purpose of short-term selling; at the initial recognition, they are part of a
portfolio of identified financial instruments and for which there is evidence of profit-taking in the short-term; or they
can be defined as derivatives (except for hedging derivatives).
b) \u201cFinancial assets not held for trading mandatorily at fair value through profit or loss\u201d
This item classifies debt instruments whose contractual cash flows do not correspond only to repayments of principal
and interest on the principal amount outstanding (SPPI).
c) \u201cFinancial assets designated at fair value through profit or loss\u201d (Fair Value Option)
This item includes the financial assets that the Group has chosen to designate at fair value through profit or loss to
eliminate accounting mismatch.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Group in the normal course of its business are in market conditions,
financial assets at fair value through profit or loss are initially recognised at their fair value, with the costs or income
associated with the transactions recognised in profit and loss at the initial moment. Subsequent changes in the fair
value of these assets are recognised in profit and loss.
The accrual of interest and of the premium/discount (when applicable) is recognised in \"Net interest income\", based on
the effective interest rate of each transaction, except the accrual of interest from trading derivatives that are
recognised in \u201cGains/(losses) on financial operations at fair value through profit or loss\u201d. Dividends are recognised in
profit and loss when the right to receive them is attributed.
Trading derivatives with a positive fair value are included in the item \"Financial assets held for trading\", while trading
derivatives with negative fair value are included in \"Financial liabilities held for trading\".
C1.2. Reclassification between categories of financial assets
Financial assets should be reclassified into other categories only if the business model used in their management has
changed. In this case, all financial assets affected must be reclassified.
The reclassification must be applied prospectively from the date of reclassification and any gains, losses (including the
ones related to impairment) or interest previously recognised should not be restated.
The reclassification of investments in equity instruments measured at fair value through other comprehensive income is
not allowed, nor of financial instruments designated at fair value through profit or loss.
C1.3. Modification and derecognition of financial assets
General principles
i) The Group shall derecognise a financial asset when, and only when:
\u2013 the contractual rights to the cash flows from the financial asset expire; or,
\u2013 it transfers the financial asset as set out in notes ii) and iii) below and the transfer qualifies for derecognition in
accordance with note iv).
ii) The Group transfers a financial asset if, and only if, it either:
\u2013 transfers the contractual rights to receive the cash flows of the financial asset; or,
\u2013 retains the contractual rights to receive the cash flows of the financial asset but assumes a contractual obligation to
pay the cash flows to one or more recipients in an arrangement that meets the conditions presented in note iii).
iii) When the Group retains the contractual rights to receive the cash flows of a financial asset (the 'original asset'), but
assumes a contractual obligation to pay these cash flows to one or more entities (the 'eventual recipients'), the
Group shall treat the transaction as a transfer of a financial asset if all the following three conditions are met:
\u2013 the Group does not have any obligation to pay amounts to the eventual recipients, unless it collects equivalent
amounts from the original asset. Short-term advances with the right of full recovery of the amount lent, plus
accrued interest at market rates, do not violate this condition;
\u2013 the Group is contractually prohibited from selling or pledging the original asset other than as a security to the
eventual recipients due its obligation to pay them cash flows; and,
\u2013 the Group has an obligation to remit any cash flows it collects on behalf of the eventual recipients without material
delay. In addition, it is not entitled to reinvest such cash flows, except for investments in cash or cash equivalents
(as defined in IAS 7 \u2013 Statement of Cash Flows) during the short settlement period from the collection date until the
date of required remittance to the eventual recipients, and interest earned on such investments is passed to the
eventual recipients.
iv) When the Group transfers a financial asset (see note ii) above), it shall evaluate the extent to which it retains the
risks and benefits arising from owning the financial asset. In this case:
\u2013 if the Group transfers substantially all the risks and benefits arising from owning the financial asset, it shall
derecognise the financial asset and recognise separately any rights and obligations created or retained in the
transfer, as assets or liabilities;
\u2013 if the Group retains substantially all the risks and benefits arising from owning the financial asset, it shall continue
to recognise the financial asset;
\u2013 if the Group neither transfers nor retains substantially all the risks and benefits arising from owning the financial
asset, it shall determine whether it retained control of the financial asset. In this case:
a) if the Group did not retain control, it shall derecognise the financial asset and recognise separately, as assets or
liabilities, any rights and obligations created or retained in the transfer;
b) if the Group retained control, it shall continue to recognise the financial asset to the extent of its continued
involvement in the financial asset.
v)\u00a0 The transfer of risks and benefits (see prior note) is evaluated by comparing the Group\u2019s exposure, before and after
the transfer, with the variability in the amounts and timing of the net cash flows of the transferred asset.
vi) The question of whether the Group retained or not control (see note iv) above) over the transferred asset depends
on the transferee's ability to sell the asset. If the transferee has the practical ability to sell the asset in its entirety
to an unrelated third party and can exercise that ability unilaterally without needing to impose additional
restrictions on the transfer, the entity did not retain control. In all other cases, the entity retained control.
Derecognition criteria
In the context of the general principles listed in the previous section, and considering that contract modification
processes may lead, in some circumstances, to the derecognition of the original financial assets and recognition of new
ones (subject to POCI identification), the purpose of this section is to set the criteria and circumstances that may lead
to the derecognition of a financial asset.
The Group considers that a modification of the terms and conditions of a credit exposure will result in derecognition of
the transaction and in recognition of a new transaction when the modification translates into at least one of the
following conditions:
\u2013 Creation of a new exposure that results from a debt consolidation, without any of the derecognized instruments
having a nominal value higher than 90% of the nominal amount of the new instrument;
\u2013 Double extension of the residual maturity, provided that the extension is not shorter than 3 years compared to the
residual maturity in the moment of the modification;
\u2013 Increase of on balance exposure by more than 10% compared to the nominal amount (refers to the last approved
amount on the operation subject to modification);
\u2013 Change in qualitative features, namely:
i) Change of currency, unless the exchange rate between the old and the new currency is pegged or managed
within limits restricted by law or the relevant monetary authorities;
ii) Exclusion or addition of a substantial equity conversion feature to a debt instrument, unless it is not
reasonably possible that it will be exercised over its term;
iii) Transfer of the instrument\u2019s credit risk to another borrower, or a significant change in the structure of
borrowers within the instrument.
iv) Deletion or addition to the debt instrument of features of the \"Pay If You Can\" type or dependent on the
financial performance of the debt instrument.
In the case of a restructuring due to financial difficulties of the debtor, only the criteria set out in items ii, iii and iv of
the above paragraphs should be checked (the other criteria listed in this paragraph are not relevant in such situations).
Under the regulatory changes that occurred in Poland and the negotiations with customers holding mortgage loans in
foreign currency described in note 57, and which correspond to contractual modifications made in accordance with IFRS
9, when the cash flows resulting from the agreement are subject to modification and a given asset is not derecognised,
Bank Millennium adjusts the gross book value of the financial asset and recognises the profit or loss due to the
modification in the Income Statement - Results on modification. The adjustment to the gross carrying amount of a
financial asset is the difference between the discounted cash flows before and after contract modification.
Loans written-off
The Group writes off a loan when it does not have reasonable expectations of recovering a financial asset in its entirety
or partially. Loans written-off are recognised in off-balance sheet accounts.
C1.4. Purchased or originated credit-impaired assets
Purchased or originated credit-impaired (POCI) assets are assets that present objective evidence of credit impairment
in the moment of their initial recognition. An asset is credit-impaired if one or more events have occurred with a
negative impact on the estimated future cash flows of the asset.
The two events that lead to the origin of a POCI exposure are presented as follows:
\u2013 financial assets arising from a recovery process, where there have been changes to the terms and conditions of the
original agreement, which presented objective evidence of impairment that resulted in its derecognition (note C1.3)
and recognition of a new contract that reflects the credit losses incurred;
\u2013 financial assets acquired with a significant discount, where the existence of a significant discount reflects credit
losses incurred at the time of their initial recognition.
At initial recognition, POCI assets do not carry an impairment allowance. Instead, lifetime expected credit losses (ECL)
are incorporated into the calculation of the effective interest rate (EIR). Consequently, at initial recognition, the gross
book value of POCI (initial balance) is accounted for at fair value and it's equal to the net book value before being
recognised as POCI (difference between the initial balance and the total discounted cash flows).
C1.5. Impairment losses
C1.5.1. Financial instruments subject to impairment losses recognition
The Group recognises impairment losses for expected credit losses on financial instruments recognised in the following
accounting items:
C1.5.1.1. Financial assets at amortised cost
Impairment losses on financial assets at amortised cost reduce the balance sheet value of these financial assets against
the item \"Impairment of financial assets at amortised cost\" (in the income statement).
C1.5.1.2. Debt instruments at fair value through other comprehensive income
Impairment losses for debt instruments at fair value through other comprehensive income are recognised in the income
statement under \"Impairment of financial assets at fair value through other comprehensive income\", against other
comprehensive income (they do not reduce the balance sheet amount of these financial assets).
C1.5.1.3. Credit commitments, documentary credits and financial guarantees
Impairment losses associated with credit commitments, documentary credits and financial guarantees are recognised in
liabilities, under the balance \"Provisions for guarantees and other commitments\", against \"Other provisions\" (in the
income statement).
C1.5.2. Classification of financial instruments by stages
Changes in credit risk since the initial recognition
Stage 1
Stage 2
Stage 3
Classification criterion
Initial recognition
Significant increase in credit
risk since initial recognition
Impaired
Impairment losses
12-month expected credit
losses
Lifetime expected credit losses
The Group determines the expected credit losses of each operation as a result of the deterioration of credit risk since
its initial recognition. For this purpose, operations are classified into one of the following three stages:
\u2013 Stage 1: the operations in which there is no significant increase in credit risk since its initial recognition are
classified in this stage. Impairment losses associated with operations classified in this stage correspond to expected
credit losses resulting from a default event that may occur within 12 months after the reporting date (12-month
expected credit losses);
\u2013 Stage 2: the operations in which there is a significant increase in credit risk since its initial recognition (note C1.5.3)
but are not impaired (note C1.5.4) are classified in this stage. Impairment losses associated with operations
classified in this stage correspond to the expected credit losses resulting from default events that may occur over
the expected residual life of the operations (lifetime expected credit losses);
\u2013 Stage 3: impaired operations are classified in this stage. Impairment losses associated with operations classified at
this stage correspond to lifetime expected credit losses.
C1.5.3. Significant increase in credit risk (SICR)
Significant increase in credit risk (SICR) is determined according to a set of mostly quantitative, but also qualitative
criteria. These criteria are mainly based on the risk grades of customers, according to the Bank's Rating Master Scale,
and on its evolution, in order to detect significant increases in Probability of Default (PD), complemented by other
information regarding the customers\u2019 behaviour towards the financial system.
C1.5.4. Definition of financial assets in default and impaired
All customers who meet at least one of the following conditions are marked as default and, consequently, in NPE:
a) Delay over 90 days of material payment:
- Amounts of principal, interest or fees not paid on the due date that, cumulatively, represent:
i) more than Euros 100 (retail) or more than Euros 500 (non-retail); and,
ii) more than 1% of the total debt (direct liabilities).
After these two conditions are met, the counting of days of delay begins: if more than 90 consecutive days in which the
customer is in this situation have been counted, it is classified as default (or GR15).
The existence of a material payment delay gives rise to the default setting (GR15) of all holders of the operation (or
operations).
b) Signs of low probability of payment:
i. Credit restructuring due to financial difficulties with loss of value;
ii. Delay after restructuring due to financial difficulties;
iii. Recurrence of restructuring due to financial difficulties;
iv. Credit with signs of impairment (or stage 3 of IFRS 9);
v. Insolvency or equivalent proceedings;
vi. Litigation;
vii. Guarantees of operations in default;
viii. Credit sales with losses;
ix. Credit fraud;
x. Unpaid credit status;
xi. Breach of covenants in a credit agreement;
xii. Spread of default in an economic group;
xiii. Cross default in BCP Group.
C1.5.5. Estimates of expected credit losses - Individual analysis
1. Customers who are in one of the following conditions are subject to individual analysis:
Customers in default
Customers in litigation or insolvency, if the total exposure of the group members in these situations exceeds
Euros 1 million
Customers integrated into groups with an exposure over Euros 5 million, if they have a risk grade 15
Groups or customers
who are not in
default
Other customers belonging to groups in the above conditions
Groups or customers with an exposure over Euros 5 million, if a group member has a risk grade 14
Groups or customers with an exposure over Euros 5 million, if a member of the group has a restructured loan
and a risk grade 13
Groups or customers with an exposure over Euros 10 million, if at least one member of the group is in stage 2
Groups or customers not included in the preceding paragraphs, whose exposure exceeds Euros 25 million
2. Regardless of the criteria described in the previous point, the individual analysis is only performed for customers
with a credit exposure over Euros 500,000, while customers with exposure below this limit are not considered for
the purpose of determining the exposure referred to in the previous point.
3. Other customers that do not meet the criteria defined in 1 will also be subject to individual analysis, if under the
following conditions:
\u2013 they have impairment as a result of the latest individual analysis;
\u2013 are classified in stage 2 as a result of the last revision of the questionnaire analysing the indications of financial
difficulties;
\u2013 according to recent information, they show a significant deterioration in risk levels; or,
\u2013 are a Special Purpose Vehicle (SPV).
4. The individual analysis includes the following procedures:
\u2013 for customers that are not in default, the analysis of financial difficulties indicators to determine whether the
customer has objective signs of impairment, or whether it should be classified in stage 2 given the occurrence of a
significant increase in credit risk, considering for this purpose a set of predetermined signs;
\u2013 for customers in default or for which the previous analysis has allowed to conclude that the customer has objective
signs of impairment, determination of the loss.
5. For the situations identified in the first paragraph of the previous point involving corporate clients, the analysis is
the responsibility of the Rating Division, and the responsibility of the Credit Division for the remaining clients.
6. For the situations identified in the second paragraph of the previous point, the individual analysis to determine the
loss is the responsibility of the client's management divisions and of the Credit Division, the latter with regard to the
customers managed by the Commercial Networks.
The assessment of existence of impairment losses in individual terms is determined through an analysis of the total
credit exposure on a case-by-case basis. For each loan considered individually significant, the Group assessed at each
balance sheet date the existence of objective evidence of impairment. In the assessment of impairment losses in
individual terms, the following factors were considered:
\u2013 total exposure of each customer towards the Group and the existence of overdue loans;
\u2013 viability of the customer\u2019s business and its capacity to generate enough cash flows to service debt obligations in the
future;
\u2013 the existence, nature and estimated value of the collaterals associated to each loan;
\u2013 significant deterioration of the customer's rating;
\u2013 the customer\u2019s available assets in liquidation or insolvency situations;
\u2013 the existence of preferential creditors;
\u2013 the amount and expected recovery term.
7. Each of the units referred to in the previous point is responsible for assigning an expectation and a recovery period
to exposures relating to customers subject to individual analysis, which must be transmitted to the Risk Office as
part of the regular process of collecting information, accompanied by detailed justification of the proposed
impairment.
8. The expected recovery shall be represented by a recovery rate of the total outstanding exposure, which may be a
weighted rate considering the different recovery prospects for each part of the customer's liabilities.
9. The recovery estimation referred to in the previous point should be influenced by future prospects (forward-
looking), contemplating not only a more expected scenario but also alternative scenarios (an unbiased and
probability-weighted amount). The application and weighting of the scenarios should be carried out both in a
global perspective and in an individualized perspective, the latter when cases that, due to their specificity, have a
high degree of uncertainty regarding the expected recovery estimation are identified.
10. The macroeconomic adjustment set out in point 8 should be analysed annually and weighted according to the type
of recovery strategy associated with the exposure under analysis:
\u2013 for Going Concern strategies (i.e., the estimation is based on the cash flows of the business), the possibility of
applying the 2 additional macroeconomic scenarios (optimistic and pessimistic) should be analysed in a global way,
to ascertain if there is the risk of a skewed view of the expected losses from the consideration of only one scenario;
\u2013 for Gone Concern strategies (i.e., the recovery estimation is based on the realization of the collateral), the impact
of the macroeconomic scenario on collaterals should be analysed, for example, to what extent the projected real
estate index indicates significant changes ahead for the current valuation values.
11. It is the responsibility of the units referred to in point 5 to consider in their projection macroeconomic expectations
that may influence the recoverability of the debt.
12. For the purposes of the preceding paragraphs, the Economic Studies, Sustainability and Cryptoassets Department
shall disclose the macroeconomic data that allow the estimations to be made.
13. The decision to consider global impacts related to the going and gone concern scenarios should be made by the Risk
Committee, as proposed by the Risk Office.
14. For specific cases with a high degree of uncertainty, the allocation of alternative scenarios should be considered
casuistically. Examples of recovery situations with a degree of uncertainty include:
\u2013 recovery of collateral in geographies in which the Bank has no relevant recovery experience;
\u2013 recovery of debt related to geographies in which there is strong political instability;
\u2013 recovery of non-real estate collateral for which there is no evidence of market liquidity;
\u2013 recovery of related collateral or government guarantees in a currency other than the country's own;
\u2013 recovery of debt related to debtors for whom there is a strong negative public exposure.
15. The Risk Office is responsible for reviewing the information collected and for clarifying all identified
inconsistencies, as well as for the final decision on the customer's impairment.
16. Customers that have objective signs of impairment, but an individual impairment amount is equal to zero, are
included in the collective analysis, assuming a PD 12-month equivalent to the risk grade 12 of the Master Scale.
17. The individual impairment analysis must be carried out annually, and may be lower for clients who fall into certain
situations of possible increased risk. In case significant signs of deterioration or improvement in the customer\u2019s
economic and financial situation are detected, as well as the macroeconomic conditions affecting the customer's
ability to accomplish debt, it is the responsibility of the Risk Office to promote the review of the expected
impairment of this customer.
C1.5.6. Estimates of expected credit losses - Collective analysis
Transactions that are not subject to an individual impairment analysis are grouped considering their risk characteristics
and subject to a collective impairment analysis. The Group's credit portfolio is divided by internal risk grades and
according to the following segments:
a) Segments with a reduced history of defaults, designated \u2018low default\u2019: Large corporate exposures, Project finance,
Institutions (banks/financial institutions) and Sovereigns;
b) Segments not \u2018low default\u2019: - Retail: Mortgages; Overdrafts; Credit cards; Small and medium enterprises - Retail
(\u2018SME Retail\u2019); and Others - Corporate: Small and medium enterprises - Corporate (\u2018Large SME\u2019); and Real Estate.
The Group performs statistical tests in order to prove the homogeneity of the segments mentioned above, with a
minimum period of one year.
Expected credit losses are estimates of credit losses that are determined as follows:
\u2013 financial assets with no signs of impairment at the reporting date: the present value of the difference between the
contractual cash flows and the cash flows that the Group expects to receive;
\u2013 financial assets with impairment at the reporting date: the difference between the gross book value and the present
value of the estimated cash flows;
\u2013 unused credit commitments: the present value of the difference between the resulting contractual cash flows if the
commitment is made and the cash flows that the Group expects to receive;
\u2013 financial guarantees: the current value of the expected repayments less the amounts that the Group expects to
recover.
The main inputs used to measure ECLs on a collective basis should include the following variables:
\u2013 Probability of Default \u2013 PD;
\u2013 Loss Given Default \u2013 LGD; and,
\u2013 Exposure at Default \u2013 EAD.
These parameters are obtained through internal statistical models and other relevant historical data, considering the
already existing regulatory models adapted to the requirements of IFRS 9.
PDs are estimated based on a certain historical period and will be calculated based on statistical models. These models
are based on internal data including both quantitative and qualitative factors. If there is a change in the risk of the
counterparty or exposure, the estimate of the associated PD will also vary. The PDs will be calculated considering the
contractual maturities of exposures.
The risk grades are a highly relevant input for determining the PD associated with each exposure.
The Group collects performance and default indicators about their credit risk exposures with analysis by types of
customers and products.
LGD is the magnitude of the loss that is expected to occur if an exposure goes into default. The Group estimates the
LGD parameters based on the historical recovery rates after entry into counterparty defaults. The LGD models consider
the associated collaterals, the counterparty activity sector, the default time, as well as the recovery costs. In the case
of contracts secured by real estate, it is expected that the LTV (loan-to-value) ratios are a parameter of high relevance
in the determination of LGD.
The EAD represents the expected exposure if the exposure and/or customer defaults. The Group obtains the EAD values
from the counterparty's current exposure and potential changes to its current value as a result of the contractual
conditions, including amortisations and prepayments. For commitments and financial guarantees, the value of the EAD
will consider both the amount of credit used and the expectation of future potential value that may be used in
accordance with the agreement.
As described above, except for financial assets that consider a 12-month PD as they do not present a significant
increase in credit risk, the Group will calculate the ECL value considering the risk of default during the maximum
contractual maturity period of the contract, even if, for the purpose of risk management, it is considered to be a longer
period. The maximum contractual period shall be considered as the period up to the date on which the Group has the
right to require payment or end the commitment or guarantee.
The Group adopted as a residual term criterion for renewable operations, when in stage 2, a term of 5 years. This term
was determined based on the behavioural models of this type of product applied by the Bank in the liquidity risk and
interest rate (ALM) analysis. According to these models, the maximum period of repayment of these operations is the 5
years considered conservatively in the scope of the calculation of credit impairment.
The Group uses models to forecast the evolution of the most relevant parameters for the expected credit losses,
namely probability of default, which incorporate forward-looking information. This incorporation of forward-looking
information is carried out in the relevant elements considered for the calculation of expected credit losses (ECL).
In particular, the PD point-in-time (PDpit) considered for the determination of the probability of performing exposures
at the reference date becoming defaulted exposures considers the expected values for a set of macroeconomic
variables, based on three scenarios (Central, Upside and Downside Scenario) prepared by the Bank's Economic Studies
area. These scenarios, which are used across the Bank for various purposes besides calculating impairment, consider
existing projections by reference entities.
In December 2023 the Bank carried out an update of the macroeconomic scenarios and of the corresponded adjustment
of the parameters considered in the collective impairment model.
C2. Financial liabilities
C2.1. Classification, initial recognition and subsequent measurement
At initial recognition, financial liabilities are classified in one of the following categories:
\u2013 \u201cFinancial liabilities at amortised cost\u201d;
\u2013 \u201cFinancial liabilities at fair value through profit or loss\u201d.
C2.1.1. Financial liabilities at fair value through profit or loss
Classification
Financial liabilities classified under \"Financial liabilities at fair value through profit or loss\" include:
a) \u201cFinancial liabilities held for trading\u201d
In this balance the issued liabilities are classified with the purpose of repurchasing in the near term, those that form
part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a
recent actual pattern of short-term profit-taking; or is a derivative (except for a derivative classified as hedging
instrument).
b) \u201cFinancial liabilities designated at fair value through profit or loss\u201d
The Group may irrevocably assign a financial liability at fair value through profit or loss at the time of its initial
recognition if at least one of the following conditions is met:
\u2013 the financial liability is managed, evaluated and reported internally at its fair value; or,
\u2013 the designation eliminates or significantly reduces the accounting mismatch of transactions.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Group in the normal course of its business are made in market
conditions, financial liabilities at fair value through profit or loss are initially recognised at fair value with the costs or
income associated with the transactions recognised in profit or loss at the initial moment.
Subsequent changes in the fair value of these financial liabilities are recognised as follows:
\u2013 the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of
that liability shall be presented in other comprehensive income;
\u2013 the remaining amount of change in the fair value of the liability shall be presented in profit or loss.
The accrual of interest and the premium/discount (when applicable) is recognised in \"Interest expense and similar
charges\" based on the effective interest rate of each transaction.
C2.1.2. Financial guarantees
If they are not designated at fair value through profit or loss at the time of initial recognition, the financial guarantee
contracts are subsequently measured at the highest of the following amounts:
\u2013 the provision for losses determined according to the criteria described in note C1.5;
\u2013 the amount initially recognised deducted, when appropriate, from the accumulated amount of income recognised
according to IFRS 15 - Revenue from contracts with customers.
Financial guarantee contracts that are not designated at fair value through profit or loss are presented under
\"Provisions\".
C2.1.3. Financial liabilities at amortised cost
Classification
Financial liabilities that were not classified at fair value through profit or loss, or correspond to financial guarantee
contracts, are measured at amortised cost.
The category \"Financial assets at amortised cost\" includes resources from credit institutions and from customers, as
well as subordinated and non-subordinated debt securities.
Initial recognition and subsequent measurement
Financial liabilities at amortised cost are initially recognised at fair value plus transaction costs and are subsequently
measured at amortised cost. Interest on financial liabilities at amortised cost are recognised in \"Interest expense and
similar charges\", based on the effective interest rate method.
C2.2. Reclassification between categories of financial liabilities
Reclassifications of financial liabilities are not allowed.
C2.3. Derecognition of financial liabilities
The Group derecognises financial liabilities when these are cancelled or extinct.
C3. Interest recognition
Income and expense related to interest from financial instruments measured at amortised cost are recognised in
\"Interest and similar income\" and \"Interest expense and similar charges\" (net interest income) through the effective
interest rate method. Interest related to financial assets at fair value through other comprehensive income is also
recognised in net interest income.
The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected
life of the financial instrument (or, when appropriate, for a shorter period), to the net carrying amount of the financial
asset or financial liability.
For calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of
the financial instrument (e.g., early payment options) but without considering future impairment losses. The
calculation includes all fees paid or received considered as included in the effective interest rate, transaction costs and
all other premiums or discounts directly related to the transaction, except for assets and liabilities at fair value through
profit and loss.
Interest income recognised in income associated with contracts classified in stage 1 or 2 are determined by applying the
effective interest rate for each contract on its gross book value. The gross balance of a contract is its amortised cost,
before deducting the respective impairment. For financial assets included in stage 3, interest is recognised in the
income statement based on its net book value (less impairment). The interest recognition is always made in a
prospective way, i.e., for financial assets entering stage 3, interest is recognised at the amortised cost (net of
impairment) in subsequent periods.
For purchased or originated credit-impaired assets (POCI), the effective interest rate reflects the expected credit losses
in determining the expected future cash flows receivable from the financial asset.
C4. Hedge accounting
As allowed by IFRS 9, the Group opted to continue to apply the hedge accounting requirements in accordance with IAS
39.
The Group designates derivatives and other financial instruments to hedge its exposure to interest rate and foreign
exchange risk, resulting from financing and investment activities. Derivatives that do not qualify for hedge accounting
are accounted for as trading instruments.
Derivative hedging instruments are stated at fair value and gains and losses on revaluation are recognised in accordance
with the hedge accounting model adopted by the Group. A hedge relationship exists when:
\u2013 at the inception of the hedge there is formal documentation of the hedge;
\u2013 the hedge is expected to be highly effective;
\u2013 the effectiveness of the hedge can be reliably measured;
\u2013 the hedge is assessed in a continuous basis and highly effective throughout the reporting period; and,
\u2013 for hedges of a forecasted transaction, the transaction is highly probable and presents an exposure to variations in
cash flows that could ultimately affect profit or loss.
When a derivative financial instrument is used to hedge foreign exchange variations arising from monetary assets or
liabilities, no hedge accounting model is applied. Any gain or loss associated to the derivative is recognised through
profit and loss, as well as changes in currency risk of the monetary items.
C4.1. Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedge instruments are recognised
in profit and loss, together with changes in the fair value attributable to the hedged risk of the asset or liability or
group of assets and liabilities. If the hedge relationship no longer meets the criteria for hedge accounting, the
cumulative gains and losses due to variations of hedged risk linked to the hedge item recognised until the
discontinuance of the hedge accounting are amortised through profit and loss over the residual term of the hedged
item.
C4.2. Cash flow hedge
In a hedge relationship, the effective portion of changes in fair value of derivatives that are designated and qualify as
cash flow hedges are recognised in equity - cash flow hedge reserves in the effective part of the hedge relations. Any
gain or loss relating to the ineffective portion of the hedge is immediately recognised in profit and loss when occurred.
Amounts accumulated in equity are reclassified to profit and loss in the periods in which the hedged item will affect
profit or loss.
In case of hedging variability of cash flows, when the hedge instrument expires or is disposed or when the hedging
relationship no longer meets the criteria for hedge accounting, or when the hedge relation is revoked, the hedge
relationship is discontinued on a prospective basis. Therefore, the fair value changes of the derivative accumulated in
equity until the date of the discontinued hedge accounting can be:
\u2013 deferred over the residual period of the hedged instrument; or,
\u2013 recognised immediately in results if the hedged instrument is extinguished.
In the case of a discontinued hedge of a forecast transaction, the change in fair value of the derivative recognised in
equity at that time remains in equity until the forecasted transaction is ultimately recognised in the income statement.
When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is
immediately transferred to profit and loss.
C4.3. Hedge effectiveness
For a hedge relationship to be classified as such according to IAS 39, effectiveness must be demonstrated. As such, the
Group performs prospective tests at the beginning date of the initial hedge, if applicable, and retrospective tests in
order to demonstrate at each reporting period the effectiveness of the hedging relationships, demonstrating that the
variations in fair value of the hedging instrument are hedged by the fair value variations of the hedged item in the
portion assigned to the risk covered. Any ineffectiveness is recognised immediately in profit and loss when incurred.
C4.4. Hedge of a net investment in a foreign operation
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any exchange gain or
loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity. The gain or loss
relating to the ineffective portion is immediately recognised in profit and loss. Gains and losses accumulated in equity
related to the investment in a foreign operation and to the associated hedge operation are recognised in equity and
transferred to profit and loss, on the disposal of the foreign operation as part of the gain or loss from the disposal.
C5. Embedded Derivatives
An embedded derivative is a component of a hybrid agreement, which also includes a non-derived host instrument.
If the main instrument included in the hybrid contract is considered a financial asset, the classification and
measurement of the entire hybrid contract is carried out in accordance with the criteria described in note C1.1.3.
Derivatives embedded in contracts that are not considered financial assets are treated separately whenever the
economic risks and benefits of the derivative are not related to those of the main instrument, since the hybrid
instrument is not initially recognised at fair value through profit or loss. Embedded derivatives are recorded at fair
value with subsequent fair value changes recorded in profit or loss for the period and presented in the trading
derivatives portfolio.
D. Securitization operations
D1. Traditional securitizations
As at 31 December 2023, Banco Comercial Portugu\u00eas has in Portugal two residential mortgage credit securitization
operations, Magellan Mortgages no.3 and no.4, in which the respective portfolios were derecognised from the Bank\u2019s
individual balance sheet, as the risks and rewards related to the residual portions of the referred transactions, were
transferred to institutional investors.
By purchasing a part or all of the most subordinated residual portion, the Group maintained control of the assets and
liabilities of Magellan Mortgages no.3, this Special Purpose Entity (SPE) being consolidated in the Group\u2019s financial
statements, in accordance with the accounting policy referred to in note 1 B.
The two operations are traditional securitizations, where each mortgage loan portfolio was sold to a Portuguese Loan
Securitisation Fund, which has financed this purchase through the sale of securitisation units to an Irish-SPE. At the
same time, this SPE issued and sold in capital markets the different tranches of bonds.
D2. Synthetic securitizations
As at 31 December 2023, Banco Comercial Portugu\u00eas has in Portugal three synthetic securitization operations, with
similar characteristics, with reference to credit portfolios granted by the Bank mainly to Small and Medium Enterprises
(SMEs).
Caravela SME no.3, which started on 28 June 2013, has a medium and long-term loan portfolio of current accounts and
authorized overdrafts.
Caravela SME no.4, initiated on 5 June 2014, has a reference portfolio of vehicle, real estate and equipment leasing.
Caravela SME no.5, initiated on 20 December 2022, is supported on a credit portfolio of medium and long term loans,
leasing contracts and commercial paper programmes.
In any of these operations, the Bank contracted a Credit Default Swap (CDS) from a Special Purpose Entity (SPE),
buying, this way, protection over the total referenced portfolio. As in all synthetic securitizations, under CDS, the risk
of the respective portfolios was divided in 3 tranches: senior, mezzanine and equity.
In the case of both Caravela no.3 and no.4, the mezzanine and part of the equity (20%) were placed in the market
through the issuance of Credit Linked Notes (CLNs) by the above mentioned SPE which were subscribed by investors,
while the Group retained the senior risk and the remaining part of the equity (80%). In the case of Caravela, SME no. 5,
only the full amount of the mezzanine was placed in the market, while the Group retained the risk of the full amount
of the senior and equity tranches.
Note that in all the above-mentioned synthetic transactions, the product of the CLNs issue was invested by the SPE in a
deposit, which fully collateralizes the responsibilities in the presence of its creditors including BCP in accordance with
the CDS.
In December 2023, the Bank Millennium carried out a synthetic securitization transaction of a portfolio of unsecured
cash loans with a total value of PLN 7.2 billion (Euros 1.7 billion). This was the largest synthetic securitization
transaction concluded by the Bank so far. As part of the transaction, the Bank transferred a significant part of the
credit risk of the securitized portfolio to the investor. The securitized loan portfolio remains on the Bank's balance
sheet. The risk of the securitized portfolio is transferred via a credit protection instrument in the form of credit risk-
related bonds issued in December 2023 (\"CLN Bonds\") in the amount of PLN 489 million (Euros 112.6 million).
Earlier, in July 2023, the Bank's subsidiary, Millennium Leasing, conducted another synthetic securitization transaction.
The reference portfolio of leasing transactions was worth PLN 4.0 billion (Euros 0.9 million). As part of the transaction,
Millennium Leasing transferred a significant part of the credit risk of the securitized portfolio to the investor. The
securitized loan portfolio remains on Millennium Leasing's balance sheet. The risk transfer of the securitized portfolio is
carried out through a credit protection instrument in the form of credit risk bonds issued in July 2023 (\"CLN Bonds\") in
the amount of PLN 280 million (Euros 64.5 million).
E. Equity instruments
A financial instrument is an equity instrument only if: i) the instrument includes no contractual obligation to deliver
cash or another financial asset to another entity or to exchange financial assets or financial liabilities with another
entity under conditions that are potentially unfavourable to the entity; and, ii) the instrument will or may be settled in
the issuer's own equity instruments, it is either a non-derivative that includes no contractual obligation for the issuer to
deliver a variable number of its own equity instruments or a derivative that will be settled only by the issuer
exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments.
An equity instrument, independently from its legal form, evidences a residual interest in the assets of an entity after
deducting all its liabilities.
Transaction costs directly attributable to an equity instrument issuance are recognised in equity as a deduction to the
amount issued. Amounts paid or received related to sales or acquisitions of equity instruments are recognised in equity,
net of transaction costs.
Preference shares issued by the Group are considered as an equity instrument when redemption of the shares is solely
at the discretion of the Group and dividends are paid at the discretion of the Group.
Income from equity instruments (dividends) are recognised when the obligation to pay is established and are deducted
to equity.
F. Securities borrowing and repurchase agreement transactions
F1. Securities borrowing
Securities lent under securities lending arrangements continue to be recognised in the balance sheet and are measured
in accordance with the applicable accounting policy. Cash collateral received in respect of securities lent is recognised
as a financial liability. Securities borrowed under securities borrowing agreements are not recognised. Cash collateral
placements in respect of securities borrowed are recognised under loans and advances to either banks or customers.
Income and expenses arising from the securities borrowing and lending business are recognised on an accrual basis over
the period of the transactions and are included in interest income or expense (net interest income).
F2. Repurchase agreements
The Group performs acquisition/sale of securities under reselling/repurchase agreements of securities substantially
equivalent in a future date at a predetermined price ('repos'/'reverse repos'). The securities related to reselling
agreements in a future date are not recognised in the balance sheet. The amounts paid are recognised in loans and
advances to customers or loans and advances to credit institutions. The receivables are collateralised by the related
securities. Securities sold through repurchase agreements continue to be recognised in the balance sheet and are
revaluated in accordance with the applicable accounting policy. The amounts received from the proceeds of these
securities are considered as deposits from customers and deposits from credit institutions. The difference between the
acquisition/sale and reselling/repurchase conditions is recognised on an accrual basis over the period of the transaction
and is included in interest income or expenses.
G. Non-current assets held for sale and Discontinued or discontinuing operations
Non-current assets, groups of non-current assets held for sale (groups of assets together with related liabilities that
include at least\u00a0 a non-current asset) and discontinued operations are classified as held for sale when the intention is
to sell the referred assets and liabilities and when the referred assets or group of assets are available for immediate
sale, subject to the terms of sale usually applicable to these types of assets, and its sale is highly probable, in
accordance with IFRS 5. For the sale to be considered highly probable, the Group must be committed to a plan to sell
the asset (or disposal group) and must have initiated an active program to locate a buyer and complete the plan. In
addition, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its
current fair value. Furthermore, it should be expected that the sale qualifies for recognition as a completed sale within
one year from the date of classification, except as permitted by paragraph 9 of IFRS 5, and that the Group remains
committed to the asset sales plan and the delay is caused by events or circumstances beyond its control.
If the requirements set out in IFRS 5 for these assets are not met, the balance sheet value and respective impairment
are reflected in the caption \"Other assets\". In 2023, a group of properties was reclassified, as described in notes 27 and
32.
The Group also classifies as non-current assets held for sale those non-current assets or groups of assets acquired
exclusively with a view to its subsequent disposal, which are available for immediate sale and its sale is highly
probable. Immediately before classification as held for sale, the measurement of the non-current assets or all assets
and liabilities in a disposal group, is performed in accordance with the applicable IFRS. After their reclassification,
these assets or disposal groups are measured at the lower of their cost and fair value less costs to sell.
Discontinued operations and the subsidiaries acquired exclusively with the purpose to sell in the short-term are
consolidated until the moment of their sale.
G1. Non-operating real estate (INAE)
The Group also classifies as non-current assets held for sale the non-operating real estate (INAE), which include
properties acquired by the Group as a result of the resolution of customer credit processes, as well as own properties
that are no longer used by the Group's services.
Properties held by real estate companies and real estate investment funds, which are part of the Group's consolidation
perimeter, whose capital or units acquired by the Group as a result of the recovery loans are treated as INAE.
At the time of acquisition, real estate classified as INAE is recognised at the lower of the value of the loans existing on
the date on which the recovery occurs, or the judicial decision is formalised, and the fair value of the property, net of
estimated costs for sale. Subsequent measurement of INAE is made at the lower of their book value and the
corresponding fair value, net of the estimated costs for their sale and are not subject to amortisation. Impairment
losses are recorded in the results of the period in which they arise.
The fair value is determined based on the market value, which is determined based on the expected sales price
obtained through periodic evaluations made by expert external evaluators accredited to the Comiss\u00e3o do Mercado de
Valores Mobili\u00e1rios (CMVM).
The principles used to determine the net fair value of selling costs of a property apply, whenever possible, to real
estate like INAE held by Real Estate Companies and Real Estate Investment Funds for the purpose of consolidating
Group accounts.
Whenever the net fair value of the selling costs calculated for an INAE is less than the amount by which the same is
recognised in the Group's balance sheet, an impairment loss is recorded in the amount of the decrease in value
ascertained. Impairment losses are recorded against income for the year.
If the net fair value of the selling costs of an INAE, after recognition of impairment, indicates a gain, the Group may
reflect that gain up to the maximum of the impairment that has been recorded on that property.
H. Lease transactions (IFRS 16)
This standard establishes the requirements regarding the scope, classification/recognition and measurement of leases:
\u2013 from the lessor's perspective, leases will continue to be classified as finance leases or operating leases;
\u2013 from the lessee\u2019s perspective, the standard defines a single model of accounting for lease contracts, which results
in the recognition of a right-of-use asset and a lease liability for all leases, except for those which the lease term
ends within 12 months or for those which the underlying asset is of low-value and, in these cases, the lessee may
opt for the exemption from recognition under IFRS 16 and shall recognise the lease payments associated with these
leases as an expense.
The Group chose not to apply this standard to short-term lease contracts, i.e. contracts with a term shorter than or
equal to one year, and to lease contracts in which the underlying asset\u2019s value is below Euros 5,000. Additionally, this
standard was not applied to leases of intangible assets.
Lease definition
The lease definition focuses on the control of the identified asset, establishing that a contract constitutes or contains a
lease if it carries the right to control the use of an identified asset, i.e., the right to obtain substantially all the
economic benefits of using it, and the right to choose how to use the identified asset over a period in exchange of a
payment.
Impacts from the lessee\u2019s perspective
The Group recognises for all leases, except for those with a term under 12 months or for leases of low-value assets:
\u2013 a right-of-use asset initially measured at cost must consider the Net Present Value (NPV) of the lease liability plus
the value of payments made (fixed and/or variable), deducted from any lease incentives received, penalties for
terminating the lease (if reasonably certain), as well as any cost estimates to be supported by the lessee with the
dismantling and removal of the underlying asset and/or with the recovery of its location. Subsequently, it will be
measured according to the cost model (subject to depreciations/amortisations and impairment tests);
\u2013 a lease liability initially recorded at the present value of the remaining lease payments (NPV), which includes:
\u2013 fixed payments deducted from any lease incentives receivable;
\u2013 variable lease payments that depend on a rate or an index, initially measured considering the rate or index as at
the commencement date;
\u2013 amounts expected to be paid by the lessee under residual values guarantees;
\u2013 the exercise price of a purchase option, if the lessee is reasonably certain to exercise that option;
\u2013 payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to end
the lease.
Since it is not possible to easily determine the implicit interest rate in the lease (paragraph 26 of IFRS 16), lease
payments are discounted according to the lessee\u2019s incremental borrowing rate, which embodies the risk-free rate curve
(swap curve) plus the Group\u2019s spread of risk, applied over the weighted average term of each lease contract. For term
contracts, that date is considered as the end of lease date, while for contracts without term, or with renewable terms,
it is assessed using the date in which the contract is enforceable, as well as eventual economic penalties associated
with the lease contract. In the evaluation of enforceability, the particular clauses of the contracts are considered, as
well as the current law on Urban Leases.
Subsequently, lease payments are measured as follows:
\u2013 by increasing their carrying amount to reflect interest;
\u2013 by reducing their carrying amount to reflect lease payments;
\u2013 carrying amount shall be remeasured to reflect any leases\u2019 revaluations or changes, as well as to reflect the review
of in -substance fixed payments and the review of the lease term.
The Group remeasures the lease liability (and makes a corresponding adjustment to the right-of-use asset) whenever:
\u2013 the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case
the lease liability is remeasured by discounting the revised lease payments using the revised discount rate;
\u2013 the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed
residual value, in which cases the liability is remeasured by discounting the revised lease payments using the initial
discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a
revised discount rate is used;
\u2013 a lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the
lease liability is remeasured by discounting the revised lease payments using the revised discount rate.
The Group did not make any adjustment during the periods presented.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If the
lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to
exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset.
The depreciation starts at the commencement date of the lease.
The implementation of this standard implies changes in the Group\u2019s financial statements, namely:
\u2013 in the consolidated income statement:
(i) recording in \u201cInterest Income\u201d the interest expenses related to lease liabilities;
(ii) recording in \u201cOther administrative costs\u201d the amounts related to short-term lease contracts and to lease
contracts of low-value assets; and,
(iii) recording in \u201cAmortisations and depreciations\u201d the depreciation expenses related to right-to-use assets.
\u2013 in the consolidated balance sheet:
(i) recording in \u201cFinancial assets at amortised cost \u2013 Loans and advances to customers\u201d the recognition of financial
assets related to sublease operations measured accordingly to IFRS 9;
(ii) recording in \u201cOther tangible assets\u201d the recognition of right-to-use assets; and,
(iii) recording in \u201cOther liabilities\u201d the amount of recognised lease liabilities.
\u2013 in the consolidated statement of cash flows, the balance \u201cCash flows arising from operating activities \u2013 Payments
(cash) to suppliers and employees\u201d includes amounts related to short-term lease contracts and to lease contracts of
low-value assets, and the balance \u201cCash flows arising from financing activities - Decrease in other sundry liabilities
and non-controlling interests\u201d includes amounts related to payments of lease liabilities\u2019 capital portions, as detailed
in the consolidated statement of cash flows.
Impact from the lessor\u2019s perspective
In accordance with IFRS 16, paragraph 62, lessors shall classify leases as finance or operational leases.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards inherent to ownership of an
underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards
inherent to ownership of an underlying asset.
Subleases
A sublease implies that the lessee establishes a lease contract with a third party, which acts as an intermediary, and
the lease contract with the original lessor is kept in force.
IFRS 16 \u2013 Leases requires that the lessor evaluates subleases regarding right-to-use and not regarding the underlying
asset.
The sublease\u2019s lessor, simultaneously lessee regarding the original lease, shall recognise an asset in the financial
statement \u2013 a right-to-use related to the initial lease (if the lease is classified as operating) or a financial asset,
measured according to IFRS 9, related to the sublease (if the lease is classified as financing).
In case the primary lease is short-term, then the sublease should be classified as an operating lease.
I. Recognition of income from services and commissions
In accordance with IFRS 15, the Bank recognizes revenue associated with services and commissions when (or as) a
performance obligation is satisfied when transferring a service, based on the transaction price associated with this
performance obligation. In this context, the Bank takes the following steps to recognize revenue associated with
services and commissions:
- Recognition (satisfaction of the performance obligation): (i) identification of the contract associated with the service
provided and whether it should be covered by IFRS 15; (ii) identification of performance obligations associated with
each contract; (iii) definition of the criteria for the fulfilment of performance obligations, also considering the
contractual terms established with the counterparty. According to this definition, a service is transferred when the
customer obtains the benefits and control associated with the service provided. In this context, the Bank also identifies
whether performance obligations are met over time (\u201cover time\u201d) or at an exact moment (\u201cpoint in time\u201d), with
revenue being recognized accordingly.
- Measurement (price to be recognized associated with each performance obligation): (i) determine the transaction
price associated with the service provided, considering the contractual terms established with the counterparty and its
usual commercial practices. The transaction price is the amount of consideration to which the Bank expects to be
entitled in exchange for transferring promised services to the customer, excluding amounts collected on behalf of third
parties. The Bank includes in the transaction price part or all of the estimated amount of the variable consideration
associated with a performance obligation, only to the extent that it is highly probable that a significant reversal in the
amount of the accrued revenue recognized will not occur when the uncertainty associated with that variable
consideration is subsequently resolved; and (ii) allocate the transaction price to each of the performance obligations
identified under the contract established with the customer.
It should be noted that when services or commissions are an integral part of the effective interest rate of a financial
instrument, income resulting from services and commissions is recorded in net interest income (Note C.3).
J. Gains/(losses) on financial operations at fair value through profit or loss, Foreign exchange
gains/(losses), Gains/(losses) on hedge accounting and Gains/(losses) arising from
derecognition of financial assets and liabilities not measured at fair value through profit or
loss
These balances include gains and losses on financial assets and liabilities at fair value through profit and loss, i.e., fair
value changes and interest on trading derivatives and embedded derivatives, as well as the corresponding dividends
received. This balance also includes the gains and losses on sale of financial assets at fair value through other
comprehensive income and financial assets and financial liabilities at amortised cost. The changes in fair value of
hedging derivatives and hedged items, when fair value hedge is applicable, are also recognised in this balance, as well
as the foreign exchange gains or losses.
K. Fiduciary activities
Assets held in the scope of fiduciary activities are not recognised in the Group\u2019s consolidated financial statements. Fees
and commissions arising from this activity are recognised in the income statement in the period in which they occur.
L. Other tangible assets
Other tangible assets are stated at acquisition cost less accumulated depreciation and impairment losses. Subsequent
costs are recognised as a separate asset only when it is probable that future economic benefits will result for the
Group. All other repairs and maintenance expenses are charged to the income statement during the financial period in
which they are incurred, under the principle of accrual-based accounting.
Depreciation is calculated on a straight-line basis, over the following periods which correspond to their estimated
useful life:
Number of years
Buildings
50
Expenditure on freehold and leasehold buildings
10
Equipment
4 to 12
Other tangible assets
3
Whenever there is an indication that a fixed tangible asset might be impaired, its recoverable amount is estimated and
an impairment loss shall be recognised if the net value of the asset exceeds its recoverable amount. The recoverable
amount is determined as the highest between the fair value less costs to sell and its value in use calculated based on
the present value of future cash flows estimated to be obtained from the continued use of the asset and its sale at the
end of the useful life. The impairment losses of the fixed tangible assets are recognised in the income statement of the
period.
M. Investment properties
Real estate properties owned by the Group are recognised as \u2018Investment properties\u2019 considering that the main
objective of these buildings is their capital appreciation on a long-term basis and not their sale in a short-term period,
nor their maintenance for own use.
These investments are initially recognised at their acquisition cost, including transaction costs, and subsequently
revaluated at their fair value. The fair value of investment properties should reflect the market conditions at the
balance sheet date. Changes in fair value are recognised in the income statement, as \"Other operating income/
(losses)\" (note 6).
The experts responsible for the valuation of the assets are properly certified for that purpose, being registered in
CMVM.
N. Intangible assets
N1. Research and development expenditure
The Group does not capitalise any research and development costs. All expenses are recognised as costs in the period in
which they occur.
N2. Software
The Group recognises as intangible assets the costs associated to software acquired from external entities and
depreciates them on a straight-line basis by an estimated lifetime of 6 years. The Group does not capitalise internal
costs arising from software development.
O. Cash and cash equivalents
For the purposes of the cash flow statement, the item \u201cCash and cash equivalents\u201d comprises balances with less than
three months maturity from the balance sheet date, where the items \"Cash and deposits at Central Banks\" and \"Loans
and advances to credit institutions\" are included.
P. Offsetting
Financial assets and liabilities are offset and recognised at their net book value when: i) the Group has a legal right to
offset the amounts recognised and transactions can be settled at their net value; and, ii) the Group intends to settle on
a net basis or realize the asset and settle the liability simultaneously. Considering the current operations of the Group,
no compensation of material amount is made. In case of reclassification of comparative amounts, the provisions of IAS
1.41 are disclosed: i) the nature of the reclassification; ii) the amount of each item (or class of items) reclassified; and,
iii) the reason for the reclassification.
Q. Foreign currency transactions
Transactions in foreign currencies are converted into the respective functional currency of the operation at the foreign
exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
converted into the respective functional currency of the operation at the foreign exchange rate on the reporting date.
Foreign exchange differences arising from conversion are recognised in the income statement. Non-monetary assets and
liabilities denominated in foreign currencies, which are stated at historical cost, are converted into the respective
functional currency of the operation at the foreign exchange rate on the date of the transaction. Non-monetary assets
and liabilities denominated in foreign currencies that are stated at fair value are converted into the respective
functional currency of the operation at the foreign exchange rate on the date that the fair value was determined
against profit and loss, except for financial assets at fair value through other comprehensive income, for which the
difference is recognised against equity.
R. Employee benefits
R1. Defined benefit plans
The Group has the responsibility to pay its employees' retirement pensions, invalidity pensions and survivor\u2019s pensions
for their death, in accordance with the terms of the two collective labour agreements approved. These benefits are
provided for in the pension plans \u2018Plano ACT\u2019 and \u2018Plano ACTQ\u2019 of the Banco Comercial Portugu\u00eas Group Pension Fund.
Following the publication of Decree-Law no. 54/2009, of 2 March, banking entities are obligatorily enrolling new
employees in the General Social Security System (RGSS). These employees have the RGSS as their basic retirement
scheme, and do not have any benefits under the ACT (base plan). Under the scope of its management and human
resources, the Group had already adopted as a rule the inclusion of new employees in the RGSS since July 2005.
However, until the transposition into the ACT of the alterations resulting from the referred Decree-Law no. 54/2009, all
employees were covered by the provisions of the social security chapter of the ACT, and for employees who were
already registered with the RGSS, the ACT benefit worked as a complement to the RGSS. As of 1 July 2009, in
accordance with the ACT, all new employees only have the RGSS as their basic social security scheme.
Until 2011, in addition to the benefits provided for in the two plans above-mentioned, the Group had assumed the
responsibility, if certain conditions of profitability were verified in each year, of assigning retirement supplements to
the Group's employees hired up to 21 September 2006 (Complementary Plan). The Group, at the end of 2012,
determined the extinction (cut) of the old-age benefit of the Complementary Plan. On 14 December 2012, Instituto de
Seguros de Portugal (ISP) formally approved this change to the Group\u2019s benefit plan, effective from 1 January 2012. The
plan was cut, and employees were given individual acquired rights. On that date, the Group also proceeded to the
settlement of the respective liability.
From 1 January 2011, Bank employees were integrated in the General Social Security Scheme which now covers their
maternity, paternity, adoption and pension benefits. However, the banks remain liable for benefits that concern
illness, disability and life insurance (Decree-Law no. 1-A/2011, of 3 January).
The contributory rate is 26.6% divided between 23.6% supported by the employer and 3% supported by the employee,
replacing the Banking Social Healthcare System which was extinguished by the decree law referred above. As a
consequence of this amendment the capability to receive pensions by the actual employees are covered by the General
Social Security Scheme regime, considering the service period between 1 January 2011 and the retirement age. The
banks support the remaining difference for the total pension assured in the Collective Labour Agreement (ACT).
This integration has led to a decrease in the present value of the total benefits reported to the retirement age to be
borne by the Pension Fund, and this effect is to be recorded in accordance with the Projected Unit Credit during the
average lifetime of the pension until the normal retirement age is reached. The calculation of the liability for pensions
carried out periodically by the actuary considers this effect and is calculated considering the actuarial assumptions in
force, ensuring that the liabilities calculated with reference to 31 December 2010, not considering the effect of the
integration of bank employees into the General Social Security Scheme are fully covered and deducted from the amount
of the effect recognised until the date. The component of this effect for the year is recognised under the heading
\"Current service costs\".
Following the approval by the Government of the Decree-Law no. 127/2011, which was published on 31 December, an
agreement was established between the Government, the Portuguese Banking Association and the Banking Labour
Unions in order to transfer, to the Social Security, the liabilities related to pensions currently being paid to pensioners
and retirees, as at 31 December 2011.
This agreement established that the responsibilities to be transferred related to the pensions in payment as at 31
December 2011 at fixed amounts (discount rate 0%) in the component established in the IRCT - Instrument of Collective
Regulation of Work of the retirees and pensioners. The responsibilities related to the increase in pensions as well as any
other complements, namely, contributions to the Health System (SAMS), death benefit and death before retirement
benefit continued to be under the responsibility of the Financial Institutions.
At the end of December 2016, a revision of the ACT was reached between the BCP Group and four unions from the two
union federations of the unions that represent the Group's employees, which introduced changes in the Social Security
clause and consequently in the pension plan financed by the BCP Group Pension Fund. The new ACT was published by
the Ministry of Labour in the Bulletin of Labour and Employment on 15 February 2017 and the effects were recorded in
the financial statements of 31 December 2016, for employees associated with these four unions.
The negotiation with Sindicato dos Banc\u00e1rios do Norte (SBN), which was also involved in the negotiations of the new
ACT, was concluded in April 2017 with the publication of the Bulletin of Labour and Employment, with the effects of
this new ACT recorded in the financial statements as at 31 December 2017, for employees associates of SBN.
The most relevant changes in the ACT were the change in the retirement age (presumed disability) from 65 years to 66
years and two months in 2016 and the subsequent update of an additional month in each year, which cannot, in any
case, be higher than the one in force at any moment in the General Regime of Social Security, the change in the
formula for determining the employer's contribution to SAMS and, lastly, the introduction of a new benefit called the
End of Career Premium, which replaces the Seniority Premium.
These changes were framed by the Group as a change to the pension plan under the terms of IAS 19, as such had an
impact on the present value of the liabilities with services rendered and were recognised in the income statement for
the year under \"Staff costs\".
In 2017, after the authorization of the Autoridade de Supervis\u00e3o de Seguros e Fundos de Pens\u00f5es (ASF - Portuguese
Insurance and Pension Funds Supervision Authority), the BCP Group's pension fund agreement was amended. The main
purpose of the process was to incorporate into the pension fund the changes introduced in the Group's ACT in terms of
retirement benefits, as well as to transfer to the pension fund the responsibilities that were directly chargeable to the
company (extra-fund liabilities). The pension fund has a part exclusively for the financing of these liabilities which, in
the scope of the fund, is called Additional Complement. The End of Career Premium also became the responsibility of
the pension fund under the basic pension plan.
The Group\u2019s net obligation in respect of pension plans (defined benefit pensions plan) is calculated on a half year basis
on 31 December and 30 June of each year, and whenever there are significant market fluctuations or significant
specific events, such as changes in the plan, curtailments or settlements since the last estimation. The responsibilities
with past service are calculated using the Projected Unit Credit method and actuarial assumptions considered
adequate.
Pension liabilities are calculated by the responsible actuary, who is certified by the ASF.
The Group\u2019s net obligation in respect of defined benefit pension plans and other benefits is calculated separately for
each plan by estimating the amount of future benefit that employees have earned in return for their service in the
current and prior periods. The benefit is discounted to determine its present value, using a discount rate determined by
reference to interest rates of high- quality corporate bonds that have maturity dates approximating the terms of the
Group\u2019s obligations. The net obligations are determined after the deduction of the fair value of the Pension Plan's
assets.
The income/cost of interest with the pension plan is calculated by the Group, multiplying the net asset/liability with
retirement pension (liabilities less the fair value of the plan's assets) by the discount rate used in the determination of
the retirement pension liabilities. On this basis, the income/cost net of interest includes the interest costs associated
with retirement pension liabilities and the expected return of the plan's assets, both measured based on the discount
rate used to calculate the liabilities.
Gains and losses from the re-measurement, namely (i) actuarial gains and losses resulting from differences between
actuarial assumptions used and the amounts actually observed (experienced gains and losses) and changes in actuarial
assumptions and (ii) gains and losses arising from the difference between the expected return of the plan's assets and
the amounts obtained, are recognised against equity under \"Other comprehensive income\".
The Group recognises in its income statement a net total amount that comprises (i) the current service cost, (ii) the
income/cost net of interest with the pension plan, (iii) the effect of early retirement, (iv) past service costs and, (v)
the effects of any settlement or curtailment occurred during the period. The net income/cost with the pension plan is
recognised as interest and similar income or interest expense and similar costs depending on their nature. The costs of
early retirements correspond to the increase in liabilities due to the employee's retirement before reaching the age of
retirement.
Employee benefits, other than pension plans, namely post-retirement health care benefits and benefits for the spouse
and descendants for death before retirement are also included in the benefit plan calculation.
The contributions to the funds are made annually by each company of the Group, according to a specific contribution
plan that ensures the solvency of the fund. In the end of each year, according to Bank of Portugal Notice no. 12/2001,
the minimum level required for the responsibilities funding must be 100% regarding pension payments and 95%
regarding past services of active employees.
R2. Revision of the salary tables for employees in service and pensions in payment
In 2023, negotiations continued with all the unions subscribing to the Group's Collective Labour Agreements, for the
conclusion of the full review of the respective clauses, negotiations which are still ongoing.
At the same time, negotiations took place with all the unions that subscribed the Group's Collective Labour
Agreements, for the review of the Salary Tables and remaining pecuniary clauses relating to the year 2023, having been
agreed on 9 and 17 October with all the Unions subscribing to the Group's Collective Labour Agreements, the update of
the Salary Tables in 2023 with differentiated increases by contractual level between 4.00% and 7.80%. An increase of
4.50% was agreed for the Bank's Contributions to SAMS and other pecuniary clauses, such as study subsidies,
diuturnities, among others, and an increase of 21.43% was agreed for the lunch subsidy, whose daily value increased to
Euros 12.75. The agreed updates took effect on 1 January 2023, with the exception of remuneration related to
subsistence and travel allowances, which were updated after the agreed updates were operationalized.
Regarding the unions SNQTB \u2013 Sindicato Nacional dos Quadros e T\u00e9cnicos Banc\u00e1rios e SIB \u2013 Sindicato Independente da
Banca, an agreement was also reached regarding the revision of the Salary Tables and other pecuniary clauses relating
to the year 2022, as already agreed in 2022 with the remaining unions.
R3. Defined contribution plan
For the defined contribution plans, the responsibilities related to the benefits attributed to the Group's employees are
recognised as expenses when incurred.
As at 31 December 2023, the Group has two defined contribution plans. One plan covers employees who were hired
before 1 July 2009. For this plan, called non-contributory, Group's contributions will be made annually and equal to 1%
of the annual remuneration paid to employees in the previous year. Contributions shall only be made if the following
requirements are met: (i) the Bank's ROE equals or exceeds the rate of government bonds of 10 years plus 5 percentage
points, and (ii) distributable profits or reserves exist in the accounts of Banco Comercial Portugu\u00eas. In 2022 the
indicated requirements were fulfilled, in 2023 the planned annual contribution was accomplished, the expect value of
which was recorded in the costs of 2022. As in the year 2023, the indicated requirements were also fulfilled, a provision
for the annual contribution to be made during 2024 was recorded in the 2023 costs.
The other plan covers employees who have been hired after 1 July 2009. For this plan, designated contributory,
monthly contributions will be made equal to 1.5% of the monthly remuneration received by employees in the current
month, either by themselves or by the Group and employees. This contribution has a mandatory character and is
defined in the Collective Labour Agreement of the BCP Group and does not have a performance criterion.
R4. Variable remuneration paid to employees
In the remuneration policy for employees in force it is foreseen an annual variable remuneration system for employees
not covered by commercial incentive systems, based on the performance assessment of each employee, in accordance
with quantitative and qualitative criteria, that is carried out annually. As a result of this assessment and of the annual
fixed remuneration of reference for the role performed, and provided that the Bank's minimum level of performance,
as measured by a set of quantitative indicators, is met, the amount of the variable remuneration to be attributed to
each employee is determined.
The Executive Committee is responsible, under the terms defined in the remuneration policy, for setting the respective
allocation criteria for each employee, whenever it is attributed. The variable remuneration attributed to employees is
recorded against the income statement in the period to which it relates.
R5. Share-based compensation plan
As at 31 December 2023, a variable compensation plan with BCP shares is in force for the members of the Executive
Committee and for the employees considered Key Function Holders (includes Key Management Members), resulting from
the Remuneration Policies for the members of the management and supervisory bodies and for the Employees, both
approved for the financial year of 2023 and following years, with the changes that may be approved in each financial
year, namely by the General Shareholders\u2019 Meeting regarding the Remuneration Policy for the members of the
management and supervisory bodies, and by the Board of Directors regarding the Remuneration Policy for Employees.
Key Function Holders include Key Management Members, which are the first line directors who report directly to the
Board of Directors and the remaining employees whose professional activities have a significant impact on the Bank's
risk profile.
As defined in the Remuneration Policy for the members of the management and supervisory bodies, an annual variable
remuneration system is foreseen, for which an assessment of the performance of each member of the Executive
Committee is carried out on an annual basis based on quantitative and qualitative criteria. According to this assessment
and the annual fixed remuneration, and provided that the Bank's minimum level of performance as measured by a set
of quantitative indicators is met, the amount of the variable remuneration to be attributed to each member of the
Executive Committee is decided by the Remuneration and Welfare Board. The payment of the amount of the variable
remuneration attributed is subject to a deferral period of 5 years for 50% of its value, being 50% of its value paid in the
year following the financial year in question. The amounts related to the non-deferred and deferred portion are paid
50% in cash and 50% in BCP shares. The number of BCP shares attributed results from their valuation at a price defined
in accordance with the approved Remuneration Policy.
The Remuneration Policy for Employees foresees an annual variable remuneration system for Employees not covered by
Commercial Incentives Systems, based on the performance assessment of each employee, in accordance with
quantitative and qualitative criteria, that is carried out annually. As a result of this assessment and the fixed reference
remuneration for the function performed, and provided that the Bank's minimum level of performance in a set of
quantitative indicators is met, the value of the variable remuneration to be attributed to each Employee is decided by
the Executive Committee. For Employees considered as Key Function Holders, the payment of the amount of the
variable remuneration to be attributed to each Employee is decided by the Nominations and Remunerations Committee,
and its payment subject to a deferral period of 5 years for 40% of its value, with 60% of its value paid in the year
following the financial year in question. The amounts related to the non-deferred and deferred portion are paid 50% in
cash and 50% in BCP shares. The number of BCP shares attributed and to be attributed results from their valuation at a
price defined in accordance with the approved Remuneration Policy. As provided for in the Remuneration Policy for
Employees, if the amount of the annual variable remuneration awarded to a Key Function Holder is less than Euros
50,000 and does not represent more than one third of the total annual remuneration of the Key Function Holder the
payment of the annual variable remuneration will be 100% in cash and there will be no deferral.
Employees considered as Key Function Holders are not covered by Commercial Incentives Systems.
For the remaining Employees not covered by Commercial Incentive Systems, the payment of the variable remuneration
amount awarded is fully paid in cash in the following year to which it relates.
As foreseen in the approved Remuneration Policy and in the applicable legislation, the amounts of variable
remuneration attributed to the members of the Executive Committee and to the Employees Key Function Holders are
subject to reduction and reversal mechanisms, to be applied in case of verification of extremely significant events, duly
identified, in which the people covered have had a direct participation.
For the members of the Executive Committee and to the employees considered as Key Function Holders, a long-term
variable remuneration system is also foreseen, through which these members may receive variable remuneration fully
paid in BCP shares after the end of the assessment period, from 1 January 2022 until 31 December 2025 (from 1 January
2023 until 31 December 2025 to the Employees Key Function Holders), provided that a certain level of performance is
achieved in a set of long-term objectives. The amount of the long-term variable remuneration attributed is subject to a
deferral period of 5 years for 50% of its value, being 50% of its value paid in the year following the assessment period to
which it relates. The number of BCP shares attributed results from their valuation at a price defined in accordance with
the approved Remuneration Policy.
All the shares attributed to the members of the Executive Committee and to the Key Function Holders, within the scope
of the payment of variable remuneration, including long-term, are subject to a retention period of 1 year after their
payment.
The total variable remuneration to be attributed, each year, to each member of the Executive Committee and to the
Key Function Holders, regarding the proportion between its amount and the annual fixed remuneration, is limited to
the limits provided in the respective Remuneration Policy.
S. Income taxes
The Group is subject to income tax in several jurisdictions. The Bank is subject, in individual terms, to the regime
established by the Corporate Income Tax Code (CIRC), the Special Regime applicable to Deferred Tax Assets approved
by Law no. 61/2014 of 26 August, to which it adhered, and individual legislation. Additionally, deferred taxes relating
to tax losses and to temporary differences between the accounting net income and the net income accepted by the Tax
Authorities for Income Taxes calculation are accounted for, whenever there is a reasonable probability that these taxes
will be paid or recovered in the future.
Income tax registered in net income for the year comprises current and deferred tax effects. Income tax is recognised
in the income statement, except when related to items recognised directly in equity, which implies its recognition in
equity. Deferred taxes arising from the revaluation of financial assets at fair value through other comprehensive income
and cash flow hedging derivatives are recognised in shareholders\u2019 equity and are recognised after in the income
statement at the moment the profit and loss that originated the deferred taxes are recognised.
Current tax is the value that determines the taxable income for the year, using tax rates enacted or substantively
enacted by authorities at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred taxes are calculated in accordance with the liability method based on the balance sheet, considering
temporary differences, between the carrying amounts of assets and liabilities and the amounts used for taxation
purposes using the tax rates approved or substantially approved at balance sheet date and that is expected to be
applied when the temporary difference is reversed.
Deferred tax liabilities are recognised for all taxable temporary differences except for non-deductible goodwill for tax
purposes, differences arising from initial recognition of assets and liabilities that affect neither accounting nor taxable
profit and differences relating to investments in subsidiaries to the extent that probably they will not reverse in the
foreseeable future.
The item \u201cDeferred tax assets\u201d includes amounts associated with credit impairments not accepted for tax purposes
whose credits have been written-off, according to the expectation that the use of such impairments will be deductible
for the purposes of determining taxable income for the tax periods in which the legal conditions required for their tax
deductibility are met.
Deferred tax assets are recognised when it is probable that there will be future taxable profits that absorb the
deductible temporary differences for tax purposes (including reportable tax losses).
The Group, as established in IAS 12, paragraph 74, compensates the deferred tax assets and liabilities if, and only if: (i)
it has a legally enforceable right to offset current tax assets and current tax liabilities; and, (ii) the deferred tax assets
and the deferred tax liabilities relate to income taxes released by the same Tax Authority on the same taxable entity.
The Group complies with the guidelines of IFRIC 23 \u2013 Uncertainty over Income Tax Treatments on the determination of
taxable profit, tax bases, tax losses to be reported, tax credits to be used and tax rates in scenarios of uncertainty
regarding the income tax treatment, not having occurred any material impact on the Bank\u2019s financial statements
resulting from its application.
In 2016, the Banco Comercial Portugu\u00eas adhered to the Special Tax Regime for Groups of Companies (RETGS) for the
purposes of corporate income (IRC) taxation, with BCP being the dominant entity. In the financial years of 2023 and
2022, RETGS application was maintained. The group's taxable profit is calculated by the algebraic sum of taxable profits
and individual tax losses of the companies that integrate it.
T. Segmental reporting
The Group adopted IFRS 8 \u2013 Operating Segments for the purpose of disclosing financial information by operating and
geographic segments. A business segment is a Group's component: (i) which develops business activities that can obtain
revenues or expenses; (ii) whose operating results are regularly reviewed by the management with the aim of taking
decisions about allocating resources to the segment and assess its performance; and, (iii) for which separate financial
information is available.
The Group controls its activity through the following major operating segments:
Portugal activity:
\u2013 Retail Banking, also including ActivoBank;
\u2013 Companies and Corporate;
\u2013 Private Banking;
\u2013 Other.
The Other segment (Portugal activity) includes activities that are not allocated to remaining segments, namely
centralized management of financial investments, corporate activities, and insurance activity.
Foreign activity:
\u2013 Poland;
\u2013 Mozambique;
\u2013 Other.
The \"Other\" segment (foreign activity) includes the contribution of the participation in an associate in Angola and the
activity arising from the discontinued operations in Cayman Islands (operation liquidated in 2022). It should also be
noted that, following the sale of the operation in Switzerland, which took place at the end of 2021, the sale price and
the corresponding capital gain generated with the completion of this operation was adjusted pursuant to typical clauses
adopted in this type of transactions in 2022 and again in 2023, as final adjustment, records reflected as income arising
from discontinued operations, as provided for in IFRS 5.
U. Provisions, Contingent liabilities and Contingent assets
U1. Provisions
Provisions are recognised when (i) the Group has a present obligation (legal or resulting from past practices or
published policies that imply the recognition of certain responsibilities); (ii) it is probable that a payment will be
required to settle; and, (iii) a reliable estimation can be made of the amount of the obligation.
Additionally, when fundamental reorganizations occur that have a material effect on the nature and focus of the
company's operations, and the criteria for recognition of provisions referred to above are met, provisions are
recognized for restructuring costs.
The measurement of provisions considers the principles set in IAS 37 regarding the best estimate of the expected cost,
the most likely result of current actions and considering the risks and uncertainties inherent to the process result. On
the cases that the discount effect is material, provision corresponds to the actual value of the expected future
payments, discounted at a rate that considers the associated risk of the obligation.
Provisions are reviewed at each balance sheet date and adjusted to reflect the best estimate, being reverted through
profit and loss in the proportion of the payments that are not probable.
Provisions are derecognised through their use in the obligations for which they were initially created, or in the case
that these obligations cease to exist.
U2. Contingent assets
Contingent assets are not recognised in the financial statements and are disclosed when a future economic inflow of
resources is probable.
U3. Contingent liabilities
Contingent liabilities are not recognised in the financial statements, being framed under IAS 37 whenever the possibility
of an outflow of resources regarding economic benefits is not remote. The Group registers a contingent liability when:
i) it is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence
or non- occurrence of one or more uncertain future events that are not wholly within the control of the Group; or,
ii) it is a present obligation that arises from past events but is not recognised because:
a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; or,
b) the amount of the obligation cannot be measured with sufficient reliability.
The contingent liabilities identified are subject to disclosure, unless the possibility of an outflow of resources
incorporating economic benefits is remote.
V. Earnings per share
Basic earnings per share are calculated by dividing net income attributable to shareholders of the Group by the
weighted average number of ordinary shares outstanding, excluding the average number of ordinary shares purchased
by the Group and held as treasury shares.
For the diluted earnings per share, the weighted average number of ordinary shares outstanding is adjusted to consider
conversion of all dilutive potential ordinary shares. Potential or contingent share issues are treated as dilutive when
their conversion to shares would decrease net earnings per share. If the earnings per share are changed because of an
issue with premium or discount or other event that changed the potential number of ordinary shares or because of
changes in the accounting policies, the earnings per share for all presented periods should be adjusted retrospectively.
W. Insurance contracts
W1. Classification
IFRS 17 is the new accounting standard for insurance contracts, reinsurance contracts and for Investment contracts with
discretionary participation features, covering aspects such as recognition and measurement, presentation and
disclosure of information, replacing IFRS 4 \u2013 Insurance contracts.
The Group issues contracts that include insurance risk, financial risk or a combination of both insurance and financial
risk. A contract, in which the Group accepts a significant insurance risk from another party, by agreeing to compensate
that party on the occurrence of a specified uncertain future event, is classified as an insurance contract.
A contract issued by the Group without significant insurance risk, but on which financial risk is transferred with
discretionary participating features is classified as an investment contract recognised and measured in accordance with
the accounting policies applicable to insurance contracts. A contract issued by the Group that transfers only financial
risk, without discretionary participating features, is accounted for as a financial instrument.
W2. Recognition and measurement
IFRS 17 defines new principles for recognition, measurement, presentation and disclosure of insurance contracts,
reinsurance contracts and Investment contracts with discretionary participation features. The references below apply
to these three types of contracts.
In terms of recognition and measurement, insurance contracts are divided into portfolios, annual cohorts and groups of
contracts. In the initial recognition, contracts that have similar risk and can be managed together, must be identified,
grouping them into portfolios. For measurement purposes, these portfolios are further subdivided into annual cohorts,
according to the issuance year. Each of the cohorts, according to the expected future return, is then divided into the
following groups: i) contracts that are onerous at initial recognition; ii) contracts that do not present a significant
possibility of subsequently becoming onerous; and iii) remaining contracts in the portfolio.
The liability of an insurance contract begins when one of the following conditions is met: i) beginning of the coverage
period of the contract, ii) date on which the first payment is made by the insured and this becomes due or iii) in the
case of an onerous contract, when it becomes onerous.
IFRS 17 defines 3 measurement models of the insurance liabilities: GMM (General Measurement Model) as a general
modal, VFA (Variable Fee Approach) to be applied for investment contracts, which does not include a transfer of
significant insurance risk and PAA (Premium Allocation Approach), which can be applied for short term contracts (less
than 1 year).
The measurement of the value of a contract is the sum of (except where contracts are being measured using the
premium allocation approach): (i) the present value of future cash flows; (ii) a non-financial risk adjustment; and the
amount of future profit that is estimated that this contract will generate the Contractual Service Margin (CSM), unless
the contract group is onerous. In this case, the estimated loss is recognized immediately.
The liability for future services in contracts measured using the premium allocation approach is based on premiums
received, less amounts recognized in profit or loss already incurred in the period.
In terms of the discount rate for determining future cash flows, it should: (i) reflect the time value of money; ii) be
consistent with similar ones applied in the market for situations with similar characteristics and iii) exclude the effect
of factors that do not affect the future cash flows of the insurance contract.
In the subsequent valuation, the Statement of Financial Position shall include liabilities for insurance contracts, divided
into i) liabilities for future services and ii) liabilities for past services. In terms of the Income Statement, it should
include: i) income from insurance contracts, ii) expenses from insurance contracts and iii) losses from the financial
component of insurance contracts.
W3. Presentation and disclosures
In the Statement of Financial Position should appear in disaggregated form i) insurance contract assets, ii) reinsurance
ceded contract assets iii) insurance contracts liabilities and iv) reinsurance ceded contract liabilities.
In terms of the Income Statement, it should be evidenced i) insurance revenue, ii) insurance service expense and iii)
Insurance finance result, as well as iv) the net result arising from reinsurance contracts.
Together with the Financial Statements, the standard provides for additional qualitative and quantitative disclosures of
i) amounts recognized in the financial statements that fall within the scope of IFRS 17; ii) significant judgments and
changes to those judgments made with the application of IFRS 17 and iii) nature and extent of the risks inherent in
contracts that fall within the scope of IFRS 17.
For risks falling within the scope of IFRS 17, the entity shall analyze: (i) concentration risk, (ii) sensitivity analysis to
the most significant risks, (iii) claims development, (iv) credit risk and (v) liquidity risk.
W4. Transition
IFRS 17 is applied retrospectively with exemptions provided for the transition date, exemptions related to the
impracticality and complexity involved, for example in the calculation of liabilities, the Contractual Service Margin
(CSM) or the Loss Component, or the Reserve of the Financial Component of Insurance/Reinsurance Contracts (\u201cOCI
option\u201d) at the transition date. When impractical the Standard provides for the use of the Modified Retrospective
Approach or the Fair Value Approach.
The impacts of applying IFRS 17 are detailed in note 59.
X. Insurance or reinsurance intermediation services
Banco Comercial Portugu\u00eas and Banco ActivoBank are entities authorized by the Insurance and Pension Funds
Supervisory Authority (ASF - Autoridade de Supervis\u00e3o de Seguros e Fundos de Pens\u00f5es) for the practice of the activity
of insurance mediation, in the category of tied Insurance Intermediary, in accordance with article 8(a)(i) of Decree-Law
no. 144/2006, of 31 July, developing the activity of insurance intermediation in the life and non-life branches.
Within the scope of insurance mediation services, these Banks sell insurance contracts. As remuneration for the services
provided of insurance mediation, they receive commissions for the mediation of insurance contracts and investment
contracts, which are defined in agreements/protocols established with the Insurers.
Commissions received by insurance mediation services are recognized in accordance with the accrual principle, so that
commissions received at a time other than the period to which it relates are recorded as receivables under \"Other
assets\". Commissions received for insurance mediation services are recognized in accordance with the policy described
in note I. Recognition of income from services and commissions.
Y. Accounting estimates and judgments in applying accounting policies
IFRS set forth a range of accounting treatments that require the Board of Directors, under advice of the Executive
Committee, to apply judgments and to make estimations when deciding which treatment is the most appropriate.
These estimates were made considering the best information available at the date of preparation of the consolidated
financial statements, considering the context of uncertainty that results from the current economic scope and the
geopolitical conflict in Eastern Europe. The most significant of these accounting estimates and judgments used when
applying accounting principles are discussed in this section to improve understanding of how they affect the Group\u2019s
reported results and related disclosure.
Considering that in some cases there are several alternatives to the accounting treatment chosen by the Board of
Directors, under advice of the Executive Committee, the Group\u2019s reported results would differ if a different treatment
was chosen. The Executive Committee believes that the choices made are appropriate and that the financial
statements present the Group\u2019s financial position and results fairly in all material relevant aspects.
The alternative outcomes discussed below are presented solely to assist the reader in understanding the financial
statements and are not intended to suggest that other alternatives or estimations would be more appropriate.
Y1. Entities included in the consolidation perimeter
For the purposes of determining entities to include in the consolidation perimeter, the Group assesses whether it is
exposed to, or has rights to, the variable returns from its involvement with the entity and if it can take possession of
these results through the power it holds (de facto control). The decision if an entity needs to be consolidated by the
Group requires the use of judgment, estimations and assumptions to determine at what extent the Group is exposed to
the variable returns and its ability to use its power to affect these returns. Different estimations and assumptions could
lead the Group to a different scope of consolidation perimeter with a direct impact in consolidated income.
Y2. Goodwill impairment
The recoverable amount of the goodwill recorded in the Group's assets is assessed annually in the preparation of
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. For this
purpose, the carrying amount of the business units of the Group for which goodwill has been recognised is compared
with the respective recoverable amount. A goodwill impairment loss is recognised when the carrying amount of the
business unit exceeds the respective recoverable amount.
In the absence of an available market value, the recoverable amount is determined using cash flows predictions,
applying a discount rate that includes a risk premium appropriated to the business unit being tested. Determining the
cash flows to discount and the discount rate, involves judgment.
Y3. Income taxes
Interpretations and estimations were required to determine the total amount of income taxes in each of the
jurisdictions where the Group operates. There are many transactions and calculations for which the tax determination
is uncertain during the ordinary course of business. Different interpretations and estimations could result in a different
level of income taxes, current and deferred, recognised in the year.
This aspect assumes greater relevance for the purposes of the analysis of the recoverability of deferred taxes, in which
the Group considers projections of future taxable income based on a set of assumptions, including the estimate of
income before tax, adjustments to taxable income, evolution of tax legislation and its interpretation. Thus, the
recoverability of deferred tax assets depends on the implementation of the Bank's Board of Directors strategy, namely
the ability to generate the estimated taxable income, the evolution of tax law and its interpretation.
Regarding the activity in Portugal, the Law No. 98/2019, of 4 September established the tax regime for credit
impairments and provisions for guarantees for tax periods beginning on or after 1 January 2019, providing for
approximation between the accounting and tax rules for the purposes of deductibility of expenses with the
reinforcement of credit impairments. The rules in force until 2018 could continue to be applied until the end of the
2023 financial year, unless the option to apply the new regime was exercised in advance.
In 2022, the Banco Comercial Portugu\u00eas, S.A. and the Banco ActivoBank, S.A. exercised the option to apply the new
regime, under the terms of which the impairment losses for credit risk relating to exposures analysed on an individual
or on a collective basis recognized in accordance with the applicable accounting standards and regulations are fully
deductible for the purposes of determining taxable profit, with the exceptions provided for in the Corporate Income
Tax Code. The exceptions apply to impairment losses relating to credits and other rights over natural or legal persons
who hold, directly or indirectly, more than 10 % of the Bank's capital, over members of its corporate bodies, over
companies in which the Bank holds, directly or indirectly, more than 10 % of the capital or over entities with which it is
in a situation of special relations.
The Impairment losses and other value corrections for specific credit risk recorded until 31 December 2021 and still not
accepted for tax purposes are only deductible up to the amount that, in each tax period, corresponds to the application
of the mandatory minimum limits set out in Notice of Bank of Portugal No. 3/95, as amended before its repeal by
Notice of Bank of Portugal No. 5/2015, and, between other conditions, provided that they are not credits covered by
real estate rights.
Following the amendments provided for in Law No. 24-D/2022, of 30 December, within the scope of the State Budget
for 2023, the time limit applicable to the carrying forward of tax losses in Portugal was eliminated. This amendment
applies to tax losses calculated in tax periods beginning on or after 1 January 2023, as well as to tax losses calculated in
tax periods prior to 1 January 2023 and whose deduction period is still in progress on that date. Thus, tax losses
calculated in 2014 and subsequent years may be deducted from future taxable income. The deduction limit for tax
losses went from 70% to 65%, being increased by ten percentage points when the difference results from the deduction
of tax losses calculated in the 2020 and 2021 tax periods, under the terms of the special regime provided for in Law n.
27-A/2020, of 24 July.
In the projections of future taxable income, namely for purposes of the analysis of the recoverability of deferred taxes
assets carried out with reference to 31 December 2023, the approximation between the accounting and tax rules
provided for in the aforementioned Law n.\u00ba 98/2019, of 4 September, taking into account the option for applying the
new regime exercised in 2022, as well as the changes in terms of the elimination of the time limit on the use of tax
losses provided for in said Law no. 24-D/2022, of 30 December.
The taxable profit or tax loss calculated by the Bank or its subsidiaries residing in Portugal can be corrected by the
Portuguese tax administration within a period of four years, except in the case of any tax losses deduction has been
made or tax credit has been used, in which the expiry period is the exercise of that right. The Bank recorded
provisions, current tax liabilities or deferred taxes liabilities in the amount it considers appropriate to cover tax
corrections or tax losses incurred, as well as contingencies relating to years not yet reviewed by the tax authorities.
Y4. Valuation of real estate recorded in Non-current assets held for sale and in Others assets
The valuation of these assets, and consequently the impairment losses, is supported by evaluations carried out by
external experts, which incorporate several assumptions, namely the selling price per square meter, discount rate,
better use of the real estate and expectations regarding the development of real estate projects, as applicable, and
also considers the Bank's historical experience in the commercialization of real estate, its perspectives on the evolution
of the real estate market and the intentions of the management body regarding the commercialization of these assets.
The assumptions used in the valuations of these assets have an impact on their valuation and consequently on the
determination of impairment.
Y5. Pension and other employees\u2019 benefits
Determining pension liabilities requires the use of assumptions and estimations, including the use of actuarial
projections, estimated returns on investment, and other factors, such as discount rate, pensions and salary growth
rates, mortality tables, that could impact the cost and liability of the pension plan.
The discount rate used to update the Bank's pension fund liabilities, regarding the defined benefit pension plans of its
employees and managers, was determined based on an analysis carried out on a set of available information, which
includes, among other elements, the market references for this indicator published by internationally recognized
specialized entities and which are based, as defined by IAS 19, on market yields of a universe of high quality bond
issues (low risk), different maturities, called in Euros and relating to a diverse and representative range of issuers (non-
sovereign).
Y6. Financial instruments \u2013 IFRS 9
Y6.1. Classification and measurement
The classification and measurement of financial assets depends on the results of the SPPI test (analysis of the
characteristics of the contractual cash flows to determine if they correspond only to payments of principal and interest
on the outstanding capital) and the testing of the business model.
The Group determines the business model at a level that reflects how financial asset groups are managed together to
achieve a specific business objective. This evaluation requires judgment, since the following aspects, among others,
must be considered: the way in which the performance of assets is evaluated; the risks that affect the performance of
the assets and the way these risks are managed; and how asset managers are rewarded.
The Group monitors the financial assets measured at amortised cost and at fair value through other comprehensive
income that are derecognised prior to their maturity to understand the underlying reasons for their disposal and to
determine whether they are consistent with the purpose of the business model defined for these assets. This monitoring
is part of a process of continuous evaluation by the Group of the business model of the financial assets that remain in
the portfolio, to determine if it is adequate and, if it is not, if there was a change in the business model and,
consequently, a prospective classification change of these financial assets.
Y6.2. Impairment losses on financial assets at amortised cost and debt instruments at fair value through
other comprehensive income
The determination of impairment losses on financial instruments involves judgments and estimations regarding, among
others, the following:
Significant increase in credit risk:
Impairment losses correspond to the expected losses on a 12-month for the assets in Stage 1 and the expected losses
considering the probability of a default event occurring at some point up to the maturity date of the instrument
financial assets for assets in Stages 2 and 3. An asset is classified in Stage 2 whenever there is a significant increase in
its credit risk since its initial recognition. In assessing the existence of a significant increase in credit risk, the Group
considers qualitative and quantitative information, reasonable and sustainable.
In order to comply with the Supervisors' guidelines, namely regarding to the identification and measurement of credit
risk in the context of of uncertainty associated with the current geopolitical crises, the disruption in distribution chains,
rising energy costs and inflationary pressures, the Bank proceeded to record additional impairments in relation to the
current models of collective impairment calculation (overlays).
The exercise carried out was based on an analysis of migrations from customers identified as having the highest risk for
Stage 2 and Stage 3, with the greatest impact on the corporate segment.
Definition of groups of assets with common credit risk characteristics:
When expected credit losses are measured on a collective basis, the financial instruments are grouped based on
common risk characteristics. The Group monitors the adequacy of credit risk characteristics on a regular basis to assess
whether it maintains its similarity. This procedure is necessary to ensure that, in the event of a change in the credit
risk characteristics, the asset segmentation is reviewed. This review may result in the creation of new portfolios or in
transferring assets to existing portfolios that better reflect their credit risk characteristics.
Definition of the number and relative weight of prospective information for each type of product/market and
determination of relevant prospective information:
In estimating expected credit losses, the Group uses reasonable and sustainable forecasting information that is based
on assumptions about the future evolution of different economic drivers and how each of the drivers impacts the
remaining drivers.
Probability of default:
The probability of default represents a determining factor in the measurement of expected credit losses and
corresponds to an estimation of the probability of default in each period, which is calculated based on historical data,
assumptions and expectations about future conditions.
Loss given default:
It corresponds to a loss estimation in a default scenario. It is based on the difference between the contractual cash
flows and those that the Bank expects to receive, through the cash flows generated by the customers' business or credit
collaterals. The estimation of loss given default is based on, among other aspects, the different recovery scenarios,
historical information, the costs involved in the recovery process and the estimation of the valuation of collaterals
associated with credit operations.
Y6.3. Fair value of derivative financial instruments
Fair values are based on listed market prices if available, otherwise fair value is determined either by dealer price
quotations (either for that transaction or for similar instruments traded) or by pricing models, based on net present
value of estimated future cash flows which considers the market conditions for the underlying instruments, time value,
yield curve and volatility factors. These pricing models may require assumptions or judgments in estimating their fair
values. Consequently, the use of a different model or of different assumptions or judgments in applying a particular
model could result in different results from the ones reported.
Due to market stress conditions, the Bank needed to reallocate the risk limits, especially in the sensitivity limit of the
trading portfolio and to review the stress-test scenarios and their methodologies.
In the context of the uncertainty associated with the current macroeconomic framework, the calculation of fair value
adjustments was revised considering liquidity discounts, the costs of closing positions (widening the buy and sell
spread), credit risk, spreads of financing and increased volatility.
Y7. Provisions for legal risk related to foreign currency-indexed mortgage loans (mostly to Swiss franc)
The Group creates provisions for legal contingencies related foreign currency-indexed mortgage loans, mostly to Swiss
franc granted by Bank Millennium, S.A.
The assumptions used by Bank Millennium are essentially based on historical observations and will have to be updated
in subsequent periods, which may have a relevant impact on the provision\u2019s estimation. The methodology developed by
Bank Millennium is based on the following parameters: (i) the number of ongoing cases (including class action
agreements) and potential future lawsuits that will arise within the specified (three-year) time horizon; (ii) the
currently estimated amount of Bank Millennium's potential loss in the event of a specific court judgment; (iii) the
probability of obtaining a specific court judgment calculated on the basis of statistics of judgments in cases where Bank
Millennium is a party and legal opinions obtained; (iv) Bank Millennium does not include in the methodology for
calculating provisions the element related to the potential claim for remuneration for the client in connection with the
repayments made by him/her; and (v) estimates involved with amicable settlements with clients, concluded in court or
out of court.
The evolution of responsibilities with legal contingencies related to mortgage loans indexed to the Swiss franc and the
amount of the Bank Millennium\u2019s actual losses depend, namely, on the number of ongoing and potential lawsuits, as
well as on the final court decisions about each case and amicable settlement with clients.
\u00a0 \u00a0 Z. Subsequent events
The Group analyses events occurred after the balance sheet date, i.e., favourable and/or unfavourable events that
occur between the balance sheet date and the date the financial statements were authorized for issue. In this context,
two types of events can be identified:
i) those that provide evidence of conditions that existed at the balance sheet date (events after the balance sheet
date that give rise to adjustments); and,
ii) those that are indicative of the conditions that arose after the balance sheet date (events after the balance sheet
date that do not give rise to adjustments).
Events occurred after the date of the financial statements that are not considered as adjustable events, if significant,
are disclosed in the notes to the consolidated financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-545": { "value": "Accounting policies
A. Basis of presentation
Banco Comercial Portugu\u00eas, S.A. (the \u2018Bank\u2019) is a private capital bank, established in Portugal in 1985. It started
operating on 5 May 1986, and these consolidated financial statements reflect the results of the operations of the Bank
and all its subsidiaries (together referred to as the \u2018Group\u2019) and the Group\u2019s interest in associates, for the years ended
on 31 December 2023 and 2022.
In accordance with Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002, and
Bank of Portugal Notice no. 5/2015 (which revoked Bank of Portugal Notice no. 1/2005), the Group\u2019s consolidated
financial statements are required to be prepared, since 2005, in accordance with International Financial Reporting
Standards (IFRS) as endorsed by the European Union (EU). IFRS comprise accounting standards issued by the
International Accounting Standards Board (IASB), as well as interpretations issued by the International Financial
Reporting Interpretations Committee (IFRIC) and its predecessor bodies. The consolidated financial statements and the
accompanying notes were approved on 25 March 2024 by the Bank's Board of Directors and are presented in thousands
of euros, rounded to the nearest thousand.
All the references in this document related to any normative always report to the respective current version.
The consolidated financial statements for the year ended on 31 December 2023 were prepared for the purpose of
recognition and measurement, in accordance with the IFRS approved by the EU that are effective on that date.
These consolidated financial statements are a translation of the financial statements originally issued in Portuguese. In
the event of discrepancies, the Portuguese version prevails.
A1. Comparative information
The Group has adopted IFRS and interpretations mandatory for accounting periods beginning on or after 1 January 2023.
The accounting policies were applied consistently to all entities of the Group and are consistent with those used in the
preparation of the financial statements of the previous period, except for the changes resulting from the adoption of
IFRS 17 - Insurance Contracts with reference to 1 January 2023. IFRS 17 establishes the principles for the recognition,
measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 - Insurance Contracts. IFRS 17
outlines a general model, which is modified for insurance contracts with direct participation features, described as the
variable fee approach. The general model is simplified if certain criteria are met by measuring the liability for
remaining coverage using the premium allocation approach. The general model uses current assumptions to estimate
the amount, timing and uncertainty of future cash flows and it explicitly measures the cost of that uncertainty. It takes
into account market interest rates and the impact of policyholders\u2019 options and guarantees.
As the Group owns 49% of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., which is dedicated to the management
of life insurance and pension funds, on 1 January 2023 Millenniumbcp Ageas made the simultaneous adoption of IFRS 9 -
Financial Instruments and IFRS 17 - Insurance Contracts. It opted for the possibility given to Insurance Companies to
defer the application of IFRS 9, since the combined implementation with IFRS 17 would minimize the distortion of
results.
Initial application of IFRS 17 and IFRS 9 requires comparative information. Therefore, Millenniumbcp Ageas made the
transition exercise on 1 January 2022, and the impacts resulting from its implementation are detailed in note 59.
Application of IFRS 17 \u2013 Insurance Contracts, and IFRS 9 - Financial Instruments by Millenniumbcp Ageas Grupo
Segurador, S.G.P.S., S.A.
In order to ensure the comparability of information, the Group made the appropriate adjustments in the 2022
consolidated balance sheet and income statement, as detailed in note 59.
The Group's financial statements were prepared under the going concern assumption, the accrual-based accounting
regime and under the historical cost convention, as modified by the application of fair value for derivative financial
instruments, financial assets and liabilities at fair value through profit or loss and financial assets at fair value through
other comprehensive income. Financial assets and liabilities that are covered under hedge accounting are stated at fair
value in respect of the risk that is being hedged, if applicable. Other financial assets and liabilities and non-financial
assets and liabilities are stated at amortised cost or historical cost. Non-current assets and disposal groups held for sale
are stated at the lower of carrying amount or fair value less costs to sell. The liability for defined benefit obligations is
recognised as the present value of the past liabilities with pensions net of the value of the fund's assets.
The preparation of the financial statements in accordance with IFRS requires the Board of Directors, under advice of
the Executive Committee, to make judgments, estimations and assumptions that affect the application of the
accounting policies and reported amounts of assets, liabilities, income and expenses. The estimations and associated
assumptions are based on historical experience and other factors that are believed to be reasonable under the
circumstances and form the basis for making the judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these estimations. The issues involving a higher
degree of judgment or complexity or for which assumptions and estimations are significant are presented in note 1.Y.
B. Basis of consolidation
As from 1 January 2010, the Group began to apply IFRS 3 (revised) for the accounting of business combinations. The
changes in the accounting policies resulting from the application of IFRS 3 (revised) are applied prospectively.
The consolidated financial statements now presented reflect the assets, liabilities, income and expenses of the Bank
and its subsidiaries (the Group), and the results attributable to the Group financial investments in associates.
B1. Investments in subsidiaries
Subsidiaries are entities controlled by the Group (including structure entities and investment funds). The Group controls
an entity when it holds the power to direct the relevant activities of the entity, and when it is exposed, or has rights,
to variable returns from its involvement with the entity and can take possession of these results through the power it
holds over the relevant activities of that entity (de facto control). The financial statements of subsidiaries are included
in the consolidated financial statements from the date on which control commences until the date on which control
ceases.
Accumulated losses are attributed to non-controlling interests in the respective proportion, implying that the Group can
recognise negative non-controlling interests.
On a step acquisition process resulting in the acquisition of control, the revaluation of any participation previously
acquired is recorded against the profit and loss account when goodwill is calculated. On a partial disposal resulting in
loss of control over a subsidiary, any participation retained is revalued at market value on the sale date and the gain or
loss resulting from this revaluation is booked against the income statement.
B2. Investments in associates
Investments in associated companies are registered by the equity method from the date that the Group acquires
significant influence until the date it ceases to exist. Associates are those entities in which the Group has significant
influence but not control over the financial and operating policy decisions of the investee. It is assumed that the Group
has significant influence when it holds, directly or indirectly, more than 20% or of the voting rights of the investee. If
the Group holds, directly or indirectly, less than 20% of the voting rights of the investee, it is presumed that the Group
does not have significant influence, unless such influence can be clearly demonstrated.
The existence of significant influence by the Group is usually evidenced in one or more of the following ways:
-representation on the Board of Directors or equivalent governing body of the investee;
-participation in policy-making processes, including participation in decisions about dividends or other distributions;
-material transactions between the Group and the investee;
-interchange of the management team;
-provision of essential technical information.
The consolidated financial statements include the part that is attributable to the Group of the total reserves and
results of associated companies accounted on an equity basis. When the Group\u2019s share of losses exceeds its interest in
the associate, the carrying amount is reduced to zero and recognition of further losses is discontinued, with exception
of the part in which the Group incurs in a legal obligation to assume these losses on behalf of an associate.
B3. Goodwill
Business combinations are accounted under the purchase method. The acquisition cost corresponds to the fair value,
determined at the acquisition date, of the assets given and liabilities incurred or assumed. Costs directly attributable
to the acquisition of a subsidiary are recorded directly in the income statement.
Positive goodwill arising from acquisitions is recognised as an asset carried at acquisition cost and is not subject to
amortisation, however, it is subject to impairment tests. Goodwill arising from the acquisition of subsidiaries and
associates is defined as the difference between the cost of acquisition and the total or corresponding share of the fair
value of the net assets and contingent liabilities acquired, depending on the option taken.
Negative goodwill arising from an acquisition is recognised directly in the income statement of the period in which the
business combination occurs.
Goodwill is not adjusted due to changes in the initial estimation of the contingent purchase price, being the difference
recorded in the income statement or in equity, when applicable.
According to IFRS 3 \u2013 Business combinations, if the initial accounting of a business combination is not concluded until
the end of the first financial reporting period in which the combination occurs, it is recorded at the respective
provisional values. These provisional values can be adjusted over the measurement period, which can\u2019t exceed a year
since the acquisition date. Over this period, the Group should retrospectively adjust the amounts recognised previously
on the acquisition date, to reflect newly obtained information about facts and circumstances that existed at the
acquisition date and that, if they were known by then, would have impacted the measurement of the amounts
recognised at that date.
During this period, the Group should also recognise additional assets and liabilities in the case of obtaining new
information about facts and circumstances that existed at the acquisition date and that, if they were known by then,
would have resulted in the recognition of those assets and liabilities at that time.
The recoverable amount of the goodwill registered in the Group's asset is assessed annually in the preparation of the
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. Impairment
losses are recognised in the income statement. The recoverable amount is determined based on the higher of the asset
value in use and the market value after deducting selling costs, calculated using valuation methodologies supported by
discounted cash flow techniques, considering market conditions, the time value of money and the business risks.
B4. Purchases and dilution of non-controlling interests
The acquisition of non-controlling interests that do not impact the control position of a subsidiary is accounted as a
transaction with shareholders and, therefore, no additional goodwill resulting from this transaction is recognised. The
difference between the acquisition cost and the fair value of non-controlling interests acquired is recognised directly in
reserves. On this basis, the gains and losses resulting from the sale of controlling interests that do not impact the
control position of a subsidiary are always recognised against reserves.
B5. Loss of control
The gains or losses resulting from the dilution or sale of a financial position in a subsidiary, with loss of control, are
recognised by the Group in the income statement.
B6. Investments in foreign subsidiaries and associates
The financial statements of foreign subsidiaries and associates of the Group are prepared in their functional currency,
defined as the currency of the primary economic environment in which they operate or the currency in which the
subsidiaries obtain their income or finance their activity. In the consolidation process, assets and liabilities, including
goodwill, of foreign subsidiaries are converted into euros at the official exchange rate on the balance sheet date.
Regarding the investments in foreign operations that are consolidated under the full consolidation or equity methods,
exchange differences, between the conversion to euros of the equity at the beginning of the year and its value in euros
at the exchange rate on the balance sheet date in which the consolidated accounts are reported, are recognised against
\u201cReserves - exchange differences\u201d. The changes in fair value resulting from instruments that are designated and
qualified as hedging instruments related to foreign operations are recorded in equity under \"Reserves and retained
earnings\". Whenever the hedge is not fully effective, the ineffective portion is accounted against profit and loss of the
year.
The income and expenses of these subsidiaries are converted to euros at an approximate rate of the rates on the dates
of the transactions, using a monthly average considering the initial and final exchange rates of each month. Exchange
differences from the conversion to euros of the profits and losses for the reporting period, arising from the difference
between the exchange rate used in the income statement and the exchange rate prevailing at the balance sheet date,
are recognised in \"Reserves and retained earnings - exchange differences resulting from the consolidation of Group's
companies\". The exchange rates used by the Group are detailed in note 54.
On disposal of investments in foreign subsidiaries for which there is loss of control, exchange differences related to the
investment in the foreign operation and to the associated hedge transaction previously recognised in reserves are
transferred to profit and loss, as part of the gains or loss arising from the disposal.
The Group applies IAS 29 \u2013 Financial reporting in hyperinflationary economies in financial statements of entities that
present accounts in functional currency of an economy that has hyperinflation. In applying this policy, non-monetary
assets and liabilities are adjusted based on the price index from the date of acquisition or the date of the last
revaluation until 31 December 2021. The restated values of assets are reduced by the amount that exceeds their
recoverable amount, in accordance with the applicable IFRS.
Equity components are also updated considering the price index from the beginning of the period or date of the
contribution if it is earlier.
When the classification as a hyperinflationary economy is applied to associated companies, its effects are included in
the Group's financial statements by applying the equity method of accounting on the financial statements restated in
accordance with the requirements of IAS 29. The effects of the application of IAS 29 with impact on capital items are
recognised against the item \"Reserves and retained earnings\".
In accordance with the requirements provided in IAS 29, Angola was considered as a hyperinflationary economy until 31
December 2018. This classification is no longer applicable as of 1 January 2019.
B7. Transactions eliminated on consolidation
The balances and transactions between Group's companies, as well as any unrealised gains and losses arising from these
transactions, are eliminated in the preparation of the consolidated financial statements. Unrealised gains and losses
arising from transactions with associates and jointly controlled entities are eliminated in the proportion of the Group's
investment in these entities.
C. Financial instruments (IFRS 9)
C1. Financial assets
C1.1. Classification, initial recognition and subsequent measurement
At the initial recognition, financial assets are classified into one of the following categories:
\u2013 \u201cFinancial assets at amortised cost\u201d;
\u2013 \u201cFinancial assets at fair value through other comprehensive income\u201d; or,
\u2013 \u201cFinancial assets at fair value through profit or loss\u201d.
The classification is made taking into consideration the following aspects:
\u2013 the Group's business model for the management of the financial asset; and,
\u2013 the characteristics of the contractual cash flows of the financial asset.
Business Model Evaluation
With reference to 1 January 2018, the Group carried out an evaluation of the business model in which the financial
instruments are held at portfolio level, since this approach reflects how assets are managed and how that information
is made available to management bodies. The information considered in this evaluation included:
\u2013 the policies and purposes established for the portfolio and the practical operability of these policies, including how
the management strategy focuses on receiving contractual interest, maintaining a certain interest rate profile,
adjusting the duration of financial assets to the duration of liabilities that finance these assets or on the realization
of cash flows through the sale of the assets;
\u2013 how the performance of the portfolio is evaluated and reported to the Group's management bodies;
\u2013 the evaluation of the risks that affect the performance of the business model (and of the financial assets held under
this business model) and the way these risks are managed;
\u2013 the remuneration of business managers, i.e., in what way the compensation depends on the fair value of the assets
under management or on contractual cash flows received; and,
\u2013 the frequency, volume and sales periodicity in previous periods, the reasons for these sales and the expectations
about future sales. However, sales information should not be considered individually, but as part of an overall
assessment of how the Group establishes financial asset management objectives and how cash flows are obtained.
Financial assets held for trading and financial assets managed and evaluated at fair value by option are measured at
fair value through profit or loss because they are not held either for the collection of contractual cash flows (HTC), nor
for the collection of cash flows and sale of these financial assets (HTC and Sell).
Evaluation if the contractual cash flows correspond to Solely Payments of Principal and Interest (SPPI)
For the purposes of this assessment, \"principal\" is defined as the fair value of the financial asset at initial recognition.
\"Interest\" is defined as the counterparty for the time value of money, for the credit risk associated with the amount
owed over a given period and for other risks and costs associated with the activity (e.g., liquidity risk and
administrative costs), as well as for a profit margin.
In the evaluation of the financial instruments in which contractual cash flows refer exclusively to the receipt of
principal and interest, the Group considered the original contractual terms of the instrument. This evaluation included
the analysis of the existence of situations in which the contractual terms can modify the periodicity and the amount of
the cash flows so that they do not fulfil the SPPI condition. In the evaluation process, the Group considered:
\u2013 contingent events that may change the periodicity and the amount of the cash flows;
\u2013 characteristics that result in leverage;
\u2013 terms of prepayment and extension of maturity;
\u2013 terms that may limit the right of the Group to claim cash flows in relation to specific assets (e.g., contracts with
terms that prevent access to assets in case of default \u2013 non-recourse asset); and,
\u2013 characteristics that may change the time value of money.
In addition, an advance payment is consistent with the SPPI criterion if:
\u2013 the financial asset is acquired or originated with a premium or discount in relation to the contractual nominal value;
\u2013 the prepayment represents substantially the nominal amount of the contract plus accrued contractual interest, but
not paid (may include reasonable compensation for prepayment); and,
\u2013 the prepaid fair value is insignificant at initial recognition.
C1.1.1. Financial assets at amortised cost
Classification
A financial asset is classified under the category \"Financial assets at amortised cost\" if both of the following conditions
are met:
\u2013 the financial asset is held within a business model whose objective is to hold financial assets in order to collect their
contractual cash flows; and,
\u2013 its contractual cash flows occur on specific dates and are solely payments of principal and interest on the principal
amount outstanding (SPPI).
The \"Financial assets at amortised cost\" category includes loans and advances to credit institutions, loans and advances
to customers and debt instruments managed based on a business model whose purpose is to receive their contractual
cash flows (government bonds, bonds issued by companies and commercial paper).
Initial recognition and subsequent measurement
Loans and advances to credit institutions and loans and advances to customers are recognised at the date the funds are
made available to the counterparty (settlement date). Debt instruments are recognised on the trade date, that is, on
the date the Group accepts to acquire them.
Financial assets at amortised cost are initially recognised at fair value plus transaction costs and are subsequently
measured at amortised cost. In addition, they are subject, at their initial recognition, to the measurement of
impairment losses for expected credit losses (note C1.5), which are recognised in \"'Impairment of financial assets
measured at amortised cost\".
Interest of financial assets at amortised cost is recognised under \"Interest and similar income\", based on the effective
interest rate method and in accordance with the criteria described in note C3.
Gains or losses generated at the time of derecognition are registered in \"Gains/(losses) arising from derecognition of
financial assets and liabilities not measured at fair value through profit or loss\".
C1.1.2. Financial assets at fair value through other comprehensive income
Classification
A financial asset is classified under the category of \"Financial assets at fair value through other comprehensive income\"
if both of the following conditions are met:
\u2013 the financial asset is held within a business model whose objective is both to collect its contractual cash flows and
to sell this financial asset; and,
\u2013 its contractual cash flows occur on specific dates and are solely payments of principal and interest on the principal
amount outstanding (SPPI).
In addition, at the initial recognition of an equity instrument that is not held for trading, nor a contingent retribution
recognised by an acquirer in a business combination to which IFRS 3 applies, the Group may irrevocably choose to
classify it in the category of \"Financial assets at fair value through other comprehensive income\" (FVOCI). This option is
exercised on a case-by-case basis and is only available for financial instruments that comply with the definition of
equity instruments provided in IAS 32 and cannot be used for financial instruments whose classification as an equity
instrument under the scope of the issuer is made under the exceptions provided in paragraphs 16A to 16D of IAS 32.
Initial recognition and subsequent measurement
Debt instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. Changes in the fair value of these financial assets are
recognised against other comprehensive income and, at the time of their disposal, the respective gains or losses
accumulated in other comprehensive income are reclassified to a specific income statement item designated \"Gains or
losses on derecognition of financial assets at fair value through other comprehensive income\u201d.
Debt instruments at fair value through other comprehensive income are also subject from their initial recognition to the
measurement of impairment losses for expected credit losses (note C1.5). Impairment losses are recognised in the
income statement under \"Impairment of financial assets at fair value through other comprehensive income\", against
\u201cOther comprehensive income\u201d, and do not reduce the carrying amount of the financial asset in the balance sheet.
Interest, premiums or discounts on financial assets at fair value through other comprehensive income are recognised in
\"Interest and similar income\", based on the effective interest rate method and in accordance with the criteria described
in note C3.
Equity instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. The changes in the fair value of these financial assets
are recognised against \u201cOther comprehensive income\u201d. Dividends are recognised in the income statement when the
right to receive them is attributed.
Impairment is not recognised for equity instruments at fair value through other comprehensive income, and the
respective accumulated gains or losses recognised in \u201cFair value changes\u201d are transferred to \u201cRetained earnings\u201d at the
time of their derecognition.
C1.1.3. Financial assets at fair value through profit or loss
Classification
A financial asset is classified in the category \"Financial assets at fair value through profit and loss\" if the business model
defined by the Group for its management or the characteristics of its contractual cash flows do not meet the conditions
described above to be measured at amortised cost or at fair value through other comprehensive income (FVOCI).
In addition, the Group may irrevocably designate a financial asset at fair value through profit or loss that meets the
criteria to be measured at amortised cost or at FVOCI at the time of its initial recognition if this eliminates or
significantly reduces an inconsistency in measurement or recognition (accounting mismatch), that will otherwise arise
from measuring assets or liabilities or recognising their gains and losses in different bases.
The Group classified \"Financial assets at fair value through profit and loss\" in the following items:
a) \u201cFinancial assets held for trading\u201d
These financial assets are acquired with the purpose of short-term selling; at the initial recognition, they are part of a
portfolio of identified financial instruments and for which there is evidence of profit-taking in the short-term; or they
can be defined as derivatives (except for hedging derivatives).
b) \u201cFinancial assets not held for trading mandatorily at fair value through profit or loss\u201d
This item classifies debt instruments whose contractual cash flows do not correspond only to repayments of principal
and interest on the principal amount outstanding (SPPI).
c) \u201cFinancial assets designated at fair value through profit or loss\u201d (Fair Value Option)
This item includes the financial assets that the Group has chosen to designate at fair value through profit or loss to
eliminate accounting mismatch.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Group in the normal course of its business are in market conditions,
financial assets at fair value through profit or loss are initially recognised at their fair value, with the costs or income
associated with the transactions recognised in profit and loss at the initial moment. Subsequent changes in the fair
value of these assets are recognised in profit and loss.
The accrual of interest and of the premium/discount (when applicable) is recognised in \"Net interest income\", based on
the effective interest rate of each transaction, except the accrual of interest from trading derivatives that are
recognised in \u201cGains/(losses) on financial operations at fair value through profit or loss\u201d. Dividends are recognised in
profit and loss when the right to receive them is attributed.
Trading derivatives with a positive fair value are included in the item \"Financial assets held for trading\", while trading
derivatives with negative fair value are included in \"Financial liabilities held for trading\".
C1.2. Reclassification between categories of financial assets
Financial assets should be reclassified into other categories only if the business model used in their management has
changed. In this case, all financial assets affected must be reclassified.
The reclassification must be applied prospectively from the date of reclassification and any gains, losses (including the
ones related to impairment) or interest previously recognised should not be restated.
The reclassification of investments in equity instruments measured at fair value through other comprehensive income is
not allowed, nor of financial instruments designated at fair value through profit or loss.
C1.3. Modification and derecognition of financial assets
General principles
i) The Group shall derecognise a financial asset when, and only when:
\u2013 the contractual rights to the cash flows from the financial asset expire; or,
\u2013 it transfers the financial asset as set out in notes ii) and iii) below and the transfer qualifies for derecognition in
accordance with note iv).
ii) The Group transfers a financial asset if, and only if, it either:
\u2013 transfers the contractual rights to receive the cash flows of the financial asset; or,
\u2013 retains the contractual rights to receive the cash flows of the financial asset but assumes a contractual obligation to
pay the cash flows to one or more recipients in an arrangement that meets the conditions presented in note iii).
iii) When the Group retains the contractual rights to receive the cash flows of a financial asset (the 'original asset'), but
assumes a contractual obligation to pay these cash flows to one or more entities (the 'eventual recipients'), the
Group shall treat the transaction as a transfer of a financial asset if all the following three conditions are met:
\u2013 the Group does not have any obligation to pay amounts to the eventual recipients, unless it collects equivalent
amounts from the original asset. Short-term advances with the right of full recovery of the amount lent, plus
accrued interest at market rates, do not violate this condition;
\u2013 the Group is contractually prohibited from selling or pledging the original asset other than as a security to the
eventual recipients due its obligation to pay them cash flows; and,
\u2013 the Group has an obligation to remit any cash flows it collects on behalf of the eventual recipients without material
delay. In addition, it is not entitled to reinvest such cash flows, except for investments in cash or cash equivalents
(as defined in IAS 7 \u2013 Statement of Cash Flows) during the short settlement period from the collection date until the
date of required remittance to the eventual recipients, and interest earned on such investments is passed to the
eventual recipients.
iv) When the Group transfers a financial asset (see note ii) above), it shall evaluate the extent to which it retains the
risks and benefits arising from owning the financial asset. In this case:
\u2013 if the Group transfers substantially all the risks and benefits arising from owning the financial asset, it shall
derecognise the financial asset and recognise separately any rights and obligations created or retained in the
transfer, as assets or liabilities;
\u2013 if the Group retains substantially all the risks and benefits arising from owning the financial asset, it shall continue
to recognise the financial asset;
\u2013 if the Group neither transfers nor retains substantially all the risks and benefits arising from owning the financial
asset, it shall determine whether it retained control of the financial asset. In this case:
a) if the Group did not retain control, it shall derecognise the financial asset and recognise separately, as assets or
liabilities, any rights and obligations created or retained in the transfer;
b) if the Group retained control, it shall continue to recognise the financial asset to the extent of its continued
involvement in the financial asset.
v)\u00a0 The transfer of risks and benefits (see prior note) is evaluated by comparing the Group\u2019s exposure, before and after
the transfer, with the variability in the amounts and timing of the net cash flows of the transferred asset.
vi) The question of whether the Group retained or not control (see note iv) above) over the transferred asset depends
on the transferee's ability to sell the asset. If the transferee has the practical ability to sell the asset in its entirety
to an unrelated third party and can exercise that ability unilaterally without needing to impose additional
restrictions on the transfer, the entity did not retain control. In all other cases, the entity retained control.
Derecognition criteria
In the context of the general principles listed in the previous section, and considering that contract modification
processes may lead, in some circumstances, to the derecognition of the original financial assets and recognition of new
ones (subject to POCI identification), the purpose of this section is to set the criteria and circumstances that may lead
to the derecognition of a financial asset.
The Group considers that a modification of the terms and conditions of a credit exposure will result in derecognition of
the transaction and in recognition of a new transaction when the modification translates into at least one of the
following conditions:
\u2013 Creation of a new exposure that results from a debt consolidation, without any of the derecognized instruments
having a nominal value higher than 90% of the nominal amount of the new instrument;
\u2013 Double extension of the residual maturity, provided that the extension is not shorter than 3 years compared to the
residual maturity in the moment of the modification;
\u2013 Increase of on balance exposure by more than 10% compared to the nominal amount (refers to the last approved
amount on the operation subject to modification);
\u2013 Change in qualitative features, namely:
i) Change of currency, unless the exchange rate between the old and the new currency is pegged or managed
within limits restricted by law or the relevant monetary authorities;
ii) Exclusion or addition of a substantial equity conversion feature to a debt instrument, unless it is not
reasonably possible that it will be exercised over its term;
iii) Transfer of the instrument\u2019s credit risk to another borrower, or a significant change in the structure of
borrowers within the instrument.
iv) Deletion or addition to the debt instrument of features of the \"Pay If You Can\" type or dependent on the
financial performance of the debt instrument.
In the case of a restructuring due to financial difficulties of the debtor, only the criteria set out in items ii, iii and iv of
the above paragraphs should be checked (the other criteria listed in this paragraph are not relevant in such situations).
Under the regulatory changes that occurred in Poland and the negotiations with customers holding mortgage loans in
foreign currency described in note 57, and which correspond to contractual modifications made in accordance with IFRS
9, when the cash flows resulting from the agreement are subject to modification and a given asset is not derecognised,
Bank Millennium adjusts the gross book value of the financial asset and recognises the profit or loss due to the
modification in the Income Statement - Results on modification. The adjustment to the gross carrying amount of a
financial asset is the difference between the discounted cash flows before and after contract modification.
Loans written-off
The Group writes off a loan when it does not have reasonable expectations of recovering a financial asset in its entirety
or partially. Loans written-off are recognised in off-balance sheet accounts.
C1.4. Purchased or originated credit-impaired assets
Purchased or originated credit-impaired (POCI) assets are assets that present objective evidence of credit impairment
in the moment of their initial recognition. An asset is credit-impaired if one or more events have occurred with a
negative impact on the estimated future cash flows of the asset.
The two events that lead to the origin of a POCI exposure are presented as follows:
\u2013 financial assets arising from a recovery process, where there have been changes to the terms and conditions of the
original agreement, which presented objective evidence of impairment that resulted in its derecognition (note C1.3)
and recognition of a new contract that reflects the credit losses incurred;
\u2013 financial assets acquired with a significant discount, where the existence of a significant discount reflects credit
losses incurred at the time of their initial recognition.
At initial recognition, POCI assets do not carry an impairment allowance. Instead, lifetime expected credit losses (ECL)
are incorporated into the calculation of the effective interest rate (EIR). Consequently, at initial recognition, the gross
book value of POCI (initial balance) is accounted for at fair value and it's equal to the net book value before being
recognised as POCI (difference between the initial balance and the total discounted cash flows).
C1.5. Impairment losses
C1.5.1. Financial instruments subject to impairment losses recognition
The Group recognises impairment losses for expected credit losses on financial instruments recognised in the following
accounting items:
C1.5.1.1. Financial assets at amortised cost
Impairment losses on financial assets at amortised cost reduce the balance sheet value of these financial assets against
the item \"Impairment of financial assets at amortised cost\" (in the income statement).
C1.5.1.2. Debt instruments at fair value through other comprehensive income
Impairment losses for debt instruments at fair value through other comprehensive income are recognised in the income
statement under \"Impairment of financial assets at fair value through other comprehensive income\", against other
comprehensive income (they do not reduce the balance sheet amount of these financial assets).
C1.5.1.3. Credit commitments, documentary credits and financial guarantees
Impairment losses associated with credit commitments, documentary credits and financial guarantees are recognised in
liabilities, under the balance \"Provisions for guarantees and other commitments\", against \"Other provisions\" (in the
income statement).
C1.5.2. Classification of financial instruments by stages
Changes in credit risk since the initial recognition
Stage 1
Stage 2
Stage 3
Classification criterion
Initial recognition
Significant increase in credit
risk since initial recognition
Impaired
Impairment losses
12-month expected credit
losses
Lifetime expected credit losses
The Group determines the expected credit losses of each operation as a result of the deterioration of credit risk since
its initial recognition. For this purpose, operations are classified into one of the following three stages:
\u2013 Stage 1: the operations in which there is no significant increase in credit risk since its initial recognition are
classified in this stage. Impairment losses associated with operations classified in this stage correspond to expected
credit losses resulting from a default event that may occur within 12 months after the reporting date (12-month
expected credit losses);
\u2013 Stage 2: the operations in which there is a significant increase in credit risk since its initial recognition (note C1.5.3)
but are not impaired (note C1.5.4) are classified in this stage. Impairment losses associated with operations
classified in this stage correspond to the expected credit losses resulting from default events that may occur over
the expected residual life of the operations (lifetime expected credit losses);
\u2013 Stage 3: impaired operations are classified in this stage. Impairment losses associated with operations classified at
this stage correspond to lifetime expected credit losses.
C1.5.3. Significant increase in credit risk (SICR)
Significant increase in credit risk (SICR) is determined according to a set of mostly quantitative, but also qualitative
criteria. These criteria are mainly based on the risk grades of customers, according to the Bank's Rating Master Scale,
and on its evolution, in order to detect significant increases in Probability of Default (PD), complemented by other
information regarding the customers\u2019 behaviour towards the financial system.
C1.5.4. Definition of financial assets in default and impaired
All customers who meet at least one of the following conditions are marked as default and, consequently, in NPE:
a) Delay over 90 days of material payment:
- Amounts of principal, interest or fees not paid on the due date that, cumulatively, represent:
i) more than Euros 100 (retail) or more than Euros 500 (non-retail); and,
ii) more than 1% of the total debt (direct liabilities).
After these two conditions are met, the counting of days of delay begins: if more than 90 consecutive days in which the
customer is in this situation have been counted, it is classified as default (or GR15).
The existence of a material payment delay gives rise to the default setting (GR15) of all holders of the operation (or
operations).
b) Signs of low probability of payment:
i. Credit restructuring due to financial difficulties with loss of value;
ii. Delay after restructuring due to financial difficulties;
iii. Recurrence of restructuring due to financial difficulties;
iv. Credit with signs of impairment (or stage 3 of IFRS 9);
v. Insolvency or equivalent proceedings;
vi. Litigation;
vii. Guarantees of operations in default;
viii. Credit sales with losses;
ix. Credit fraud;
x. Unpaid credit status;
xi. Breach of covenants in a credit agreement;
xii. Spread of default in an economic group;
xiii. Cross default in BCP Group.
C1.5.5. Estimates of expected credit losses - Individual analysis
1. Customers who are in one of the following conditions are subject to individual analysis:
Customers in default
Customers in litigation or insolvency, if the total exposure of the group members in these situations exceeds
Euros 1 million
Customers integrated into groups with an exposure over Euros 5 million, if they have a risk grade 15
Groups or customers
who are not in
default
Other customers belonging to groups in the above conditions
Groups or customers with an exposure over Euros 5 million, if a group member has a risk grade 14
Groups or customers with an exposure over Euros 5 million, if a member of the group has a restructured loan
and a risk grade 13
Groups or customers with an exposure over Euros 10 million, if at least one member of the group is in stage 2
Groups or customers not included in the preceding paragraphs, whose exposure exceeds Euros 25 million
2. Regardless of the criteria described in the previous point, the individual analysis is only performed for customers
with a credit exposure over Euros 500,000, while customers with exposure below this limit are not considered for
the purpose of determining the exposure referred to in the previous point.
3. Other customers that do not meet the criteria defined in 1 will also be subject to individual analysis, if under the
following conditions:
\u2013 they have impairment as a result of the latest individual analysis;
\u2013 are classified in stage 2 as a result of the last revision of the questionnaire analysing the indications of financial
difficulties;
\u2013 according to recent information, they show a significant deterioration in risk levels; or,
\u2013 are a Special Purpose Vehicle (SPV).
4. The individual analysis includes the following procedures:
\u2013 for customers that are not in default, the analysis of financial difficulties indicators to determine whether the
customer has objective signs of impairment, or whether it should be classified in stage 2 given the occurrence of a
significant increase in credit risk, considering for this purpose a set of predetermined signs;
\u2013 for customers in default or for which the previous analysis has allowed to conclude that the customer has objective
signs of impairment, determination of the loss.
5. For the situations identified in the first paragraph of the previous point involving corporate clients, the analysis is
the responsibility of the Rating Division, and the responsibility of the Credit Division for the remaining clients.
6. For the situations identified in the second paragraph of the previous point, the individual analysis to determine the
loss is the responsibility of the client's management divisions and of the Credit Division, the latter with regard to the
customers managed by the Commercial Networks.
The assessment of existence of impairment losses in individual terms is determined through an analysis of the total
credit exposure on a case-by-case basis. For each loan considered individually significant, the Group assessed at each
balance sheet date the existence of objective evidence of impairment. In the assessment of impairment losses in
individual terms, the following factors were considered:
\u2013 total exposure of each customer towards the Group and the existence of overdue loans;
\u2013 viability of the customer\u2019s business and its capacity to generate enough cash flows to service debt obligations in the
future;
\u2013 the existence, nature and estimated value of the collaterals associated to each loan;
\u2013 significant deterioration of the customer's rating;
\u2013 the customer\u2019s available assets in liquidation or insolvency situations;
\u2013 the existence of preferential creditors;
\u2013 the amount and expected recovery term.
7. Each of the units referred to in the previous point is responsible for assigning an expectation and a recovery period
to exposures relating to customers subject to individual analysis, which must be transmitted to the Risk Office as
part of the regular process of collecting information, accompanied by detailed justification of the proposed
impairment.
8. The expected recovery shall be represented by a recovery rate of the total outstanding exposure, which may be a
weighted rate considering the different recovery prospects for each part of the customer's liabilities.
9. The recovery estimation referred to in the previous point should be influenced by future prospects (forward-
looking), contemplating not only a more expected scenario but also alternative scenarios (an unbiased and
probability-weighted amount). The application and weighting of the scenarios should be carried out both in a
global perspective and in an individualized perspective, the latter when cases that, due to their specificity, have a
high degree of uncertainty regarding the expected recovery estimation are identified.
10. The macroeconomic adjustment set out in point 8 should be analysed annually and weighted according to the type
of recovery strategy associated with the exposure under analysis:
\u2013 for Going Concern strategies (i.e., the estimation is based on the cash flows of the business), the possibility of
applying the 2 additional macroeconomic scenarios (optimistic and pessimistic) should be analysed in a global way,
to ascertain if there is the risk of a skewed view of the expected losses from the consideration of only one scenario;
\u2013 for Gone Concern strategies (i.e., the recovery estimation is based on the realization of the collateral), the impact
of the macroeconomic scenario on collaterals should be analysed, for example, to what extent the projected real
estate index indicates significant changes ahead for the current valuation values.
11. It is the responsibility of the units referred to in point 5 to consider in their projection macroeconomic expectations
that may influence the recoverability of the debt.
12. For the purposes of the preceding paragraphs, the Economic Studies, Sustainability and Cryptoassets Department
shall disclose the macroeconomic data that allow the estimations to be made.
13. The decision to consider global impacts related to the going and gone concern scenarios should be made by the Risk
Committee, as proposed by the Risk Office.
14. For specific cases with a high degree of uncertainty, the allocation of alternative scenarios should be considered
casuistically. Examples of recovery situations with a degree of uncertainty include:
\u2013 recovery of collateral in geographies in which the Bank has no relevant recovery experience;
\u2013 recovery of debt related to geographies in which there is strong political instability;
\u2013 recovery of non-real estate collateral for which there is no evidence of market liquidity;
\u2013 recovery of related collateral or government guarantees in a currency other than the country's own;
\u2013 recovery of debt related to debtors for whom there is a strong negative public exposure.
15. The Risk Office is responsible for reviewing the information collected and for clarifying all identified
inconsistencies, as well as for the final decision on the customer's impairment.
16. Customers that have objective signs of impairment, but an individual impairment amount is equal to zero, are
included in the collective analysis, assuming a PD 12-month equivalent to the risk grade 12 of the Master Scale.
17. The individual impairment analysis must be carried out annually, and may be lower for clients who fall into certain
situations of possible increased risk. In case significant signs of deterioration or improvement in the customer\u2019s
economic and financial situation are detected, as well as the macroeconomic conditions affecting the customer's
ability to accomplish debt, it is the responsibility of the Risk Office to promote the review of the expected
impairment of this customer.
C1.5.6. Estimates of expected credit losses - Collective analysis
Transactions that are not subject to an individual impairment analysis are grouped considering their risk characteristics
and subject to a collective impairment analysis. The Group's credit portfolio is divided by internal risk grades and
according to the following segments:
a) Segments with a reduced history of defaults, designated \u2018low default\u2019: Large corporate exposures, Project finance,
Institutions (banks/financial institutions) and Sovereigns;
b) Segments not \u2018low default\u2019: - Retail: Mortgages; Overdrafts; Credit cards; Small and medium enterprises - Retail
(\u2018SME Retail\u2019); and Others - Corporate: Small and medium enterprises - Corporate (\u2018Large SME\u2019); and Real Estate.
The Group performs statistical tests in order to prove the homogeneity of the segments mentioned above, with a
minimum period of one year.
Expected credit losses are estimates of credit losses that are determined as follows:
\u2013 financial assets with no signs of impairment at the reporting date: the present value of the difference between the
contractual cash flows and the cash flows that the Group expects to receive;
\u2013 financial assets with impairment at the reporting date: the difference between the gross book value and the present
value of the estimated cash flows;
\u2013 unused credit commitments: the present value of the difference between the resulting contractual cash flows if the
commitment is made and the cash flows that the Group expects to receive;
\u2013 financial guarantees: the current value of the expected repayments less the amounts that the Group expects to
recover.
The main inputs used to measure ECLs on a collective basis should include the following variables:
\u2013 Probability of Default \u2013 PD;
\u2013 Loss Given Default \u2013 LGD; and,
\u2013 Exposure at Default \u2013 EAD.
These parameters are obtained through internal statistical models and other relevant historical data, considering the
already existing regulatory models adapted to the requirements of IFRS 9.
PDs are estimated based on a certain historical period and will be calculated based on statistical models. These models
are based on internal data including both quantitative and qualitative factors. If there is a change in the risk of the
counterparty or exposure, the estimate of the associated PD will also vary. The PDs will be calculated considering the
contractual maturities of exposures.
The risk grades are a highly relevant input for determining the PD associated with each exposure.
The Group collects performance and default indicators about their credit risk exposures with analysis by types of
customers and products.
LGD is the magnitude of the loss that is expected to occur if an exposure goes into default. The Group estimates the
LGD parameters based on the historical recovery rates after entry into counterparty defaults. The LGD models consider
the associated collaterals, the counterparty activity sector, the default time, as well as the recovery costs. In the case
of contracts secured by real estate, it is expected that the LTV (loan-to-value) ratios are a parameter of high relevance
in the determination of LGD.
The EAD represents the expected exposure if the exposure and/or customer defaults. The Group obtains the EAD values
from the counterparty's current exposure and potential changes to its current value as a result of the contractual
conditions, including amortisations and prepayments. For commitments and financial guarantees, the value of the EAD
will consider both the amount of credit used and the expectation of future potential value that may be used in
accordance with the agreement.
As described above, except for financial assets that consider a 12-month PD as they do not present a significant
increase in credit risk, the Group will calculate the ECL value considering the risk of default during the maximum
contractual maturity period of the contract, even if, for the purpose of risk management, it is considered to be a longer
period. The maximum contractual period shall be considered as the period up to the date on which the Group has the
right to require payment or end the commitment or guarantee.
The Group adopted as a residual term criterion for renewable operations, when in stage 2, a term of 5 years. This term
was determined based on the behavioural models of this type of product applied by the Bank in the liquidity risk and
interest rate (ALM) analysis. According to these models, the maximum period of repayment of these operations is the 5
years considered conservatively in the scope of the calculation of credit impairment.
The Group uses models to forecast the evolution of the most relevant parameters for the expected credit losses,
namely probability of default, which incorporate forward-looking information. This incorporation of forward-looking
information is carried out in the relevant elements considered for the calculation of expected credit losses (ECL).
In particular, the PD point-in-time (PDpit) considered for the determination of the probability of performing exposures
at the reference date becoming defaulted exposures considers the expected values for a set of macroeconomic
variables, based on three scenarios (Central, Upside and Downside Scenario) prepared by the Bank's Economic Studies
area. These scenarios, which are used across the Bank for various purposes besides calculating impairment, consider
existing projections by reference entities.
In December 2023 the Bank carried out an update of the macroeconomic scenarios and of the corresponded adjustment
of the parameters considered in the collective impairment model.
C2. Financial liabilities
C2.1. Classification, initial recognition and subsequent measurement
At initial recognition, financial liabilities are classified in one of the following categories:
\u2013 \u201cFinancial liabilities at amortised cost\u201d;
\u2013 \u201cFinancial liabilities at fair value through profit or loss\u201d.
C2.1.1. Financial liabilities at fair value through profit or loss
Classification
Financial liabilities classified under \"Financial liabilities at fair value through profit or loss\" include:
a) \u201cFinancial liabilities held for trading\u201d
In this balance the issued liabilities are classified with the purpose of repurchasing in the near term, those that form
part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a
recent actual pattern of short-term profit-taking; or is a derivative (except for a derivative classified as hedging
instrument).
b) \u201cFinancial liabilities designated at fair value through profit or loss\u201d
The Group may irrevocably assign a financial liability at fair value through profit or loss at the time of its initial
recognition if at least one of the following conditions is met:
\u2013 the financial liability is managed, evaluated and reported internally at its fair value; or,
\u2013 the designation eliminates or significantly reduces the accounting mismatch of transactions.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Group in the normal course of its business are made in market
conditions, financial liabilities at fair value through profit or loss are initially recognised at fair value with the costs or
income associated with the transactions recognised in profit or loss at the initial moment.
Subsequent changes in the fair value of these financial liabilities are recognised as follows:
\u2013 the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of
that liability shall be presented in other comprehensive income;
\u2013 the remaining amount of change in the fair value of the liability shall be presented in profit or loss.
The accrual of interest and the premium/discount (when applicable) is recognised in \"Interest expense and similar
charges\" based on the effective interest rate of each transaction.
C2.1.2. Financial guarantees
If they are not designated at fair value through profit or loss at the time of initial recognition, the financial guarantee
contracts are subsequently measured at the highest of the following amounts:
\u2013 the provision for losses determined according to the criteria described in note C1.5;
\u2013 the amount initially recognised deducted, when appropriate, from the accumulated amount of income recognised
according to IFRS 15 - Revenue from contracts with customers.
Financial guarantee contracts that are not designated at fair value through profit or loss are presented under
\"Provisions\".
C2.1.3. Financial liabilities at amortised cost
Classification
Financial liabilities that were not classified at fair value through profit or loss, or correspond to financial guarantee
contracts, are measured at amortised cost.
The category \"Financial assets at amortised cost\" includes resources from credit institutions and from customers, as
well as subordinated and non-subordinated debt securities.
Initial recognition and subsequent measurement
Financial liabilities at amortised cost are initially recognised at fair value plus transaction costs and are subsequently
measured at amortised cost. Interest on financial liabilities at amortised cost are recognised in \"Interest expense and
similar charges\", based on the effective interest rate method.
C2.2. Reclassification between categories of financial liabilities
Reclassifications of financial liabilities are not allowed.
C2.3. Derecognition of financial liabilities
The Group derecognises financial liabilities when these are cancelled or extinct.
C3. Interest recognition
Income and expense related to interest from financial instruments measured at amortised cost are recognised in
\"Interest and similar income\" and \"Interest expense and similar charges\" (net interest income) through the effective
interest rate method. Interest related to financial assets at fair value through other comprehensive income is also
recognised in net interest income.
The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected
life of the financial instrument (or, when appropriate, for a shorter period), to the net carrying amount of the financial
asset or financial liability.
For calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of
the financial instrument (e.g., early payment options) but without considering future impairment losses. The
calculation includes all fees paid or received considered as included in the effective interest rate, transaction costs and
all other premiums or discounts directly related to the transaction, except for assets and liabilities at fair value through
profit and loss.
Interest income recognised in income associated with contracts classified in stage 1 or 2 are determined by applying the
effective interest rate for each contract on its gross book value. The gross balance of a contract is its amortised cost,
before deducting the respective impairment. For financial assets included in stage 3, interest is recognised in the
income statement based on its net book value (less impairment). The interest recognition is always made in a
prospective way, i.e., for financial assets entering stage 3, interest is recognised at the amortised cost (net of
impairment) in subsequent periods.
For purchased or originated credit-impaired assets (POCI), the effective interest rate reflects the expected credit losses
in determining the expected future cash flows receivable from the financial asset.
C4. Hedge accounting
As allowed by IFRS 9, the Group opted to continue to apply the hedge accounting requirements in accordance with IAS
39.
The Group designates derivatives and other financial instruments to hedge its exposure to interest rate and foreign
exchange risk, resulting from financing and investment activities. Derivatives that do not qualify for hedge accounting
are accounted for as trading instruments.
Derivative hedging instruments are stated at fair value and gains and losses on revaluation are recognised in accordance
with the hedge accounting model adopted by the Group. A hedge relationship exists when:
\u2013 at the inception of the hedge there is formal documentation of the hedge;
\u2013 the hedge is expected to be highly effective;
\u2013 the effectiveness of the hedge can be reliably measured;
\u2013 the hedge is assessed in a continuous basis and highly effective throughout the reporting period; and,
\u2013 for hedges of a forecasted transaction, the transaction is highly probable and presents an exposure to variations in
cash flows that could ultimately affect profit or loss.
When a derivative financial instrument is used to hedge foreign exchange variations arising from monetary assets or
liabilities, no hedge accounting model is applied. Any gain or loss associated to the derivative is recognised through
profit and loss, as well as changes in currency risk of the monetary items.
C4.1. Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedge instruments are recognised
in profit and loss, together with changes in the fair value attributable to the hedged risk of the asset or liability or
group of assets and liabilities. If the hedge relationship no longer meets the criteria for hedge accounting, the
cumulative gains and losses due to variations of hedged risk linked to the hedge item recognised until the
discontinuance of the hedge accounting are amortised through profit and loss over the residual term of the hedged
item.
C4.2. Cash flow hedge
In a hedge relationship, the effective portion of changes in fair value of derivatives that are designated and qualify as
cash flow hedges are recognised in equity - cash flow hedge reserves in the effective part of the hedge relations. Any
gain or loss relating to the ineffective portion of the hedge is immediately recognised in profit and loss when occurred.
Amounts accumulated in equity are reclassified to profit and loss in the periods in which the hedged item will affect
profit or loss.
In case of hedging variability of cash flows, when the hedge instrument expires or is disposed or when the hedging
relationship no longer meets the criteria for hedge accounting, or when the hedge relation is revoked, the hedge
relationship is discontinued on a prospective basis. Therefore, the fair value changes of the derivative accumulated in
equity until the date of the discontinued hedge accounting can be:
\u2013 deferred over the residual period of the hedged instrument; or,
\u2013 recognised immediately in results if the hedged instrument is extinguished.
In the case of a discontinued hedge of a forecast transaction, the change in fair value of the derivative recognised in
equity at that time remains in equity until the forecasted transaction is ultimately recognised in the income statement.
When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is
immediately transferred to profit and loss.
C4.3. Hedge effectiveness
For a hedge relationship to be classified as such according to IAS 39, effectiveness must be demonstrated. As such, the
Group performs prospective tests at the beginning date of the initial hedge, if applicable, and retrospective tests in
order to demonstrate at each reporting period the effectiveness of the hedging relationships, demonstrating that the
variations in fair value of the hedging instrument are hedged by the fair value variations of the hedged item in the
portion assigned to the risk covered. Any ineffectiveness is recognised immediately in profit and loss when incurred.
C4.4. Hedge of a net investment in a foreign operation
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any exchange gain or
loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity. The gain or loss
relating to the ineffective portion is immediately recognised in profit and loss. Gains and losses accumulated in equity
related to the investment in a foreign operation and to the associated hedge operation are recognised in equity and
transferred to profit and loss, on the disposal of the foreign operation as part of the gain or loss from the disposal.
C5. Embedded Derivatives
An embedded derivative is a component of a hybrid agreement, which also includes a non-derived host instrument.
If the main instrument included in the hybrid contract is considered a financial asset, the classification and
measurement of the entire hybrid contract is carried out in accordance with the criteria described in note C1.1.3.
Derivatives embedded in contracts that are not considered financial assets are treated separately whenever the
economic risks and benefits of the derivative are not related to those of the main instrument, since the hybrid
instrument is not initially recognised at fair value through profit or loss. Embedded derivatives are recorded at fair
value with subsequent fair value changes recorded in profit or loss for the period and presented in the trading
derivatives portfolio.
D. Securitization operations
D1. Traditional securitizations
As at 31 December 2023, Banco Comercial Portugu\u00eas has in Portugal two residential mortgage credit securitization
operations, Magellan Mortgages no.3 and no.4, in which the respective portfolios were derecognised from the Bank\u2019s
individual balance sheet, as the risks and rewards related to the residual portions of the referred transactions, were
transferred to institutional investors.
By purchasing a part or all of the most subordinated residual portion, the Group maintained control of the assets and
liabilities of Magellan Mortgages no.3, this Special Purpose Entity (SPE) being consolidated in the Group\u2019s financial
statements, in accordance with the accounting policy referred to in note 1 B.
The two operations are traditional securitizations, where each mortgage loan portfolio was sold to a Portuguese Loan
Securitisation Fund, which has financed this purchase through the sale of securitisation units to an Irish-SPE. At the
same time, this SPE issued and sold in capital markets the different tranches of bonds.
D2. Synthetic securitizations
As at 31 December 2023, Banco Comercial Portugu\u00eas has in Portugal three synthetic securitization operations, with
similar characteristics, with reference to credit portfolios granted by the Bank mainly to Small and Medium Enterprises
(SMEs).
Caravela SME no.3, which started on 28 June 2013, has a medium and long-term loan portfolio of current accounts and
authorized overdrafts.
Caravela SME no.4, initiated on 5 June 2014, has a reference portfolio of vehicle, real estate and equipment leasing.
Caravela SME no.5, initiated on 20 December 2022, is supported on a credit portfolio of medium and long term loans,
leasing contracts and commercial paper programmes.
In any of these operations, the Bank contracted a Credit Default Swap (CDS) from a Special Purpose Entity (SPE),
buying, this way, protection over the total referenced portfolio. As in all synthetic securitizations, under CDS, the risk
of the respective portfolios was divided in 3 tranches: senior, mezzanine and equity.
In the case of both Caravela no.3 and no.4, the mezzanine and part of the equity (20%) were placed in the market
through the issuance of Credit Linked Notes (CLNs) by the above mentioned SPE which were subscribed by investors,
while the Group retained the senior risk and the remaining part of the equity (80%). In the case of Caravela, SME no. 5,
only the full amount of the mezzanine was placed in the market, while the Group retained the risk of the full amount
of the senior and equity tranches.
Note that in all the above-mentioned synthetic transactions, the product of the CLNs issue was invested by the SPE in a
deposit, which fully collateralizes the responsibilities in the presence of its creditors including BCP in accordance with
the CDS.
In December 2023, the Bank Millennium carried out a synthetic securitization transaction of a portfolio of unsecured
cash loans with a total value of PLN 7.2 billion (Euros 1.7 billion). This was the largest synthetic securitization
transaction concluded by the Bank so far. As part of the transaction, the Bank transferred a significant part of the
credit risk of the securitized portfolio to the investor. The securitized loan portfolio remains on the Bank's balance
sheet. The risk of the securitized portfolio is transferred via a credit protection instrument in the form of credit risk-
related bonds issued in December 2023 (\"CLN Bonds\") in the amount of PLN 489 million (Euros 112.6 million).
Earlier, in July 2023, the Bank's subsidiary, Millennium Leasing, conducted another synthetic securitization transaction.
The reference portfolio of leasing transactions was worth PLN 4.0 billion (Euros 0.9 million). As part of the transaction,
Millennium Leasing transferred a significant part of the credit risk of the securitized portfolio to the investor. The
securitized loan portfolio remains on Millennium Leasing's balance sheet. The risk transfer of the securitized portfolio is
carried out through a credit protection instrument in the form of credit risk bonds issued in July 2023 (\"CLN Bonds\") in
the amount of PLN 280 million (Euros 64.5 million).
E. Equity instruments
A financial instrument is an equity instrument only if: i) the instrument includes no contractual obligation to deliver
cash or another financial asset to another entity or to exchange financial assets or financial liabilities with another
entity under conditions that are potentially unfavourable to the entity; and, ii) the instrument will or may be settled in
the issuer's own equity instruments, it is either a non-derivative that includes no contractual obligation for the issuer to
deliver a variable number of its own equity instruments or a derivative that will be settled only by the issuer
exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments.
An equity instrument, independently from its legal form, evidences a residual interest in the assets of an entity after
deducting all its liabilities.
Transaction costs directly attributable to an equity instrument issuance are recognised in equity as a deduction to the
amount issued. Amounts paid or received related to sales or acquisitions of equity instruments are recognised in equity,
net of transaction costs.
Preference shares issued by the Group are considered as an equity instrument when redemption of the shares is solely
at the discretion of the Group and dividends are paid at the discretion of the Group.
Income from equity instruments (dividends) are recognised when the obligation to pay is established and are deducted
to equity.
F. Securities borrowing and repurchase agreement transactions
F1. Securities borrowing
Securities lent under securities lending arrangements continue to be recognised in the balance sheet and are measured
in accordance with the applicable accounting policy. Cash collateral received in respect of securities lent is recognised
as a financial liability. Securities borrowed under securities borrowing agreements are not recognised. Cash collateral
placements in respect of securities borrowed are recognised under loans and advances to either banks or customers.
Income and expenses arising from the securities borrowing and lending business are recognised on an accrual basis over
the period of the transactions and are included in interest income or expense (net interest income).
F2. Repurchase agreements
The Group performs acquisition/sale of securities under reselling/repurchase agreements of securities substantially
equivalent in a future date at a predetermined price ('repos'/'reverse repos'). The securities related to reselling
agreements in a future date are not recognised in the balance sheet. The amounts paid are recognised in loans and
advances to customers or loans and advances to credit institutions. The receivables are collateralised by the related
securities. Securities sold through repurchase agreements continue to be recognised in the balance sheet and are
revaluated in accordance with the applicable accounting policy. The amounts received from the proceeds of these
securities are considered as deposits from customers and deposits from credit institutions. The difference between the
acquisition/sale and reselling/repurchase conditions is recognised on an accrual basis over the period of the transaction
and is included in interest income or expenses.
G. Non-current assets held for sale and Discontinued or discontinuing operations
Non-current assets, groups of non-current assets held for sale (groups of assets together with related liabilities that
include at least\u00a0 a non-current asset) and discontinued operations are classified as held for sale when the intention is
to sell the referred assets and liabilities and when the referred assets or group of assets are available for immediate
sale, subject to the terms of sale usually applicable to these types of assets, and its sale is highly probable, in
accordance with IFRS 5. For the sale to be considered highly probable, the Group must be committed to a plan to sell
the asset (or disposal group) and must have initiated an active program to locate a buyer and complete the plan. In
addition, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its
current fair value. Furthermore, it should be expected that the sale qualifies for recognition as a completed sale within
one year from the date of classification, except as permitted by paragraph 9 of IFRS 5, and that the Group remains
committed to the asset sales plan and the delay is caused by events or circumstances beyond its control.
If the requirements set out in IFRS 5 for these assets are not met, the balance sheet value and respective impairment
are reflected in the caption \"Other assets\". In 2023, a group of properties was reclassified, as described in notes 27 and
32.
The Group also classifies as non-current assets held for sale those non-current assets or groups of assets acquired
exclusively with a view to its subsequent disposal, which are available for immediate sale and its sale is highly
probable. Immediately before classification as held for sale, the measurement of the non-current assets or all assets
and liabilities in a disposal group, is performed in accordance with the applicable IFRS. After their reclassification,
these assets or disposal groups are measured at the lower of their cost and fair value less costs to sell.
Discontinued operations and the subsidiaries acquired exclusively with the purpose to sell in the short-term are
consolidated until the moment of their sale.
G1. Non-operating real estate (INAE)
The Group also classifies as non-current assets held for sale the non-operating real estate (INAE), which include
properties acquired by the Group as a result of the resolution of customer credit processes, as well as own properties
that are no longer used by the Group's services.
Properties held by real estate companies and real estate investment funds, which are part of the Group's consolidation
perimeter, whose capital or units acquired by the Group as a result of the recovery loans are treated as INAE.
At the time of acquisition, real estate classified as INAE is recognised at the lower of the value of the loans existing on
the date on which the recovery occurs, or the judicial decision is formalised, and the fair value of the property, net of
estimated costs for sale. Subsequent measurement of INAE is made at the lower of their book value and the
corresponding fair value, net of the estimated costs for their sale and are not subject to amortisation. Impairment
losses are recorded in the results of the period in which they arise.
The fair value is determined based on the market value, which is determined based on the expected sales price
obtained through periodic evaluations made by expert external evaluators accredited to the Comiss\u00e3o do Mercado de
Valores Mobili\u00e1rios (CMVM).
The principles used to determine the net fair value of selling costs of a property apply, whenever possible, to real
estate like INAE held by Real Estate Companies and Real Estate Investment Funds for the purpose of consolidating
Group accounts.
Whenever the net fair value of the selling costs calculated for an INAE is less than the amount by which the same is
recognised in the Group's balance sheet, an impairment loss is recorded in the amount of the decrease in value
ascertained. Impairment losses are recorded against income for the year.
If the net fair value of the selling costs of an INAE, after recognition of impairment, indicates a gain, the Group may
reflect that gain up to the maximum of the impairment that has been recorded on that property.
H. Lease transactions (IFRS 16)
This standard establishes the requirements regarding the scope, classification/recognition and measurement of leases:
\u2013 from the lessor's perspective, leases will continue to be classified as finance leases or operating leases;
\u2013 from the lessee\u2019s perspective, the standard defines a single model of accounting for lease contracts, which results
in the recognition of a right-of-use asset and a lease liability for all leases, except for those which the lease term
ends within 12 months or for those which the underlying asset is of low-value and, in these cases, the lessee may
opt for the exemption from recognition under IFRS 16 and shall recognise the lease payments associated with these
leases as an expense.
The Group chose not to apply this standard to short-term lease contracts, i.e. contracts with a term shorter than or
equal to one year, and to lease contracts in which the underlying asset\u2019s value is below Euros 5,000. Additionally, this
standard was not applied to leases of intangible assets.
Lease definition
The lease definition focuses on the control of the identified asset, establishing that a contract constitutes or contains a
lease if it carries the right to control the use of an identified asset, i.e., the right to obtain substantially all the
economic benefits of using it, and the right to choose how to use the identified asset over a period in exchange of a
payment.
Impacts from the lessee\u2019s perspective
The Group recognises for all leases, except for those with a term under 12 months or for leases of low-value assets:
\u2013 a right-of-use asset initially measured at cost must consider the Net Present Value (NPV) of the lease liability plus
the value of payments made (fixed and/or variable), deducted from any lease incentives received, penalties for
terminating the lease (if reasonably certain), as well as any cost estimates to be supported by the lessee with the
dismantling and removal of the underlying asset and/or with the recovery of its location. Subsequently, it will be
measured according to the cost model (subject to depreciations/amortisations and impairment tests);
\u2013 a lease liability initially recorded at the present value of the remaining lease payments (NPV), which includes:
\u2013 fixed payments deducted from any lease incentives receivable;
\u2013 variable lease payments that depend on a rate or an index, initially measured considering the rate or index as at
the commencement date;
\u2013 amounts expected to be paid by the lessee under residual values guarantees;
\u2013 the exercise price of a purchase option, if the lessee is reasonably certain to exercise that option;
\u2013 payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to end
the lease.
Since it is not possible to easily determine the implicit interest rate in the lease (paragraph 26 of IFRS 16), lease
payments are discounted according to the lessee\u2019s incremental borrowing rate, which embodies the risk-free rate curve
(swap curve) plus the Group\u2019s spread of risk, applied over the weighted average term of each lease contract. For term
contracts, that date is considered as the end of lease date, while for contracts without term, or with renewable terms,
it is assessed using the date in which the contract is enforceable, as well as eventual economic penalties associated
with the lease contract. In the evaluation of enforceability, the particular clauses of the contracts are considered, as
well as the current law on Urban Leases.
Subsequently, lease payments are measured as follows:
\u2013 by increasing their carrying amount to reflect interest;
\u2013 by reducing their carrying amount to reflect lease payments;
\u2013 carrying amount shall be remeasured to reflect any leases\u2019 revaluations or changes, as well as to reflect the review
of in -substance fixed payments and the review of the lease term.
The Group remeasures the lease liability (and makes a corresponding adjustment to the right-of-use asset) whenever:
\u2013 the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case
the lease liability is remeasured by discounting the revised lease payments using the revised discount rate;
\u2013 the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed
residual value, in which cases the liability is remeasured by discounting the revised lease payments using the initial
discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a
revised discount rate is used;
\u2013 a lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the
lease liability is remeasured by discounting the revised lease payments using the revised discount rate.
The Group did not make any adjustment during the periods presented.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If the
lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to
exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset.
The depreciation starts at the commencement date of the lease.
The implementation of this standard implies changes in the Group\u2019s financial statements, namely:
\u2013 in the consolidated income statement:
(i) recording in \u201cInterest Income\u201d the interest expenses related to lease liabilities;
(ii) recording in \u201cOther administrative costs\u201d the amounts related to short-term lease contracts and to lease
contracts of low-value assets; and,
(iii) recording in \u201cAmortisations and depreciations\u201d the depreciation expenses related to right-to-use assets.
\u2013 in the consolidated balance sheet:
(i) recording in \u201cFinancial assets at amortised cost \u2013 Loans and advances to customers\u201d the recognition of financial
assets related to sublease operations measured accordingly to IFRS 9;
(ii) recording in \u201cOther tangible assets\u201d the recognition of right-to-use assets; and,
(iii) recording in \u201cOther liabilities\u201d the amount of recognised lease liabilities.
\u2013 in the consolidated statement of cash flows, the balance \u201cCash flows arising from operating activities \u2013 Payments
(cash) to suppliers and employees\u201d includes amounts related to short-term lease contracts and to lease contracts of
low-value assets, and the balance \u201cCash flows arising from financing activities - Decrease in other sundry liabilities
and non-controlling interests\u201d includes amounts related to payments of lease liabilities\u2019 capital portions, as detailed
in the consolidated statement of cash flows.
Impact from the lessor\u2019s perspective
In accordance with IFRS 16, paragraph 62, lessors shall classify leases as finance or operational leases.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards inherent to ownership of an
underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards
inherent to ownership of an underlying asset.
Subleases
A sublease implies that the lessee establishes a lease contract with a third party, which acts as an intermediary, and
the lease contract with the original lessor is kept in force.
IFRS 16 \u2013 Leases requires that the lessor evaluates subleases regarding right-to-use and not regarding the underlying
asset.
The sublease\u2019s lessor, simultaneously lessee regarding the original lease, shall recognise an asset in the financial
statement \u2013 a right-to-use related to the initial lease (if the lease is classified as operating) or a financial asset,
measured according to IFRS 9, related to the sublease (if the lease is classified as financing).
In case the primary lease is short-term, then the sublease should be classified as an operating lease.
I. Recognition of income from services and commissions
In accordance with IFRS 15, the Bank recognizes revenue associated with services and commissions when (or as) a
performance obligation is satisfied when transferring a service, based on the transaction price associated with this
performance obligation. In this context, the Bank takes the following steps to recognize revenue associated with
services and commissions:
- Recognition (satisfaction of the performance obligation): (i) identification of the contract associated with the service
provided and whether it should be covered by IFRS 15; (ii) identification of performance obligations associated with
each contract; (iii) definition of the criteria for the fulfilment of performance obligations, also considering the
contractual terms established with the counterparty. According to this definition, a service is transferred when the
customer obtains the benefits and control associated with the service provided. In this context, the Bank also identifies
whether performance obligations are met over time (\u201cover time\u201d) or at an exact moment (\u201cpoint in time\u201d), with
revenue being recognized accordingly.
- Measurement (price to be recognized associated with each performance obligation): (i) determine the transaction
price associated with the service provided, considering the contractual terms established with the counterparty and its
usual commercial practices. The transaction price is the amount of consideration to which the Bank expects to be
entitled in exchange for transferring promised services to the customer, excluding amounts collected on behalf of third
parties. The Bank includes in the transaction price part or all of the estimated amount of the variable consideration
associated with a performance obligation, only to the extent that it is highly probable that a significant reversal in the
amount of the accrued revenue recognized will not occur when the uncertainty associated with that variable
consideration is subsequently resolved; and (ii) allocate the transaction price to each of the performance obligations
identified under the contract established with the customer.
It should be noted that when services or commissions are an integral part of the effective interest rate of a financial
instrument, income resulting from services and commissions is recorded in net interest income (Note C.3).
J. Gains/(losses) on financial operations at fair value through profit or loss, Foreign exchange
gains/(losses), Gains/(losses) on hedge accounting and Gains/(losses) arising from
derecognition of financial assets and liabilities not measured at fair value through profit or
loss
These balances include gains and losses on financial assets and liabilities at fair value through profit and loss, i.e., fair
value changes and interest on trading derivatives and embedded derivatives, as well as the corresponding dividends
received. This balance also includes the gains and losses on sale of financial assets at fair value through other
comprehensive income and financial assets and financial liabilities at amortised cost. The changes in fair value of
hedging derivatives and hedged items, when fair value hedge is applicable, are also recognised in this balance, as well
as the foreign exchange gains or losses.
K. Fiduciary activities
Assets held in the scope of fiduciary activities are not recognised in the Group\u2019s consolidated financial statements. Fees
and commissions arising from this activity are recognised in the income statement in the period in which they occur.
L. Other tangible assets
Other tangible assets are stated at acquisition cost less accumulated depreciation and impairment losses. Subsequent
costs are recognised as a separate asset only when it is probable that future economic benefits will result for the
Group. All other repairs and maintenance expenses are charged to the income statement during the financial period in
which they are incurred, under the principle of accrual-based accounting.
Depreciation is calculated on a straight-line basis, over the following periods which correspond to their estimated
useful life:
Number of years
Buildings
50
Expenditure on freehold and leasehold buildings
10
Equipment
4 to 12
Other tangible assets
3
Whenever there is an indication that a fixed tangible asset might be impaired, its recoverable amount is estimated and
an impairment loss shall be recognised if the net value of the asset exceeds its recoverable amount. The recoverable
amount is determined as the highest between the fair value less costs to sell and its value in use calculated based on
the present value of future cash flows estimated to be obtained from the continued use of the asset and its sale at the
end of the useful life. The impairment losses of the fixed tangible assets are recognised in the income statement of the
period.
M. Investment properties
Real estate properties owned by the Group are recognised as \u2018Investment properties\u2019 considering that the main
objective of these buildings is their capital appreciation on a long-term basis and not their sale in a short-term period,
nor their maintenance for own use.
These investments are initially recognised at their acquisition cost, including transaction costs, and subsequently
revaluated at their fair value. The fair value of investment properties should reflect the market conditions at the
balance sheet date. Changes in fair value are recognised in the income statement, as \"Other operating income/
(losses)\" (note 6).
The experts responsible for the valuation of the assets are properly certified for that purpose, being registered in
CMVM.
N. Intangible assets
N1. Research and development expenditure
The Group does not capitalise any research and development costs. All expenses are recognised as costs in the period in
which they occur.
N2. Software
The Group recognises as intangible assets the costs associated to software acquired from external entities and
depreciates them on a straight-line basis by an estimated lifetime of 6 years. The Group does not capitalise internal
costs arising from software development.
O. Cash and cash equivalents
For the purposes of the cash flow statement, the item \u201cCash and cash equivalents\u201d comprises balances with less than
three months maturity from the balance sheet date, where the items \"Cash and deposits at Central Banks\" and \"Loans
and advances to credit institutions\" are included.
P. Offsetting
Financial assets and liabilities are offset and recognised at their net book value when: i) the Group has a legal right to
offset the amounts recognised and transactions can be settled at their net value; and, ii) the Group intends to settle on
a net basis or realize the asset and settle the liability simultaneously. Considering the current operations of the Group,
no compensation of material amount is made. In case of reclassification of comparative amounts, the provisions of IAS
1.41 are disclosed: i) the nature of the reclassification; ii) the amount of each item (or class of items) reclassified; and,
iii) the reason for the reclassification.
Q. Foreign currency transactions
Transactions in foreign currencies are converted into the respective functional currency of the operation at the foreign
exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
converted into the respective functional currency of the operation at the foreign exchange rate on the reporting date.
Foreign exchange differences arising from conversion are recognised in the income statement. Non-monetary assets and
liabilities denominated in foreign currencies, which are stated at historical cost, are converted into the respective
functional currency of the operation at the foreign exchange rate on the date of the transaction. Non-monetary assets
and liabilities denominated in foreign currencies that are stated at fair value are converted into the respective
functional currency of the operation at the foreign exchange rate on the date that the fair value was determined
against profit and loss, except for financial assets at fair value through other comprehensive income, for which the
difference is recognised against equity.
R. Employee benefits
R1. Defined benefit plans
The Group has the responsibility to pay its employees' retirement pensions, invalidity pensions and survivor\u2019s pensions
for their death, in accordance with the terms of the two collective labour agreements approved. These benefits are
provided for in the pension plans \u2018Plano ACT\u2019 and \u2018Plano ACTQ\u2019 of the Banco Comercial Portugu\u00eas Group Pension Fund.
Following the publication of Decree-Law no. 54/2009, of 2 March, banking entities are obligatorily enrolling new
employees in the General Social Security System (RGSS). These employees have the RGSS as their basic retirement
scheme, and do not have any benefits under the ACT (base plan). Under the scope of its management and human
resources, the Group had already adopted as a rule the inclusion of new employees in the RGSS since July 2005.
However, until the transposition into the ACT of the alterations resulting from the referred Decree-Law no. 54/2009, all
employees were covered by the provisions of the social security chapter of the ACT, and for employees who were
already registered with the RGSS, the ACT benefit worked as a complement to the RGSS. As of 1 July 2009, in
accordance with the ACT, all new employees only have the RGSS as their basic social security scheme.
Until 2011, in addition to the benefits provided for in the two plans above-mentioned, the Group had assumed the
responsibility, if certain conditions of profitability were verified in each year, of assigning retirement supplements to
the Group's employees hired up to 21 September 2006 (Complementary Plan). The Group, at the end of 2012,
determined the extinction (cut) of the old-age benefit of the Complementary Plan. On 14 December 2012, Instituto de
Seguros de Portugal (ISP) formally approved this change to the Group\u2019s benefit plan, effective from 1 January 2012. The
plan was cut, and employees were given individual acquired rights. On that date, the Group also proceeded to the
settlement of the respective liability.
From 1 January 2011, Bank employees were integrated in the General Social Security Scheme which now covers their
maternity, paternity, adoption and pension benefits. However, the banks remain liable for benefits that concern
illness, disability and life insurance (Decree-Law no. 1-A/2011, of 3 January).
The contributory rate is 26.6% divided between 23.6% supported by the employer and 3% supported by the employee,
replacing the Banking Social Healthcare System which was extinguished by the decree law referred above. As a
consequence of this amendment the capability to receive pensions by the actual employees are covered by the General
Social Security Scheme regime, considering the service period between 1 January 2011 and the retirement age. The
banks support the remaining difference for the total pension assured in the Collective Labour Agreement (ACT).
This integration has led to a decrease in the present value of the total benefits reported to the retirement age to be
borne by the Pension Fund, and this effect is to be recorded in accordance with the Projected Unit Credit during the
average lifetime of the pension until the normal retirement age is reached. The calculation of the liability for pensions
carried out periodically by the actuary considers this effect and is calculated considering the actuarial assumptions in
force, ensuring that the liabilities calculated with reference to 31 December 2010, not considering the effect of the
integration of bank employees into the General Social Security Scheme are fully covered and deducted from the amount
of the effect recognised until the date. The component of this effect for the year is recognised under the heading
\"Current service costs\".
Following the approval by the Government of the Decree-Law no. 127/2011, which was published on 31 December, an
agreement was established between the Government, the Portuguese Banking Association and the Banking Labour
Unions in order to transfer, to the Social Security, the liabilities related to pensions currently being paid to pensioners
and retirees, as at 31 December 2011.
This agreement established that the responsibilities to be transferred related to the pensions in payment as at 31
December 2011 at fixed amounts (discount rate 0%) in the component established in the IRCT - Instrument of Collective
Regulation of Work of the retirees and pensioners. The responsibilities related to the increase in pensions as well as any
other complements, namely, contributions to the Health System (SAMS), death benefit and death before retirement
benefit continued to be under the responsibility of the Financial Institutions.
At the end of December 2016, a revision of the ACT was reached between the BCP Group and four unions from the two
union federations of the unions that represent the Group's employees, which introduced changes in the Social Security
clause and consequently in the pension plan financed by the BCP Group Pension Fund. The new ACT was published by
the Ministry of Labour in the Bulletin of Labour and Employment on 15 February 2017 and the effects were recorded in
the financial statements of 31 December 2016, for employees associated with these four unions.
The negotiation with Sindicato dos Banc\u00e1rios do Norte (SBN), which was also involved in the negotiations of the new
ACT, was concluded in April 2017 with the publication of the Bulletin of Labour and Employment, with the effects of
this new ACT recorded in the financial statements as at 31 December 2017, for employees associates of SBN.
The most relevant changes in the ACT were the change in the retirement age (presumed disability) from 65 years to 66
years and two months in 2016 and the subsequent update of an additional month in each year, which cannot, in any
case, be higher than the one in force at any moment in the General Regime of Social Security, the change in the
formula for determining the employer's contribution to SAMS and, lastly, the introduction of a new benefit called the
End of Career Premium, which replaces the Seniority Premium.
These changes were framed by the Group as a change to the pension plan under the terms of IAS 19, as such had an
impact on the present value of the liabilities with services rendered and were recognised in the income statement for
the year under \"Staff costs\".
In 2017, after the authorization of the Autoridade de Supervis\u00e3o de Seguros e Fundos de Pens\u00f5es (ASF - Portuguese
Insurance and Pension Funds Supervision Authority), the BCP Group's pension fund agreement was amended. The main
purpose of the process was to incorporate into the pension fund the changes introduced in the Group's ACT in terms of
retirement benefits, as well as to transfer to the pension fund the responsibilities that were directly chargeable to the
company (extra-fund liabilities). The pension fund has a part exclusively for the financing of these liabilities which, in
the scope of the fund, is called Additional Complement. The End of Career Premium also became the responsibility of
the pension fund under the basic pension plan.
The Group\u2019s net obligation in respect of pension plans (defined benefit pensions plan) is calculated on a half year basis
on 31 December and 30 June of each year, and whenever there are significant market fluctuations or significant
specific events, such as changes in the plan, curtailments or settlements since the last estimation. The responsibilities
with past service are calculated using the Projected Unit Credit method and actuarial assumptions considered
adequate.
Pension liabilities are calculated by the responsible actuary, who is certified by the ASF.
The Group\u2019s net obligation in respect of defined benefit pension plans and other benefits is calculated separately for
each plan by estimating the amount of future benefit that employees have earned in return for their service in the
current and prior periods. The benefit is discounted to determine its present value, using a discount rate determined by
reference to interest rates of high- quality corporate bonds that have maturity dates approximating the terms of the
Group\u2019s obligations. The net obligations are determined after the deduction of the fair value of the Pension Plan's
assets.
The income/cost of interest with the pension plan is calculated by the Group, multiplying the net asset/liability with
retirement pension (liabilities less the fair value of the plan's assets) by the discount rate used in the determination of
the retirement pension liabilities. On this basis, the income/cost net of interest includes the interest costs associated
with retirement pension liabilities and the expected return of the plan's assets, both measured based on the discount
rate used to calculate the liabilities.
Gains and losses from the re-measurement, namely (i) actuarial gains and losses resulting from differences between
actuarial assumptions used and the amounts actually observed (experienced gains and losses) and changes in actuarial
assumptions and (ii) gains and losses arising from the difference between the expected return of the plan's assets and
the amounts obtained, are recognised against equity under \"Other comprehensive income\".
The Group recognises in its income statement a net total amount that comprises (i) the current service cost, (ii) the
income/cost net of interest with the pension plan, (iii) the effect of early retirement, (iv) past service costs and, (v)
the effects of any settlement or curtailment occurred during the period. The net income/cost with the pension plan is
recognised as interest and similar income or interest expense and similar costs depending on their nature. The costs of
early retirements correspond to the increase in liabilities due to the employee's retirement before reaching the age of
retirement.
Employee benefits, other than pension plans, namely post-retirement health care benefits and benefits for the spouse
and descendants for death before retirement are also included in the benefit plan calculation.
The contributions to the funds are made annually by each company of the Group, according to a specific contribution
plan that ensures the solvency of the fund. In the end of each year, according to Bank of Portugal Notice no. 12/2001,
the minimum level required for the responsibilities funding must be 100% regarding pension payments and 95%
regarding past services of active employees.
R2. Revision of the salary tables for employees in service and pensions in payment
In 2023, negotiations continued with all the unions subscribing to the Group's Collective Labour Agreements, for the
conclusion of the full review of the respective clauses, negotiations which are still ongoing.
At the same time, negotiations took place with all the unions that subscribed the Group's Collective Labour
Agreements, for the review of the Salary Tables and remaining pecuniary clauses relating to the year 2023, having been
agreed on 9 and 17 October with all the Unions subscribing to the Group's Collective Labour Agreements, the update of
the Salary Tables in 2023 with differentiated increases by contractual level between 4.00% and 7.80%. An increase of
4.50% was agreed for the Bank's Contributions to SAMS and other pecuniary clauses, such as study subsidies,
diuturnities, among others, and an increase of 21.43% was agreed for the lunch subsidy, whose daily value increased to
Euros 12.75. The agreed updates took effect on 1 January 2023, with the exception of remuneration related to
subsistence and travel allowances, which were updated after the agreed updates were operationalized.
Regarding the unions SNQTB \u2013 Sindicato Nacional dos Quadros e T\u00e9cnicos Banc\u00e1rios e SIB \u2013 Sindicato Independente da
Banca, an agreement was also reached regarding the revision of the Salary Tables and other pecuniary clauses relating
to the year 2022, as already agreed in 2022 with the remaining unions.
R3. Defined contribution plan
For the defined contribution plans, the responsibilities related to the benefits attributed to the Group's employees are
recognised as expenses when incurred.
As at 31 December 2023, the Group has two defined contribution plans. One plan covers employees who were hired
before 1 July 2009. For this plan, called non-contributory, Group's contributions will be made annually and equal to 1%
of the annual remuneration paid to employees in the previous year. Contributions shall only be made if the following
requirements are met: (i) the Bank's ROE equals or exceeds the rate of government bonds of 10 years plus 5 percentage
points, and (ii) distributable profits or reserves exist in the accounts of Banco Comercial Portugu\u00eas. In 2022 the
indicated requirements were fulfilled, in 2023 the planned annual contribution was accomplished, the expect value of
which was recorded in the costs of 2022. As in the year 2023, the indicated requirements were also fulfilled, a provision
for the annual contribution to be made during 2024 was recorded in the 2023 costs.
The other plan covers employees who have been hired after 1 July 2009. For this plan, designated contributory,
monthly contributions will be made equal to 1.5% of the monthly remuneration received by employees in the current
month, either by themselves or by the Group and employees. This contribution has a mandatory character and is
defined in the Collective Labour Agreement of the BCP Group and does not have a performance criterion.
R4. Variable remuneration paid to employees
In the remuneration policy for employees in force it is foreseen an annual variable remuneration system for employees
not covered by commercial incentive systems, based on the performance assessment of each employee, in accordance
with quantitative and qualitative criteria, that is carried out annually. As a result of this assessment and of the annual
fixed remuneration of reference for the role performed, and provided that the Bank's minimum level of performance,
as measured by a set of quantitative indicators, is met, the amount of the variable remuneration to be attributed to
each employee is determined.
The Executive Committee is responsible, under the terms defined in the remuneration policy, for setting the respective
allocation criteria for each employee, whenever it is attributed. The variable remuneration attributed to employees is
recorded against the income statement in the period to which it relates.
R5. Share-based compensation plan
As at 31 December 2023, a variable compensation plan with BCP shares is in force for the members of the Executive
Committee and for the employees considered Key Function Holders (includes Key Management Members), resulting from
the Remuneration Policies for the members of the management and supervisory bodies and for the Employees, both
approved for the financial year of 2023 and following years, with the changes that may be approved in each financial
year, namely by the General Shareholders\u2019 Meeting regarding the Remuneration Policy for the members of the
management and supervisory bodies, and by the Board of Directors regarding the Remuneration Policy for Employees.
Key Function Holders include Key Management Members, which are the first line directors who report directly to the
Board of Directors and the remaining employees whose professional activities have a significant impact on the Bank's
risk profile.
As defined in the Remuneration Policy for the members of the management and supervisory bodies, an annual variable
remuneration system is foreseen, for which an assessment of the performance of each member of the Executive
Committee is carried out on an annual basis based on quantitative and qualitative criteria. According to this assessment
and the annual fixed remuneration, and provided that the Bank's minimum level of performance as measured by a set
of quantitative indicators is met, the amount of the variable remuneration to be attributed to each member of the
Executive Committee is decided by the Remuneration and Welfare Board. The payment of the amount of the variable
remuneration attributed is subject to a deferral period of 5 years for 50% of its value, being 50% of its value paid in the
year following the financial year in question. The amounts related to the non-deferred and deferred portion are paid
50% in cash and 50% in BCP shares. The number of BCP shares attributed results from their valuation at a price defined
in accordance with the approved Remuneration Policy.
The Remuneration Policy for Employees foresees an annual variable remuneration system for Employees not covered by
Commercial Incentives Systems, based on the performance assessment of each employee, in accordance with
quantitative and qualitative criteria, that is carried out annually. As a result of this assessment and the fixed reference
remuneration for the function performed, and provided that the Bank's minimum level of performance in a set of
quantitative indicators is met, the value of the variable remuneration to be attributed to each Employee is decided by
the Executive Committee. For Employees considered as Key Function Holders, the payment of the amount of the
variable remuneration to be attributed to each Employee is decided by the Nominations and Remunerations Committee,
and its payment subject to a deferral period of 5 years for 40% of its value, with 60% of its value paid in the year
following the financial year in question. The amounts related to the non-deferred and deferred portion are paid 50% in
cash and 50% in BCP shares. The number of BCP shares attributed and to be attributed results from their valuation at a
price defined in accordance with the approved Remuneration Policy. As provided for in the Remuneration Policy for
Employees, if the amount of the annual variable remuneration awarded to a Key Function Holder is less than Euros
50,000 and does not represent more than one third of the total annual remuneration of the Key Function Holder the
payment of the annual variable remuneration will be 100% in cash and there will be no deferral.
Employees considered as Key Function Holders are not covered by Commercial Incentives Systems.
For the remaining Employees not covered by Commercial Incentive Systems, the payment of the variable remuneration
amount awarded is fully paid in cash in the following year to which it relates.
As foreseen in the approved Remuneration Policy and in the applicable legislation, the amounts of variable
remuneration attributed to the members of the Executive Committee and to the Employees Key Function Holders are
subject to reduction and reversal mechanisms, to be applied in case of verification of extremely significant events, duly
identified, in which the people covered have had a direct participation.
For the members of the Executive Committee and to the employees considered as Key Function Holders, a long-term
variable remuneration system is also foreseen, through which these members may receive variable remuneration fully
paid in BCP shares after the end of the assessment period, from 1 January 2022 until 31 December 2025 (from 1 January
2023 until 31 December 2025 to the Employees Key Function Holders), provided that a certain level of performance is
achieved in a set of long-term objectives. The amount of the long-term variable remuneration attributed is subject to a
deferral period of 5 years for 50% of its value, being 50% of its value paid in the year following the assessment period to
which it relates. The number of BCP shares attributed results from their valuation at a price defined in accordance with
the approved Remuneration Policy.
All the shares attributed to the members of the Executive Committee and to the Key Function Holders, within the scope
of the payment of variable remuneration, including long-term, are subject to a retention period of 1 year after their
payment.
The total variable remuneration to be attributed, each year, to each member of the Executive Committee and to the
Key Function Holders, regarding the proportion between its amount and the annual fixed remuneration, is limited to
the limits provided in the respective Remuneration Policy.
S. Income taxes
The Group is subject to income tax in several jurisdictions. The Bank is subject, in individual terms, to the regime
established by the Corporate Income Tax Code (CIRC), the Special Regime applicable to Deferred Tax Assets approved
by Law no. 61/2014 of 26 August, to which it adhered, and individual legislation. Additionally, deferred taxes relating
to tax losses and to temporary differences between the accounting net income and the net income accepted by the Tax
Authorities for Income Taxes calculation are accounted for, whenever there is a reasonable probability that these taxes
will be paid or recovered in the future.
Income tax registered in net income for the year comprises current and deferred tax effects. Income tax is recognised
in the income statement, except when related to items recognised directly in equity, which implies its recognition in
equity. Deferred taxes arising from the revaluation of financial assets at fair value through other comprehensive income
and cash flow hedging derivatives are recognised in shareholders\u2019 equity and are recognised after in the income
statement at the moment the profit and loss that originated the deferred taxes are recognised.
Current tax is the value that determines the taxable income for the year, using tax rates enacted or substantively
enacted by authorities at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred taxes are calculated in accordance with the liability method based on the balance sheet, considering
temporary differences, between the carrying amounts of assets and liabilities and the amounts used for taxation
purposes using the tax rates approved or substantially approved at balance sheet date and that is expected to be
applied when the temporary difference is reversed.
Deferred tax liabilities are recognised for all taxable temporary differences except for non-deductible goodwill for tax
purposes, differences arising from initial recognition of assets and liabilities that affect neither accounting nor taxable
profit and differences relating to investments in subsidiaries to the extent that probably they will not reverse in the
foreseeable future.
The item \u201cDeferred tax assets\u201d includes amounts associated with credit impairments not accepted for tax purposes
whose credits have been written-off, according to the expectation that the use of such impairments will be deductible
for the purposes of determining taxable income for the tax periods in which the legal conditions required for their tax
deductibility are met.
Deferred tax assets are recognised when it is probable that there will be future taxable profits that absorb the
deductible temporary differences for tax purposes (including reportable tax losses).
The Group, as established in IAS 12, paragraph 74, compensates the deferred tax assets and liabilities if, and only if: (i)
it has a legally enforceable right to offset current tax assets and current tax liabilities; and, (ii) the deferred tax assets
and the deferred tax liabilities relate to income taxes released by the same Tax Authority on the same taxable entity.
The Group complies with the guidelines of IFRIC 23 \u2013 Uncertainty over Income Tax Treatments on the determination of
taxable profit, tax bases, tax losses to be reported, tax credits to be used and tax rates in scenarios of uncertainty
regarding the income tax treatment, not having occurred any material impact on the Bank\u2019s financial statements
resulting from its application.
In 2016, the Banco Comercial Portugu\u00eas adhered to the Special Tax Regime for Groups of Companies (RETGS) for the
purposes of corporate income (IRC) taxation, with BCP being the dominant entity. In the financial years of 2023 and
2022, RETGS application was maintained. The group's taxable profit is calculated by the algebraic sum of taxable profits
and individual tax losses of the companies that integrate it.
T. Segmental reporting
The Group adopted IFRS 8 \u2013 Operating Segments for the purpose of disclosing financial information by operating and
geographic segments. A business segment is a Group's component: (i) which develops business activities that can obtain
revenues or expenses; (ii) whose operating results are regularly reviewed by the management with the aim of taking
decisions about allocating resources to the segment and assess its performance; and, (iii) for which separate financial
information is available.
The Group controls its activity through the following major operating segments:
Portugal activity:
\u2013 Retail Banking, also including ActivoBank;
\u2013 Companies and Corporate;
\u2013 Private Banking;
\u2013 Other.
The Other segment (Portugal activity) includes activities that are not allocated to remaining segments, namely
centralized management of financial investments, corporate activities, and insurance activity.
Foreign activity:
\u2013 Poland;
\u2013 Mozambique;
\u2013 Other.
The \"Other\" segment (foreign activity) includes the contribution of the participation in an associate in Angola and the
activity arising from the discontinued operations in Cayman Islands (operation liquidated in 2022). It should also be
noted that, following the sale of the operation in Switzerland, which took place at the end of 2021, the sale price and
the corresponding capital gain generated with the completion of this operation was adjusted pursuant to typical clauses
adopted in this type of transactions in 2022 and again in 2023, as final adjustment, records reflected as income arising
from discontinued operations, as provided for in IFRS 5.
U. Provisions, Contingent liabilities and Contingent assets
U1. Provisions
Provisions are recognised when (i) the Group has a present obligation (legal or resulting from past practices or
published policies that imply the recognition of certain responsibilities); (ii) it is probable that a payment will be
required to settle; and, (iii) a reliable estimation can be made of the amount of the obligation.
Additionally, when fundamental reorganizations occur that have a material effect on the nature and focus of the
company's operations, and the criteria for recognition of provisions referred to above are met, provisions are
recognized for restructuring costs.
The measurement of provisions considers the principles set in IAS 37 regarding the best estimate of the expected cost,
the most likely result of current actions and considering the risks and uncertainties inherent to the process result. On
the cases that the discount effect is material, provision corresponds to the actual value of the expected future
payments, discounted at a rate that considers the associated risk of the obligation.
Provisions are reviewed at each balance sheet date and adjusted to reflect the best estimate, being reverted through
profit and loss in the proportion of the payments that are not probable.
Provisions are derecognised through their use in the obligations for which they were initially created, or in the case
that these obligations cease to exist.
U2. Contingent assets
Contingent assets are not recognised in the financial statements and are disclosed when a future economic inflow of
resources is probable.
U3. Contingent liabilities
Contingent liabilities are not recognised in the financial statements, being framed under IAS 37 whenever the possibility
of an outflow of resources regarding economic benefits is not remote. The Group registers a contingent liability when:
i) it is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence
or non- occurrence of one or more uncertain future events that are not wholly within the control of the Group; or,
ii) it is a present obligation that arises from past events but is not recognised because:
a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; or,
b) the amount of the obligation cannot be measured with sufficient reliability.
The contingent liabilities identified are subject to disclosure, unless the possibility of an outflow of resources
incorporating economic benefits is remote.
V. Earnings per share
Basic earnings per share are calculated by dividing net income attributable to shareholders of the Group by the
weighted average number of ordinary shares outstanding, excluding the average number of ordinary shares purchased
by the Group and held as treasury shares.
For the diluted earnings per share, the weighted average number of ordinary shares outstanding is adjusted to consider
conversion of all dilutive potential ordinary shares. Potential or contingent share issues are treated as dilutive when
their conversion to shares would decrease net earnings per share. If the earnings per share are changed because of an
issue with premium or discount or other event that changed the potential number of ordinary shares or because of
changes in the accounting policies, the earnings per share for all presented periods should be adjusted retrospectively.
W. Insurance contracts
W1. Classification
IFRS 17 is the new accounting standard for insurance contracts, reinsurance contracts and for Investment contracts with
discretionary participation features, covering aspects such as recognition and measurement, presentation and
disclosure of information, replacing IFRS 4 \u2013 Insurance contracts.
The Group issues contracts that include insurance risk, financial risk or a combination of both insurance and financial
risk. A contract, in which the Group accepts a significant insurance risk from another party, by agreeing to compensate
that party on the occurrence of a specified uncertain future event, is classified as an insurance contract.
A contract issued by the Group without significant insurance risk, but on which financial risk is transferred with
discretionary participating features is classified as an investment contract recognised and measured in accordance with
the accounting policies applicable to insurance contracts. A contract issued by the Group that transfers only financial
risk, without discretionary participating features, is accounted for as a financial instrument.
W2. Recognition and measurement
IFRS 17 defines new principles for recognition, measurement, presentation and disclosure of insurance contracts,
reinsurance contracts and Investment contracts with discretionary participation features. The references below apply
to these three types of contracts.
In terms of recognition and measurement, insurance contracts are divided into portfolios, annual cohorts and groups of
contracts. In the initial recognition, contracts that have similar risk and can be managed together, must be identified,
grouping them into portfolios. For measurement purposes, these portfolios are further subdivided into annual cohorts,
according to the issuance year. Each of the cohorts, according to the expected future return, is then divided into the
following groups: i) contracts that are onerous at initial recognition; ii) contracts that do not present a significant
possibility of subsequently becoming onerous; and iii) remaining contracts in the portfolio.
The liability of an insurance contract begins when one of the following conditions is met: i) beginning of the coverage
period of the contract, ii) date on which the first payment is made by the insured and this becomes due or iii) in the
case of an onerous contract, when it becomes onerous.
IFRS 17 defines 3 measurement models of the insurance liabilities: GMM (General Measurement Model) as a general
modal, VFA (Variable Fee Approach) to be applied for investment contracts, which does not include a transfer of
significant insurance risk and PAA (Premium Allocation Approach), which can be applied for short term contracts (less
than 1 year).
The measurement of the value of a contract is the sum of (except where contracts are being measured using the
premium allocation approach): (i) the present value of future cash flows; (ii) a non-financial risk adjustment; and the
amount of future profit that is estimated that this contract will generate the Contractual Service Margin (CSM), unless
the contract group is onerous. In this case, the estimated loss is recognized immediately.
The liability for future services in contracts measured using the premium allocation approach is based on premiums
received, less amounts recognized in profit or loss already incurred in the period.
In terms of the discount rate for determining future cash flows, it should: (i) reflect the time value of money; ii) be
consistent with similar ones applied in the market for situations with similar characteristics and iii) exclude the effect
of factors that do not affect the future cash flows of the insurance contract.
In the subsequent valuation, the Statement of Financial Position shall include liabilities for insurance contracts, divided
into i) liabilities for future services and ii) liabilities for past services. In terms of the Income Statement, it should
include: i) income from insurance contracts, ii) expenses from insurance contracts and iii) losses from the financial
component of insurance contracts.
W3. Presentation and disclosures
In the Statement of Financial Position should appear in disaggregated form i) insurance contract assets, ii) reinsurance
ceded contract assets iii) insurance contracts liabilities and iv) reinsurance ceded contract liabilities.
In terms of the Income Statement, it should be evidenced i) insurance revenue, ii) insurance service expense and iii)
Insurance finance result, as well as iv) the net result arising from reinsurance contracts.
Together with the Financial Statements, the standard provides for additional qualitative and quantitative disclosures of
i) amounts recognized in the financial statements that fall within the scope of IFRS 17; ii) significant judgments and
changes to those judgments made with the application of IFRS 17 and iii) nature and extent of the risks inherent in
contracts that fall within the scope of IFRS 17.
For risks falling within the scope of IFRS 17, the entity shall analyze: (i) concentration risk, (ii) sensitivity analysis to
the most significant risks, (iii) claims development, (iv) credit risk and (v) liquidity risk.
W4. Transition
IFRS 17 is applied retrospectively with exemptions provided for the transition date, exemptions related to the
impracticality and complexity involved, for example in the calculation of liabilities, the Contractual Service Margin
(CSM) or the Loss Component, or the Reserve of the Financial Component of Insurance/Reinsurance Contracts (\u201cOCI
option\u201d) at the transition date. When impractical the Standard provides for the use of the Modified Retrospective
Approach or the Fair Value Approach.
The impacts of applying IFRS 17 are detailed in note 59.
X. Insurance or reinsurance intermediation services
Banco Comercial Portugu\u00eas and Banco ActivoBank are entities authorized by the Insurance and Pension Funds
Supervisory Authority (ASF - Autoridade de Supervis\u00e3o de Seguros e Fundos de Pens\u00f5es) for the practice of the activity
of insurance mediation, in the category of tied Insurance Intermediary, in accordance with article 8(a)(i) of Decree-Law
no. 144/2006, of 31 July, developing the activity of insurance intermediation in the life and non-life branches.
Within the scope of insurance mediation services, these Banks sell insurance contracts. As remuneration for the services
provided of insurance mediation, they receive commissions for the mediation of insurance contracts and investment
contracts, which are defined in agreements/protocols established with the Insurers.
Commissions received by insurance mediation services are recognized in accordance with the accrual principle, so that
commissions received at a time other than the period to which it relates are recorded as receivables under \"Other
assets\". Commissions received for insurance mediation services are recognized in accordance with the policy described
in note I. Recognition of income from services and commissions.
Y. Accounting estimates and judgments in applying accounting policies
IFRS set forth a range of accounting treatments that require the Board of Directors, under advice of the Executive
Committee, to apply judgments and to make estimations when deciding which treatment is the most appropriate.
These estimates were made considering the best information available at the date of preparation of the consolidated
financial statements, considering the context of uncertainty that results from the current economic scope and the
geopolitical conflict in Eastern Europe. The most significant of these accounting estimates and judgments used when
applying accounting principles are discussed in this section to improve understanding of how they affect the Group\u2019s
reported results and related disclosure.
Considering that in some cases there are several alternatives to the accounting treatment chosen by the Board of
Directors, under advice of the Executive Committee, the Group\u2019s reported results would differ if a different treatment
was chosen. The Executive Committee believes that the choices made are appropriate and that the financial
statements present the Group\u2019s financial position and results fairly in all material relevant aspects.
The alternative outcomes discussed below are presented solely to assist the reader in understanding the financial
statements and are not intended to suggest that other alternatives or estimations would be more appropriate.
Y1. Entities included in the consolidation perimeter
For the purposes of determining entities to include in the consolidation perimeter, the Group assesses whether it is
exposed to, or has rights to, the variable returns from its involvement with the entity and if it can take possession of
these results through the power it holds (de facto control). The decision if an entity needs to be consolidated by the
Group requires the use of judgment, estimations and assumptions to determine at what extent the Group is exposed to
the variable returns and its ability to use its power to affect these returns. Different estimations and assumptions could
lead the Group to a different scope of consolidation perimeter with a direct impact in consolidated income.
Y2. Goodwill impairment
The recoverable amount of the goodwill recorded in the Group's assets is assessed annually in the preparation of
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. For this
purpose, the carrying amount of the business units of the Group for which goodwill has been recognised is compared
with the respective recoverable amount. A goodwill impairment loss is recognised when the carrying amount of the
business unit exceeds the respective recoverable amount.
In the absence of an available market value, the recoverable amount is determined using cash flows predictions,
applying a discount rate that includes a risk premium appropriated to the business unit being tested. Determining the
cash flows to discount and the discount rate, involves judgment.
Y3. Income taxes
Interpretations and estimations were required to determine the total amount of income taxes in each of the
jurisdictions where the Group operates. There are many transactions and calculations for which the tax determination
is uncertain during the ordinary course of business. Different interpretations and estimations could result in a different
level of income taxes, current and deferred, recognised in the year.
This aspect assumes greater relevance for the purposes of the analysis of the recoverability of deferred taxes, in which
the Group considers projections of future taxable income based on a set of assumptions, including the estimate of
income before tax, adjustments to taxable income, evolution of tax legislation and its interpretation. Thus, the
recoverability of deferred tax assets depends on the implementation of the Bank's Board of Directors strategy, namely
the ability to generate the estimated taxable income, the evolution of tax law and its interpretation.
Regarding the activity in Portugal, the Law No. 98/2019, of 4 September established the tax regime for credit
impairments and provisions for guarantees for tax periods beginning on or after 1 January 2019, providing for
approximation between the accounting and tax rules for the purposes of deductibility of expenses with the
reinforcement of credit impairments. The rules in force until 2018 could continue to be applied until the end of the
2023 financial year, unless the option to apply the new regime was exercised in advance.
In 2022, the Banco Comercial Portugu\u00eas, S.A. and the Banco ActivoBank, S.A. exercised the option to apply the new
regime, under the terms of which the impairment losses for credit risk relating to exposures analysed on an individual
or on a collective basis recognized in accordance with the applicable accounting standards and regulations are fully
deductible for the purposes of determining taxable profit, with the exceptions provided for in the Corporate Income
Tax Code. The exceptions apply to impairment losses relating to credits and other rights over natural or legal persons
who hold, directly or indirectly, more than 10 % of the Bank's capital, over members of its corporate bodies, over
companies in which the Bank holds, directly or indirectly, more than 10 % of the capital or over entities with which it is
in a situation of special relations.
The Impairment losses and other value corrections for specific credit risk recorded until 31 December 2021 and still not
accepted for tax purposes are only deductible up to the amount that, in each tax period, corresponds to the application
of the mandatory minimum limits set out in Notice of Bank of Portugal No. 3/95, as amended before its repeal by
Notice of Bank of Portugal No. 5/2015, and, between other conditions, provided that they are not credits covered by
real estate rights.
Following the amendments provided for in Law No. 24-D/2022, of 30 December, within the scope of the State Budget
for 2023, the time limit applicable to the carrying forward of tax losses in Portugal was eliminated. This amendment
applies to tax losses calculated in tax periods beginning on or after 1 January 2023, as well as to tax losses calculated in
tax periods prior to 1 January 2023 and whose deduction period is still in progress on that date. Thus, tax losses
calculated in 2014 and subsequent years may be deducted from future taxable income. The deduction limit for tax
losses went from 70% to 65%, being increased by ten percentage points when the difference results from the deduction
of tax losses calculated in the 2020 and 2021 tax periods, under the terms of the special regime provided for in Law n.
27-A/2020, of 24 July.
In the projections of future taxable income, namely for purposes of the analysis of the recoverability of deferred taxes
assets carried out with reference to 31 December 2023, the approximation between the accounting and tax rules
provided for in the aforementioned Law n.\u00ba 98/2019, of 4 September, taking into account the option for applying the
new regime exercised in 2022, as well as the changes in terms of the elimination of the time limit on the use of tax
losses provided for in said Law no. 24-D/2022, of 30 December.
The taxable profit or tax loss calculated by the Bank or its subsidiaries residing in Portugal can be corrected by the
Portuguese tax administration within a period of four years, except in the case of any tax losses deduction has been
made or tax credit has been used, in which the expiry period is the exercise of that right. The Bank recorded
provisions, current tax liabilities or deferred taxes liabilities in the amount it considers appropriate to cover tax
corrections or tax losses incurred, as well as contingencies relating to years not yet reviewed by the tax authorities.
Y4. Valuation of real estate recorded in Non-current assets held for sale and in Others assets
The valuation of these assets, and consequently the impairment losses, is supported by evaluations carried out by
external experts, which incorporate several assumptions, namely the selling price per square meter, discount rate,
better use of the real estate and expectations regarding the development of real estate projects, as applicable, and
also considers the Bank's historical experience in the commercialization of real estate, its perspectives on the evolution
of the real estate market and the intentions of the management body regarding the commercialization of these assets.
The assumptions used in the valuations of these assets have an impact on their valuation and consequently on the
determination of impairment.
Y5. Pension and other employees\u2019 benefits
Determining pension liabilities requires the use of assumptions and estimations, including the use of actuarial
projections, estimated returns on investment, and other factors, such as discount rate, pensions and salary growth
rates, mortality tables, that could impact the cost and liability of the pension plan.
The discount rate used to update the Bank's pension fund liabilities, regarding the defined benefit pension plans of its
employees and managers, was determined based on an analysis carried out on a set of available information, which
includes, among other elements, the market references for this indicator published by internationally recognized
specialized entities and which are based, as defined by IAS 19, on market yields of a universe of high quality bond
issues (low risk), different maturities, called in Euros and relating to a diverse and representative range of issuers (non-
sovereign).
Y6. Financial instruments \u2013 IFRS 9
Y6.1. Classification and measurement
The classification and measurement of financial assets depends on the results of the SPPI test (analysis of the
characteristics of the contractual cash flows to determine if they correspond only to payments of principal and interest
on the outstanding capital) and the testing of the business model.
The Group determines the business model at a level that reflects how financial asset groups are managed together to
achieve a specific business objective. This evaluation requires judgment, since the following aspects, among others,
must be considered: the way in which the performance of assets is evaluated; the risks that affect the performance of
the assets and the way these risks are managed; and how asset managers are rewarded.
The Group monitors the financial assets measured at amortised cost and at fair value through other comprehensive
income that are derecognised prior to their maturity to understand the underlying reasons for their disposal and to
determine whether they are consistent with the purpose of the business model defined for these assets. This monitoring
is part of a process of continuous evaluation by the Group of the business model of the financial assets that remain in
the portfolio, to determine if it is adequate and, if it is not, if there was a change in the business model and,
consequently, a prospective classification change of these financial assets.
Y6.2. Impairment losses on financial assets at amortised cost and debt instruments at fair value through
other comprehensive income
The determination of impairment losses on financial instruments involves judgments and estimations regarding, among
others, the following:
Significant increase in credit risk:
Impairment losses correspond to the expected losses on a 12-month for the assets in Stage 1 and the expected losses
considering the probability of a default event occurring at some point up to the maturity date of the instrument
financial assets for assets in Stages 2 and 3. An asset is classified in Stage 2 whenever there is a significant increase in
its credit risk since its initial recognition. In assessing the existence of a significant increase in credit risk, the Group
considers qualitative and quantitative information, reasonable and sustainable.
In order to comply with the Supervisors' guidelines, namely regarding to the identification and measurement of credit
risk in the context of of uncertainty associated with the current geopolitical crises, the disruption in distribution chains,
rising energy costs and inflationary pressures, the Bank proceeded to record additional impairments in relation to the
current models of collective impairment calculation (overlays).
The exercise carried out was based on an analysis of migrations from customers identified as having the highest risk for
Stage 2 and Stage 3, with the greatest impact on the corporate segment.
Definition of groups of assets with common credit risk characteristics:
When expected credit losses are measured on a collective basis, the financial instruments are grouped based on
common risk characteristics. The Group monitors the adequacy of credit risk characteristics on a regular basis to assess
whether it maintains its similarity. This procedure is necessary to ensure that, in the event of a change in the credit
risk characteristics, the asset segmentation is reviewed. This review may result in the creation of new portfolios or in
transferring assets to existing portfolios that better reflect their credit risk characteristics.
Definition of the number and relative weight of prospective information for each type of product/market and
determination of relevant prospective information:
In estimating expected credit losses, the Group uses reasonable and sustainable forecasting information that is based
on assumptions about the future evolution of different economic drivers and how each of the drivers impacts the
remaining drivers.
Probability of default:
The probability of default represents a determining factor in the measurement of expected credit losses and
corresponds to an estimation of the probability of default in each period, which is calculated based on historical data,
assumptions and expectations about future conditions.
Loss given default:
It corresponds to a loss estimation in a default scenario. It is based on the difference between the contractual cash
flows and those that the Bank expects to receive, through the cash flows generated by the customers' business or credit
collaterals. The estimation of loss given default is based on, among other aspects, the different recovery scenarios,
historical information, the costs involved in the recovery process and the estimation of the valuation of collaterals
associated with credit operations.
Y6.3. Fair value of derivative financial instruments
Fair values are based on listed market prices if available, otherwise fair value is determined either by dealer price
quotations (either for that transaction or for similar instruments traded) or by pricing models, based on net present
value of estimated future cash flows which considers the market conditions for the underlying instruments, time value,
yield curve and volatility factors. These pricing models may require assumptions or judgments in estimating their fair
values. Consequently, the use of a different model or of different assumptions or judgments in applying a particular
model could result in different results from the ones reported.
Due to market stress conditions, the Bank needed to reallocate the risk limits, especially in the sensitivity limit of the
trading portfolio and to review the stress-test scenarios and their methodologies.
In the context of the uncertainty associated with the current macroeconomic framework, the calculation of fair value
adjustments was revised considering liquidity discounts, the costs of closing positions (widening the buy and sell
spread), credit risk, spreads of financing and increased volatility.
Y7. Provisions for legal risk related to foreign currency-indexed mortgage loans (mostly to Swiss franc)
The Group creates provisions for legal contingencies related foreign currency-indexed mortgage loans, mostly to Swiss
franc granted by Bank Millennium, S.A.
The assumptions used by Bank Millennium are essentially based on historical observations and will have to be updated
in subsequent periods, which may have a relevant impact on the provision\u2019s estimation. The methodology developed by
Bank Millennium is based on the following parameters: (i) the number of ongoing cases (including class action
agreements) and potential future lawsuits that will arise within the specified (three-year) time horizon; (ii) the
currently estimated amount of Bank Millennium's potential loss in the event of a specific court judgment; (iii) the
probability of obtaining a specific court judgment calculated on the basis of statistics of judgments in cases where Bank
Millennium is a party and legal opinions obtained; (iv) Bank Millennium does not include in the methodology for
calculating provisions the element related to the potential claim for remuneration for the client in connection with the
repayments made by him/her; and (v) estimates involved with amicable settlements with clients, concluded in court or
out of court.
The evolution of responsibilities with legal contingencies related to mortgage loans indexed to the Swiss franc and the
amount of the Bank Millennium\u2019s actual losses depend, namely, on the number of ongoing and potential lawsuits, as
well as on the final court decisions about each case and amicable settlement with clients.
\u00a0 \u00a0 Z. Subsequent events
The Group analyses events occurred after the balance sheet date, i.e., favourable and/or unfavourable events that
occur between the balance sheet date and the date the financial statements were authorized for issue. In this context,
two types of events can be identified:
i) those that provide evidence of conditions that existed at the balance sheet date (events after the balance sheet
date that give rise to adjustments); and,
ii) those that are indicative of the conditions that arose after the balance sheet date (events after the balance sheet
date that do not give rise to adjustments).
Events occurred after the date of the financial statements that are not considered as adjustable events, if significant,
are disclosed in the notes to the consolidated financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-544": { "value": "Accounting policies
A. Basis of presentation
Banco Comercial Portugu\u00eas, S.A. (the \u2018Bank\u2019) is a private capital bank, established in Portugal in 1985. It started
operating on 5 May 1986, and these consolidated financial statements reflect the results of the operations of the Bank
and all its subsidiaries (together referred to as the \u2018Group\u2019) and the Group\u2019s interest in associates, for the years ended
on 31 December 2023 and 2022.
In accordance with Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002, and
Bank of Portugal Notice no. 5/2015 (which revoked Bank of Portugal Notice no. 1/2005), the Group\u2019s consolidated
financial statements are required to be prepared, since 2005, in accordance with International Financial Reporting
Standards (IFRS) as endorsed by the European Union (EU). IFRS comprise accounting standards issued by the
International Accounting Standards Board (IASB), as well as interpretations issued by the International Financial
Reporting Interpretations Committee (IFRIC) and its predecessor bodies. The consolidated financial statements and the
accompanying notes were approved on 25 March 2024 by the Bank's Board of Directors and are presented in thousands
of euros, rounded to the nearest thousand.
All the references in this document related to any normative always report to the respective current version.
The consolidated financial statements for the year ended on 31 December 2023 were prepared for the purpose of
recognition and measurement, in accordance with the IFRS approved by the EU that are effective on that date.
These consolidated financial statements are a translation of the financial statements originally issued in Portuguese. In
the event of discrepancies, the Portuguese version prevails.
A1. Comparative information
The Group has adopted IFRS and interpretations mandatory for accounting periods beginning on or after 1 January 2023.
The accounting policies were applied consistently to all entities of the Group and are consistent with those used in the
preparation of the financial statements of the previous period, except for the changes resulting from the adoption of
IFRS 17 - Insurance Contracts with reference to 1 January 2023. IFRS 17 establishes the principles for the recognition,
measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 - Insurance Contracts. IFRS 17
outlines a general model, which is modified for insurance contracts with direct participation features, described as the
variable fee approach. The general model is simplified if certain criteria are met by measuring the liability for
remaining coverage using the premium allocation approach. The general model uses current assumptions to estimate
the amount, timing and uncertainty of future cash flows and it explicitly measures the cost of that uncertainty. It takes
into account market interest rates and the impact of policyholders\u2019 options and guarantees.
As the Group owns 49% of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., which is dedicated to the management
of life insurance and pension funds, on 1 January 2023 Millenniumbcp Ageas made the simultaneous adoption of IFRS 9 -
Financial Instruments and IFRS 17 - Insurance Contracts. It opted for the possibility given to Insurance Companies to
defer the application of IFRS 9, since the combined implementation with IFRS 17 would minimize the distortion of
results.
Initial application of IFRS 17 and IFRS 9 requires comparative information. Therefore, Millenniumbcp Ageas made the
transition exercise on 1 January 2022, and the impacts resulting from its implementation are detailed in note 59.
Application of IFRS 17 \u2013 Insurance Contracts, and IFRS 9 - Financial Instruments by Millenniumbcp Ageas Grupo
Segurador, S.G.P.S., S.A.
In order to ensure the comparability of information, the Group made the appropriate adjustments in the 2022
consolidated balance sheet and income statement, as detailed in note 59.
The Group's financial statements were prepared under the going concern assumption, the accrual-based accounting
regime and under the historical cost convention, as modified by the application of fair value for derivative financial
instruments, financial assets and liabilities at fair value through profit or loss and financial assets at fair value through
other comprehensive income. Financial assets and liabilities that are covered under hedge accounting are stated at fair
value in respect of the risk that is being hedged, if applicable. Other financial assets and liabilities and non-financial
assets and liabilities are stated at amortised cost or historical cost. Non-current assets and disposal groups held for sale
are stated at the lower of carrying amount or fair value less costs to sell. The liability for defined benefit obligations is
recognised as the present value of the past liabilities with pensions net of the value of the fund's assets.
The preparation of the financial statements in accordance with IFRS requires the Board of Directors, under advice of
the Executive Committee, to make judgments, estimations and assumptions that affect the application of the
accounting policies and reported amounts of assets, liabilities, income and expenses. The estimations and associated
assumptions are based on historical experience and other factors that are believed to be reasonable under the
circumstances and form the basis for making the judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these estimations. The issues involving a higher
degree of judgment or complexity or for which assumptions and estimations are significant are presented in note 1.Y.
B. Basis of consolidation
As from 1 January 2010, the Group began to apply IFRS 3 (revised) for the accounting of business combinations. The
changes in the accounting policies resulting from the application of IFRS 3 (revised) are applied prospectively.
The consolidated financial statements now presented reflect the assets, liabilities, income and expenses of the Bank
and its subsidiaries (the Group), and the results attributable to the Group financial investments in associates.
B1. Investments in subsidiaries
Subsidiaries are entities controlled by the Group (including structure entities and investment funds). The Group controls
an entity when it holds the power to direct the relevant activities of the entity, and when it is exposed, or has rights,
to variable returns from its involvement with the entity and can take possession of these results through the power it
holds over the relevant activities of that entity (de facto control). The financial statements of subsidiaries are included
in the consolidated financial statements from the date on which control commences until the date on which control
ceases.
Accumulated losses are attributed to non-controlling interests in the respective proportion, implying that the Group can
recognise negative non-controlling interests.
On a step acquisition process resulting in the acquisition of control, the revaluation of any participation previously
acquired is recorded against the profit and loss account when goodwill is calculated. On a partial disposal resulting in
loss of control over a subsidiary, any participation retained is revalued at market value on the sale date and the gain or
loss resulting from this revaluation is booked against the income statement.
B2. Investments in associates
Investments in associated companies are registered by the equity method from the date that the Group acquires
significant influence until the date it ceases to exist. Associates are those entities in which the Group has significant
influence but not control over the financial and operating policy decisions of the investee. It is assumed that the Group
has significant influence when it holds, directly or indirectly, more than 20% or of the voting rights of the investee. If
the Group holds, directly or indirectly, less than 20% of the voting rights of the investee, it is presumed that the Group
does not have significant influence, unless such influence can be clearly demonstrated.
The existence of significant influence by the Group is usually evidenced in one or more of the following ways:
-representation on the Board of Directors or equivalent governing body of the investee;
-participation in policy-making processes, including participation in decisions about dividends or other distributions;
-material transactions between the Group and the investee;
-interchange of the management team;
-provision of essential technical information.
The consolidated financial statements include the part that is attributable to the Group of the total reserves and
results of associated companies accounted on an equity basis. When the Group\u2019s share of losses exceeds its interest in
the associate, the carrying amount is reduced to zero and recognition of further losses is discontinued, with exception
of the part in which the Group incurs in a legal obligation to assume these losses on behalf of an associate.
B3. Goodwill
Business combinations are accounted under the purchase method. The acquisition cost corresponds to the fair value,
determined at the acquisition date, of the assets given and liabilities incurred or assumed. Costs directly attributable
to the acquisition of a subsidiary are recorded directly in the income statement.
Positive goodwill arising from acquisitions is recognised as an asset carried at acquisition cost and is not subject to
amortisation, however, it is subject to impairment tests. Goodwill arising from the acquisition of subsidiaries and
associates is defined as the difference between the cost of acquisition and the total or corresponding share of the fair
value of the net assets and contingent liabilities acquired, depending on the option taken.
Negative goodwill arising from an acquisition is recognised directly in the income statement of the period in which the
business combination occurs.
Goodwill is not adjusted due to changes in the initial estimation of the contingent purchase price, being the difference
recorded in the income statement or in equity, when applicable.
According to IFRS 3 \u2013 Business combinations, if the initial accounting of a business combination is not concluded until
the end of the first financial reporting period in which the combination occurs, it is recorded at the respective
provisional values. These provisional values can be adjusted over the measurement period, which can\u2019t exceed a year
since the acquisition date. Over this period, the Group should retrospectively adjust the amounts recognised previously
on the acquisition date, to reflect newly obtained information about facts and circumstances that existed at the
acquisition date and that, if they were known by then, would have impacted the measurement of the amounts
recognised at that date.
During this period, the Group should also recognise additional assets and liabilities in the case of obtaining new
information about facts and circumstances that existed at the acquisition date and that, if they were known by then,
would have resulted in the recognition of those assets and liabilities at that time.
The recoverable amount of the goodwill registered in the Group's asset is assessed annually in the preparation of the
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. Impairment
losses are recognised in the income statement. The recoverable amount is determined based on the higher of the asset
value in use and the market value after deducting selling costs, calculated using valuation methodologies supported by
discounted cash flow techniques, considering market conditions, the time value of money and the business risks.
B4. Purchases and dilution of non-controlling interests
The acquisition of non-controlling interests that do not impact the control position of a subsidiary is accounted as a
transaction with shareholders and, therefore, no additional goodwill resulting from this transaction is recognised. The
difference between the acquisition cost and the fair value of non-controlling interests acquired is recognised directly in
reserves. On this basis, the gains and losses resulting from the sale of controlling interests that do not impact the
control position of a subsidiary are always recognised against reserves.
B5. Loss of control
The gains or losses resulting from the dilution or sale of a financial position in a subsidiary, with loss of control, are
recognised by the Group in the income statement.
B6. Investments in foreign subsidiaries and associates
The financial statements of foreign subsidiaries and associates of the Group are prepared in their functional currency,
defined as the currency of the primary economic environment in which they operate or the currency in which the
subsidiaries obtain their income or finance their activity. In the consolidation process, assets and liabilities, including
goodwill, of foreign subsidiaries are converted into euros at the official exchange rate on the balance sheet date.
Regarding the investments in foreign operations that are consolidated under the full consolidation or equity methods,
exchange differences, between the conversion to euros of the equity at the beginning of the year and its value in euros
at the exchange rate on the balance sheet date in which the consolidated accounts are reported, are recognised against
\u201cReserves - exchange differences\u201d. The changes in fair value resulting from instruments that are designated and
qualified as hedging instruments related to foreign operations are recorded in equity under \"Reserves and retained
earnings\". Whenever the hedge is not fully effective, the ineffective portion is accounted against profit and loss of the
year.
The income and expenses of these subsidiaries are converted to euros at an approximate rate of the rates on the dates
of the transactions, using a monthly average considering the initial and final exchange rates of each month. Exchange
differences from the conversion to euros of the profits and losses for the reporting period, arising from the difference
between the exchange rate used in the income statement and the exchange rate prevailing at the balance sheet date,
are recognised in \"Reserves and retained earnings - exchange differences resulting from the consolidation of Group's
companies\". The exchange rates used by the Group are detailed in note 54.
On disposal of investments in foreign subsidiaries for which there is loss of control, exchange differences related to the
investment in the foreign operation and to the associated hedge transaction previously recognised in reserves are
transferred to profit and loss, as part of the gains or loss arising from the disposal.
The Group applies IAS 29 \u2013 Financial reporting in hyperinflationary economies in financial statements of entities that
present accounts in functional currency of an economy that has hyperinflation. In applying this policy, non-monetary
assets and liabilities are adjusted based on the price index from the date of acquisition or the date of the last
revaluation until 31 December 2021. The restated values of assets are reduced by the amount that exceeds their
recoverable amount, in accordance with the applicable IFRS.
Equity components are also updated considering the price index from the beginning of the period or date of the
contribution if it is earlier.
When the classification as a hyperinflationary economy is applied to associated companies, its effects are included in
the Group's financial statements by applying the equity method of accounting on the financial statements restated in
accordance with the requirements of IAS 29. The effects of the application of IAS 29 with impact on capital items are
recognised against the item \"Reserves and retained earnings\".
In accordance with the requirements provided in IAS 29, Angola was considered as a hyperinflationary economy until 31
December 2018. This classification is no longer applicable as of 1 January 2019.
B7. Transactions eliminated on consolidation
The balances and transactions between Group's companies, as well as any unrealised gains and losses arising from these
transactions, are eliminated in the preparation of the consolidated financial statements. Unrealised gains and losses
arising from transactions with associates and jointly controlled entities are eliminated in the proportion of the Group's
investment in these entities.
C. Financial instruments (IFRS 9)
C1. Financial assets
C1.1. Classification, initial recognition and subsequent measurement
At the initial recognition, financial assets are classified into one of the following categories:
\u2013 \u201cFinancial assets at amortised cost\u201d;
\u2013 \u201cFinancial assets at fair value through other comprehensive income\u201d; or,
\u2013 \u201cFinancial assets at fair value through profit or loss\u201d.
The classification is made taking into consideration the following aspects:
\u2013 the Group's business model for the management of the financial asset; and,
\u2013 the characteristics of the contractual cash flows of the financial asset.
Business Model Evaluation
With reference to 1 January 2018, the Group carried out an evaluation of the business model in which the financial
instruments are held at portfolio level, since this approach reflects how assets are managed and how that information
is made available to management bodies. The information considered in this evaluation included:
\u2013 the policies and purposes established for the portfolio and the practical operability of these policies, including how
the management strategy focuses on receiving contractual interest, maintaining a certain interest rate profile,
adjusting the duration of financial assets to the duration of liabilities that finance these assets or on the realization
of cash flows through the sale of the assets;
\u2013 how the performance of the portfolio is evaluated and reported to the Group's management bodies;
\u2013 the evaluation of the risks that affect the performance of the business model (and of the financial assets held under
this business model) and the way these risks are managed;
\u2013 the remuneration of business managers, i.e., in what way the compensation depends on the fair value of the assets
under management or on contractual cash flows received; and,
\u2013 the frequency, volume and sales periodicity in previous periods, the reasons for these sales and the expectations
about future sales. However, sales information should not be considered individually, but as part of an overall
assessment of how the Group establishes financial asset management objectives and how cash flows are obtained.
Financial assets held for trading and financial assets managed and evaluated at fair value by option are measured at
fair value through profit or loss because they are not held either for the collection of contractual cash flows (HTC), nor
for the collection of cash flows and sale of these financial assets (HTC and Sell).
Evaluation if the contractual cash flows correspond to Solely Payments of Principal and Interest (SPPI)
For the purposes of this assessment, \"principal\" is defined as the fair value of the financial asset at initial recognition.
\"Interest\" is defined as the counterparty for the time value of money, for the credit risk associated with the amount
owed over a given period and for other risks and costs associated with the activity (e.g., liquidity risk and
administrative costs), as well as for a profit margin.
In the evaluation of the financial instruments in which contractual cash flows refer exclusively to the receipt of
principal and interest, the Group considered the original contractual terms of the instrument. This evaluation included
the analysis of the existence of situations in which the contractual terms can modify the periodicity and the amount of
the cash flows so that they do not fulfil the SPPI condition. In the evaluation process, the Group considered:
\u2013 contingent events that may change the periodicity and the amount of the cash flows;
\u2013 characteristics that result in leverage;
\u2013 terms of prepayment and extension of maturity;
\u2013 terms that may limit the right of the Group to claim cash flows in relation to specific assets (e.g., contracts with
terms that prevent access to assets in case of default \u2013 non-recourse asset); and,
\u2013 characteristics that may change the time value of money.
In addition, an advance payment is consistent with the SPPI criterion if:
\u2013 the financial asset is acquired or originated with a premium or discount in relation to the contractual nominal value;
\u2013 the prepayment represents substantially the nominal amount of the contract plus accrued contractual interest, but
not paid (may include reasonable compensation for prepayment); and,
\u2013 the prepaid fair value is insignificant at initial recognition.
C1.1.1. Financial assets at amortised cost
Classification
A financial asset is classified under the category \"Financial assets at amortised cost\" if both of the following conditions
are met:
\u2013 the financial asset is held within a business model whose objective is to hold financial assets in order to collect their
contractual cash flows; and,
\u2013 its contractual cash flows occur on specific dates and are solely payments of principal and interest on the principal
amount outstanding (SPPI).
The \"Financial assets at amortised cost\" category includes loans and advances to credit institutions, loans and advances
to customers and debt instruments managed based on a business model whose purpose is to receive their contractual
cash flows (government bonds, bonds issued by companies and commercial paper).
Initial recognition and subsequent measurement
Loans and advances to credit institutions and loans and advances to customers are recognised at the date the funds are
made available to the counterparty (settlement date). Debt instruments are recognised on the trade date, that is, on
the date the Group accepts to acquire them.
Financial assets at amortised cost are initially recognised at fair value plus transaction costs and are subsequently
measured at amortised cost. In addition, they are subject, at their initial recognition, to the measurement of
impairment losses for expected credit losses (note C1.5), which are recognised in \"'Impairment of financial assets
measured at amortised cost\".
Interest of financial assets at amortised cost is recognised under \"Interest and similar income\", based on the effective
interest rate method and in accordance with the criteria described in note C3.
Gains or losses generated at the time of derecognition are registered in \"Gains/(losses) arising from derecognition of
financial assets and liabilities not measured at fair value through profit or loss\".
C1.1.2. Financial assets at fair value through other comprehensive income
Classification
A financial asset is classified under the category of \"Financial assets at fair value through other comprehensive income\"
if both of the following conditions are met:
\u2013 the financial asset is held within a business model whose objective is both to collect its contractual cash flows and
to sell this financial asset; and,
\u2013 its contractual cash flows occur on specific dates and are solely payments of principal and interest on the principal
amount outstanding (SPPI).
In addition, at the initial recognition of an equity instrument that is not held for trading, nor a contingent retribution
recognised by an acquirer in a business combination to which IFRS 3 applies, the Group may irrevocably choose to
classify it in the category of \"Financial assets at fair value through other comprehensive income\" (FVOCI). This option is
exercised on a case-by-case basis and is only available for financial instruments that comply with the definition of
equity instruments provided in IAS 32 and cannot be used for financial instruments whose classification as an equity
instrument under the scope of the issuer is made under the exceptions provided in paragraphs 16A to 16D of IAS 32.
Initial recognition and subsequent measurement
Debt instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. Changes in the fair value of these financial assets are
recognised against other comprehensive income and, at the time of their disposal, the respective gains or losses
accumulated in other comprehensive income are reclassified to a specific income statement item designated \"Gains or
losses on derecognition of financial assets at fair value through other comprehensive income\u201d.
Debt instruments at fair value through other comprehensive income are also subject from their initial recognition to the
measurement of impairment losses for expected credit losses (note C1.5). Impairment losses are recognised in the
income statement under \"Impairment of financial assets at fair value through other comprehensive income\", against
\u201cOther comprehensive income\u201d, and do not reduce the carrying amount of the financial asset in the balance sheet.
Interest, premiums or discounts on financial assets at fair value through other comprehensive income are recognised in
\"Interest and similar income\", based on the effective interest rate method and in accordance with the criteria described
in note C3.
Equity instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. The changes in the fair value of these financial assets
are recognised against \u201cOther comprehensive income\u201d. Dividends are recognised in the income statement when the
right to receive them is attributed.
Impairment is not recognised for equity instruments at fair value through other comprehensive income, and the
respective accumulated gains or losses recognised in \u201cFair value changes\u201d are transferred to \u201cRetained earnings\u201d at the
time of their derecognition.
C1.1.3. Financial assets at fair value through profit or loss
Classification
A financial asset is classified in the category \"Financial assets at fair value through profit and loss\" if the business model
defined by the Group for its management or the characteristics of its contractual cash flows do not meet the conditions
described above to be measured at amortised cost or at fair value through other comprehensive income (FVOCI).
In addition, the Group may irrevocably designate a financial asset at fair value through profit or loss that meets the
criteria to be measured at amortised cost or at FVOCI at the time of its initial recognition if this eliminates or
significantly reduces an inconsistency in measurement or recognition (accounting mismatch), that will otherwise arise
from measuring assets or liabilities or recognising their gains and losses in different bases.
The Group classified \"Financial assets at fair value through profit and loss\" in the following items:
a) \u201cFinancial assets held for trading\u201d
These financial assets are acquired with the purpose of short-term selling; at the initial recognition, they are part of a
portfolio of identified financial instruments and for which there is evidence of profit-taking in the short-term; or they
can be defined as derivatives (except for hedging derivatives).
b) \u201cFinancial assets not held for trading mandatorily at fair value through profit or loss\u201d
This item classifies debt instruments whose contractual cash flows do not correspond only to repayments of principal
and interest on the principal amount outstanding (SPPI).
c) \u201cFinancial assets designated at fair value through profit or loss\u201d (Fair Value Option)
This item includes the financial assets that the Group has chosen to designate at fair value through profit or loss to
eliminate accounting mismatch.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Group in the normal course of its business are in market conditions,
financial assets at fair value through profit or loss are initially recognised at their fair value, with the costs or income
associated with the transactions recognised in profit and loss at the initial moment. Subsequent changes in the fair
value of these assets are recognised in profit and loss.
The accrual of interest and of the premium/discount (when applicable) is recognised in \"Net interest income\", based on
the effective interest rate of each transaction, except the accrual of interest from trading derivatives that are
recognised in \u201cGains/(losses) on financial operations at fair value through profit or loss\u201d. Dividends are recognised in
profit and loss when the right to receive them is attributed.
Trading derivatives with a positive fair value are included in the item \"Financial assets held for trading\", while trading
derivatives with negative fair value are included in \"Financial liabilities held for trading\".
C1.2. Reclassification between categories of financial assets
Financial assets should be reclassified into other categories only if the business model used in their management has
changed. In this case, all financial assets affected must be reclassified.
The reclassification must be applied prospectively from the date of reclassification and any gains, losses (including the
ones related to impairment) or interest previously recognised should not be restated.
The reclassification of investments in equity instruments measured at fair value through other comprehensive income is
not allowed, nor of financial instruments designated at fair value through profit or loss.
C1.3. Modification and derecognition of financial assets
General principles
i) The Group shall derecognise a financial asset when, and only when:
\u2013 the contractual rights to the cash flows from the financial asset expire; or,
\u2013 it transfers the financial asset as set out in notes ii) and iii) below and the transfer qualifies for derecognition in
accordance with note iv).
ii) The Group transfers a financial asset if, and only if, it either:
\u2013 transfers the contractual rights to receive the cash flows of the financial asset; or,
\u2013 retains the contractual rights to receive the cash flows of the financial asset but assumes a contractual obligation to
pay the cash flows to one or more recipients in an arrangement that meets the conditions presented in note iii).
iii) When the Group retains the contractual rights to receive the cash flows of a financial asset (the 'original asset'), but
assumes a contractual obligation to pay these cash flows to one or more entities (the 'eventual recipients'), the
Group shall treat the transaction as a transfer of a financial asset if all the following three conditions are met:
\u2013 the Group does not have any obligation to pay amounts to the eventual recipients, unless it collects equivalent
amounts from the original asset. Short-term advances with the right of full recovery of the amount lent, plus
accrued interest at market rates, do not violate this condition;
\u2013 the Group is contractually prohibited from selling or pledging the original asset other than as a security to the
eventual recipients due its obligation to pay them cash flows; and,
\u2013 the Group has an obligation to remit any cash flows it collects on behalf of the eventual recipients without material
delay. In addition, it is not entitled to reinvest such cash flows, except for investments in cash or cash equivalents
(as defined in IAS 7 \u2013 Statement of Cash Flows) during the short settlement period from the collection date until the
date of required remittance to the eventual recipients, and interest earned on such investments is passed to the
eventual recipients.
iv) When the Group transfers a financial asset (see note ii) above), it shall evaluate the extent to which it retains the
risks and benefits arising from owning the financial asset. In this case:
\u2013 if the Group transfers substantially all the risks and benefits arising from owning the financial asset, it shall
derecognise the financial asset and recognise separately any rights and obligations created or retained in the
transfer, as assets or liabilities;
\u2013 if the Group retains substantially all the risks and benefits arising from owning the financial asset, it shall continue
to recognise the financial asset;
\u2013 if the Group neither transfers nor retains substantially all the risks and benefits arising from owning the financial
asset, it shall determine whether it retained control of the financial asset. In this case:
a) if the Group did not retain control, it shall derecognise the financial asset and recognise separately, as assets or
liabilities, any rights and obligations created or retained in the transfer;
b) if the Group retained control, it shall continue to recognise the financial asset to the extent of its continued
involvement in the financial asset.
v)\u00a0 The transfer of risks and benefits (see prior note) is evaluated by comparing the Group\u2019s exposure, before and after
the transfer, with the variability in the amounts and timing of the net cash flows of the transferred asset.
vi) The question of whether the Group retained or not control (see note iv) above) over the transferred asset depends
on the transferee's ability to sell the asset. If the transferee has the practical ability to sell the asset in its entirety
to an unrelated third party and can exercise that ability unilaterally without needing to impose additional
restrictions on the transfer, the entity did not retain control. In all other cases, the entity retained control.
Derecognition criteria
In the context of the general principles listed in the previous section, and considering that contract modification
processes may lead, in some circumstances, to the derecognition of the original financial assets and recognition of new
ones (subject to POCI identification), the purpose of this section is to set the criteria and circumstances that may lead
to the derecognition of a financial asset.
The Group considers that a modification of the terms and conditions of a credit exposure will result in derecognition of
the transaction and in recognition of a new transaction when the modification translates into at least one of the
following conditions:
\u2013 Creation of a new exposure that results from a debt consolidation, without any of the derecognized instruments
having a nominal value higher than 90% of the nominal amount of the new instrument;
\u2013 Double extension of the residual maturity, provided that the extension is not shorter than 3 years compared to the
residual maturity in the moment of the modification;
\u2013 Increase of on balance exposure by more than 10% compared to the nominal amount (refers to the last approved
amount on the operation subject to modification);
\u2013 Change in qualitative features, namely:
i) Change of currency, unless the exchange rate between the old and the new currency is pegged or managed
within limits restricted by law or the relevant monetary authorities;
ii) Exclusion or addition of a substantial equity conversion feature to a debt instrument, unless it is not
reasonably possible that it will be exercised over its term;
iii) Transfer of the instrument\u2019s credit risk to another borrower, or a significant change in the structure of
borrowers within the instrument.
iv) Deletion or addition to the debt instrument of features of the \"Pay If You Can\" type or dependent on the
financial performance of the debt instrument.
In the case of a restructuring due to financial difficulties of the debtor, only the criteria set out in items ii, iii and iv of
the above paragraphs should be checked (the other criteria listed in this paragraph are not relevant in such situations).
Under the regulatory changes that occurred in Poland and the negotiations with customers holding mortgage loans in
foreign currency described in note 57, and which correspond to contractual modifications made in accordance with IFRS
9, when the cash flows resulting from the agreement are subject to modification and a given asset is not derecognised,
Bank Millennium adjusts the gross book value of the financial asset and recognises the profit or loss due to the
modification in the Income Statement - Results on modification. The adjustment to the gross carrying amount of a
financial asset is the difference between the discounted cash flows before and after contract modification.
Loans written-off
The Group writes off a loan when it does not have reasonable expectations of recovering a financial asset in its entirety
or partially. Loans written-off are recognised in off-balance sheet accounts.
C1.4. Purchased or originated credit-impaired assets
Purchased or originated credit-impaired (POCI) assets are assets that present objective evidence of credit impairment
in the moment of their initial recognition. An asset is credit-impaired if one or more events have occurred with a
negative impact on the estimated future cash flows of the asset.
The two events that lead to the origin of a POCI exposure are presented as follows:
\u2013 financial assets arising from a recovery process, where there have been changes to the terms and conditions of the
original agreement, which presented objective evidence of impairment that resulted in its derecognition (note C1.3)
and recognition of a new contract that reflects the credit losses incurred;
\u2013 financial assets acquired with a significant discount, where the existence of a significant discount reflects credit
losses incurred at the time of their initial recognition.
At initial recognition, POCI assets do not carry an impairment allowance. Instead, lifetime expected credit losses (ECL)
are incorporated into the calculation of the effective interest rate (EIR). Consequently, at initial recognition, the gross
book value of POCI (initial balance) is accounted for at fair value and it's equal to the net book value before being
recognised as POCI (difference between the initial balance and the total discounted cash flows).
C1.5. Impairment losses
C1.5.1. Financial instruments subject to impairment losses recognition
The Group recognises impairment losses for expected credit losses on financial instruments recognised in the following
accounting items:
C1.5.1.1. Financial assets at amortised cost
Impairment losses on financial assets at amortised cost reduce the balance sheet value of these financial assets against
the item \"Impairment of financial assets at amortised cost\" (in the income statement).
C1.5.1.2. Debt instruments at fair value through other comprehensive income
Impairment losses for debt instruments at fair value through other comprehensive income are recognised in the income
statement under \"Impairment of financial assets at fair value through other comprehensive income\", against other
comprehensive income (they do not reduce the balance sheet amount of these financial assets).
C1.5.1.3. Credit commitments, documentary credits and financial guarantees
Impairment losses associated with credit commitments, documentary credits and financial guarantees are recognised in
liabilities, under the balance \"Provisions for guarantees and other commitments\", against \"Other provisions\" (in the
income statement).
C1.5.2. Classification of financial instruments by stages
Changes in credit risk since the initial recognition
Stage 1
Stage 2
Stage 3
Classification criterion
Initial recognition
Significant increase in credit
risk since initial recognition
Impaired
Impairment losses
12-month expected credit
losses
Lifetime expected credit losses
The Group determines the expected credit losses of each operation as a result of the deterioration of credit risk since
its initial recognition. For this purpose, operations are classified into one of the following three stages:
\u2013 Stage 1: the operations in which there is no significant increase in credit risk since its initial recognition are
classified in this stage. Impairment losses associated with operations classified in this stage correspond to expected
credit losses resulting from a default event that may occur within 12 months after the reporting date (12-month
expected credit losses);
\u2013 Stage 2: the operations in which there is a significant increase in credit risk since its initial recognition (note C1.5.3)
but are not impaired (note C1.5.4) are classified in this stage. Impairment losses associated with operations
classified in this stage correspond to the expected credit losses resulting from default events that may occur over
the expected residual life of the operations (lifetime expected credit losses);
\u2013 Stage 3: impaired operations are classified in this stage. Impairment losses associated with operations classified at
this stage correspond to lifetime expected credit losses.
C1.5.3. Significant increase in credit risk (SICR)
Significant increase in credit risk (SICR) is determined according to a set of mostly quantitative, but also qualitative
criteria. These criteria are mainly based on the risk grades of customers, according to the Bank's Rating Master Scale,
and on its evolution, in order to detect significant increases in Probability of Default (PD), complemented by other
information regarding the customers\u2019 behaviour towards the financial system.
C1.5.4. Definition of financial assets in default and impaired
All customers who meet at least one of the following conditions are marked as default and, consequently, in NPE:
a) Delay over 90 days of material payment:
- Amounts of principal, interest or fees not paid on the due date that, cumulatively, represent:
i) more than Euros 100 (retail) or more than Euros 500 (non-retail); and,
ii) more than 1% of the total debt (direct liabilities).
After these two conditions are met, the counting of days of delay begins: if more than 90 consecutive days in which the
customer is in this situation have been counted, it is classified as default (or GR15).
The existence of a material payment delay gives rise to the default setting (GR15) of all holders of the operation (or
operations).
b) Signs of low probability of payment:
i. Credit restructuring due to financial difficulties with loss of value;
ii. Delay after restructuring due to financial difficulties;
iii. Recurrence of restructuring due to financial difficulties;
iv. Credit with signs of impairment (or stage 3 of IFRS 9);
v. Insolvency or equivalent proceedings;
vi. Litigation;
vii. Guarantees of operations in default;
viii. Credit sales with losses;
ix. Credit fraud;
x. Unpaid credit status;
xi. Breach of covenants in a credit agreement;
xii. Spread of default in an economic group;
xiii. Cross default in BCP Group.
C1.5.5. Estimates of expected credit losses - Individual analysis
1. Customers who are in one of the following conditions are subject to individual analysis:
Customers in default
Customers in litigation or insolvency, if the total exposure of the group members in these situations exceeds
Euros 1 million
Customers integrated into groups with an exposure over Euros 5 million, if they have a risk grade 15
Groups or customers
who are not in
default
Other customers belonging to groups in the above conditions
Groups or customers with an exposure over Euros 5 million, if a group member has a risk grade 14
Groups or customers with an exposure over Euros 5 million, if a member of the group has a restructured loan
and a risk grade 13
Groups or customers with an exposure over Euros 10 million, if at least one member of the group is in stage 2
Groups or customers not included in the preceding paragraphs, whose exposure exceeds Euros 25 million
2. Regardless of the criteria described in the previous point, the individual analysis is only performed for customers
with a credit exposure over Euros 500,000, while customers with exposure below this limit are not considered for
the purpose of determining the exposure referred to in the previous point.
3. Other customers that do not meet the criteria defined in 1 will also be subject to individual analysis, if under the
following conditions:
\u2013 they have impairment as a result of the latest individual analysis;
\u2013 are classified in stage 2 as a result of the last revision of the questionnaire analysing the indications of financial
difficulties;
\u2013 according to recent information, they show a significant deterioration in risk levels; or,
\u2013 are a Special Purpose Vehicle (SPV).
4. The individual analysis includes the following procedures:
\u2013 for customers that are not in default, the analysis of financial difficulties indicators to determine whether the
customer has objective signs of impairment, or whether it should be classified in stage 2 given the occurrence of a
significant increase in credit risk, considering for this purpose a set of predetermined signs;
\u2013 for customers in default or for which the previous analysis has allowed to conclude that the customer has objective
signs of impairment, determination of the loss.
5. For the situations identified in the first paragraph of the previous point involving corporate clients, the analysis is
the responsibility of the Rating Division, and the responsibility of the Credit Division for the remaining clients.
6. For the situations identified in the second paragraph of the previous point, the individual analysis to determine the
loss is the responsibility of the client's management divisions and of the Credit Division, the latter with regard to the
customers managed by the Commercial Networks.
The assessment of existence of impairment losses in individual terms is determined through an analysis of the total
credit exposure on a case-by-case basis. For each loan considered individually significant, the Group assessed at each
balance sheet date the existence of objective evidence of impairment. In the assessment of impairment losses in
individual terms, the following factors were considered:
\u2013 total exposure of each customer towards the Group and the existence of overdue loans;
\u2013 viability of the customer\u2019s business and its capacity to generate enough cash flows to service debt obligations in the
future;
\u2013 the existence, nature and estimated value of the collaterals associated to each loan;
\u2013 significant deterioration of the customer's rating;
\u2013 the customer\u2019s available assets in liquidation or insolvency situations;
\u2013 the existence of preferential creditors;
\u2013 the amount and expected recovery term.
7. Each of the units referred to in the previous point is responsible for assigning an expectation and a recovery period
to exposures relating to customers subject to individual analysis, which must be transmitted to the Risk Office as
part of the regular process of collecting information, accompanied by detailed justification of the proposed
impairment.
8. The expected recovery shall be represented by a recovery rate of the total outstanding exposure, which may be a
weighted rate considering the different recovery prospects for each part of the customer's liabilities.
9. The recovery estimation referred to in the previous point should be influenced by future prospects (forward-
looking), contemplating not only a more expected scenario but also alternative scenarios (an unbiased and
probability-weighted amount). The application and weighting of the scenarios should be carried out both in a
global perspective and in an individualized perspective, the latter when cases that, due to their specificity, have a
high degree of uncertainty regarding the expected recovery estimation are identified.
10. The macroeconomic adjustment set out in point 8 should be analysed annually and weighted according to the type
of recovery strategy associated with the exposure under analysis:
\u2013 for Going Concern strategies (i.e., the estimation is based on the cash flows of the business), the possibility of
applying the 2 additional macroeconomic scenarios (optimistic and pessimistic) should be analysed in a global way,
to ascertain if there is the risk of a skewed view of the expected losses from the consideration of only one scenario;
\u2013 for Gone Concern strategies (i.e., the recovery estimation is based on the realization of the collateral), the impact
of the macroeconomic scenario on collaterals should be analysed, for example, to what extent the projected real
estate index indicates significant changes ahead for the current valuation values.
11. It is the responsibility of the units referred to in point 5 to consider in their projection macroeconomic expectations
that may influence the recoverability of the debt.
12. For the purposes of the preceding paragraphs, the Economic Studies, Sustainability and Cryptoassets Department
shall disclose the macroeconomic data that allow the estimations to be made.
13. The decision to consider global impacts related to the going and gone concern scenarios should be made by the Risk
Committee, as proposed by the Risk Office.
14. For specific cases with a high degree of uncertainty, the allocation of alternative scenarios should be considered
casuistically. Examples of recovery situations with a degree of uncertainty include:
\u2013 recovery of collateral in geographies in which the Bank has no relevant recovery experience;
\u2013 recovery of debt related to geographies in which there is strong political instability;
\u2013 recovery of non-real estate collateral for which there is no evidence of market liquidity;
\u2013 recovery of related collateral or government guarantees in a currency other than the country's own;
\u2013 recovery of debt related to debtors for whom there is a strong negative public exposure.
15. The Risk Office is responsible for reviewing the information collected and for clarifying all identified
inconsistencies, as well as for the final decision on the customer's impairment.
16. Customers that have objective signs of impairment, but an individual impairment amount is equal to zero, are
included in the collective analysis, assuming a PD 12-month equivalent to the risk grade 12 of the Master Scale.
17. The individual impairment analysis must be carried out annually, and may be lower for clients who fall into certain
situations of possible increased risk. In case significant signs of deterioration or improvement in the customer\u2019s
economic and financial situation are detected, as well as the macroeconomic conditions affecting the customer's
ability to accomplish debt, it is the responsibility of the Risk Office to promote the review of the expected
impairment of this customer.
C1.5.6. Estimates of expected credit losses - Collective analysis
Transactions that are not subject to an individual impairment analysis are grouped considering their risk characteristics
and subject to a collective impairment analysis. The Group's credit portfolio is divided by internal risk grades and
according to the following segments:
a) Segments with a reduced history of defaults, designated \u2018low default\u2019: Large corporate exposures, Project finance,
Institutions (banks/financial institutions) and Sovereigns;
b) Segments not \u2018low default\u2019: - Retail: Mortgages; Overdrafts; Credit cards; Small and medium enterprises - Retail
(\u2018SME Retail\u2019); and Others - Corporate: Small and medium enterprises - Corporate (\u2018Large SME\u2019); and Real Estate.
The Group performs statistical tests in order to prove the homogeneity of the segments mentioned above, with a
minimum period of one year.
Expected credit losses are estimates of credit losses that are determined as follows:
\u2013 financial assets with no signs of impairment at the reporting date: the present value of the difference between the
contractual cash flows and the cash flows that the Group expects to receive;
\u2013 financial assets with impairment at the reporting date: the difference between the gross book value and the present
value of the estimated cash flows;
\u2013 unused credit commitments: the present value of the difference between the resulting contractual cash flows if the
commitment is made and the cash flows that the Group expects to receive;
\u2013 financial guarantees: the current value of the expected repayments less the amounts that the Group expects to
recover.
The main inputs used to measure ECLs on a collective basis should include the following variables:
\u2013 Probability of Default \u2013 PD;
\u2013 Loss Given Default \u2013 LGD; and,
\u2013 Exposure at Default \u2013 EAD.
These parameters are obtained through internal statistical models and other relevant historical data, considering the
already existing regulatory models adapted to the requirements of IFRS 9.
PDs are estimated based on a certain historical period and will be calculated based on statistical models. These models
are based on internal data including both quantitative and qualitative factors. If there is a change in the risk of the
counterparty or exposure, the estimate of the associated PD will also vary. The PDs will be calculated considering the
contractual maturities of exposures.
The risk grades are a highly relevant input for determining the PD associated with each exposure.
The Group collects performance and default indicators about their credit risk exposures with analysis by types of
customers and products.
LGD is the magnitude of the loss that is expected to occur if an exposure goes into default. The Group estimates the
LGD parameters based on the historical recovery rates after entry into counterparty defaults. The LGD models consider
the associated collaterals, the counterparty activity sector, the default time, as well as the recovery costs. In the case
of contracts secured by real estate, it is expected that the LTV (loan-to-value) ratios are a parameter of high relevance
in the determination of LGD.
The EAD represents the expected exposure if the exposure and/or customer defaults. The Group obtains the EAD values
from the counterparty's current exposure and potential changes to its current value as a result of the contractual
conditions, including amortisations and prepayments. For commitments and financial guarantees, the value of the EAD
will consider both the amount of credit used and the expectation of future potential value that may be used in
accordance with the agreement.
As described above, except for financial assets that consider a 12-month PD as they do not present a significant
increase in credit risk, the Group will calculate the ECL value considering the risk of default during the maximum
contractual maturity period of the contract, even if, for the purpose of risk management, it is considered to be a longer
period. The maximum contractual period shall be considered as the period up to the date on which the Group has the
right to require payment or end the commitment or guarantee.
The Group adopted as a residual term criterion for renewable operations, when in stage 2, a term of 5 years. This term
was determined based on the behavioural models of this type of product applied by the Bank in the liquidity risk and
interest rate (ALM) analysis. According to these models, the maximum period of repayment of these operations is the 5
years considered conservatively in the scope of the calculation of credit impairment.
The Group uses models to forecast the evolution of the most relevant parameters for the expected credit losses,
namely probability of default, which incorporate forward-looking information. This incorporation of forward-looking
information is carried out in the relevant elements considered for the calculation of expected credit losses (ECL).
In particular, the PD point-in-time (PDpit) considered for the determination of the probability of performing exposures
at the reference date becoming defaulted exposures considers the expected values for a set of macroeconomic
variables, based on three scenarios (Central, Upside and Downside Scenario) prepared by the Bank's Economic Studies
area. These scenarios, which are used across the Bank for various purposes besides calculating impairment, consider
existing projections by reference entities.
In December 2023 the Bank carried out an update of the macroeconomic scenarios and of the corresponded adjustment
of the parameters considered in the collective impairment model.
C2. Financial liabilities
C2.1. Classification, initial recognition and subsequent measurement
At initial recognition, financial liabilities are classified in one of the following categories:
\u2013 \u201cFinancial liabilities at amortised cost\u201d;
\u2013 \u201cFinancial liabilities at fair value through profit or loss\u201d.
C2.1.1. Financial liabilities at fair value through profit or loss
Classification
Financial liabilities classified under \"Financial liabilities at fair value through profit or loss\" include:
a) \u201cFinancial liabilities held for trading\u201d
In this balance the issued liabilities are classified with the purpose of repurchasing in the near term, those that form
part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a
recent actual pattern of short-term profit-taking; or is a derivative (except for a derivative classified as hedging
instrument).
b) \u201cFinancial liabilities designated at fair value through profit or loss\u201d
The Group may irrevocably assign a financial liability at fair value through profit or loss at the time of its initial
recognition if at least one of the following conditions is met:
\u2013 the financial liability is managed, evaluated and reported internally at its fair value; or,
\u2013 the designation eliminates or significantly reduces the accounting mismatch of transactions.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Group in the normal course of its business are made in market
conditions, financial liabilities at fair value through profit or loss are initially recognised at fair value with the costs or
income associated with the transactions recognised in profit or loss at the initial moment.
Subsequent changes in the fair value of these financial liabilities are recognised as follows:
\u2013 the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of
that liability shall be presented in other comprehensive income;
\u2013 the remaining amount of change in the fair value of the liability shall be presented in profit or loss.
The accrual of interest and the premium/discount (when applicable) is recognised in \"Interest expense and similar
charges\" based on the effective interest rate of each transaction.
C2.1.2. Financial guarantees
If they are not designated at fair value through profit or loss at the time of initial recognition, the financial guarantee
contracts are subsequently measured at the highest of the following amounts:
\u2013 the provision for losses determined according to the criteria described in note C1.5;
\u2013 the amount initially recognised deducted, when appropriate, from the accumulated amount of income recognised
according to IFRS 15 - Revenue from contracts with customers.
Financial guarantee contracts that are not designated at fair value through profit or loss are presented under
\"Provisions\".
C2.1.3. Financial liabilities at amortised cost
Classification
Financial liabilities that were not classified at fair value through profit or loss, or correspond to financial guarantee
contracts, are measured at amortised cost.
The category \"Financial assets at amortised cost\" includes resources from credit institutions and from customers, as
well as subordinated and non-subordinated debt securities.
Initial recognition and subsequent measurement
Financial liabilities at amortised cost are initially recognised at fair value plus transaction costs and are subsequently
measured at amortised cost. Interest on financial liabilities at amortised cost are recognised in \"Interest expense and
similar charges\", based on the effective interest rate method.
C2.2. Reclassification between categories of financial liabilities
Reclassifications of financial liabilities are not allowed.
C2.3. Derecognition of financial liabilities
The Group derecognises financial liabilities when these are cancelled or extinct.
C3. Interest recognition
Income and expense related to interest from financial instruments measured at amortised cost are recognised in
\"Interest and similar income\" and \"Interest expense and similar charges\" (net interest income) through the effective
interest rate method. Interest related to financial assets at fair value through other comprehensive income is also
recognised in net interest income.
The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected
life of the financial instrument (or, when appropriate, for a shorter period), to the net carrying amount of the financial
asset or financial liability.
For calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of
the financial instrument (e.g., early payment options) but without considering future impairment losses. The
calculation includes all fees paid or received considered as included in the effective interest rate, transaction costs and
all other premiums or discounts directly related to the transaction, except for assets and liabilities at fair value through
profit and loss.
Interest income recognised in income associated with contracts classified in stage 1 or 2 are determined by applying the
effective interest rate for each contract on its gross book value. The gross balance of a contract is its amortised cost,
before deducting the respective impairment. For financial assets included in stage 3, interest is recognised in the
income statement based on its net book value (less impairment). The interest recognition is always made in a
prospective way, i.e., for financial assets entering stage 3, interest is recognised at the amortised cost (net of
impairment) in subsequent periods.
For purchased or originated credit-impaired assets (POCI), the effective interest rate reflects the expected credit losses
in determining the expected future cash flows receivable from the financial asset.
C4. Hedge accounting
As allowed by IFRS 9, the Group opted to continue to apply the hedge accounting requirements in accordance with IAS
39.
The Group designates derivatives and other financial instruments to hedge its exposure to interest rate and foreign
exchange risk, resulting from financing and investment activities. Derivatives that do not qualify for hedge accounting
are accounted for as trading instruments.
Derivative hedging instruments are stated at fair value and gains and losses on revaluation are recognised in accordance
with the hedge accounting model adopted by the Group. A hedge relationship exists when:
\u2013 at the inception of the hedge there is formal documentation of the hedge;
\u2013 the hedge is expected to be highly effective;
\u2013 the effectiveness of the hedge can be reliably measured;
\u2013 the hedge is assessed in a continuous basis and highly effective throughout the reporting period; and,
\u2013 for hedges of a forecasted transaction, the transaction is highly probable and presents an exposure to variations in
cash flows that could ultimately affect profit or loss.
When a derivative financial instrument is used to hedge foreign exchange variations arising from monetary assets or
liabilities, no hedge accounting model is applied. Any gain or loss associated to the derivative is recognised through
profit and loss, as well as changes in currency risk of the monetary items.
C4.1. Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedge instruments are recognised
in profit and loss, together with changes in the fair value attributable to the hedged risk of the asset or liability or
group of assets and liabilities. If the hedge relationship no longer meets the criteria for hedge accounting, the
cumulative gains and losses due to variations of hedged risk linked to the hedge item recognised until the
discontinuance of the hedge accounting are amortised through profit and loss over the residual term of the hedged
item.
C4.2. Cash flow hedge
In a hedge relationship, the effective portion of changes in fair value of derivatives that are designated and qualify as
cash flow hedges are recognised in equity - cash flow hedge reserves in the effective part of the hedge relations. Any
gain or loss relating to the ineffective portion of the hedge is immediately recognised in profit and loss when occurred.
Amounts accumulated in equity are reclassified to profit and loss in the periods in which the hedged item will affect
profit or loss.
In case of hedging variability of cash flows, when the hedge instrument expires or is disposed or when the hedging
relationship no longer meets the criteria for hedge accounting, or when the hedge relation is revoked, the hedge
relationship is discontinued on a prospective basis. Therefore, the fair value changes of the derivative accumulated in
equity until the date of the discontinued hedge accounting can be:
\u2013 deferred over the residual period of the hedged instrument; or,
\u2013 recognised immediately in results if the hedged instrument is extinguished.
In the case of a discontinued hedge of a forecast transaction, the change in fair value of the derivative recognised in
equity at that time remains in equity until the forecasted transaction is ultimately recognised in the income statement.
When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is
immediately transferred to profit and loss.
C4.3. Hedge effectiveness
For a hedge relationship to be classified as such according to IAS 39, effectiveness must be demonstrated. As such, the
Group performs prospective tests at the beginning date of the initial hedge, if applicable, and retrospective tests in
order to demonstrate at each reporting period the effectiveness of the hedging relationships, demonstrating that the
variations in fair value of the hedging instrument are hedged by the fair value variations of the hedged item in the
portion assigned to the risk covered. Any ineffectiveness is recognised immediately in profit and loss when incurred.
C4.4. Hedge of a net investment in a foreign operation
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any exchange gain or
loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity. The gain or loss
relating to the ineffective portion is immediately recognised in profit and loss. Gains and losses accumulated in equity
related to the investment in a foreign operation and to the associated hedge operation are recognised in equity and
transferred to profit and loss, on the disposal of the foreign operation as part of the gain or loss from the disposal.
C5. Embedded Derivatives
An embedded derivative is a component of a hybrid agreement, which also includes a non-derived host instrument.
If the main instrument included in the hybrid contract is considered a financial asset, the classification and
measurement of the entire hybrid contract is carried out in accordance with the criteria described in note C1.1.3.
Derivatives embedded in contracts that are not considered financial assets are treated separately whenever the
economic risks and benefits of the derivative are not related to those of the main instrument, since the hybrid
instrument is not initially recognised at fair value through profit or loss. Embedded derivatives are recorded at fair
value with subsequent fair value changes recorded in profit or loss for the period and presented in the trading
derivatives portfolio.
D. Securitization operations
D1. Traditional securitizations
As at 31 December 2023, Banco Comercial Portugu\u00eas has in Portugal two residential mortgage credit securitization
operations, Magellan Mortgages no.3 and no.4, in which the respective portfolios were derecognised from the Bank\u2019s
individual balance sheet, as the risks and rewards related to the residual portions of the referred transactions, were
transferred to institutional investors.
By purchasing a part or all of the most subordinated residual portion, the Group maintained control of the assets and
liabilities of Magellan Mortgages no.3, this Special Purpose Entity (SPE) being consolidated in the Group\u2019s financial
statements, in accordance with the accounting policy referred to in note 1 B.
The two operations are traditional securitizations, where each mortgage loan portfolio was sold to a Portuguese Loan
Securitisation Fund, which has financed this purchase through the sale of securitisation units to an Irish-SPE. At the
same time, this SPE issued and sold in capital markets the different tranches of bonds.
D2. Synthetic securitizations
As at 31 December 2023, Banco Comercial Portugu\u00eas has in Portugal three synthetic securitization operations, with
similar characteristics, with reference to credit portfolios granted by the Bank mainly to Small and Medium Enterprises
(SMEs).
Caravela SME no.3, which started on 28 June 2013, has a medium and long-term loan portfolio of current accounts and
authorized overdrafts.
Caravela SME no.4, initiated on 5 June 2014, has a reference portfolio of vehicle, real estate and equipment leasing.
Caravela SME no.5, initiated on 20 December 2022, is supported on a credit portfolio of medium and long term loans,
leasing contracts and commercial paper programmes.
In any of these operations, the Bank contracted a Credit Default Swap (CDS) from a Special Purpose Entity (SPE),
buying, this way, protection over the total referenced portfolio. As in all synthetic securitizations, under CDS, the risk
of the respective portfolios was divided in 3 tranches: senior, mezzanine and equity.
In the case of both Caravela no.3 and no.4, the mezzanine and part of the equity (20%) were placed in the market
through the issuance of Credit Linked Notes (CLNs) by the above mentioned SPE which were subscribed by investors,
while the Group retained the senior risk and the remaining part of the equity (80%). In the case of Caravela, SME no. 5,
only the full amount of the mezzanine was placed in the market, while the Group retained the risk of the full amount
of the senior and equity tranches.
Note that in all the above-mentioned synthetic transactions, the product of the CLNs issue was invested by the SPE in a
deposit, which fully collateralizes the responsibilities in the presence of its creditors including BCP in accordance with
the CDS.
In December 2023, the Bank Millennium carried out a synthetic securitization transaction of a portfolio of unsecured
cash loans with a total value of PLN 7.2 billion (Euros 1.7 billion). This was the largest synthetic securitization
transaction concluded by the Bank so far. As part of the transaction, the Bank transferred a significant part of the
credit risk of the securitized portfolio to the investor. The securitized loan portfolio remains on the Bank's balance
sheet. The risk of the securitized portfolio is transferred via a credit protection instrument in the form of credit risk-
related bonds issued in December 2023 (\"CLN Bonds\") in the amount of PLN 489 million (Euros 112.6 million).
Earlier, in July 2023, the Bank's subsidiary, Millennium Leasing, conducted another synthetic securitization transaction.
The reference portfolio of leasing transactions was worth PLN 4.0 billion (Euros 0.9 million). As part of the transaction,
Millennium Leasing transferred a significant part of the credit risk of the securitized portfolio to the investor. The
securitized loan portfolio remains on Millennium Leasing's balance sheet. The risk transfer of the securitized portfolio is
carried out through a credit protection instrument in the form of credit risk bonds issued in July 2023 (\"CLN Bonds\") in
the amount of PLN 280 million (Euros 64.5 million).
E. Equity instruments
A financial instrument is an equity instrument only if: i) the instrument includes no contractual obligation to deliver
cash or another financial asset to another entity or to exchange financial assets or financial liabilities with another
entity under conditions that are potentially unfavourable to the entity; and, ii) the instrument will or may be settled in
the issuer's own equity instruments, it is either a non-derivative that includes no contractual obligation for the issuer to
deliver a variable number of its own equity instruments or a derivative that will be settled only by the issuer
exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments.
An equity instrument, independently from its legal form, evidences a residual interest in the assets of an entity after
deducting all its liabilities.
Transaction costs directly attributable to an equity instrument issuance are recognised in equity as a deduction to the
amount issued. Amounts paid or received related to sales or acquisitions of equity instruments are recognised in equity,
net of transaction costs.
Preference shares issued by the Group are considered as an equity instrument when redemption of the shares is solely
at the discretion of the Group and dividends are paid at the discretion of the Group.
Income from equity instruments (dividends) are recognised when the obligation to pay is established and are deducted
to equity.
F. Securities borrowing and repurchase agreement transactions
F1. Securities borrowing
Securities lent under securities lending arrangements continue to be recognised in the balance sheet and are measured
in accordance with the applicable accounting policy. Cash collateral received in respect of securities lent is recognised
as a financial liability. Securities borrowed under securities borrowing agreements are not recognised. Cash collateral
placements in respect of securities borrowed are recognised under loans and advances to either banks or customers.
Income and expenses arising from the securities borrowing and lending business are recognised on an accrual basis over
the period of the transactions and are included in interest income or expense (net interest income).
F2. Repurchase agreements
The Group performs acquisition/sale of securities under reselling/repurchase agreements of securities substantially
equivalent in a future date at a predetermined price ('repos'/'reverse repos'). The securities related to reselling
agreements in a future date are not recognised in the balance sheet. The amounts paid are recognised in loans and
advances to customers or loans and advances to credit institutions. The receivables are collateralised by the related
securities. Securities sold through repurchase agreements continue to be recognised in the balance sheet and are
revaluated in accordance with the applicable accounting policy. The amounts received from the proceeds of these
securities are considered as deposits from customers and deposits from credit institutions. The difference between the
acquisition/sale and reselling/repurchase conditions is recognised on an accrual basis over the period of the transaction
and is included in interest income or expenses.
G. Non-current assets held for sale and Discontinued or discontinuing operations
Non-current assets, groups of non-current assets held for sale (groups of assets together with related liabilities that
include at least\u00a0 a non-current asset) and discontinued operations are classified as held for sale when the intention is
to sell the referred assets and liabilities and when the referred assets or group of assets are available for immediate
sale, subject to the terms of sale usually applicable to these types of assets, and its sale is highly probable, in
accordance with IFRS 5. For the sale to be considered highly probable, the Group must be committed to a plan to sell
the asset (or disposal group) and must have initiated an active program to locate a buyer and complete the plan. In
addition, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its
current fair value. Furthermore, it should be expected that the sale qualifies for recognition as a completed sale within
one year from the date of classification, except as permitted by paragraph 9 of IFRS 5, and that the Group remains
committed to the asset sales plan and the delay is caused by events or circumstances beyond its control.
If the requirements set out in IFRS 5 for these assets are not met, the balance sheet value and respective impairment
are reflected in the caption \"Other assets\". In 2023, a group of properties was reclassified, as described in notes 27 and
32.
The Group also classifies as non-current assets held for sale those non-current assets or groups of assets acquired
exclusively with a view to its subsequent disposal, which are available for immediate sale and its sale is highly
probable. Immediately before classification as held for sale, the measurement of the non-current assets or all assets
and liabilities in a disposal group, is performed in accordance with the applicable IFRS. After their reclassification,
these assets or disposal groups are measured at the lower of their cost and fair value less costs to sell.
Discontinued operations and the subsidiaries acquired exclusively with the purpose to sell in the short-term are
consolidated until the moment of their sale.
G1. Non-operating real estate (INAE)
The Group also classifies as non-current assets held for sale the non-operating real estate (INAE), which include
properties acquired by the Group as a result of the resolution of customer credit processes, as well as own properties
that are no longer used by the Group's services.
Properties held by real estate companies and real estate investment funds, which are part of the Group's consolidation
perimeter, whose capital or units acquired by the Group as a result of the recovery loans are treated as INAE.
At the time of acquisition, real estate classified as INAE is recognised at the lower of the value of the loans existing on
the date on which the recovery occurs, or the judicial decision is formalised, and the fair value of the property, net of
estimated costs for sale. Subsequent measurement of INAE is made at the lower of their book value and the
corresponding fair value, net of the estimated costs for their sale and are not subject to amortisation. Impairment
losses are recorded in the results of the period in which they arise.
The fair value is determined based on the market value, which is determined based on the expected sales price
obtained through periodic evaluations made by expert external evaluators accredited to the Comiss\u00e3o do Mercado de
Valores Mobili\u00e1rios (CMVM).
The principles used to determine the net fair value of selling costs of a property apply, whenever possible, to real
estate like INAE held by Real Estate Companies and Real Estate Investment Funds for the purpose of consolidating
Group accounts.
Whenever the net fair value of the selling costs calculated for an INAE is less than the amount by which the same is
recognised in the Group's balance sheet, an impairment loss is recorded in the amount of the decrease in value
ascertained. Impairment losses are recorded against income for the year.
If the net fair value of the selling costs of an INAE, after recognition of impairment, indicates a gain, the Group may
reflect that gain up to the maximum of the impairment that has been recorded on that property.
H. Lease transactions (IFRS 16)
This standard establishes the requirements regarding the scope, classification/recognition and measurement of leases:
\u2013 from the lessor's perspective, leases will continue to be classified as finance leases or operating leases;
\u2013 from the lessee\u2019s perspective, the standard defines a single model of accounting for lease contracts, which results
in the recognition of a right-of-use asset and a lease liability for all leases, except for those which the lease term
ends within 12 months or for those which the underlying asset is of low-value and, in these cases, the lessee may
opt for the exemption from recognition under IFRS 16 and shall recognise the lease payments associated with these
leases as an expense.
The Group chose not to apply this standard to short-term lease contracts, i.e. contracts with a term shorter than or
equal to one year, and to lease contracts in which the underlying asset\u2019s value is below Euros 5,000. Additionally, this
standard was not applied to leases of intangible assets.
Lease definition
The lease definition focuses on the control of the identified asset, establishing that a contract constitutes or contains a
lease if it carries the right to control the use of an identified asset, i.e., the right to obtain substantially all the
economic benefits of using it, and the right to choose how to use the identified asset over a period in exchange of a
payment.
Impacts from the lessee\u2019s perspective
The Group recognises for all leases, except for those with a term under 12 months or for leases of low-value assets:
\u2013 a right-of-use asset initially measured at cost must consider the Net Present Value (NPV) of the lease liability plus
the value of payments made (fixed and/or variable), deducted from any lease incentives received, penalties for
terminating the lease (if reasonably certain), as well as any cost estimates to be supported by the lessee with the
dismantling and removal of the underlying asset and/or with the recovery of its location. Subsequently, it will be
measured according to the cost model (subject to depreciations/amortisations and impairment tests);
\u2013 a lease liability initially recorded at the present value of the remaining lease payments (NPV), which includes:
\u2013 fixed payments deducted from any lease incentives receivable;
\u2013 variable lease payments that depend on a rate or an index, initially measured considering the rate or index as at
the commencement date;
\u2013 amounts expected to be paid by the lessee under residual values guarantees;
\u2013 the exercise price of a purchase option, if the lessee is reasonably certain to exercise that option;
\u2013 payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to end
the lease.
Since it is not possible to easily determine the implicit interest rate in the lease (paragraph 26 of IFRS 16), lease
payments are discounted according to the lessee\u2019s incremental borrowing rate, which embodies the risk-free rate curve
(swap curve) plus the Group\u2019s spread of risk, applied over the weighted average term of each lease contract. For term
contracts, that date is considered as the end of lease date, while for contracts without term, or with renewable terms,
it is assessed using the date in which the contract is enforceable, as well as eventual economic penalties associated
with the lease contract. In the evaluation of enforceability, the particular clauses of the contracts are considered, as
well as the current law on Urban Leases.
Subsequently, lease payments are measured as follows:
\u2013 by increasing their carrying amount to reflect interest;
\u2013 by reducing their carrying amount to reflect lease payments;
\u2013 carrying amount shall be remeasured to reflect any leases\u2019 revaluations or changes, as well as to reflect the review
of in -substance fixed payments and the review of the lease term.
The Group remeasures the lease liability (and makes a corresponding adjustment to the right-of-use asset) whenever:
\u2013 the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case
the lease liability is remeasured by discounting the revised lease payments using the revised discount rate;
\u2013 the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed
residual value, in which cases the liability is remeasured by discounting the revised lease payments using the initial
discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a
revised discount rate is used;
\u2013 a lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the
lease liability is remeasured by discounting the revised lease payments using the revised discount rate.
The Group did not make any adjustment during the periods presented.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If the
lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to
exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset.
The depreciation starts at the commencement date of the lease.
The implementation of this standard implies changes in the Group\u2019s financial statements, namely:
\u2013 in the consolidated income statement:
(i) recording in \u201cInterest Income\u201d the interest expenses related to lease liabilities;
(ii) recording in \u201cOther administrative costs\u201d the amounts related to short-term lease contracts and to lease
contracts of low-value assets; and,
(iii) recording in \u201cAmortisations and depreciations\u201d the depreciation expenses related to right-to-use assets.
\u2013 in the consolidated balance sheet:
(i) recording in \u201cFinancial assets at amortised cost \u2013 Loans and advances to customers\u201d the recognition of financial
assets related to sublease operations measured accordingly to IFRS 9;
(ii) recording in \u201cOther tangible assets\u201d the recognition of right-to-use assets; and,
(iii) recording in \u201cOther liabilities\u201d the amount of recognised lease liabilities.
\u2013 in the consolidated statement of cash flows, the balance \u201cCash flows arising from operating activities \u2013 Payments
(cash) to suppliers and employees\u201d includes amounts related to short-term lease contracts and to lease contracts of
low-value assets, and the balance \u201cCash flows arising from financing activities - Decrease in other sundry liabilities
and non-controlling interests\u201d includes amounts related to payments of lease liabilities\u2019 capital portions, as detailed
in the consolidated statement of cash flows.
Impact from the lessor\u2019s perspective
In accordance with IFRS 16, paragraph 62, lessors shall classify leases as finance or operational leases.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards inherent to ownership of an
underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards
inherent to ownership of an underlying asset.
Subleases
A sublease implies that the lessee establishes a lease contract with a third party, which acts as an intermediary, and
the lease contract with the original lessor is kept in force.
IFRS 16 \u2013 Leases requires that the lessor evaluates subleases regarding right-to-use and not regarding the underlying
asset.
The sublease\u2019s lessor, simultaneously lessee regarding the original lease, shall recognise an asset in the financial
statement \u2013 a right-to-use related to the initial lease (if the lease is classified as operating) or a financial asset,
measured according to IFRS 9, related to the sublease (if the lease is classified as financing).
In case the primary lease is short-term, then the sublease should be classified as an operating lease.
I. Recognition of income from services and commissions
In accordance with IFRS 15, the Bank recognizes revenue associated with services and commissions when (or as) a
performance obligation is satisfied when transferring a service, based on the transaction price associated with this
performance obligation. In this context, the Bank takes the following steps to recognize revenue associated with
services and commissions:
- Recognition (satisfaction of the performance obligation): (i) identification of the contract associated with the service
provided and whether it should be covered by IFRS 15; (ii) identification of performance obligations associated with
each contract; (iii) definition of the criteria for the fulfilment of performance obligations, also considering the
contractual terms established with the counterparty. According to this definition, a service is transferred when the
customer obtains the benefits and control associated with the service provided. In this context, the Bank also identifies
whether performance obligations are met over time (\u201cover time\u201d) or at an exact moment (\u201cpoint in time\u201d), with
revenue being recognized accordingly.
- Measurement (price to be recognized associated with each performance obligation): (i) determine the transaction
price associated with the service provided, considering the contractual terms established with the counterparty and its
usual commercial practices. The transaction price is the amount of consideration to which the Bank expects to be
entitled in exchange for transferring promised services to the customer, excluding amounts collected on behalf of third
parties. The Bank includes in the transaction price part or all of the estimated amount of the variable consideration
associated with a performance obligation, only to the extent that it is highly probable that a significant reversal in the
amount of the accrued revenue recognized will not occur when the uncertainty associated with that variable
consideration is subsequently resolved; and (ii) allocate the transaction price to each of the performance obligations
identified under the contract established with the customer.
It should be noted that when services or commissions are an integral part of the effective interest rate of a financial
instrument, income resulting from services and commissions is recorded in net interest income (Note C.3).
J. Gains/(losses) on financial operations at fair value through profit or loss, Foreign exchange
gains/(losses), Gains/(losses) on hedge accounting and Gains/(losses) arising from
derecognition of financial assets and liabilities not measured at fair value through profit or
loss
These balances include gains and losses on financial assets and liabilities at fair value through profit and loss, i.e., fair
value changes and interest on trading derivatives and embedded derivatives, as well as the corresponding dividends
received. This balance also includes the gains and losses on sale of financial assets at fair value through other
comprehensive income and financial assets and financial liabilities at amortised cost. The changes in fair value of
hedging derivatives and hedged items, when fair value hedge is applicable, are also recognised in this balance, as well
as the foreign exchange gains or losses.
K. Fiduciary activities
Assets held in the scope of fiduciary activities are not recognised in the Group\u2019s consolidated financial statements. Fees
and commissions arising from this activity are recognised in the income statement in the period in which they occur.
L. Other tangible assets
Other tangible assets are stated at acquisition cost less accumulated depreciation and impairment losses. Subsequent
costs are recognised as a separate asset only when it is probable that future economic benefits will result for the
Group. All other repairs and maintenance expenses are charged to the income statement during the financial period in
which they are incurred, under the principle of accrual-based accounting.
Depreciation is calculated on a straight-line basis, over the following periods which correspond to their estimated
useful life:
Number of years
Buildings
50
Expenditure on freehold and leasehold buildings
10
Equipment
4 to 12
Other tangible assets
3
Whenever there is an indication that a fixed tangible asset might be impaired, its recoverable amount is estimated and
an impairment loss shall be recognised if the net value of the asset exceeds its recoverable amount. The recoverable
amount is determined as the highest between the fair value less costs to sell and its value in use calculated based on
the present value of future cash flows estimated to be obtained from the continued use of the asset and its sale at the
end of the useful life. The impairment losses of the fixed tangible assets are recognised in the income statement of the
period.
M. Investment properties
Real estate properties owned by the Group are recognised as \u2018Investment properties\u2019 considering that the main
objective of these buildings is their capital appreciation on a long-term basis and not their sale in a short-term period,
nor their maintenance for own use.
These investments are initially recognised at their acquisition cost, including transaction costs, and subsequently
revaluated at their fair value. The fair value of investment properties should reflect the market conditions at the
balance sheet date. Changes in fair value are recognised in the income statement, as \"Other operating income/
(losses)\" (note 6).
The experts responsible for the valuation of the assets are properly certified for that purpose, being registered in
CMVM.
N. Intangible assets
N1. Research and development expenditure
The Group does not capitalise any research and development costs. All expenses are recognised as costs in the period in
which they occur.
N2. Software
The Group recognises as intangible assets the costs associated to software acquired from external entities and
depreciates them on a straight-line basis by an estimated lifetime of 6 years. The Group does not capitalise internal
costs arising from software development.
O. Cash and cash equivalents
For the purposes of the cash flow statement, the item \u201cCash and cash equivalents\u201d comprises balances with less than
three months maturity from the balance sheet date, where the items \"Cash and deposits at Central Banks\" and \"Loans
and advances to credit institutions\" are included.
P. Offsetting
Financial assets and liabilities are offset and recognised at their net book value when: i) the Group has a legal right to
offset the amounts recognised and transactions can be settled at their net value; and, ii) the Group intends to settle on
a net basis or realize the asset and settle the liability simultaneously. Considering the current operations of the Group,
no compensation of material amount is made. In case of reclassification of comparative amounts, the provisions of IAS
1.41 are disclosed: i) the nature of the reclassification; ii) the amount of each item (or class of items) reclassified; and,
iii) the reason for the reclassification.
Q. Foreign currency transactions
Transactions in foreign currencies are converted into the respective functional currency of the operation at the foreign
exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
converted into the respective functional currency of the operation at the foreign exchange rate on the reporting date.
Foreign exchange differences arising from conversion are recognised in the income statement. Non-monetary assets and
liabilities denominated in foreign currencies, which are stated at historical cost, are converted into the respective
functional currency of the operation at the foreign exchange rate on the date of the transaction. Non-monetary assets
and liabilities denominated in foreign currencies that are stated at fair value are converted into the respective
functional currency of the operation at the foreign exchange rate on the date that the fair value was determined
against profit and loss, except for financial assets at fair value through other comprehensive income, for which the
difference is recognised against equity.
R. Employee benefits
R1. Defined benefit plans
The Group has the responsibility to pay its employees' retirement pensions, invalidity pensions and survivor\u2019s pensions
for their death, in accordance with the terms of the two collective labour agreements approved. These benefits are
provided for in the pension plans \u2018Plano ACT\u2019 and \u2018Plano ACTQ\u2019 of the Banco Comercial Portugu\u00eas Group Pension Fund.
Following the publication of Decree-Law no. 54/2009, of 2 March, banking entities are obligatorily enrolling new
employees in the General Social Security System (RGSS). These employees have the RGSS as their basic retirement
scheme, and do not have any benefits under the ACT (base plan). Under the scope of its management and human
resources, the Group had already adopted as a rule the inclusion of new employees in the RGSS since July 2005.
However, until the transposition into the ACT of the alterations resulting from the referred Decree-Law no. 54/2009, all
employees were covered by the provisions of the social security chapter of the ACT, and for employees who were
already registered with the RGSS, the ACT benefit worked as a complement to the RGSS. As of 1 July 2009, in
accordance with the ACT, all new employees only have the RGSS as their basic social security scheme.
Until 2011, in addition to the benefits provided for in the two plans above-mentioned, the Group had assumed the
responsibility, if certain conditions of profitability were verified in each year, of assigning retirement supplements to
the Group's employees hired up to 21 September 2006 (Complementary Plan). The Group, at the end of 2012,
determined the extinction (cut) of the old-age benefit of the Complementary Plan. On 14 December 2012, Instituto de
Seguros de Portugal (ISP) formally approved this change to the Group\u2019s benefit plan, effective from 1 January 2012. The
plan was cut, and employees were given individual acquired rights. On that date, the Group also proceeded to the
settlement of the respective liability.
From 1 January 2011, Bank employees were integrated in the General Social Security Scheme which now covers their
maternity, paternity, adoption and pension benefits. However, the banks remain liable for benefits that concern
illness, disability and life insurance (Decree-Law no. 1-A/2011, of 3 January).
The contributory rate is 26.6% divided between 23.6% supported by the employer and 3% supported by the employee,
replacing the Banking Social Healthcare System which was extinguished by the decree law referred above. As a
consequence of this amendment the capability to receive pensions by the actual employees are covered by the General
Social Security Scheme regime, considering the service period between 1 January 2011 and the retirement age. The
banks support the remaining difference for the total pension assured in the Collective Labour Agreement (ACT).
This integration has led to a decrease in the present value of the total benefits reported to the retirement age to be
borne by the Pension Fund, and this effect is to be recorded in accordance with the Projected Unit Credit during the
average lifetime of the pension until the normal retirement age is reached. The calculation of the liability for pensions
carried out periodically by the actuary considers this effect and is calculated considering the actuarial assumptions in
force, ensuring that the liabilities calculated with reference to 31 December 2010, not considering the effect of the
integration of bank employees into the General Social Security Scheme are fully covered and deducted from the amount
of the effect recognised until the date. The component of this effect for the year is recognised under the heading
\"Current service costs\".
Following the approval by the Government of the Decree-Law no. 127/2011, which was published on 31 December, an
agreement was established between the Government, the Portuguese Banking Association and the Banking Labour
Unions in order to transfer, to the Social Security, the liabilities related to pensions currently being paid to pensioners
and retirees, as at 31 December 2011.
This agreement established that the responsibilities to be transferred related to the pensions in payment as at 31
December 2011 at fixed amounts (discount rate 0%) in the component established in the IRCT - Instrument of Collective
Regulation of Work of the retirees and pensioners. The responsibilities related to the increase in pensions as well as any
other complements, namely, contributions to the Health System (SAMS), death benefit and death before retirement
benefit continued to be under the responsibility of the Financial Institutions.
At the end of December 2016, a revision of the ACT was reached between the BCP Group and four unions from the two
union federations of the unions that represent the Group's employees, which introduced changes in the Social Security
clause and consequently in the pension plan financed by the BCP Group Pension Fund. The new ACT was published by
the Ministry of Labour in the Bulletin of Labour and Employment on 15 February 2017 and the effects were recorded in
the financial statements of 31 December 2016, for employees associated with these four unions.
The negotiation with Sindicato dos Banc\u00e1rios do Norte (SBN), which was also involved in the negotiations of the new
ACT, was concluded in April 2017 with the publication of the Bulletin of Labour and Employment, with the effects of
this new ACT recorded in the financial statements as at 31 December 2017, for employees associates of SBN.
The most relevant changes in the ACT were the change in the retirement age (presumed disability) from 65 years to 66
years and two months in 2016 and the subsequent update of an additional month in each year, which cannot, in any
case, be higher than the one in force at any moment in the General Regime of Social Security, the change in the
formula for determining the employer's contribution to SAMS and, lastly, the introduction of a new benefit called the
End of Career Premium, which replaces the Seniority Premium.
These changes were framed by the Group as a change to the pension plan under the terms of IAS 19, as such had an
impact on the present value of the liabilities with services rendered and were recognised in the income statement for
the year under \"Staff costs\".
In 2017, after the authorization of the Autoridade de Supervis\u00e3o de Seguros e Fundos de Pens\u00f5es (ASF - Portuguese
Insurance and Pension Funds Supervision Authority), the BCP Group's pension fund agreement was amended. The main
purpose of the process was to incorporate into the pension fund the changes introduced in the Group's ACT in terms of
retirement benefits, as well as to transfer to the pension fund the responsibilities that were directly chargeable to the
company (extra-fund liabilities). The pension fund has a part exclusively for the financing of these liabilities which, in
the scope of the fund, is called Additional Complement. The End of Career Premium also became the responsibility of
the pension fund under the basic pension plan.
The Group\u2019s net obligation in respect of pension plans (defined benefit pensions plan) is calculated on a half year basis
on 31 December and 30 June of each year, and whenever there are significant market fluctuations or significant
specific events, such as changes in the plan, curtailments or settlements since the last estimation. The responsibilities
with past service are calculated using the Projected Unit Credit method and actuarial assumptions considered
adequate.
Pension liabilities are calculated by the responsible actuary, who is certified by the ASF.
The Group\u2019s net obligation in respect of defined benefit pension plans and other benefits is calculated separately for
each plan by estimating the amount of future benefit that employees have earned in return for their service in the
current and prior periods. The benefit is discounted to determine its present value, using a discount rate determined by
reference to interest rates of high- quality corporate bonds that have maturity dates approximating the terms of the
Group\u2019s obligations. The net obligations are determined after the deduction of the fair value of the Pension Plan's
assets.
The income/cost of interest with the pension plan is calculated by the Group, multiplying the net asset/liability with
retirement pension (liabilities less the fair value of the plan's assets) by the discount rate used in the determination of
the retirement pension liabilities. On this basis, the income/cost net of interest includes the interest costs associated
with retirement pension liabilities and the expected return of the plan's assets, both measured based on the discount
rate used to calculate the liabilities.
Gains and losses from the re-measurement, namely (i) actuarial gains and losses resulting from differences between
actuarial assumptions used and the amounts actually observed (experienced gains and losses) and changes in actuarial
assumptions and (ii) gains and losses arising from the difference between the expected return of the plan's assets and
the amounts obtained, are recognised against equity under \"Other comprehensive income\".
The Group recognises in its income statement a net total amount that comprises (i) the current service cost, (ii) the
income/cost net of interest with the pension plan, (iii) the effect of early retirement, (iv) past service costs and, (v)
the effects of any settlement or curtailment occurred during the period. The net income/cost with the pension plan is
recognised as interest and similar income or interest expense and similar costs depending on their nature. The costs of
early retirements correspond to the increase in liabilities due to the employee's retirement before reaching the age of
retirement.
Employee benefits, other than pension plans, namely post-retirement health care benefits and benefits for the spouse
and descendants for death before retirement are also included in the benefit plan calculation.
The contributions to the funds are made annually by each company of the Group, according to a specific contribution
plan that ensures the solvency of the fund. In the end of each year, according to Bank of Portugal Notice no. 12/2001,
the minimum level required for the responsibilities funding must be 100% regarding pension payments and 95%
regarding past services of active employees.
R2. Revision of the salary tables for employees in service and pensions in payment
In 2023, negotiations continued with all the unions subscribing to the Group's Collective Labour Agreements, for the
conclusion of the full review of the respective clauses, negotiations which are still ongoing.
At the same time, negotiations took place with all the unions that subscribed the Group's Collective Labour
Agreements, for the review of the Salary Tables and remaining pecuniary clauses relating to the year 2023, having been
agreed on 9 and 17 October with all the Unions subscribing to the Group's Collective Labour Agreements, the update of
the Salary Tables in 2023 with differentiated increases by contractual level between 4.00% and 7.80%. An increase of
4.50% was agreed for the Bank's Contributions to SAMS and other pecuniary clauses, such as study subsidies,
diuturnities, among others, and an increase of 21.43% was agreed for the lunch subsidy, whose daily value increased to
Euros 12.75. The agreed updates took effect on 1 January 2023, with the exception of remuneration related to
subsistence and travel allowances, which were updated after the agreed updates were operationalized.
Regarding the unions SNQTB \u2013 Sindicato Nacional dos Quadros e T\u00e9cnicos Banc\u00e1rios e SIB \u2013 Sindicato Independente da
Banca, an agreement was also reached regarding the revision of the Salary Tables and other pecuniary clauses relating
to the year 2022, as already agreed in 2022 with the remaining unions.
R3. Defined contribution plan
For the defined contribution plans, the responsibilities related to the benefits attributed to the Group's employees are
recognised as expenses when incurred.
As at 31 December 2023, the Group has two defined contribution plans. One plan covers employees who were hired
before 1 July 2009. For this plan, called non-contributory, Group's contributions will be made annually and equal to 1%
of the annual remuneration paid to employees in the previous year. Contributions shall only be made if the following
requirements are met: (i) the Bank's ROE equals or exceeds the rate of government bonds of 10 years plus 5 percentage
points, and (ii) distributable profits or reserves exist in the accounts of Banco Comercial Portugu\u00eas. In 2022 the
indicated requirements were fulfilled, in 2023 the planned annual contribution was accomplished, the expect value of
which was recorded in the costs of 2022. As in the year 2023, the indicated requirements were also fulfilled, a provision
for the annual contribution to be made during 2024 was recorded in the 2023 costs.
The other plan covers employees who have been hired after 1 July 2009. For this plan, designated contributory,
monthly contributions will be made equal to 1.5% of the monthly remuneration received by employees in the current
month, either by themselves or by the Group and employees. This contribution has a mandatory character and is
defined in the Collective Labour Agreement of the BCP Group and does not have a performance criterion.
R4. Variable remuneration paid to employees
In the remuneration policy for employees in force it is foreseen an annual variable remuneration system for employees
not covered by commercial incentive systems, based on the performance assessment of each employee, in accordance
with quantitative and qualitative criteria, that is carried out annually. As a result of this assessment and of the annual
fixed remuneration of reference for the role performed, and provided that the Bank's minimum level of performance,
as measured by a set of quantitative indicators, is met, the amount of the variable remuneration to be attributed to
each employee is determined.
The Executive Committee is responsible, under the terms defined in the remuneration policy, for setting the respective
allocation criteria for each employee, whenever it is attributed. The variable remuneration attributed to employees is
recorded against the income statement in the period to which it relates.
R5. Share-based compensation plan
As at 31 December 2023, a variable compensation plan with BCP shares is in force for the members of the Executive
Committee and for the employees considered Key Function Holders (includes Key Management Members), resulting from
the Remuneration Policies for the members of the management and supervisory bodies and for the Employees, both
approved for the financial year of 2023 and following years, with the changes that may be approved in each financial
year, namely by the General Shareholders\u2019 Meeting regarding the Remuneration Policy for the members of the
management and supervisory bodies, and by the Board of Directors regarding the Remuneration Policy for Employees.
Key Function Holders include Key Management Members, which are the first line directors who report directly to the
Board of Directors and the remaining employees whose professional activities have a significant impact on the Bank's
risk profile.
As defined in the Remuneration Policy for the members of the management and supervisory bodies, an annual variable
remuneration system is foreseen, for which an assessment of the performance of each member of the Executive
Committee is carried out on an annual basis based on quantitative and qualitative criteria. According to this assessment
and the annual fixed remuneration, and provided that the Bank's minimum level of performance as measured by a set
of quantitative indicators is met, the amount of the variable remuneration to be attributed to each member of the
Executive Committee is decided by the Remuneration and Welfare Board. The payment of the amount of the variable
remuneration attributed is subject to a deferral period of 5 years for 50% of its value, being 50% of its value paid in the
year following the financial year in question. The amounts related to the non-deferred and deferred portion are paid
50% in cash and 50% in BCP shares. The number of BCP shares attributed results from their valuation at a price defined
in accordance with the approved Remuneration Policy.
The Remuneration Policy for Employees foresees an annual variable remuneration system for Employees not covered by
Commercial Incentives Systems, based on the performance assessment of each employee, in accordance with
quantitative and qualitative criteria, that is carried out annually. As a result of this assessment and the fixed reference
remuneration for the function performed, and provided that the Bank's minimum level of performance in a set of
quantitative indicators is met, the value of the variable remuneration to be attributed to each Employee is decided by
the Executive Committee. For Employees considered as Key Function Holders, the payment of the amount of the
variable remuneration to be attributed to each Employee is decided by the Nominations and Remunerations Committee,
and its payment subject to a deferral period of 5 years for 40% of its value, with 60% of its value paid in the year
following the financial year in question. The amounts related to the non-deferred and deferred portion are paid 50% in
cash and 50% in BCP shares. The number of BCP shares attributed and to be attributed results from their valuation at a
price defined in accordance with the approved Remuneration Policy. As provided for in the Remuneration Policy for
Employees, if the amount of the annual variable remuneration awarded to a Key Function Holder is less than Euros
50,000 and does not represent more than one third of the total annual remuneration of the Key Function Holder the
payment of the annual variable remuneration will be 100% in cash and there will be no deferral.
Employees considered as Key Function Holders are not covered by Commercial Incentives Systems.
For the remaining Employees not covered by Commercial Incentive Systems, the payment of the variable remuneration
amount awarded is fully paid in cash in the following year to which it relates.
As foreseen in the approved Remuneration Policy and in the applicable legislation, the amounts of variable
remuneration attributed to the members of the Executive Committee and to the Employees Key Function Holders are
subject to reduction and reversal mechanisms, to be applied in case of verification of extremely significant events, duly
identified, in which the people covered have had a direct participation.
For the members of the Executive Committee and to the employees considered as Key Function Holders, a long-term
variable remuneration system is also foreseen, through which these members may receive variable remuneration fully
paid in BCP shares after the end of the assessment period, from 1 January 2022 until 31 December 2025 (from 1 January
2023 until 31 December 2025 to the Employees Key Function Holders), provided that a certain level of performance is
achieved in a set of long-term objectives. The amount of the long-term variable remuneration attributed is subject to a
deferral period of 5 years for 50% of its value, being 50% of its value paid in the year following the assessment period to
which it relates. The number of BCP shares attributed results from their valuation at a price defined in accordance with
the approved Remuneration Policy.
All the shares attributed to the members of the Executive Committee and to the Key Function Holders, within the scope
of the payment of variable remuneration, including long-term, are subject to a retention period of 1 year after their
payment.
The total variable remuneration to be attributed, each year, to each member of the Executive Committee and to the
Key Function Holders, regarding the proportion between its amount and the annual fixed remuneration, is limited to
the limits provided in the respective Remuneration Policy.
S. Income taxes
The Group is subject to income tax in several jurisdictions. The Bank is subject, in individual terms, to the regime
established by the Corporate Income Tax Code (CIRC), the Special Regime applicable to Deferred Tax Assets approved
by Law no. 61/2014 of 26 August, to which it adhered, and individual legislation. Additionally, deferred taxes relating
to tax losses and to temporary differences between the accounting net income and the net income accepted by the Tax
Authorities for Income Taxes calculation are accounted for, whenever there is a reasonable probability that these taxes
will be paid or recovered in the future.
Income tax registered in net income for the year comprises current and deferred tax effects. Income tax is recognised
in the income statement, except when related to items recognised directly in equity, which implies its recognition in
equity. Deferred taxes arising from the revaluation of financial assets at fair value through other comprehensive income
and cash flow hedging derivatives are recognised in shareholders\u2019 equity and are recognised after in the income
statement at the moment the profit and loss that originated the deferred taxes are recognised.
Current tax is the value that determines the taxable income for the year, using tax rates enacted or substantively
enacted by authorities at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred taxes are calculated in accordance with the liability method based on the balance sheet, considering
temporary differences, between the carrying amounts of assets and liabilities and the amounts used for taxation
purposes using the tax rates approved or substantially approved at balance sheet date and that is expected to be
applied when the temporary difference is reversed.
Deferred tax liabilities are recognised for all taxable temporary differences except for non-deductible goodwill for tax
purposes, differences arising from initial recognition of assets and liabilities that affect neither accounting nor taxable
profit and differences relating to investments in subsidiaries to the extent that probably they will not reverse in the
foreseeable future.
The item \u201cDeferred tax assets\u201d includes amounts associated with credit impairments not accepted for tax purposes
whose credits have been written-off, according to the expectation that the use of such impairments will be deductible
for the purposes of determining taxable income for the tax periods in which the legal conditions required for their tax
deductibility are met.
Deferred tax assets are recognised when it is probable that there will be future taxable profits that absorb the
deductible temporary differences for tax purposes (including reportable tax losses).
The Group, as established in IAS 12, paragraph 74, compensates the deferred tax assets and liabilities if, and only if: (i)
it has a legally enforceable right to offset current tax assets and current tax liabilities; and, (ii) the deferred tax assets
and the deferred tax liabilities relate to income taxes released by the same Tax Authority on the same taxable entity.
The Group complies with the guidelines of IFRIC 23 \u2013 Uncertainty over Income Tax Treatments on the determination of
taxable profit, tax bases, tax losses to be reported, tax credits to be used and tax rates in scenarios of uncertainty
regarding the income tax treatment, not having occurred any material impact on the Bank\u2019s financial statements
resulting from its application.
In 2016, the Banco Comercial Portugu\u00eas adhered to the Special Tax Regime for Groups of Companies (RETGS) for the
purposes of corporate income (IRC) taxation, with BCP being the dominant entity. In the financial years of 2023 and
2022, RETGS application was maintained. The group's taxable profit is calculated by the algebraic sum of taxable profits
and individual tax losses of the companies that integrate it.
T. Segmental reporting
The Group adopted IFRS 8 \u2013 Operating Segments for the purpose of disclosing financial information by operating and
geographic segments. A business segment is a Group's component: (i) which develops business activities that can obtain
revenues or expenses; (ii) whose operating results are regularly reviewed by the management with the aim of taking
decisions about allocating resources to the segment and assess its performance; and, (iii) for which separate financial
information is available.
The Group controls its activity through the following major operating segments:
Portugal activity:
\u2013 Retail Banking, also including ActivoBank;
\u2013 Companies and Corporate;
\u2013 Private Banking;
\u2013 Other.
The Other segment (Portugal activity) includes activities that are not allocated to remaining segments, namely
centralized management of financial investments, corporate activities, and insurance activity.
Foreign activity:
\u2013 Poland;
\u2013 Mozambique;
\u2013 Other.
The \"Other\" segment (foreign activity) includes the contribution of the participation in an associate in Angola and the
activity arising from the discontinued operations in Cayman Islands (operation liquidated in 2022). It should also be
noted that, following the sale of the operation in Switzerland, which took place at the end of 2021, the sale price and
the corresponding capital gain generated with the completion of this operation was adjusted pursuant to typical clauses
adopted in this type of transactions in 2022 and again in 2023, as final adjustment, records reflected as income arising
from discontinued operations, as provided for in IFRS 5.
U. Provisions, Contingent liabilities and Contingent assets
U1. Provisions
Provisions are recognised when (i) the Group has a present obligation (legal or resulting from past practices or
published policies that imply the recognition of certain responsibilities); (ii) it is probable that a payment will be
required to settle; and, (iii) a reliable estimation can be made of the amount of the obligation.
Additionally, when fundamental reorganizations occur that have a material effect on the nature and focus of the
company's operations, and the criteria for recognition of provisions referred to above are met, provisions are
recognized for restructuring costs.
The measurement of provisions considers the principles set in IAS 37 regarding the best estimate of the expected cost,
the most likely result of current actions and considering the risks and uncertainties inherent to the process result. On
the cases that the discount effect is material, provision corresponds to the actual value of the expected future
payments, discounted at a rate that considers the associated risk of the obligation.
Provisions are reviewed at each balance sheet date and adjusted to reflect the best estimate, being reverted through
profit and loss in the proportion of the payments that are not probable.
Provisions are derecognised through their use in the obligations for which they were initially created, or in the case
that these obligations cease to exist.
U2. Contingent assets
Contingent assets are not recognised in the financial statements and are disclosed when a future economic inflow of
resources is probable.
U3. Contingent liabilities
Contingent liabilities are not recognised in the financial statements, being framed under IAS 37 whenever the possibility
of an outflow of resources regarding economic benefits is not remote. The Group registers a contingent liability when:
i) it is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence
or non- occurrence of one or more uncertain future events that are not wholly within the control of the Group; or,
ii) it is a present obligation that arises from past events but is not recognised because:
a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; or,
b) the amount of the obligation cannot be measured with sufficient reliability.
The contingent liabilities identified are subject to disclosure, unless the possibility of an outflow of resources
incorporating economic benefits is remote.
V. Earnings per share
Basic earnings per share are calculated by dividing net income attributable to shareholders of the Group by the
weighted average number of ordinary shares outstanding, excluding the average number of ordinary shares purchased
by the Group and held as treasury shares.
For the diluted earnings per share, the weighted average number of ordinary shares outstanding is adjusted to consider
conversion of all dilutive potential ordinary shares. Potential or contingent share issues are treated as dilutive when
their conversion to shares would decrease net earnings per share. If the earnings per share are changed because of an
issue with premium or discount or other event that changed the potential number of ordinary shares or because of
changes in the accounting policies, the earnings per share for all presented periods should be adjusted retrospectively.
W. Insurance contracts
W1. Classification
IFRS 17 is the new accounting standard for insurance contracts, reinsurance contracts and for Investment contracts with
discretionary participation features, covering aspects such as recognition and measurement, presentation and
disclosure of information, replacing IFRS 4 \u2013 Insurance contracts.
The Group issues contracts that include insurance risk, financial risk or a combination of both insurance and financial
risk. A contract, in which the Group accepts a significant insurance risk from another party, by agreeing to compensate
that party on the occurrence of a specified uncertain future event, is classified as an insurance contract.
A contract issued by the Group without significant insurance risk, but on which financial risk is transferred with
discretionary participating features is classified as an investment contract recognised and measured in accordance with
the accounting policies applicable to insurance contracts. A contract issued by the Group that transfers only financial
risk, without discretionary participating features, is accounted for as a financial instrument.
W2. Recognition and measurement
IFRS 17 defines new principles for recognition, measurement, presentation and disclosure of insurance contracts,
reinsurance contracts and Investment contracts with discretionary participation features. The references below apply
to these three types of contracts.
In terms of recognition and measurement, insurance contracts are divided into portfolios, annual cohorts and groups of
contracts. In the initial recognition, contracts that have similar risk and can be managed together, must be identified,
grouping them into portfolios. For measurement purposes, these portfolios are further subdivided into annual cohorts,
according to the issuance year. Each of the cohorts, according to the expected future return, is then divided into the
following groups: i) contracts that are onerous at initial recognition; ii) contracts that do not present a significant
possibility of subsequently becoming onerous; and iii) remaining contracts in the portfolio.
The liability of an insurance contract begins when one of the following conditions is met: i) beginning of the coverage
period of the contract, ii) date on which the first payment is made by the insured and this becomes due or iii) in the
case of an onerous contract, when it becomes onerous.
IFRS 17 defines 3 measurement models of the insurance liabilities: GMM (General Measurement Model) as a general
modal, VFA (Variable Fee Approach) to be applied for investment contracts, which does not include a transfer of
significant insurance risk and PAA (Premium Allocation Approach), which can be applied for short term contracts (less
than 1 year).
The measurement of the value of a contract is the sum of (except where contracts are being measured using the
premium allocation approach): (i) the present value of future cash flows; (ii) a non-financial risk adjustment; and the
amount of future profit that is estimated that this contract will generate the Contractual Service Margin (CSM), unless
the contract group is onerous. In this case, the estimated loss is recognized immediately.
The liability for future services in contracts measured using the premium allocation approach is based on premiums
received, less amounts recognized in profit or loss already incurred in the period.
In terms of the discount rate for determining future cash flows, it should: (i) reflect the time value of money; ii) be
consistent with similar ones applied in the market for situations with similar characteristics and iii) exclude the effect
of factors that do not affect the future cash flows of the insurance contract.
In the subsequent valuation, the Statement of Financial Position shall include liabilities for insurance contracts, divided
into i) liabilities for future services and ii) liabilities for past services. In terms of the Income Statement, it should
include: i) income from insurance contracts, ii) expenses from insurance contracts and iii) losses from the financial
component of insurance contracts.
W3. Presentation and disclosures
In the Statement of Financial Position should appear in disaggregated form i) insurance contract assets, ii) reinsurance
ceded contract assets iii) insurance contracts liabilities and iv) reinsurance ceded contract liabilities.
In terms of the Income Statement, it should be evidenced i) insurance revenue, ii) insurance service expense and iii)
Insurance finance result, as well as iv) the net result arising from reinsurance contracts.
Together with the Financial Statements, the standard provides for additional qualitative and quantitative disclosures of
i) amounts recognized in the financial statements that fall within the scope of IFRS 17; ii) significant judgments and
changes to those judgments made with the application of IFRS 17 and iii) nature and extent of the risks inherent in
contracts that fall within the scope of IFRS 17.
For risks falling within the scope of IFRS 17, the entity shall analyze: (i) concentration risk, (ii) sensitivity analysis to
the most significant risks, (iii) claims development, (iv) credit risk and (v) liquidity risk.
W4. Transition
IFRS 17 is applied retrospectively with exemptions provided for the transition date, exemptions related to the
impracticality and complexity involved, for example in the calculation of liabilities, the Contractual Service Margin
(CSM) or the Loss Component, or the Reserve of the Financial Component of Insurance/Reinsurance Contracts (\u201cOCI
option\u201d) at the transition date. When impractical the Standard provides for the use of the Modified Retrospective
Approach or the Fair Value Approach.
The impacts of applying IFRS 17 are detailed in note 59.
X. Insurance or reinsurance intermediation services
Banco Comercial Portugu\u00eas and Banco ActivoBank are entities authorized by the Insurance and Pension Funds
Supervisory Authority (ASF - Autoridade de Supervis\u00e3o de Seguros e Fundos de Pens\u00f5es) for the practice of the activity
of insurance mediation, in the category of tied Insurance Intermediary, in accordance with article 8(a)(i) of Decree-Law
no. 144/2006, of 31 July, developing the activity of insurance intermediation in the life and non-life branches.
Within the scope of insurance mediation services, these Banks sell insurance contracts. As remuneration for the services
provided of insurance mediation, they receive commissions for the mediation of insurance contracts and investment
contracts, which are defined in agreements/protocols established with the Insurers.
Commissions received by insurance mediation services are recognized in accordance with the accrual principle, so that
commissions received at a time other than the period to which it relates are recorded as receivables under \"Other
assets\". Commissions received for insurance mediation services are recognized in accordance with the policy described
in note I. Recognition of income from services and commissions.
Y. Accounting estimates and judgments in applying accounting policies
IFRS set forth a range of accounting treatments that require the Board of Directors, under advice of the Executive
Committee, to apply judgments and to make estimations when deciding which treatment is the most appropriate.
These estimates were made considering the best information available at the date of preparation of the consolidated
financial statements, considering the context of uncertainty that results from the current economic scope and the
geopolitical conflict in Eastern Europe. The most significant of these accounting estimates and judgments used when
applying accounting principles are discussed in this section to improve understanding of how they affect the Group\u2019s
reported results and related disclosure.
Considering that in some cases there are several alternatives to the accounting treatment chosen by the Board of
Directors, under advice of the Executive Committee, the Group\u2019s reported results would differ if a different treatment
was chosen. The Executive Committee believes that the choices made are appropriate and that the financial
statements present the Group\u2019s financial position and results fairly in all material relevant aspects.
The alternative outcomes discussed below are presented solely to assist the reader in understanding the financial
statements and are not intended to suggest that other alternatives or estimations would be more appropriate.
Y1. Entities included in the consolidation perimeter
For the purposes of determining entities to include in the consolidation perimeter, the Group assesses whether it is
exposed to, or has rights to, the variable returns from its involvement with the entity and if it can take possession of
these results through the power it holds (de facto control). The decision if an entity needs to be consolidated by the
Group requires the use of judgment, estimations and assumptions to determine at what extent the Group is exposed to
the variable returns and its ability to use its power to affect these returns. Different estimations and assumptions could
lead the Group to a different scope of consolidation perimeter with a direct impact in consolidated income.
Y2. Goodwill impairment
The recoverable amount of the goodwill recorded in the Group's assets is assessed annually in the preparation of
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. For this
purpose, the carrying amount of the business units of the Group for which goodwill has been recognised is compared
with the respective recoverable amount. A goodwill impairment loss is recognised when the carrying amount of the
business unit exceeds the respective recoverable amount.
In the absence of an available market value, the recoverable amount is determined using cash flows predictions,
applying a discount rate that includes a risk premium appropriated to the business unit being tested. Determining the
cash flows to discount and the discount rate, involves judgment.
Y3. Income taxes
Interpretations and estimations were required to determine the total amount of income taxes in each of the
jurisdictions where the Group operates. There are many transactions and calculations for which the tax determination
is uncertain during the ordinary course of business. Different interpretations and estimations could result in a different
level of income taxes, current and deferred, recognised in the year.
This aspect assumes greater relevance for the purposes of the analysis of the recoverability of deferred taxes, in which
the Group considers projections of future taxable income based on a set of assumptions, including the estimate of
income before tax, adjustments to taxable income, evolution of tax legislation and its interpretation. Thus, the
recoverability of deferred tax assets depends on the implementation of the Bank's Board of Directors strategy, namely
the ability to generate the estimated taxable income, the evolution of tax law and its interpretation.
Regarding the activity in Portugal, the Law No. 98/2019, of 4 September established the tax regime for credit
impairments and provisions for guarantees for tax periods beginning on or after 1 January 2019, providing for
approximation between the accounting and tax rules for the purposes of deductibility of expenses with the
reinforcement of credit impairments. The rules in force until 2018 could continue to be applied until the end of the
2023 financial year, unless the option to apply the new regime was exercised in advance.
In 2022, the Banco Comercial Portugu\u00eas, S.A. and the Banco ActivoBank, S.A. exercised the option to apply the new
regime, under the terms of which the impairment losses for credit risk relating to exposures analysed on an individual
or on a collective basis recognized in accordance with the applicable accounting standards and regulations are fully
deductible for the purposes of determining taxable profit, with the exceptions provided for in the Corporate Income
Tax Code. The exceptions apply to impairment losses relating to credits and other rights over natural or legal persons
who hold, directly or indirectly, more than 10 % of the Bank's capital, over members of its corporate bodies, over
companies in which the Bank holds, directly or indirectly, more than 10 % of the capital or over entities with which it is
in a situation of special relations.
The Impairment losses and other value corrections for specific credit risk recorded until 31 December 2021 and still not
accepted for tax purposes are only deductible up to the amount that, in each tax period, corresponds to the application
of the mandatory minimum limits set out in Notice of Bank of Portugal No. 3/95, as amended before its repeal by
Notice of Bank of Portugal No. 5/2015, and, between other conditions, provided that they are not credits covered by
real estate rights.
Following the amendments provided for in Law No. 24-D/2022, of 30 December, within the scope of the State Budget
for 2023, the time limit applicable to the carrying forward of tax losses in Portugal was eliminated. This amendment
applies to tax losses calculated in tax periods beginning on or after 1 January 2023, as well as to tax losses calculated in
tax periods prior to 1 January 2023 and whose deduction period is still in progress on that date. Thus, tax losses
calculated in 2014 and subsequent years may be deducted from future taxable income. The deduction limit for tax
losses went from 70% to 65%, being increased by ten percentage points when the difference results from the deduction
of tax losses calculated in the 2020 and 2021 tax periods, under the terms of the special regime provided for in Law n.
27-A/2020, of 24 July.
In the projections of future taxable income, namely for purposes of the analysis of the recoverability of deferred taxes
assets carried out with reference to 31 December 2023, the approximation between the accounting and tax rules
provided for in the aforementioned Law n.\u00ba 98/2019, of 4 September, taking into account the option for applying the
new regime exercised in 2022, as well as the changes in terms of the elimination of the time limit on the use of tax
losses provided for in said Law no. 24-D/2022, of 30 December.
The taxable profit or tax loss calculated by the Bank or its subsidiaries residing in Portugal can be corrected by the
Portuguese tax administration within a period of four years, except in the case of any tax losses deduction has been
made or tax credit has been used, in which the expiry period is the exercise of that right. The Bank recorded
provisions, current tax liabilities or deferred taxes liabilities in the amount it considers appropriate to cover tax
corrections or tax losses incurred, as well as contingencies relating to years not yet reviewed by the tax authorities.
Y4. Valuation of real estate recorded in Non-current assets held for sale and in Others assets
The valuation of these assets, and consequently the impairment losses, is supported by evaluations carried out by
external experts, which incorporate several assumptions, namely the selling price per square meter, discount rate,
better use of the real estate and expectations regarding the development of real estate projects, as applicable, and
also considers the Bank's historical experience in the commercialization of real estate, its perspectives on the evolution
of the real estate market and the intentions of the management body regarding the commercialization of these assets.
The assumptions used in the valuations of these assets have an impact on their valuation and consequently on the
determination of impairment.
Y5. Pension and other employees\u2019 benefits
Determining pension liabilities requires the use of assumptions and estimations, including the use of actuarial
projections, estimated returns on investment, and other factors, such as discount rate, pensions and salary growth
rates, mortality tables, that could impact the cost and liability of the pension plan.
The discount rate used to update the Bank's pension fund liabilities, regarding the defined benefit pension plans of its
employees and managers, was determined based on an analysis carried out on a set of available information, which
includes, among other elements, the market references for this indicator published by internationally recognized
specialized entities and which are based, as defined by IAS 19, on market yields of a universe of high quality bond
issues (low risk), different maturities, called in Euros and relating to a diverse and representative range of issuers (non-
sovereign).
Y6. Financial instruments \u2013 IFRS 9
Y6.1. Classification and measurement
The classification and measurement of financial assets depends on the results of the SPPI test (analysis of the
characteristics of the contractual cash flows to determine if they correspond only to payments of principal and interest
on the outstanding capital) and the testing of the business model.
The Group determines the business model at a level that reflects how financial asset groups are managed together to
achieve a specific business objective. This evaluation requires judgment, since the following aspects, among others,
must be considered: the way in which the performance of assets is evaluated; the risks that affect the performance of
the assets and the way these risks are managed; and how asset managers are rewarded.
The Group monitors the financial assets measured at amortised cost and at fair value through other comprehensive
income that are derecognised prior to their maturity to understand the underlying reasons for their disposal and to
determine whether they are consistent with the purpose of the business model defined for these assets. This monitoring
is part of a process of continuous evaluation by the Group of the business model of the financial assets that remain in
the portfolio, to determine if it is adequate and, if it is not, if there was a change in the business model and,
consequently, a prospective classification change of these financial assets.
Y6.2. Impairment losses on financial assets at amortised cost and debt instruments at fair value through
other comprehensive income
The determination of impairment losses on financial instruments involves judgments and estimations regarding, among
others, the following:
Significant increase in credit risk:
Impairment losses correspond to the expected losses on a 12-month for the assets in Stage 1 and the expected losses
considering the probability of a default event occurring at some point up to the maturity date of the instrument
financial assets for assets in Stages 2 and 3. An asset is classified in Stage 2 whenever there is a significant increase in
its credit risk since its initial recognition. In assessing the existence of a significant increase in credit risk, the Group
considers qualitative and quantitative information, reasonable and sustainable.
In order to comply with the Supervisors' guidelines, namely regarding to the identification and measurement of credit
risk in the context of of uncertainty associated with the current geopolitical crises, the disruption in distribution chains,
rising energy costs and inflationary pressures, the Bank proceeded to record additional impairments in relation to the
current models of collective impairment calculation (overlays).
The exercise carried out was based on an analysis of migrations from customers identified as having the highest risk for
Stage 2 and Stage 3, with the greatest impact on the corporate segment.
Definition of groups of assets with common credit risk characteristics:
When expected credit losses are measured on a collective basis, the financial instruments are grouped based on
common risk characteristics. The Group monitors the adequacy of credit risk characteristics on a regular basis to assess
whether it maintains its similarity. This procedure is necessary to ensure that, in the event of a change in the credit
risk characteristics, the asset segmentation is reviewed. This review may result in the creation of new portfolios or in
transferring assets to existing portfolios that better reflect their credit risk characteristics.
Definition of the number and relative weight of prospective information for each type of product/market and
determination of relevant prospective information:
In estimating expected credit losses, the Group uses reasonable and sustainable forecasting information that is based
on assumptions about the future evolution of different economic drivers and how each of the drivers impacts the
remaining drivers.
Probability of default:
The probability of default represents a determining factor in the measurement of expected credit losses and
corresponds to an estimation of the probability of default in each period, which is calculated based on historical data,
assumptions and expectations about future conditions.
Loss given default:
It corresponds to a loss estimation in a default scenario. It is based on the difference between the contractual cash
flows and those that the Bank expects to receive, through the cash flows generated by the customers' business or credit
collaterals. The estimation of loss given default is based on, among other aspects, the different recovery scenarios,
historical information, the costs involved in the recovery process and the estimation of the valuation of collaterals
associated with credit operations.
Y6.3. Fair value of derivative financial instruments
Fair values are based on listed market prices if available, otherwise fair value is determined either by dealer price
quotations (either for that transaction or for similar instruments traded) or by pricing models, based on net present
value of estimated future cash flows which considers the market conditions for the underlying instruments, time value,
yield curve and volatility factors. These pricing models may require assumptions or judgments in estimating their fair
values. Consequently, the use of a different model or of different assumptions or judgments in applying a particular
model could result in different results from the ones reported.
Due to market stress conditions, the Bank needed to reallocate the risk limits, especially in the sensitivity limit of the
trading portfolio and to review the stress-test scenarios and their methodologies.
In the context of the uncertainty associated with the current macroeconomic framework, the calculation of fair value
adjustments was revised considering liquidity discounts, the costs of closing positions (widening the buy and sell
spread), credit risk, spreads of financing and increased volatility.
Y7. Provisions for legal risk related to foreign currency-indexed mortgage loans (mostly to Swiss franc)
The Group creates provisions for legal contingencies related foreign currency-indexed mortgage loans, mostly to Swiss
franc granted by Bank Millennium, S.A.
The assumptions used by Bank Millennium are essentially based on historical observations and will have to be updated
in subsequent periods, which may have a relevant impact on the provision\u2019s estimation. The methodology developed by
Bank Millennium is based on the following parameters: (i) the number of ongoing cases (including class action
agreements) and potential future lawsuits that will arise within the specified (three-year) time horizon; (ii) the
currently estimated amount of Bank Millennium's potential loss in the event of a specific court judgment; (iii) the
probability of obtaining a specific court judgment calculated on the basis of statistics of judgments in cases where Bank
Millennium is a party and legal opinions obtained; (iv) Bank Millennium does not include in the methodology for
calculating provisions the element related to the potential claim for remuneration for the client in connection with the
repayments made by him/her; and (v) estimates involved with amicable settlements with clients, concluded in court or
out of court.
The evolution of responsibilities with legal contingencies related to mortgage loans indexed to the Swiss franc and the
amount of the Bank Millennium\u2019s actual losses depend, namely, on the number of ongoing and potential lawsuits, as
well as on the final court decisions about each case and amicable settlement with clients.
\u00a0 \u00a0 Z. Subsequent events
The Group analyses events occurred after the balance sheet date, i.e., favourable and/or unfavourable events that
occur between the balance sheet date and the date the financial statements were authorized for issue. In this context,
two types of events can be identified:
i) those that provide evidence of conditions that existed at the balance sheet date (events after the balance sheet
date that give rise to adjustments); and,
ii) those that are indicative of the conditions that arose after the balance sheet date (events after the balance sheet
date that do not give rise to adjustments).
Events occurred after the date of the financial statements that are not considered as adjustable events, if significant,
are disclosed in the notes to the consolidated financial statements.
Net interest income
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Interest and similar income
Interest on deposits at Central Banks and on loans and advances to credit
institutions repayable on demand
105,333
55,281
Interest on financial assets at amortised cost
Loans and advances to credit institutions
74,377
74,519
Loans and advances to customers
3,243,794
2,150,214
Debt securities
491,969
242,165
Interest on financial assets at fair value through profit or loss
Financial assets held for trading
53,684
2,543
Financial assets not held for trading mandatorily at fair value through profit or loss
2,202
6,109
Financial assets designated at fair value through profit or loss
452
\u2014
Interest on financial assets at fair value through other comprehensive income
268,650
152,066
Interest on hedging derivatives
114,085
47,212
Interest on other assets
16,743
7,126
4,371,289
2,737,235
Interest expense and similar charges
Interest on financial liabilities at amortised cost
Resources from credit institutions
(50,838)
18,156
Resources from customers
(873,330)
(421,674)
Non subordinated debt securities issued
(90,084)
(27,703)
Subordinated debt
(84,234)
(68,546)
Interest on financial liabilities at fair value through profit or loss
Financial liabilities held for trading
Derivatives associated to financial instruments at fair value through profit or loss
(33,724)
(14,130)
Financial liabilities at fair value through profit or loss
Resources from customers
(8,582)
\u2014
Non subordinated debt securities issued
(631)
(3,565)
Interest on hedging derivatives
(392,995)
(62,159)
Interest on leasing
(10,983)
(5,633)
Interest on other liabilities
(164)
(2,209)
(1,545,565)
(587,463)
2,825,724
2,149,772
The balance Interest and similar income - Interest on deposits at Central Banks and on loans and advances to credit
institutions repayable on demand has accounted for a positive interest of Euros 11,884,000 (2022: negative interest
Euros 6,572,000) associated with demand deposits with the Bank of Portugal (do not include overnight operations).
The balance Interest and similar income - Interest on financial assets at amortised cost - Loans and advances to
customers includes the amount of Euros 54,823,000 (2022: Euros 55,967,000) related to commissions and other gains
accounted for under the effective interest method, as referred in the accounting policy described in note 1 C3. The
balance also includes the amount of Euros 92,894,000 (2022: Euros 76,249,000) related to interest income arising from
customers classified in stage 3.\u00a0
The balance Interest and similar income includes the following amounts related to hedge breakages: Interest on
financial assets at amortized cost - Loans and advances to customers, negative interest of Euros 32,558,000 (2022:
positive interests of Euros 58,153,000), Interest on financial assets at amortized cost - Debt securities, positive
interests of Euros 64,385,000 (2022: positive interests of Euros 30,752,000), Interest on financial assets at fair value
through other comprehensive income, positive interests of Euros 5,360,000 (2022: positive interests of Euros
11,301,000), no hedge breaks were recorded for customer's deposits.
The balances Interest expense and similar charges - Interest on non-subordinated debt securities issued and Interest on
subordinated debt include the amount of Euros 2,892,000 and Euros 712,000, respectively (2022: Euros 2,553,000 and
Euros 970,000, respectively) related to commissions and other costs accounted for under the effective interest method,
as referred in the accounting policy described in note 1 C3.
In 2022, the balance Interest expense and similar charges - Interest on financial liabilities at amortised cost - Resources
from credit institutions had recorded a negative cost of Euros 41,555,000 associated with the TLTRO III operation
described in note 33.
The balance Interest expense and similar charges -\u00a0 Interest on leasing refers to the interest cost related to the leasing
liabilities recognised under IFRS 16, as referred in accounting policy described 1 H.
Dividends from equity instruments
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Dividends from financial assets through other comprehensive income
1,783
10,086
1,783
10,086
The balances Dividends from financial assets through other comprehensive income include dividends from shares of
Tiicc, Sarl and Octal Group, Ltd. in the amount of Euros 615,000 and Euros 412,000, respectively (2022: Euros 7,950,000
and Euros 1,325,000 of Octal Group, Ltd. and Tiicc, Sarl, respectively). This balance also includes income from
investment fund units received during the year.
Net fees and commissions income
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Fees and commissions received
Banking services provided
489,255
484,454
Management and maintenance of accounts
168,859
170,372
Bancassurance
120,702
121,824
Securities operations
65,917
70,775
From guarantees granted
49,551
46,834
From commitments to third parties
5,243
5,195
Management and intervention commissions
23,381
23,624
Other commissions
21,403
20,696
944,311
943,774
Fees and commissions paid
Banking services provided by third parties
(131,769)
(132,751)
Securities operations
(7,520)
(8,991)
From guarantees received
(8,357)
(7,699)
Other commissions
(24,992)
(22,425)
(172,638)
(171,866)
771,673
771,908
Gains / (losses) on financial operations
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial operations at fair value through profit or loss
Gains/(losses) on financial assets held for trading
172,618
(151,915)
Gains/(losses) on financial assets not held for trading mandatorily
at fair value through profit or loss
(3,111)
8,962
Gains/(losses) on financial assets and liabilities designated at fair value
through profit or loss
(176,057)
170,259
(6,550)
27,306
Foreign exchange gains/(losses)
17,469
19,390
Gains/(losses) on hedge accounting
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
112,088
5,497
144,815
49,960
The balances Gains/(losses) on financial operations at fair value through profit or loss is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial assets held for trading
Gains
Debt securities portfolio
12,001
7,122
Equity instruments
13,414
202
Derivative financial instruments
335,620
336,772
Other operations
1,374
1,962
362,409
346,058
Losses
Debt securities portfolio
(7,578)
(16,543)
Equity instruments
(9,613)
(8,062)
Derivative financial instruments
(171,890)
(472,534)
Other operations
(710)
(834)
(189,791)
(497,973)
172,618
(151,915)
(continues)
(continuation)
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial assets not held for trading
mandatorily at fair value through profit or loss
Gains
Loans and advances to customers
3,011
10,280
Debt securities portfolio
48,269
38,336
Equity instruments
10,307
22,674
61,587
71,290
Losses
Loans and advances to customers
(3,222)
(7,610)
Debt securities portfolio
(42,769)
(42,847)
Equity instruments
(18,707)
(11,871)
(64,698)
(62,328)
(3,111)
8,962
Gains/(losses) on financial assets and liabilities designated at fair value
through profit or loss
Gains
Debt securities portfolio
207
\u2014
Resources from customers
6,243
3,936
Debt securities issued
Certificates and structured securities issued
66,658
142,982
Other debt securities issued
188
25,993
73,296
172,911
Losses
Resources from customers
(11,495)
\u2014
Debt securities issued
Certificates and structured securities issued
(224,547)
\u2014
Other debt securities issued
(13,311)
(2,652)
(249,353)
(2,652)
(176,057)
170,259
The balances Gains / (losses) on financial assets and liabilities designated at fair value through profit or loss - Gains/
(Losses) - Certificates and structured securities issued record the valuations and devaluations of certificates issued by
the Group. These liabilities are covered by futures, which valuation and devaluation are recorded in Gains / (losses) on
financial assets held for trading - Gains/(Losses) - Derivative financial instruments.
The balances Foreign exchange gains/(losses), Gains/(losses) on hedge accounting and Gains/(losses) arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss, are presented as
follows:
(Thousands of euros)
2023
2022
(restated)
Foreign exchange gains/(losses)
Gains
3,714,151
2,637,014
Losses
(3,696,682)
(2,617,624)
17,469
19,390
Gains/(losses) on hedge accounting
Gains
Hedging derivatives
274,230
1,303,985
Hedged items
214,420
199,940
488,650
1,503,925
Losses
Hedging derivatives
(289,761)
(376,843)
Hedged items
(177,081)
(1,129,315)
(466,842)
(1,506,158)
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
Gains
Credit sales
9,840
13,040
Debt securities portfolio at amortized cost
1,070
10,466
Debt securities portfolio at fair value through other comprehensive income
2,102
40,019
Debt securities issued
1,614
1,224
Others
128,825
933
143,451
65,682
Losses
Credit sales
(15,082)
(4,683)
Debt securities portfolio at fair value through other comprehensive income
(14,744)
(53,405)
Debt securities issued
(1,027)
(630)
Others
(510)
(1,467)
(31,363)
(60,185)
112,088
5,497
In 2023, the main contributions for the balance Gains/(losses) on hedge accounting were the gains of Euros 12,755,000
and Euros 8,713,000 relating to the deposits portfolio hedge and subordinated issues portfolio hedge, respectively.
Regarding the sale of financial assets at fair value through other comprehensive income subject to hedge accounting,
the balance Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value
through profit or loss - Debt securities portfolio at fair value through other comprehensive income, includes a net gain
of Euros 853,000 (2022: net gain Euros 114,278,000), which is offset in the balance Gains/(losses) on hedge accounting.
The balance Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value
through profit or loss - Gains - Debt securities portfolio at fair value through other comprehensive income includes the
amount of Euros 12,000 (2022: Euros 479,000) related to gains resulting from the sale of Portuguese Treasury bonds.
As described in note 48, the Bank Millennium's Management Board announced that after obtaining the necessary
corporate approvals, on 13 February 2023, the Bank concluded an agreement (\"Agreement\") for the sale of 80% of
shares in Millennium Financial Services sp. z o. o. (\"Company\") to Towarzystwo Ubezpiecze\u0144 na \u017bycie Europa S.A., which
acquires 72% of the Company's shares, and Towarzystwo Ubezpiecze\u0144 Europa S.A., which acquires 8% of the Company's
shares (collectively, the \"Buyer\").
Bank Millennium also concluded agreements with the Buyers and the Company regarding the exclusive insurance
distribution model, including cooperation agreements, distribution agreements and agency agreements. Strategic
insurance cooperation provides for long-term (10 years) cooperation in the field of bancassurance in relation to specific
insurance related to credit products offered by the Bank Millennium.
The essence of the transaction provided for in the Agreement was the direct purchase of Shares by the Buyers from the
Bank for a defined initial price, which could be subject to a price adjustment mechanism after the closing of the
Transaction.
On 29 March 2023, 80% of the shares in the company were transferred to the Buyers, and the final settlement of the
transaction, together with the price adjustment, took place in December 2023.
Since as part of the transaction, in addition to Agreement, Bank Millennium also concluded other agreements with the
Buyers and the Company, the Bank analysed individual agreements and their economic effects in accordance with the
requirements of IFRS 10, IFRS 15 and IFRS 9. As a result, Millennium identified contractual obligations and assessed the
assignment of contractual remuneration for individual elements of the transaction, determining the appropriate
method of recognizing revenues from single contractual obligations.
As a result, Bank Millennium recognized in 2023 in the Profit and Loss Account a result of Euros 143.7 million (PLN 652.4
million) (gross), which consisted of:
1. profit realized on sale: payment of the price less the fair value of the shares at the moment of loss of control
in the amount of Euros 122 million (PLN 553.9 million) (gross) was included in the item \u201cGains arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss - Others\u201d;
2. an inflow of Euros 10.1 million (PLN 46 million) (gross) as a valuation of the derivative at the time of final
settlement of the transaction in December 2023, resulting from the agreed potential future remuneration
payments, was recognized as \u201cGains on financial assets held for trading\u201d;
3. At the same time, due to the loss of control over the Company, the Bank valued the remaining non-controlling
share in the Company at fair value of\u00a0 Euros 11.6 million (PLN 52.5 million) (gross), this amount was included
in \"Gains/(losses) on disposal of subsidiaries and other assets\" (note 16).
Starting from the moment of loss of control, the investment in the Company is treated as an involvement in an
associated entity (Bank Millennium holds 20% of the shares in the Company) and is valued at the Group level using the
equity method, while in the Bank Millennium's financial statements the valuation model is fair value with the valuation
effect recorded in the Profit and Loss Account.
The Bank Millennium's assessment was made on the basis of IFRS and their interpretations applicable as at the date of
these financial statements.
Other operating income / (losses)
The amount of this account is comprised of
(Thousands of euros)
2023
2022
(restated)
Operating income
Gains on leasing operations
3,783
3,266
Income from services provided
30,026
28,614
Rents
2,133
4,053
Sales of cheques and others
8,357
9,730
Other operating income
80,583
50,125
124,882
95,788
Operating costs
Donations and contributions
(4,151)
(4,435)
Contribution to the banking sector
(44,807)
(43,484)
Contributions to Resolution Funds
(22,716)
(36,489)
Contribution to the Single Resolution Fund
(17,729)
(25,847)
Contributions to the Deposit Guarantee Fund
(665)
(8,805)
Institutional protection scheme (Poland)
\u2014
(58,972)
Special tax on the polish banking sector
\u2014
(36,107)
Taxes
(16,098)
(18,137)
Losses on financial leasing operations
(25)
(37)
Other operating costs
(79,106)
(56,587)
(185,297)
(288,900)
(60,415)
(193,112)
The balance Contribution to the banking sector in Portugal is estimated according to the terms of the Decree-Law no.
55-A/2010. The determination of the amount payable is based on: (i) the annual average liabilities deducted by core
capital (Tier 1) and supplementary capital (Tier 2) and deposits covered by the Deposit Guarantee Fund, and (ii)
notional amount of derivatives.
The balance Contributions to Resolution Funds includes the periodic contributions that must be paid to the Portuguese
Fund, as stipulated in Decree-Law No 24/2013. The periodic contributions are determined by a base rate, established
by the Bank of Portugal through regulatory instruments, to be applied in each year and which may be adjusted to the
credit institution\u2019s risk profile based on the objective incidence of those contributions. The period contributions affect
the liabilities of the credit institutions members of the Fund, as per the article 10 of the referred Decree-Law,
deducted from the liability elements that are part of the core capital and supplementary and from the deposits covered
by the Deposit Guarantee Fund.
The balance Contributions to Resolution Funds also includes the mandatory contributions made by Bank Millennium, S.A
to the Bank Guarantee Fund in Poland. The current principles of financing the deposit guarantee system and resolution
in Poland, as defined in the Act of 10 June 2016 on the Bank Guarantee Fund, deposit guarantee system and forced
restructuring, and are effective from 2017.
The method of calculating contributions regarding the resolution fund of banks in Poland was defined in the Delegated
Regulation of the European Commission No. 2015/63 (amended by regulation 2016/1434), which applies directly to all
European Union countries. The contribution for a given year from each entity is calculated by BFG in accordance with
this regulation and the entity is notified by 1 May, each year.
The balance Contribution to the Single Resolution Fund (\u2018SRF\u2019) corresponds to the Bank\u2019s annual ex-ante contribution to
support the application of resolution measures at EU level. The SRF has been established by Regulation (EU) No
806/2014 (the \u201cSRM Regulation\u201d). The SRF is financed from ex-ante contributions paid annually at individual level by all
credit institutions within the Banking Union. Contributions to the SRF consider the annual target level as well as the
size and the risk profile of institutions.
In calculating the ex-ante contributions, the SRF applies the methodology as set out in the Commission Delegated
Regulation (EU) No 2015/63 and European Parliament and of the Council Regulation (EU) No 806/2014. The annual
contribution to the Fund is based on the institution's liabilities excluding own funds and covered deposits considering
adjustments due to derivatives and intra group liabilities and on a risk factor adjustment that depends on the risk
profile of the institution.
In accordance with Article 67(4) of SRM Regulation and in accordance with the Intergovernmental Agreement on the
transfer and mutualisation of contributions to the SRF, the ex-ante contributions are collected by national resolution
authorities and transferred to the SRF by 30 June of each year.
In 2023, the total value of the contribution to the Single Resolution Fund attributable to the Group (BCP and
ActivoBank) amounted to Euros 22,861,000 (2022: Euros 30,400,000). The Group delivered the amount of Euros
17,729,000 to the Single Resolution Fund (2022: Euros 25,847,000) and chose to constitute an irrevocable commitment
in the amount of Euros 5,132,000 (2022: Euros 4,553,000), under the terms set out in Decree-Law no. 24/2013, of 19
February. As a guarantee of the assumption of the irrevocable payment commitment made in the year with the Single
Resolution Fund, a deposit was set up for this purpose, in the amount of Euros 5,132,000 (2022: Euros 4,553,000), which
is fully secured and accounted for in Other assets - Deposit account applications (note 32). The accumulated
irrevocable payment commitments constituted in the amount of Euros 30,638,000 (2022: Euros 25,506,000) are
accounted for in off-balance sheet items (note 45), and are fully collateralized by assets registered in Other assets -
Deposit account applications (note 32).
In 2023, the total value of the contribution to the Deposit Guarantee Fund attributable to the Group (BCP and
ActivoBank) amounted to Euros 583,000 (2022: Euros 506,000), with the Group delivering the entire contribution to the
Deposit Guarantee Fund. Until 2011, inclusive, under the terms set out in Banco de Portugal Notice No. 11/94, the Bank
could choose to deliver part of the contribution to the Deposit Guarantee Fund and the other part to constitute an
irrevocable payment commitment. As a guarantee of the assumption of irrevocable payment commitments assumed
until 2012 with the Deposit Guarantee Fund, a security pledge has been created for this purpose, in the amount of
Euros 99,824,000 (2022: Euros 99,757,000). The accumulated irrevocable payment commitments constituted amount to
Euros 95,190,000, and are accounted for in off-balance sheet items (note 45).
Regarding the irrevocable commitments of the Single Resolution Fund and the Deposit Guarantee Fund, the Bank
considered that they qualify as contingent liabilities under IAS 37, meaning that no liabilities or provisions were
recorded for this purpose.
In 2022, the balance Institutional protection scheme (Poland) corresponded to the contribution of Bank Millennium to
the polish Institutional Protection Scheme.
Regarding the item Special tax on the polish banking sector, as a result of the implementation of the Recovery Plan
from July 2022, Bank Millennium S.A. benefited from the exemption from the special tax on the polish banking sector
starting from that date.
Staff costs
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Remunerations
517,492
470,285
Mandatory social security charges
Post-employment benefits (note 50)
Service cost
(9,616)
(11,727)
Net interest cost / (income) in the liability coverage balance
(17,062)
(5,929)
Cost with early retirement programs
7,043
2,223
Amount transferred to the Fund resulting from acquired rights
unassigned related to the Complementary Plan
(9)
(6)
(19,644)
(15,439)
Other mandatory social security charges
113,622
104,784
93,978
89,345
Voluntary social security charges
15,538
12,326
Other staff costs
4,798
8,851
631,806
580,807
The balance Remunerations includes the amount of Euros 9,740,000 (2022: Euros 5,630,000) related to the distribution
of profits to Bank's employees.
In 2023, the Group paid severance payments in the amount of 3,718,000 (2022: Euros 1,588,000), of which the highest
amounted to Euros 565,000 (2022: Euros 217,000). Of the total severance payments, Euros 3,113,000 had already been
recorded as staff costs in the 2022 financial year, given that these were agreements concluded in that year, but whose
effective departures only occurred in 2023, as described in note 39.
The average number of employees by professional category, at service in the Group, is analysed as follows by category:
2023
2022
(restated)
Portugal
Top Management
880
854
Intermediary Management
1,426
1,416
Specific/Technical functions
2,926
2,867
Other functions
1,032
1,119
6,264
6,256
Abroad
9,318
9,314
15,582
15,570
Remunerations
In compliance with the provisions of Article 47 of Banco de Portugal Notice no. 3/2020, quantitative information is
disclosed regarding the remuneration paid to different categories of members of governing bodies and categories of
employees provided for in Article 115 C no. 2 of the RGICS, as well as the information provided for in Article 450 g) to i)
of Regulation (EU) 2019/876 of the European Parliament and of the Council.
A. BCP Board of Directors
The fixed remuneration and social charges paid to members of the Board of Directors of Banco Comercial Portugu\u00eas,
S.A. are analysed as follows:
(Thousands of euros)
Board of Directors
Executive Committee
Non-executive directors
2023
2022
(restated)
2023
2022
(restated)
Fixed remuneration
3,177
3,055
2,083
1,856
Variable remuneration
Pecuniary
461
370
\u2014
\u2014
Shares
460
1,322
\u2014
\u2014
Deferred
534
1,024
\u2014
\u2014
Supplementary retirement pension
635
611
144
138
Post-employment benefits
(14)
(42)
\u2014
\u2014
Other mandatory social security charges
763
734
491
443
6,016
7,074
2,718
2,437
Number of beneficiaries
6
6
11
11
Considering that the remuneration of members of the Executive Committee and Directors, with an exclusivity contract,
intends to compensate the functions that are performed in the Bank and in all other functions performed in subsidiaries
or governing bodies for which they have been designated by indication or in representation of the Bank, in the latter
case, the net amount of the remuneration annually received by each member of the Executive Committee will be
deducted from the fixed annual remuneration attributed by the Bank, ensuring that the effective payable amount
corresponds to the one approved by the Remuneration and Welfare Board.
In 2023, the amount of remuneration paid to the Executive Committee includes the amount of Euros 113,000 (2022:
Euros 101,000) supported by subsidiaries or companies whose governing bodies represent the Group's interests.
Regarding the Non-executive directors, this amount was Euros 27,000 (2022: Euros 26,000).
In 2023, it was assigned variable remuneration in accordance with the remuneration policies for the members of the
management and supervisory bodies and for employees, approved for 2022, as described in accounting policies 1 R4 and
1 R5.
In 2023, the variable remuneration attributed was Euros 923,000 in cash, of which Euros 463,000 are deferred for 5
years, and 4,136,539 shares corresponding to Euros 1,846,000, of which 2,068,268 shares are deferred for 5 years.
In 2023, the deferred variable remuneration paid refers to the years 2021, 2020, 2019 and 2018, of which Euros 131,000
in cash and 1,811,526 BCP shares in the amount of Euros 403,000.
In 2022, the variable remuneration attributed was Euros 616,000 in cash, of which Euros 246,000 are deferred for 5
years, and 12,416,223 shares corresponding to Euros 2,567,000, of which 1,568,846 shares are deferred for 5 years, and
3,397,643 shares are deferred for 3 years.
In 2022 the deferred variable remuneration of 2021, 2020 and 2019 attributed to the Executive Committee is related to
2020, 2019 and 2018 years, and amounts to Euros 590,000 in cash and 2,443,549 BCP shares in the amount of Euros
434,000.
In 2023 and 2022, no severance payments were paid to members of the Board of Directors.
B. Key Function Holders (KFH)
In 2023, the remunerations and social security charges supported with the Group's Key Function Holders are, detailed
by segment, as follows:
(Thousands of euros)
2023
Retail
Corporate
Control
functions
Others
Total
Fixed remuneration
1,391
2,387
2,838
5,098
11,714
Variable remuneration
Pecuniary
287
335
475
1,028
2,125
Shares
98
119
166
369
752
Deferred
42
36
19
125
222
Post-employment benefits
(72)
(39)
(146)
(234)
(491)
Other mandatory social security charges
368
504
708
1,283
2,863
2,114
3,342
4,060
7,669
17,185
Number of beneficiaries
10
13
31
38
92
Arising from the application of the Remuneration Policies for Employees, approved for the financial year 2022, as
described in accounting policies 1 R4 and 1 R5, in 2023, the 92 Key Function Holders were awarded with variable
remuneration, in the amount of Euros 337,000 in cash and 1,494,050 shares deferred for 5 years, as well as 229
participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
In 2023, deferred variable remunerations were paid to KFH deferred from 2022, 2021 and 2020 years, corresponding in
cash to Euros 102,000 and shares in the amount of Euros 120,000.
In 2023, severance payments were paid to 5 KFH in the amount of Euros 267,000, of which the highest payment was
Euros 110.000 and end-of-career bonuses in the amount of Euros 35,000.
In 2022, the remunerations and social security charges supported with the Group's Key Function Holders are, detailed
by segment, as follows:
(Thousands of euros)
2022 (restated)
Retail
Corporate
Control
functions
Others
Total
Fixed remuneration
1,317
2,657
2,474
5,494
11,942
Variable remuneration
Pecuniary
129
176
224
491
1,020
Shares
80
105
139
280
604
Deferred
48
42
20
129
239
Post-employment benefits
(112)
(108)
(191)
(373)
(784)
Other mandatory social security charges
331
547
649
1,320
2,847
1,793
3,419
3,315
7,341
15,868
Number of beneficiaries
9
15
26
40
90
Arising from the application of the Remuneration Policies for Employees, approved for the financial year 2021, as
described in accounting policies 1 R4 and 1 R5, in 2022, the 90 Key Function Holders were awarded with variable
remuneration, in the amount of Euros 236,000 in cash and 1,534,941 shares deferred for 5 years, as well as 174
participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
In 2022, deferred variable remunerations were paid to KFH deferred from 2021, 2020 and 2019 years, corresponding in
cash to Euros 57,000 and shares in the amount of Euros 182,000.
In 2022, severance payments were paid to 3 Bank's Key Function Holders in the amount of Euros 255,000 of which the
highest amounts to Euros 200,000 and end-of-career bonuses in the amount of Euros 65,000.
The remunerations and social security charges supported with the Group's Key Function Holders, discriminated by Key
management members and by members whose professional activities have significant impact in the risk profile of the
Bank (Other KFH), are as follows:
(Thousands of euros)
Key Function Holders
Key management members
Other KFH
Total
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
Fixed remuneration
7,785
7,865
3,929
4,077
11,714
11,942
Variable remuneration
Pecuniary
1,497
705
628
315
2,125
1,020
Shares
538
417
214
187
752
604
Deferred
217
230
5
9
222
239
Post-employment benefits
(265)
(453)
(226)
(331)
(491)
(784)
Other mandatory social security
charges
1,944
1,934
919
913
2,863
2,847
11,716
10,698
5,469
5,170
17,185
15,868
Number of beneficiaries
54
53
38
37
92
90
In 2023, referring to the 2022 financial year, the Key management members were awarded with deferred variable
remuneration in the amount of Euros 337,000 and 1,494,050 shares deferred for 5 years, as well as 229 participation
units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
In 2023 deferred variable remunerations from 2022, 2021 and 2020 years were paid in cash to Key management
members, in the amount of Euros 99,000, as well as BCP shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio
Fund corresponding to Euros 118,000. Regarding the other KFH, were paid Euros 2,000 in cash deferred from 2020, BCP
shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund, from the years 2020, corresponding to Euros 3,000.
During 2022, with reference to the financial year of 2021, the Key management members were awarded with deferred
variable remuneration in the amount of Euros 236,000 and 1,534,941 shares deferred for 5 years, as well as 174
participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
During 2022, deferred variable remunerations from 2021 and 2020 years were paid Euros 55,000 in cash to Key
management members, BCP shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund from the years 2021, 2020
and 2019 corresponding to Euros 175,000. Relatedly to the other KFH, were paid Euros 3,000 in cash deferred from 2020
and BCP shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund, from the years 2020 and 2019, corresponding
to Euros 7,000.
In accordance with regulation (EU) 11\u00ba 575/2013, Article 450 point 1.i), in the year 2023 the Bank has 1 employee on
the Board of Directors with remuneration between Euros 1 and Euros 1.5 million. In 2022, the Bank had no employees
earning more than Euros 1 million.
Other administrative costs
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Water, electricity and fuel
14,846
17,885
Credit cards and mortgage
8,621
8,603
Communications
25,152
24,296
Maintenance and related services
18,407
17,651
Legal expenses
5,011
4,368
Travel, hotel and representation costs
7,279
5,318
Advisory services
44,301
32,103
Training costs
1,453
1,404
Information technology services
25,708
35,277
Consumables
7,601
7,554
Outsourcing and independent labour
111,577
77,424
Advertising
27,705
24,854
Rents and leases
26,769
31,244
Insurance
4,943
4,848
Transportation
11,192
10,185
Other specialised services
28,869
28,970
Other supplies and services
23,812
20,977
393,246
352,961
The balance Rents and leases includes the amount of Euros 1,440,000 (2022: Euros 590,000) related to short-term lease
contracts and the amount of Euros 2,612,000 (2022: Euros 2,402,000) related to lease contracts of low-value assets, as
described in the accounting policy 1 H.
The balance Other specialised services includes fees for services rendered by the Statutory Auditor of the Group,
currently in functions, and by companies in its network as part of its statutory audit functions, as well as other services,
is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Auditing services
Legal certification
3,310
3,190
Other assurance services
1,180
1,388
Other services
747
310
5,237
4,888
Amortisations and depreciations
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Amortisations of intangible assets (note 30):
Software
33,928
36,168
Other intangible assets
5,289
4,166
39,217
40,334
Depreciations of other tangible assets (note 29):
Properties
14,324
14,917
Equipment
Computers
17,738
16,375
Security equipment
958
862
Installations
3,167
3,007
Machinery
1,649
1,535
Furniture
2,540
2,717
Motor vehicles
5,054
4,636
Other equipment
1,662
1,498
Right-of-use
Real estate
51,190
53,365
Vehicles and equipment
\u2014
4
98,282
98,916
137,499
139,250
Results on modification
The Group has accounted for in this balance the negative amount of Euros 19,426,000 (2022: negative amount of Euros
27,052,000) relating to contractual modifications made in accordance with IFRS 9, namely those negotiated with
customers holding foreign currency-indexed mortgage loans in Poland, described in note 57, which amounted, in 2023,
to Euros 11,505,000 (2022: Euros 21,817,000).
During 2022 an Act on crowdfunding for business ventures and assistance to borrowers was approved in Poland,
introducing, among others, a possibility of up to 8 months of credit holidays in 2022-2023 for PLN mortgage borrowers.
It was calculated an adjustment and recognized in accordance with IFRS 9 the reduction of the gross value of mortgage
loans in PLN against Results on modification item. The amount of the adjustment was originally calculated as the
difference between the gross value of the loan portfolio as at the calculation date and the current value of estimated
cash flows under loan agreements, considering 80% of loan principals that would suspend the repayment instalment. As
a result of the analysis of customer behaviour carried out in December 2022, the Bank Millennium's Group adjusted the
estimates of the percentage to 68%. As a result of the above and the expected costs, the value of the adjustment
recognized in 2022 as Results on modification amounted to Euros 282,813,000 (PLN 1,324,208,000).
Impairment of financial assets at amortised cost
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Loans and advances to credit institutions (note 21)
Charge for the year
92
349
Reversals for the year
(762)
(673)
(670)
(324)
Loans and advances to customers (note 22)
Charge for the year
805,500
830,750
Reversals for the year
(511,733)
(506,926)
Recoveries of loans and interest charged-off
(57,731)
(20,836)
236,036
302,988
Debt securities (note 23)
Associated to credit operations
Charge for the year
3,991
8
Reversals for the year
\u2014
(2,393)
3,991
(2,385)
Not associated to credit operations
Charge for the year
9,323
3,329
Reversals for the year
(688)
(2,779)
8,635
550
12,626
(1,835)
247,992
300,829
Impairment of financial assets at fair value through other comprehensive
income
The detail of this balance is comprised of:
(Thousands of euros)
2023
2022
(restated)
Impairment of financial assets at fair value through other comprehensive income (note 24)
Charge for the year
2,641
545
Reversals for the year
(1,319)
(5,568)
1,322
(5,023)
Impairment of other assets
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Impairment of investments in associated companies (note 26)
Charge for the year
\u2014
1,435
\u2014
1,435
Impairment of non-current assets held for sale (note 27)
Charge for the year
12,899
78,318
Reversals for the year
(1,656)
(1,116)
11,243
77,202
Impairment of goodwill of subsidiaries (note 30)
Charge for the year
\u2014
102,770
\u2014
102,770
Impairment of other assets (note 32)
Charge for the year
17,673
17,699
Reversals for the year
(7,150)
(7,047)
10,523
10,652
Impairment of real estate and other assets arising from recovered loans (note 32) (*)
Charge for the year
34,706
\u2014
Reversals for the year
(98)
\u2014
34,608
\u2014
56,374
192,059
(*) The 2023 values regard to impairment associated with real estate and assets arising from recovered loans.
Other provisions
This balance is comprised of:
(Thousands of euros)
2023
2022
(restated)
Provision for guarantees and other commitments (note 39)
Charge for the year
40,602
27,864
Reversals for the year
(28,372)
(26,939)
12,230
925
Other provisions for liabilities and charges (note 39)
Charge for the year
785,928
569,226
Reversals for the year
(4,000)
(1,854)
781,928
567,372
794,158
568,297
The balance Other provisions for liabilities and charges - Charge for the year refers essentially to provisions for legal
risk accounted for by Bank Millennium, related to foreign currency-indexed mortgage loans, as described in note 57,
which, in 2023, amounted to Euros 675,252,000 (2022: Euros 430,843,000).
Share of profit of associates accounted for using the equity method
The main contributions of the investments accounted for using the equity method are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Banco Millennium Atl\u00e2ntico, S.A. (note 26)
Appropriation relating to the current year
2,977
2,431
Appropriation relating to the previous year
\u2014
(2,924)
Effect of the application of IAS 29:
Amortization of the effect calculated until 31 December 2018 (a)
(268)
(423)
2,709
(916)
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A.
40,422
29,700
Unicre - Institui\u00e7\u00e3o Financeira de Cr\u00e9dito, S.A.
6,597
11,843
SIBS, S.G.P.S, S.A.
9,851
11,687
Banque BCP, S.A.S.
2,745
4,520
Fidelidade Mo\u00e7ambique - Companhia de Seguros S.A.
1,942
1,841
Other companies
\u2014
(64)
61,557
59,527
64,266
58,611
(a) Based on the requirements of IAS 29, Angola was considered as a high inflation economy until 31 December 2018, for the purposes of
presentation of consolidated financial statements, as described in accounting policy 1 B6. This classification is no longer applied since 1 January
2019.
Gains/(losses) on disposal of subsidiaries and other assets
This balance is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains /(Losses) on disposal of investments
11,539
(283)
Gains /(Losses) on disposal of other assets
10,270
10,450
21,809
10,167
As described in notes 5 and 48, due to the sale of 80% of the shares of Millennium Financial Services sp. z o.o. by Bank
Millennium in Poland and consequently loss of control over the company, the Group measured its remaining non-
controlling stake (20%) at fair value, recording a gain of Euros 11,562,000 recorded as Gains /(Losses) on disposal of
investments.
The balance Gains /(Losses) on disposal of other assets includes essentially gains on disposal of assets held by the Group
and classified as non-current assets held for sale and as other assets, which corresponds to a gain of Euros 5,612,000
(2022: gain of Euros 11,323,000).
Net income from discontinued or discontinuing operations
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Banque Priv\u00e9e BCP (Suisse) S.A.
Gains on disposal of the investment held (price adjustment)
(2,843)
1,765
Fidelidade Mo\u00e7ambique - Companhia de Seguros S.A.
Correction of gains on disposal of the investment held
\u2014
3,772
Millennium bcp Gest\u00e3o de Activos - Sociedade Gestora de Fundos de Investimento, S.A.
Losses (expenses)
(9)
\u2014
(2,852)
5,537
Under the agreement entered between Banco Comercial Portugu\u00eas, S.A. and Union Bancaire Priv\u00e9e, UBP SA regarding
the sale of the entire share capital of Banque Priv\u00e9e BCP (Suisse) S.A. and in accordance with the provisions of IFRS 5,
this operation was considered as discontinued in June 2021, and the impact on results presented in a separate line of
the income statement named \"Net income from discontinued or discontinuing operations\".
The sale price received and the corresponding capital gain on disposal were adjusted in 2022 and in 2023 definitively,
based on price adjustments related to the evolution of certain parameters defined contractually, as is usual in this type
of transaction, including those that result from the variation of stocks and/or flows of assets under management, in
pre-determined dates and specified portfolios.
By the end of 2021, the Group, through its subsidiary BIM - Banco Internacional de Mo\u00e7ambique, S.A., sold 70% of the
investment held in Seguradora Internacional de Mo\u00e7ambique, S.A. (now designated Fidelidade Mo\u00e7ambique - Companhia
de Seguros S.A., according to note 60), becoming to hold a minority stake of 22%. In accordance with the provisions of
IFRS 5, this operation was considered as discontinued and the impact on results presented in a separate line of the
income statement named \"Net income from discontinued or discontinuing operations\".
The final sales price was adjusted positively in 2022, depending on the price adjustment resulting from adjustments as
is usual in this type of transactions, namely the variation of the value and/or flows of assets under management, in pre-
determined dates and for specified assets. By the end of 2022, the period during which price adjustments could be
made ended.
Earnings per share
The earnings per share are calculated as follows:
(Thousands of euros)
2023
2022
(restated)
Continuing operations
Net income from continuing operations
950,461
114,027
Non-controlling interests
(91,559)
77,822
Appropriated net income from continuing operations
858,902
191,849
Interests on perpetual subordinated bonds (Additional Tier 1)
(37,000)
(37,000)
Adjusted net income from continuing operations
821,902
154,849
Discontinued or discontinuing operations (note 17)
Net income from discontinued or discontinuing operations
(2,852)
5,537
Adjusted net income
819,050
160,386
Average number of shares
15,113,989,952
15,113,989,952
Basic earnings per share (Euros):
from continuing operations
0.054
0.010
from discontinued or discontinuing operations
0.000
0.000
0.054
0.010
Diluted earnings per share (Euros):
from continuing operations
0.054
0.010
from discontinued or discontinuing operations
0.000
0.000
0.054
0.010
As at 31\u00a0December 2023, the Bank's share capital amounts to Euros 3,000,000,000 (2022: Euros 3,000,000,000) and is
represented by 15,113,989,952 nominative book-entry shares without nominal value, fully subscribed and paid up.
There were not identified another dilution effects of the earnings per share as at 31\u00a0December 2023 and 2022, so the
diluted result is equivalent to the basic result.
Cash and deposits at Central Banks
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Cash
688,501
593,033
Central Banks
Bank of Portugal
2,134,395
3,370,139
Central Banks abroad
1,722,630
2,058,829
4,545,526
6,022,001
The balance Central Banks includes deposits at Central Banks of the countries where the Group operates to satisfy the
legal requirements to maintain a cash reserve calculated based on the value of deposits and other effective liabilities.
According to the European Central Bank System for Euro Zone, the cash reserve requirements establish the
maintenance of a deposit with the Central Bank equivalent to 1% of the average value of deposits and other liabilities,
during each reserve requirement period. The rate is different for countries outside the Euro Zone.
In addition, from the reserve counting period started on 30 October 2019, the ECB introduced the tiering regime, in
which the balance with the Central Bank in excess of the minimum cash reserves, up to an estimated maximum of 6
times of the reserves, is remunerated at the central bank's lending rate instead of the deposit rate.
Loans and advances to credit institutions repayable on demand
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Credit institutions in Portugal
1,285
2,338
Credit institutions abroad
260,227
112,443
Amounts due for collection
76,175
98,679
337,687
213,460
The balance Amounts due for collection represents, essentially, cheques due for collection on other financial
institutions. These balances were settled in the first days of the following month.
Loans and advances to credit institutions
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Loans and advances to Central Banks
Central Banks abroad
184,650
382,038
184,650
382,038
Loans and advances to credit institutions in Portugal
\u00a0 Term deposits
(23)
973
\u00a0 Loans
\u2014
4,250
\u00a0 Term deposits to collateralise CIRS and IRS operations (*)
330
\u2014
\u00a0 Other
10,175
1,068
10,482
6,291
Loans and advances to credit institutions abroad
\u00a0 Term deposits
371,647
425,152
\u00a0 Term deposits to collateralise CIRS and IRS operations (*)
58,446
124,746
\u00a0 Other
283,476
26,069
713,569
575,967
908,701
964,296
Impairment for loans and advances to credit institutions
(224)
(862)
908,477
963,434
(*) Under the scope of derivative financial instruments operations (IRS and CIRS) with institutional counterparties, and as defined in the
respective contracts (\"Cash collateral\"), these deposits are held by the counterparties and are given as collateral of the referred operations (IRS
and CIRS), whose revaluation is negative for the Group.
This balance analysed by the period to maturity, before impairment, is as follows:
(Thousands of euros)
2023
2022
(restated)
Up to 3 months
703,056
752,913
3 to 6 months
1,041
79,247
6 to 12 months
204,604
132,136
908,701
964,296
The changes occurred in impairment of Loans and advances to credit institutions are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
862
1,187
Transfers
28
\u2014
Charge for the year (note 11)
92
349
Reversals for the year (note 11)
(762)
(673)
Exchange rate differences
4
(1)
Balance at the end of the year
224
862
Loans and advances to customers
The analysis of loans and advances to customers, by type of credit, is as follows:
(Thousands of euros)
2023
2022
(restated)
Mortgage loans
28,622,845
28,658,104
Loans
16,520,496
17,672,581
Finance leases
4,195,116
4,176,329
Factoring operations
2,909,570
3,022,248
Current account credits
847,455
822,473
Overdrafts
1,019,668
1,046,121
Discounted bills
156,603
201,081
54,271,753
55,598,937
Overdue loans - less than 90 days
110,996
94,063
Overdue loans - Over 90 days
505,060
485,166
54,887,809
56,178,166
Loans impairment
(1,582,650)
(1,502,373)
53,305,159
54,675,793
The balance Loans and advances to customers, as at 31 December 2023, is analysed as follows:
(Thousands of euros)
2023
Outstanding
loans
Overdue
loans
Gross
amount
Impairment
Net
amount
Public sector
538,721
40
538,761
(1,261)
537,500
Asset-backed loans
31,799,089
111,046
31,910,135
(564,616)
31,345,519
Other guaranteed loans
4,716,031
71,101
4,787,132
(183,142)
4,603,990
Unsecured loans
8,039,408
308,262
8,347,670
(612,363)
7,735,307
Foreign loans
2,073,818
13,816
2,087,634
(51,924)
2,035,710
Factoring operations
2,909,570
22,103
2,931,673
(59,231)
2,872,442
Finance leases
4,195,116
89,688
4,284,804
(110,113)
4,174,691
54,271,753
616,056
54,887,809
(1,582,650)
53,305,159
The balances Asset-backed loans and Other guaranteed loans follow the subsequent types of guarantees considered:
\u2013 Asset-backed loans: Financial collaterals, physical collaterals (movable or immovable) and amounts receivable (income
consignment);
\u2013 Credit with other guarantees: First-demand guarantees issued by banks or other entities and personal guarantees.
The balance Loans and advances to customers, as at 31 December 2022, is analysed as follows:
(Thousands of euros)
2022 (restated)
Outstanding
loans
Overdue
loans
Gross
amount
Impairment
Net
amount
Public sector
583,999
\u2014
583,999
(966)
583,033
Asset-backed loans
32,233,382
123,063
32,356,445
(555,500)
31,800,945
Other guaranteed loans
5,667,532
100,085
5,767,617
(222,449)
5,545,168
Unsecured loans
7,458,312
258,186
7,716,498
(476,885)
7,239,613
Foreign loans
2,457,135
2,451
2,459,586
(34,334)
2,425,252
Factoring operations
3,022,248
16,680
3,038,928
(49,411)
2,989,517
Finance leases
4,176,329
78,764
4,255,093
(162,828)
4,092,265
55,598,937
579,229
56,178,166
(1,502,373)
54,675,793
The balance Loans and advances to customers includes the amount of Euros 10,875,965,000 (31\u00a0December 2022: Euros
10,613,589,000) regarding mortgage loans assigned to the cover pool backing the Group\u2019s covered bond programme
issuances.
As part of the liquidity risk management, the Group holds a pool of eligible assets that can serve as collateral in funding
operations with the European Central Bank and other Central Banks in countries where the Group operates, which
include loans and advances to customers.
As referred in note 51, the Group provides loans and/or guarantees to qualifying shareholders holding individually or
together with their affiliates, 5% or more of the share capital identified in the Board of Directors report and in note 41.
The Group granted credit to qualifying shareholders and entities controlled by them, in the amount of Euros
112,007,000 (31\u00a0December 2022: Euros 98,658,000), as referred in note 51 a). The amount of impairment recognised for
these contracts amounts to Euros 1,481,000 (31\u00a0December 2022: Euros 914,000).
The conclusion of business between the Company and holders of qualifying holdings or individuals or legal entities
related to them in accordance with the provisions of article 33.\u00ba, n.\u00ba 3 of Notice 3/2020 of Bank of Portugal, regardless
of the amount, is always subject of consideration and deliberation by the Board of Directors, after obtaining a prior
opinion from the Audit Committee, and by proposal of the Executive Committee, which in turn deliberates under
proposal from the Credit Committee, after obtaining an analysis and opinion from the Compliance Office, which
pronounces regarding the compliance of the proposed operations with internal regulations, legal and regulatory
provisions and other conditions that may apply to them, and the Risk Office, which evaluates and issues an opinion on
the risks inherent to the operation.
As at 31\u00a0December 2022, the balance Finance leases included the amount of Euros 348,000 relative to sublease
operations, as referred in accounting policy 1 H.
The analysis of the outstanding amount of financial lease contracts, by type of client, is presented as follows:
(Thousands of euros)
2023
2022
(restated)
Individuals
Home
36,649
43,402
Consumption
26,702
27,606
Others
71,927
75,666
135,278
146,674
Companies
Equipment
1,936,577
1,890,361
Real estate
2,123,261
2,139,294
4,059,838
4,029,655
4,195,116
4,176,329
The analysis of loans and advances to customers, as at 31\u00a0December 2023, by sector of activity, is as follows:
(Thousands of euros)
2023
Outstanding
loans
Overdue
loans
Gross
amount
Impairment
Net
amount
% Gross
amount
Agriculture and forestry
433,118
5,320
438,438
(12,157)
426,281
0.80%
Fisheries
23,941
3,237
27,178
(3,835)
23,343
0.05%
Mining
64,315
1,603
65,918
(6,510)
59,408
0.12%
Food, beverage and tobacco
721,867
6,374
728,241
(33,043)
695,198
1.33%
Textiles
412,927
11,034
423,961
(54,906)
369,055
0.77%
Wood and cork
239,794
2,606
242,400
(5,411)
236,989
0.44%
Paper, printing and publishing
120,862
703
121,565
(4,018)
117,547
0.22%
Chemicals
702,032
15,497
717,529
(30,817)
686,712
1.31%
Machinery, equipment and basic
metallurgical
1,347,043
27,219
1,374,262
(61,863)
1,312,399
2.50%
Electricity and gas
234,740
255
234,995
(7,500)
227,495
0.43%
Water
190,356
608
190,964
(8,609)
182,355
0.35%
Construction
1,465,696
23,140
1,488,836
(80,773)
1,408,063
2.71%
Retail business
1,697,573
18,103
1,715,676
(38,154)
1,677,522
3.13%
Wholesale business
2,001,101
24,270
2,025,371
(72,776)
1,952,595
3.69%
Restaurants and hotels
1,358,246
16,267
1,374,513
(76,772)
1,297,741
2.50%
Transports
1,305,519
13,925
1,319,444
(29,283)
1,290,161
2.40%
Post offices
24,654
319
24,973
(571)
24,402
0.05%
Telecommunications
355,653
4,045
359,698
(7,521)
352,177
0.66%
Services
Financial intermediation
1,456,457
476
1,456,933
(40,634)
1,416,299
2.65%
Real estate activities
1,987,406
14,870
2,002,276
(53,201)
1,949,075
3.65%
Consulting, scientific and technical
activities
1,009,028
29,952
1,038,980
(156,822)
882,158
1.89%
Administrative and support services
activities
490,512
5,048
495,560
(22,072)
473,488
0.90%
Public sector
631,184
40
631,224
(2,956)
628,268
1.15%
Education
107,963
969
108,932
(2,286)
106,646
0.20%
Health and collective service activities
356,644
1,856
358,500
(9,471)
349,029
0.65%
Artistic, sports and recreational
activities
221,300
901
222,201
(32,350)
189,851
0.41%
Other services
258,037
3,808
261,845
(72,074)
189,771
0.48%
Consumer loans
6,566,398
256,681
6,823,079
(428,213)
6,394,866
12.43%
Mortgage credit
27,868,097
112,639
27,980,736
(202,120)
27,778,616
50.98%
Other domestic activities
1,501
197
1,698
(152)
1,546
0.00%
Other international activities
617,789
14,094
631,883
(25,780)
606,103
1.15%
54,271,753
616,056
54,887,809
(1,582,650)
53,305,159
100%
The analysis of loans and advances to customers, as at 31\u00a0December 2022, by sector of activity, is as follows:
(Thousands of euros)
2022 (restated)
Outstanding
loans
Overdue
loans
Gross
amount
Impairment
Net
amount
% Gross
amount
Agriculture and forestry
461,680
8,517
470,197
(13,879)
456,318
0.84%
Fisheries
25,308
3,226
28,534
(2,563)
25,971
0.05%
Mining
70,970
1,676
72,646
(5,249)
67,397
0.13%
Food, beverage and tobacco
813,359
11,634
824,993
(26,201)
798,792
1.47%
Textiles
497,338
8,989
506,327
(17,109)
489,218
0.90%
Wood and cork
260,175
3,730
263,905
(5,364)
258,541
0.47%
Paper, printing and publishing
148,937
742
149,679
(3,924)
145,755
0.27%
Chemicals
862,826
38,334
901,160
(63,538)
837,622
1.60%
Machinery, equipment and basic
metallurgical
1,526,778
25,298
1,552,076
(56,649)
1,495,427
2.76%
Electricity and gas
229,821
443
230,264
(1,285)
228,979
0.41%
Water
204,736
452
205,188
(8,371)
196,817
0.37%
Construction
1,497,114
21,639
1,518,753
(141,991)
1,376,762
2.70%
Retail business
1,705,882
18,730
1,724,612
(36,848)
1,687,764
3.07%
Wholesale business
2,225,903
26,755
2,252,658
(67,081)
2,185,577
4.01%
Restaurants and hotels
1,505,963
15,721
1,521,684
(71,192)
1,450,492
2.71%
Transports
1,320,236
7,464
1,327,700
(20,751)
1,306,949
2.36%
Post offices
19,918
254
20,172
(412)
19,760
0.04%
Telecommunications
411,885
1,508
413,393
(9,411)
403,982
0.74%
Services
Financial intermediation
2,047,265
2,149
2,049,414
(44,691)
2,004,723
3.65%
Real estate activities
1,978,182
10,931
1,989,113
(35,469)
1,953,644
3.54%
Consulting, scientific and technical
activities
969,410
8,232
977,642
(86,718)
890,924
1.74%
Administrative and support services
activities
532,237
4,296
536,533
(57,220)
479,313
0.96%
Public sector
823,904
\u2014
823,904
(2,545)
821,359
1.47%
Education
143,930
814
144,744
(14,627)
130,117
0.26%
Health and collective service activities
378,423
1,029
379,452
(7,108)
372,344
0.68%
Artistic, sports and recreational
activities
236,543
2,128
238,671
(37,124)
201,547
0.43%
Other services
234,399
2,971
237,370
(101,356)
136,014
0.42%
Consumer loans
5,775,239
237,160
6,012,399
(369,220)
5,643,179
10.70%
Mortgage credit
28,012,946
110,809
28,123,755
(181,551)
27,942,204
50.06%
Other domestic activities
1,377
332
1,709
(38)
1,671
0.00%
Other international activities
676,253
3,266
679,519
(12,888)
666,631
1.21%
55,598,937
579,229
56,178,166
(1,502,373)
54,675,793
100%
The analysis of loans and advances to customers, by maturity and by sector of activity, as at 31\u00a0December 2023, is as
follows:
(Thousands of euros)
2023
Outstanding loans
Due within
1 year
1 year to
5 years
Over 5
years
Total
Outstanding
Overdue
loans
Total
Agriculture and forestry
100,868
184,889
147,361
433,118
5,320
438,438
Fisheries
4,945
14,326
4,670
23,941
3,237
27,178
Mining
14,165
39,788
10,362
64,315
1,603
65,918
Food, beverage and tobacco
351,595
288,183
82,089
721,867
6,374
728,241
Textiles
155,018
203,731
54,178
412,927
11,034
423,961
Wood and cork
94,585
110,513
34,696
239,794
2,606
242,400
Paper, printing and publishing
28,129
67,447
25,286
120,862
703
121,565
Chemicals
272,606
335,125
94,301
702,032
15,497
717,529
Machinery, equipment and basic
metallurgical
535,951
649,954
161,138
1,347,043
27,219
1,374,262
Electricity and gas
23,025
77,272
134,443
234,740
255
234,995
Water
29,806
72,955
87,595
190,356
608
190,964
Construction
560,700
582,187
322,809
1,465,696
23,140
1,488,836
Retail business
801,913
634,450
261,210
1,697,573
18,103
1,715,676
Wholesale business
940,274
854,941
205,886
2,001,101
24,270
2,025,371
Restaurants and hotels
104,819
395,354
858,073
1,358,246
16,267
1,374,513
Transports
375,001
815,722
114,796
1,305,519
13,925
1,319,444
Post offices
13,066
9,822
1,766
24,654
319
24,973
Telecommunications
75,412
235,896
44,345
355,653
4,045
359,698
Services
Financial intermediation
242,262
395,639
818,556
1,456,457
476
1,456,933
Real estate activities
385,845
814,149
787,412
1,987,406
14,870
2,002,276
Consulting, scientific and technical
activities
204,844
368,309
435,875
1,009,028
29,952
1,038,980
Administrative and support services
activities
161,135
249,466
79,911
490,512
5,048
495,560
Public sector
48,020
330,153
253,011
631,184
40
631,224
Education
26,519
42,676
38,768
107,963
969
108,932
Health and collective service activities
75,506
147,598
133,540
356,644
1,856
358,500
Artistic, sports and recreational
activities
11,753
58,855
150,692
221,300
901
222,201
Other services
75,487
120,256
62,294
258,037
3,808
261,845
Consumer loans
2,180,784
3,153,772
1,231,842
6,566,398
256,681
6,823,079
Mortgage credit
455,670
1,751,219
25,661,208
27,868,097
112,639
27,980,736
Other domestic activities
304
543
654
1,501
197
1,698
Other international activities
408,128
57,386
152,275
617,789
14,094
631,883
8,758,135
13,062,576
32,451,042
54,271,753
616,056
54,887,809
The analysis of loans and advances to customers, by maturity and by sector of activity, as at 31\u00a0December 2022, is as
follows:
(Thousands of euros)
2022 (restated)
Outstanding loans
Due within
1 year
1 year to
5 years
Over 5
years
Total
Outstanding
Overdue
loans
Total
Agriculture and forestry
104,760
181,701
175,219
461,680
8,517
470,197
Fisheries
3,756
12,465
9,087
25,308
3,226
28,534
Mining
17,107
42,103
11,760
70,970
1,676
72,646
Food, beverage and tobacco
408,663
307,334
97,362
813,359
11,634
824,993
Textiles
154,019
265,451
77,868
497,338
8,989
506,327
Wood and cork
92,259
135,429
32,487
260,175
3,730
263,905
Paper, printing and publishing
42,397
76,818
29,722
148,937
742
149,679
Chemicals
335,828
396,647
130,351
862,826
38,334
901,160
Machinery, equipment and basic
metallurgical
559,264
742,898
224,616
1,526,778
25,298
1,552,076
Electricity and gas
55,254
67,104
107,463
229,821
443
230,264
Water
35,418
80,638
88,680
204,736
452
205,188
Construction
524,861
638,536
333,717
1,497,114
21,639
1,518,753
Retail business
668,493
729,772
307,617
1,705,882
18,730
1,724,612
Wholesale business
1,011,781
933,752
280,370
2,225,903
26,755
2,252,658
Restaurants and hotels
81,252
523,536
901,175
1,505,963
15,721
1,521,684
Transports
334,717
840,728
144,791
1,320,236
7,464
1,327,700
Post offices
12,384
6,551
983
19,918
254
20,172
Telecommunications
82,116
274,708
55,061
411,885
1,508
413,393
Services
Financial intermediation
194,026
783,252
1,069,987
2,047,265
2,149
2,049,414
Real estate activities
345,774
830,401
802,007
1,978,182
10,931
1,989,113
Consulting, scientific and technical
activities
211,357
387,691
370,362
969,410
8,232
977,642
Administrative and support services
activities
122,350
278,364
131,523
532,237
4,296
536,533
Public sector
84,965
283,426
455,513
823,904
\u2014
823,904
Education
29,436
47,613
66,881
143,930
814
144,744
Health and collective service activities
70,100
167,080
141,243
378,423
1,029
379,452
Artistic, sports and recreational
activities
11,618
64,764
160,161
236,543
2,128
238,671
Other services
70,922
121,649
41,828
234,399
2,971
237,370
Consumer loans
1,901,816
2,744,264
1,129,159
5,775,239
237,160
6,012,399
Mortgage credit
464,882
1,593,206
25,954,858
28,012,946
110,809
28,123,755
Other domestic activities
247
477
653
1,377
332
1,709
Other international activities
432,937
81,442
161,874
676,253
3,266
679,519
8,464,759
13,639,800
33,494,378
55,598,937
579,229
56,178,166
The analysis of loans and advances to customers, by type of credit and by maturity, as at 31\u00a0December 2023, is as
follows:
(Thousands of euros)
2023
Outstanding loans
Due within
1 year
1 year to
5 years
Over
5 years
Total
Outstanding
Overdue
loans
Total
Public sector
9,277
189,817
339,627
538,721
40
538,761
Asset-backed loans
1,654,088
3,658,185
26,486,816
31,799,089
111,046
31,910,135
Other guaranteed loans
843,304
3,182,893
689,834
4,716,031
71,101
4,787,132
Unsecured loans
2,791,442
3,863,145
1,384,821
8,039,408
308,262
8,347,670
Foreign loans
229,016
386,412
1,458,390
2,073,818
13,816
2,087,634
Factoring operations
2,645,855
263,715
\u2014
2,909,570
22,103
2,931,673
Finance leases
585,153
1,518,409
2,091,554
4,195,116
89,688
4,284,804
8,758,135
13,062,576
32,451,042
54,271,753
616,056
54,887,809
The analysis of loans and advances to customers, by type of credit and by maturity, as at 31\u00a0December 2022, is as
follows:
(Thousands of euros)
2022 (restated)
Outstanding loans
Due within
1 year
1 year to
5 years
Over
5 years
Total
Outstanding
Overdue
loans
Total
Public sector
21,138
19,832
543,029
583,999
\u2014
583,999
Asset-backed loans
1,608,240
3,615,091
27,010,051
32,233,382
123,063
32,356,445
Other guaranteed loans
842,171
3,866,580
958,781
5,667,532
100,085
5,767,617
Unsecured loans
2,660,372
3,452,035
1,345,905
7,458,312
258,186
7,716,498
Foreign loans
171,535
785,272
1,500,328
2,457,135
2,451
2,459,586
Factoring operations
2,592,313
426,935
3,000
3,022,248
16,680
3,038,928
Finance leases
568,990
1,474,055
2,133,284
4,176,329
78,764
4,255,093
8,464,759
13,639,800
33,494,378
55,598,937
579,229
56,178,166
The item Loans and advances to customers, split by stage according with IFRS 9, is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Stage 1
Gross amount
45,652,779
46,404,751
Impairment
(268,948)
(214,469)
45,383,831
46,190,282
Stage 2
Gross amount
7,295,904
7,567,944
Impairment
(291,928)
(284,653)
7,003,976
7,283,291
Stage 3
Gross amount
1,939,126
2,205,471
Impairment
(1,021,774)
(1,003,251)
917,352
1,202,220
Net amount
53,305,159
54,675,793
The exposure and impairment of the above table also includes the operations classified as POCI as detailed in note 54.
The analysis of the exposure covered by collaterals associated with loans and advances to customers' portfolio, by stage
according with IFRS 9, considering the collaterals' fair value, is as follows:
(Thousands of euros)
2023
2022
(restated)
Stage 1
Securities and other financial assets
1,601,275
1,533,809
Residential real estate
25,107,829
24,796,864
Other real estate
3,236,223
3,475,795
Other guarantees
7,147,794
7,654,261
37,093,121
37,460,729
Stage 2
Securities and other financial assets
177,614
192,025
Residential real estate
2,840,231
2,507,458
Other real estate
1,159,093
1,158,362
Other guarantees
1,500,324
1,744,218
5,677,262
5,602,063
Stage 3
Securities and other financial assets
20,313
28,765
Residential real estate
442,566
432,138
Other real estate
346,101
516,903
Other guarantees
214,931
235,900
1,023,911
1,213,706
43,794,294
44,276,498
The balance Other guarantees include first-demand guarantees issued by the Bank and other entities, with an internal
risk rating of 7 or better; personal guarantees, when the guarantors are classified with internal risk grade 7 or better.
This balance also includes pledges, assets subject to financial leasing operations and personal guarantees, among
others.
Considering the policy of risk management of the Group (note 54), the amounts presented do not include the fair value
of the personal guarantees provided by clients with lower risk rating. When considered, the fair value of the personal
guarantees corresponds to the guaranteed amount.
The Group is applying physical collaterals and financial guarantees as instruments to mitigate the credit risk. The
physical collaterals are mainly mortgages on residential buildings for the mortgage portfolio and other mortgages on
other types of buildings related to other types of loans. To reflect the market value, these collaterals are regularly
reviewed based on independent and certified valuation entities or through the application of revaluation coefficients
that reflect the market trends for each specific type of building and geographical area. The financial guarantees are
reviewed based on the market value of the respective assets, when available, with the subsequent application of
haircuts that reflect the volatility of their prices. The Group continued to negotiate additional physical and financial
collaterals with its customers.
The loan to customers' portfolio includes contracts that resulted in a formal restructuring with the customers and which
arise to the marking of operations as being restructured due to financial difficulties of customers. The restructuring
may include in a reinforce of guarantees, liquidation of part of the credit and imply an extension of maturities or
changes in interest rate. The analysis of the restructured loans, by sector of activity, is as follows:
(Thousands of euros)
2023
2022 (restated)
Restructured
loans
Impairment
(*)
Net amount
Restructured
loans
Impairment
(*)
Net amount
Agriculture and forestry
21,199
(1,928)
19,271
15,009
(2,216)
12,793
Fisheries
3,381
(2,708)
673
2,772
(1,762)
1,010
Mining
5,919
(3,246)
2,673
1,305
(199)
1,106
Food, beverage and tobacco
18,625
(7,781)
10,844
28,393
(10,112)
18,281
Textiles
7,766
(1,948)
5,818
14,120
(4,981)
9,139
Wood and cork
3,670
(428)
3,242
6,088
(784)
5,304
Paper, printing and publishing
6,563
(1,868)
4,695
8,698
(1,701)
6,997
Chemicals
22,807
(6,719)
16,088
30,146
(11,809)
18,337
Machinery, equipment and basic
metallurgical
35,284
(14,955)
20,329
74,637
(22,688)
51,949
Electricity and gas
951
(6)
945
1,133
(255)
878
Water
1,749
(934)
815
1,767
(734)
1,033
Construction
141,642
(27,956)
113,686
151,970
(94,787)
57,183
Retail business
22,524
(4,587)
17,937
38,861
(10,085)
28,776
Wholesale business
25,671
(6,607)
19,064
68,474
(13,627)
54,847
Restaurants and hotels
63,536
(21,319)
42,217
97,002
(16,126)
80,876
Transports
4,666
(1,513)
3,153
9,620
(1,767)
7,853
Post offices
100
(40)
60
125
(33)
92
Telecommunications
1,861
(404)
1,457
25,228
(4,066)
21,162
Services
Financial intermediation
24,992
(2,430)
22,562
54,764
(19,879)
34,885
Real estate activities
74,959
(14,492)
60,467
45,785
(9,927)
35,858
Consulting, scientific and technical
activities
192,379
(130,306)
62,073
190,444
(63,606)
126,838
Administrative and support services
activities
28,633
(10,843)
17,790
67,941
(46,519)
21,422
Public sector
60,886
(464)
60,422
63,016
(427)
62,589
Education
2,089
(234)
1,855
17,310
(11,358)
5,952
Health and collective service
activities
9,543
(1,352)
8,191
8,428
(1,206)
7,222
Artistic, sports and recreational
activities
38,720
(27,782)
10,938
19,732
(8,865)
10,867
Other services
8,596
(1,801)
6,795
11,855
(1,601)
10,254
Consumer loans
276,092
(115,154)
160,938
274,500
(99,459)
175,041
Mortgage credit
623,740
(71,001)
552,739
535,948
(69,129)
466,819
Other domestic activities
3
\u2014
3
\u2014
\u2014
\u2014
Other international activities
705
(621)
84
977
(594)
383
1,729,251
(481,427)
1,247,824
1,866,048
(530,302)
1,335,746
(*)The impairment presented in the table does not include the amounts of impairment calculated using the overlays methodology described in
point ii. of the section \"Additional measures with impact on the Impairment level\" of note 54.
The breakdown of the restructured loans as at 31\u00a0December 2023, by restructuring measure, is as follows:
(Thousands of euros)
2023
Number of
operations
Outstanding
loans
Overdue
loans
Gross
amount
Impairment
(*)
Net
amount
Extension of the repayment term
41,274
338,147
59,307
397,454
(130,610)
266,844
Introduction of the grace period for
capital and / or interest
6,318
358,580
31,700
390,280
(97,525)
292,755
Interest rate reduction
2,130
106,926
2,383
109,309
(9,963)
99,346
Payment plan change
8,891
332,029
9,784
341,813
(133,956)
207,857
Debt relief
86
22,201
1,334
23,535
(21,655)
1,880
Debt-asset swaps
2
\u2014
17
17
(1)
16
Other restructured loans
6,046
401,629
65,214
466,843
(87,717)
379,126
64,747
1,559,512
169,739
1,729,251
(481,427)
1,247,824
The breakdown of the restructured loans as at 31\u00a0December 2022, by restructuring measure, is as follows:
(Thousands of euros)
2022 (restated)
Number of
operations
Outstanding
loans
Overdue
loans
Gross
amount
Impairment
(*)
Net
amount
Extension of the repayment term
40,796
383,529
64,104
447,633
(130,635)
316,998
Introduction of the grace period for
capital and / or interest
7,359
433,555
30,187
463,742
(134,502)
329,240
Interest rate reduction
3,933
147,583
5,694
153,277
(105,411)
47,866
Payment plan change
10,832
233,879
9,338
243,217
(21,762)
221,455
Debt relief
105
935
1,693
2,628
(1,391)
1,237
Debt-asset swaps
4
368
21
389
(31)
358
Other restructured loans
6,877
507,410
47,752
555,162
(136,570)
418,592
69,906
1,707,259
158,789
1,866,048
(530,302)
1,335,746
(*) The impairment presented in the tables does not include the amounts of impairment calculated using the overlays methodology described in
point ii. of the section \"Additional measures with impact on the Impairment level\" of note 54.
The restructured loans are also subject to an impairment analysis resulting from the revaluation of expectation to meet
new cash flows inherent to the new contract terms and considering new collaterals.
The Group has implemented a process for marking operations restructured due to clients' financial difficulties. This
marking is part of the credit analysis process, being in charge of the respective decision-making bodies, according to
the corresponding competencies, established in the regulations in force.
The information on operations restructured due to financial difficulties is available in the Group's information systems,
having a relevant role in the processes of credit analysis, in the marking of customers in default and in the process of
determining impairment. In particular:
- there are several default triggers related to restructuring due to financial difficulties (restructuring with loss of value,
recidivism of restructuring, default on customers with restructured operations);
- in the process of individual impairment analysis, in addition to the existence of operations restructured due to
financial difficulties, being a reason for customer selection, the loss inherent to the change in the conditions resulting
from the restructuring is determined.
The demarcation of an operation marked as restructured due to financial difficulties, can only take place at least 2-
years periods after the date of marking, provided that a set of conditions exist that allow to conclude by the
improvement of the financial condition of the client. In the case of credits marked as Non-Performing Exposure (NPE),
this 2-year period will only start on the date of classification of the credit as performing.
The definition of Non-Performing Loans for more than 90 days (NPL > 90) incorporates total credit (past due plus
outstanding) associated with past due operations for more than 90 days. The amount calculated is Euros 749,569,000
(31\u00a0December 2022: Euros 725,300,000).
All customers who check at least one of the following conditions are marked in default and therefore as NPE:
- Material payment delay of more than 90 days in the amounts of principal, interest or unpaid commissions on the due
date that, cumulatively, represent: more than Euros 100 (retail) or more than Euros 500 (non-retail); and more than 1%
of the total debt (direct liabilities).
- Indications of low probability of payment:
a) Credit restructuring due to financial difficulties with loss of value; b) Delay after restructuring due to financial
difficulties; c) Recurrence of restructuring due to financial difficulties; d) Credit with signs of impairment (or Stage 3 of
IFRS 9); e) Insolvency or equivalent process; f) Litigation; g) Guarantees of operations in default; h) Loss of credit sales;
i) Credit fraud; j) Unpaid credit status; k) Breach of covenants in a credit agreement; l) Contagion of default in an
economic group; m) Cross default in the BCP Group.
The NPE associated with Loans and advances customers at amortized cost amounts to Euros 1,939,126,000
(31\u00a0December 2022: Euros 2,205,471,000).
The changes occurred in Loans impairment are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
1,502,373
1,849,284
Charge for the year in net income interest
3,545
32,942
Transfers resulting from changes in the Group's structure
411
\u2014
Other transfers
(1,054)
(53,634)
Impairment charge for the year (note 11)
805,500
830,750
Reversals for the year (note 11)
(511,733)
(506,926)
Loans charged-off
Write-offs
(192,473)
(458,405)
Credit assignments
(62,044)
(189,061)
Exchange rate differences
38,125
(2,577)
Balance at the end of the year
1,582,650
1,502,373
The balance Other transfers included, as at 31 December 2022, the amount of Euros 52,794,000 related to impairment
for loans that were reclassified to Financial assets not held for trading mandatorily at fair value through profit or loss -
Loans and advances to customers at fair value.
According to note 39, regarding the proceedings related to foreign currency-indexed mortgage loans of Bank Millennium
the amount of Euros 1,500,209,000 has been written-off from the gross carrying amount of loans portfolio (31\u00a0December
2022: Euros 976,782,000).
The analysis of Write-offs, by sector of activity, is as follows:
(Thousands of euros)
2023
2022
(restated)
Agriculture and forestry
1,046
271
Fisheries
\u2014
1
Mining
\u2014
46
Food, beverage and tobacco
3,799
1,696
Textiles
1,141
1,405
Wood and cork
567
2,083
Paper, printing and publishing
103
141
Chemicals
1,058
1,425
Machinery, equipment and basic metallurgical
6,091
2,613
Electricity and gas
377
615
Water
51
39
Construction
3,100
9,992
Retail business
1,714
10,324
Wholesale business
3,338
13,782
Restaurants and hotels
891
3,482
Transports
475
6,527
Post offices
134
128
Telecommunications
234
72
Services
Financial intermediation
20,210
72,244
Real estate activities
208
306
Consulting, scientific and technical activities
5,975
1,119
Administrative and support services activities
35,569
2,839
Education
10
48
Health and collective service activities
173
179
Artistic, sports and recreational activities
222
6,492
Other services
268
240,544
Consumer loans
64,537
69,019
Mortgage credit
1,968
3,581
Other domestic activities
761
838
Other international activities
38,453
6,554
192,473
458,405
According with the accounting policy described in note 1 C1.3, the Group writes off a loan when it does not have
reasonable expectations of recovering a financial asset in its entirety or partially. Loans written-off are recognised in
off-balance sheet accounts.
The analysis of Write-offs, by type of credit, is as follows:
(Thousands of euros)
2023
2022
(restated)
Asset-backed loans
2,432
3,296
Other guaranteed loans
40,982
313,915
Unsecured loans
142,768
128,131
Finance leases
6,291
13,063
192,473
458,405
The analysis of recovered loans and interest occurred during 2023 and 2022, by sector of activity, is as follows:
(Thousands of euros)
2023
2022
(restated)
Agriculture and forestry
52
6
Food, beverage and tobacco
30
34
Textiles
29
41
Wood and cork
137
43
Chemicals
533
105
Machinery, equipment and basic metallurgical
17
165
Construction
1,065
2,719
Retail business
1,151
757
Wholesale business
1,570
113
Restaurants and hotels
22
67
Transports
301
56
Post offices
\u2014
1
Telecommunications
\u2014
2
Services
Financial intermediation
2,492
619
Real estate activities
192
483
Consulting, scientific and technical activities
1,962
8
Administrative and support services activities
31
29
Education
1
5
Health and collective service activities
1
1
Artistic, sports and recreational activities
20
3
Other services
1,206
8
Consumer loans
10,399
13,967
Mortgage credit
603
130
Other domestic activities
17
29
Other international activities
35,900
1,445
57,731
20,836
The analysis of recovered loans and interest occurred during 2023 and 2022, by type of credit, is as follows:
(Thousands of euros)
2023
2022
(restated)
Asset-backed loans
1,318
130
Other guaranteed loans
37,409
4,237
Unsecured loans
16,625
16,300
Foreign loans
1,511
80
Finance leases
868
89
57,731
20,836
The balance Loans and advances to customers includes the effect of traditional securitization transactions made
through Special Purpose Entities (SPE) consolidated following the application of IFRS 10, in accordance with accounting
policy 1 B and synthetic securitization. The characterization of these operations is described in note 1 D.
Traditional securitizations
The traditional securitization transaction engaged by the BCP and still ongoing, refers to mortgage loans portfolios and
are set through securitization funds and special purpose entities (SPEs). As referred in accounting policy 1 B, when the
substance of the relationships with the referred SPEs indicates that the Group holds control of its activities, those are
consolidated by the full method.
Magellan Mortgages No. 3
On 24 June 2005, the Bank transferred, through securitization funds, an owned mortgage loans portfolio to the SPE
\u201cMagellan Mortgages No. 3 PLC\u201d. Considering that, by having acquired part of the subordinated tranche of the bonds
issued by that SPE, the Bank holds the control of the referred assets, the SPE is consolidated in the Group\u2019s Financial
Statements, as established in the accounting policy 1.B. As at 31\u00a0December 2023, the SPE's credit portfolio associated
with this operation amounts to Euros 160,845,000 (31\u00a0December 2022: Euros 188,214,000) and bonds issued with
different subordination levels amount to Euros 121,882,000 (this amount excludes bonds hold by the Group in the
amount of Euros 54,929,000) and the most subordinated tranche amounts to Euros 44,000 (this amount excludes bonds
already acquired by the Group in the amount Euros 206,000).
Synthetic securitizations
BCP has three operations in progress which form structures of synthetic securitization with similar characteristics, with
reference to credit portfolios granted by the Bank mainly to Small and Medium Enterprises (SMEs).
Caravela SME No. 3
Caravela SME No.3, supports an operation started on 28 June 2013, based on a medium and long term loans portfolio of
current accounts and authorized overdrafts. The legal maturity date of the operation is 25 March of 2036 and the
operation amounts to Euros 177,327,000 as at 31\u00a0December 2023 (31\u00a0December 2022: Euros 276,209,000). The fair value
of the relative Credit Default Swap (CDS) is recorded as a positive amount of Euros 172,994,000 (31\u00a0December 2022:
Euros 179,713,000)and the respective gain registered in 2023 amounts to Euros 959,000 (31\u00a0December 2022: loss of
Euros 4,824,000).
Caravela SME No. 4
Caravela SME No.4 is a similar operation, initiated on 5 June 2014, which portfolio contains car, real estate and
equipment leasing. The legal maturity date is 21 September of 2043 and, as at 31\u00a0December 2023, the operation
amounts to Euros 393,247,000 (31\u00a0December 2022: Euros 506,117,000). The fair value of the relative CDS is recorded as
a positive amount of Euros 60,386,000 (31\u00a0December 2022: Euros 61,551,000) and the respective gain registered in 2023
amounts to Euros 648,000 (31\u00a0December 2022: loss of Euros 2,026,000).
Caravela SME No.5
Caravela SME No.5, initiated on 20 December 2022, is supported by a portfolio of medium and long term loans, leasing
contract and commercial paper programmes. The legal maturity date is 26 September of 2035 and, as at 31\u00a0December
2023, the operation amounts to Euros 1,697,747,000 (31\u00a0December 2022: Euros 1,918,408,000). The fair value of the
relative CDS is recorded as a negative amount of Euros 46,362,000 (31\u00a0December 2022: positive amount 76,000) and the
respective cost registered\u00a0 in 2023 amounts to Euros 18,010,000 (31\u00a0December 2022: Euros 1,424,000).
In any of these transactions, the Bank contracted a Credit Default Swap (CDS) with a Special Purpose Entity (SPE),
purchasing from it form, credit risk protection on the referenced portfolio. In the case of synthetic structures, in the of
this same CDS the risk of the respective portfolios was subdivided into 3 tranches: senior, mezzanine and equity. In this
case of Caravela SME no.3 and no.4 operations, the mezzanine tranche and part of equity (20%) were placed on the
market through the issuance, by the SPE, of Credit Linked Notes (CLN's) subscribed by investors, while in Caravela SME
no.5 has been placed on the market for the entire mezzanine tranche. In turn, the Bank retained the risk of the tranche
senior and the remaining part of the equity tranche (80%) in the case of Caravela operations no. 3 and no. 4, and the
whole of the equity tranche in the case of Caravela SME no.5. The proceeds of the issuance of the CLNs were applied by
the SPE in the constitution of a deposit which fully collateralises its liabilities to its creditors in connection with the
transaction, including BCP.
These operations allowed the Bank to reduce the risk-weighted assets associated with the credit portfolios supporting
the operations, but the Bank did not transfer to third parties most of the rights and obligations arising from the credits
included in the respective portfolios, thus not meeting the derecognition criteria in the accounting policy presented in
note 1 C1.3.
Securitization operations carried out by Bank Millennium Group
In December 2023, the Bank Millennium carried out a synthetic securitization transaction of a portfolio of unsecured
cash loans with a total value of PLN 7.2 billion (Euros 1.7 billion). This was the largest synthetic securitization
transaction concluded by the Bank so far. As part of the transaction, the Bank transferred a significant part of the
credit risk of the securitized portfolio to the investor. The securitized loan portfolio remains on the Bank's balance
sheet. The risk of the securitized portfolio is transferred via a credit protection instrument in the form of credit risk-
related bonds issued in December 2023 (\"CLN Bonds\") in the amount of PLN 489 million (Euros 112.6 million).
Earlier, in July 2023, the Bank's subsidiary, Millennium Leasing, conducted another synthetic securitization transaction.
The reference portfolio of leasing transactions was worth PLN 4.0 billion (Euros 0.9 million). As part of the transaction,
Millennium Leasing transferred a significant part of the credit risk of the securitized portfolio to the investor. The
securitized loan portfolio remains on Millennium Leasing's balance sheet. The risk transfer of the securitized portfolio is
carried out through a credit protection instrument in the form of credit risk bonds issued in July 2023 (\"CLN Bonds\") in
the amount of PLN 280 million (Euros 64.5 million).
Debt securities
The balance Debt securities is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Debt securities held associated with credit operations
Portuguese issuers
Bonds
115,629
183,260
Commercial paper
1,762,453
1,256,557
Foreign issuers
Commercial paper
38,900
65,781
1,916,982
1,505,598
Overdue securities - over 90 days
40
40
1,917,022
1,505,638
Impairment
(8,668)
(4,676)
1,908,354
1,500,962
Debt securities held not associated with credit operations
Bonds issued by public entities (*)
Portuguese issuers
3,552,807
3,517,560
Foreign issuers
11,237,924
7,317,443
Bonds issued by public companies and other entities
Portuguese issuers
459,392
248,399
Foreign issuers
395,102
124,438
Treasury bills (Public Issuers and Central Banks)
\u00a0 Foreign issuers
42,277
336,343
15,687,502
11,544,183
Impairment
(16,720)
(9,563)
15,670,782
11,534,620
17,579,136
13,035,582
(*) Includes the negative amount of Euros 356,628,000 (31\u00a0December 2022: negative amount of Euros 417,311,000) related to adjustments
resulting from the application of fair value hedge accounting.
Under the terms of IFRS 9, the balance Debt securities held not associated with credit operations - Bonds issued by
public issuers, includes essentially a portfolio of securities to support Bank's ALM (Asset and Liability Management),
whose business model seeks to receive the respective income until maturity, that is, of a portfolio Held to Collect,
whose value as at 31\u00a0December 2023 amounts to Euros 9,905,849,000 (31\u00a0December 2022: Euros 9,248,707,000).
The analysis of the balance Debt securities before impairment, by maturity, as at 31\u00a0December 2023 is as follows:
(Thousands of euros)
2023
Up to
3 months
3 months to
1 year
1 year to
5 years
Over 5
years
Overdue
Total
Debt securities held associated
with credit operations
Portuguese issuers
\u00a0 Bonds
\u2014
\u2014
10,128
105,501
\u2014
115,629
\u00a0 Commercial paper
1,382,628
379,825
\u2014
\u2014
40
1,762,493
Foreign issuers
\u00a0 Commercial paper
19,407
19,493
\u2014
\u2014
\u2014
38,900
1,402,035
399,318
10,128
105,501
40
1,917,022
Debt securities held not associated
with credit operations
Public entities
\u00a0 Portuguese issuers
\u2014
\u2014
2,876,835
675,972
\u2014
3,552,807
\u00a0 Foreign issuers
625,851
675,486
4,811,329
5,125,258
\u2014
11,237,924
Public companies and other entities
\u00a0 Portuguese issuers
\u2014
50,030
133,699
275,663
\u2014
459,392
\u00a0 Foreign issuers
\u2014
\u2014
395,102
\u2014
\u2014
395,102
Treasury bills (Public Issuers and Central Banks)
\u00a0 Foreign issuers
42,277
\u2014
\u2014
\u2014
42,277
668,128
725,516
8,216,965
6,076,893
\u2014
15,687,502
2,070,163
1,124,834
8,227,093
6,182,394
40
17,604,524
The analysis of the balance Debt securities before impairment, by maturity, as at 31\u00a0December 2022 is as follows:
(Thousands of euros)
2022 (restated)
Up to
3 months
3 months to
1 year
1 year to
5 years
Over 5
years
Overdue
Total
Debt securities held associated
with credit operations
Portuguese issuers
Bonds
\u2014
\u2014
13,480
169,780
\u2014
183,260
Commercial paper
860,395
396,162
\u2014
\u2014
40
1,256,597
Foreign issuers
Commercial paper
31,361
34,420
\u2014
\u2014
\u2014
65,781
891,756
430,582
13,480
169,780
40
1,505,638
Debt securities held not associated
with credit operations
Public entities
Portuguese issuers
\u2014
\u2014
1,865,689
1,651,871
\u2014
3,517,560
Foreign issuers
50,410
212,482
970,601
6,083,950
\u2014
7,317,443
Public companies and other entities
Portuguese issuers
\u2014
\u2014
153,548
94,851
\u2014
248,399
Foreign issuers
\u2014
97,962
\u2014
26,476
\u2014
124,438
Treasury bills (Public Issuers and Central Banks)
Foreign issuers
237,209
99,134
\u2014
\u2014
336,343
287,619
409,578
2,989,838
7,857,148
\u2014
11,544,183
1,179,375
840,160
3,003,318
8,026,928
40
13,049,821
The analysis of debt securities portfolio, net of impairment, by sector of activity, is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Debt securities held associated with credit operations
Agriculture and forestry
2,479
2,496
Mining
85,939
46,403
Food, beverage and tobacco
102,720
79,448
Textiles
45,203
58,555
Wood and cork
23,720
19,630
Paper, printing and publishing
9,206
8,104
Chemicals
215,972
179,516
Machinery, equipment and basic metallurgical
42,787
65,973
Electricity and gas
211,183
165,676
Water
31,955
5,475
Construction
10,633
13,397
Retail business
28,973
20,507
Wholesale business
64,044
56,698
Restaurants and hotels
8,857
8,789
Transports
33,392
36,591
Telecommunications
4,018
9,706
Services
\u00a0 \u00a0 Financial intermediation
114,283
107,372
\u00a0 \u00a0 Real estate activities
55,566
50,845
\u00a0 \u00a0 Consulting, scientific and technical activities
751,610
473,231
\u00a0 \u00a0 Administrative and support services activities
11,217
12,269
\u00a0 \u00a0 Health and collective service activities
4,974
\u2014
\u00a0 \u00a0 Artistic, sports and recreational activities
7,058
10,406
\u00a0 \u00a0 Other services
3,665
4,095
Other international activities
38,900
65,780
1,908,354
1,500,962
Debt securities held not associated with credit operations
Machinery, equipment and basic metallurgical
11,977
\u2014
Electricity and gas
99,846
88,873
Water
\u2014
39,704
Services
Financial intermediation
437,378
460,781
Consulting, scientific and technical activities
346,117
119,297
895,318
708,655
Government and Public securities
14,775,464
10,825,965
15,670,782
11,534,620
17,579,136
13,035,582
The analysis of restructured debt securities portfolio, by sector of activity, is analysed as follows:
(Thousands of euros)
2023
2022
Restructured
loans
Impairment
Net amount
Restructured
loans
Impairment
Net amount
Debt securities held associated with
credit operations
Food, beverage and tobacco
7,711
(126)
7,585
\u2014
\u2014
\u2014
Chemicals
\u2014
\u2014
\u2014
5,062
(101)
4,961
Services
Administrative and support services
activities
10,311
(90)
10,221
10,604
(132)
10,472
18,022
(216)
17,806
15,666
(233)
15,433
The changes occurred in impairment of debt securities are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Debt securities held associated with credit operations
Balance on 1 January
4,676
7,059
Charge for the year in net income interest
2
\u2014
Charge for the year (note 11)
3,991
8
Reversals for the year (note 11)
\u2014
(2,393)
Exchange rate differences
(1)
2
Balance at the end of the year
8,668
4,676
Debt securities held not associated with credit operations
Balance on 1 January
9,563
8,743
Charge for the year (note 11)
9,323
3,329
Reversals for the year (note 11)
(688)
(2,779)
Amounts charged-off
(1,282)
\u2014
Exchange rate differences
(196)
270
Balance at the end of the year
16,720
9,563
Financial assets at fair value through profit or loss and financial assets at fair
value through other comprehensive income
The balances Financial assets at fair value through profit or loss and Financial assets at fair value through other
comprehensive income are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Financial assets at fair value through profit or loss
Financial assets held for trading
Debt instruments
355,526
338,813
Equity instruments
53,432
51,540
Trading derivatives
413,946
376,244
822,904
766,597
Financial assets not held for trading mandatorily at fair value through profit or loss
Loans and advances to customers at fair value
4,454
20,929
Debt instruments
280,558
311,404
Equity instruments
182,242
220,346
467,254
552,679
\u00a0 Financial assets designated at fair value through profit or loss
\u00a0 Debt instruments
32,004
\u2014
32,004
\u2014
Financial assets at fair value through other comprehensive income
Debt instruments
10,809,872
7,434,152
Equity instruments
24,419
27,401
10,834,291
7,461,553
12,156,453
8,780,829
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive income, net of impairment, by type of asset, as
at 31\u00a0December 2023, is analysed as follows:
(Thousands of euros)
2023
At fair value through profit or loss
Held for trading
Not held for trading
mandatorily at fair
value through
profit or loss
Designated at
fair value
through profit
or loss
At fair value
through other
comprehensive
income
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
20,312
\u2014
32,004
1,950,559
2,002,875
Foreign issuers
25,452
\u2014
\u2014
3,435,176
3,460,628
Bonds issued by public companies and
other entities
Portuguese issuers
\u2014
50
\u2014
403,971
404,021
Foreign issuers
10,395
\u2014
\u2014
1,120,454
1,130,849
Treasury bills (Public Issuers and
Central Banks)
Portuguese issuers
103,661
\u2014
\u2014
\u2014
103,661
Foreign issuers
192,741
\u2014
\u2014
3,899,712
4,092,453
Shares of foreign companies (a)
\u2014
23,498
\u2014
\u2014
23,498
Investment fund units (b)
\u2014
257,010
\u2014
\u2014
257,010
Commercial paper
2,965
\u2014
\u2014
\u2014
2,965
355,526
280,558
32,004
10,809,872
11,477,960
Equity instruments
Shares
Portuguese companies
142
\u2014
\u2014
16,352
16,494
Foreign companies
28
15,335
\u2014
8,067
23,430
Investment fund units (c)
\u2014
166,907
\u2014
\u2014
166,907
Other securities (d)
53,262
\u2014
\u2014
\u2014
53,262
53,432
182,242
\u2014
24,419
260,093
Trading derivatives
413,946
\u2014
\u2014
\u2014
413,946
822,904
462,800
32,004
10,834,291
12,151,999
Level 1
405,585
\u2014
32,004
8,301,377
8,738,966
Level 2
84,614
\u2014
\u2014
2,431,483
2,516,097
Level 3
332,705
462,800
\u2014
101,431
896,936
(a) These shares are considered as debt instruments because they do not fall within the definition of equity instruments provided by IAS 32.
(b) These investment fund units are considered as debt instruments because they do not fall within the definition of equity instruments
provided by IAS 32.
(c) These investment fund units were considered as equity instruments in accordance with the terms provided in IAS 32.
(d) Includes the amount of Euros 52,854,000 in Exchange Traded Funds (ETFs).
The portfolios are recorded at fair value in accordance with the accounting policy described in note 1 C. As referred in
IFRS 13, financial instruments are measured according to the levels of valuation described in note 49.
The balance Financial assets held for trading include bonds issued with different levels of subordination associated with
the traditional securitization transactions Magellan Mortgages No. 4, referred in note 1 D, in the amount of Euros
66,000 (31\u00a0December 2022: Euros 74,000).
In accordance with the accounting policy C1.1.3 regarding the classification of financial assets, the securities accounted
for in Financial assets designated at fair value through profit or loss are covered by the \"Treasury Bond Certificates
October 2025\" issued by Banco Comercial Portugu\u00eas, S.A. which are recorded in Financial liabilities designated at fair
value through profit or loss (note 38).
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive income, net of impairment, by type of asset, as
at 31\u00a0December 2022, is analysed as follows:
(Thousands of euros)
2022 (restated)
At fair value through profit or loss
Held for trading
Not held for
trading
mandatorily at fair
value through
profit or loss
At fair value
through other
comprehensive
income
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
21,450
\u2014
2,448,636
2,470,086
Foreign issuers
8,353
\u2014
2,916,098
2,924,451
Bonds issued by public companies and other entities
Portuguese issuers
\u2014
51
542,765
542,816
Foreign issuers
74
\u2014
897,146
897,220
Treasury bills (Public Issuers and Central Banks)
Portuguese issuers
308,936
\u2014
993
309,929
Foreign issuers
\u2014
\u2014
628,514
628,514
Shares of foreign companies (a)
\u2014
19,387
\u2014
19,387
Investment fund units (b)
\u2014
291,966
\u2014
291,966
338,813
311,404
7,434,152
8,084,369
Equity instruments
Shares
Portuguese companies
\u2014
\u2014
18,811
18,811
Foreign companies
24
27,550
8,590
36,164
Investment fund units (c)
\u2014
192,796
\u2014
192,796
Other securities (d)
51,516
\u2014
\u2014
51,516
51,540
220,346
27,401
299,287
Trading derivatives
376,244
\u2014
\u2014
376,244
766,597
531,750
7,461,553
8,759,900
Level 1
389,954
\u2014
6,489,282
6,879,236
Level 2
81,347
\u2014
862,566
943,913
Level 3
295,296
531,750
109,705
936,751
(a) These shares are considered as debt instruments because they do not fall within the definition of equity instruments provided by IAS 32.
(b) These investment fund units are considered debt instruments because they do not fall within the definition of equity instruments provided
by IAS 32.
(c) These investment fund units were considered as equity instruments in accordance with the terms provided in IAS 32.
(d) Includes the amount of Euros 51,191,000 in Exchange Traded Funds (ETFs).
The changes occurred in impairment of financial assets at fair value through other comprehensive income, are analysed
as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
1,067
1,092
Transfers to fair value changes (note 43)
(1,322)
5,024
Impairment through profit and loss (note 12)
2,641
545
Reversals through profit and loss (note 12)
(1,319)
(5,569)
Exchange rate differences
83
(25)
Balance at the end of the year
1,150
1,067
The accumulated impairment related to credit risk associated with the financial assets at fair value through other
comprehensive income amounts to Euros 6,272,000 and is recognised against Fair value reserves (31\u00a0December 2022:
Euros 5,270,000).
The portfolio of financial assets at fair value through other comprehensive income, as at 31\u00a0December 2023, is analysed
as follows:
(Thousands of euros)
2023
Amortised cost
(a)
Fair value
hedge
adjustments
(note 43)
Fair value
adjustments
(note 43)
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
2,071,760
(78,556)
(42,645)
1,950,559
Foreign issuers
3,452,443
6,501
(23,768)
3,435,176
Bonds issued by public companies and other entities
Portuguese issuers
412,309
(9,040)
702
403,971
Foreign issuers
1,182,733
(49,114)
(13,165)
1,120,454
Treasury bills (Public Issuers and Central Banks)
Foreign issuers
3,896,162
\u2014
3,550
3,899,712
11,015,407
(130,209)
(75,326)
10,809,872
Equity instruments
Shares
Portuguese companies
23,253
\u2014
(6,901)
16,352
Foreign companies
4,913
\u2014
3,154
8,067
28,166
\u2014
(3,747)
24,419
11,043,573
(130,209)
(79,073)
10,834,291
(a) Include interest accrued and accumulated impairment for debt securities classified as financial assets at fair value through other
comprehensive income, as provided by IFRS 9, and according to the requirements defined in the accounting policy 1 C1.5.1.2.
The portfolio of financial assets at fair value through other comprehensive income, as at 31\u00a0December 2022, is analysed
as follows:
(Thousands of euros)
2022 (restated)
Amortised cost
(a)
Fair value hedge
adjustments
(note 43)
Fair value
adjustments
(note 43)
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
2,721,263
(182,643)
(89,984)
2,448,636
Foreign issuers
3,007,189
\u2014
(91,091)
2,916,098
Bonds issued by public companies and other entities
Portuguese issuers
566,480
(19,099)
(4,616)
542,765
Foreign issuers
1,023,516
(83,632)
(42,738)
897,146
Treasury bills (Public Issuers and Central Banks)
Portuguese issuers
994
\u2014
(1)
993
Foreign issuers
628,509
\u2014
5
628,514
7,947,951
(285,374)
(228,425)
7,434,152
Equity instruments
Shares
Portuguese companies
33,448
\u2014
(14,637)
18,811
Foreign companies
19,799
\u2014
(11,209)
8,590
53,247
\u2014
(25,846)
27,401
8,001,198
(285,374)
(254,271)
7,461,553
(a) Include interest accrued and accumulated impairment for debt securities classified as financial assets at fair value through other
comprehensive income, as provided by IFRS 9, and according to the requirements defined in the accounting policy 1 C1.5.1.2.
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive, net of impairment, as at 31\u00a0December 2023, by
valuation levels, is analysed as follows:
(Thousands of euros)
2023
Level 1
Level 2
Level 3
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
1,973,284
29,591
\u2014
2,002,875
Foreign issuers
3,448,941
\u2014
11,687
3,460,628
Bonds issued by public companies and other entities
Portuguese issuers
279,580
59,064
65,377
404,021
Foreign issuers
1,130,849
\u2014
\u2014
1,130,849
Treasury bills (Public Issuers and Central Banks)
Portuguese issuers
103,661
\u2014
\u2014
103,661
Foreign issuers
1,749,627
2,342,826
\u2014
4,092,453
Shares of Foreign companies
\u2014
\u2014
23,498
23,498
Investment fund units
\u2014
\u2014
257,010
257,010
Commercial paper
\u2014
\u2014
2,965
2,965
8,685,942
2,431,481
360,537
11,477,960
Equity instruments
Shares
Portuguese companies
142
\u2014
16,352
16,494
Foreign companies
28
\u2014
23,402
23,430
Investment fund units
\u2014
\u2014
166,907
166,907
Other securities
52,854
\u2014
408
53,262
53,024
\u2014
207,069
260,093
Trading derivatives
\u2014
84,616
329,330
413,946
8,738,966
2,516,097
896,936
12,151,999
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive, net of impairment, as at 31\u00a0December 2022, by
valuation levels, is analysed as follows:
(Thousands of euros)
2022 (restated)
Level 1
Level 2
Level 3
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
2,336,787
133,299
\u2014
2,470,086
Foreign issuers
2,908,924
\u2014
15,527
2,924,451
Bonds issued by public companies and other entities
Portuguese issuers
416,374
57,212
69,230
542,816
Foreign issuers
853,605
43,615
\u2014
897,220
Treasury bills (Public Issuers and Central Banks)
Portuguese issuers
309,929
\u2014
\u2014
309,929
Foreign issuers
\u2014
628,514
\u2014
628,514
Shares of Foreign companies
\u2014
\u2014
19,387
19,387
Investment fund units
\u2014
\u2014
291,966
291,966
6,825,619
862,640
396,110
8,084,369
Equity instruments
Shares
Portuguese companies
2,402
\u2014
16,409
18,811
Foreign companies
24
\u2014
36,140
36,164
Investment fund units
\u2014
\u2014
192,796
192,796
Other securities
51,191
\u2014
325
51,516
53,617
\u2014
245,670
299,287
Trading derivatives
\u2014
81,273
294,971
376,244
6,879,236
943,913
936,751
8,759,900
As referred in IFRS 13, financial instruments are measured according to the levels of valuation described in note 49.
The balance Debt instruments - Investment fund units classified as level 3, includes units in restructuring funds (note
47) which book value resulted from the last disclosure of the Net Asset Value (NAV) determined by the Management
Company, which corresponds to the NAV with reference to that date, after considering the effects of the last audited
accounts for the respective funds. These funds have a diverse set of assets and liabilities, valued in their respective
accounts at fair value through internal methodologies used by the management company.
The instruments classified as level 3 have associated net losses not performed in the amount of Euros 856,000
(31\u00a0December 2022: losses Euros 15,429,000) recorded in Other comprehensive income. The amount of impairment
created for these securities amounts to Euros 1,150,000 (31\u00a0December 2022: Euros 1,067,000).
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances at fair value and
trading derivatives) and Financial assets at fair value through other comprehensive, by residual maturity, as at
31\u00a0December 2023, is as follows:
(Thousands of euros)
2023
Up to 3
months
3 months to 1
year
1 year to 5
years
Over
5 years
Undetermined
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
324
30,653
1,600,329
371,569
\u2014
2,002,875
Foreign issuers
65,904
501,611
2,638,954
254,159
\u2014
3,460,628
Bonds issued by public companies and
other entities
Portuguese issuers
\u2014
56,316
319,417
28,288
\u2014
404,021
Foreign issuers
31,846
140,832
644,363
313,808
\u2014
1,130,849
Treasury bills (Public Issuers and
Central Banks)
Portuguese issuers
49,648
54,013
\u2014
\u2014
\u2014
103,661
Foreign issuers
2,416,524
1,675,929
\u2014
\u2014
\u2014
4,092,453
Shares of Foreign companies
\u2014
\u2014
\u2014
\u2014
23,498
23,498
Investment fund units
6,404
3,067
205,191
37,142
5,206
257,010
Commercial paper
2,965
\u2014
\u2014
\u2014
\u2014
2,965
2,573,615
2,462,421
5,408,254
1,004,966
28,704
11,477,960
Equity instruments
Shares
Portuguese companies
16,494
16,494
Foreign companies
23,430
23,430
Investment fund units
166,907
166,907
Other securities
53,262
53,262
260,093
260,093
2,573,615
2,462,421
5,408,254
1,004,966
288,797
11,738,053
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances at fair value and
trading derivatives) and Financial assets at fair value through other comprehensive, by residual maturity, as at
31\u00a0December 2022, is as follows:
(Thousands of euros)
2022 (restated)
Up to 3
months
3 months to 1
year
1 year to 5
years
Over
5 years
Undetermined
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
\u2014
8,267
2,172,623
289,196
\u2014
2,470,086
Foreign issuers
416,699
493,389
1,863,833
150,530
\u2014
2,924,451
Bonds issued by public companies and
other entities
Portuguese issuers
163,229
58,247
300,962
20,378
\u2014
542,816
Foreign issuers
4,414
13,732
457,154
421,920
\u2014
897,220
Treasury bills (Public Issuers and
Central Banks)
Portuguese issuers
128,349
181,580
\u2014
\u2014
\u2014
309,929
Foreign issuers
56,638
571,876
\u2014
\u2014
\u2014
628,514
Shares of Foreign companies
\u2014
\u2014
\u2014
\u2014
19,387
19,387
Investment fund units
5,942
38,534
202,152
39,863
5,475
291,966
775,271
1,365,625
4,996,724
921,887
24,862
8,084,369
Equity instruments
Shares
Portuguese companies
18,811
18,811
Foreign companies
36,164
36,164
Investment fund units
192,796
192,796
Other securities
51,516
51,516
299,287
299,287
775,271
1,365,625
4,996,724
921,887
324,149
8,383,656
The balance Financial assets not held for trading mandatorily at fair value through profit or loss - Loans to customers at
fair value is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Unsecured loans
2,688
17,217
Overdue loans - less than 90 days
106
554
Overdue loans - Over 90 days
1,660
3,158
4,454
20,929
The balance Loans to customers at fair value correspond essentially to consumer loans. This balance is analysed, by
remaining period, as follows:
(Thousands of euros)
2023
2022
(restated)
Up to 3 months
318
1,733
3 months to 1 year
1,452
6,220
1 to 5 years
918
9,264
Undetermined
1,766
3,712
4,454
20,929
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances to customers at fair
value and trading derivatives) and Financial assets at fair value through other comprehensive income, by sector of
activity, as at 31\u00a0December 2023, is as follows:
(Thousands of euros)
2023
Bonds and
Treasury bills
Shares
Other Financial
Assets
Total
Mining
\u2014
6
\u2014
6
Paper, printing and publishing
47,416
\u2014
\u2014
47,416
Chemicals
7,952
2
\u2014
7,954
Machinery, equipment and basic metallurgical
2,477
8
\u2014
2,485
Electricity and gas
70,806
\u2014
\u2014
70,806
Water
5,025
\u2014
\u2014
5,025
Construction
\u2014
145
\u2014
145
Wholesale business
7,067
238
\u2014
7,305
Transports
43,767
\u2014
\u2014
43,767
Telecommunications
39,126
4,553
\u2014
43,679
Services
\u00a0 Financial intermediation
3,510,636
52,163
476,771
4,039,570
\u00a0 Consulting, scientific and technical activities
111,525
131
\u2014
111,656
\u00a0 Administrative and support services activities
24,216
6,149
\u2014
30,365
\u00a0 Public sector
10,645
\u2014
408
11,053
\u00a0 Other services
\u2014
26
\u2014
26
Other international activities
\u2014
1
\u2014
1
3,880,658
63,422
477,179
4,421,259
Government and Public securities
7,316,794
\u2014
\u2014
7,316,794
11,197,452
63,422
477,179
11,738,053
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances to customers at fair
value and trading derivatives) and Financial assets at fair value through other comprehensive income, by sector of
activity, as at 31\u00a0December 2022, is as follows:
(Thousands of euros)
2022 (restated)
Bonds and Treasury
bills
Shares
Other Financial
Assets
Total
Mining
\u2014
5
\u2014
5
Paper, printing and publishing
45,562
2
\u2014
45,564
Chemicals
\u2014
2
\u2014
2
Machinery, equipment and basic metallurgical
2,302
6
\u2014
2,308
Electricity and gas
44,627
\u2014
\u2014
44,627
Water
9,460
\u2014
\u2014
9,460
Construction
4,934
2
\u2014
4,936
Retail business
20,503
2
\u2014
20,505
Wholesale business
6,456
260
\u2014
6,716
Restaurants and hotels
\u2014
1,401
\u2014
1,401
Transports
29,491
\u2014
\u2014
29,491
Telecommunications
38,869
4,401
\u2014
43,270
Services
Financial intermediation
1,533,154
54,477
532,567
2,120,198
Consulting, scientific and technical activities
303,036
103
\u2014
303,139
Administrative and support services activities
26,691
8,629
\u2014
35,320
Public sector
\u2014
\u2014
325
325
Other services
3,465
5,054
3,386
11,905
Other international activities
\u2014
18
\u2014
18
2,068,550
74,362
536,278
2,679,190
Government and Public securities
5,704,466
\u2014
\u2014
5,704,466
7,773,016
74,362
536,278
8,383,656
The analysis of trading derivatives, by maturity, as at 31\u00a0December 2023, is as follows:
(Thousands of euros)
2023
Notional (remaining term)
Fair value
Up to
3 months
3 months to
1 year
Over 1
year
Total
Assets
Liabilities
(note 37)
Interest rate derivatives:
OTC Market:
Interest rate swaps
885,425
602,395
4,038,102
5,525,922
56,115
49,956
Interest rate options (purchase)
13,750
32,876
295,120
341,746
2,824
\u2014
Interest rate options (sale)
13,750
32,876
295,121
341,747
\u2014
2,779
912,925
668,147
4,628,343
6,209,415
58,939
52,735
Stock Exchange transactions:
Interest rate futures
\u2014
\u2014
28,351
28,351
\u2014
\u2014
\u2014
\u2014
28,351
28,351
\u2014
\u2014
Currency derivatives:
OTC Market:
Forward exchange contract
246,896
109,064
6,591
362,551
3,855
9,235
Currency swaps
1,386,897
437,757
7,327
1,831,981
16,822
26,780
Other currency contracts
107,251
\u2014
\u2014
107,251
\u2014
\u2014
1,741,044
546,821
13,918
2,301,783
20,677
36,015
Shares/indexes:
OTC Market:
Shares/indexes swaps
815,184
1,572,063
228,377
2,615,624
5,004
19,865
Shares/indexes options (purchase)
117,574
482,355
199,637
799,566
95,945
\u2014
Shares/indexes options (sale)
779,957
17,699
1,910
799,566
\u2014
97,923
1,712,715
2,072,117
429,924
4,214,756
100,949
117,788
Stock exchange transactions:
Shares futures
\u2014
\u2014
891,352
891,352
\u2014
\u2014
\u2014
\u2014
891,352
891,352
\u2014
\u2014
Commodity derivatives:
Stock Exchange transactions:
Commodities futures
\u2014
\u2014
1
1
\u2014
\u2014
\u2014
\u2014
1
1
\u2014
\u2014
Credit derivatives:
OTC Market:
Credit default swaps (CDS)
\u2014
\u2014
358,107
358,107
233,381
223
\u2014
\u2014
358,107
358,107
233,381
223
Total derivatives traded in:
OTC Market
4,366,684
3,287,085
5,430,292
13,084,061
413,946
206,761
of which: Embedded derivatives
\u2014
\u2014
771,103
771,103
\u2014
95,357
Stock Exchange
\u2014
\u2014
919,704
919,704
\u2014
\u2014
4,366,684
3,287,085
6,349,996
14,003,765
413,946
206,761
The analysis of trading derivatives, by maturity, as at 31\u00a0December 2022, is as follows:
(Thousands of euros)
2022 (restated)
Notional (remaining term)
Fair value
Up to
3 months
3 months to
1 year
Over 1
year
Total
Assets
Liabilities
(note 37)
Interest rate derivatives:
OTC Market:
Interest rate swaps
79,053
233,349
3,425,079
3,737,481
53,994
119,637
Interest rate options (purchase)
\u2014
133,738
88,199
221,937
6,668
\u2014
Interest rate options (sale)
\u2014
133,738
88,200
221,938
\u2014
6,555
79,053
500,825
3,601,478
4,181,356
60,662
126,192
Stock Exchange transactions:
Interest rate futures
\u2014
\u2014
66,888
66,888
\u2014
\u2014
\u2014
\u2014
66,888
66,888
\u2014
\u2014
Currency derivatives:
OTC Market:
Forward exchange contract
222,128
253,830
9,349
485,307
6,013
9,418
Currency swaps
1,580,200
198,362
8,256
1,786,818
14,081
23,245
1,802,328
452,192
17,605
2,272,125
20,094
32,663
Currency and interest rate swaps:
OTC Market:
Currency and interest rate swaps:
100,177
\u2014
\u2014
100,177
432
90
100,177
\u2014
\u2014
100,177
432
90
Shares/indexes:
OTC Market:
Shares/indexes swaps
\u2014
523,118
459,431
982,549
\u2014
27,193
Shares/indexes options (sale)
\u2014
\u2014
597,213
597,213
\u2014
53,487
\u2014
523,118
1,056,644
1,579,762
\u2014
80,680
Stock exchange transactions:
Shares futures
\u2014
\u2014
835,835
835,835
\u2014
\u2014
Shares/indexes options (purchase)
\u2014
59,735
533,092
592,827
53,707
\u2014
Shares/indexes options (sale)
\u2014
4,636
11,945
16,581
\u2014
859
\u2014
64,371
1,380,872
1,445,243
53,707
859
Credit derivatives:
OTC Market:
Credit default swaps (CDS)
2,000
\u2014
395,831
397,831
241,349
\u2014
Other credit derivatives (sale)
\u2014
\u2014
4,351
4,351
\u2014
\u2014
2,000
\u2014
400,182
402,182
241,349
\u2014
Total derivatives traded in:
OTC Market
1,983,558
1,476,135
5,075,909
8,535,602
322,537
239,625
of which: Embedded derivatives
2,000
\u2014
576,242
\u2014
\u2014
53,495
Stock Exchange
\u2014
64,371
1,447,760
1,512,131
53,707
859
1,983,558
1,540,506
6,523,669
10,047,733
376,244
240,484
Hedging derivatives
This balance is analysed, by hedging instruments, as follows:
(Thousands of euros)
2023
2022 (restated)
Assets
Liabilities
Assets
Liabilities
Swaps
40,628
67,825
59,703
178,000
Hedging derivatives are measured in accordance with internal valuation techniques considering observable market
inputs and, when not available, on information prepared by the Group by extrapolation of market data. In accordance
with the hierarchy of the valuation sources, as referred in IFRS 13, these derivatives are classified in level 2. The Group
resources to derivatives to hedge interest and exchange rate exposure risks. The accounting method depends on the
nature of the hedged risk, namely if the Group is exposed to fair value changes, variability in cash flows or highly
probable forecast transactions.
As allowed by IFRS 9, the Group opted to continue to apply the hedge accounting requirements in accordance with IAS
39, using mainly interest rate and exchange rate derivatives. The fair value hedge model is adopted for debt securities,
loans granted at fixed rate and money market loans and deposits, securities and combined hedge of variable rate
financial assets and fixed rate financial liabilities. The cash flows hedge model is adopted for future transactions in
foreign currency to cover dynamic changes in cash flows from loans granted and variable rate deposits in foreign
currency and foreign currency mortgage loans.
The relationships that follow the fair value hedge model recorded ineffectiveness of a negative amount of Euros
5,590,000 (31\u00a0December 2022: negative amount of Euros 17,355,000) and the hedging relationships that follow the cash
flows model recorded ineffectiveness of a positive amount of Euros 517,000 (31\u00a0December 2022: negative amount of
Euros 1,571,000).
Reclassifications of amounts recorded in results for fair reserves were carried out related to cash flow hedge
relationships, in a negative amount of Euros 45,947,000 (31\u00a0December 2022: positive amount of Euros 54,861,000). The
accumulated adjustment on financial risks covered performed on the assets and liabilities which includes hedged items
is detailed in note 54.
The analysis of hedging derivatives portfolio, by maturity, as at 31\u00a0December 2023, is as follows:
(Thousands of euros)
2023
Notional (remaining period)
Fair value
Up to
3 months
3 months to 1
year
Over 1 year
Total
Assets
Liabilities
Fair value hedging derivatives related to
interest rate risk changes
OTC Market
\u00a0 Interest rate swaps
7,750
508,735
10,965,729
11,482,214
34,716
8,441
Fair value hedging derivatives related to
currency risk changes
OTC Market
Currency and interest rate swap (CIRS)
140,291
208,173
\u2014
348,464
2,279
6,272
Cash flow hedging derivatives related to
interest rate risk changes
OTC Market
\u00a0 Interest rate swaps
499,574
1,600,000
8,159,354
10,258,928
164
14,965
Cash flow hedging derivatives related to
currency risk changes
OTC Market
Currency and interest rate swap (CIRS)
354,009
19,885
80,374
454,268
3,469
38,147
Total derivatives traded by
OTC Market
1,001,624
2,336,793
19,205,457
22,543,874
40,628
67,825
The analysis of hedging derivatives portfolio, by maturity, as at 31\u00a0December 2022, is as follows:
(Thousands of euros)
2022 (restated)
Notional (remaining period)
Fair value
Up to
3 months
3 months to 1
year
Over 1 year
Total
Assets
Liabilities
Fair value hedging derivatives related to
interest rate risk changes
OTC Market
Interest rate swaps
293,467
377,114
11,291,464
11,962,045
27,696
7,031
Fair value hedging derivatives related to
currency risk changes
OTC Market
Currency and interest rate swap (CIRS)
98,439
332,818
\u2014
431,257
2,999
18,432
Cash flow hedging derivatives related to
interest rate risk changes
OTC Market
Interest rate swaps
240,409
278,751
14,039,978
14,559,138
\u2014
110,562
Cash flow hedging derivatives related to
currency risk changes
OTC Market
Currency and interest rate swap (CIRS)
153,720
685,365
434,578
1,273,663
29,008
41,975
Total derivatives traded by
OTC Market
786,035
1,674,048
25,766,020
28,226,103
59,703
178,000
Investments in associated companies
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Portuguese credit institutions
51,793
49,228
Foreign credit institutions
128,467
170,045
Other Portuguese companies
179,312
131,477
Other foreign companies
43,042
30,432
402,614
381,182
Impairment
(46,355)
(66,263)
356,259
314,919
The balance Investments in associated companies, as at 31\u00a0December 2023, is analysed as follows:
(Thousands of euros)
2023
Global value of
participation
Impairment of
investments in
associated
companies
Book value of
participation
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A.
114,767
\u2014
114,767
Banco Millennium Atl\u00e2ntico, S.A.
75,430
(28,344)
47,086
Banque BCP, S.A.S.
53,037
\u2014
53,037
SIBS, S.G.P.S, S.A.
64,545
\u2014
64,545
Fidelidade Mo\u00e7ambique - Companhia de Seguros S.A.
12,942
\u2014
12,942
Unicre - Institui\u00e7\u00e3o Financeira de Cr\u00e9dito, S.A.
51,793
\u2014
51,793
Webspectator Corporation
18,011
(18,011)
\u2014
Millennium Financial Services Sp. z o.o.
12,089
\u2014
12,089
402,614
(46,355)
356,259
These investments correspond to unquoted companies. According to the accounting policy described in note 1 B, these
investments are measured at the equity method.
The balance Investments in associated companies, as at 31\u00a0December 2022, is analysed as follows:
(Thousands of euros)
2022 (restated)
Global value of
participation
Impairment of
investments in
associated
companies
Book value of
participation
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A.
75,968
\u2014
75,968
Banco Millennium Atl\u00e2ntico, S.A.
119,180
(48,252)
70,928
Banque BCP, S.A.S.
50,865
\u2014
50,865
SIBS, S.G.P.S, S.A.
55,509
\u2014
55,509
Fidelidade Mo\u00e7ambique - Companhia de Seguros S.A.
12,421
\u2014
12,421
Unicre - Institui\u00e7\u00e3o Financeira de Cr\u00e9dito, S.A.
49,228
\u2014
49,228
Webspectator Corporation
18,011
(18,011)
\u2014
381,182
(66,263)
314,919
The Group's companies included in the consolidation perimeter are presented in note 60, as well as the main indicators
of the most relevant ones.
The movements occurred in Impairment of investments in associated companies are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
66,263
78,268
Transfers from Other provisions (Banco Millennium Atl\u00e2ntico, S.A.) (note 39)
\u2014
5,000
Impairment charge for the year (note 13)
\u2014
1,435
Impairment write-off (Banco Millennium Atl\u00e2ntico, S.A.)
\u2014
(16,787)
Exchange rate differences
(19,908)
(1,653)
Balance at the end of the year
46,355
66,263
In accordance with the requirements of IFRS 12 and considering their relevance, the movements occurred in the
investment held in Banco Millennium Atl\u00e2ntico, S.A., is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Ownership held by BCP on equity of the associated company as at 1 January
70,928
60,203
Application of IAS 29 for the year:
Net non-monetary assets of the BMA
Effect of exchange rate variations (note 43)
(3,417)
1,282
Amortization of the effect of IAS 29 application calculated as at 31 December 2018 (note 15)
(268)
(423)
Goodwill of the merger operation of the BMA
Effect of exchange rate variations (note 43)
(8,223)
2,810
Transfers from Other provisions (note 39)
\u2014
(5,000)
Impairment of investments in associated companies
\u2014
(1,436)
Appropriation of the net income of the associated companies (note 15)
2,977
2,431
Appropriation of the net income of previous years (note 15)
\u2014
(2,924)
Other comprehensive income attributable to BCP
3,182
99
Exchange differences
Effect on BMA's equity
(27,994)
8,814
Goodwill associated with investment in BMA
(10,007)
3,419
Impairment of investments in associated companies (note 43)
19,908
1,653
Investment held at the end of the year
47,086
70,928
The following table presents the financial statements of Banco Millennium Atl\u00e2ntico, S.A, prepared in accordance with
IFRS, modified by the consolidation adjustments:
(Thousands of euros)
2023
2022
(restated)
Net profit for the year
13,097
10,693
Comprehensive income
13,996
435
Total comprehensive income attributable to Shareholders of the associated company
27,093
11,128
Application of IAS 29 (*)
(1,180)
(1,861)
Attributable to Shareholders of the associated companies adjusted to BCP GAAP
25,913
9,267
Attributable to the BCP Group
5,891
2,107
Balance sheet
Financial assets
1,979,566
2,562,438
Non-financial assets
245,431
347,632
Financial liabilities
(2,000,669)
(2,579,341)
Non-financial liabilities
(27,475)
(37,836)
Attributable to Shareholders of the associated companies
196,853
292,893
Application of IAS 29 (*)
20,764
36,974
Attributable to Shareholders of the associated companies adjusted to BCP GAAP
217,617
329,867
Attributable to the BCP Group
49,474
74,994
Goodwill of the merge
25,956
44,186
Impairment of investments in associated companies
(28,344)
(48,252)
Attributable to the BCP Group adjusted of consolidation items
47,086
70,928
(*) The impact of the IAS 29 adoption was calculated from the date of the merger (April 2016).
The amounts presented do not include adjustments arising from the application of IAS 29. Based on the requirements of
IAS 29, Angola was considered a hyperinflationary economy until 31 December 2018, for the purpose of presenting the
consolidated financial statements, as described in accounting policy 1 B6. This classification ceased to be applied on 1
January 2019.
In accordance with the requirements of IFRS 12 and considering their relevance, the movements occurred in the
investment held in Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Appropriation of equity of the associate on 1 January (before restatement)
59,766
261,446
Transition to IFRS 9 and IFRS 17 (note 59):
1 January 2022
(89,858)
(89,858)
Other comprehensive income for the year 2022
116,152
\u2014
Other reserves for the year 2022
19
\u2014
Net income for the year 2022
(10,111)
\u2014
Appropriation of equity of the associate on 1 January (restated)
75,968
171,588
Appropriation of net income for the year of associate:
Before the restatement
\u2014
39,811
Transition to IFRS 9 and IFRS 17 (note 59)
\u2014
(10,111)
Appropriation of net income for the year of associates (note 15)
40,422
29,700
Other comprehensive income attributable to BCP:
Before the restatement
\u2014
(109,240)
Transition to IFRS 9 and IFRS 17 (note 59)
\u2014
116,152
Other comprehensive income attributable to BCP
(1,565)
6,912
Dividends received
\u2014
(132,251)
Other changes (Transition to IFRS 9 and IFRS 17) (note 59)
\u2014
19
Other changes
(58)
\u2014
Investment held at the end of the year
114,767
75,968
The following table presents the financial statements of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A.,
prepared in accordance with IFRS, modified by the consolidation adjustments:
(Thousands of euros)
2023
2022
(restated)
Net profit for the year
82,494
60,612
Comprehensive income
(3,194)
14,106
Total comprehensive income attributable to Shareholders of the associated company
79,300
74,718
Attributable to the BCP Group (49%)
38,857
36,612
Balance sheet
Financial assets
7,813,872
8,176,426
Non-financial assets
482,087
673,510
Financial liabilities
(3,632,700)
(8,362,729)
Non-financial liabilities
(4,165,573)
(68,754)
Total equity
497,686
418,453
Attributable to non-controlling interests
10,980
10,929
Attributable to Shareholders of the associated companies
486,706
407,524
Adjustments of intra-group transactions (*)
378,415
378,415
Attributable to Shareholders of the associated company adjusted to BCP GAAP
865,121
785,939
Attributable to the BCP Group
423,909
385,110
Reverse of the initial gain in 2004 allocated to the BCP Group
(309,142)
(309,142)
Attributable to the BCP Group adjusted of consolidation items
114,767
75,968
(*) Adjustment related to the cancellation in the BCP Group consolidated accounts of the VOBA recorded by Millenniumbcp Ageas Grupo
Segurador, S.G.P.S, S.A., at the time of the initial registration of this investment. VOBA corresponds to the estimated current value of the
future cash flows of the contracts in force at the date of acquisition under IFRS 4. With the implementation of IFRS 17, this concept was
cancelled in the consolidated accounts of Millenniumbcp Ageas having no impact on the Group 's consolidated accounts as it is not recognised in
the investment.
The Group owns 49% of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., being accounted for under the equity
method, as Investments in associated companies.
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. is dedicated to the management of life insurance and pension
funds. On 1 January 2023 Millenniumbcp Ageas made the simultaneous adoption of IFRS 9 - Financial Instruments and
IFRS 17 - Insurance Contracts. It opted for the possibility given to Insurance Companies to defer the application of IFRS
9, since the combined implementation with IFRS 17 would minimize the distortion of results.
IFRS 17 replaces IFRS 4 - \"Insurance Contracts\" and is applicable to all entities that issue insurance contracts,
reinsurance contracts and investment contracts with discretionary participation features if they are also issuers of
insurance contracts.
The initial application of IFRS 17 and IFRS 9 requires comparative information. Therefore, Millenniumbcp Ageas Grupo
Segurador made the transition exercise on 1 January 2022 and the impacts resulting from its implementation are
detailed in note 59. Application of IFRS 17 \u2013 Insurance Contracts and IFRS 9 - Financial Instruments by Millenniumbcp
Ageas Grupo Segurador, S.G.P.S., S.A.
Non-current assets held for sale
This balance is analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Gross value
Impairment
Net value
Gross value
Impairment
Net value
Real estate
Assets arising from recovered loans
87,735
(39,327)
48,408
326,577
(90,699)
235,878
Assets belong to investments funds and
real estate companies
19,854
(6,149)
13,705
266,544
(46,497)
220,047
Assets for own use (closed branches)
3,472
(1,671)
1,801
20,556
(6,626)
13,930
Equipment and other
5,006
(696)
4,310
22,117
(5,743)
16,374
Other assets (*)
16,446
(4,353)
12,093
12,806
\u2014
12,806
132,513
(52,196)
80,317
648,600
(149,565)
499,035
(*) includes Shares, Price Deposit and Property Adjudication Proposals
In 2023, a set of assets with a balance sheet value of Euros 264.127.000 (of which Euros 237,816,000 in Assets arising
from recovered loans) and respective impairment of Euros 51,802,000 (of which Euros 50,856,000 in Assets arising from
recovered loans), were transferred to \"Other assets\u201d (note 32) following the analysis of the requirements provided in
IFRS 5.
The assets included in this balance are accounted for in accordance with the accounting policy described in note 1 G.
The balance Real estate - Assets arising from recovered loans includes, essentially, real estate resulted from process of
recovered loans or judicial auction being accounted for at the time the Group assumes control of the asset, which is
usually associated with the transfer of their legal ownership. Additional information on these assets is presented in note
54.
The Group has a strategy for sale these assets, consistent with the characteristic of each asset as well as with the
breakdown of underlying valuations. However, considering the formal constraints, it was not possible in all instances to
conclude the sales in the expected time. The sale strategy is based in an active search of buyers, with the Group having
a website where advertises these properties and through partnerships with the mediation of companies having more
ability for the product that each time the Group has for sale. Prices are periodically reviewed and adjusted for
continuous adaptation to the market. The Group requests, regularly, to the European Central Bank, the extension of
the period of holding these properties.
As at 31 December 2023, this balance includes properties for which the Group has already entered sales contracts in
the gross amount of Euros 54,014,000 (31\u00a0December 2022: Euros 97,975,000). The impairment associated with these
contracts amounts to Euros 24,127,000 (31\u00a0December 2022: Euros 11,296,000), and it was calculated considering the
value of the respective contracts. With reference to 31 December 2022, from the total of the entered sales contracts
Euros 70,169,000 were related to properties held by investment funds and for which was recorded impairment in the
amount of Euros 6,059,000.
The changes occurred in Impairment of non-current assets held for sale are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
149,565
190,714
Transfer to other assets
(51,802)
\u2014
Other transfers
(21,143)
\u2014
Charge for the year (note 13)
12,899
78,318
Reversals for the year (note 13)
(1,656)
(1,116)
Amounts charged-off
(35,249)
(119,073)
Exchange rate differences
(418)
722
Balance at the end of the year
52,196
149,565
Investment property
The balance Investment property corresponds to real estate evaluated in accordance with the accounting policy
presented in note 1 N, based on independent assessments and compliance with legal requirements.
The rents received related to these assets amounted to Euros 851,000 (31\u00a0December 2022: Euros 681,000).
The changes occurred in this balance are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
15,217
2,870
Transfers from / (to) non-current assets held for sale
\u2014
12,532
Revaluations
94
(185)
Disposals
23,789
\u2014
Balance at the end of the year
39,100
15,217
Other tangible assets
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Real estate
669,847
670,000
Equipment
Computer equipment
346,220
334,864
Security equipment
67,587
67,687
Interior installations
151,649
149,986
Machinery
49,712
47,283
Furniture
84,154
84,516
Motor vehicles
35,839
32,529
Other equipment
31,842
28,224
Right of use
Real estate
390,625
366,363
Vehicles and equipment
\u2014
431
Work in progress
20,563
21,279
Other tangible assets
36
39
1,848,074
1,803,201
Accumulated depreciation
Relative to the current year (note 9)
(98,282)
(98,916)
Relative to the previous years
(1,143,345)
(1,129,588)
(1,241,627)
(1,228,504)
606,447
574,697
The balance Real Estate includes the amount of Euros 107,833,000 (31\u00a0December 2022: Euros 108,616,000) related to
real estate held by the Group's real estate investment funds.
The balance Right-of-use essentially corresponds to real estate (branches and central buildings) and to a residual
number of vehicles, which are amortized according to the lease term of each contract, as described in the accounting
policy 1 H.
The changes occurred in Other tangible assets during 2023 are analysed as follows:
(Thousands of euros)
2023
Balance on 1
January
Acquisitions
/ Charge
Disposals
/ Charged-off
Transfers
Exchange
differences
Balance on
31 December
Real estate
670,000
3,552
(13,520)
6,778
3,037
669,847
Equipment:
Computer equipment
334,864
13,297
(10,799)
7,318
1,540
346,220
Security equipment
67,687
459
(548)
183
(194)
67,587
Interior installations
149,986
916
(1,691)
2,944
(506)
151,649
Machinery
47,283
115
(605)
1,388
1,531
49,712
Furniture
84,516
494
(1,467)
803
(192)
84,154
Motor vehicles
32,529
7,649
(5,407)
561
507
35,839
Other equipment
28,224
22
(859)
2,436
2,019
31,842
Right of use
Real estate
366,363
138,697
(122,744)
\u2014
8,309
390,625
Vehicles and equipment
431
\u2014
(444)
\u2014
13
\u2014
Work in progress
21,279
23,188
(571)
(24,351)
1,018
20,563
Other tangible assets
39
\u2014
\u2014
\u2014
(3)
36
1,803,201
188,389
(158,655)
(1,940)
17,079
1,848,074
Accumulated depreciation
Real estate
(406,065)
(14,324)
12,459
779
(3,304)
(410,455)
Equipment:
Computer equipment
(286,978)
(17,738)
10,729
141
(625)
(294,471)
Security equipment
(63,350)
(958)
537
27
145
(63,599)
Interior installations
(133,154)
(3,167)
1,582
37
322
(134,380)
Machinery
(39,524)
(1,649)
517
(199)
(1,160)
(42,015)
Furniture
(79,007)
(2,540)
1,428
148
149
(79,822)
Motor vehicles
(18,457)
(5,054)
4,594
(37)
(234)
(19,188)
Other equipment
(22,660)
(1,662)
806
(21)
(1,564)
(25,101)
Right of use
Real estate
(178,839)
(51,190)
61,845
(1)
(4,375)
(172,560)
Vehicles and equipment
(431)
\u2014
444
\u2014
(13)
\u2014
Other tangible assets
(39)
\u2014
\u2014
\u2014
3
(36)
(1,228,504)
(98,282)
94,941
874
(10,656)
(1,241,627)
574,697
90,107
(63,714)
(1,066)
6,423
606,447
The changes occurred in Other tangible assets during 2022 are analysed as follows:
(Thousands of euros)
2022 (restated)
Balance on 1
January
Acquisitions
/ Charge
Disposals
/ Charged-off
Transfers
Exchange
differences
Balance on
31 December
Real estate
708,803
2,442
(37,606)
(6,690)
3,051
670,000
Equipment:
Computer equipment
337,457
15,238
(31,600)
12,186
1,583
334,864
Security equipment
67,542
844
(1,372)
382
291
67,687
Interior installations
148,532
1,339
(1,880)
1,198
797
149,986
Machinery
49,455
611
(2,068)
(380)
(335)
47,283
Furniture
84,923
440
(3,583)
2,371
365
84,516
Motor vehicles
29,703
7,033
(4,869)
306
356
32,529
Other equipment
30,711
180
(2,223)
107
(551)
28,224
Right of use
Real estate
352,346
35,010
(20,114)
(8)
(871)
366,363
Vehicles and equipment
505
\u2014
(65)
\u2014
(9)
431
Work in progress
20,656
24,408
(1,133)
(22,808)
156
21,279
Other tangible assets
38
\u2014
\u2014
\u2014
1
39
1,830,671
87,545
(106,513)
(13,336)
4,834
1,803,201
Accumulated depreciation
Real estate
(428,656)
(14,917)
31,982
5,702
(176)
(406,065)
Equipment:
Computer equipment
(300,560)
(16,375)
31,432
(116)
(1,359)
(286,978)
Security equipment
(63,723)
(862)
1,337
152
(254)
(63,350)
Interior installations
(131,897)
(3,007)
1,828
446
(524)
(133,154)
Machinery
(41,681)
(1,535)
1,997
1,427
268
(39,524)
Furniture
(78,344)
(2,717)
3,543
(1,232)
(257)
(79,007)
Motor vehicles
(17,743)
(4,636)
4,189
(53)
(214)
(18,457)
Other equipment
(23,811)
(1,498)
2,222
12
415
(22,660)
Right of use
Real estate
(142,996)
(53,365)
17,094
1
427
(178,839)
Vehicles and equipment
(501)
(4)
65
\u2014
9
(431)
Other tangible assets
(38)
\u2014
\u2014
\u2014
(1)
(39)
(1,229,950)
(98,916)
95,689
6,339
(1,666)
(1,228,504)
600,721
(11,371)
(10,824)
(6,997)
3,168
574,697
Goodwill and intangible assets
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Goodwill - Differences arising on consolidation
Bank Millennium, S.A. (Poland)
110,640
102,655
Euro Bank, S.A. (Poland)
44,231
41,038
Others
10,172
10,182
165,043
153,875
Impairment
Bank Millennium, S.A. (Poland)
(110,640)
(102,655)
Others
(9,880)
(9,880)
(120,520)
(112,535)
44,523
41,340
Intangible assets
Software
309,776
277,205
Other intangible assets
80,598
73,607
390,374
350,812
Accumulated amortisation
Charge for the year (note 9)
(39,217)
(40,334)
Charge for the previous years
(172,575)
(169,131)
(211,792)
(209,465)
178,582
141,347
223,105
182,687
According to the accounting policy described in note 1 B, the recoverable amount of the Goodwill is annually assessed
in the second half of each year or whenever there are indications of eventual loss of value. In accordance with IAS 36
the recoverable amount of goodwill resulting from the consolidation of the subsidiaries, should be the greater between
its value in use (the present value of the future cash flows expected from its use) and its fair value less costs to sell.
Based on these criteria, the Group made in 2022, valuations of their investments for which there is goodwill recognised
considering among other factors:
(i) an estimate of future cash flows generated by each cash generating unit;
(ii) an expectation of potential changes in the amounts and timing of cash flows;
(iii) the time value of money;
(iv) a risk premium associated with the uncertainty by holding the asset; and
(v) other factors associated with the current situation of financial markets.
The valuations are based on reasonable and sustainable assumptions representing the best estimate of the Executive
Committee on the economic conditions that affect each subsidiary, the budgets and the latest projections approved for
those subsidiaries and their extrapolation to future periods. The assumptions made for these valuations might vary with
the change in economic conditions and in the market.
In 2023, there were no factors pointing to the deterioration of the value of those financial participations that could
lead to impairment charges in respect of goodwill. In the case of Bank Millennium S.A. (Poland), in which case factors
were identified during 2022 that showed a deterioration in the value of this financial participation, which led to a total
impairment of the goodwill then associated with the acquisition by the BCP Group of the percentage of control over
Bank Millennium S.A. (Poland) in the amount of Euros 102.3 million in the first half of 2022.
The changes occurred in Goodwill and intangible assets, during 2023, are analysed as follows:
(Thousands of euros)
2023
Balance on
1 January
Acquisitions
/ Charge
Disposals
/ Charged-off
Transfers
Exchange
differences
Balance on
31 December
Goodwill - Differences arising
on consolidation
153,875
\u2014
\u2014
\u2014
11,168
165,043
Impairment for goodwill
(112,535)
\u2014
\u2014
\u2014
(7,985)
(120,520)
41,340
\u2014
\u2014
\u2014
3,183
44,523
Intangible assets
Software
277,205
75,177
(47,120)
(2,396)
6,910
309,776
Other intangible assets
73,607
14
(1,154)
2,403
5,728
80,598
350,812
75,191
(48,274)
7
12,638
390,374
Accumulated depreciation
Software
(146,799)
(33,928)
45,427
217
(3,425)
(138,508)
Other intangible assets
(62,666)
(5,289)
\u2014
(216)
(5,113)
(73,284)
(209,465)
(39,217)
45,427
1
(8,538)
(211,792)
141,347
35,974
(2,847)
8
4,100
178,582
182,687
35,974
(2,847)
8
7,283
223,105
The changes occurred in Goodwill and intangible assets during 2022 are analysed as follows:
(Thousands of euros)
2022 (restated)
Balance on
1 January
Acquisitions
/ Charge
Disposals
/ Charged-off
Transfers
Exchange
differences
Balance on
31 December
Goodwill - Differences arising
on consolidation
159,431
\u2014
(2,512)
\u2014
(3,044)
153,875
Impairment for goodwill
(11,931)
(102,770)
2,512
\u2014
(346)
(112,535)
147,500
(102,770)
\u2014
\u2014
(3,390)
41,340
Intangible assets
Software
234,192
72,441
(25,315)
(3,664)
(449)
277,205
Other intangible assets
70,823
1,213
(1,037)
4,073
(1,465)
73,607
305,015
73,654
(26,352)
409
(1,914)
350,812
Accumulated depreciation
Software
(136,360)
(36,168)
24,859
419
451
(146,799)
Other intangible assets
(59,942)
(4,166)
1,027
(828)
1,243
(62,666)
(196,302)
(40,334)
25,886
(409)
1,694
(209,465)
108,713
33,320
(466)
\u2014
(220)
141,347
256,213
(69,450)
(466)
\u2014
(3,610)
182,687
Income tax
Income tax assets and liabilities are analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Assets
Liabilities
Net
Assets
Liabilities
Net
Deferred taxes not depending
on the future profits (a)
Impairment losses (b)
862,261
\u2014
862,261
982,465
\u2014
982,465
Employee benefits
732,273
\u2014
732,273
835,619
\u2014
835,619
1,594,534
\u2014
1,594,534
1,818,084
\u2014
1,818,084
Deferred taxes depending
on the future profits
Impairment losses (b)
419,544
\u2014
419,544
438,430
(50,303)
388,127
Tax losses carried forward
167,995
\u2014
167,995
188,693
\u2014
188,693
Employee benefits
103,938
(141,506)
(37,568)
50,770
(136,019)
(85,249)
Financial assets at fair value through other
comprehensive income
500,202
(82,879)
417,323
729,416
(134,154)
595,262
Derivatives
\u2014
(7,750)
(7,750)
\u2014
(5,482)
(5,482)
Intangible assets
968
\u2014
968
1,143
\u2014
1,143
Other tangible assets
9,401
(3,268)
6,133
8,693
(3,380)
5,313
Others
92,615
(108,258)
(15,643)
111,336
(89,949)
21,387
1,294,663
(343,661)
951,002
1,528,481
(419,287)
1,109,194
Total deferred taxes
2,889,197
(343,661)
2,545,536
3,346,565
(419,287)
2,927,278
Offset between deferred tax assets
and deferred tax liabilities\u00a0
(334,866)
334,866
\u2014
(407,579)
407,579
\u2014
Net deferred taxes
2,554,331
(8,795)
2,545,536
2,938,986
(11,708)
2,927,278
Current taxes (c)
20,469
(197,085)
\u2014
17,945
(23,680)
\u2014
(a) Special Regime applicable to deferred tax assets.
(b) The amounts as at 31 December 2023 and 2022 include deferred tax assets related with credit impairments non-accepted fiscally of which
credits were written-off, according to the expectation that the use of such impairments will be deductible for the purposes of determining
taxable income for the tax periods in which the legal conditions required for their tax deductibility are met.
(c) The amounts of current taxes assets and liabilities refer exclusively to income taxes levied on the various BCP Group companies.
As at 31 December 2023, the balance deferred tax assets amounts to Euros 2,554,331,000, of which Euros 2,439,081,000
are related to the Bank's activity. The deferred taxes assets relating to the individual activity include a net amount of
Euros 397,020,000 resulting from losses on cash flow hedging derivatives operations of interest rate risk recognized in
other comprehensive income, whose average maturity of operations is 2.5 years and Euros 447,528,000 which depends
on the existence of future profitable profits (deferred tax assets not eligible under the special regime applicable to
deferred tax assets, approved by Law No. 61/2014, of 26 August), including:
- Euros 260,047,000 (net value) related to impairment losses; and
- Euros 157,450,000 resulting from tax losses carried forward from 2016 and 2020.
Special regime applicable to deferred tax assets
The Extraordinary General Meetings of Banco Comercial Portugu\u00eas and Activobank which took place on 15 October 2014
and 5 November 2014 approved the accession of these banks to the Special Regime approved by Law No. 61/2014, of 26
August, applicable to deferred tax assets that resulted from not deduction of expenses and negative equity variations
with impairment losses on credits and post-employment or long-term employee benefits.
The special regime is applicable to those expenses and negative equity variations recorded in tax periods beginning on
or after 1 January 2015, as well as to deferred tax assets recorded in the annual accounts for the last tax period prior
to that date and to part of expenses and negative equity variations associated with them. Pursuant to Law No. 23/2016,
of 19 August, this special regime is not applicable to expenses and negative equity variations with impairment losses on
credits and with post-employment or long-term employee benefits recorded in the period's taxation commencing on or
after 1 January 2016, nor to deferred tax assets to these associates.
The special regime applicable to deferred tax assets provides for an optional framework and with the possibility of
subsequent waiver, under which:
- Expenses and negative equity variations with impairment losses on credits and with post-employment or long-term
employee benefits covered by it are deducted, under the terms and conditions set out in the Corporate income tax
Code and in relevant separate tax legislation, up to the limit of the taxable profit for the tax period determined before
these deductions. Expenses and negative equity variations not deducted because of applying this limit are deducted in
subsequent tax periods, with the same limit. In the BCP Group, deferred tax assets associated with expenses and
negative equity variations under these conditions amount to Euros 1,387,878,000 (31 December 2022: Euros
1,599,199,000), of which Euros 848,120,000 relate to impairment losses on credits (31 December 2022: Euros
967,679,000) and Euros 539,758,000 relate to post-employment or long-term employee benefits (31 December 2022:
Euros 631,520,000).
- In certain situations (those with negative net results in annual individual accounts or liquidation by voluntary
dissolution, insolvency decreed by court or revocation of the respective authorization), deferred tax assets covered by
the Special Regime are converted into tax credits, in part or in wholeness. In case of negative net income, the
conversion is made according to the proportion between the amount of the negative net income for the period and the
total of equity, and a special reserve corresponding to 110% of the tax credit must also be constituted and,
simultaneously, constituting conversion rights attributable to the State of equivalent value, rights that can be acquired
by the shareholders upon payment to the State of the same value. Tax credits may be offset against tax debts of the
beneficiaries (or an entity based in Portugal within the same prudential consolidation perimeter or included in the same
group of entities for which are applied the Special Tax Regime for Groups of Companies) or reimbursed by the State. As
neither Banco Comercial Portugu\u00eas nor Banco ActivoBank recorded negative net results in the years 2015 to 2022, there
was no conversion of deferred taxes assets into tax credits, under the terms provided for in the Special Regime.
Pursuant to the regime described, the recovery of deferred tax assets covered by the optional regime approved by Law
No. 61/2014, of 26 August, is not dependent on future profits.
The above-mentioned legal framework was densified by Ordinance no. 259/2016, of 4 October, about the control and
use of tax credits, and by the Ordinance No. 293-A/2016, of 18 November, which establishes the conditions and
procedures for the acquisition by the shareholders of the referred rights of the State. Law No. 98/2019, of 4
September, establishes a deadline for the acquisition of the referred rights of the State by the shareholders, after
which the Management Board of the issuing bank is obliged to promote the record of the capital increase by the amount
resulting from the exercise of the conversion rights. According to this legislation, among other aspects, these rights are
subject to a right of acquisition by the shareholders on the date of creation of the rights of the State, exercisable in
periods that will be established by the Board of Directors until 3 years after the confirmation date of the conversion of
the deferred tax asset into tax credit by the Portuguese Tax and Customs Authority. The issuing entity shall deposit in
favour of the State the amount of the price corresponding to all the rights issued, within 3 months beginning from the
confirmation date of the conversion of the deferred tax asset into tax credit. Such deposit shall be redeemed when and
to the extent that the rights of the State are acquired by the shareholders or exercised by the State.
Deferred taxes are calculated based on the tax rates expected to be in force when the temporary differences are
reversed, which correspond to the approved rates or substantially approved at the balance sheet date. The deferred
tax assets and liabilities are presented on a net basis whenever, in accordance with applicable law, current tax assets
and current tax liabilities can be offset with each other, and the deferred tax assets and liabilities related to income
taxes levied by the same fiscal authority over the same taxable entity.
The current tax rate for Banco Comercial Portugu\u00eas, S.A. is analysed as follows:
2023
2022
(restated)
Income tax
21%
21%
Municipal surtax rate (on taxable net income)
1.5%
1.5%
State tax rate (on taxable net income)
More than 1,500,000 to 7,500,000
3%
3%
From more than 7,500,000 to 35,000,000
5%
5%
More than 35,000,000
9%
9%
The deferred tax rate related to the Bank\u2019s tax losses is 21%, in 2023 and 2022.
The average deferred tax rate associated with temporary differences of Banco Comercial Portugu\u00eas, S.A. is 31.3%. The
income tax rate in the other main countries where the Group operates is 19% in Poland, 32% in Mozambique and 0%
(exemption) in the Cayman Islands.
Following the amendments provided for in Law No. 24-D/2022, of 30 December, within the scope of the State Budget
for 2023, the time limit applicable to the carrying forward of tax losses in Portugal was eliminated. This amendment
applies to tax losses calculated in tax periods beginning on or after 1 January 2023, as well as to tax losses calculated in
tax periods prior to 1 January 2023 and whose deduction period is still in progress on that date. Thus, tax losses
calculated in 2014 and subsequent years may be deducted from future taxable income. The deduction limit for tax
losses increased from 70% to 65%, being increased by ten percentage points when the difference results from the
deduction of tax losses calculated in the 2020 and 2021 tax periods, under the terms of the special regime provided for
in Law n. 27-A/2020, of 24 July.
The reporting period for tax losses carried forward in Poland and in Mozambique it is 5 years.
Banco Comercial Portugu\u00eas, S.A. applies the Special Tax Regime for Groups of Companies (RETGS) since 2016 for
taxation purposes under corporate income tax (IRC), in which it\u2019s the dominant company.\u00a0The remaining companies
covered by the RETGS are Banco ActivoBank, S.A., Interfundos - Sociedade Gestora de Organismos de\u00a0 Investimento
Coletivo, S.A., BCP \u00c1frica, S.G.P.S. Lda., Millennium bcp Participa\u00e7\u00f5es, S.G.P.S., Sociedade Unipessoal Lda. and
Millennium bcp Teleservi\u00e7os \u2013 Servi\u00e7os de Com\u00e9rcio Electr\u00f3nico, S.A. In 2023 and 2022, the application of RETGS was
maintained.
The balance deferred tax assets not depending on the future profits (covered by the regime approved by Law no.
61/2014, of 26 August) includes the amounts of Euros 210,686,000 and Euros 4,020,000 recorded in 2015 and 2016,
respectively, related to expenses and negative equity variations with post-employment or long-term employee benefits
and to impairment losses of loans accounted for until 31 December 2014.
Regarding the activity in Portugal, the Law No. 98/2019, of 4 September, established the tax regime for credit
impairments and provisions for guarantees for tax periods beginning on or after 1 January 2019, providing for
approximation between the accounting and tax rules for the purposes of deductibility of expenses with the
reinforcement of credit impairments. The rules in force until 2018 could continue to be applied until the end of the
2023 financial year, unless the option to apply the new regime was exercised in advance.
In 2022, the Banco Comercial Portugu\u00eas, S.A. and the Banco ActivoBank, S.A. exercised the option to apply the new
regime, under the terms of which the impairment losses for credit risk relating to exposures analysed on an individual
or on a collective basis recognized in accordance with the applicable accounting standards and regulations are fully
deductible for the purposes of determining taxable profit, with the exceptions provided for in the Corporate Income
Tax Code. The exceptions apply to impairment losses relating to credits and other rights over natural or legal persons
who hold, directly or indirectly, more than 10 % of the Bank's capital, over members of its corporate bodies, over
companies in which the Bank holds, directly or indirectly, more than 10 % of the capital or over entities with which it is
in a situation of special relations.
The Impairment losses and other value corrections for specific credit risk recorded until 31 December 2021 and still not
accepted for tax purposes are only deductible up to the amount that, in each tax period, corresponds to the application
of the mandatory minimum limits set out in Notice of Bank of Portugal No. 3/95, as amended before its repeal by
Notice of Bank of Portugal No. 5/2015 and, between other conditions, provided that they are not claims covered by real
estate rights.
The Group complies with the guidelines of IFRIC 23 - Uncertainty over Income Tax Treatments on the determination of
taxable profit, tax bases, tax losses to be reported, tax credits to be used and tax rates in scenarios of uncertainty
regarding the income tax treatment.
Analysis of the recoverability of deferred tax assets
In accordance with the accounting policy 1 Y3 and with the requirements of IAS 12, the deferred tax assets were
recognised based on the Group's expectation of their recoverability. The recoverability of deferred taxes depends on
the implementation of the strategy of the Bank's Board of Directors, namely the generation of estimated taxable
income and its interpretation of tax legislation. Any changes in the assumptions used in estimating future profits or tax
legislation may have material impacts on deferred tax assets.
The assessment of the recoverability of deferred tax assets is based on the projected results for the period from 2024
to 2030, as longer projection periods have higher underlying factors of uncertainty. The projected pre-tax results for
the years 2024, 2025 and 2026 are consistent with the budget approved by the Bank's Board of Directors in November
2023, which incorporates the priorities stemming from the 2021-2024 Strategic Plan, in a framework where the
financial targets set therein for 2024 have been achieved or exceeded in 2023, adjusted for the impact of a new issue
of additional Tier 1 securities in the amount of Euros 400 million, with an option for early repayment from the end of
the 5th year and with an annual interest rate of 8.125%. In the earnings projection for the years 2027, 2028, 2029 and
2030, a standard nominal growth rate of 2% was considered.
The projections incorporate the impact of the stabilization of interest rates at a lower level than the current one,
preserving profitability levels in line with those targets and reflecting the commercial positioning and the desired
capture of efficiency gains, enshrined in the 2021-2024 Strategic Plan approved by the governing bodies, highlighting:
- after reflecting the impacts of the normalization of interest rates, the net interest income benefits from the recovery
of volumes in deposits and loans to customers, where the Bank continues to privilege priority segments associated with
the relationship and knowledge of its customers and transactionality;
- increase in commission income based on an efficient and judicious management of commissions and price lists;
- cost of risk still showing improvement, although gradually less significant, as this indicator converges to levels in line
with the Bank's current activity, with a lower impact on the historical portfolios of NPEs, foreclosed assets and FRE
(Corporate Restructuring Funds), after the reduction of these exposures achieved over the last years;
- Preservation of high levels of efficiency based on continued cost discipline and increased use of technology.
To estimate taxable net income for the periods of 2024 to 2030, the following main assumptions were considered:
- The rules of the new tax regime of credit impairment were applied. In the application of these rules, the following
assumptions were considered, in general terms:
a) the impairment losses for credit risk related to exposures analysed on an individual or collective basis, recognised
in accordance with the applicable accounting and regulatory standards, were considered deductible for tax purposes;
b) impairment reversals created up to 31 December 2021 not accepted for tax purposes were estimated based on the\u00a0
Non-Performing Assets Reduction Plan 2024-2025 submitted to the supervisory authority in March 2023, and also on
the basis of the average percentage of reversal observed in the last years from 2016 to 2023;
c) the referred average percentages were calculated separately, depending on whether or not there was a mortgage
guarantee, the eligibility for purposes of the special regime applicable to deferred tax assets and according to the
customers\u2019 classification as Non-Performing\u00a0 Exposures (NPE).
- The deductions related to impairment of financial assets were projected based on the destination (sale or settlement)
and the estimated date of the respective operations;
- Impairment reversals of non-financial assets not accepted for tax purposes were projected considering the expected
periods of disinvestment in certain real estate assets. For the remaining assets without a forecasted term for
disinvestment, the reversals were estimated based on the average percentage of reversal observed in the years from
2016 to 2023. Non-deductible expenses related to the reinforcement of impairment of non-financial assets were
estimated on the based on the average percentage of amounts not deducted for tax purposes in the years from 2016 to
2023, compared to the amounts of reinforcements net of impairment recorded in those years;\u00a0
- The deductions related to employee benefits were projected based on their estimated payments or deduction plans,
in accordance with information provided by the pension fund actuary;\u00a0
- The realization of changes in the fair value of real estate investment funds was projected based on the information
available in the regulations of the funds in question in relation to the period foreseen for the respective liquidation.
According to the estimate of future taxable income, the deferred taxes assets recorded as at 31 December 2023 and 31
December 2022 are adequate under the IAS 12 requirements.
In accordance with these assessments, the amount of unrecognised deferred tax related to temporary differences and
to tax losses is as follows:
(Thousands of euros)
2023
2022
(restated)
Temporary differences
40,976
54,015
Tax losses carried forward
2014
161,906
161,895
2015
2
2
2016
282,498
286,419
2017
2,773
3,530
2018
118,295
118,295
2019 (*)
24,192
24,265
2020 (*)
15,213
5,704
2021
193,878
193,829
2022
19,469
16,707
2023
2,402
\u2014
Total
820,628
810,646
(*) Following the publication of the Circular n. 3/2024 issued by the Portuguese Tax Authorities on the Corporate Income tax treatment of
leased assets under IFRS 16, the DTA related to 2019 and 2020 tax losses should increase by Euros 4,886 thousands and Euros 4,616 thousands,
respectively.
The amount of unrecognized deferred taxes relating to tax losses per expiry year is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
2024
206
278
2025
13,623
77
2026
129
2,447
2027
12,051
12,797
2028
2,293
\u2014
No expiry date
792,326
795,047
Total
820,628
810,646
The impact of income taxes in Net income and in other balances of\u00a0 Group's equity, as at 31 December 2023, is analysed
as follows:
(Thousands of euros)
2023
Net income for
the year
Reserves
Exchange
differences
Deferred taxes not depending on the future profits
Impairment losses
(120,204)
\u2014
\u2014
Employee benefits
(89,567)
(13,779)
\u2014
(209,771)
(13,779)
\u2014
Deferred taxes depending on the future profits
Impairment losses
(27,671)
(1,978)
10,763
Tax losses carried forward (a)
(21,822)
500
624
Employee benefits
(56,994)
103,856
819
Financial assets at fair value through other comprehensive income
\u2014
(195,343)
17,404
Derivatives
\u2014
\u2014
(2,268)
Intangible assets
(253)
\u2014
78
Other tangible assets
851
\u2014
(31)
Others
(41,854)
(164)
(17,576)
(147,743)
(93,129)
9,813
(357,514)
(106,908)
9,813
Current taxes
Current year
(179,519)
387
\u2014
Correction of previous years
(338)
\u2014
\u2014
(179,857)
387
\u2014
(537,371)
(106,521)
9,813
The impact of income taxes in Net\u00a0 income and in other balances of Group's equity, as at 31 December 2022, is analysed
as follows:
(Thousands of euros)
2022 (restated)
Net income for
the year
Reserves
Exchange
differences
Deferred taxes not depending on the future profits
Impairment losses
(712)
\u2014
\u2014
(712)
\u2014
\u2014
Deferred taxes depending on the future profits
Impairment losses
(160,953)
\u2014
(2,542)
Tax losses carried forward (a)
2,785
(2,236)
669
Employee benefits
(6,199)
(126,957)
(449)
Financial assets at fair value through other comprehensive income
\u2014
575,491
(1,271)
Derivatives
\u2014
\u2014
(559)
Intangible assets
(463)
\u2014
(33)
Other tangible assets
503
\u2014
12
Others
(29,649)
6,803
1,755
(193,976)
453,101
(2,418)
(194,688)
453,101
(2,418)
Current taxes
Current year
(110,551)
(18)
\u2014
Correction of previous years
919
\u2014
\u2014
(109,632)
(18)
\u2014
(304,320)
453,083
(2,418)
(a) The amount recorded in reserves refers to the deferred tax on the part of tax loss arising from the deduction of negative equity changes
recorded in reserves that contribute to the calculation of taxable income.
The reconciliation between the nominal tax rate and the effective tax rate is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Net income before income taxes
1,487,832
418,347
Current tax rate (%)
31.5%
31.5%
Expected tax
(468,667)
(131,779)
Non-deductible impairment and provisions (a)
(139,548)
(145,811)
Mandatory contributions to the banking sector (b)
(16,760)
(25,502)
Results of companies accounted by the equity method
20,253
18,472
Interests on other equity instruments (c)
11,655
11,655
Effect of the tax rate difference (d)
54,764
(8,508)
Effect of recognition/derecognition net of deferred taxes (e)
7,071
(24,252)
Non-deductible costs and other corrections
(6,731)
2,013
Correction of previous years
1,353
660
Autonomous tax
(761)
(1,268)
Total
(537,371)
(304,320)
Effective rate (%)
36.1%
72.7%
(a) In 2023 includes the negative amount of Euros 113,706,000 (2022: negative Euros 85,896,000) related to the impact of the non-deductibility
for tax purposes of the provisions related to legal risks associated with the mortgage loans portfolio granted in foreign currency by Bank
Millennium, such as the negative amount of Euros 27,858,000 (2022: negative Euros 23,695,000) relating on the impact of the non-deductibility
for tax purposes of the net reinforcement of provisions for risks and charges registered with Banco Comercial Portugu\u00eas, S.A. In 2022 includes
the negative amount of Euros 32,227,000 regarding the goodwill impairment associated to this\u00a0 subsidiary. On 6 December 2023, the Supreme
Administrative Court issued a judgment on the Bank Millennium\u2019s complaint against the tax ruling of the Director of the National Tax
Information Service on the rules for recognizing the effects in CIT of cancellations of mortgage loans indexed to foreign currencies and foreign
currency loans (in particular in CHF) adjudicated by common courts. According to the ruling, Bank Millennium should recognise the tax
consequences not by recognising the resulting losses as tax-deductible costs, but by adjusting the revenues from the above-mentioned loans
and advances (FX gains, interest, commissions and fees) previously taxed with CIT, taking into account the rules of limitation of tax liabilities.
Until the above judgment was issued, Bank Millennium prudently did not recognize losses due to cancellations for CIT and deferred tax purposes
and is currently in the process of analysing and preparing a methodology and process both in order to make appropriate adjustments to CIT
liabilities due to cancellations in previous years, as well as to recognize the relevant asset in deferred tax relating in a fair manner to the
probable cancellations of the above-mentioned loans and advances in the future. Indeed, there are doubts as to the detailed rules for the
adjustment of revenues, which may change the final amounts of the adjustments.
(b) Refers to mandatory contributions to the banking sector in Portugal (contribution to the banking sector and additional solidarity on the
banking sector) and in Poland.
(c) Relates to the impact of the deduction for taxable income purposes of interest paid in respect of perpetual bonds representing subordinated
debt issued in 2019.
(d) In 2023 this balance includes the amount of Euros 18,947,000 (2022: Euros 21,668,000) related with the effect of the taxation of 20% tax on
interests of Mozambique's public debt securities and the amount of Euros 36,140,000 (2022: negative Euros 19,507,000) related to the effect of
the difference in the tax rate on profits in Poland, which is 19%, on a net income before income tax.
(e) In 2023 includes the amount of Euros 29,469,000 related to the recognition of deferred tax assets related to temporary differences
associated with potential losses in specialised credit recovery funds and the negative amount of Euros 14,788,000 (2022: negative Euros
20,981,000) related to the non-recognition/derecognition of deferred tax assets of tax losses.
Directive (EU) 2022/2523 of the Council, of 15 December 2022 \u2013 Minimum level of taxation of
15% per jurisdiction
Under Pillar 2 of the Base Erosion and Profit Shifting 2.0 (\"BEPS 2.0\") project of the Organisation for Economic Co-
operation and Development (\"OECD\"), enshrined in Council Directive (EU) 2022/2523 of 15 December 2022,
multinationals enterprises and large national groups with consolidated annual revenues of more than EUR 750 million in
at least two of the last four financial years, will become subject, as of the 2024 financial year, to a minimum level of
taxation of 15% in each of the jurisdiction they operate.
Neither Portugal nor Poland ensured the transposition of this new regime into their respective domestic legislation by
31 December 2023, under the terms determined by the Directive mentioned above, and it is expected that the Pillar 2
legislation will be enacted in the course of 2024.
The regime in question may determine the payment of a top-up tax when a minimum level of taxation of 15% is not
observed, on a jurisdictional basis.
Considering\u00a0 the consolidated annual income earned in recent years, the Group should meet the eligibility criterion for
the application of the Pillar 2 legislation.
According to the analysis carried out on the potential future impacts of this regime, the Group estimates that it will
meet, in the jurisdictions in which it operates, namely in Portugal, Poland and Mozambique, the necessary
requirements for the application of \"transitional safe harbours\", thus being excluded, between 2024-2026, from the
obligation to calculate any tup-up tax.
Other assets
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Deposit account applications
57,866
51,371
Capital supplies
173,175
178,725
Obligations with post-employment benefits
390,258
593,494
Debtors for futures and options transactions
118,472
191,290
Real estate and other assets arising from recovered loans (a)
338,486
\u2014
Debtors
Residents
Receivables from real estate,\u00a0transfers of assets and other securities
87,816
111,693
Prosecution cases / agreements with the Bank
11,163
12,163
SIBS
3,579
3,521
Others
21,779
66,744
Non-residents
50,992
30,584
Amounts due for collection
81,614
80,024
Interest and other amounts receivable
80,094
69,613
Amounts receivable on trading activity
10,736
3,234
Amounts due from customers
76,047
51,229
Artistic patrimony
28,796
28,796
Prepaid expenses
25,505
23,654
Subsidies receivables
8,347
10,764
Other recoverable tax
8,112
9,082
Gold and other precious metals
3,562
3,640
Capital supplementary contributions
165
165
Associated companies
116
145
Sundry assets
371,836
254,276
1,948,516
1,774,207
Impairment for other assets
(321,832)
(191,752)
1,626,684
1,582,455
(a) assets transferred from Non-current assets held for sale
As at 31 December 2023, the balance Deposit account applications includes the amount of Euros 30,638,000
(31\u00a0December 2022: Euros 25,506,000) relating to the collateral constituted in compliance with the assumption of
irrevocable payment commitments to Single Resolution Fund, as referred in note 6.
As referred in note 47, as at 31\u00a0December 2023, the balance Capital supplies includes the amount of Euros 165,837,000
(31\u00a0December 2022: Euros 171,397,000) arising from the transfers of assets to Specialized recovery funds which have
impairment in the same amount.
The balance Amounts receivable on trading activity includes amounts receivable within 3 business days of stock
exchange operations.
Considering the nature of these transactions and the age of the amounts of these items, the Group's procedure is to
periodically assess the collectability of these amounts and whenever impairment is identified, an impairment loss is
registered in the income statement.
The detail of the item Real estate and other assets arising from recovered loans is analysed as follows:
(Thousands\u00a0 of euros)
2023
Gross value
Impairment
Net value
Real estate
Assets arising from recovered loans
138,165
(45,829)
92,336
Assets belong to investments funds and real estate companies
173,443
(84,904)
88,539
Assets for own use (closed branches)
13,537
(5,432)
8,105
Equipment
92
(81)
11
Other assets (*)
13,249
(594)
12,655
338,486
(136,840)
201,646
(*) includes Shares, Price Deposit and Property Adjudication Proposals
The changes occurred in Impairment of other assets, with the exception of impairment for Real estate and other assets
arising from recovered loans are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
191,752
260,199
Transfers resulting from changes in the Group's structure
\u2014
(1,038)
Other transfers
(513)
908
Charge for the year (note 13)
17,673
17,699
Reversals for the year (note 13)
(7,150)
(7,047)
Amounts charged-off
(17,232)
(78,835)
Exchange rate differences
462
(134)
Balance at the end of the year
184,992
191,752
The changes occurred in impairment for Real Estate and other assets arising from recovered loans, are analysed as
follow:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
\u2014
\u2014
Transfer of Non-current assets held for sale (note 27)
51,802
\u2014
Other transfers
52,488
\u2014
Charge for the year (note 13)
34,706
\u2014
Reversals for the year (note 13)
(98)
\u2014
Amounts charged-off
(1,953)
\u2014
Exchange rate differences
(105)
\u2014
Balance at the end of the year
136,840
\u2014
Resources from credit institutions
This balance is analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Non-interest
bearing
Interest
bearing
Total
Non-interest
bearing
Interest
bearing
Total
Resources and other financing
from Central Banks
Bank of Portugal
\u2014
\u2014
\u2014
\u2014
592,740
592,740
Central Banks abroad
\u2014
110,776
110,776
\u2014
14,736
14,736
\u2014
110,776
110,776
\u2014
607,476
607,476
Resources from credit institutions in
Portugal
Sight deposits
63,128
\u2014
63,128
92,493
\u2014
92,493
Term Deposits
\u2014
79,198
79,198
\u2014
151,244
151,244
63,128
79,198
142,326
92,493
151,244
243,737
Resources from credit institutions
abroad
Repayable on demand
88,864
\u2014
88,864
74,890
\u2014
74,890
Term deposits
\u2014
127,224
127,224
\u2014
152,385
152,385
Loans obtained
\u2014
264,635
264,635
\u2014
293,387
293,387
CIRS and IRS operations collateralised
by deposits (*)
88,633
\u2014
88,633
92,299
\u2014
92,299
Other resources
\u2014
6,668
6,668
\u2014
4,186
4,186
177,497
398,527
576,024
167,189
449,958
617,147
240,625
588,501
829,126
259,682
1,208,678
1,468,360
(*) Under the scope of transactions involving derivative financial instruments (IRS and CIRS) with institutional counterparties, and in
accordance with the terms of their respective agreements (\"Cash collateral\"). These deposits are held by the Group and are reported as
collateral for the referred operations (IRS and CIRS), whose revaluation is positive.
As at 31 December 2022, the item Resources and others financing from Central Banks \u2013 Bank of Portugal included a total
amount associated with the TLTRO III program of Euros 600,000,000, having been repaid early in January 2023.
Considering the financing characteristics and the nature of the respective lender, the Bank accounted for the TLTRO III
operation under IFRS 9. The Bank considered that the operation constitutes a variable rate financing, indexed to the
Deposit Facility Rate of the European Central Bank (ECB), having fulfilled the necessary criteria for it. Specifically for
the period between 24 June 2020 and 23 June 2022, the Bank complied with the conditions required for the
application, to each of the two tranches of the financing, of a maximum interest rate of -1%. Consequently, it
recognised in the financial statements, for the referred interest counting period, the rate of -1%. For the period
between 24 June and 31 December 2022, the rate resulting from the provisions of the regulation applied for the
calculation in the different subperiods.
This balance is analysed, by remaining period, as follows:
(Thousands of euros)
2023
2022
(restated)
Up to 3 months
516,776
499,654
3 to 6 months
18,467
53,095
6 to 12 months
293,883
34,278
1 to 5 periods
\u2014
881,333
829,126
1,468,360
Resources from customers and other loans
This balance is analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Non-interest
bearing
Interest
bearing
Total
Non-interest
bearing
Interest
bearing
Total
Deposits from customers
Repayable on demand
44,526,917
522,014
45,048,931
48,490,531
182,647
48,673,178
Term deposits
\u2014
25,106,121
25,106,121
\u2014
19,742,066
19,742,066
Saving accounts
\u2014
4,487,509
4,487,509
\u2014
6,315,477
6,315,477
Cheques and orders to pay
630,497
\u2014
630,497
564,369
\u2014
564,369
Other
\u2014
60,000
60,000
\u2014
60,005
60,005
45,157,414
30,175,644
75,333,058
49,054,900
26,300,195
75,355,095
Corrections to the liabilities value
subject to hedging operations
103,654
(1,846)
Deferred costs/ (income)
(621)
(716)
Interests to pay
170,722
77,610
75,606,813
75,430,143
In the terms of the Law, the Deposit Guarantee Fund was established to guarantee the reimbursement of funds
deposited in Credit Institutions. The criteria to calculate the annual contributions to the Portuguese fund are defined in
the Regulation no. 11/94 of the Bank of Portugal.
This balance is analysed, by remaining period until the next operation renewal date, as follows:
(Thousands of euros)
2023
2022
(restated)
Deposits repayable on demand
45,049,544
48,673,569
Term deposits and saving accounts
Up to 3 months
15,054,319
14,069,453
3 to 6 months
8,776,363
7,034,909
6 to 12 months
5,341,384
3,921,351
1 to 5 years
693,602
1,106,125
29,865,668
26,131,838
Cheques and orders to pay
Up to 3 months
630,497
564,369
630,497
564,369
Other
Up to 3 months
1,104
367
Over 5 years
60,000
60,000
61,104
60,367
75,606,813
75,430,143
Non subordinated debt securities issued
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Bonds
232,866
53,799
Medium term notes (MTN)
2,347,610
1,347,967
Securitisations
121,933
142,062
2,702,409
1,543,828
Corrections to the liabilities value subject to hedging operations
(22,873)
(66,860)
Deferred cost s/ (gains)
(11,142)
(12,523)
Interests to pay
44,288
17,641
2,712,682
1,482,086
The characteristics of the bonds issued by the Group, as at 31\u00a0December 2023 are analysed as follows:
(Thousands of euros)
Issue
Issue
date
Maturity
date
Interest rate
Nominal
value
Book
value
Banco Comercial Portugu\u00eas:
Bcp 6NC5 Senior Preferred EUR
500MN NG - MTN 856
February, 2021
February, 2027
Fixed rate 1.125% year until
Feb-26 /after Euribor 3M +
Variable rate 1.55%
500,000
509,986
Bcp 1.75% Eur 500M 6.5Nc5.5 Social
Senior Preferred Notes - Mtn 857
October, 2021
April, 2028
Fixed rate 1.75% year until
Apr-27/after + Euribor 3M + 2%
500,000
466,298
BCP2022 MTN 859 BCP Senior
Preferred Notes OCT 2025
October, 2022
October, 2025
Fixed rate 8.5% until October
2024; after 5.547% + Euribor 3M
350,000
353,061
BCP2023 MTN 861 BCP Senior
Preferred Notes OCT 2026
October, 2023
October, 2026
Fixed rate 5.625% until October
2025; after 1.90% + Euribor 3M
500,000
505,554
BCP Fin.Bank - EUR 10 M (*)
March, 2004
March, 2024
Fixed rate 5.01%
300
311
Magellan Mortgages n.\u00ba 3:
Mbs Magellan Mortgages S 3 Cl.A
June, 2005
May, 2058
Euribor 3M + 0.26%
120,348
112,165
Mbs Magellan Mortgages S.3 Cl.B
June, 2005
May, 2058
Euribor 3M + 0.38%
621
579
Mbs Magellan Mortgages S. 3 Cl.C
June, 2005
May, 2058
Euribor 3M + 0.58%
964
900
Bank Millennium:
Bank Millennium - BMCN_012040
December, 2022
January, 2040
Wibor 3m 7.05%+1.39% = 19.57%
55,828
57,863
Millennium Leasing CLN 23-38
July, 2023
October, 2038
Wibor 3m 6.85%+11.75% \u00a0= 18.6%
64,461
66,739
Bank Millennium - MILP-2027/09
September, 2023
September, 2027
Fixed rate 9.875%
499,945
525,473
Bank Millennium - BMCN_082036
December, 2023
August, 2036
Wibor 3m 5,85%+12,30%\u00a0= 18,15%
112,577
113,753
2,712,682
(*) In the last quarter of 2023, the issuer was replaced by Banco Comercial Portugu\u00eas
This balance as at 31\u00a0December 2023 is analysed by the remaining period, as follows:
(Thousands of euros)
2023
Up to 3
months
3 months to 6
months
6 months to 1
year
1 year to 5
years
Over
5 years
Total
Bonds
\u2014
\u2014
\u2014
\u2014
238,355
238,355
Medium term notes (MTNs)
\u2014
311
\u2014
2,360,372
\u2014
2,360,683
Securitisations
\u2014
\u2014
\u2014
\u2014
113,644
113,644
\u2014
311
\u2014
2,360,372
351,999
2,712,682
This balance as at 31\u00a0December 2022 is analysed by the remaining period, as follows:
(Thousands of euros)
2022 (restated)
Up to 3
months
3 months to 6
months
6 months to 1
year
1 year to 5
years
Over
5 years
Total
Bonds
2,008
\u2014
\u2014
\u2014
52,066
54,074
Medium term notes (MTNs)
\u2014
\u2014
\u2014
852,706
443,148
1,295,854
Securitisations
\u2014
\u2014
\u2014
\u2014
132,158
132,158
2,008
\u2014
\u2014
852,706
627,372
1,482,086
Subordinated debt
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Bonds
Non-Perpetual
1,402,278
1,376,856
Corrections to the\u00a0 liabilities value subject to hedging operations (note 54)
(41,831)
(72,040)
Deferred costs / (income)
(1,956)
(2,436)
Interests to pay
38,934
30,676
1,397,425
1,333,056
As at 31\u00a0December 2023, the subordinated debt issues are analysed as follows:
(Thousands of euros)
2023
Issue
Issue
date
Maturity
date
Interest
rate
Nominal
value
Book
value
Own funds
value (*)
Banco Comercial Portugu\u00eas
Bcp Fix Rate Reset Sub Notes-Emtn 854
December, 2017
December, 2027
See reference (i)
166,300
166,666
130,915
Bcp Subord Fix Rate Note Projeto Tagus
Mtn 855
September, 2019
March, 2030
See reference (ii)
450,000
443,394
450,000
BCP Tier 2 Subord Callable Notes Due
May 2032 - MTN 858
November, 2021
May, 2032
See reference (iii)
300,000
285,050
300,000
BCP2022 Tier 2 Sub Callable Notes Due 2
June 2033 MTN 860
December, 2022
March, 2033
See reference (iv)
133,700
141,969
133,700
Bank Millennium Group
Bank Millennium - BKMO_071227R
December, 2017
December, 2027
8.12%
161,153
162,013
51,556
Bank Millennium - BKMO_300129W
January, 2019
January, 2029
8.94%
191,081
198,289
61,131
Magellan No. 3
Magellan No. 3 Series 3 Class F
June, 2005
May, 2058
-
44
44
\u2014
1,397,425
1,127,302
(*) Amount of subordinated loans, eligible as Level 2 own funds, in accordance with Articles 62 a), 63 to 65, 66 a) and 67 of the CRR.
References - Interest rate:
(i) up to the 5th year fixed rate 4.5%; 6th year and following: mid-swap rate\u00a0 in force at the beginning of this period + 4.267%;
(ii) Annual interest rate of 3.871% during the first 5.5 years (corresponding to a spread of 4.231% over the 5.5-year mid-swap rate, for the
remaining 5 years will be applied over the mid-swap rate in force at the beginning of that period).
(iii)\u00a0 Interest rate of 4%, per annum, during the first 5 years and 6 months (corresponding to a spread of 4.065% over the average of the mid-
swap rates of 5 and 6 years). At the end of the first 5 years and 6 months the interest rate will be reset to maturity based on the 5-year mid
swaps rate prevailing at that time plus the Spread.
(iv) Fixed annual interest rate of 8.75% during the first 5.25 years. The annual interest rate from year 5.25 onwards was set at the 5-year mid-
swap rate plus a 6.051%.
As at 31\u00a0December 2022, the subordinated debt issues are analysed as follows:
(Thousands of euros)
2022 (restated)
Issue
Issue
date
Maturity
date
Interest
rate
Nominal
value
Book
value
Own funds
value (*)
Banco Comercial Portugu\u00eas
Bcp Fix Rate Reset Sub Notes-Emtn 854
December, 2017
December, 2027
See reference (i)
166,300
164,044
164,175
Bcp Subord Fix Rate Note Projeto Tagus
Mtn 855
September, 2019
March, 2030
See reference (ii)
450,000
428,740
450,000
BCP Tier 2 Subord Callable Notes Due
May 2032 - MTN 858
November, 2021
May, 2032
See reference (iii)
300,000
274,350
300,000
BCP2022 Tier 2 Sub Callable Notes Due
2 June 2033 MTN 860
December, 2022
March, 2033
See reference (iv)
133,700
130,932
133,700
Bank Millennium Group
Bank Millennium - BKMO_071227R
December, 2017
December, 2027
9.7%
149,521
150,475
98,956
Bank Millennium - BKMO_300129W
January, 2019
January, 2029
9.6%
177,290
184,471
117,334
Magellan No. 3
Magellan No. 3 Series 3 Class F
June, 2005
May, 2058
-
44
44
\u2014
1,333,056
1,264,165
(*) Amount of subordinated loans, eligible as Level 2 own funds, in accordance with Articles 62 a), 63 to 65, 66 a) and 67 of the CRR.
References - Interest rate:
(i) up to the 5th year fixed rate 4.5%; 6th year and following: mid-swap rate\u00a0 in force at the beginning of this period + 4.267%;
(ii) Annual interest rate of 3.871% during the first 5.5 years (corresponding to a spread of 4.231% over the 5.5-year mid-swap rate, for the
remaining 5 years will be applied over the mid-swap rate in force at the beginning of that period).
(iii)\u00a0 Interest rate of 4%, per annum, during the first 5 years and 6 months (corresponding to a spread of 4.065% over the average of the mid-
swap rates of 5 and 6 years). At the end of the first 5 years and 6 months the interest rate will be reset to maturity based on the 5-year mid
swaps rate prevailing at that time plus the Spread.
(iv) Fixed annual interest rate of 8.75% during the first 5.25 years. The annual interest rate from year 5.25 onwards was set at the 5-year mid-
swap rate plus a 6.051%.
The analysis of the subordinated debt by remaining period, is as follows:
(Thousands of euros)
2023
2022
(restated)
1 to 5 years
328,679
314,519
Over 5 years
1,068,746
1,018,537
1,397,425
1,333,056
Financial liabilities held for trading
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Short selling securities
626
1,022
Trading derivatives (note 24)
\u00a0 Swaps
96,824
170,165
of which: Embedded derivatives
\u2014
8
\u00a0 Options
100,702
60,901
of which: Embedded derivatives
95,357
53,487
Forwards
9,235
9,418
206,761
240,484
207,387
241,506
Level 2
108,767
186,130
Level 3
98,620
55,376
As referred in IFRS 13, financial instruments are measured according to the levels of valuation described in note 49. The
balance Financial liabilities held for trading includes, as at 31\u00a0December 2023, the embedded derivatives valuation
separated from the host contracts in accordance with the accounting policy presented in note 1 C5. in the amount of
Euros 95,357,000 (31\u00a0December 2022: Euros 53,495,000). This note should be analysed together with note 24.
Financial liabilities designated at fair value through profit or loss
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Deposits from customers (*)
2,321,000
476,671
Certificates
989,703
850,681
Debt securities at fair value through profit and loss
Medium term notes (MTN)
297,784
490,326
3,608,487
1,817,678
(*) Deposits from customers whose remuneration is indexed to a set of shares and/or indices.
As at 31\u00a0December 2023, the analysis of Debt securities at fair value\u00a0 through profit and loss, is as follows:
(Thousands of euros)
Issue
Issue date
Maturity date
Interest rate
Nominal value
Book value
Banco Comercial Portugu\u00eas:
Bcp Cabaz 3 A\u00e7\u00f5es Fevereiro 2024 - Smtn
Sr 31
February, 2019
February, 2024
Indexed to portfolio
of 3 shares
71,904
71,170
Bcp Tit Div Mill Cabaz 3 A\u00e7\u00f5es 8Abr24
Smtn Sr 35
April, 2019
April, 2024
Indexed to portfolio
of 3 shares
64,634
63,405
Bcp Tit Div Millennium Cabaz 5 Ac
26Julho2024 Smtn 42
July, 2019
July, 2024
Indexed to portfolio
of 5 shares
75,600
73,026
Bcp Tit Divida Millennium Cabaz 5 Acoes
6Dez24 Smtn 44
December, 2019
December, 2024
Indexed to portfolio
of 5 shares
94,602
90,183
297,784
As at 31\u00a0December 2023, the analysis of Debt securities at fair value\u00a0 through profit and loss, is as follows:
(Thousands of euros)
2023
Up to
3 months
3 months to
6 months
6 months to
1 year
1 year to
5 years
Over 5
years
Total
Deposits from customers
749,199
277,406
1,059,861
234,534
\u2014
2,321,000
Certificates
\u2014
\u2014
\u2014
32,088
957,615
989,703
Debt securities at fair value
through profit and loss
MTN
71,170
63,405
163,209
\u2014
\u2014
297,784
820,369
340,811
1,223,070
266,622
957,615
3,608,487
As at 31\u00a0December 2022, the analysis of this balance, by remaining period, is as follows:
(Thousands of euros)
2022 (restated)
Up to
3 months
3 months to
6 months
6 months to
1 year
1 year to
5 years
Over 5
years
Total
Deposits from customers
315,692
160,979
476,671
Certificates
\u2014
\u2014
\u2014
\u2014
850,681
850,681
Debt securities at fair value through
profit and loss
MTN
\u2014
80,858
116,899
292,569
\u2014
490,326
\u2014
80,858
432,591
453,548
850,681
1,817,678
Provisions
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Provision for guarantees and other commitments
121,574
110,754
Other provisions for liabilities and charges
631,529
451,032
753,103
561,786
Changes in Provisions for guarantees and other commitments are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
110,754
110,649
Transfers
(1,990)
(708)
Charge for the year (note 14)
40,602
27,864
Reversals for the year (note 14)
(28,372)
(26,939)
Exchange rate differences
580
(112)
Balance at the end of the year
121,574
110,754
Changes in Other provisions for liabilities and charges are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
451,032
348,095
Transfers
(24,858)
(5,504)
Charge of the year for restructuring costs
\u2014
4,414
Charge for the year (note 14)
785,928
569,226
Reversals for the year (note 14)
(4,000)
(1,854)
Amounts charged-off
(42,138)
(116,874)
Allocation to loan's portfolio (note 22)
(583,027)
(344,052)
Exchange rate differences
48,592
(2,419)
Balance at the end of the year
631,529
451,032
The balance Other provisions for liabilities and charges - Charge for the year refers essentially to provisions for legal
risk accounted for by Bank Millennium, related to foreign currency-indexed mortgage loans, as described in note 57,
which, in 2023, amounted to Euros 675,252,000 (2022: Euros 430,843,000).
The Other provisions for liabilities and charges were based on the probability of occurrence of certain contingencies
related to risks inherent to the Group's activity, being reviewed at each reporting date in order to reflect the best
estimate of the amount and respective probability of payment.
This balance includes provisions for lawsuits, frauds and tax contingencies. As at 31\u00a0December 2023, the provisions
constituted to cover tax contingencies totalled Euros 54,384,000 (31\u00a0December 2022: Euros 38,311,000).
At the end of December 2022, the balance of Other provisions for liabilities and charges was reinforced in the amount
of Euros 4,414,000, referring to agreements already concluded with some employees whose effective departures will
occur during the first half of 2023. By 31 December 2023, the Bank has written-off the amount of Euros 3,113,000,
relating to compensations for termination of functions (note 7).
Additionally, there are provisions for liabilities and charges recorded for corporate restructuring funds and carved-out
assets of the Project Crow, completed in December 2022.
Provisions for legal risk related to foreign currency-indexed mortgage loans in Bank Millennium (Poland)
In 2021, Bank Millennium changed the accounting policy regarding the recognition of provisions for future claims related
to active CHF mortgage loans in the balance sheet. As a result of changes in market conditions, such as the growing
number of unfavourable court judgments declaring the entire agreement or certain provisions of these credits to be
invalid, the Bank does not expect that all contractual cash flows related to these loans will be recovered. As a result,
Bank Millennium allocates provisions for future claims and recognizes them as a reduction of the gross carrying amount
of loans for which a decrease in future cash flows is expected, in accordance with paragraph B5.4.6 of IFRS 9 \"Financial
Instruments\" (previously provisions for future claims used to be recognized in accordance with IAS 37 \"Provisions,
Contingent Liabilities and Contingent Assets\"). As a result of the above change, the approach applied in accordance
with IAS 37 will be continued only regarding claims relating to already repaid (or almost fully repaid) receivables not
recognised in Bank Millennium's balance sheet.
As at 31\u00a0December 2023, the Loans and advances to customers portfolio in CHF has a gross amount of Euros
2,218,947,000 (31 December 2022: Euros 2,477,851,000).
As at 31\u00a0December 2023, the provisions estimated by Bank Millennium to address the legal risk related to foreign
currency-indexed mortgage loans amount to Euros 1,812,231,000 (PLN 7,871,789,000), of which Euros 1,500,209,000
(PLN 6,516,460,000) are presented under assets, as a deduction from the gross amount of the loan portfolio in CHF
(note 22) and Euros 312,022,000 (PLN 1,355,329,000) are presented under Provisions.\u00a0
With reference to 31\u00a0December 2022, the provisions estimated by Bank Millennium to address the legal risk related to
foreign currency-indexed mortgage loans amount to Euros 1,152,457,000 (PLN 5,395,344,000), of which Euros
976,782,000 (PLN 4,572,901,000) are presented under assets, as a deduction from the gross amount of the loan
portfolio in CHF (note 22) and Euros 175,676,000 (PLN 822,443,000) are presented under Provisions.
The variation in the level of provisions or concrete losses will depend on the final court decisions about each case and
on the number of court cases.
Other liabilities
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Interests and other amounts payable
169,842
163,843
Operations to be settled - foreign, transfers and deposits
249,509
212,208
Credit insurance received and to accrued
49,181
62,740
Holidays, subsidies and other remuneration payable
58,018
55,132
Transactions on securities to be settled
3,855
4,514
Public sector
51,675
43,628
Creditors
Rents to pay
215,714
185,163
Deposit account and other applications
157,102
89,386
Suppliers
57,652
35,649
From factoring operations
47,987
41,618
For futures and options transactions
11,121
73,394
Liabilities not covered by the Group Pension Fund - amounts payable by the Group
10,561
10,819
Associated companies
26
21
\u00a0 Other creditors
\u00a0 \u00a0 Residents
35,660
66,158
\u00a0 \u00a0 Non-residents
96,525
70,590
Deferred income
10,424
10,155
Other administrative costs payable
7,809
4,763
Other liabilities
458,891
262,192
1,691,552
1,391,973
The balance Liabilities not covered by the Group Pension Fund - amounts payable by the Group includes the amount of
Euros 6,620,000 (31\u00a0December 2022: Euros 6,777,000) related to the actual value of benefits attributed associated with
mortgage loans to employees, retirees and former employees.
The balance Amounts payable on trading activity includes amounts payable within 3 business days of stock exchange
operations.
The Group has several operating leases for properties, being registered in the item Rents to pay the amount of lease
liabilities recognised under IFRS 16, as described in the accounting policy 1 H. The analysis of this balance, by maturity,
is as follows:
(Thousands of euros)
2023
2022
(restated)
Until 1 year
20,728
20,402
1 to 5 years
84,482
137,949
Over 5 years
146,725
33,485
251,935
191,836
Accrued costs recognised in Net interest income
(36,221)
(6,673)
215,714
185,163
Share capital, Share premium and Other equity instruments
As at 31\u00a0December 2023, the Bank's share capital amounts to Euros 3,000,000,000 and is represented by 15,113,989,952
nominative book-entry shares without nominal value, fully subscribed and paid up.
As at 31\u00a0December 2023, the Share premium amounts to Euros 16,470,667.11, corresponding to the difference between
the issue price (Euros 0.0834 per share) and the issue value (Euros 0.08 per share) determined under the scope of the
Exchange Offer occurred in June 2015.
As at 31\u00a0December 2023, the Other equity instruments in the amount of Euros 400,000,000 corresponds to 2,000
subordinated perpetual bonds (Additional Tier 1), issued on 31 January 2019, with a nominal value of Euros 200,000
each. This issue was classified as an equity instrument in accordance with the specific rules of IAS 32 and accounting
policy 1 E. This operation without fixed term has the option of early repayment by the Bank as from the end of the 5th
year, and an annual interest rate of 9.25% during the first 5 years. As an instrument classified as AT1, the corresponding
interest payment is decided by the Bank at its discretion and is still subject to compliance with a set of conditions,
including compliance with the combined requirement of capital reserve and the existence of Distributable Funds in
sufficient amount. The payment of interest may also be cancelled by imposition of the competent authorities.
As at 31\u00a0December 2023, the shareholders who hold, individually or jointly, 5% or more of the Bank's capital, are the
following:
Shareholder
number
of shares
% share
capital
% voting
rights
Chiado (Luxembourg) S.\u00e0.r.l. (Fosun Group)
3,927,436,381
25.99%
25.99%
Sonangol - Sociedade Nacional de Combust\u00edveis de Angola, EP
2,946,353,914
19.49%
19.49%
Total Qualified Shareholdings
6,873,790,295
45.48%
45.48%
Chiado (Luxembourg) S.\u00e0.r.l. announced on 23 January 2024, that it held on to that date, 3,027,936,381 BCP shares,
corresponding to 20.03% of the respective share capital and voting rights.
Legal and statutory reserves
Under the Portuguese legislation, the Bank is required to annually set-up a legal reserve equal to a minimum of 10% of
annual profits until the reserve equals the share capital, or until the sum of the free reserves constituted and the
retained earnings, if higher. In accordance with the proposal for the appropriation of net income for the 2022 financial
year approved at the General Shareholders' Meeting held on 24 May 2023, the Bank increased its legal reserves in the
amount of Euros 47,841,000, thus, as at 31\u00a0December 2023 the Legal Reserves amount to Euros 316,375,000
(31\u00a0December 2022: Euros 268,534,000).
In accordance with the current Portuguese legislation, the Group companies must set-up annually a reserve with a
minimum percentage between 5 and 20% of their net annual profits depending on the nature of their economic activity
and are recognised in Other reserves and retained earnings in the Bank's consolidated financial statements (note 43).
Reserves and retained earnings
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Fair value changes - Gross amount
Financial assets at fair value through other comprehensive income (note 24)
\u00a0 \u00a0 Debt instruments (*)
(75,326)
(228,425)
\u00a0 \u00a0 Equity instruments
(3,747)
(25,846)
Of associated companies and other changes
1,931
7,838
Cash-flow hedge
(1,274,684)
(1,744,727)
From financial liabilities designated at fair value through profit or loss
related to changes in own credit risk
(2,596)
182
(1,354,422)
(1,990,978)
Fair value changes - Tax
Financial assets at fair value through other comprehensive income
\u00a0 Debt instruments
20,266
58,780
\u00a0 Equity instruments
1,403
1,550
Cash-flow hedge
398,207
540,755
From financial liabilities designated at fair value through profit or loss
related to changes in own credit risk
814
(57)
420,690
601,028
(933,732)
(1,389,950)
Exchange differences arising on consolidation
\u00a0 Bank Millennium, S.A.
(35,347)
(92,629)
\u00a0 BIM - Banco Internacional de Mo\u00e7ambique, S.A.
(152,108)
(139,373)
\u00a0 Banco Millennium Atl\u00e2ntico, S.A.
(180,187)
(143,989)
\u00a0 Others
2,031
2,073
(365,611)
(373,918)
Application of IAS 29
\u00a0 Effect on equity of Banco Millennium Atl\u00e2ntico, S.A.
50,584
42,316
\u00a0 Others
(3,965)
(3,965)
46,619
38,351
Other reserves and retained earnings
2,975,899
2,997,779
1,723,175
1,272,262
(*) Includes the effects arising from the application of hedge accounting.
The fair value changes correspond to the accumulated changes of the Financial assets at fair value through other
comprehensive income and Cash flow hedge, in accordance with the accounting policy presented in note 1 C.
The variation in the fair value of cash flow hedges reflects the economic impact on these hedges of the pronounced
increase in market interest rates, an effect that is more than offset by the economic impact on the fair value of
liabilities that are more sensitive to such an increase and that are accounted for at amortized cost.
During 2023, the changes occurred in Fair value changes - Gross amount, excluding the effect of hedge accounting and
changes in own credit risk associated with financial liabilities at fair value through profit or loss, are analysed as
follows:
(Thousands of euros)
2023
Balance as
at 1 January
Fair value
changes
Fair value
hedge
adjustment
Impairment
in profit or
loss
Disposals
Balance as at
31 December
Financial assets at fair value through
other comprehensive income (note 24)
Debt instruments
Debt securities - Portuguese public
issuers
(89,985)
140,683
(104,087)
306
10,438
(42,645)
Others
(138,440)
154,972
(51,078)
1,016
849
(32,681)
(228,425)
295,655
(155,165)
1,322
11,287
(75,326)
Equity instruments
(25,846)
12,505
\u2014
\u2014
9,594
(3,747)
Associated companies and other
changes
Millenniumbcp Ageas
(3,725)
(1,533)
\u2014
\u2014
(1,350)
(6,608)
Other associates and other changes
11,563
2,699
\u2014
\u2014
(5,723)
8,539
7,838
1,166
\u2014
\u2014
(7,073)
1,931
(246,433)
309,326
(155,165)
1,322
13,808
(77,142)
During 2022 the changes occurred in Fair value changes - Gross amount, excluding the effect of hedge accounting and
changes in own credit risk associated with financial liabilities at fair value through profit or loss, are analysed as
follows:
(Thousands of euros)
2022 (restated)
Balance as
at 1 January
Fair value
changes
Fair value
hedge
adjustment
Impairment
in profit or
loss
Disposals
Balance as at
31 December
Financial assets at fair value through
other comprehensive income (note 24)
Debt instruments
Debt securities - Portuguese public
issuers
41,380
(293,433)
146,264
(2,406)
18,210
(89,985)
Others
(32,684)
(183,482)
85,052
(2,617)
(4,709)
(138,440)
8,696
(476,915)
231,316
(5,023)
13,501
(228,425)
Equity instruments
(30,242)
(3,183)
\u2014
\u2014
7,579
(25,846)
Associated companies and other
changes
Millenniumbcp Ageas
(24,485)
6,522
\u2014
\u2014
14,238
(3,725)
Other associates and other changes
9,640
1,923
\u2014
\u2014
\u2014
11,563
(14,845)
8,445
\u2014
\u2014
14,238
7,838
(36,391)
(471,653)
231,316
(5,023)
35,318
(246,433)
The item Disposals refers to the derecognition of debt securities and equity instruments at fair value through other
comprehensive income.
Non-controlling interests
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Fair value changes
Debt instruments
(27,718)
(98,139)
Equity instruments
2,924
2,380
Cash-flow hedge
(6,226)
(43,281)
Other
4
7
(31,016)
(139,033)
Deferred taxes
Debt instruments
5,362
18,531
Equity instruments
(600)
(467)
Cash-flow hedge
1,183
8,223
5,945
26,287
(25,071)
(112,746)
Exchange differences arising on consolidation
(136,624)
(187,306)
Actuarial losses (net of taxes)
897
1,742
Other reserves and retained earnings
1,148,225
1,080,424
987,427
782,114
The balance Non-controlling interests is analysed as follows:
(Thousands of euros)
Balance Sheet
Income Statement
2023
2022
(restated)
2023
2022
(restated)
Bank Millennium Group
792,061
585,618
63,284
(108,125)
BIM - Banco Internacional de Mo\u00e7ambique Group
178,500
174,041
33,865
35,323
Other subsidiaries
16,866
22,455
(5,590)
(5,020)
987,427
782,114
91,559
(77,822)
The following table presents a summary of financial information for the main subsidiaries included in this balance,
prepared in accordance with IFRS. The information is presented before inter-company eliminations:
(Thousands of euros)
Bank Millennium Group
BIM - Banco International de
Mo\u00e7ambique Group
2023
2022
(restated)
2023
2022
(restated)
Net income for the year
126,821
(216,683)
105,099
106,030
Correction of net income from previous years
\u2014
\u2014
(3,447)
\u2014
Adjusted net income
126,821
(216,683)
101,652
106,030
Net income for the year attributable to the shareholders
63,537
(108,558)
67,787
70,707
Net income for the year attributable to non-controlling interests
63,284
(108,125)
33,865
35,323
Other comprehensive income attributable to the shareholders
143,760
(34,929)
(11,355)
23,390
Other comprehensive income attributable to non-controlling interests
143,186
(34,790)
(5,673)
11,685
Total comprehensive income
413,767
(286,402)
84,624
141,105
Balance sheet
Financial assets
28,184,289
23,055,876
2,495,727
2,606,994
Non-financial assets
752,625
641,571
215,447
217,416
Financial liabilities
(26,121,981)
(21,684,366)
(2,096,244)
(2,235,210)
Non-financial liabilities
(1,227,601)
(839,464)
(80,310)
(68,008)
Equity
1,587,332
1,173,617
534,620
521,192
Equity attributed to the shareholders
795,271
587,999
356,514
347,559
Equity attributed to the non-controlling interests
792,061
585,618
178,106
173,633
Cash flows arising from:
operating activities
3,337,195
2,134,937
101,745
104,089
investing activities
(2,828,892)
260,370
(18,862)
(12,141)
financing activities
474,329
(75,834)
(71,516)
(191,515)
Increase / (decrease) in cash and equivalents
982,632
2,319,473
11,367
(99,567)
Dividends paid during the year:
attributed to the shareholders
\u2014
\u2014
47,478
119,244
attributed to the non-controlling interests
\u2014
\u2014
23,719
59,572
\u2014
\u2014
71,197
178,816
Guarantees and other commitments
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Guarantees granted
Guarantees
3,893,124
4,144,220
Stand-by letter of credit
75,018
57,084
Open documentary credits
238,962
258,591
Bails and indemnities
135,256
135,718
4,342,360
4,595,613
Commitments to third parties
Irrevocable commitments
Term deposits contracts
2,051
1,621
Irrevocable credit lines
5,279,307
4,880,858
Securities subscription
22,145
41,285
Other irrevocable commitments
157,711
153,982
Revocable commitments
Revocable credit lines
6,013,393
5,834,056
Bank overdraft facilities
890,579
998,886
Other revocable commitments
181,380
128,025
12,546,566
12,038,713
Guarantees received
28,126,885
29,552,693
Commitments from third parties
12,352,650
13,453,876
Securities and other items held for safekeeping
85,357,406
75,348,414
Securities and other items held under custody by the Securities Depository Authority
87,167,519
82,314,713
Other off balance sheet accounts
146,614,201
131,084,605
The guarantees granted by the Group may be related to loans transactions, where the Group grants a guarantee in
connection with a loan granted to a client by a third entity. According to its specific characteristics it is expected that
some of these guarantees expire without being executed and therefore these transactions do not necessarily represent
a cash-outflow. The estimated liabilities are recorded under provisions (note 39).
Stand-by letters and open documentary credits aim to ensure the payment to third parties from commercial deals with
foreign entities and therefore financing the shipment of the goods. Therefore, the credit risk of these transactions is
limited since they are collateralised by the shipped goods and are generally short-term operations.
Irrevocable commitments are non-used parts of credit facilities granted to corporate or retail customers. Many of these
transactions have a fixed term and a variable interest rate and therefore the credit and interest rate risk are limited.
The balance Irrevocable commitments - Other irrevocable commitments includes the amount of Euros 30,638,000
(31\u00a0December 2022: Euros 25,506,000) relating to the collateral constituted in compliance with the assumption of
irrevocable payment commitments to Single Resolution Fund, as referred in note 6.
This balance also includes the amount of Euros 95.190.000 (31\u00a0December 2022: Euros 95.190.000) corresponding to
irrevocable commitments for cumulative payments assumed with the Deposit Guarantee Fund, as referred in note 6.
The financial instruments accounted as Guarantees and other commitments are subject to the same approval and
control procedures applied to the credit portfolio, namely regarding the analysis of objective evidence of impairment,
as described in the accounting policy in note 1.C. The maximum credit exposure is represented by the nominal value
that could be lost related to guarantees and commitments undertaken by the Group in the event of default by the
respective counterparties, without considering potential recoveries or collaterals.
The balance of Guarantees granted, Irrevocable credit lines and revocable commitments portfolio detailed by stage
according with IFRS 9, is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Stage 1
Gross amount
14,934,354
14,303,231
Impairment
(12,880)
(11,307)
14,921,474
14,291,924
Stage 2
Gross amount
1,433,605
1,768,595
Impairment
(14,686)
(14,893)
1,418,919
1,753,702
Stage 3
Gross amount
339,060
365,612
Impairment
(94,008)
(84,554)
245,052
281,058
16,585,445
16,326,684
Assets under management and custody
Asset management activity is governed by the framework established in Decree-Law No. 27/2023, of April 28, and by
the Portuguese Securities Code as well. The aforementioned framework determines, namely, the obligations to which
fund management companies and depositaries are subject to. The total value of funds managed by the Group
companies is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Banco Comercial Portugu\u00eas, S.A. (*)
3,738,751
3,618,326
Interfundos - Sociedade Gestora de Organismos de\u00a0 Investimento Coletivo, S.A.
611,913
689,142
Millennium TFI S.A.
1,210,447
806,162
5,561,111
5,113,630
The Group provides custody, trustee, corporate administration, investment management and advisory services to third
parties, which involve the Group making allocation and purchase and sale decisions in relation to a wide range of
financial instruments. For certain services are set objectives and levels of return for assets under management and
custody. There is no capital or profitability guaranteed by the Bank in these assets. Those assets held in a fiduciary
capacity are not included in the financial statements.
The assets under management and custody are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Assets under deposit
78,388,104
70,104,626
Wealth management (*)
3,738,751
3,618,326
Investment funds
1,822,360
1,495,304
83,949,215
75,218,256
(*) Corresponds to the assets portfolio that are currently monitored and controlled by the business area as being managed by the Bank.
Transfers of assets
The Group performed a set of transactions of sale of financial assets (namely loans and advances to customers) for
Funds specialized in the recovery of loans. These funds take the responsibility for management of the borrower
companies or assets received as collateral with the objective of ensuring a pro-active management through the
implementation of plans to explore/increase the value of the companies/assets.
The specialized funds in credit recovery that acquired the financial assets are closed funds, in which the holders of the
participation units have no possibility to request the reimbursement of its participation units throughout the useful life
of the fund. These participation units are held by several banks, which are the sellers of the loans, in percentages that
vary through the useful life of the Funds, ensuring however that, separately, none of the banks hold more than 50% of
the capital of the Fund.
The Funds have a specific management structure (General Partner), fully independent from the assignor banks and that
is selected on the date of establishment of the Fund. The management structure of the Fund has as main
responsibilities to: (i) determine the objective of the Fund and (ii) administrate and manage exclusively the Fund,
determining the objectives and investment policy and the conduct in management and business of the Fund. The
management structure is remunerated through management commissions charged to the Funds.
These funds (in which the Group holds minority positions) establish companies in order to acquire the loans to the
banks, which are financed through the issuance of senior and junior securities. The value of the senior securities fully
subscribed by the Funds that hold the share capital match the fair value of the asset sold, determined in accordance
with a negotiation based on valuations performed by both parties.
The value of the junior securities is equivalent to the difference between the fair value that was based on the valuation
of the senior security and the value of the transferred receivables. These junior securities, being subscribed by the
Group, will entitle the Group to a contingent positive value if the value of the assets transferred exceeds the amount of
the senior tranches plus the remuneration on them. Thus, considering these junior assets reflect a difference between
the valuations of the assets sold based on the appraisals performed by independent entities and the negotiation
between the parties, the Group performs the constitution of impairment losses for all of them.
Therefore, as a result of the transfer of assets occurred operations, the Group subscribed:
- Senior securities (participation units) of the funds, for which the cash-flows arise mainly from a set of assets
transferred from the participant banks. These securities are booked in Financial assets not held for trading mandatorily
at fair value through profit or loss portfolio and are accounted for at fair value based on the last available Net assets
value (NAV), as disclosed by the Management companies and audited at year end, still being analysed by the Bank;
- Junior securities (with higher subordination degree) issued by the Portuguese law companies held by the funds and
which are fully provided to reflect the best estimate of impairment of the financial assets transferred.
Within this context, not withholding control but maintaining an exposure to certain risks and rewards, the Group, in
accordance with IFRS 9 3.2\u00a0 performed an analysis of the exposure to the variability of risks and rewards in the assets
transferred, before and after the transaction, having concluded that it does not hold substantially all the risks and
rewards. Considering that it does not hold control and does not exercise significant influence on the funds or
companies' management, the Group performed, under the scope of IAS IFRS 9 3.2, the derecognition of the assets
transferred and the recognition of the assets received.
The results are calculated on the date of transfer of the assets. During 2023 and 2022, no credits were sold to corporate
restructuring funds.
The amounts accumulated as at 31\u00a0December 2023, related to these operations, are analysed as follows:
(Thousands of euros)
Assets
transferred
Net assets
transferred
Received
value
Net gains
/ (losses)
Fundo Recupera\u00e7\u00e3o FCR (a)
343,266
243,062
232,267
(10,795)
Fundo Aquarius FCR (b)
132,635
124,723
132,635
7,912
Discovery Real Estate Fund (b)
211,388
152,155
138,187
(13,968)
Fundo Vega FCR (c)
113,665
113,653
109,599
(4,054)
800,954
633,593
612,688
(20,905)
The activity segments are as follows: a) Diversified; b) Real estate and tourism; and c) Real estate.
The amounts accumulated as at 31\u00a0December 2022, related to these operations, are analysed as follows:
(Thousands of euros)
Assets
transferred
Net assets
transferred
Received
value
Net gains
/ (losses)
Fundo Reestrutura\u00e7\u00e3o Empresarial FCR (a)
84,112
82,566
83,212
646
Fundo Recupera\u00e7\u00e3o FCR (a)
343,266
243,062
232,267
(10,795)
Fundo Aquarius FCR (b)
132,635
124,723
132,635
7,912
Discovery Real Estate Fund (b)
211,388
152,155
138,187
(13,968)
Fundo Vega FCR (c)
113,665
113,653
109,599
(4,054)
885,066
716,159
695,900
(20,259)
The activity segments are as follows: a) Diversified; b) Real estate and tourism; and c) Real estate.
On 29 June 2023, all of the participation units held by BCP in the Fundo Reestrutura\u00e7\u00e3o Empresarial FCR were sold, as a
result the Group no longer held a position in that Fund.
As at 31\u00a0December 2023, the assets received under the scope of these operations are comprised of:
(Thousands of euros)
2023
Senior securities
Junior securities
Investment fund units
(note 24)
Capital supplies
(note 32)
Total
Fundo Recupera\u00e7\u00e3o FCR
Gross value
166,637
74,631
241,268
Impairment and other fair value adjustments
(138,607)
(74,631)
(213,238)
28,030
\u2014
28,030
Fundo Aquarius FCR
Gross value
105,498
\u2014
105,498
Impairment and other fair value adjustments
(7,379)
\u2014
(7,379)
98,119
\u2014
98,119
Discovery Real Estate Fund
Gross value
157,716
\u2014
157,716
Impairment and other fair value adjustments
4,568
\u2014
4,568
162,284
\u2014
162,284
Fundo Vega FCR
Gross value
46,233
91,206
137,439
Impairment and other fair value adjustments
(10,091)
(91,206)
(101,297)
36,142
\u2014
36,142
Total Gross value
476,084
165,837
641,921
Total impairment and other fair value adjustments
(151,509)
(165,837)
(317,346)
324,575
\u2014
324,575
As at 31\u00a0December 2023, the book value of these assets is accounted for in item Financial assets not held for trading
mandatorily at fair value through profit or loss and considers the Fund's Global Net Asset Value (NAV) communicated by
the Management Companies.
The following aspects should also be mentioned: (i) these are Funds whose latest Limited Audit Reports available with
reference to 30 June 2023, and Audit Reports available with reference to 31 December 2022, do not include reserves;
(ii) the funds are subject to supervision by the competent authorities.
As at 31 31\u00a0December 2022, the assets received under the scope of these operations are comprised of:
(Thousands of euros)
2022 (restated)
Senior securities
Junior securities
Investment fund
units
(note 24)
Capital supplies
(note 32)
Total
Fundo Reestrutura\u00e7\u00e3o Empresarial FCR
Gross value
60,963
\u2014
60,963
Impairment and other fair value adjustments
(37,966)
\u2014
(37,966)
22,997
\u2014
22,997
Fundo Recupera\u00e7\u00e3o FCR
Gross value
169,033
85,018
254,051
Impairment and other fair value adjustments
(134,767)
(85,018)
(219,785)
34,266
\u2014
34,266
Fundo Aquarius FCR
Gross value
119,631
\u2014
119,631
Impairment and other fair value adjustments
(11,527)
\u2014
(11,527)
108,104
\u2014
108,104
Discovery Real Estate Fund
Gross value
157,716
\u2014
157,716
Impairment and other fair value adjustments
(1,801)
\u2014
(1,801)
155,915
\u2014
155,915
Fundo Vega FCR
Gross value
48,762
86,379
135,141
Impairment and other fair value adjustments
(9,899)
(86,379)
(96,278)
38,863
\u2014
38,863
Total Gross value
556,105
171,397
727,502
Total impairment and other fair value adjustments
(195,960)
(171,397)
(367,357)
360,145
\u2014
360,145
As at 31\u00a0December 2022, the book value of these assets is accounted for in item Financial assets not held for trading
mandatorily at fair value through profit or loss and considers the Fund's Global Net Asset Value (NAV) communicated by
the Management Companies.
The following aspects should also be mentioned: (i) these are Funds whose latest Limited Audit Reports available with
reference to 30 June 2022 and Audit Reports available with reference to 31 December 2022 and 2021, do not include
reserves; (ii) the funds are subject to supervision by the competent authorities.
The detail of the commitments of subscribed and unpaid capital for each of the corporate restructuring funds is
analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Corporate restructuring funds
Subscribed
capital
Capital
realized
Subscribed
and unpaid
capital
Subscribed
capital
Capital
realized
Subscribed
and unpaid
capital
Fundo Reestrutura\u00e7\u00e3o Empresarial FCR
\u2014
\u2014
\u2014
51,212
46,486
4,726
Fundo Recupera\u00e7\u00e3o FCR
171,846
166,637
5,209
186,602
169,033
17,569
Fundo Aquarius FCR
118,350
105,497
12,853
134,205
119,631
14,574
Discovery Real Estate Fund
158,991
158,991
\u2014
158,991
158,991
\u2014
Fundo Vega FCR
45,439
43,492
1,947
48,150
45,870
2,280
494,626
474,617
20,009
579,160
540,011
39,149
In 31\u00a0December 2023 and 2022, there are additional subscription commitments for the fund Discovery, in the amount of
Euros 1,107,000.
Additionally, are booked in Loans and advances to customer\u2019s portfolio and in balances Guarantees granted and
Irrevocable credit lines, the following exposures and respective impairment, in relation to entities controlled by these
funds:
(Thousands of euros)
Items
2023
2022
(restated)
Loans and advances to customers
35,978
248,439
Guarantees granted and irrevocable credit lines
24,018
74,834
Gross exposure
59,996
323,273
Impairment
(6,176)
(15,183)
Net exposure
53,820
308,090
Project Crow
At the end of December 2022, the designated sale process for the Crow Project was completed, which included the sale
to a related company of Davidson Kempner Capital Management LP (Purchaser) of 3 hotel assets belonging to the Fundo
Recupera\u00e7\u00e3o and the sale of all shares/units of participation of the FLITPTREL and Fundo Recupera\u00e7\u00e3o Turismo funds,
together with the assets directly and indirectly held by these two funds, with the exception of a set of assets that were
transferred to the sellers and which, in the case of Banco Comercial Portugu\u00eas, S.A. include the investment held in a
Venture capital fund, in 2 real estate funds and in a company, as detailed in the table below:
(Thousands of euros)
2023
2022
(restated)
Financial assets not held for trading mandatorily at fair value through profit or loss (note 24)
Fundo Turismo Algarve, FCR
40,758
50,426
Lusofundo - Fundo de Investimento Imobili\u00e1rio Fechado
18,780
26,429
Fundo Especial de Investimento Imobili\u00e1rio Fechado Eurofundo
8,467
12,091
68,005
88,946
Non-current assets held for sale (note 27)
Imoserit, S.A.*
\u2014
17,919
Other assets (note 32)
Imoserit, S.A.*
14,805
\u2014
82,810
106,865
* previous FLITPTREL Tires, S.A.
As referred in note 39, there are provisions for liabilities and charges recorded for corporate restructuring funds and
carved-out assets of the Project Crow, completed in December 2022.
Relevant events occurred during 2023
Banco Comercial Portugu\u00eas, S.A. informed about the upgrade of senior unsecured debt and
deposits ratings by DBRS Morningstar
Banco Comercial Portugu\u00eas, S.A. (\u201cBCP\u201d or \u201cBank\u201d) informed that DBRS Morningstar rating agency on 18 December
2023, upgraded the Bank's senior unsecured debt ratings from BBB (low) to BBB and deposits ratings from BBB to BBB
(high), one notch above the Intrinsic Assessment, reflecting the legal framework in place in Portugal which has full
depositor preference in bank insolvency and resolution proceedings.
This upgrade of BCP's ratings by DBRS Morningstar reflects the improvement in profitability and the strengthening in
capitalization levels while maintaining adequate asset quality. The stable trend reflects DBRS Morningstar expectations
that the Bank will maintain adequate profitability levels and solid capital buffers. The stable trend also takes into
consideration the Bank\u2019s adequate funding structure coupled with solid liquidity buffers.
Banco Comercial Portugu\u00eas, S.A. informed about conversion of its existing covered bonds
programme into a covered bonds programme compliant with the Legal Regime of Covered
Bonds
As at 5 December 2023, Banco Comercial Portugu\u00eas, S.A. announced that, following the entry into force of Decree-Law
no. 31/2022, of 6 May, approving the new legal regime of covered bonds and transposing Directive (EU) 2019/2162
(\u201cLegal Regime of Covered Bonds\u201d), the conversion of its existing covered bonds programme into a covered bonds
programme compliant with the Legal Regime of Covered Bonds, in the total amount of Euros 12,500,000,000 (the
\u201cProgramme\u201d), was approved on the present date by the Portuguese Securities Commission (Comiss\u00e3o do Mercado de
Valores Mobili\u00e1rios) (\u201cCMVM\u201d).
Accordingly, Banco Comercial Portugu\u00eas, S.A. hereby informed that the covered bonds issues with the ISINs indicated
below shall, as from the present date, be governed by the Legal Regime of Covered Bonds and by the terms of the
adjusted programme.
ISINs:
(i) Euros 2.200.000.000 Floating Rate Covered Bonds due 2024 Series 5 (ISIN PTBIPGOE0061);
(ii) Euros 2.000.000.000 Floating Rate Covered Bonds due 2025 Series 6 (ISIN PTBCSFOE0024);
(iii) Euros 1.000.000.000 Floating Rate Covered Bonds due 2027 Series 7 (ISIN PTBCS3OE0028); and
(iv) Euros 4.000.000.000 Floating Rate Covered Bonds due 2026 Series 8 (ISIN PTBCQLOE0036).
Minimum prudential requirements
As at 4 December 2023, Banco Comercial Portugu\u00eas, S.A. (BCP, Bank) informed that, under the context of the
Supervisory Review and Evaluation Process (SREP), it has been notified of the decision of the European Central Bank
(ECB) regarding minimum prudential requirements to be fulfilled on a consolidated basis from 1 January 2024. The
minimum prudential requirements to be in force from January 2024 remained unchanged compared to the requirements
in force in 2023.
BCP, in the current announcement, also informed the decision from Banco de Portugal on its capital buffer requirement
as \u201cother systemically important institution\u201d (O-SII).
The ECB\u2019s decision prescribes the following minimum ratios as a percentage of total risk weighted assets (RWA) from 1
January, 2024:
Minimum Capital Requirements
BCP Consolidated
Capital
requirements
of which:
Pilar 1
Pilar 2
Buffers
CET1
9.41%
4.50%
1.41%
3.50%
T1
11.38%
6.00%
1.88%
3.50%
Total
14.00%
8.00%
2.50%
3.50%
Buffers include the conservation buffer (2.5%), the countercyclical buffer (0%) and the buffer for other systemically
important institutions (O-SII: 1.0%).
Banco Comercial Portugu\u00eas, S.A. informed about the upgrade of deposits and senior
unsecured debt ratings by Moody\u2019s
Banco Comercial Portugu\u00eas, S.A. (\u201cBCP\u201d or \u201cBank\u201d) informed that Moody\u2019s rating agency on 22 November 2023,
upgraded the Bank's senior unsecured debt ratings from Baa3 to Baa2 and deposits ratings from Baa2 to A3, positioning
the rating assigned to deposits at the same risk level to that assigned to the Portuguese Republic.
This upgrade of BCP's ratings by Moody\u2019s reflects the reduction in the stock of non-performing assets (NPA), the
improvement in capitalization levels as well as the improvement in domestic recurrent profitability. The rating action
on BCP also reflects the recent upward revision of the Portuguese Republic's debt rating, from Baa2 to A3.
In the scope of the review carried out by Moody\u2019s, it was simultaneously communicated, the upgrade of the Baseline
Credit Assessment (BCA) and Adjusted BCA from Ba2 to Ba1, the junior senior debt rating to (P)Ba1, the dated
subordinated debt to (P)Ba2 and the preference shares rating to B1(hyb). Additionally, Moody\u2019s informed, on the same
date that the rating of BCP's covered bonds program was upgraded from Aa2 to Aaa.
The Outlook on the long-term deposit and senior unsecured debt ratings is currently stable, reflecting Moody's view of
the expected performance of the Bank over the next 12 to 18 months.
Banco Comercial Portugu\u00eas, S.A. informed about notification from Banco de Portugal on the
implementation of a reserve in own funds for sectoral systemic risk
As at 17 November 2023, Banco Comercial Portugu\u00eas, S.A. (\u201cBank\u201d) informed that it was notified by the Banco de
Portugal on the decision to implement a reserve for sectoral systemic risk, which aims to reinforce the resilience of the
banking sector of a potential deterioration in economic conditions and/or unexpected significant correction in
residential property prices. The reserve for sectoral systemic risk complements the current prudential recommendation
and consists of a preventive measure to address the possible materialization of potential risks.
The Banco de Portugal's decision translates into the requirement to comply with a reserve for sectoral systemic risk of
4% on the amount of risk exposures on the retail portfolio of loans to individuals collateralized by residential properties
located in Portugal, calculated in pursuant to paragraph 3 of article 92 of Regulation (EU) 575/2013, from 1 October
2024, onwards, at the highest level of consolidation in Portugal, considering the applicable legal framework.
Banco Comercial Portugu\u00eas, S.A. informed that the decision to impose this measure, that aims to create a reserve for
sectoral systemic risk, would translate on a pro forma basis into an estimated increase in own funds requirements of 26
basis points.
BCP S.A. informed about the ECB's authorization to exercise the early redemption option of
the currently outstanding Additional Tier 1 (\u201cAT1\u201d) instrument with an outstanding amount of
Euros 400 million
As at 13 November 2023, Banco Comercial Portugu\u00eas, S.A. (\u201cBank\u201d) informed that it has received permission from the
ECB to reduce its Own Funds, through the exercise of the early redemption option of the currently outstanding
Additional Tier 1 (\u201cAT1\u201d) instrument, considering that following the said reduction, BCP\u00b4s own funds and eligible
liabilities, on a consolidated basis, are expected to exceed the requirements laid down in Regulation (EU) No 575/2013,
Directive 2013/36/ EU of the European Parliament and of the Council and Directive2014/59/EU of the European
Parliament and of the Council by a margin that the ECB considers necessary.
Notice is further given that the decision on whether to exercise such option of early redemption of the AT1 issue (ISIN:
PTBCPFOM0043) is still under evaluation by the Bank. Such decision will be communicated in due course under the
terms set out in the instrument\u00b4s final terms and conditions.
Banco Comercial Portugu\u00eas, S.A. informed about issue of senior preferred debt securities
eligible for MREL
As at 25 September 2023, Banco Comercial Portugu\u00eas, S.A. (\u201cBank\u201d) informed that it has fixed the terms for a new
issue of senior preferred debt securities eligible for MREL (Minimum Requirement for own funds and Eligible Liabilities),
under its Euro Note Programme.
The issue, in the amount of Euros 500 million, will have a tenor of 3 years, with the option of early redemption by the
Bank at the end of year 2, an issue price of 99.825% and an annual interest rate of 5.625% during the first 2 years
(corresponding to a spread of 1.90% over the 2-year mid-swap rate). The interest rate for the 3rd year was set at 3-
month Euribor plus a 1.90% spread.
Banco Comercial Portugu\u00eas, S.A. informed about the upgrade to Investment Grade of senior
debt ratings by Fitch Ratings
As at 21 September 2023, Banco Comercial Portugu\u00eas, S.A. (\u201cBCP\u201d or \u201cBank\u201d) informed that Fitch Ratings upgraded
BCP's long-term senior unsecured debt ratings to Investment Grade, from BB+ to BBB-, following the upgrade of the
long-term Issuer Default Rating (IDR) from BB+ to BBB- and the Viability Rating (VR) from bb+ to bbb-. This upgrade
reflects the Fitch Ratings\u2019 view that BCP\u2019 capital ratios have increased to levels considered adequate. This
improvement has been supported by materially stronger profitability given higher interest rates, strong cost efficiency
and a balance sheet with reduced credit risk. The upgrade also reflects reduced risks surrounding litigations costs
coming from its Polish subsidiary in relation to legacy Swiss franc-denominated mortgage loans. The Outlook on the
Long-Term IDR is Stable.
Fitch Ratings also raised the ratings on BCP's Additional Tier 1 and Tier 2 instruments by one notch.
Banco Comercial Portugu\u00eas, S.A. informed about the upgrade to Investment Grade of senior
debt ratings by S&P Global
As at 12 September 2023, Banco Comercial Portugu\u00eas, S.A. (\u201cBCP\u201d or \u201cBank\u201d) informed that S&P Global Ratings
upgraded BCP's senior unsecured debt ratings to Investment Grade, from BB+/B to BBB-/A-3. This upgrade reflects the
view that BCP creditworthiness has gradually improved in absolute terms and relative to peers due to a combination of
extraordinary measures and solid internal capital generation driven by improving profitability, based on better-than-
peer efficiency levels and the expectation that a possible asset quality deterioration will be manageable. The rating on
BCP also incorporates potential downside risks arising from the group\u2019s Polish operations and its impact on earnings in
2023 and 2024.
Bank Millennium S.A. (Poland) informed about the conclusion of subscription of non-preferred
senior notes issued under the EMTN Programme\u00a0
The Bank Millennium S.A. Management Board informed that on 11 September 2023 it concluded the subscription for 4-
year non-preferred senior notes of the total nominal value of Euros 400 million, exceeding 10% of the Bank Millennium
Group's equity capitals. On 18 September 2023 these notes were admitted to trading on a regulated market, on the
Luxembourg Stock Exchange.
On 20 September 2023 Bank Millennium S.A. concluded the subscription for 4-year non-preferred senior notes of the
total nominal value of Euros 100 million, which were admitted to trading on a regulated market, on the Luxembourg
Stock Exchange on 27 September 2023.
All issued notes mature on 18 September 2027 (with the possibility of early redemption on 18 September 2026).
These notes issue have been organised under the EMTN Programme on the basis of main Prospectus approved on 25
August 2023 by the Commission de Surveillance du Secteur Financier. The notes will be consolidated and will form a
single series with a total nominal value of Euros 500 million.
The stable Outlook reflects the expectation that the Bank can defend its solid domestic retail franchise and financial
profile over the next 18-24 months and the fact that possible further unpredictable government interventions in the
Polish market would have a manageable effect on the bank's capitalization, which will remain adequate.
S&P Global Ratings also raised the ratings on BCP's Additional Tier 1 and Tier 2 instruments by two notches.
Banco Comercial Portugu\u00eas, S.A. informed about 2023 EU-Wide Stress Test Results
As at 28 July, Banco Comercial Portugu\u00eas, S.A. was subject to the 2023 EU-wide stress test conducted by the European
Banking Authority (EBA), in cooperation with the Banco de Portugal (BdP), the European Central Bank (ECB), and the
European Systemic Risk Board (ESRB).
The adverse stress test scenario was set by the ECB/ESRB and covers a three-year time horizon (2023-2025). The stress
test has been carried out applying a static balance sheet assumption as of December 2022, and therefore does not take
into account future business strategies and management actions. It is not a forecast of Banco Comercial Portugu\u00eas, S.A.
profits.
Considering the results of Banco Comercial Portugu\u00eas, S.A, in the stress test, it should be highlighted the following:
\u2022 the application of the adverse scenario resulted in a reduction of 448 b.p. in the fully loaded CET1 capital ratio at
the end of 2025 compared to December 2022, which compares with an average reduction of 459 b.p. in the
universe of the 70 banks submitted to this exercise.
\u2022 the application of the baseline scenario resulted in an increase of 256 b.p. in the fully loaded CET1 capital ratio at
the end of 2025 compared to December 2022, which compares with an average increase of 136 b.p.
MREL requirements of Banco Comercial Portugu\u00eas, S.A.
As at 12 July 2023, Banco Comercial Portugu\u00eas, S.A. (\"BCP\" or the \"Bank\") informed that it has been notified by Banco
de Portugal, as the national resolution authority, about the update of its minimum requirement for own funds and
eligible liabilities (\"MREL\" or \"Minimum Requirement for own funds and Eligible Liabilities\") as decided by the Single
Resolution Board.
The resolution strategy applied continues to be that of a multiple point of entry (\"MPE\"). The MREL requirements to be
met by BCP Group of Resolution (consisting of BCP, S.A., Banco ActivoBank, S.A. and all the subsidiary companies of
BCP apart from Bank Millennium S.A. and Banco Internacional de Mo\u00e7ambique and their respective subsidiaries), from 1
January 2024 is of:
\u2022 24.65% of the total risk exposure amount (\"TREA\") (to which adds further a combined buffer requirement
(\"CBR\") of 3.5%, thus corresponding to total requirements of 28.15%); and
\u2022 6.71% of the leverage ratio exposure measure (\"LRE\").
The Bank is not subject to any subordination requirements.
In accordance with the regulations in force, MREL requirements could be annually updated by the competent
authorities, and therefore these targets replace those previously set.
BCP complies to the currently applicable MREL requirement, both as a percentage of the TREA (also including the
applicable CBR) and as a percentage of the LRE.
The MREL requirements, now communicated to the BCP resolution group described above, are in line with the 2021-24
Strategic Plan and are accommodated by the ongoing funding plan.
Bank Millennium Minimum requirements for own funds and eligible liabilities (MREL)
Bank Millennium manages MREL requirements ratios in a manner analogous to capital adequacy ratios.
Bank Millennium received a joint decision from the resolution authorities in June 2023, obliging it to comply with MREL
requirements. The decision sets updated minimum requirements that must be met by 31 December 2023 - at the levels
of 18.89% (consolidated MREL-TREA) and 5.91% (consolidated MREL-TEM). Additionally, in relation to the above
decisions, Bank Millennium should also meet the MREL requirement considering the Combined Buffer Requirement
(currently 2.75%).
Taking into account the above, in September 2023, Bank Millennium successfully completed the subscription of senior
non-preferred bonds with a total value of Euros 500 million under the Euro Medium Term Notes Issuance Program with a
total nominal value of no more than Euros 3 billion.
MREL
31.12.2023
30.09.2023
30.06.2023
31.12.2022
MREL-TREA ratio (consolidated)
23.77%
22.05%
14.93%
14.77%
Minimum required level MREL-TREA
18.89%
14.42%
14.42%
15.60%
Surplus(+) / Deficit(-) of MREL-TREA (p.p.)
4.88%
7.63%
0.51%
-0.83%
Minimum required level including Combined Buffer Requirement (CBR)
21.64%
17.17%
17.17%
18.35%
Surplus(+) / Deficit(-) of MREL-TREA+CBR (p.p.)
2.13%
4.88%
-2.24%
-3.58%
MREL-TEM (consolidated)
7.50%
7.72%
5.87%
6.04%
Minimum required level of MREL-TEM
5.91%
4.46%
4.46%
3.00%
Surplus(+) / Deficit(-) of MREL-TEM (p.p.)
1.59%
3.26%
1.41%
3.04%
In terms of the MREL-TREA and MREL-TEM requirements, the Bank Millennium's Group presents a surplus compared to
the minimum required levels as of 31 December 2023, and also meets the MREL-TREA Requirement after the inclusion
of the Combined Buffer Requirement.
In addition, in December 2023, Bank Millennium received a letter from the Bank Guarantee Fund informing that due to
the update of the P2R buffer by the PFSA, the target updated minimum required MREL-TREA ratio would be 18.03%
MREL-TREA with a minimum subordination requirement, while the target MREL-TEM would be 5.91%, with a
subordination requirement. The Fund will propose the above MREL-TEM levels as part of the joint decision process in
the 2023/2024 planning cycle.
Resolutions of the Annual General Meeting of Banco Comercial Portugu\u00eas, S.A.
Banco Comercial Portugu\u00eas, S.A. concluded on 24 May 2023, through electronic means and, simultaneously, at the
Bank's facilities, with 64.29% of the share capital represented, the Annual General Meeting of Shareholders, with the
following resolutions:
Item One \u2013 Approval of the individual and consolidated Annual Report, balance sheet and financial statements of 2022,
and the Corporate Governance Report, that includes a chapter on the remuneration of the management and supervisory
bodies and the Sustainability Report;
Item Two \u2013 Approval of the proposal for the appropriation of profit concerning the 2022 financial year;
Item Three \u2013 Approval of a vote of trust and praise addressed to the Board of Directors, including to the Executive
Committee and to the Audit Committee and each one of their members, as well as to the Chartered Accountant and its
representative;
Item Four \u2013 Approval of the updating of the policy for the remuneration of Members of the Management and Supervisory
Bodies and the repeal of the regulation of reform of the Executive Directors;
Item Five \u2013 Approval of the update of the policy for selection and appointment of the Statutory Auditor or audit firm
and the hiring of non-prohibited non-audit services, under the terms of the legislation in force;
Item Six \u2013 Approval of the acquisition and sale of own shares and bonds.
Approval of the application of article 352 (2) of the CRR
On 24 March 2023, BCP was notified of the favourable decision of the supervisory authority on the request for the
application of article 352 (2) of the CRR for the exclusion of the calculation of weighted assets for market risk of
certain structural exchange positions for hedging of regulatory ratios against changes in exchange rates. The change has
an estimated impact on the fully implemented CET1 ratio of around 50 basis points and of around 70 basis points in the
total capital ratio.
Signing of conditional agreement concerning the sale of Millennium Financial Services sp.zo.o.
and strategic insurance cooperation
The Management Board of Bank Millennium S.A. informed that following necessary corporate approvals, on 13 February
2023, Bank Millennium executed the agreement (the \"Agreement\") for the sale of 80% of the shares (the \u201cShares\u201d) in
Millennium Financial Services sp. z o.o. (the \u201cCompany\u201d) to Towarzystwo Ubezpiecze\u0144 na \u017bycie Europa S.A. which
acquires 72% of the Company\u2019s shares and Towarzystwo Ubezpiecze\u0144 Europa S.A. which acquires 8% of the Company\u2019s
shares (collectively the \"Buyers\").
Bank Millennium concluded also with the Buyers and the Company certain agreements concerning exclusive insurance
distribution model, including a cooperation agreement, distribution agreements and agency agreements (the \"Strategic
Insurance Cooperation\"). The Strategic Insurance Cooperation provides for long term (10 years) bancassurance liaison in
relation specified insurance products linked to loans offered by Bank Millennium.\u00a0
On 29 March 2023, 80% of the shares (the \"Shares\") of Millennium Financial Services sp. z o.o. (the \"Company\") from the
Bank to Towarzystwo Ubezpiecze\u0144 in \u017bycie Europa S.A. which acquired 72% of the Company's shares and to
Towarzystwo Ubezpiecze\u0144 Europa S.A. which acquired 8% of the Company's shares, as well as the payment of the price
for the Shares to Bank Millennium S.A. The impacts of the Transaction are reflected in note 5 - Gains / (losses) on
financial operations and note 16 - Gains/(losses) on disposal of subsidiaries and other assets.
The sale of the Shares by Bank Millennium S.A. to the Buyers constitutes the conclusion of the Transaction, resulting in
the recognition of the corresponding positive financial result and triggers the commencement of the Strategic Insurance
Cooperation between the Bank and the Buyers, as described above.
Fair value
Fair value is based on market prices, whenever these are available. If market prices are not available, as occurs
regarding many products sold to clients, fair value is estimated through internal models based on cash-flow discounting
techniques. Cash-flows for the different instruments sold are calculated according to its financial characteristics and
the discount rates used include both the market interest rate curve and the current conditions of the Group's pricing
policy.
Thus, the fair value obtained is influenced by the parameters used in the evaluation model that have some degree of
judgment and reflects exclusively the value attributed to different financial instruments. However, it does not consider
prospective factors, as the future business evolution. Therefore, the values presented cannot be understood as an
estimate of the economic value of the Group.
The main methods and assumptions used in estimating the fair value for the financial assets and financial liabilities are
presented as follows:
Cash and deposits at Central Banks and Loans and advances to credit institutions repayable on
demand
Considering the short term of these financial instruments, the amount in the balance sheet is a reasonable estimate of
its fair value.
Loans and advances to credit institutions, Deposits from credit institutions and Assets with
repurchase agreements
The fair value of these financial instruments is calculated discounting the expected principal and interest future cash
flows for these instruments, considering that the payments of the instalments occur in the contractually defined dates.
This update is made based on the prevailing market rate for the term of each cash flow plus the average spread of the
production of the most recent 3 months of the same. For the elements with signs of impairment, the net impairment of
these operations is considered as a reasonable estimate of their fair value, considering the economic valuation that is
realized in the determination of this impairment.
For resources from Central Banks, it was considered that the book value is a reasonable estimate of its fair value, given
the nature of operations and the associated short-term.
For the remaining loans and advances and deposits, the discount rate used reflects the current conditions applied by
the Group on identical instruments for each of the different residual maturities (rates from the monetary market or
from the interest rate swap market).
Loans and advances to customers without defined maturity date
Considering the short maturity of these financial instruments, the conditions of the portfolio are similar to conditions
used at the date of the report. Therefore, the amount in the balance sheet is a reasonable estimate of its fair value
(this class incorporates among other, factoring operations, current account credit, credit cards and overdrafts in
demand deposits).
Loans and advances to customers with defined maturity date
The fair value of these instruments is calculated by discounting the expected principal and interest future cash flows
for these instruments, considering that the payments of the instalments occur in the contractually defined dates. For
loans with signs of impairment (Stage 3 loans), the net impairment of these operations is considered as a reasonable
estimate of their fair value, considering the economic valuation that is realized in the determination of this
impairment.
The discount rate used is the one that reflects the current rates of the Group for each of the homogeneous classes of
this type of instruments and with similar residual maturity. The discount rate includes the market rates for the residual
maturity date (rates from the monetary market or from the interest rate swap market) and the spread used at the date
of the report, which was calculated from the average production of the three most recent months compared to the
reporting date.
Resources from customers and other loans
The fair value of these financial instruments is calculated by discounting the expected principal and interest future
cash flows for the referred instruments, considering that payments occur in the contractually defined dates. The
discount rate used reflects the current conditions applied by the Group in similar instruments with a similar maturity.
The discount rate includes the market rates of the residual maturity date (rates of monetary market or the interest
rate swap market, at the end of the period) and the actual spread of the Group. This was calculated from the average
production of the three most recent months compared to the reporting date.
As in the case of credits without defined maturity, also for the resources from customers without defined maturity
(demand deposits) it is considered that given the potential short term of the same, possibility of their liquidation at any
time, the book value of these liabilities is a reasonable estimate of their fair value.
The average discount rates for Loans and advances to credit institutions, Loans and advances to customers, Resources
from credit institutions and Resources from customers are analysed as follows:
Loans and advances to
credit institutions
Loans and advances to
customers
Resources from credit
institutions
Resources from customers
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
EUR
4.31%
2.44%
4.76%
5.15%
4.28%
3.38%
4.32%
2.77%
AOA
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
AUD
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4.86%
3.76%
CAD
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
5.43%
5.11%
CHF
n.a.
n.a.
3.57%
4.48%
n.a.
n.a.
2.10%
1.58%
CNY
n.a.
n.a.
2.95%
n.a.
n.a.
n.a.
2.66%
1.64%
DKK
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.93%
2.77%
GBP
n.a.
n.a.
n.a.
n.a.
5.69%
4.07%
5.50%
4.18%
HKD
n.a.
n.a.
4.24%
4.73%
n.a.
n.a.
5.30%
3.89%
JPY
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
MOP
n.a.
n.a.
3.66%
4.17%
n.a.
n.a.
5.11%
4.89%
MZN
19.51%
19.51%
23.62%
22.59%
n.a.
n.a.
16.41%
15.99%
NOK
n.a.
n.a.
n.a.
6.19%
n.a.
n.a.
5.09%
3.64%
PLN
5.27%
7.27%
8.28%
10.01%
5.28%
7.39%
5.48%
7.00%
SEK
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4.37%
3.53%
TRY
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
44.94%
n.a.
USD
5.78%
5.41%
6.34%
5.74%
5.85%
5.52%
5.03%
4.51%
ZAR
8.69%
8.61%
13.08%
13.05%
n.a.
n.a.
5.87%
5.45%
Financial assets and liabilities measured at fair value through profit or loss (except
derivatives), financial assets at fair value through other comprehensive income
These financial instruments are accounted for at fair value. Fair value is based on market prices (\"Bid-price\"), whenever
these are available. If market prices are not available, fair value is estimated through numerical models based on cash-
flow discounting techniques, using the market interest rate curve adjusted for factors associated, predominantly credit
risk and liquidity risk, determined in accordance with the market conditions and time frame. In this class of assets, the
fair value corresponds to their book value.
Market interest rates are determined based on information released by the suppliers of financial content - Reuters and
Bloomberg - more specifically because of prices of interest rate swaps. The values for the very short-term rates are
obtained from similar sources but regarding interbank money market. The interest rate curve obtained is calibrated
with the values of interest rate short-term futures. Interest rates for specific periods of the cash flows are determined
by appropriate interpolation methods. The same interest rate curves are used in the projection of the non-
deterministic cash flows such as indexes.
When optionality is involved, the standard templates (Black-Scholes, Black, Ho and others) are used considering the
volatility areas applicable. Whenever there are no references in the market of sufficient quality or that the available
models do not fully apply to meet the characteristics of the financial instrument, specific quotations supplied by an
external entity are applied, typically a counterparty of the business.
Financial assets measured at amortised cost - Debt securities
These financial instruments are accounted at amortised cost net of impairment, as referred in the accounting policy
described in note 1 C1.1.1. The fair value of this class of assets, is based on market prices, whenever these are
available. If market prices are not available, fair value is estimated through numerical models based on cash-flow
discounting techniques, using the market interest rate curve adjusted for factors associated, predominantly credit risk
and liquidity risk, determined in accordance with the market conditions and time frame.
Hedging and trading derivatives
All derivatives are recorded at fair value. In case of derivative contracts that are quoted in organised markets their
market prices are used. As for derivatives traded \"Over-the-counter\", it is applied methods based on numerical cash-
flow discounting techniques and models for assessment of options considering variables of the market, particularly the
interest rates on the instruments in question, and where necessary, their volatilities.
Market interest rates are determined based on information released by the suppliers of financial content - Reuters and
Bloomberg - more specifically because of prices of interest rate swaps. The values for the very short-term rates are
obtained from similar sources but regarding interbank money market. The interest rate curve obtained is calibrated
with the values of interest rate short-term futures. Interest rates for specific periods of the cash flows are determined
by appropriate interpolation methods. The same interest rate curves are used in the projection of the non-
deterministic cash flows such as indexes.
Debt securities non subordinated issued and subordinated debt
For these financial instruments the fair value was calculated for components for which fair value is not yet reflected in
the balance sheet. Fixed rate remunerated instruments for which the Group adopts \"hedge-accounting\", the fair value
related to the interest rate risk is already recognised. For the fair value calculation, other components of risk were
considered, in addition to the interest rate risk already recorded, when applicable. The fair value is based on market
prices, whenever these are available. If market prices are not available, fair value is estimated through numerical
models based on cash-flow discounting techniques, using the market interest rate curve adjusted by associated factors,
predominantly credit risk and trading margin, the latter only in the case of issues placed on non-institutional customers
of the Group.
As original reference, the Group applies the curves resulting from the market interest rate swaps for each specific
currency. The credit risk (credit spread) is represented by an excess from the curve of interest rate swaps established
specifically for each term and class of instruments based on the market prices on equivalent instruments.
For own issued debts placed among non-institutional customers of the Group, one more differential was added
(commercial spread), which represents the margin between the financing cost in the institutional market and the cost
obtained by distributing the respective instrument in the owned commercial network.
The average of the reference rates of the yield curve obtained from the market prices of the different currencies used
in the determination of the fair value of the\u00a0 issues is analysed as follows:
2023
2022 (restated)
EUR
PLN
EUR
PLN
Placed in the institutional market
Subordinated
4.98%
0.00%
9.33%
0.00%
Senior
0.04%
0.00%
0.19%
0.00%
Placed in retail
Senior and collateralised
2.36%
0.04%
3.37%
6.19%
For non subordinated debt securities issued, the fair value calculation focused on all the components of these
instruments, as a result the difference determined is a positive amount of Euros 118,547,000 (31\u00a0December 2022: a
positive amount of Euros 72,745,000) and includes a payable amount of Euros 95,357,000 (31\u00a0December 2022: a payable
amount of Euros 53,495,000) which reflects the fair value of embedded derivatives and are recorded in financial assets
and liabilities held for trading (note 24 and 37).
The following table presents the interest rates used in the definition of the interest rate curves of main currencies,
namely EUR, USD, GBP and PLN used to determine the fair value of the financial assets and liabilities of the Group:
2023
2022 (restated)
EUR
USD
GBP
PLN
EUR
USD
GBP
PLN
1 day
3.93%
5.28%
5.20%
5.74%
2.00%
4.45%
3.55%
6.76%
7 days
3.93%
5.29%
5.22%
5.74%
2.00%
4.47%
3.58%
6.76%
1 month
3.96%
5.37%
5.25%
5.70%
2.04%
4.57%
3.67%
6.83%
2 months
3.98%
5.41%
5.29%
5.74%
2.13%
4.66%
3.80%
6.87%
3 months
3.97%
5.44%
5.32%
5.78%
2.25%
4.77%
3.91%
6.92%
6 months
3.86%
5.37%
5.34%
5.72%
2.73%
5.07%
4.32%
7.04%
9 months
3.75%
5.33%
5.29%
5.71%
3.11%
5.28%
4.65%
7.09%
1 year
3.45%
5.05%
5.25%
5.50%
3.26%
5.11%
4.87%
7.35%
2 years
2.81%
4.37%
4.28%
4.94%
3.39%
4.69%
4.69%
6.97%
3 years
2.56%
4.04%
3.94%
4.62%
3.31%
4.33%
4.56%
6.53%
5 years
2.43%
3.81%
3.63%
4.41%
3.23%
4.02%
4.33%
6.20%
7 years
2.44%
3.75%
3.53%
4.41%
3.19%
3.89%
4.14%
6.13%
10 years
2.50%
3.74%
3.54%
4.49%
3.21%
3.82%
3.99%
6.20%
15 years
2.56%
3.76%
3.63%
4.66%
3.14%
3.79%
3.91%
6.45%
20 years
2.51%
3.74%
3.66%
4.75%
2.93%
3.72%
3.84%
6.49%
30 years
2.33%
3.57%
3.61%
4.75%
2.54%
3.48%
3.70%
6.49%
The following table shows the fair value of financial assets and liabilities of the Group, as at 31\u00a0December 2023:
(Thousands of euros)
2023
Fair value
through
profit or loss
Fair value
through other
comprehensive
income
Amortised
cost
Book value
Fair value
Assets
Cash and deposits at Central Banks
\u2014
\u2014
4,545,526
4,545,526
4,545,526
Loans and advances to credit institutions repayable
on demand
\u2014
\u2014
337,687
337,687
337,687
Financial assets at amortised cost
Loans and advances to credit institutions
\u2014
\u2014
908,477
908,477
904,728
Loans and advances to customers (i)
\u2014
\u2014
53,305,159
53,305,159
52,389,825
Debt securities
\u2014
\u2014
17,579,136
17,579,136
17,260,082
Financial assets at fair value through profit or loss
Financial assets held for trading
822,904
\u2014
\u2014
822,904
822,904
Financial assets not held for trading mandatorily
at fair value through profit or loss
467,254
\u2014
\u2014
467,254
467,254
Financial assets designated at fair value
through profit or loss
32,004
\u2014
\u2014
32,004
32,004
Financial assets at fair value through
other comprehensive income
\u2014
10,834,291
\u2014
10,834,291
10,834,291
Hedging derivatives (ii)
40,628
\u2014
\u2014
40,628
40,628
1,362,790
10,834,291
76,675,985
88,873,066
87,634,929
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
\u2014
\u2014
829,126
829,126
820,805
Resources from customers (i)
\u2014
\u2014
75,606,813
75,606,813
75,460,202
Non subordinated debt securities issued (i)
\u2014
\u2014
2,712,682
2,712,682
2,831,229
Subordinated debt (i)
\u2014
\u2014
1,397,425
1,397,425
1,456,002
Financial liabilities at fair value through profit or
loss
Financial liabilities held for trading
207,387
\u2014
\u2014
207,387
207,387
Financial liabilities designated
at fair value through profit or loss
3,608,487
\u2014
\u2014
3,608,487
3,608,487
Hedging derivatives (ii)
67,825
\u2014
\u2014
67,825
67,825
3,883,699
\u2014
80,546,046
84,429,745
84,451,937
(i) - The book value includes the effect of the adjustments resulting from the application of hedge accounting;
(ii) - Includes a portion that is recognised in reserves in the application of accounting cash flow hedge.
The Bank includes in the Book value column of the heading Financial assets at amortized cost - Debt securities the
variation in the fair value of the hedged element attributable to the hedged risk (risk of interest rate) for securities to
which the Bank is applying fair value hedge accounting.
Until 31 December 2022, the Fair value column of the heading Financial assets at cost amortized - Debt securities
corresponded to the fair value plus the variation in the fair value of the hedged element attributable to the hedged risk
(interest rate risk) for the securities in which the Bank was applying fair value hedge accounting. Since 31 December
2022, the difference between the two columns presented (Book value and Fair value) corresponded to potential gains
on debt securities recorded in accounting at amortized cost, not considering the effects of applying hedge accounting
(alternatively compared to the initial acquisition cost). As of 30 June 2023, for these instruments, the Bank began to
apply a strict definition of Fair value, no longer adding at fair value the change in the fair value of the hedged item
attributable to the hedged risk. This way, as of that date, the differential between the two columns referred to above
(Book value and Fair value) corresponds to potential gains on debt securities recorded in the accounting at amortized
cost after considering the effects of applying hedge accounting. In order to ensure the consistency and comparability of
the information disclosed, the information relating to 31 December 2022 was presented consistently with the applied
with reference to 31 December 2023.
The following table shows the fair value of financial assets and liabilities of the Group, as at 31\u00a0December 2022:
(Thousands of euros)
2022 (restated)
Fair value
through
profit or loss
Fair value
through other
comprehensive
income
Amortised
cost
Book value
Fair value
Assets
Cash and deposits at Central Banks
\u2014
\u2014
6,022,001
6,022,001
6,022,001
Loans and advances to credit institutions repayable
on demand
\u2014
\u2014
213,460
213,460
213,460
Financial assets at amortised cost
Loans and advances to credit institutions
\u2014
\u2014
963,434
963,434
953,643
Loans and advances to customers (i)
\u2014
\u2014
54,675,793
54,675,793
53,436,993
Debt securities
\u2014
\u2014
13,035,582
13,035,582
12,248,074
Financial assets at fair value through profit or loss
Financial assets held for trading
766,597
\u2014
\u2014
766,597
766,597
Financial assets not held for trading mandatorily
at fair value through profit or loss
552,679
\u2014
\u2014
552,679
552,679
Financial assets at fair value through
other comprehensive income
\u2014
7,461,553
\u2014
7,461,553
7,461,553
Hedging derivatives (ii)
59,703
\u2014
\u2014
59,703
59,703
1,378,979
7,461,553
74,910,270
83,750,802
81,714,703
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
\u2014
\u2014
1,468,360
1,468,360
1,453,270
Resources from customers (i)
\u2014
\u2014
75,430,143
75,430,143
75,129,795
Non subordinated debt securities issued (i)
\u2014
\u2014
1,482,086
1,482,086
1,554,561
Subordinated debt (i)
\u2014
\u2014
1,333,056
1,333,056
1,305,013
Financial liabilities at fair value through profit or
loss
Financial liabilities held for trading
241,506
\u2014
\u2014
241,506
241,506
Financial liabilities designated
at fair value through profit or loss
1,817,678
\u2014
\u2014
1,817,678
1,817,678
Hedging derivatives (ii)
178,000
\u2014
\u2014
178,000
178,000
2,237,184
\u2014
79,713,645
81,950,829
81,679,823
(i) - The book value includes the effect of the adjustments resulting from the application of hedge accounting;
(ii) - Includes a portion that is recognised in reserves in the application of accounting cash flow hedge.
The Group classified the financial instruments recorded in the balance sheet at fair value in accordance with the
hierarchy established in IFRS 13. The fair value of financial instruments is determined using quotations recorded in
active and liquid markets, considering that a market is active and liquid whenever its stakeholders conduct transactions
on a regular basis giving liquidity to the instruments traded. When it is verified that there are no transactions that
regularly provide liquidity to the traded instruments, valuation methods and techniques are used to determine the fair
value of the financial instruments.
Level 1 - With quotation in active market
In this category are included, in addition to financial instruments traded on a regulated market, bonds and units of
investment funds valued based on the prices disclosed through trading systems.
The classification of the fair value of level 1 is used when:
i. there is a firm daily enforceable quotation for the financial instruments concerned, or;
ii. there is a quotation available in market information systems that aggregate multiple prices of various stakeholders.
Level 2 - Valuation methods and techniques based on market data
Financial instruments, when there are no regular transactions in the active and liquid markets (level 1), are classified in
level 2, according to the following rules:
i. failure to comply with the rules defined for level 1, or;
ii. they are valued based on valuation methods and techniques that use mostly observable market data (interest rate or
exchange rate curves, credit curves, etc.).
Level 2 includes over-the-counter derivative financial instruments contracted with counterparties with which the Bank
maintains collateral agreements (ISDAs with Credit Support Annex (CSA)). In addition, derivative financial instruments
traded in the over-the-counter market, which, despite not having CSA agreements, the non-observable market data
component (i.e., internal ratings, default probabilities determined by internal models, etc.) incorporated in the
estimation of CVA/DVA is not significant in the overall value of the derivative. In order to assess the significance of this
component, the Bank defined a quantitative relevance criterion and performed a qualitative sensitivity analysis on the
valuation component that includes unobservable market data.
Level 3 - Valuation methods and techniques based on data not observable in the market
If the level 1 or level 2 criteria are not met, financial instruments should be classified in level 3, as well as in situations
where the fair value of financial instruments results from the use of information not observable in the market, such as:
- financial instruments which are not classified as level 1 and which are valued using evaluation methods and
techniques without being known or where there is consensus on the criteria to be used, namely:
i. - those measured using comparative price analysis of financial instruments with risk and return profile, typology,
seniority or other similar factors, observable in the active and liquid markets;
ii. - those measured based on performance of impairment tests, using performance indicators of the underlying
transactions (e.g. default probability rates of the underlying assets, delinquency rates, evolution of the ratings,
etc.);
iii. - those measured taking as reference the NAV (Net Asset Value) disclosed by the management entities of securities/
real estate/other investment funds not listed on a regulated market.
Level 3 includes over-the-counter derivative financial instruments that have been contracted with counterparties with
which the Bank does not maintain collateral exchange agreements, and whose unobservable market data component
incorporated in the estimation of the value adjustment.
The following table shows, by valuation levels, the fair value of financial assets and liabilities of the Group as at
31\u00a0December 2023:
(Thousands of euros)
2023
Level 1
Level 2
Level 3
Total
Assets
Cash and deposits at Central Banks
4,545,526
\u2014
\u2014
4,545,526
Loans and advances to credit institutions repayable on demand
337,687
\u2014
\u2014
337,687
Financial assets at amortised cost
Loans and advances to credit institutions
\u2014
\u2014
904,728
904,728
Loans and advances to customers
\u2014
\u2014
52,389,825
52,389,825
Debt securities
13,626,971
935,239
2,697,872
17,260,082
Financial assets at fair value through profit or loss
Financial assets held for trading
405,585
84,614
332,705
822,904
Financial assets not held for trading mandatorily
at fair value through profit or loss
\u2014
\u2014
467,254
467,254
Financial assets designated at fair value through profit or loss
32,004
\u2014
\u2014
32,004
Financial assets at fair value through other comprehensive income
8,301,377
2,431,483
101,431
10,834,291
Hedging derivatives
\u2014
40,628
\u2014
40,628
27,249,150
3,491,964
56,893,815
87,634,929
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
\u2014
\u2014
820,805
820,805
Resources from customers
\u2014
\u2014
75,460,202
75,460,202
Non subordinated debt securities issued
\u2014
\u2014
2,831,229
2,831,229
Subordinated debt
\u2014
\u2014
1,456,002
1,456,002
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading
\u2014
108,767
98,620
207,387
Financial liabilities designated at fair value through profit or loss
989,703
\u2014
2,618,784
3,608,487
Hedging derivatives
\u2014
67,825
\u2014
67,825
989,703
176,592
83,285,642
84,451,937
The following table shows, by valuation levels, the fair value of financial assets and liabilities of the Group as at
31\u00a0December 2022:
(Thousands of euros)
2022 (restated)
Level 1
Level 2
Level 3
Total
Assets
Cash and deposits at Central Banks
6,022,001
\u2014
\u2014
6,022,001
Loans and advances to credit institutions repayable on demand
213,460
\u2014
\u2014
213,460
Financial assets at amortised cost
Loans and advances to credit institutions
\u2014
\u2014
953,643
953,643
Loans and advances to customers
\u2014
\u2014
53,436,993
53,436,993
Debt securities
9,462,042
694,560
2,091,472
12,248,074
Financial assets at fair value through profit or loss
Financial assets held for trading
389,954
81,347
295,296
766,597
Financial assets not held for trading mandatorily
at fair value through profit or loss
\u2014
\u2014
552,679
552,679
Financial assets at fair value through other comprehensive income
6,489,282
862,566
109,705
7,461,553
Hedging derivatives
\u2014
59,703
\u2014
59,703
22,576,739
1,698,176
57,439,788
81,714,703
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
\u2014
\u2014
1,453,270
1,453,270
Resources from customers
\u2014
\u2014
75,129,795
75,129,795
Non subordinated debt securities issued
\u2014
\u2014
1,554,561
1,554,561
Subordinated debt
\u2014
\u2014
1,305,013
1,305,013
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading
\u2014
186,130
55,376
241,506
Financial liabilities designated at fair value through profit or loss
850,681
\u2014
966,997
1,817,678
Hedging derivatives
\u2014
178,000
\u2014
178,000
850,681
364,130
80,465,012
81,679,823
For financial assets classified at level 3 recorded in the balance sheet at fair value, the changes occurred during 2023 is
presented as follows:
(Thousands of euros)
2023
Financial assets
Held for
trading
Not held for trading
mandatorily at fair
value through profit
or loss
At fair value
through other
comprehensive
income
Financial
liabilities held
for trading (*)
Balance as at 1 January
295,296
552,679
109,705
54,354
Gains / (losses) recognised in profit or loss
Results on financial operations
11,032
(5,722)
\u2014
203
Net interest income
(31)
2,202
\u2014
\u2014
Purchases / (Sales, repayments or amortisations)
26,408
(86,915)
(14,487)
43,437
Gains / (losses) recognised in reserves
\u2014
\u2014
6,124
\u2014
Exchange differences
\u2014
5,010
(626)
\u2014
Accruals of interest
\u2014
\u2014
715
\u2014
Balance as at 31 December
332,705
467,254
101,431
97,994
(*) Do not include short sales in the amount of Euros 626,000 (note 37).
For financial assets classified at level 3 recorded in the balance sheet at fair value, the changes occurred during 2022 is
presented as follows:
(Thousands of euros)
2022 (restated)
Financial assets
Held for
trading
Not held for trading
mandatorily at fair
value through profit
or loss
At fair value
through other
comprehensive
income
Financial
liabilities held
for trading (*)
Balance as at 1 January
263,157
990,938
123,944
6,576
Gains / (losses) recognised in profit or loss
Results on financial operations
(10,027)
(90,286)
\u2014
47,221
Net interest income
\u2014
6,109
\u2014
\u2014
Transfers between levels
(1,860)
\u2014
\u2014
(145)
Purchases / (Sales, repayments or amortisations)
44,028
(351,744)
(11,130)
702
Gains / (losses) recognised in reserves
\u2014
\u2014
(4,138)
\u2014
Exchange differences
\u2014
(2,338)
1,061
\u2014
Accruals of interest
(2)
\u2014
(32)
\u2014
Balance as at 31 December
295,296
552,679
109,705
54,354
(*) Do not include short sales in the amount of Euros 1,022,000 (note 37).
Post-employment benefits and other long-term benefits
The Group assumed the liability to pay to their employees' pensions on retirement or disability and other obligations, in
accordance with the accounting policy described in note 1 R.
The number of participants in the Pension Fund of Banco Comercial Portugu\u00eas covered by this pension plan and other
benefits is analysed as follows:
Number of participants
2023
2022
(restated)
Pensioners
17,121
17,111
Former Attendees Acquired Rights
3,452
3,495
Employees
6,345
6,370
26,918
26,976
In accordance with the accounting policy described in note 1 R, the Group's retirement pension liabilities and other
benefits and the respective coverage, based on the Projected Unit Credit method are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Actual amount of the past services
Pensioners
2,318,761
2,126,809
Former attendees acquired rights
183,252
161,387
Employees
577,562
502,428
3,079,575
2,790,624
Pension fund value
(3,469,833)
(3,384,118)
Net (assets) / liabilities in balance sheet (note 32)
(390,258)
(593,494)
Accumulated actuarial deviations and changing assumptions
effect recognised in Other comprehensive income
3,375,415
3,152,535
In 2017, following the authorization of the Insurance and Pension Funds Supervisory Authority, the BCP group's pension
fund agreement was amended. The main purpose of this process was to incorporate into the pension fund the changes
made to the Group's Collective Labour Agreement (CLA) in terms of retirement benefits and to pass on to the pension
fund the responsibilities that were directly in charge by the companies (extra-fund liabilities). The pension fund has a
share exclusively related to the financing of these liabilities, which under the scope of the fund is called an Additional
Complement, which as at 31\u00a0December 2023 amounts to Euros 195,420,000 (31\u00a0December 2022: Euros 197,486,000).
The End of Career Premium also came to be borne by the pension fund under the basic pension plan.
In 2023, negotiations continued with all the unions subscribing to the Group's Collective Labour Agreements, for the
conclusion of the full review of the respective clauses, negotiations which are still ongoing.
At the same time, negotiations took place with all the unions that subscribed the Group's Collective Labour
Agreements, for the review of the Salary Tables and remaining pecuniary clauses relating to the year 2023, having been
agreed on 9 and 17 October with all the Unions subscribing to the Group's Collective Labour Agreements, the update of
the Salary Tables in 2023 with differentiated increases by contractual level between 4.00% and 7.80%. An increase of
4.50% was agreed for the Bank's Contributions to SAMS and other pecuniary clauses, such as study subsidies,
diuturnities, among others, and an increase of 21.43% was agreed for the lunch subsidy, whose daily value increased to
Euros 12.75. The agreed updates took effect on 1 January 2023, with the exception of remuneration related to
subsistence and travel allowances, which were updated after the agreed updates were operationalized.
Regarding the unions SNQTB \u2013 Sindicato Nacional dos Quadros e T\u00e9cnicos Banc\u00e1rios e SIB \u2013 Sindicato Independente da
Banca, an agreement was also reached regarding the revision of the Salary Tables and other pecuniary clauses relating
to the year 2022, as already agreed in 2022 with the remaining unions.
The change in the projected benefit obligations is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance as at 1 January
2,790,624
3,497,622
Service cost
(9,616)
(11,727)
Interest cost / (income)
111,658
67,059
Actuarial losses / (gains)
Not related to changes in actuarial assumptions
42,609
58,590
Related to changes in assumptions
279,783
(693,673)
Payments
(149,634)
(136,338)
Early retirement programmes and terminations by mutual agreement
7,043
2,223
Contributions of employees
7,108
6,868
Balance at the end of the year
3,079,575
2,790,624
The pensions paid by the Fund, including the Additional Complement, amounts to Euros 149,634,000 (31\u00a0December
2022: Euros 136,338,000).
The liabilities with health benefits are fully covered by the Pension Fund and correspond to Euros 258,840,000
(31\u00a0December 2022: Euros 241,345,000).
Additionally, regarding the coverage of some benefit obligations related to pensions, the Bank contracted with
Ocidental Vida the acquisition of perpetual annuities for which the total liability amounts to Euros 33,765,000
(31\u00a0December 2022: Euros 39,093,000), in order to pay:
i) pensions of former Group's Board Members in accordance with the Bank's Board Members Retirement Regulation;
ii) pensions and complementary pensions to pensioners in accordance with the Pension Fund of the BCP Group
employees established in 28 December 1987, as also to pensioners, in accordance with other Pension Funds, that were
incorporated after on the BCP Group Pension Fund and which were planed that the retirement benefits should be paid
through the acquisition of insurance policies, in accordance with the Decree - Law no. 12/2006.
Ocidental Vida is 100% owned by Ageas Group and Ageas Group is 49% owned by the BCP Group.
During 2023 and 2022, the changes occurred in the plan's assets value is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance as at 1 January
3,384,118
3,699,988
Employees' contributions
7,108
6,868
Actuarial gains / (losses)
99,512
(259,394)
Payments
(149,634)
(136,338)
Expected return on plan assets
128,720
72,988
Amount transferred to the Fund resulting from acquired rights unassigned
related to the Complementary Plan
9
6
Balance at the end of the year
3,469,833
3,384,118
The elements of the Pension Fund's assets are analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Asset class
Assets with
market price in
active market
Remaining
Total
Portfolio
Assets with
market price in
active market
Remaining
Total
Portfolio
Shares
330,370
1,262
331,632
96,817
1,183
98,000
Bonds and other fixed income
securities
1,995,531
\u2014
1,995,531
1,120,132
\u2014
1,120,132
Participations units in
investment funds
\u2014
497,830
497,830
\u2014
969,232
969,232
Participation units in real
estate funds
\u2014
298,969
298,969
\u2014
308,404
308,404
Properties
\u2014
264,968
264,968
\u2014
275,493
275,493
Loans and advances to credit
institutions and others
\u2014
80,903
80,903
\u2014
612,857
612,857
2,325,901
1,143,932
3,469,833
1,216,949
2,167,169
3,384,118
The balance Properties includes buildings booked in the Fund's financial statements and used by the Group's companies
which amounts to Euros 227,346,000 (31\u00a0December 2022: Euros 238,202,000).
The securities issued by Group's companies accounted in the portfolio of the Fund are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Shares
\u2014
4,301
Bonds and other fixed income securities
1,812
2,805
Loans and advances to credit institutions and others
48,438
128,476
50,250
135,582
The evolution of net (assets) / liabilities in the balance sheet is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance as at 1 January
(593,494)
(202,366)
Recognised in the income statement:
Service cost
(9,616)
(11,727)
Interest cost / (income) net of the balance liabilities coverage
(17,062)
(5,929)
Cost with early retirement programs
7,043
2,223
Amount transferred to the Fund resulting from acquired rights
unassigned related to the Complementary Plan
(9)
(6)
(19,644)
(15,439)
Recognised in the statement of comprehensive income:
Actuarial (gains) / losses
Not related to changes in actuarial assumptions
Difference between the estimated and the actual income of the fund
(99,512)
259,394
Difference between expected and effective obligations
42,609
58,590
Arising from changes in actuarial assumptions
279,783
(693,673)
222,880
(375,689)
Balance at the end of the year
(390,258)
(593,494)
The estimate of contributions to be made in 2024, by the employees, for the Defined Benefit Plan amount to Euros
7,130,000.
In accordance with IAS 19, the Group accounted for (income)/costs with post-employment benefits, which is analysed
as follows:
(Thousands of euros)
2023
2022
(restated)
Current service cost
(9,616)
(11,727)
Net interest cost /(income) in the liability coverage balance
(17,062)
(5,929)
Cost with early retirement programs
7,043
2,223
Amount transferred to the Fund resulting from acquired rights unassigned related to the
Complementary Plan
(9)
(6)
(Income) / Cost of the year
(19,644)
(15,439)
Within the framework of the three-party agreement between the Government, the Banking and the Trade Unions, the
bank's employees in activity as at 31 December 2010 under the CAFEB / CLA regime were integrated into the General
Social Security System (RGSS) with effect from 1 January 2011. The integration led to an effective decrease in the
present value of the total benefits reported at the retirement age to be borne by the Pension Fund, and this effect is
recorded on a straight-line basis over the average period of active life until the normal retirement age is reached. The
calculation of the liability for pensions carried out periodically by the actuary considers this effect and is calculated
considering the actuarial assumptions in force, ensuring that the liabilities calculated with reference to 31 December
2010, not considering the effect of the integration of bank employees into the General Social Security Scheme are fully
covered and deducted from the amount of the effect recognised until the date. The component of this effect for the
year is recognised under the heading \"Current service costs\".
Board of Directors Plan
As the Board of Directors Retirement Regulation establish that the pensions are subjected to an annual update, and as
it is not common in the insurance market the acquisition of perpetual annuities including variable updates in pensions,
the Bank determined, the liability to be recognised on the financial statements related to that update, taking into
consideration current actuarial assumptions.
In accordance with the remuneration policy of the Board Members, the Group has the responsibility of supporting the
cost with: i) the retirement pensions of former Group's Executive Board Members; and ii) the Complementary Plan for
these members in accordance with the applicable rules funded through the Pension Fund, Extra-fund and perpetual
annuities.
In order to cover liabilities with pensions to former members of the Executive Board of Directors, under the Bank's
Board of Directors Retirement Regulation the Bank contracted with Ocidental Vida to purchase immediate life annuity
insurance policies.
Assumptions used in the liability's assessment
Considering the market indicators, particularly the inflation rate estimates and the long-term interest rate for Euro
Zone, as well as the demographic characteristics of its employees, the Group considered the following actuarial
assumptions for calculating the liabilities with pension obligations:
2023
2022 (restated)
Salary growth rate (c)
2,65% in 2024; 1,9% in 2025 and
1,15% in the following years
3,75% in 2023; 2,25% in 2024
and 1% in the following years
Pension's growth rate (c)
2,25% in 2024; 1,5% in 2025 and
0,75% in the following years
3,0% in 2023; 2,0% in 2024 and
0.75% in the following years
Discount rate / Projected Fund's rate of return
3.53%
4.17%
Mortality tables
Men
TV 88/90 less a year
TV 88/90 less a year
Women (a)
TV 99/01 less 2 years
TV 99/01 less 2 years
Disability rate
Non applicable
Non applicable
Turnover rate
Non applicable
Non applicable
Normal retirement age (b)
66 years and 4 months
66 years and 7 months
Total salary growth rate for Social Security purposes
1.75%
1.75%
Revaluation rate of wages / pensions of Social Security
1%
1%
a) The mortality table considered for women corresponds to TV 99/01 adjusted in less than 2 years (which implies an
increase in hope life expectancy compared to that which would be considered in relation to their effective age).
b) Retirement age is variable. The normal retirement age increases one month for each civil year and cannot be higher
than the normal retirement age in force in the General Social Security Regime (RGSS). The normal retirement age in
the RGSS is variable and depends on the evolution of the average life expectancy at 65 years of age.
In 2022 the retirement age was 66 years and 7 months. For 2023 and 2024, the normal retirement age in the RGSS is
66 years and 4 months. The reduction in the retirement age was due to the evolution of the average life expectancy
at 65 years in Portugal. For the projection of life expectancy\u2019s increment, it was considered an increase of one year
in every 10 years, with the maximum retirement age being set at 67 years and 2 months.
c) This rate refers to the growth for the years following the reporting year.
The assumptions used on the calculation of the actuarial value of the liabilities are in accordance with the
requirements of IAS 19, and are determined based on the references of the entities under common control. No
disability decreases are considered in the calculation of the liabilities.
The discount rate used to update the Bank's pension fund liabilities, regarding the defined benefit pension plans of its
employees and managers, was determined based on an analysis carried out on a set of available information, which
includes, among other elements, the market references for this indicator published by internationally recognized
specialized entities and which are based, as defined by IAS 19, on market yields of a universe of high quality bond
issues (low risk), different maturities, called in Euros and relating to a diverse and representative range of issuers (non-
sovereign). With reference to 31\u00a0December 2023, the Group used a discount rate of 3.53% (31\u00a0December 2022: 4.17%).
The Actuarial gains are related to the difference between the actuarial assumptions used for the estimation of the
liabilities and the values verified and the change in actuarial assumptions, are analysed as follows:
(Thousands of euros)
Actuarial (gains) / losses
2023
2022 (restated)
Values
effectively
verified in %
Amount
of deviations
Values
effectively
verified in %
Amount
of deviations
Deviation between expected and actual liabilities
42,609
58,590
Changes on the assumptions:
Discount rate
225,566
(1,108,506)
\u00a0 Salary and pensions growth rate
54,217
279,108
\u00a0 Mortality tables
\u2014
63,571
\u00a0 Other changes
\u2014
72,154
Deviation between expected income and income from funds
7.07%
(99,512)
(5.07)%
259,394
222,880
(375,689)
In accordance with IAS 19, the sensitivity analysis to changes in assumptions, is as follows:
(Thousands of euros)
Impact resulting from changes in financial assumptions
2023
2022 (restated)
-0.25%
0.25%
-0.25%
0.25%
Discount rate
99,220
(92,532)
87,938
(82,095)
Pension's increase rate
(104,068)
108,563
(98,276)
102,703
Salary growth rate
(25,075)
29,118
(20,620)
23,675
(Thousands of euros)
Impact resulting from changes in demographic assumptions
2023
2022 (restated)
- 1 year
+ 1 year
- 1 year
+ 1 year
Changes in mortality table (*)
100,138
(100,538)
83,017
(83,816)
(*) The impact of 1 year reduction in the mortality table implies an increase in the average life expectancy
Defined contribution plan
According to what is described in accounting policy 1 R3, in the scope of the Defined Contribution Plan provided for the
BCP Pension Fund of the BCP Group for employees who have been admitted until 1 July 2009, it was accounted for a
cost in 2023 of Euros 2,061,000 (2022: cost of 2,026,000) as an estimated contribution given that the Group estimates
that the following requirements will be met, cumulatively: (i) the previous year BCP's ROE equals or exceeds the rate of
government bonds of 10 years plus 5 percentage points, and (ii) distributable profits or reserves exist in the accounts of
Banco Comercial Portugu\u00eas.
For employees who have been admitted after 1 July 2009, are made monthly contributions equal to 1.5% of the monthly
remuneration received by employees in the current month, either by themselves or by the Group and employees. This
contribution has a mandatory character and is defined in the Collective Labour Agreement of the BCP Group and does
not have a performance criterion. The Group accounted for staff costs in 2023 the amount of Euros 384,000 (2022:
Euros 307,000) related to this contribution.
Related parties
As defined by IAS 24, are considered related parties of the Group, the companies detailed in note 60 - List of subsidiary
and associated companies of Banco Comercial Portugu\u00eas Group, the Pension Fund, the members of the Board of
Directors and key management members. The key management members are the first line Directors. Beyond the
members of the Board of Directors and key management members, are also considered related parties, people who are
close to them (family relationships) and entities controlled by them or in whose management they have significant
influence.
As the transactions with subsidiaries are eliminated in consolidation, these are not included in the notes to the Group's
consolidated financial statements.
According to Portuguese law, namely under Article no. 109 of the General Law for Credit Institutions and Financial
Companies and also in accordance with Article no. 33 of Notice 3/2020 of the Bank of Portugal, are considered related
parties as well, the qualified shareholders of Banco Comercial Portugu\u00eas, S.A. and the entities controlled by them or
with which they are in a group relationship. The list of the qualified shareholders is detailed in note 41.
A) Balances and transactions with qualified shareholders
The balances reflected in assets of consolidated balance sheet with qualified shareholders, are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Assets
Financial assets at amortised cost
Loans and advances to customers
110,527
97,744
Debt securities
52,548
79,787
163,075
177,531
Liabilities
Resources from customers
48,099
96,159
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading
2,138
4,287
50,237
100,446
The values of Financial assets at amortized cost are net of impairment in the amount of Euros 1,481,000 (31\u00a0December
2022: Euros 914,000) for Loans and advances to customers and for Debt securities the amount of Euros 237,000
(31\u00a0December 2022: Euros 257,000).
The transactions with qualified shareholders, reflected in the consolidated income statement items, are as follows:
(Thousands of euros)
2023
2022
(restated)
Income
Interest and similar income
13,280
5,989
Commissions
476
752
13,756
6,741
Costs
Interest and similar expenses
179
\u2014
Commissions
76
82
255
82
The balances with qualified shareholders, reflected in the guarantees granted and revocable and irrevocable credit
lines, are as follows:
(Thousands of euros)
2023
2022
(restated)
Guarantees granted
3,536
2,273
Revocable credit lines
5,622
18,171
9,158
20,444
The Group has accounted for provisions for guarantees granted the amount of Euros 8,000 (31\u00a0December 2022: Euros
3,000) and provisions for revocable credit lines the amount of Euros 141,000 (31\u00a0December 2022: Euros 229,000).
B) Balances and transactions with members of the Board of Directors and key management
members
The balances with related parties discriminated in the following table, included on the consolidated balance sheet, are
analysed as follows:
(Thousands of euros)
Loans and advances to
customers
Resources from customers
2023
2022
(restated)
2023
2022
(restated)
Board of Directors
Non-executive directors
8
10
8,900
8,180
Executive Committee (*)
27
46
2,918
2,716
Closely related people
19
14
2,651
2,629
Controlled entities
\u2014
\u2014
24
24
Key management members
Key management members
5,416
6,575
10,934
10,180
Closely related people
1,948
2,475
4,433
4,497
Controlled entities
705
928
3,276
2,613
8,123
10,048
33,136
30,839
(*) The item Loans to Customers corresponds to mortgage loans granted prior to the respective election and to the amount used from private
credit cards which must be settled on the maturity date.
In accordance with Article 85, no. 9 of RGICSF, no credits were granted during 2023 and 2022.
The transactions with related parties discriminated in the following table, included in income items of the consolidated
income statement, are as follows:
(Thousands of euros)
Interest and similar income
Commissions income
2023
2022
(restated)
2023
2022
(restated)
Board of Directors
Non-executive directors
\u2014
\u2014
27
29
Executive Committee
1
\u2014
23
10
Closely related people
\u2014
\u2014
9
9
Key management members
Key management members
174
41
62
62
Closely related people
88
22
39
43
Controlled entities
63
17
31
19
326
80
191
172
The transactions with related parties discriminated in the following table, included in cost items of the consolidated
income statement, are as follows:
(Thousands of euros)
Interest and similar expense
Commissions' expense
2023
2022
(restated)
2023
2022
(restated)
Board of Directors
Non-executive directors
128
19
\u2014
\u2014
Executive Committee (*)
26
\u2014
\u2014
1
Closely related people
33
9
\u2014
\u2014
Key management members
Key management members
101
6
1
4
Closely related people
20
2
1
2
Controlled entities
21
\u2014
2
2
329
36
4
9
The revocable credit lines granted by the Group to the following related parties are as follows:
Guarantees granted
Revocable credit lines
2023
2022
(restated)
2023
2022
(restated)
Board of Directors
Non-executive directors
\u2014
\u2014
143
113
Executive Committee (*)
\u2014
\u2014
160
140
Closely related people
\u2014
\u2014
63
43
Key management members
Key management members
5
5
844
825
Closely related people
\u2014
\u2014
180
164
Controlled entities
\u2014
\u2014
622
525
5
5
2,012
1,810
(*) Corresponds to the maximum authorized and unused limit of private credit cards and overdraft authorization in a salary account under the
same regime as all the Bank's other employees.
The shareholder and bondholder position of members of the Board of Directors, Key management members and people
closely related to the previous categories, as well as the movements occurred during 2023, are as follows:
Number of securities
Unit
price
Euros
Shareholders/Bondholders
Security
2023
2022
(restated)
Acquisitions
Disposals
Date
MEMBERS OF BOARD OF DIRECTORS
Altina de F\u00e1tima Sebasti\u00e1n Gonz\u00e1lez Villamarin
BCP Shares
0
0
Ana Paula Alcobia Gray
BCP Shares
0
0
Cid\u00e1lia Maria da Mota Lopes
BCP Shares
2,184
2,184
Fernando da Costa Lima
BCP Shares
18,986
18,986
Jo\u00e3o Nuno Oliveira Jorge Palma
BCP Shares
1,723,818
1,364,642
636,836
(a)
277,660
(b)
23/6/2023
0.2200
Jorge Manuel Baptista Magalh\u00e3es Correia
BCP Shares
388,500
388,298
202
20/1/2023
0.1900
Bonds (i)
1
1
Bonds (ii)
1
1
Bonds (iv)
1
0
1
25/9/2023
100,000
Jos\u00e9 Miguel Bensliman Schorcht da Silva
Pessanha
BCP Shares
1,504,495
1,177,152
582,460
(a)
255,117
(b)
23/6/2023
0.2200
Jos\u00e9 Pedro Rivera Ferreira Malaquias
BCP Shares
9,808
9,808
J\u00falia Gu (Xiao Xu Gu)
BCP Shares
0
0
Lingjiang Xu
BCP Shares
0
0
Lingzi Yuan (Smilla Yuan)
BCP Shares
0
0
Maria Jos\u00e9 Henriques Barreto de Matos de
Campos
BCP Shares
2,014,344
1,554,512
574,790
(a)
114,958
(b)
23/6/2023
0.2200
Miguel de Campos Pereira de Bragan\u00e7a
BCP Shares
2,111,178
1,725,908
674,727
(a)
289,457
(b)
23/6/2023
0.2200
Miguel Maya Dias Pinheiro
BCP Shares
2,501,557
2,018,854
839,483
(a)
356,780
(b)
23/6/2023
0.2200
Nuno Manuel da Silva Amado
BCP Shares
2,525,388
1,525,388
1,000,000
3/1/2023
0.1567
Bonds (i)
2
2
Bonds (ii)
2
2
Bonds (iii)
3
1
2
8/8/2023
100,000
Bonds (iv)
1
0
1
27/9/2023
100,000
Rui Manuel da Silva Teixeira
BCP Shares
1,207,858
571,501
(a)
250,317
(b)
23/6/2023
0.2200
1,152,359
376,663
1/8/2023
0.2500
Valter Rui Dias de Barros
BCP Shares
0
0
KEY MANAGEMENT MEMBERS
Albino Ant\u00f3nio Carneiro de Andrade
BCP Shares
133,881
128,684
5,197
(a)
23/6/2023
0.2200
Alexandre Manuel Casimiro de Almeida
BCP Shares
169,519
111,400
58,119
(a)
23/6/2023
0.2200
Am\u00e9rico Jo\u00e3o Pinto Carola
BCP Shares
140,747
104,945
63,588
(a)
27,786
(b)
23/6/2023
0.2200
Ana Maria Jord\u00e3o F. Torres Marques Tavares
BCP Shares
255,931
215,340
63,819
(a)
23,228
(b)
23/6/2023
0.2200
Ana Patr\u00edcia Moniz Macedo
BCP Shares
35,864
0
63,588
(a)
27,724
(b)
23/6/2023
0.2200
Ant\u00f3nio Augusto Amaral de Medeiros
BCP Shares
178,245
143,063
62,599
(a)
27,417
(b)
23/6/2023
0.2200
Ant\u00f3nio Ferreira Pinto J\u00fanior
BCP Shares
11,842
11,842
Ant\u00f3nio Jos\u00e9 Lindeiro Cordeiro
BCP Shares
93,898
64,134
49,854
(a)
20,090
(b)
23/6/2023
0.2200
Ant\u00f3nio Lu\u00eds Duarte Bandeira
BCP Shares
321,903
285,425
64,906
(a)
28,428
(b)
23/6/2023
0.2200
Ant\u00f3nio Ricardo Fery Salgueiro Antunes
BCP Shares
120,117
61,361
58,756
(a)
23/6/2023
0.2200
Ant\u00f3nio V\u00edtor Martins Monteiro
BCP Shares
3,872
3,872
(i) - Fixed Rate Reset Perpetual Temporary Write Down Additional Tier 1 Capital Notes
(ii) - BCP Tier 2 Subordinated Callable Notes
(iii) - BCP 1.75% EUR 500M 6.5NC5.5 Social Senior Preferred Notes
(iv) - BCP/2023 - BCP Senior Preferred Fiexed FLT OCT 2026
(a) - identifies the increment in shares during 2023 corresponding to the annual deferred variable compensation of previous years.
(b) - identifies the shares used in sell-cover in 2023 related to the increment of shares of variable compensation.
Number of securities
Unit
price
Euros
Shareholders/Bondholders
Security
2023
2022
(restated)
Acquisitions
Disposals
Date
Artur Frederico Silva Luna Pais
BCP Shares
517,197
459,405
57,792
(a)
23/6/2023
0.2200
Belmira Abreu Cabral
BCP Shares
129,190
96,604
57,978
(a)
25,392
(b)
23/6/2023
0.2200
Bernardo Roquette de Arag\u00e3o de Portugal
Colla\u00e7o
BCP Shares
89,825
54,362
62,103
(a)
26,640
(b)
23/6/2023
0.2200
Carlos Manuel da Silva Teixeira
BCP Shares
0
0
Chi Wai Leung (Timothy)
BCP Shares
43,768
26,582
17,186
(a)
23/6/2023
0.2200
Constantino Alves Mousinho
BCP Shares
108,170
72,352
35,818
(a)
23/6/2023
0.2200
Fernando Maria Cardoso Rodrigues Bicho
BCP Shares
237
237
Filipe Maria de Sousa Ferreira Abecasis
BCP Shares
174,218
135,398
68,947
(a)
30,127
(b)
23/6/2023
0.2200
Francisco Ant\u00f3nio Caspa Monteiro
BCP Shares
225,015
186,219
69,030
(a)
30,234
(b)
23/6/2023
0.2200
Gon\u00e7alo Nuno Belo de Almeida Pascoal
BCP Shares
153,373
119,771
58,846
(a)
25,244
(b)
23/6/2023
0.2200
Hugo Miguel Martins Resende
BCP Shares
178,524
139,589
69,030
(a)
30,095
(b)
23/6/2023
0.2200
Jo\u00e3o Adriano Azevedo Seixas Vale
BCP Shares
43,222
43,222
Jo\u00e3o Br\u00e1s Jorge
BCP Shares
91,709
91,709
Jo\u00e3o Manuel Taveira Pinto Santos Paiva
BCP Shares
259,116
190,677
68,439
(a)
23/6/2023
0.2200
Jorge Filipe Nogueira Freire Cortes Martins
BCP Shares
107,720
48,257
59,463
(a)
23/6/2023
0.2200
Jorge Manuel Machado de Sousa G\u00f3is
BCP Shares
190,352
134,204
56,148
(a)
23/6/2023
0.2200
Jorge Manuel Magalh\u00e3es Oliveira Pereira
BCP Shares
57,488
25,460
56,785
(a)
24,757
(b)
23/6/2023
0.2200
Jorge Manuel Nobre Carreteiro
BCP Shares
55,988
55,776
(a)
23/6/2023
0.2200
41,000
5/9/2023
0.2630
80,764
10,000
4/12/2023
0.3270
Jorge Oct\u00e1vio Neto dos Santos
BCP Shares
471,191
471,191
Jos\u00e9 Artur Gouveia Coelho Caetano
BCP Shares
0
0
Jos\u00e9 Carlos Benito Garcia de Oliveira
BCP Shares
37,941
37,941
Jos\u00e9 Gon\u00e7alo Prior Regalado
BCP Shares
147,115
79,184
67,931
(a)
23/6/2023
0.2200
Jos\u00e9 Guilherme Potier Raposo Pulido Valente
BCP Shares
315,008
280,081
62,144
(a)
27,217
(b)
23/6/2023
0.2200
Jos\u00e9 Maria Gon\u00e7alves Pereira Brand\u00e3o de
Brito
BCP Shares
87,138
55,225
52,660
(a)
20,747
(b)
23/6/2023
0.2200
Liliana Marisa Catoja Costa Lemos
BCP Shares
400
400
Luis Miguel Manso Correia dos Santos
BCP Shares
285,820
216,790
69,030
(a)
23/6/2023
0.2200
Maria Constan\u00e7a C. Brand\u00e3o Amado Fonseca
G. Santos
BCP Shares
800
800
Maria de F\u00e1tima Coelho Dias
BCP Shares
0
0
Maria de Los Angeles Sanchez Sanchez
BCP Shares
61,375
41,011
36,232
(a)
15,868
(b)
23/6/2023
0.2200
Maria Helena Soledade Nunes Henriques
BCP Shares
268,800
232,863
63,943
(a)
28,006
(b)
23/6/2023
0.2200
Maria Manuela de Ara\u00fajo Mesquita Reis
BCP Shares
228,036
190,663
62,599
(a)
25,226
(b)
23/6/2023
0.2200
M\u00e1rio Ant\u00f3nio Pinho Gaspar Neves
BCP Shares
142,301
108,172
60,616
(a)
26,487
(b)
23/6/2023
0.2200
M\u00e1rio Madeira Robalo Fernandes
BCP Shares
220,539
156,951
63,588
(a)
23/6/2023
0.2200
Nelson Lu\u00eds Vieira Teixeira
BCP Shares
108,936
7,200
16/2/2023
0.2100
22,200
24/2/2023
0.2250
118,570
68,356
(a)
29,322
(b)
23/6/2023
0.2200
Nuno Alexandre Ferreira Pereira Alves
BCP Shares
251,695
183,959
67,736
(a)
23/6/2023
0.2200
Nuno Miguel Nobre Botelho
BCP Shares
144,294
85,625
58,669
(a)
23/6/2023
0.2200
Pedro Jos\u00e9 Mora de Paiva Beija
BCP Shares
138,202
50,673
17/1/2023
0.1934
69,030
(a)
23/6/2023
0.2200
173,559
17,000
21/12/2023
0.2710
Pedro Manuel Francisco da Silva Dias
BCP Shares
152,178
111,149
68,493
(a)
27,464
(b)
23/6/2023
0.2200
Pedro Manuel Macedo Vilas Boas
BCP Shares
146,870
66,368
(a)
23/6/2023
0.2200
70,000
143,238
5/12/2023
0.3310
Pedro Manuel Rendas Duarte Turras
BCP Shares
146,367
105,371
68,439
(a)
27,443
(b)
23/6/2023
0.2200
(a) - identifies the increment in shares during 2023 corresponding to the annual deferred variable compensation of previous years.
(b) - identifies the shares used in sell-cover in 2023 related to the increment of shares of variable compensation.
Number of securities
Unit
price
Euros
Shareholders/Bondholders
Security
2023
2022
(restated)
Acquisitions
Disposals
Date
Ricardo Potes Valadares
BCP Shares
100,121
68,014
55,354
(a)
23,247
(b)
23/6/2023
0.2200
Rosa Maria Ferreira Vaz Santa B\u00e1rbara
BCP Shares
117,023
68,163
5/1/2023
0.1712
87,324
68,439
(a)
29,975
(b)
23/6/2023
0.2200
Bonds (i)
1
1
Rui Artur dos Santos Baptista
BCP Shares
2,500
2,500
8/8/2023
0.2500
Rui Emanuel Agapito Silva
BCP Shares
145,528
109,252
64,315
(a)
28,039
(b)
23/6/2023
0.2200
Rui Fernando da Silva Teixeira
BCP Shares
221,892
186,154
63,588
(a)
27,850
(b)
23/6/2023
0.2200
Rui Manuel Pereira Pedro
BCP Shares
408,353
339,819
68,534
(a)
23/6/2023
0.2200
Rui Miguel Alves Costa
BCP Shares
348,163
279,133
69,030
(a)
23/6/2023
0.2200
Rui Nelson Moreira de Carvalho Maximino
BCP Shares
146,835
110,273
64,823
(a)
28,261
(b)
23/6/2023
0.2200
Rui Pedro da Concei\u00e7\u00e3o Coimbra Fernandes
BCP Shares
143,793
102,700
21/6/2023
0.2200
79,629
63,588
(a)
25,052
(b)
23/6/2023
0.2200
Tiago Alexandre Machado Ferreira Mateus
BCP Shares
52,540
2,128
50,412
(a)
23/6/2023
0.2200
V\u00e2nia Alexandra Machado Marques Correia
BCP Shares
160,146
115,226
56,148
(a)
11,228
(b)
23/6/2023
0.2200
PEOPLE CLOSELY RELATED TO THE PREVIOUS
of: Cid\u00e1lia Maria da Mota Lopes
Alexandre Miguel Martins Ventura
BCP Shares
2,184
2,184
of: Jos\u00e9 Miguel Bensliman Schorcht da Silva
Pessanha
Heran\u00e7a de Anne Marie Bensliman Silva
Pessanha
BCP Shares
139
139
of: Maria Jos\u00e9 Henriques Barreto de Matos de
Campos
Ricardo Gil Monteiro Lopes de Campos
BCP Shares
(c)
(c)
of: Rui Manuel da Silva Teixeira
Maria Helena Espassandim Cat\u00e3o
BCP Shares
576
576
of: Am\u00e9rico Jo\u00e3o Pinto Carola
Ana Isabel Salgueiro Antunes
BCP Shares
29
29
of: Ana Maria Jord\u00e3o F. Torres Marques Tavares
\u00c1lvaro Manuel Coreia Marques Tavares
BCP Shares
25,118
25,118
Francisco Jord\u00e3o Torres Marques Tavares
BCP Shares
1,016
1,016
of: Ant\u00f3nio Lu\u00eds Duarte Bandeira
Ant\u00f3nio da Silva Bandeira
BCP Shares
0
20,000
20,000
20/2/2023
0.2110
Ana Margarida Rebelo A. M. Soares Bandeira
BCP Shares
2,976
2,976
of: Ant\u00f3nio Ferreira Pinto J\u00fanior
Paula Alexandre Cardoso de Miguel Pinto
BCP Shares
33,187
33,187
of: Ant\u00f3nio V\u00edtor Martins Monteiro
Isabel Maria Vaz Leite Pinto Martins Monteiro
BCP Shares
3,104
3,104
of: Francisco Ant\u00f3nio Caspa Monteiro
Ricardo Miranda Monteiro
BCP Shares
1,639
1,639
Rita Miranda Monteiro
BCP Shares
1,639
1,639
of: Maria Helena Soledade Nunes Henriques
Jo\u00e3o Paulo Rodrigues Taborda Gon\u00e7alves
BCP Shares
130
130
of: Maria Manuela de Ara\u00fajo Mesquita Reis
Lu\u00eds Filipe da Silva Reis
BCP Shares
280,000
280,000
of: Jos\u00e9 Pedro Rivera Ferreira Malaquias
Maria Joana de Oliveira Monteiro Ferreira
Malaquias
BCP Shares
(d)
(d)
(i) - Fixed Rate Reset Perpetual Temporary Write Down Additional Tier 1 Capital Notes
(a) - identifies the increment in shares during 2023 corresponding to the annual deferred variable compensation of previous years.
(b) - identifies the shares used in sell-cover in 2023 related to the increment of shares of variable compensation.
(c) - solidary ownership in both securities accounts, and Dr. Ricardo Campos is the first holder and Eng.\u00aa Maria Jos\u00e9 Campos is the 2nd holder of the
securities account.
(d) - solidary ownership in both securities accounts, and Dr. Jos\u00e9 Pedro Ferreira Malaquias is the first holder and Maria Joana Ferreira Malaquias is the 2nd
holder of the securities account.
C) Balances and transactions with associated companies
The balances with associated companies included in the consolidated balance sheet items, except for the item
investments in associated companies, are as follows:
(Thousands of euros)
2023
2022
(restated)
Assets
Loans and advances to credit institutions repayable on demand
12,220
8,834
Financial assets at amortised cost
Loans and advances to credit institutions
212,037
206,078
Loans and advances to customers
2,517
59,487
Financial assets at fair value through profit or loss
Financial assets held for trading
3,465
\u2014
Other assets
11,778
11,497
242,017
285,896
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
22,365
62,845
Resources from customers
198,627
211,193
Non subordinated debt securities issued
6,896
2,002
Financial liabilities held for trading
5,136
3,894
Other liabilities
356
8
233,380
279,942
The transactions with associated companies included in the consolidated income statement items are as follows:
(Thousands of euros)
2023
2022
(restated)
Income
Interest and similar income
10,343
4,198
Commissions
53,594
60,230
Gains on financial operations
2,513
1,020
Other operating income
2,786
1,957
69,236
67,405
Costs
Interest and similar expenses
4,785
1,104
Commissions
11
113
Other administrative costs
2,365
4,136
Losses on financial operations
2,796
\u2014
Other operating losses
1
51
9,958
5,404
The guarantees granted and revocable and irrevocable credit lines by the Group over associated companies are as
follows:
(Thousands of euros)
2023
2022
(restated)
Guarantees granted
4,824
7,539
Revocable credit lines
9,328
9,527
Other revocable commitments
16,284
\u2014
30,436
17,066
Under the scope of the Group's insurance mediation activities, the remuneration from services provided is analysed as
follows:\u00a0
(Thousands of euros)
2023
2022
(restated)
Life insurance
Saving products
24,166
27,966
Mortgage and consumer loans
20,424
20,699
Others
1
\u2014
44,591
48,665
Non-Life insurance
Accidents and health
24,007
21,612
Motor
4,066
3,956
Multi-Risk Housing
8,516
7,753
Others
1,843
1,660
38,432
34,981
83,023
83,646
Remuneration from insurance intermediation services was received through bank transfers and resulted from insurance
intermediation with Ocidental - Companhia Portuguesa de Seguros de Vida, S.A. and Ageas Portugal - Companhia de
Seguros, S.A. (Millenniumbcp Ageas Group). The Group does not collect insurance premiums on behalf of Insurance
Companies nor performs any movement of funds related to insurance contracts. Thus, there is no other asset, liability,
income or expense to be reported related to the activity of insurance mediation exercised by the Group, other than
those already disclosed.
The receivable balances from insurance intermediation activities, by nature, are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Funds receivable for payment of life insurance commissions
10,546
11,467
Funds receivable for payment of non-life insurance commissions
9,713
8,835
20,259
20,302
The commissions received result from insurance mediation contracts and investment contracts, under the terms
established in the contracts in force. The mediation commissions are calculated according to the nature of the
contracts subject to mediation, as follows:
- insurance contracts \u2013 use of fixed rates on gross premiums issued;
- investment contracts \u2013 use of fixed rates on the responsibilities assumed by the insurance company under the
commercialisation of these products.
D) Transactions with the Pension Fund
The balances with the Pension Fund included in items of the consolidated balance sheet are as follows:
(Thousands of euros)
2023
2022
(restated)
Assets
Financial assets held for trading
\u2014
209
\u2014
209
Liabilities
Resources from customers
54,850
145,303
Non subordinated debt securities issued
9,075
13,199
Financial liabilities held for trading
\u2014
3,475
Other liabilities
231
\u2014
64,156
161,977
In 2023 and 2022, there were no transactions related to other financial instruments between the Group and the Pension
Fund.
Income and expenses with the Pension Fund included in the items of the consolidated income statement are as follows:
(Thousands of euros)
2023
2022
(restated)
Income
Commissions
1,073
2,167
Expenses
Interest expense and similar charges
102
\u2014
Other administrative costs
15,118
14,227
15,220
14,227
The balance Other administrative costs corresponds to rents incurred under the scope of the Pension Fund's properties
in which the tenant is the Group.
As at 31\u00a0December 2023 and 2022, the guarantees granted by the Group to the Pension Fund amount to Euros 5,000.
Consolidated Balance sheet and Income statement by geographic and
operational segments
The segments presented are in accordance with IFRS 8. In accordance with the Group's management model, the
segments presented correspond to the segments used for management purposes by the Executive Committee. The
Group offers a wide range of banking activities and financial services in Portugal and abroad, with a special focus on
Commercial Banking, Companies Banking and Private Banking.
Segments description
A. Geographical Segments
The Group operates in the Portuguese market, and also in a few affinity markets with recognised growth potential.
Considering this, the geographical segments are structured in Portugal and Foreign Business (Poland, Mozambique and
Other). Portugal segment reflects, essentially, the activities carried out by Banco Comercial Portugu\u00eas in Portugal and
ActivoBank.
Portugal activity includes the following segments: i) Retail Banking; ii) Companies and Corporate; iii) Private Banking
and iv) Other.
Retail Banking includes the following business areas:
- Retail network, which ensures the monitoring of individual customers, entrepreneurs, merchants and small and
medium enterprises with a turnover less than Euros 2.5 million. The Retail network strategic approach is to target
\u201cMass Market\u201d customers, who appreciate a value proposal based on innovation and speed, as well as Prestige and
Small Business customers, whose specific characteristics, financial assets or income imply a value proposal based on
innovation and personalisation, requiring a dedicated Account Manager;
- Retail Recovery Division that accompanies and manages the responsibilities of customers or economic groups in
effective default, as well as customers with bankruptcy requirement or other similar mechanisms, looking through the
conclusion of agreements or payment restructuring processes that minimizes the economic loss to the Bank; and
- ActivoBank, a bank focused on clients who are young, intensive users of new communication technologies and who
prefer a banking relationship based on simplicity, offering modern products and services.
Companies and Corporate segment includes:
- Companies and Corporate network, which monitors clients included in the corporate segment, economic groups and
institutional entities, with a turnover higher than Euros 2.5 million, offering a wide range of traditional banking
products complemented by specialised financing;
- Large Corporate network that assures the relationship and the monitoring of a set of Groups / Clients, which in
addition to Portugal, develop their activity in several geographies (Poland, Angola, Mozambique and East), providing a
complete range of value-added products and services;
- Specialised Monitoring Division which carries out the monitorisation of business groups that have high and complex
credit exposures or that show relevant signs of impairment, in order to defend the value and managing credit risk, in
a sustainable medium and long term perspective;
\u2013 Specialised Recovery Division which ensures efficient tracking of customers with predictable or effective high risk of
credit, from Companies, Corporate, Large Corporate and retail networks (exposure exceeding Euros 1 million);
- Investment Banking unit, that ensures the offer of products and specific services, in particular financial advice,
including corporate finance services, capital market transactions and analysis and financing structuring in the medium
to long term;
- Interfundos with the activity of management of real estate investment funds;
- Specialized Credit and Real Estate Department, with the mission of managing the Group's foreclosed assets portfolio,
referred as non-performing assets, in order to place them back to the market.
- Treasury, Markets and International Department, which coordinates business with banks and financial institutions in
order to better serve the Bank's commercial networks and operations abroad. This unit has a dynamic emphasis that
promotes international business within commercial networks, aiming to be a partner for clients for internationalization.
It also provides securities custody services to resident and non-resident clients, and grants the Bank's intervention in
the financial markets, providing commercial services for treasury and markets products and managing the financial risks
inherent to the Bank's activity.
The Private Banking segment, for the purposes of geographical segments, comprises:
- Private Banking Division in Portugal, which ensures the monitoring of clients with high net worth, based on a
commitment to excellence and a personalized relationship with clients;
- Wealth Management Division, which provides advisory customer services and portfolio management for clients in the
Private Banking network and the affluent segment.
For the purposes of business segments, the Private Banking segment also includes Millennium bcp Bank & Trust in
Cayman Islands (entity liquidated in 2022) that is considered Foreign Business on geographical segmentation.
All other businesses not previously discriminated are allocated to the Other segment (Portugal) and include centralized
management of financial investments, corporate activities and operations not integrated in the remaining business
segments and other amounts not allocated to segments.
Foreign Business includes the following segments:
- Poland, where the Group is represented by Bank Millennium, a universal bank offering a wide range of financial
products and services to individuals and companies nationwide;
- Mozambique, where the Group is represented by BIM \u2013 Banco Internacional de Mo\u00e7ambique, a universal bank targeting
companies and individual customers; and
- Other, which includes the contribution of the associate in Angola and the contribution of the discontinued operation
in Cayman Islands.
B. Business Segments
For the purposes of business segments reporting, Foreign Business segment comprises the Group\u2019s operations developed
in other countries already mentioned excluding the activity of Millennium bcp Bank & Trust in the Cayman Islands
(entity liquidated) which, in this context, is considered in Private Banking segment.
Business segments activity
The figures reported for each segment resulted from aggregating the subsidiaries and business units integrated in each
segment. For the business units in Portugal, the aggregation process reflects the impact from capital allocation and
balancing process in the balance sheet and income statement, based on average figures. The balance sheet headings
for each business unit in Portugal were calculated considering the allocation process, based on the regulatory solvency
criteria.
Considering that the process of capital allocation complies with the regulatory criteria of solvency in force, as at 31
December 2023 and 31 December 2022 the risk weighted assets, and consequently the capital allocated to the business
segments, are determined in accordance with the Basel III framework, pursuant to the CRD IV/CRR. The capital
allocated to each segment resulted from the application of a target capital ratio to the risks managed by each segment,
reflecting the application of the Basel III methodology previously referred. Each operation is balanced through internal
transfers of funds, with impact on the net interest income and income taxes of each segment, hence with no impact on
consolidated accounts.
Commissions and other net income, as well as operating costs calculated for each business area, are based on the
amounts accounted for directly in the respective cost centres, on the one hand, and the amounts resulting from
internal processes for allocating revenues and costs, for another. In this case, the allocation is based on the application
of pre-defined criteria related to the level of activity of each business area.
The following information has been prepared based on the individual and consolidated financial statements of the
Group prepared in accordance with international financial reporting standards (IFRS), as adopted by the European
Union (EU), at the reference date and with the Organization of the Group's business areas in force on 31 December
2023. Information relating to prior periods is restated whenever changes in the internal organization of the entity are
likely to change the composition of the reportable segments (business and geographical) or relevant changes in the
dynamics of allocation of indirect revenues and costs, as described in the previous paragraph, ensuring the
comparability of the information provided in the reported periods.
The information in the financial statements of reportable segments is reconciled, at the level of the total revenue of
those same segments, with the revenue from the demonstration of the consolidated financial position of the reportable
entity for each date on which is lodged a statement of financial position.
As at 31 December 2023, the net contribution of the major business segments, for the income statement, is analysed as
follows:
(Thousands of euros)
2023
Commercial banking
Companies
and
Corporate in
Portugal
Retail in
Portugal
Foreign
business (1)
Total
Private
banking
Other
Consolidated
INCOME STATEMENT
Net interest income
881,859
1,359,093
2,240,952
206,539
34,834
343,399
2,825,724
Net fees and commissions income
435,629
211,395
647,024
141,435
32,370
(49,156)
771,673
Other net income
12,535
26,414
38,949
10,609
49
(88,213)
(38,606)
Net gains arising from trading
activity (2)
1,513
131,939
133,452
106
67
11,190
144,815
Dividends from equity instruments
\u2014
756
756
\u2014
\u2014
1,027
1,783
Share of profit of associates under
the equity method
\u2014
4,651
4,651
\u2014
\u2014
59,615
64,266
Net operating revenue
1,331,536
1,734,248
3,065,784
358,689
67,320
277,862
3,769,655
Operating expenses
356,321
545,894
902,215
61,930
14,960
183,446
1,162,551
Results on modification (3)
\u2014
(19,426)
(19,426)
\u2014
\u2014
\u2014
(19,426)
Impairment for credit and financial
assets (4)
(44,223)
(36,782)
(81,005)
(154,511)
(178)
(14,290)
(249,984)
Other impairments and provisions (5)
(98)
(694,696)
(694,794)
\u2014
\u2014
(155,068)
(849,862)
Net income before income tax
930,894
437,450
1,368,344
142,248
52,182
(74,942)
1,487,832
Income tax
(291,370)
(206,268)
(497,638)
(44,524)
(16,333)
21,124
(537,371)
Net income after income tax
from continuing operations
639,524
231,182
870,706
97,724
35,849
(53,818)
950,461
Income arising from discontinued
operations
\u2014
\u2014
\u2014
\u2014
(2,843)
(9)
(2,852)
Net income for the year
639,524
231,182
870,706
97,724
33,006
(53,827)
947,609
Non-controlling interests
\u2014
(97,148)
(97,148)
\u2014
\u2014
5,589
(91,559)
Net income for the year
attributable to Bank's Shareholders
639,524
134,034
773,558
97,724
33,006
(48,238)
856,050
(1) Includes the contribution associated with the\u00a0 investments held in Angola, in Banco Millennium Atl\u00e2ntico.
(2) Includes results from financial operations at fair value through profit or loss, results from foreign exchange, results from hedge accounting
operations and results arising from derecognition of financial assets and liabilities not measured at fair value through profit or loss.
(3) Includes the results of contractual amendments, namely, costs arising from negotiations with customers holding mortgage loans in foreign
currency.
(4) Includes impairment of financial assets at amortised cost, for loans to customers (net of recoveries - principal and accrual) and for debt
instruments related to credit operations. It also includes impairment of financial assets (at fair value through other comprehensive income and
at amortised cost not associated with credit operations).
(5) Includes impairment of non-current assets held for sale, investments in associated companies, goodwill, other assets and provisions,
highlighting the provisions for legal proceedings related to mortgage loans granted in Swiss francs, booked by the Polish subsidiary.
As at 31 December 2023, the net contribution of the major operational Segments, for the balance sheet, is analysed as
follows:
(Thousands of euros)
2023
Commercial banking
Companies
and
Corporate in
Portugal
Retail in
Portugal
Foreign
business
Total
Private
banking
Other
Consolidated
BALANCE SHEET
Cash and Loans and advances to
credit institutions
14,390,981
2,803,205
17,194,186
1,255,995
2,371,683
(15,030,174)
5,791,690
Loans and advances to customers (1)
26,002,815
17,581,929
43,584,744
11,097,187
333,393
202,643
55,217,967
Financial assets (2)
\u2014
10,269,402
10,269,402
\u2014
\u2014
17,594,007
27,863,409
Other assets
\u2014
1,000,590
1,000,590
\u2014
\u2014
4,506,122
5,506,712
Total Assets
40,393,796
31,655,126
72,048,922
12,353,182
2,705,076
7,272,598
94,379,778
Resources from\u00a0 credit institutions
(3)
259,026
151,175
410,201
1,618,782
\u2014
(1,199,857)
829,126
Resources from customers (4)
37,934,752
26,764,909
64,699,661
9,463,888
2,545,353
1,218,911
77,927,813
Debt securities issued (5)
1,144,133
763,831
1,907,964
1,408
133,442
1,957,355
4,000,169
Other financial liabilities (6)
\u2014
538,311
538,311
\u2014
\u2014
1,134,326
1,672,637
Other liabilities (7)
\u2014
1,268,020
1,268,020
\u2014
\u2014
1,382,515
2,650,535
Total Liabilities
39,337,911
29,486,246
68,824,157
11,084,078
2,678,795
4,493,250
87,080,280
Total Equity
1,055,885
2,168,880
3,224,765
1,269,104
26,281
2,779,348
7,299,498
Total Liabilities and Equity
40,393,796
31,655,126
72,048,922
12,353,182
2,705,076
7,272,598
94,379,778
Number of employees
3,599
9,446
13,045
440
106
2,097
15,688
(1) Includes loans to customers at amortised cost net of impairment, debt instruments at amortised cost associated to credit operations net of
impairment and balance sheet amount of loans to customers at fair value through profit or loss.
(2) Includes debt instruments at amortised cost not associated with credit operations (net of impairment), financial assets at fair value through
profit or loss (excluding the ones related to loans to customers), financial assets at fair value through other comprehensive income and hedging
derivatives.
(3) Includes resources and other financing from central banks and resources from other credit institutions.
(4) Corresponds to deposits and other resources from customers (including resources from customers at amortised cost and customer deposits at
fair value through profit or loss).
(5) Includes non-subordinated debt securities at amortized cost and financial liabilities at fair value through profit or loss (debt securities and
certificates).
(6) Includes financial liabilities held for trading, subordinated debt and hedging derivatives.
(7) Includes provisions, current and deferred tax liabilities and other liabilities.
As at 31 December 2022, the net contribution of the major business segments, for the income statement, is analysed as
follows:
(Thousands of euros)
2022 (restated)
Commercial banking
Companies
and
Corporate in
Portugal
Private
banking
Other
Consolidated
Retail in
Portugal
Foreign
business
(1)
Total
INCOME STATEMENT
Net interest income
621,413
1,197,822
1,819,235
202,754
21,116
106,667
2,149,772
Net fees and commissions income
421,398
211,325
632,723
149,029
32,368
(42,212)
771,908
Other net income
21,634
(106,637)
(85,003)
40,768
(10)
(138,700)
(182,945)
Net gains arising from trading activity
(2)
2,680
(19,299)
(16,619)
69
182
66,328
49,960
Dividends from equity instruments
\u2014
811
811
\u2014
\u2014
9,275
10,086
Share of profit of associates under the
equity method
\u2014
925
925
\u2014
\u2014
57,686
58,611
Net operating revenue
1,067,125
1,284,947
2,352,072
392,620
53,656
59,044
2,857,392
Operating expenses
328,887
470,347
799,234
57,615
15,299
200,870
1,073,018
Results on modification (3)
\u2014
(309,865)
(309,865)
\u2014
\u2014
\u2014
(309,865)
Impairment for credit and financial
assets (4)
(66,953)
(82,394)
(149,347)
(149,529)
591
2,156
(296,129)
Other impairments and provisions (5)
(394)
(550,085)
(550,479)
\u2014
\u2014
(209,554)
(760,033)
Net income before income tax
670,891
(127,744)
543,147
185,476
38,948
(349,224)
418,347
Income tax
(209,989)
(96,742)
(306,731)
(58,054)
(12,172)
72,637
(304,320)
Net income after income tax
from continuing operations
460,902
(224,486)
236,416
127,422
26,776
(276,587)
114,027
Income arising from discontinued
operations
\u2014
3,772
3,772
\u2014
1,765
\u2014
5,537
Net income for the year
460,902
(220,714)
240,188
127,422
28,541
(276,587)
119,564
Non-controlling interests
\u2014
72,802
72,802
\u2014
\u2014
5,020
77,822
Net income for the year attributable
to Bank's Shareholders
460,902
(147,912)
312,990
127,422
28,541
(271,567)
197,386
(1) Includes the contribution associated with the\u00a0 investments held in Angola, in Banco Millennium Atl\u00e2ntico.
(2) Includes results from financial operations at fair value through profit or loss, results from foreign exchange, results from hedge accounting
operations and results arising from derecognition of financial assets and liabilities not measured at fair value through profit or loss.
(3) Results mainly from the amount associated to potential costs arising from the moratorium program in Poland (credit holidays). It's also
included the results of contractual amendments, namely, costs arising from negotiations with customers holding mortgage loans in foreign
currency.
(4) Includes impairment of financial assets at amortised cost, for loans to customers (net of recoveries - principal and accrual) and for debt
instruments related to credit operations. It also includes impairment of financial assets (at fair value through other comprehensive income and
at amortised cost not associated with credit operations).
(5) Includes impairment of non-current assets held for sale, investments in associated companies, goodwill, other assets and provisions,
highlighting the provisions for legal proceedings related to mortgage loans granted in Swiss francs, booked by the Polish subsidiary.
As at 31 December 2022, the net contribution of the major operational Segments, for the balance sheet, is analysed as
follows:
(Thousands of euros)
2022 (restated)
Commercial banking
Companies
and
Corporate in
Portugal
Retail in
Portugal
Foreign
business
Total
Private
banking
Other
Consolidated
BALANCE SHEET
Cash and Loans and advances to
credit institutions
14,496,145
3,208,230
17,704,375
2,405,941
2,427,179
(15,338,600)
7,198,895
Loans and advances to customers (1)
26,360,608
16,983,242
43,343,850
11,751,456
345,264
757,114
56,197,684
Financial assets (2)
\u2014
5,458,513
5,458,513
\u2014
\u2014
14,895,710
20,354,223
Other assets
\u2014
942,640
942,640
\u2014
\u2014
5,183,301
6,125,941
Total Assets
40,856,753
26,592,625
67,449,378
14,157,397
2,772,443
5,497,525
89,876,743
Resources from\u00a0 credit institutions (3)
229,245
158,808
388,053
1,140,782
\u2014
(60,475)
1,468,360
Resources from customers (4)
38,537,857
23,173,054
61,710,911
11,539,455
2,605,487
50,961
75,906,814
Debt securities issued (5)
1,201,403
52,066
1,253,469
\u2014
141,613
1,428,011
2,823,093
Other financial liabilities (6)
\u2014
535,648
535,648
\u2014
\u2014
1,216,914
1,752,562
Other liabilities (7)
\u2014
907,471
907,471
\u2014
\u2014
1,081,676
1,989,147
Total Liabilities
39,968,505
24,827,047
64,795,552
12,680,237
2,747,100
3,717,087
83,939,976
Total Equity
888,248
1,765,578
2,653,826
1,477,160
25,343
1,780,438
5,936,767
Total Liabilities and Equity
40,856,753
26,592,625
67,449,378
14,157,397
2,772,443
5,497,525
89,876,743
Number of employees
3,519
9,491
13,010
444
140
2,149
15,743
(1) Includes loans to customers at amortised cost net of impairment, debt instruments at amortised cost associated to credit operations net of
impairment and balance sheet amount of loans to customers at fair value through profit or loss.
(2) Includes debt instruments at amortised cost not associated with credit operations (net of impairment), financial assets at fair value through
profit or loss (excluding the ones related to loans to customers), financial assets at fair value through other comprehensive income and hedging
derivatives.
(3) Includes resources and other financing from central banks and resources from other credit institutions.
(4) Corresponds to deposits and other resources from customers (including resources from customers at amortised cost and customer deposits at
fair value through profit or loss).
(5) Includes non-subordinated debt securities at amortized cost and financial liabilities at fair value through profit or loss (debt securities and
certificates).
(6) Includes financial liabilities held for trading, subordinated debt and hedging derivatives.
(7) Includes provisions, current and deferred tax liabilities and other liabilities.
As at 31 December 2023, the net contribution of the major geographic segments, for the income statement, is analysed
as follows:
(Thousands of euros)
2023
Portugal
Retail
banking
Companies
and
Corporate
Private
banking
Other
Total
Poland
Mozambique
Other (1)
Consolidated
INCOME STATEMENT
Net interest income
881,859
206,539
34,834
343,399
1,466,631
1,157,256
201,837
\u2014
2,825,724
Net fees and commissions
income
435,629
141,435
32,370
(49,156)
560,278
172,346
39,049
\u2014
771,673
Other net income
12,535
10,609
49
(88,213)
(65,020)
21,822
4,592
\u2014
(38,606)
Net gains arising from trading
activity (2)
1,513
106
67
11,190
12,876
115,625
16,314
\u2014
144,815
Dividends from equity
instruments
\u2014
\u2014
\u2014
1,027
1,027
756
\u2014
\u2014
1,783
Share of profit of associates
under the equity method
\u2014
\u2014
\u2014
59,615
59,615
\u2014
1,942
2,709
64,266
Net operating revenue
1,331,536
358,689
67,320
277,862
2,035,407
1,467,805
263,734
2,709
3,769,655
Operating expenses
356,321
61,930
14,960
183,446
616,657
420,211
125,683
\u2014
1,162,551
Results on modification (3)
\u2014
\u2014
\u2014
\u2014
\u2014
(19,426)
\u2014
\u2014
(19,426)
Impairment for credit and
financial assets (4)
(44,223)
(154,511)
(178)
(14,290)
(213,202)
(57,192)
20,410
\u2014
(249,984)
Other impairments and
provisions (5)
(98)
\u2014
\u2014
(155,068)
(155,166)
(681,857)
(12,839)
\u2014
(849,862)
Net income before income
tax
930,894
142,248
52,182
(74,942)
1,050,382
289,119
145,622
2,709
1,487,832
Income tax
(291,370)
(44,524)
(16,333)
21,124
(331,103)
(162,298)
(43,970)
\u2014
(537,371)
Net income after income tax
from continuing operations
639,524
97,724
35,849
(53,818)
719,279
126,821
101,652
2,709
950,461
Income arising from
discontinued operations
\u2014
\u2014
\u2014
(9)
(9)
\u2014
\u2014
(2,843)
(2,852)
Net income for the year
639,524
97,724
35,849
(53,827)
719,270
126,821
101,652
(134)
947,609
Non-controlling interests
\u2014
\u2014
\u2014
5,589
5,589
(63,283)
(33,865)
\u2014
(91,559)
Net income for the year
attributable to Bank's
Shareholders
639,524
97,724
35,849
(48,238)
724,859
63,538
67,787
(134)
856,050
(1) Includes the contribution associated with the\u00a0 investments held in Angola, in Banco Millennium Atl\u00e2ntico.
(2) Includes results from financial operations at fair value through profit or loss, results from foreign exchange, results from hedge accounting
operations and results arising from derecognition of financial assets and liabilities not measured at fair value through profit or loss.
(3) Includes the results of contractual amendments, namely, costs arising from negotiations with customers holding mortgage loans in foreign
currency.
(4) Includes impairment of financial assets at amortised cost for loans to customers (net of recoveries - principal and accrual) and for debt
instruments related to credit operations. It also includes impairment of financial assets at amortised cost not associated with credit operations.
(5) Includes impairment of non-current assets held for sale, investments in associated companies, goodwill, other assets and provisions,
highlighting the provisions for legal proceedings related to mortgage loans granted in Swiss francs, booked by the Polish subsidiary.
As at 31 December 2023, the net contribution of the major geographic segments, for the balance sheet is analysed as
follows:
(Thousands of euros)
2023
Portugal
Retail
banking
Companies
and
Corporate
Private
banking
Other
Total
Poland
Mozambique
Other (1)
Consolidated
BALANCE SHEET
Cash and Loans and
advances to credit
institutions
14,390,981
1,255,995
2,371,683
(15,030,174)
2,988,485
1,621,924
1,181,281
\u2014
5,791,690
Loans and advances to
customers (1)
26,002,815
11,097,187
333,393
202,643
37,636,038
16,955,492
626,437
\u2014
55,217,967
Financial assets (2)
\u2014
\u2014
\u2014
17,594,007
17,594,007
9,594,785
674,653
(36)
27,863,409
Other assets
\u2014
\u2014
\u2014
4,506,122
4,506,122
724,823
228,803
46,964
5,506,712
Total Assets
40,393,796
12,353,182
2,705,076
7,272,598
62,724,652
28,897,024
2,711,174
46,928
94,379,778
Resources from other
credit institutions (3)
259,026
1,618,782
\u2014
(1,199,857)
677,951
130,131
21,044
\u2014
829,126
Resources from
customers (4)
37,934,752
9,463,888
2,545,353
1,218,911
51,162,904
24,689,709
2,075,200
\u2014
77,927,813
Debt securities issued (5)
1,144,133
1,408
133,442
1,957,355
3,236,338
763,831
\u2014
\u2014
4,000,169
Other financial liabilities
(6)
\u2014
\u2014
\u2014
1,134,326
1,134,326
538,311
\u2014
\u2014
1,672,637
Other liabilities (7)
\u2014
\u2014
\u2014
1,382,515
1,382,515
1,187,710
80,310
\u2014
2,650,535
Total Liabilities
39,337,911
11,084,078
2,678,795
4,493,250
57,594,034
27,309,692
2,176,554
\u2014
87,080,280
Total Equity
1,055,885
1,269,104
26,281
2,779,348
5,130,618
1,587,332
534,620
46,928
7,299,498
Total Liabilities and
Equity
40,393,796
12,353,182
2,705,076
7,272,598
62,724,652
28,897,024
2,711,174
46,928
94,379,778
Number of employees
3,599
440
106
2,097
6,242
6,872
2,574
0
15,688
1) Includes loans to customers at amortised cost net of impairment, debt instruments at amortised cost associated to credit operations net of
impairment and balance sheet amount of loans to customers at fair value through profit or loss.
2) Includes debt instruments at amortised cost not associated with credit operations (net of impairment), financial assets at fair value through
profit or loss (excluding the ones related to loans to customers), financial assets at fair value through other comprehensive income and hedging
derivatives.
3) Includes resources and other financing from central banks and resources from other credit institutions.
4) Corresponds to deposits and other resources from customers (including resources from customers at amortised cost and customer deposits at
fair value through profit or loss).
5) Includes non-subordinated debt securities at amortized cost and financial liabilities at fair value through profit or loss (debt securities and
certificates).
6) Includes financial liabilities held for trading, subordinated debt and hedging derivatives.
7) Includes provisions, current and deferred tax liabilities and other liabilities.
As at 31 December 2022, the net contribution of the major geographic segments, for the\u00a0 income statement, is
analysed as follows:
(Thousands of euros)
2022 (restated)
Portugal
Retail
banking
Companies
and
Corporate
Private
banking
Other
Total
Poland
Mozambique
Other (1)
Consolidated
INCOME STATEMENT
Net interest income
621,413
202,754
20,144
106,667
950,978
995,565
202,257
972
2,149,772
Net fees and commissions
income
421,398
149,029
32,343
(42,212)
560,558
172,631
38,694
25
771,908
Other net income
21,634
40,768
24
(138,700)
(76,274)
(109,088)
2,451
(34)
(182,945)
Net gains arising from trading
activity (2)
2,680
69
162
66,328
69,239
(40,130)
20,830
21
49,960
Dividends from equity
instruments
\u2014
\u2014
\u2014
9,275
9,275
811
\u2014
\u2014
10,086
Share of profit of associates
under the equity method
\u2014
\u2014
\u2014
57,686
57,686
\u2014
1,841
(916)
58,611
Net operating revenue
1,067,125
392,620
52,673
59,044
1,571,462
1,019,789
266,073
68
2,857,392
Operating expenses
328,887
57,615
14,376
200,870
601,748
357,092
113,255
923
1,073,018
Results on modification (3)
\u2014
\u2014
\u2014
\u2014
\u2014
(309,865)
\u2014
\u2014
(309,865)
Impairment for credit and
financial assets (4)
(66,953)
(149,529)
591
2,156
(213,735)
(74,067)
(8,327)
\u2014
(296,129)
Other impairments and
provisions (5)
(394)
\u2014
\u2014
(209,554)
(209,948)
(537,143)
(6,506)
(6,436)
(760,033)
Net income before income
tax
670,891
185,476
38,888
(349,224)
546,031
(258,378)
137,985
(7,291)
418,347
Income tax
(209,989)
(58,054)
(12,172)
72,637
(207,578)
(60,614)
(36,128)
\u2014
(304,320)
Net income after income tax
from continuing operations
460,902
127,422
26,716
(276,587)
338,453
(318,992)
101,857
(7,291)
114,027
Income arising from
discontinued operations
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
3,772
1,765
5,537
Net income for the period
460,902
127,422
26,716
(276,587)
338,453
(318,992)
105,629
(5,526)
119,564
Non-controlling interests
\u2014
\u2014
\u2014
5,020
5,020
108,125
(35,323)
\u2014
77,822
Net income for the period
attributable to Bank's
Shareholders
460,902
127,422
26,716
(271,567)
343,473
(210,867)
70,306
(5,526)
197,386
(1) Includes the contribution associated with the\u00a0 investments held in Angola, in Banco Millennium Atl\u00e2ntico.
(2) Includes results from financial operations at fair value through profit or loss, results from foreign exchange, results from hedge accounting
operations and results arising from derecognition of financial assets and liabilities not measured at fair value through profit or loss.
(3) ) Results mainly from the amount associated to potential costs arising from the moratorium program in Poland (credit holidays). It's also
included the results of contractual amendments, namely, costs arising from negotiations with customers holding mortgage loans in foreign
currency.
(4) Includes impairment of financial assets at amortised cost for loans to customers (net of recoveries - principal and accrual) and for debt
instruments related to credit operations. It also includes impairment of financial assets at amortised cost not associated with credit operations.
(5) Includes impairment of non-current assets held for sale, investments in associated companies, goodwill, other assets and provisions,
highlighting the provisions for legal proceedings related to mortgage loans granted in Swiss francs, booked by the Polish subsidiary.
As at 31 December 2022, the net contribution of the major geographic segments, for the balance sheet is analysed as
follows:
(Thousands of euros)
2022 (restated)
Portugal
Retail
banking
Companies
and
Corporate
Private
banking
Other
Total
Poland
Mozambique
Other (1)
Consolidated
BALANCE SHEET
Cash and Loans and
advances to credit
institutions
14,496,145
2,405,941
2,427,179
(15,338,600)
3,990,665
2,193,520
1,014,710
\u2014
7,198,895
Loans and advances to
customers (1)
26,360,608
11,751,456
345,264
757,114
39,214,442
16,355,525
627,717
\u2014
56,197,684
Financial assets (2)
\u2014
\u2014
\u2014
14,895,710
14,895,710
4,506,830
951,716
(33)
20,354,223
Other assets
\u2014
\u2014
\u2014
5,183,301
5,183,301
641,572
230,266
70,802
6,125,941
Total Assets
40,856,753
14,157,397
2,772,443
5,497,525
63,284,118
23,697,447
2,824,409
70,769
89,876,743
Resources from other
credit institutions (3)
229,245
1,140,782
\u2014
(60,475)
1,309,552
155,411
3,397
\u2014
1,468,360
Resources from
customers (4)
38,537,857
11,539,455
2,605,487
50,961
52,733,760
20,941,241
2,231,813
\u2014
75,906,814
Debt securities issued (5)
1,201,403
\u2014
141,613
1,428,011
2,771,027
52,066
\u2014
\u2014
2,823,093
Other financial
liabilities (6)
\u2014
\u2014
\u2014
1,216,914
1,216,914
535,648
\u2014
\u2014
1,752,562
Other liabilities (7)
\u2014
\u2014
\u2014
1,081,676
1,081,676
839,464
68,007
\u2014
1,989,147
Total Liabilities
39,968,505
12,680,237
2,747,100
3,717,087
59,112,929
22,523,830
2,303,217
\u2014
83,939,976
Total Equity
888,248
1,477,160
25,343
1,780,438
4,171,189
1,173,617
521,192
70,769
5,936,767
Total Liabilities and
Equity
40,856,753
14,157,397
2,772,443
5,497,525
63,284,118
23,697,447
2,824,409
70,769
89,876,743
Number of employees
3,519
444
140
2,149
6,252
6,987
2,504
0
15,743
1) Includes loans to customers at amortised cost net of impairment, debt instruments at amortised cost associated to credit operations net of
impairment and balance sheet amount of loans to customers at fair value through profit or loss.
2) Includes debt instruments at amortised cost not associated with credit operations (net of impairment), financial assets at fair value through
profit or loss (excluding the ones related to loans to customers), financial assets at fair value through other comprehensive income and hedging
derivatives.
3) Includes resources and other financing from central banks and resources from other credit institutions.
4) Corresponds to deposits and other resources from customers (including resources from customers at amortised cost and customer deposits at
fair value through profit or loss).
5) Includes non-subordinated debt securities at amortized cost and financial liabilities at fair value through profit or loss (debt securities and
certificates).
6) Includes financial liabilities held for trading, subordinated debt and hedging derivatives.
7) Includes provisions, current and deferred tax liabilities and other liabilities.
Reconciliation of net income of reportable segments with the net income attributable to
shareholders
(Thousands of euros)
2023
2022
(restated)
Net contribution
Retail banking in Portugal
639,524
460,902
Companies and Corporate
97,724
127,422
Private Banking
35,849
26,716
Foreign business (continuing operations)
231,182
(224,426)
Non-controlling interests (1)
(97,148)
72,802
907,131
463,416
Income arising from discontinued or discontinuing operations
(2,843)
5,537
904,288
468,953
Amounts not allocated to segments
Net interest income - bonds portfolio
325,921
105,777
Net interest income - others (2)
17,478
890
Foreign exchange activity
17,005
39,603
Gains / (losses) arising from sales of subsidiaries and other assets
3,098
(26,440)
Equity accounted earnings
59,614
57,686
Impairment and other provisions (3)
(169,358)
(207,397)
Operational costs
(183,446)
(200,870)
Gains on sale of Portuguese public debt
(8,181)
(24,336)
Gains on sale of foreign public debt
31
15,404
Mandatory contributions
(72,583)
(88,528)
Loans sale
(5,242)
8,357
Income from other financial assets not held for trading mandatorily
at fair value through profit or loss (4)
(5,834)
3,473
Taxes (5)
21,124
72,637
Income from discontinued operations
(9)
\u2014
Non-controlling interests
5,589
5,020
Others (6)
(53,445)
(32,843)
Total not allocated to segments
(48,238)
(271,567)
Consolidated net income
856,050
197,386
(1) Corresponds mainly to the income attributable to third parties related to the subsidiaries in Poland and in Mozambique.
(2) Includes net interest income arising from internal transfer of liquidity, interest rate risk, cost of wholesale funding and others.
(3) Includes impairments for non-current assets held for sale, impairments for other assets, provisions for administrative infractions, various
contingencies and other impairments and/or provisions not allocated to business segments.
(4) Includes gains/(losses) from corporate restructuring funds.
(5) Includes deferred tax revenue, net of current non-segment tax expense, namely the tax effect associated with the impacts of the previous
items.
(6) It includes other operations not allocated previously namely funding for non-interest bearing assets and strategic financial investments.
Solvency
The Group\u2019s own funds are determined according to the established regulation, in particular, according to Directive
2013/36/EU and Regulation (EU) 575/2013, approved by the European Parliament and the Council (CRD IV/CRR).
Total capital includes tier 1 and tier 2. Tier 1 comprises common equity tier 1 (CET1) and additional tier 1.
Common equity tier 1 includes: (i) paid-up capital, share premium, reserves and retained earnings deducted
anticipated dividends and non-controlling interests; ii) and deductions related to own shares and loans to finance the
acquisition of shares of the Bank, the shortfall of value adjustments and provisions to expected losses concerning risk\u2010
weighted exposure amounts calculated according to the IRB approach, goodwill and other intangible assets and the
additional value adjustments necessary for the prudent valuation requirements applied to all assets at fair value,
adjustments related to minimum commitment with collective investments undertakings, insufficient coverage for non-
performing exposures and with the amount of securitisation positions, eligible for deduction as an alternative to a 1 250
% risk weight. Reserves and retained earnings are adjusted by the reversal of unrealised gains and losses on cash-flow
hedge transactions and on financial liabilities valued at fair value through profits and losses, to the extent related to
own credit risk. The non-controlling interests are only eligible up to the amount of the Group\u2019s capital requirements
attributable to the minorities. In addition, the deferred tax assets arising from unused tax losses carried forward are
deducted, as well as the deferred tax assets arising from temporary differences relying on the future profitability and
the interests held in financial institutions and insurers of at least 10%, in this case only in the amount that exceeds the
thresholds of 10% and 15% of the common equity tier 1, when analysed on an individual and aggregated basis,
respectively. The irrevocable payment commitments for the Single Resolution Fund, the fair value of the collateral for
irrevocable commitments from the Deposits Guarantee Fund and the additional coverage for non-performing exposures,
are also deducted, due to a SREP (Supervisory Review and Evaluation Process) recommendation.
Additional tier 1 comprises preference shares, hybrid instruments and perpetual bonds representing subordinated debt
that are compliant with the issue conditions established in the Regulation and non-controlling interests related to
minimum level 1 additional capital requirements of institutions that are not totally owned by the Group.
Tier 2 includes the subordinated debt that is compliant with the Regulation and the non-controlling interests related to
minimum total capital requirements of institutions that are not totally owned by the Group. Additionally, Tier 2
instruments held in financial institutions and insurers of at least 10% are deducted.
The legislation in force stipulates a transitional period between the own funds calculated under national law until 31
December 2013, and own funds estimated according to EU law, in order to exclude some elements previously
considered (phase-out) and include new elements (phase-in). The transitional period was extended to the end of 2017
for most of the elements, except for the deferred tax assets already recorded on the balance sheet of 1 January 2014,
according to the new regulation, which period ends in 2023.
With the IFRS9 introduction the Group has decided to gradually recognise the impacts, according to art\u00ba 473\u00ba-A of CRR.
CRD IV/CRR\u00a0 establishes Pilar 1 capital requirements for CET1, Tier 1 and Total Capital. However, under the scope of
SREP , European Central Bank notified BCP about the need to comply with phased-in capital ratios, including additional
Pilar 2 requirements,\u00a0 O-SII and capital conservation buffer, as following:
2023 Minimum Capital Requirements
BCP Consolidated
Phased-in
of which:
Fully
implemented
of which:
Pilar 1
Pilar 2
Buffers
Pilar 1
Pilar 2
Buffers
CET1
9.41%
4.50%
1.41%
3.50%
9.41%
4.50%
1.41%
3.50%
T1
11.38%
6.00%
1.88%
3.50%
11.38%
6.00%
1.88%
3.50%
Total
14.00%
8.00%
2.50%
3.50%
14.00%
8.00%
2.50%
3.50%
The Bank meets all the requirements and other recommendations issued by\u00a0 the supervisor on this matter.
The Group has adopted the methodologies based on internal rating models (IRB) for the calculation of capital
requirements for credit and counterparty risk, covering a substantial part of both its retail portfolio in Portugal and
Poland and its corporate portfolio in Portugal. The Group has adopted the advanced approach (internal model) for the
coverage of trading portfolio\u2019s general market risk and for exchange rate risks generated in exposures in the perimeter
centrally managed from Portugal, and the standard method was used for the purposes of operational risk coverage. The
capital requirements of the other portfolios/geographies were calculated using the standardised approach.
The own funds and the capital requirements determined according to the CRD IV/CRR (phased-in) methodologies
previously referred, are the following:
(Thousands of euros)
2023
2022
(restated)
Common equity tier 1 (CET1)
Share capital
3,000,000
3,000,000
Share Premium
16,471
16,471
Reserves and retained earnings
2,632,602
1,715,797
Non-controlling interests eligible to CET1
475,923
433,767
Regulatory adjustments to CET1
32,342
276,422
6,157,338
5,442,457
Tier 1
Capital Instruments
400,000
400,000
Non-controlling interests eligible to AT1
84,267
96,341
6,641,605
5,938,798
Tier 2
Subordinated debt
1,014,615
1,047,875
Non-controlling interests eligible to Tier 2
225,063
271,800
Other
24,303
20,240
1,263,981
1,339,915
Total own funds
7,905,586
7,278,713
RWA - Risk weighted assets
Credit risk
34,304,305
36,265,788
Market risk
547,022
2,611,404
Operational risk
4,854,039
4,178,551
CVA
45,646
47,016
39,751,012
43,102,759
Capital ratios
CET1
15.5%
12.6%
Tier 1
16.7%
13.8%
Tier 2
3.2%
3.1%
Total own funds
19.9%
16.9%
The presented amounts include the accumulated net income.
Risk Management
The Group is subject to several risks during the course of its business. The risks from different companies of the Group
are managed centrally, in coordination with the local departments and considering the specific risks of each business.
The Group's risk-management policy is designed to permanently ensure an adequate relationship between its own funds
and the business it develops, as well as the corresponding evaluation of the risk/return profile by business line. Under
this scope, the monitoring and control of the main types of financial risks (e.g., credit, market, operational) or non-
financial risks (e.g., legal and compliance, reputational) to which the Group\u2019s business is subject to, including the
impact of the ESG risk drivers (environmental, social and governance).
The Bank implemented a regular process for identifying and assessing the risks to which its activity is exposed, which
conclusions are presented to the management bodies and influence the update of the Group\u2019s risk appetite and risk
strategy.
Internal organisation
The Board of Directors of Banco Comercial Portugu\u00eas is responsible for the definition of the risk strategy and policies,
including the approval of the principles and rules of the highest level to be followed in risk management of the Group,
as well as the guidelines dictating the allocation of capital to the business lines.
The Board of Directors, through the Audit Committee and Committee for Risk Assessment, ensures the existence of
adequate risk control and of risk-management systems at Group level and for each entity. The Board of Directors also
approves the risk-tolerance level acceptable to the Group, proposed by its Executive Committee, hearing the Risk
Assessment Committee.
The Risk Committee is responsible for monitoring the overall levels of risk incurred, ensuring that these are compatible
with the goals and strategies approved for the business. Other commissions regularly monitor specific risks, namely the
Compliance and Operational Risks Commission, the Credit and Non-performing Assets Monitoring Commission, the
Pension Funds Risk Monitoring Commission, the Operational Resilience Commission (with a focus on information
technologies and cybernetics), the Sustainability Commission and the Corporate Risk Monitoring Commission.
The Chief Risk Officer is responsible for the control of risks in all Group entities, for the identification of all risks to
which the Group activity is exposed and for the proposal of measures to improve risks control. The Chief Risk Officer
also ensures that risks are monitored on an overall basis and that there is alignment of concepts, practices and goals in
risk management. The activity of every entity included within the Banco Comercial Portugu\u00eas consolidation perimeter is
governed by the principles and decisions established centrally by the Board of Directors and the main subsidiaries are
provided with Risk Office structures which are established in accordance with the risks inherent to their particular
business. A Risk Control Commission has been set up at each relevant subsidiary, responsible for the control of risks at
local level, in which the Chief Risk Officer takes part.
As Head of the Compliance Office, the Compliance Officer is responsible to ensure that regulatory requirements are
complied with, as well as the ethical values of the organization, fulfilling all the attributions that are legally conferred
to it, ensuring the existence of an internal control culture, thus contributing to the mitigation of the risk of attributing
sanctions or significant asset or reputational damages to the Group Entities, including the compliance with the
regulatory framework on the prevention and combating money laundering and terrorism financing.
Risk assessment
Credit Risk
Credit granting is based on a prior classification of the customers\u2019 risk and on a thorough assessment of the level of
protection provided by the underlying collateral. In order to do so, a single risk-notation system has been introduced,
the Rating Master Scale, based on the expected probability of default, allowing greater discrimination in the
assessment of the customers and better establishment of the hierarchies of the associated risk.
The Rating Master Scale also identifies those customers that show a worsening credit capacity and, in particular, those
classified as being in default. All rating and scoring models used by the Group have been duly calibrated for the Rating
Master Scale. The protection-level concept has been introduced as a crucial element of evaluation of the effectiveness
of the collateral in credit-risk mitigation, leading to a more active collateralization of loans and to a better adequacy
of pricing regarding the risk incurred.
The gross Group\u2019s exposure to credit risk (original exposure) is presented in the following table:
(Thousands of euros)
Risk items
2023
2022
(restated)
Central Governments or Central Banks
26,982,937
22,898,387
Regional Governments or Local Authorities
1,210,789
1,012,723
Administrative and non-profit Organisations
1,098,748
412,223
Multilateral Development Banks
227,711
114,633
Other Credit Institutions
3,283,571
3,279,977
Retail and Corporate customers
67,789,725
69,798,319
Other items (*)
11,597,622
10,153,154
112,191,103
107,669,416
Note: gross exposures of impairment and amortization, in accordance with the prudential consolidation perimeter. Includes securitization
positions.
(*) In addition to positions in equity, collective investment and securitization, the Other items contain other assets subject to credit risk in
accordance with Article 156 of the CRR.
The evaluation of the risk associated to the loan portfolio and quantification of the respective losses expected
considers the following methodological notes.
a) Collaterals and Guarantees
On the risk evaluation of an operation or of a group of operations, the mitigation elements of credit risk associated to
those operations are considered in accordance with the rules and internal procedures that fulfil the requirements
defined by the regulations in force, also reflecting the experience of the loan's recovery areas and the Legal
Department opinions with respect to the entailment of the various mitigation instruments.
The collaterals and the relevant guarantees can be aggregated in the following categories:
- financial collaterals, real estate collaterals or other collaterals;
- receivables;
- first demand guarantees, issued by banks or other entities with Risk Grade 7 or better on the Rating Master Scale;
- personal guarantees when the persons are classified with Risk Grade 7 or better;
- credit derivatives. \u00a0
The financial collaterals accepted are those that are traded in a recognised stock exchange, i.e., on an organized
secondary market, liquid and transparent, with public bid-ask prices, located in countries of the European Union,
United Kingdom, United States, Japan, Canada, Hong Kong or Switzerland.
In this context, it is important to refer that the Bank\u2019s shares are not accepted as financial collaterals of new credit
operations and are only accepted for the reinforcement of guarantees of existing credit operations, or in restructuring
process associated to credit recoveries.
Regarding guarantees and credit derivatives, it can be applied the substitution principle by replacing the Risk Grade of
the client by the Risk Grade of the guarantor, (if the Risk of Grade Degree of the guarantor is better than the client\u2019s),
when the protection is formalized through:
- State, Financial Institutions or Mutual Guarantee Societies guarantees exist;
- personal guarantees (or, in the case of Leasing, there is a recovery agreement of the provider);
- Credit derivatives;
- Formalization of the clause of the contracting party in leasing contracts in which it is an entity that is in a relationship
of dominion or group with the lessee.
An internal level of protection is attributed to all credit operations at the moment of the credit granting decision,
considering the credit amount as well as the value and type of the collaterals involved. The protection level
corresponds to the loss reduction in case of default that is linked to the various collateral types, considering their
market value and the amount of the associated exposure.
In the case of financial collaterals, adjustments are made to the protection value by the use of a set of haircuts, in
order to reflect the price volatility of the financial instruments.
In the case of real estate mortgages, the initial appraisal of the real estate value is done during the credit analysis and
before decision process.
Either the initial evaluations or the subsequent reviews carried out are performed by external expert valuers and the
ratification process is centralized in the Appraisals Unit, which is independent of the clients\u2019 areas.
In any case, they are the subject to a written report, in a standardized digital format, based on a group of predefined
methods that are aligned with the sector practices \u2013 income, replacement cost and/or market comparative -
mentioning the obtained value, for both the market value and for purposes of the mortgage guarantee, depending on
the type of the real estate. The evaluations have a declaration/certification of an expert valuer since 2008, as
requested by Regulation (EU) 575/2013 and Law 153/2015 of 14 September and are ratified by the Appraisals Unit.
Regarding residential real estate, after the initial valuation and in accordance with Notice n. 5/2006 of Bank of
Portugal and e CRR 575/2013, the Bank monitors the respective values through market indexes. If the index is lower
than 0.9, the Bank revaluates choosing one of the following two methods:
i) - depreciation of the property by direct application of the index, if the amount owed does not exceed Euros 300,000;
ii) - review of the property value by external valuators, depending on the value of the credit operation, and in
accordance with the established standards from ECB and Bank of Portugal.
For all non-residential real estate, the Bank also monitors its values through market indexes and to the regular
valuation reviews with the minimum periodicities in accordance with the Regulation (EU) 575/2013, in the case of
offices, commercial spaces, warehouses and industrial premises.
For all real estate (residential or non-residential) for which the monitoring result in significant devaluation of the real
estate value (more than 10%), a valuation review is subsequently carried out by an expert valuer, preserving the
referred i) above.
For the remaining real estate (land or countryside buildings for example) there are no market indexes available for the
monitoring of appraisal values, after the initial valuations. Therefore, for these cases and in accordance with the
minimum periodicity established for the monitoring and reviewing of this type of real estate, valuation reviews are
carried out by expert valuers.
The indexes currently used are supplied to the Bank by an external specialized entity that, for more than a decade, has
been collecting and processing the data upon which the indexes are built.
In the case of financial collaterals, their market value is daily and automatically updated, through the IT connection
between the collaterals management system and the relevant financial markets data.
b) Risk grades
Credit granting is based on the previous risk assessment of clients and also on a rigorous assessment of the protection
level provided by the underlying collaterals. For this purpose, a single risk grading system is used - the Rating Master
Scale - based on Probability of Default (PD), allowing for a greater discriminating power in clients' assessment and for a
better hierarchy of the associated risk. The Rating Master Scale also allows to identify clients that show signs of
degradation in their credit capacity and, in particular, those that are classified in a default situation. All rating systems
and models used by the Group were calibrated for the Rating Master Scale.
Aiming at an adequate assessment of credit risk, the Group defined a set of macro segments and segments which are
treated through different rating systems and models that relate the internal risk grades and the clients\u2019 PD, ensuring a
risk assessment that considers the clients\u2019 specific features in terms of their respectively risk profiles.
The assessment made by these rating systems and models result in the risk grades of the Master Scale, that has fifteen
grades, where the last three correspond to relevant downgrades of the clients\u2019 credit quality and are referred to by
\u201cprocedural risk grades\u201d: 13, 14 and 15, that correspond, in this order, to situations of increased severity in terms
default, as risk grade 15 is a Default situation.
The non-procedural risk grades are attributed by the rating systems through automatic decision models or by the Rating
Division \u2013 a unit which is independent from the credit analysis and decision areas and bodies- and are reviewed/updated
periodically or whenever this is justified by events.
The models within the various rating systems are regularly subject to validation, made by the Models Validation and
Monitoring Office, which is independent from the units that are responsible for the development and maintenance of
the rating models.
The conclusions of the validations by the Models Validation and Monitoring Office, as well the respective
recommendations and proposal for changes and/or improvements, are analysed and ratified by a specific Validation
Committee, composed in accordance to the type of model analysed. The proposals for models\u2019 changes originated by
the Validation Committee are submitted to the approval of the Risk Committee.
The following table lists the equivalence between the internal rating levels (Rating Master Scale) and the external
ratings of the international rating agencies:
Internal risk grade
External ratings
Fitch
S&P
Moody's
DBRS
1
AAA
AAA
Aaa
AAA
1
AA+
AA+
Aa1
AA (high)
2
AA
AA
Aa2
AA
2
AA-
AA-
Aa3
AA (low)
3
A+
A+
A1
A (high)
3
A
A
A2
A
4
A-
A-
A3
A (low)
4
BBB+
BBB+
Baa1
BBB (high)
5
BBB
BBB
Baa2
BBB
6
BBB-
BBB-
Baa3
BBB (low)
7
BB+
BB+
Ba1
BB (high)
8
BB
BB
Ba2
BB
9
BB-
BB-
Ba3
BB (low)
10
B+
B+
B1
B (high)
11
B
B
B2
B
12
\u2264 B-
\u2264 B-
\u2264 B3
\u2264 B-
c) Impairment and Write-offs
The credit impairment calculation as at 31\u00a0December 2023 and 2022 integrates the general principles defined in
International Financial Reporting Standards (IFRS 9) and the guidelines issued by the Bank of Portugal through Circular
Letter CC/2018/00000062, in order to align the calculation process used in the Group with the best international
practices in this area.
As at 31\u00a0December 2023, the financial instruments subject to impairment requirements under IFRS 9, (do not include
equity instruments as accounting policy 1.C1.1.2), analysed by stage, are detailed in the following tables:
(Thousands of euros)
Category
2023
Gross exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
908,701
\u2014
\u2014
\u2014
908,701
Loans and advances to customers (note 22)
45,651,670
7,290,622
1,914,768
30,749
54,887,809
Debt instruments (note 23)
17,536,547
62,872
5,105
\u2014
17,604,524
Debt instruments at fair value through other
comprehensive income (note 24) (*)
10,809,872
\u2014
1,150
\u2014
10,811,022
Guarantees and other commitments (note 45) (**)
14,934,354
1,433,594
336,497
2,574
16,707,019
Total
89,841,144
8,787,088
2,257,520
33,323
100,919,075
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments
(Thousands of euros)
Category
2023
Impairment losses
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
224
\u2014
\u2014
\u2014
224
Loans and advances to customers (note 22)
268,948
291,752
1,007,481
14,469
1,582,650
Debt instruments (note 23)
23,066
797
1,525
\u2014
25,388
Debt instruments at fair value through other
comprehensive income (note 24) (*)
\u2014
\u2014
1,150
\u2014
1,150
Guarantees and other commitments (note 39)
12,880
14,686
94,008
\u2014
121,574
Total
305,118
307,235
1,104,164
14,469
1,730,986
(Thousands of euros)
Category
2023
Net exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
908,477
\u2014
\u2014
\u2014
908,477
Loans and advances to customers (note 22)
45,382,722
6,998,870
907,287
16,280
53,305,159
Debt instruments (note 23)
17,513,481
62,075
3,580
\u2014
17,579,136
Debt instruments at fair value through other
comprehensive income (note 24) (*)
10,809,872
\u2014
\u2014
\u2014
10,809,872
Guarantees and other commitments (note 45) (**)
14,921,474
1,418,908
242,489
2,574
16,585,445
Total
89,536,026
8,479,853
1,153,356
18,854
99,188,089
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments.
As at 31\u00a0December 2022, the financial instruments subject to impairment requirements under IFRS 9 (do not include
equity instruments as accounting policy 1.C1.1.2), analysed by stage, are detailed in the following tables:
(Thousands of euros)
Category
2022 (restated)
Gross exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
964,296
\u2014
\u2014
\u2014
964,296
Loans and advances to customers (note 22)
46,395,996
7,564,235
2,170,979
46,956
56,178,166
Debt instruments (note 23)
12,990,232
55,787
3,802
\u2014
13,049,821
Debt instruments at fair value through other
comprehensive income (note 24) (*)
7,434,152
\u2014
1,067
\u2014
7,435,219
Guarantees and other commitments (note 45) (**)
14,303,231
1,768,595
364,691
921
16,437,438
Total
82,087,907
9,388,617
2,540,539
47,877
94,064,940
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments.
(Thousands of euros)
Category
2022 (restated)
Impairment losses
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
862
\u2014
\u2014
\u2014
862
Loans and advances to customers (note 22)
214,470
284,448
985,557
17,898
1,502,373
Debt instruments (note 23)
13,409
720
110
\u2014
14,239
Debt instruments at fair value through other
comprehensive income (note 24) (*)
\u2014
\u2014
1,067
\u2014
1,067
Guarantees and other commitments (note 39)
11,307
14,893
84,435
119
110,754
Total
240,048
300,061
1,071,169
18,017
1,629,295
(Thousands of euros)
Category
2022 (restated)
Net exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
963,434
\u2014
\u2014
\u2014
963,434
Loans and advances to customers (note 22)
46,181,526
7,279,787
1,185,422
29,058
54,675,793
Debt instruments (note 23)
12,976,823
55,067
3,692
\u2014
13,035,582
Debt instruments at fair value through other
comprehensive income (note 24) (*)
7,434,152
\u2014
\u2014
\u2014
7,434,152
Guarantees and other commitments (note 45) (**)
14,291,924
1,753,702
280,256
802
16,326,684
Total
81,847,859
9,088,556
1,469,370
29,860
92,435,645
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1 C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments
The maximum exposure to credit risk of financial assets not subject to impairment requirements is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Financial assets held for trading (note 24)
Debt instruments
355,526
338,813
Derivatives
437,155
394,183
Financial assets designated at fair value through profit or loss - Debt instruments (note 24)
32,004
\u2014
Financial assets not held for trading mandatorily at fair value through profit or loss
Debt instruments (note 24)
280,558
311,404
Hedging derivatives (note 25)
40,628
59,703
Total
1,145,871
1,104,103
- In the case of financial assets, excluding derivatives, it is considered that its credit risk exposure is equal to its book value;
- In the case of derivatives, the maximum exposure to credit risk is its market value, plus its potential risk (\"add-on\").
During 2023, the changes occurred in Loans and advances to customers - gross amount are as follows:
(Thousands of euros)
2023
Financial assets at amortised cost - Loans and advances to customers -
Gross amount
Stage 1
Stage 2
Stage 3
POCI
Total
Gross amount as at 1 January
46,395,996
7,564,235
2,170,979
46,956
56,178,166
Changes in gross book value:
Transfers from stage 1 to stage 2
(2,100,816)
2,100,816
\u2014
\u2014
\u2014
Transfers from stage 1 to stage 3
(285,020)
\u2014
285,020
\u2014
\u2014
Transfers from stage 2 to stage 1
1,889,217
(1,889,217)
\u2014
\u2014
\u2014
Transfers from stage 2 to stage 3
\u2014
(415,277)
415,277
\u2014
\u2014
Transfers from stage 3 to stage 1
36,667
\u2014
(36,667)
\u2014
\u2014
Transfers from stage 3 to stage 2
\u2014
291,025
(291,025)
\u2014
\u2014
Write-offs
(811)
(2,261)
(186,529)
(2,872)
(192,473)
Net balance of new financial assets and derecognised\u00a0
financial assets and other variations
(283,563)
(358,699)
(442,287)
(13,335)
(1,097,884)
Gross amount at the end of the year
45,651,670
7,290,622
1,914,768
30,749
54,887,809
During 2023, the changes occurred in Loans and advances to customers - impairment are as follows:
(Thousands of euros)
2023
Financial assets at amortised cost - Loans and advances to customers
impairment
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment losses as at 1 January
214,470
284,448
985,557
17,898
1,502,373
Change in impairment losses:
Transfer to Stage 1
64,091
(55,424)
(8,587)
(80)
\u2014
Transfer to Stage 2
(12,326)
129,062
(116,736)
\u2014
\u2014
Transfer to Stage 3
(4,882)
(36,867)
42,105
(356)
\u2014
Changes occurred due to changes in credit risk
(26,368)
(45,099)
376,483
2,155
307,171
Write-offs
(811)
(2,261)
(186,529)
(2,872)
(192,473)
Changes due to new financial assets and derecognised
financial assets and other variations
34,774
17,893
(84,812)
(2,276)
(34,421)
Impairment losses at the end of the year
268,948
291,752
1,007,481
14,469
1,582,650
During 2022, the changes occurred in Loans and advances to customers - gross amount are as follows:
(Thousands of euros)
2022 (restated)
Financial assets at amortised cost - Loans and advances to customers - Gross
amount
Stage 1
Stage 2
Stage 3
POCI
Total
Gross amount as at 1 January
46,113,653
7,964,052
2,686,267
57,713
56,821,685
Changes in gross book value:
Transfers from stage 1 to stage 2
(2,111,726)
2,111,726
\u2014
\u2014
\u2014
Transfers from stage 1 to stage 3
(258,614)
\u2014
258,614
\u2014
\u2014
Transfers from stage 2 to stage 1
1,946,027
(1,946,027)
\u2014
\u2014
\u2014
Transfers from stage 2 to stage 3
\u2014
(631,859)
631,859
\u2014
\u2014
Transfers from stage 3 to stage 1
26,176
\u2014
(26,176)
\u2014
\u2014
Transfers from stage 3 to stage 2
\u2014
174,249
(174,249)
\u2014
\u2014
Write-offs
(922)
(2,996)
(440,667)
(13,820)
(458,405)
Net balance of new financial assets and
derecognised financial assets and other variations
681,402
(104,910)
(764,669)
3,063
(185,114)
Gross amount at the end of the year
46,395,996
7,564,235
2,170,979
46,956
56,178,166
During 2022, the changes occurred in Loans and advances to customers - impairment are as follows:
(Thousands of euros)
2022 (restated)
Financial assets at amortised cost - Loans and advances to customers
impairment
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment losses as at 1 January
207,328
288,642
1,336,612
16,702
1,849,284
Change in impairment losses:
Transfer to Stage 1
50,530
(50,139)
(4,778)
4,387
\u2014
Transfer to Stage 2
(14,016)
47,552
(33,614)
78
\u2014
Transfer to Stage 3
(4,314)
(55,508)
58,004
1,818
\u2014
Changes occurred due to changes in credit risk
(51,425)
25,711
196,355
4,816
175,457
Write-offs
(922)
(2,996)
(440,667)
(13,820)
(458,405)
Changes due to new financial assets and derecognised
financial assets and other variations
27,289
31,186
(126,355)
3,917
(63,963)
Impairment losses at the end of the year
214,470
284,448
985,557
17,898
1,502,373
Financial assets modified during the period that have not resulted in derecognition (with impairment losses based on
expected lifetime losses) are analysed as follows:
(Thousands of euros)
Financial assets modified
2023
2022
(restated)
Amortised cost before changes
457,237
396,049
Impairment losses before changes
(61,984)
(47,337)
Net amortised cost before changes
395,253
348,712
Net gain/loss arising on changes
(9,926)
(32,993)
Net amortised cost after changes
385,327
315,719
The financial assets changed since the initial recognition at a time when the impairment loss was measured based on
the expected credit losses lifetime, are analysed as follows:
(Thousands of euros)
Financial assets changed
2023
2022
(restated)
Amortised cost of financial assets for which credit losses expected to go from \"lifetime\" to 12 months
106,778
65,942
As at 31\u00a0December 2023, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by segment and stage, are as follows:
(Thousands of euros)
2023
Stage 2
Stage 3
Segment
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <=
90 days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Individuals-Mortgage
24,913,323
2,317,570
217,742
106,027
2,641,339
269,211
149,473
418,684
11,247
27,984,593
Individuals-Other
8,455,374
996,879
138,926
50,292
1,186,097
256,328
320,458
576,786
14,263
10,232,520
Financial Companies
3,275,624
53,152
42
1
53,195
46,841
10
46,851
\u2014
3,375,670
Non-financial companies -
Corporate
10,825,177
716,737
13,734
1,961
732,432
198,010
29,407
227,417
2,209
11,787,235
Non-financial companies - SME-
Corporate
8,777,780
2,327,698
13,722
3,902
2,345,322
582,545
102,199
684,744
2,959
11,810,805
Non-financial companies -SME-
Retail
6,672,112
1,429,586
45,468
19,621
1,494,675
161,067
138,539
299,606
2,645
8,469,038
Non-financial companies -
Other
515,637
22,791
4
16
22,811
269
2,010
2,279
\u2014
540,727
Other loans
15,596,245
308,938
2,266
13
311,217
1
2
3
\u2014
15,907,465
Total
79,031,272
8,173,351
431,904
181,833
8,787,088
1,514,272
742,098
2,256,370
33,323
90,108,053
Impairment
Individuals-Mortgage
30,606
21,789
4,435
5,736
31,960
59,673
54,599
114,272
5,376
182,214
Individuals-Other
65,165
42,205
23,950
13,973
80,128
104,578
211,238
315,816
9,093
470,202
Financial Companies
23,475
1,381
3
\u2014
1,384
34,559
6
34,565
\u2014
59,424
Non-financial companies -
Corporate
36,533
25,712
247
312
26,271
91,151
20,578
111,729
\u2014
174,533
Non-financial companies - SME-
Corporate
49,075
78,177
1,490
760
80,427
313,575
59,279
372,854
\u2014
502,356
Non-financial companies -SME-
Retail
83,013
75,676
4,281
4,152
84,109
92,830
59,457
152,287
\u2014
319,409
Non-financial companies -
Other
370
74
\u2014
2
76
8
1,482
1,490
\u2014
1,936
Other loans
16,881
2,763
116
1
2,880
\u2014
1
1
\u2014
19,762
Total
305,118
247,777
34,522
24,936
307,235
696,374
406,640
1,103,014
14,469
1,729,836
Net exposure
Individuals-Mortgage
24,882,717
2,295,781
213,307
100,291
2,609,379
209,538
94,874
304,412
5,871
27,802,379
Individuals-Other
8,390,209
954,674
114,976
36,319
1,105,969
151,750
109,220
260,970
5,170
9,762,318
Financial Companies
3,252,149
51,771
39
1
51,811
12,282
4
12,286
\u2014
3,316,246
Non-financial companies -
Corporate
10,788,644
691,025
13,487
1,649
706,161
106,859
8,829
115,688
2,209
11,612,702
Non-financial companies - SME-
Corporate
8,728,705
2,249,521
12,232
3,142
2,264,895
268,970
42,920
311,890
2,959
11,308,449
Non-financial companies -SME-
Retail
6,589,099
1,353,910
41,187
15,469
1,410,566
68,237
79,082
147,319
2,645
8,149,629
Non-financial companies -
Other
515,267
22,717
4
14
22,735
261
528
789
\u2014
538,791
Other loans
15,579,364
306,175
2,150
12
308,337
1
1
2
\u2014
15,887,703
Total
78,726,154
7,925,574
397,382
156,897
8,479,853
817,898
335,458
1,153,356
18,854
88,378,217
% of impairment coverage
Individuals-Mortgage
0.12%
0.94%
2.04%
5.41%
1.21%
22.17%
36.53%
27.29%
47.80%
0.65%
Individuals-Other
0.77%
4.23%
17.24%
27.78%
6.76%
40.80%
65.92%
54.75%
63.75%
4.60%
Financial Companies
0.72%
2.60%
7.14%
0.00%
2.60%
73.78%
60.00%
73.78%
0.00%
1.76%
Non-financial companies -
Corporate
0.34%
3.59%
1.80%
15.91%
3.59%
46.03%
69.98%
49.13%
0.00%
1.48%
Non-financial companies - SME-
Corporate
0.56%
3.36%
10.86%
19.48%
3.43%
53.83%
58.00%
54.45%
0.00%
4.25%
Non-financial companies -SME-
Retail
1.24%
5.29%
9.42%
21.16%
5.63%
57.63%
42.92%
50.83%
0.00%
3.77%
Non-financial companies -
Other
0.07%
0.32%
0.00%
12.50%
0.33%
2.97%
73.73%
65.38%
0.00%
0.36%
Other loans
0.11%
0.89%
5.12%
7.69%
0.93%
0.00%
50.00%
33.33%
0.00%
0.12%
Total
0.39%
3.03%
7.99%
13.71%
3.50%
45.99%
54.80%
48.88%
43.42%
1.92%
As at 31\u00a0December 2022, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by segment and stage, are as follows:
(Thousands of euros)
2022 (restated)
Stage 2
Stage 3
Segment
Stage 1
No delays
Days past
due <=
30 days
Days past
due > 30
days
Total
Days past
due <=
90 days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Individuals-Mortgage
25,213,881
2,320,624
151,906
89,857
2,562,387
284,276
142,817
427,093
10,525
28,213,886
Individuals-Other
7,614,004
958,714
118,276
42,895
1,119,885
252,456
284,486
536,942
19,621
9,290,452
Financial Companies
3,569,566
80,945
61
\u2014
81,006
72,980
1,494
74,474
7,545
3,732,591
Non-financial companies -
Corporate
9,621,830
700,538
660
13
701,211
204,523
91,575
296,098
\u2014
10,619,139
Non-financial companies - SME-
Corporate
10,238,522
2,798,567
5,339
2,559
2,806,465
761,101
95,135
856,236
6,733
13,907,956
Non-financial companies -SME-
Retail
6,024,603
1,683,407
30,867
14,532
1,728,806
231,377
117,109
348,486
3,453
8,105,348
Non-financial companies -
Other
558,812
46,613
2
\u2014
46,615
113
\u2014
113
\u2014
605,540
Other loans
11,812,537
342,203
39
\u2014
342,242
\u2014
30
30
\u2014
12,154,809
Total
74,653,755
8,931,611
307,150
149,856
9,388,617
1,806,826
732,646
2,539,472
47,877
86,629,721
Impairment
Individuals-Mortgage
15,380
23,667
4,083
5,262
33,012
56,519
56,440
112,959
5,452
166,803
Individuals-Other
52,559
31,277
18,676
11,224
61,177
104,108
180,916
285,024
12,436
411,196
Financial Companies
8,491
1,701
4
\u2014
1,705
36,543
1,245
37,788
\u2014
47,984
Non-financial companies -
Corporate
27,484
18,218
22
\u2014
18,240
87,043
43,500
130,543
\u2014
176,267
Non-financial companies - SME-
Corporate
46,296
81,667
506
660
82,833
298,455
46,890
345,345
129
474,603
Non-financial companies -SME-
Retail
78,239
92,784
4,090
3,226
100,100
106,533
51,896
158,429
\u2014
336,768
Non-financial companies -
Other
512
129
\u2014
\u2014
129
5
\u2014
5
\u2014
646
Other loans
11,087
2,860
5
\u2014
2,865
\u2014
9
9
\u2014
13,961
Total
240,048
252,303
27,386
20,372
300,061
689,206
380,896
1,070,102
18,017
1,628,228
Net exposure
Individuals-Mortgage
25,198,501
2,296,957
147,823
84,595
2,529,375
227,757
86,377
314,134
5,073
28,047,083
Individuals-Other
7,561,445
927,437
99,600
31,671
1,058,708
148,348
103,570
251,918
7,185
8,879,256
Financial Companies
3,561,075
79,244
57
\u2014
79,301
36,437
249
36,686
7,545
3,684,607
Non-financial companies -
Corporate
9,594,346
682,320
638
13
682,971
117,480
48,075
165,555
\u2014
10,442,872
Non-financial companies - SME-
Corporate
10,192,226
2,716,900
4,833
1,899
2,723,632
462,646
48,245
510,891
6,604
13,433,353
Non-financial companies -SME-
Retail
5,946,364
1,590,623
26,777
11,306
1,628,706
124,844
65,213
190,057
3,453
7,768,580
Non-financial companies -
Other
558,300
46,484
2
\u2014
46,486
108
\u2014
108
\u2014
604,894
Other loans
11,801,450
339,343
34
\u2014
339,377
\u2014
21
21
\u2014
12,140,848
Total
74,413,707
8,679,308
279,764
129,484
9,088,556
1,117,620
351,750
1,469,370
29,860
85,001,493
% of impairment coverage
Individuals-Mortgage
0.06%
1.02%
2.69%
5.86%
1.29%
19.88%
39.52%
26.45%
51.80%
0.59%
Individuals-Other
0.69%
3.26%
15.79%
26.17%
5.46%
41.24%
63.59%
53.08%
63.38%
4.43%
Financial Companies
0.24%
2.10%
6.56%
0.00%
2.10%
50.07%
83.33%
50.74%
0.00%
1.29%
Non-financial companies -
Corporate
0.29%
2.60%
3.33%
0.00%
2.60%
42.56%
47.50%
44.09%
0.00%
1.66%
Non-financial companies - SME-
Corporate
0.45%
2.92%
9.48%
25.79%
2.95%
39.21%
49.29%
40.33%
1.92%
3.41%
Non-financial companies -SME-
Retail
1.30%
5.51%
13.25%
22.20%
5.79%
46.04%
44.31%
45.46%
0.00%
4.15%
Non-financial companies -
Other
0.09%
0.28%
0.00%
0.00%
0.28%
4.42%
0.00%
4.42%
0.00%
0.11%
Other loans
0.09%
0.84%
12.82%
0.00%
0.84%
0.00%
30.00%
30.00%
0.00%
0.11%
Total
0.32%
2.82%
8.92%
13.59%
3.20%
38.14%
51.99%
42.14%
37.63%
1.88%
As at 31\u00a0December 2023, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by sector of activity and stage, are as follows:
(Thousands of euros)
2023
Stage 2
Stage 3
Sector of activity
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <= 90
days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Loans to individuals
33,368,697
3,314,449
356,668
156,319
3,827,436
525,539
469,931
995,470
25,510
38,217,113
Non-financial companies -
Trade
5,299,609
735,392
16,114
3,998
755,504
91,961
44,149
136,110
604
6,191,827
Non-financial companies -
Construction
2,346,987
583,617
7,508
2,523
593,648
272,067
30,830
302,897
4,141
3,247,673
Non-financial companies -
Manufacturing industries
5,596,512
934,013
14,368
7,458
955,839
137,257
71,289
208,546
560
6,761,457
Non-financial companies -
Other activities
2,265,462
372,268
12,087
954
385,309
56,211
15,197
71,408
50
2,722,229
Non-financial companies -
Other services
11,282,136
1,871,522
22,851
10,567
1,904,940
384,395
110,690
495,085
2,458
13,684,619
Other Services /Other
activities
18,871,869
362,090
2,308
14
364,412
46,842
12
46,854
\u2014
19,283,135
Total
79,031,272
8,173,351
431,904
181,833
8,787,088
1,514,272
742,098
2,256,370
33,323
90,108,053
Impairment
Loans to individuals
95,771
63,994
28,385
19,709
112,088
164,251
265,837
430,088
14,469
652,416
Non-financial companies -
Trade
28,456
25,648
863
1,084
27,595
40,537
19,292
59,829
\u2014
115,880
Non-financial companies -
Construction
15,896
13,624
978
645
15,247
91,537
17,927
109,464
\u2014
140,607
Non-financial companies -
Manufacturing industries
54,770
57,777
1,909
1,842
61,528
53,536
35,826
89,362
\u2014
205,660
Non-financial companies -
Other activities
10,608
18,371
771
170
19,312
38,378
8,562
46,940
\u2014
76,860
Non-financial companies -
Other services
59,261
64,219
1,497
1,485
67,201
273,576
59,189
332,765
\u2014
459,227
Other Services /Other
activities
40,356
4,144
119
1
4,264
34,559
7
34,566
\u2014
79,186
Total
305,118
247,777
34,522
24,936
307,235
696,374
406,640
1,103,014
14,469
1,729,836
Net exposure
Loans to individuals
33,272,926
3,250,455
328,283
136,610
3,715,348
361,288
204,094
565,382
11,041
37,564,697
Non-financial companies -
Trade
5,271,153
709,744
15,251
2,914
727,909
51,424
24,857
76,281
604
6,075,947
Non-financial companies -
Construction
2,331,091
569,993
6,530
1,878
578,401
180,530
12,903
193,433
4,141
3,107,066
Non-financial companies -
Manufacturing industries
5,541,742
876,236
12,459
5,616
894,311
83,721
35,463
119,184
560
6,555,797
Non-financial companies -
Other activities
2,254,854
353,897
11,316
784
365,997
17,833
6,635
24,468
50
2,645,369
Non-financial companies -
Other services
11,222,875
1,807,303
21,354
9,082
1,837,739
110,819
51,501
162,320
2,458
13,225,392
Other Services /Other
activities
18,831,513
357,946
2,189
13
360,148
12,283
5
12,288
\u2014
19,203,949
Total
78,726,154
7,925,574
397,382
156,897
8,479,853
817,898
335,458
1,153,356
18,854
88,378,217
% of impairment coverage
Loans to individuals
0.29%
1.93%
7.96%
12.61%
2.93%
31.25%
56.57%
43.20%
56.72%
1.71%
Non-financial companies -
Trade
0.54%
3.49%
5.36%
27.11%
3.65%
44.08%
43.70%
43.96%
0.00%
1.87%
Non-financial companies -
Construction
0.68%
2.33%
13.03%
25.56%
2.57%
33.65%
58.15%
36.14%
0.00%
4.33%
Non-financial companies -
Manufacturing industries
0.98%
6.19%
13.29%
24.70%
6.44%
39.00%
50.25%
42.85%
0.00%
3.04%
Non-financial companies -
Other activities
0.47%
4.93%
6.38%
17.82%
5.01%
68.27%
56.34%
65.73%
0.00%
2.82%
Non-financial companies -
Other services
0.53%
3.43%
6.55%
14.05%
3.53%
71.17%
53.47%
67.21%
0.00%
3.36%
Other Services /Other
activities
0.21%
1.14%
5.16%
7.14%
1.17%
73.78%
58.33%
73.77%
0.00%
0.41%
Total
0.39%
3.03%
7.99%
13.71%
3.50%
45.99%
54.80%
48.88%
43.42%
1.92%
As at 31\u00a0December 2022, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by sector of activity and stage, are as follows:
(Thousands of euros)
2022 (restated)
Stage 2
Stage 3
Sector of activity
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <= 90
days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Loans to individuals
32,827,885
3,279,338
270,182
132,752
3,682,272
536,732
427,303
964,035
30,146
37,504,338
Non-financial companies -
Trade
5,312,463
827,990
9,921
4,283
842,194
91,204
45,688
136,892
4,715
6,296,264
Non-financial companies -
Construction
2,010,021
771,490
3,040
1,033
775,563
363,418
32,791
396,209
1,851
3,183,644
Non-financial companies -
Manufacturing industries
5,836,145
1,013,888
9,380
4,983
1,028,251
162,228
117,804
280,032
928
7,145,356
Non-financial companies -
Other activities
2,107,745
395,981
3,587
1,007
400,575
101,252
17,354
118,606
44
2,626,970
Non-financial companies -
Other services
11,177,393
2,219,776
10,940
5,798
2,236,514
479,012
90,182
569,194
2,648
13,985,749
Other Services /Other
activities
15,382,103
423,148
100
\u2014
423,248
72,980
1,524
74,504
7,545
15,887,400
Total
74,653,755
8,931,611
307,150
149,856
9,388,617
1,806,826
732,646
2,539,472
47,877
86,629,721
Impairment
Loans to individuals
67,939
54,944
22,759
16,486
94,189
160,627
237,356
397,983
17,888
577,999
Non-financial companies -
Trade
22,306
26,555
1,168
1,110
28,833
35,530
20,294
55,824
129
107,092
Non-financial companies -
Construction
11,517
16,055
551
288
16,894
154,391
18,769
173,160
\u2014
201,571
Non-financial companies -
Manufacturing industries
54,925
54,821
1,293
1,258
57,372
65,474
58,761
124,235
\u2014
236,532
Non-financial companies -
Other activities
7,701
15,667
529
154
16,350
44,356
8,459
52,815
\u2014
76,866
Non-financial companies -
Other services
56,082
79,700
1,077
1,076
81,853
192,285
36,003
228,288
\u2014
366,223
Other Services /Other
activities
19,578
4,561
9
\u2014
4,570
36,543
1,254
37,797
\u2014
61,945
Total
240,048
252,303
27,386
20,372
300,061
689,206
380,896
1,070,102
18,017
1,628,228
Net exposure
Loans to individuals
32,759,946
3,224,394
247,423
116,266
3,588,083
376,105
189,947
566,052
12,258
36,926,339
Non-financial companies -
Trade
5,290,157
801,435
8,753
3,173
813,361
55,674
25,394
81,068
4,586
6,189,172
Non-financial companies -
Construction
1,998,504
755,435
2,489
745
758,669
209,027
14,022
223,049
1,851
2,982,073
Non-financial companies -
Manufacturing industries
5,781,220
959,067
8,087
3,725
970,879
96,754
59,043
155,797
928
6,908,824
Non-financial companies -
Other activities
2,100,044
380,314
3,058
853
384,225
56,896
8,895
65,791
44
2,550,104
Non-financial companies -
Other services
11,121,311
2,140,076
9,863
4,722
2,154,661
286,727
54,179
340,906
2,648
13,619,526
Other Services /Other
activities
15,362,525
418,587
91
\u2014
418,678
36,437
270
36,707
7,545
15,825,455
Total
74,413,707
8,679,308
279,764
129,484
9,088,556
1,117,620
351,750
1,469,370
29,860
85,001,493
% of impairment coverage
Loans to individuals
0.21%
1.68%
8.42%
12.42%
2.56%
29.93%
55.55%
41.28%
59.34%
1.54%
Non-financial companies -
Trade
0.42%
3.21%
11.77%
25.92%
3.42%
38.96%
44.42%
40.78%
2.74%
1.70%
Non-financial companies -
Construction
0.57%
2.08%
18.13%
27.88%
2.18%
42.48%
57.24%
43.70%
0.00%
6.33%
Non-financial companies -
Manufacturing industries
0.94%
5.41%
13.78%
25.25%
5.58%
40.36%
49.88%
44.36%
0.00%
3.31%
Non-financial companies -
Other activities
0.37%
3.96%
14.75%
15.29%
4.08%
43.81%
48.74%
44.53%
0.00%
2.93%
Non-financial companies -
Other services
0.50%
3.59%
9.84%
18.56%
3.66%
40.14%
39.92%
40.11%
0.00%
2.62%
Other Services /Other
activities
0.13%
1.08%
9.00%
0.00%
1.08%
50.07%
82.28%
50.73%
0.00%
0.39%
Total
0.32%
2.82%
8.92%
13.59%
3.20%
38.14%
51.99%
42.14%
37.63%
1.88%
As at 31\u00a0December 2023, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by geography and stage, are as follows:
(Thousands of euros)
2023
Stage 2
Stage 3
Geography
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <= 90
days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Portugal
54,817,070
6,507,490
243,837
97,956
6,849,283
1,101,355
321,902
1,423,257
14,814
63,104,424
Poland
22,932,079
1,254,639
168,557
76,684
1,499,880
404,395
394,011
798,406
18,509
25,248,874
Mozambique
1,282,123
411,222
19,510
7,193
437,925
8,522
26,185
34,707
\u2014
1,754,755
Total
79,031,272
8,173,351
431,904
181,833
8,787,088
1,514,272
742,098
2,256,370
33,323
90,108,053
Impairment
Portugal
190,234
201,637
10,867
9,419
221,923
551,673
145,912
697,585
\u2014
1,109,742
Poland
103,505
40,435
22,551
14,419
77,405
143,301
245,864
389,165
14,469
584,544
Mozambique
11,379
5,705
1,104
1,098
7,907
1,400
14,864
16,264
\u2014
35,550
Total
305,118
247,777
34,522
24,936
307,235
696,374
406,640
1,103,014
14,469
1,729,836
Net exposure
Portugal
54,626,836
6,305,853
232,970
88,537
6,627,360
549,682
175,990
725,672
14,814
61,994,682
Poland
22,828,574
1,214,204
146,006
62,265
1,422,475
261,094
148,147
409,241
4,040
24,664,330
Mozambique
1,270,744
405,517
18,406
6,095
430,018
7,122
11,321
18,443
\u2014
1,719,205
Total
78,726,154
7,925,574
397,382
156,897
8,479,853
817,898
335,458
1,153,356
18,854
88,378,217
% of impairment
coverage
Portugal
0.35%
3.10%
4.46%
9.62%
3.24%
50.09%
45.33%
49.01%
0.00%
1.76%
Poland
0.45%
3.22%
13.38%
18.80%
5.16%
35.44%
62.40%
48.74%
78.17%
2.32%
Mozambique
0.89%
1.39%
5.66%
15.26%
1.81%
16.43%
56.77%
46.86%
0.00%
2.03%
Total
0.39%
3.03%
7.99%
13.71%
3.50%
45.99%
54.80%
48.88%
43.42%
1.92%
As at 31\u00a0December 2022, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by geography and stage, are as follows:
(Thousands of euros)
2022 (restated)
Stage 2
Stage 3
Geography
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <= 90
days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Portugal
54,604,642
7,155,127
159,209
66,646
7,380,982
1,410,285
306,213
1,716,498
19,011
63,721,133
Poland
18,184,099
1,377,667
142,519
81,498
1,601,684
386,990
343,753
730,743
28,866
20,545,392
Mozambique
1,865,014
398,817
5,422
1,712
405,951
9,551
82,680
92,231
\u2014
2,363,196
Total
74,653,755
8,931,611
307,150
149,856
9,388,617
1,806,826
732,646
2,539,472
47,877
86,629,721
Impairment
Portugal
150,039
205,954
7,124
5,447
218,525
550,372
124,012
674,384
\u2014
1,042,948
Poland
83,818
42,151
19,641
14,566
76,358
136,847
210,573
347,420
18,017
525,613
Mozambique
6,191
4,198
621
359
5,178
1,987
46,311
48,298
\u2014
59,667
Total
240,048
252,303
27,386
20,372
300,061
689,206
380,896
1,070,102
18,017
1,628,228
Net exposure
Portugal
54,454,603
6,949,173
152,085
61,199
7,162,457
859,913
182,201
1,042,114
19,011
62,678,185
Poland
18,100,281
1,335,516
122,878
66,932
1,525,326
250,143
133,180
383,323
10,849
20,019,779
Mozambique
1,858,823
394,619
4,801
1,353
400,773
7,564
36,369
43,933
\u2014
2,303,529
Total
74,413,707
8,679,308
279,764
129,484
9,088,556
1,117,620
351,750
1,469,370
29,860
85,001,493
% of impairment
coverage
Portugal
0.27%
2.88%
4.47%
8.17%
2.96%
39.03%
40.50%
39.29%
0.00%
1.64%
Poland
0.46%
3.06%
13.78%
17.87%
4.77%
35.36%
61.26%
47.54%
62.42%
2.56%
Mozambique
0.33%
1.05%
11.45%
20.97%
1.28%
20.80%
56.01%
52.37%
0.00%
2.52%
Total
0.32%
2.82%
8.92%
13.59%
3.20%
38.14%
51.99%
42.14%
37.63%
1.88%
As at 31\u00a0December 2023, the gross exposure, by type of financial instrument, internal rating and stage, is analysed as
follows:
(Thousands of euros)
2023
Gross Exposure
Higher quality
(GR 1-6)
Average
quality
(GR 7-9)
Lower
quality
(GR 10-12)
Procedural
(GR 13/14/15)
Not classified
(without risk
grade)
Total
Impairment
losses
Net
exposure
Financial assets at
amortised cost
stage 1
48,884,930
9,891,705
4,050,015
800
1,269,469
64,096,919
292,238
63,804,681
stage 2
1,338,150
1,942,276
3,215,313
379,810
477,945
7,353,494
292,549
7,060,945
stage 3
\u2014
\u2014
\u2014
1,896,329
23,543
1,919,872
1,009,006
910,866
POCI
2,152
2,448
1,202
24,831
115
30,748
14,469
16,279
50,225,232
11,836,429
7,266,530
2,301,770
1,771,072
73,401,033
1,608,262
71,792,771
Debt instruments at fair
value through other
comprehensive income (*)
stage 1
10,490,205
153,637
11,687
50
154,294
10,809,873
\u2014
10,809,873
stage 3
\u2014
\u2014
\u2014
\u2014
1,150
1,150
1,150
\u2014
10,490,205
153,637
11,687
50
155,444
10,811,023
1,150
10,809,873
Guarantees and other
commitments (**)
stage 1
9,603,432
3,927,153
1,224,614
3,511
175,643
14,934,353
12,880
14,921,473
stage 2
169,847
400,684
670,786
13,250
179,027
1,433,594
14,686
1,418,908
stage 3
\u2014
\u2014
\u2014
336,351
147
336,498
94,008
242,490
POCI
6
5
1
2,563
\u2014
2,575
\u2014
2,575
9,773,285
4,327,842
1,895,401
355,675
354,817
16,707,020
121,574
16,585,446
Total
70,488,722
16,317,908
9,173,618
2,657,495
2,281,333
100,919,076
1,730,986
99,188,090
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements indicated in the
accounting policy 1 C1.5.1.2.
(**) The gross exposure includes the guarantees granted, irrevocable credit lines and revocable commitments (note 45).
As at 31\u00a0December 2022, the gross exposure, by type of financial instrument, internal rating and stage, is analysed as
follows:
(Thousands of euros)
2022 (restated)
Gross Exposure
Higher quality
(GR 1-6)
Average
quality
(GR 7-9)
Lower
quality
(GR 10-12)
Procedural
(GR 13/14/15)
Not classified
(without risk
grade)
Total
Impairment
losses
Net
exposure
Financial assets at
amortised cost
stage 1
44,625,339
10,468,892
3,984,622
2,862
1,268,808
60,350,523
228,741
60,121,782
stage 2
1,456,028
1,911,502
3,321,694
373,651
557,148
7,620,023
285,168
7,334,855
stage 3
\u2014
\u2014
\u2014
2,165,309
9,472
2,174,781
985,667
1,189,114
POCI
1,928
9,048
1,122
34,782
77
46,957
17,898
29,059
46,083,295
12,389,442
7,307,438
2,576,604
1,835,505
70,192,284
1,517,474
68,674,810
Debt instruments at fair
value through other
comprehensive income (*)
stage 1
6,600,955
169,240
34,790
\u2014
629,167
7,434,152
\u2014
7,434,152
stage 3
\u2014
\u2014
\u2014
\u2014
1,067
1,067
1,067
\u2014
6,600,955
169,240
34,790
\u2014
630,234
7,435,219
1,067
7,434,152
Guarantees and other
commitments (**)
stage 1
9,105,641
3,673,579
1,312,038
57
211,917
14,303,232
11,307
14,291,925
stage 2
219,327
390,858
832,431
34,840
291,138
1,768,594
14,893
1,753,701
stage 3
\u2014
\u2014
\u2014
364,627
64
364,691
84,435
280,256
POCI
\u2014
\u2014
\u2014
921
\u2014
921
119
802
9,324,968
4,064,437
2,144,469
400,445
503,119
16,437,438
110,754
16,326,684
Total
62,009,218
16,623,119
9,486,697
2,977,049
2,968,858
94,064,941
1,629,295
92,435,646
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements indicated in the
accounting policy 1 C1.5.1.2.
(**) The gross exposure includes the guarantees granted, irrevocable credit lines and revocable commitments (note 45).
As at 31\u00a0December 2023, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by segment, are presented in the following table:
(Thousands of euros)
2023
Gross Exposure
Impairment losses
Segment
Individual
Collective
Total
Individual
Collective
Total
Individuals - Mortgage
27,960
27,956,633
27,984,593
9,347
172,867
182,214
Individuals - Other
8,531
10,223,989
10,232,520
4,709
465,493
470,202
Financial Companies
48,444
3,327,226
3,375,670
34,439
24,985
59,424
Non-financial companies-Corporate
204,869
11,582,366
11,787,235
105,559
68,974
174,533
Non-financial companies-SME-Corporate
517,062
11,293,743
11,810,805
326,269
176,087
502,356
Non-financial companies-SME-Retail
84,903
8,384,136
8,469,039
77,852
241,557
319,409
Non-financial companies-Other
702
540,025
540,727
567
1,369
1,936
Other loans
\u2014
15,907,464
15,907,464
\u2014
19,762
19,762
Total
892,471
89,215,582
90,108,053
558,742
1,171,094
1,729,836
As at 31\u00a0December 2022, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by segment, are presented in the following table:
(Thousands of euros)
2022 (restated)
Gross Exposure
Impairment losses
Segment
Individual
Collective
Total
Individual
Collective
Total
Individuals - Mortgage
30,700
28,183,186
28,213,886
9,386
157,417
166,803
Individuals - Other
26,953
9,263,499
9,290,452
18,543
392,653
411,196
Financial Companies
81,059
3,651,532
3,732,591
37,622
10,362
47,984
Non-financial companies-Corporate
276,046
10,343,093
10,619,139
126,378
49,889
176,267
Non-financial companies-SME-Corporate
654,073
13,253,883
13,907,956
301,952
172,651
474,603
Non-financial companies -SME - Retail
158,552
7,946,796
8,105,348
94,878
241,890
336,768
Non-financial companies-Other
\u2014
605,540
605,540
\u2014
646
646
Other loans
\u2014
12,154,809
12,154,809
\u2014
13,961
13,961
Total
1,227,383
85,402,338
86,629,721
588,759
1,039,469
1,628,228
As at 31\u00a0December 2023, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by sector of activity are presented in the following table:
(Thousands of euros)
2023
Gross Exposure
Impairment losses
Sector of activity
Individual
Collective
Total
Individual
Collective
Total
Loans to individuals
36,491
38,180,622
38,217,113
14,056
638,360
652,416
Non-financial companies-Trade
63,282
6,128,545
6,191,827
33,799
82,081
115,880
Non-financial companies-Construction
212,160
3,035,513
3,247,673
88,160
52,447
140,607
Non-financial companies-Manufacturing
industry
110,203
6,651,255
6,761,458
57,795
147,865
205,660
Non-financial companies-Other activities
48,448
2,673,781
2,722,229
37,216
39,644
76,860
Non-financial companies-Other services
373,443
13,311,176
13,684,619
293,277
165,950
459,227
Other Services/Other activities
48,444
19,234,690
19,283,134
34,439
44,747
79,186
Total
892,471
89,215,582
90,108,053
558,742
1,171,094
1,729,836
As at 31\u00a0December 2022, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by sector of activity are presented in the following table:
(Thousands of euros)
2022 (restated)
Gross Exposure
Impairment losses
Sector of activity
Individual
Collective
Total
Individual
Collective
Total
Loans to individuals
57,653
37,446,685
37,504,338
27,929
550,070
577,999
Non-financial companies-Trade
56,649
6,239,615
6,296,264
30,640
76,452
107,092
Non-financial companies-Construction
308,289
2,875,355
3,183,644
158,454
43,117
201,571
Non-financial companies-Manufacturing
industry
173,248
6,972,108
7,145,356
93,885
142,647
236,532
Non-financial companies-Other activities
95,832
2,531,138
2,626,970
44,541
32,325
76,866
Non-financial companies-Other services
454,653
13,531,096
13,985,749
195,688
170,535
366,223
Other Services/Other activities
81,059
15,806,341
15,887,400
37,622
24,323
61,945
Total
1,227,383
85,402,338
86,629,721
588,759
1,039,469
1,628,228
As at 31\u00a0December 2023, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by geography, are presented in the following table:
(Thousands of euros)
2023
Gross Exposure
Impairment losses
Geography
Individual
Collective
Total
Individual
Collective
Total
Portugal
758,022
62,346,402
63,104,424
516,336
593,406
1,109,742
Poland
121,548
25,127,326
25,248,874
36,255
548,289
584,544
Mozambique
12,901
1,741,854
1,754,755
6,151
29,399
35,550
Total
892,471
89,215,582
90,108,053
558,742
1,171,094
1,729,836
As at 31\u00a0December 2022, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by geography, are presented in the following table:
(Thousands of euros)
2022 (restated)
Gross Exposure
Impairment losses
Geography
Individual
Collective
Total
Individual
Collective
Total
Portugal
1,053,955
62,667,178
63,721,133
511,657
531,291
1,042,948
Poland
98,717
20,446,675
20,545,392
37,219
488,394
525,613
Mozambique
74,711
2,288,485
2,363,196
39,883
19,784
59,667
Total
1,227,383
85,402,338
86,629,721
588,759
1,039,469
1,628,228
The columns Gross exposure and Collective impairment losses of the previous tables include loans subject to individual
analysis for which the Group has concluded that there is no objective evidence of impairment.
As at 31\u00a0December 2023, the following table includes the loans portfolio (including guarantees and commitments) by
segment and by year of production (date of the beginning of the operations, in the portfolio at the date of balance
sheet - it does not include restructured loans):
2023
Year of production
Construction
and Commercial
Real Estate
Companies -
Other Activities
Mortgage
loans
Individuals -
Other
Other loans
Total
2013 and previous
Number of operations
13,988
27,550
275,796
637,888
380
955,602
Value (Euros '000)
928,757
3,261,687
8,790,207
1,229,144
89,608
14,299,403
Impairment constituted (Euros '000)
73,508
58,659
113,180
22,494
812
268,653
2014
Number of operations
1,310
5,156
7,877
63,545
85
77,973
Value (Euros '000)
69,788
447,850
327,925
111,200
184,307
1,141,070
Impairment constituted (Euros '000)
7,137
5,895
5,441
4,563
873
23,909
2015
Number of operations
1,740
7,093
9,709
84,470
114
103,126
Value (Euros '000)
85,463
591,723
464,924
145,749
8,498
1,296,357
Impairment constituted (Euros '000)
1,952
22,286
4,621
7,655
577
37,091
2016
Number of operations
2,053
8,438
10,979
110,408
49
131,927
Value (Euros '000)
141,513
1,117,972
542,229
213,263
3,067
2,018,044
Impairment constituted (Euros '000)
2,314
12,494
5,106
13,662
179
33,755
2017
Number of operations
2,482
9,808
17,985
120,635
99
151,009
Value (Euros '000)
157,801
978,292
1,047,446
246,833
14,258
2,444,630
Impairment constituted (Euros '000)
10,391
17,786
6,592
17,477
774
53,020
2018
Number of operations
4,819
15,084
23,954
213,882
165
257,904
Value (Euros '000)
384,262
1,901,330
1,604,675
530,572
301,822
4,722,661
Impairment constituted (Euros '000)
5,771
33,804
8,220
37,433
1,227
86,455
2019
Number of operations
7,245
21,732
27,329
521,238
150
577,694
Value (Euros '000)
499,121
1,658,088
1,956,352
982,211
79,619
5,175,391
Impairment constituted (Euros '000)
7,673
43,210
7,137
67,067
1,144
126,231
2020
Number of operations
9,258
31,822
32,966
244,303
189
318,538
Value (Euros '000)
862,852
2,855,711
2,410,351
617,566
104,195
6,850,675
Impairment constituted (Euros '000)
14,538
76,473
8,944
38,516
1,913
140,384
2021
Number of operations
9,130
33,058
48,727
363,405
219
454,539
Value (Euros '000)
792,772
2,539,394
3,981,918
1,016,489
333,477
8,664,050
Impairment constituted (Euros '000)
11,334
42,963
10,857
67,703
3,131
135,988
2022
Number of operations
9,311
34,292
35,724
571,063
396
650,786
Value (Euros '000)
1,397,283
4,265,544
3,490,509
1,677,789
126,587
10,957,712
Impairment constituted (Euros '000)
15,286
51,293
6,233
79,493
1,704
154,009
2023
Number of operations
14,388
113,890
31,737
1,312,681
4,733
1,477,429
Value (Euros '000)
1,967,654
6,445,098
3,317,913
2,949,518
179,760
14,859,943
Impairment constituted (Euros '000)
16,782
217,800
6,768
70,824
2,232
314,406
Total
Number of operations
75,724
307,923
522,783
4,243,518
6,579
5,156,527
Value (Euros '000)
7,287,266
26,062,689
27,934,449
9,720,334
1,425,198
72,429,936
Impairment constituted (Euros '000)
166,686
582,663
183,099
426,887
14,566
1,373,901
In the year of the current production, are included operations that, by their nature, are contractually subject to
renewals. In these cases, the date of the last renewal is considered, namely for overdraft operations, secured current
account and factoring operations.
As at 31\u00a0December 2022, the following table includes the loans portfolio (including guarantees and commitments) by
segment and by year of production (date of the beginning of the operations, in the portfolio at the date of balance
sheet - it does not include restructured loans):
2022 (restated)
Year of production
Construction
and Commercial
Real Estate
Companies -
Other Activities
Mortgage
loans
Individuals -
Other
Other loans
Total
2012 and previous
Number of operations
15,703
25,791
293,344
677,001
384
1,012,223
Value (Euros '000)
970,246
3,194,423
10,117,624
1,228,014
81,780
15,592,087
Impairment constituted (Euros '000)
73,617
51,428
106,931
17,378
646
250,000
2013
Number of operations
1,121
3,600
10,115
65,523
17
80,376
Value (Euros '000)
64,192
510,025
376,049
106,759
2,537
1,059,562
Impairment constituted (Euros '000)
3,236
3,441
5,681
3,329
6
15,693
2014
Number of operations
1,234
4,859
8,737
82,035
86
96,951
Value (Euros '000)
76,217
509,250
356,743
126,516
183,780
1,252,506
Impairment constituted (Euros '000)
5,049
9,235
4,719
4,618
855
24,476
2015
Number of operations
1,691
6,284
10,836
112,676
124
131,611
Value (Euros '000)
106,007
908,354
515,361
185,482
44,947
1,760,151
Impairment constituted (Euros '000)
1,947
23,398
3,874
9,116
27,758
66,093
2016
Number of operations
1,911
8,196
12,280
134,403
55
156,845
Value (Euros '000)
154,183
1,209,277
616,181
256,858
4,248
2,240,747
Impairment constituted (Euros '000)
5,274
13,961
4,432
17,195
174
41,036
2017
Number of operations
2,568
11,100
20,277
142,014
96
176,055
Value (Euros '000)
219,318
1,228,140
1,202,742
305,913
13,230
2,969,343
Impairment constituted (Euros '000)
2,807
17,900
5,830
21,347
720
48,604
2018
Number of operations
5,312
19,488
26,701
286,638
203
338,342
Value (Euros '000)
498,338
2,227,925
1,833,809
655,719
309,885
5,525,676
Impairment constituted (Euros '000)
7,262
32,931
6,511
43,836
1,607
92,147
2019
Number of operations
8,703
27,962
30,166
595,430
185
662,446
Value (Euros '000)
632,970
2,098,246
2,198,981
1,221,662
144,135
6,295,994
Impairment constituted (Euros '000)
7,295
45,754
5,735
75,179
3,002
136,965
2020
Number of operations
9,891
37,416
36,088
313,758
255
397,408
Value (Euros '000)
1,148,968
4,324,442
2,656,294
809,745
165,228
9,104,677
Impairment constituted (Euros '000)
13,228
83,686
7,361
42,424
1,638
148,337
2021
Number of operations
10,744
37,545
53,486
524,347
340
626,462
Value (Euros '000)
1,146,704
3,355,457
4,464,436
1,376,201
388,696
10,731,494
Impairment constituted (Euros '000)
15,760
51,953
8,848
61,243
2,299
140,103
2022
Number of operations
14,046
117,544
38,354
1,108,878
4,678
1,283,500
Value (Euros '000)
2,097,778
7,566,584
3,822,846
2,514,949
364,556
16,366,713
Impairment constituted (Euros '000)
19,365
169,939
5,788
64,160
2,593
261,845
Total
Number of operations
72,924
299,785
540,384
4,042,703
6,423
4,962,219
Value (Euros '000)
7,114,921
27,132,123
28,161,066
8,787,818
1,703,022
72,898,950
Impairment constituted (Euros '000)
154,840
503,626
165,710
359,825
41,298
1,225,299
In the year of the current production, are included operations that, by their nature, are contractually subject to
renewals. In these cases, the date of the last renewal is considered, namely for overdraft operations, secured current
account and factoring operations.
As at 31\u00a0December 2023, the following table includes the fair value of the collaterals by segments (not limited by the
value of the collateral) associated to the loan's portfolio:
2023
Construction and Commercial
Real Estate
Companies - Other Activities
Mortgage loans
Fair Value
Real Estate
(*)
Other real
Collateral (**)
Real Estate
(*)
Other real
Collateral (**)
Real Estate
(*)
Other real
Collateral (**)
< 0.5 M\u20ac
Number
7,433
10,521
8,995
74,256
453,097
247
Value (Euros '000)
957,351
270,085
1,360,898
1,715,200
64,939,467
14,258
>= 0.5 M\u20ac and < 1 M\u20ac
Number
788
68
1,221
261
6,910
5
Value (Euros '000)
548,653
46,495
856,785
181,934
4,459,854
2,833
>= 1 M\u20ac and < 5 M\u20ac
Number
752
49
1,137
180
1,169
1
Value (Euros '000)
1,564,212
90,200
2,317,694
351,774
1,828,625
1,121
>= 5 M\u20ac and < 10 M\u20ac
Number
126
1
128
15
16
\u2014
Value (Euros '000)
883,759
5,424
892,174
111,364
102,113
\u2014
>= 10 M\u20ac and < 20 M\u20ac
Number
52
1
62
12
2
\u2014
Value (Euros '000)
705,360
10,415
882,748
176,111
21,129
\u2014
>= 20 M\u20ac and < 50 M\u20ac
Number
32
1
47
2
\u2014
\u2014
Value (Euros '000)
900,127
20,241
1,393,377
46,125
\u2014
\u2014
>= 50 M\u20ac
Number
4
\u2014
15
4
\u2014
\u2014
Value (Euros '000)
263,193
\u2014
1,124,438
855,609
\u2014
\u2014
Total Number
9,187
10,641
11,605
74,730
461,194
253
Total Value (Euros '000)
5,822,655
442,860
8,828,114
3,438,117
71,351,188
18,212
(*) The fair value of real estate collateral relates to the PVT included in valuations.
(**) Includes, namely, securities, deposits and fixed assets pledges.
As at 31\u00a0December 2022, the following table includes the fair value of the collaterals by segments (not limited by the
value of the collateral) associated to the loan's portfolio:
2022 (restated)
Construction and Commercial
Real Estate
Companies - Other Activities
Mortgage loans
Fair Value
Real Estate
(*)
Other real
Collateral (**)
Real Estate
(*)
Other real
Collateral (**)
Real Estate
(*)
Other real
Collateral (**)
< 0.5 M\u20ac
Number
6,822
9,575
9,030
71,315
468,372
303
Value (Euros '000)
882,242
223,661
1,369,613
1,489,242
62,924,078
17,038
>= 0.5 M\u20ac and < 1 M\u20ac
Number
741
70
1,189
236
6,321
4
Value (Euros '000)
520,105
47,186
832,819
162,741
4,080,818
2,230
>= 1 M\u20ac and < 5 M\u20ac
Number
634
47
1,110
205
1,062
1
Value (Euros '000)
1,307,513
84,190
2,223,387
395,940
1,636,182
1,267
>= 5 M\u20ac and < 10 M\u20ac
Number
108
2
118
15
14
\u2014
Value (Euros '000)
737,705
10,838
852,256
102,251
86,476
\u2014
>= 10 M\u20ac and < 20 M\u20ac
Number
50
2
57
13
1
\u2014
Value (Euros '000)
651,146
21,833
809,825
194,916
11,110
\u2014
>= 20 M\u20ac and < 50 M\u20ac
Number
22
\u2014
40
1
\u2014
\u2014
Value (Euros '000)
636,352
\u2014
1,208,432
20,452
\u2014
\u2014
>= 50 M\u20ac
Number
6
\u2014
14
2
\u2014
\u2014
Value (Euros '000)
455,600
\u2014
1,245,381
523,630
\u2014
\u2014
Total Number
8,383
9,696
11,558
71,787
475,770
308
Total Value (Euros '000)
5,190,663
387,708
8,541,713
2,889,172
68,738,664
20,535
(*) The fair value of real estate collateral relates to the PVT included in valuations.
(**) Includes, namely, securities, deposits and fixed assets pledges.
As at 31\u00a0December 2023, the following table includes the LTV (loan-to-value) ratio by segments Construction and
Commercial Real Estate (CRE), Companies - Other Activities and Mortgage loans:
(Thousands of euros)
2023
Segment/Ratio
Number
of properties
Stage 1
Stage 2
Stage 3
Impairment
Construction and CRE
Without associated collateral
n.a.
1,325,209
368,506
61,341
69,194
<60%
26,471
1,231,512
314,464
27,331
22,492
>=60% and <80%
4,107
405,123
124,352
25,326
17,357
>=80% and <100%
858
115,631
26,141
2,513
3,689
>=100%
915
83,185
56,059
49,530
30,584
Companies - Other Activities
Without associated collateral
n.a.
9,520,386
1,406,516
244,982
438,065
<60%
49,955
1,888,694
528,115
128,724
75,157
>=60% and <80%
15,150
965,433
277,671
80,993
42,715
>=80% and <100%
9,050
457,684
378,185
48,634
34,873
>=100%
2,328
492,635
159,776
258,397
208,054
Mortgage loans
Without associated collateral
n.a.
62,011
3,510
9,719
12,435
<60%
380,896
13,666,658
1,351,098
264,041
119,276
>=60% and <80%
119,725
8,368,284
896,151
117,924
39,255
>=80% and <100%
33,465
2,594,964
349,466
50,104
20,302
>=100%
4,814
168,138
53,712
19,770
10,447
As at 31\u00a0December 2022, the following table includes the LTV (loan-to-value) ratio by segments Construction and
Commercial Real Estate (CRE), Companies - Other Activities and Mortgage loans:
(Thousands of euros)
2022 (restated)
Segment/Ratio
Number
of properties
Stage 1
Stage 2
Stage 3
Impairment
Construction and CRE
Without associated collateral
n.a.
1,528,695
453,957
73,399
70,799
<60%
25,799
1,019,694
259,169
42,667
31,589
>=60% and <80%
2,771
376,094
81,106
21,337
9,536
>=80% and <100%
1,067
131,874
46,414
58,121
49,541
>=100%
979
74,888
73,472
61,705
40,249
Companies - Other Activities
Without associated collateral
n.a.
10,285,172
1,651,463
284,131
393,519
<60%
49,259
1,563,296
495,030
141,344
65,781
>=60% and <80%
16,491
991,449
329,502
128,863
48,995
>=80% and <100%
11,106
576,326
406,133
72,826
47,386
>=100%
2,741
654,901
202,769
280,711
146,244
Mortgage loans
Without associated collateral
n.a.
53,715
2,892
10,403
10,816
<60%
383,344
13,363,029
1,310,064
261,616
102,636
>=60% and <80%
129,126
8,530,613
844,549
112,000
32,431
>=80% and <100%
39,677
2,884,194
357,767
58,421
19,953
>=100%
6,013
235,017
60,244
30,008
15,674
As at 31\u00a0December 2023, the following table includes the fair value and the net book value of the properties classified
as Non-current assets held for sale (note 27) and as Other assets (note 32), by type of asset:
(Thousands of euros)
2023
Assets arising from recovered
loans results
Assets belong to investments
funds and
real estate companies
Total
Asset
Appraised
value
Book value
Appraised
value (1)
Book value
Appraised
value
Book value
Land
Urban
80,526
49,779
84,684
84,684
165,210
134,463
Rural
4,622
2,188
17,560
17,560
22,182
19,748
Buildings in development
Commercials
790
529
\u2014
\u2014
790
529
Mortgage loans
2,474
1,438
\u2014
\u2014
2,474
1,438
Constructed buildings
Commercials
29,968
15,391
\u2014
\u2014
29,968
15,391
Mortgage loans
52,120
35,758
\u2014
\u2014
52,120
35,758
Other
30,495
30,261
\u2014
\u2014
30,495
30,261
Other assets
5,400
5,400
\u2014
\u2014
5,400
5,400
206,395
140,744
102,244
102,244
308,639
242,988
(1) Value deducted from haircuts or other applicable impairments
As at 31\u00a0December 2022, the following table includes the fair value and the net book value of the properties classified
as Non-current assets held for sale (note 27), by type of asset:
(Thousands of euros)
2022 (restated)
Assets arising from recovered
loans
Assets belong to investments
funds and
real estate companies
Total
Asset
Appraised
value
Book value
Appraised
value (1)
Book value
Appraised
value
Book value
Land
Urban
126,593
84,970
199,094
199,094
325,687
284,064
Rural
5,318
2,996
20,768
20,768
26,086
23,764
Buildings in development
Commercials
869
517
\u2014
\u2014
869
517
Mortgage loans
2,550
1,491
\u2014
\u2014
2,550
1,491
Other
11
11
\u2014
\u2014
11
11
Constructed buildings
Commercials
62,390
43,304
\u2014
\u2014
62,390
43,304
Mortgage loans
82,549
64,015
185
185
82,734
64,200
Other
38,697
38,574
\u2014
\u2014
38,697
38,574
318,977
235,878
220,047
220,047
539,024
455,925
(1) Value deducted from haircuts or other applicable impairments
Credit portfolio monitoring process
The Bank has in place a credit portfolio management and monitoring processes, namely with regard to the assessment
of the risk profile of the exposure in different portfolios/segments. These procedures have the purpose of identifying
and closely monitoring the customers potentially more affected by the prevailing macroeconomic context, anticipating
possible difficulties in complying the responsibilities and defining credit and performance strategies adjusted to the
specificities of each customer/group of customers, with a view to both maintaining support to customers considered
viable and mitigating credit risk in cases where there are risks of loss in the exposure value.
The importance of this approach is reinforced by the uncertainty that has marked the activity in recent years, with
special emphasis on the pandemic context that emerged at the beginning of 2020 and the effects resulting from
multiple geopolitical conflicts, with impacts on various aspects such as a more modest level of economic growth,
budgetary pressures to cope with the impacts felt by economic agents, the need to allocate budgetary amounts to
areas such as Defence, limitations on the transportation of goods, pressure on energy costs, inflationary impacts, high
levels of interest rates and rising unemployment rates.
In the specific case of Portugal, the context described translated into lower demand for credit instruments from
customers, especially in the corporate segment.
The main guidelines of the credit portfolio monitoring approach can be characterized as presented below:
- Global and transversal: Analysis of the entire credit portfolio of the Bank, being excluded from the monitoring process
only customers with a better risk profile (in the case of retail) or with exposures of a lower size (in the case of retail
and corporate).
- Specialized: Monitoring by the \u201cComit\u00e9 de Acompanhamento de Risco de Empresas\u201d (CARE), and Credit Division in
coordination with the Rating Division for the corporate segment and by the Credit Division and Retail Recovery Division
for individuals and small businesses. The cases monitored by the CARE committee, are related to clients covered by a
set of criteria that combine exposure size and risk factors like the rating assigned, IFRS 9 staging and, for the corporate
segment, the level of leverage and whether the sector in which it operates is considered highly vulnerable.
- Segmented: Prioritization of approach/analysis recurrence based on risk signs, in order to gather additional
information and agree on appropriate and sustainable financial restructuring solutions in a timely manner.
- Prospective: Use of predictive models, in order to anticipate potential future defaults, avoiding a reactive approach.
- Standardized: Both in terms of risk models and monitoring, and in terms of credit solutions for which it is possible to
identify pre-defined alternatives (retail segments).
- Convenient and innovative: Making the restructuring journey simpler and more convenient both in terms of credit
solutions and channels, extending the restructuring offer to the App for consumer credit and mortgages.
Specifically in the corporate segment, the process of portfolio follow-up and monitoring can be generically
characterized as described below, having as a fundamental component the attribution of credit strategies, among pre-
defined options, with review periods differentiated according to the level of risk associated to the strategy attributed:
1. Client Assessment and presentation of Indicative Credit Strategy by the Rating Division (for customers with ratings
assigned by corporate rating models);
2. Approval, by the competent credit decision levels, of a credit strategy for each customer, taking into consideration
the Indicative Credit Strategy from the Rating Division, the information received from the area that follows the
client and the inputs received as a result of the customer interaction process;
3. Decision, negotiation and formalisation of the operations that will ensure that the approved strategy is pursued and
the approved credit limits are met (Credit Division, Areas that follow the client and Operations Division);
4. Monitoring the Credit Strategy and the evolution of the customer's activity (Credit Division, Areas that follow the
client and Specialised Committees - CARE);
5. Monitoring of the credit portfolio and effectiveness of the portfolio monitoring process and credit strategy
attribution (Risk Office), based on a set of KPIs, (e.g. percentage of the credit portfolio with valid risk strategy;
evolution of credit exposure to customers with a reduction strategy; adequacy of the credit strategy to the
customer's performance);
6. In the attribution of the customer's credit strategy, besides the intrinsic factors of the customer, more transversal
factors are taken into consideration, such as the evaluation of the sectorial risk and ESG impacts (periodically
reviewed with the support of the Economic, Sustainability and Criptoactives Studies Division) and taking into
consideration the attribution of a ESG rating regarding the clients with most relevant exposures;
7. The occurrence of effective and/or potential risk events (signs of default/delinquency; breach of contractual
covenants; severe alteration in sector risk; alteration in the corporate/shareholder structure), trigger an
extraordinary/anticipated revision of the strategy.
Within the scope of this monitoring process and with an impact on other complementary procedures adopted by the
Bank, namely for reporting purposes, the Bank defines a list of sectors considered as more vulnerable to the
macroeconomic environment, which is reviewed periodically (at least annually), also involving the preparation of report
presenting a detailed characterisation of its loan portfolio under a sectoral perspective.
Additional measures with impact on the Impairment level
i. Updating macroeconomic scenarios and the parameters of the collective impairment model
Taking into account the changes and uncertainty of the context and the economic outlook essentially marked by a
context conditioned by the maintenance of relatively high levels of inflation and interest rates, an update of the
macroeconomic scenarios used in the collective impairment analysis model in Portugal was carried out in December
2023, based on three scenarios (Central Scenario, Optimistic and Pessimistic) prepared by the Bank's Economic Studies
area.
The referred scenarios, which are used in the Bank for several purposes other than the impairment calculation, took
into consideration the existing projections of reputed entities.
The tables below systematise the projections for 2023 and 2024 considered for Portugal concerning the central
scenarios with regard to some of the critical variables used in the calculation of collective impairment.
Update of main macroeconomic scenario assumptions (Base Scenario) - Portugal
December 2022 Scenario
December 2023 Scenario
Difference
Variable
2023
2024
2023
2024
2023
2024
Unemployment rate
5.88%
5.92%
6.53%
7.15%
0.65%
1.23%
3 months Euribor Rate
3.17%
3.10%
3.43%
3.18%
0.26%
0.08%
Savings Rate
5.80%
6.00%
6.40%
8.40%
0.60%
2.40%
Inflation Rate
5.83%
3.25%
5.34%
2.93%
-0.49%
-0.33%
Regarding Poland, an update of the macroeconomic assumptions was also carried out in relation to those considered in
December 2022, which translates into the terms presented in the table below regarding the projections for 2023 and
2024 foreseen in the central scenario.
Update of main macroeconomic scenario assumptions (Base Scenario) - Poland
Variable
December 2022 Scenario
December 2023 Scenario
Difference
2023
2024
2023
2024
2023
2024
Unemployment rate
5.80%
6.00%
5.20%
5.30%
-0.60%
-0.70%
Nominal GDP annual evolution
13.80%
9.00%
11.70%
7.60%
-2.10%
-1.40%
Consumption annual evolution
0.70%
1.50%
-1.00%
3.50%
-1.70%
2.00%
Disposable Income
4.90%
4.80%
12.60%
8.10%
7.70%
3.30%
EUR/PLN exchange rate
4,64
4,52
4,48
4,42
-0.16
-0,10
CHF/PLN exchange rate
4,65
4,48
4,60
4,58
-0.05
0,10
The following tables describe the weightings assigned in Portugal and Poland to the different macroeconomic scenarios
considered at the end of 2022 and 2023, which can be considered as conservative:
Weightings of the macroeconomic scenarios considered
Scenario
Weightings
Portugal
Poland
Dec 2022
Dec 2023
Dec 2022
Dec 2023
Central
60%
60%
65%
70%
Upside
10%
10%
10%
10%
Downside
30%
30%
25%
20%
For Portugal, a simulation of an additional one percentage point worsening in the evolution of the key indicators for the
collective impairment estimate was carried out, which translates into the impacts shown in the table below, based on
the collective impairment of the portfolio in Portugal as at 31 December 2023, which amounted to Euros 488 million
(this figure does not include the impairment amounts calculated by the overlays methodology described in point ii. of
this section).
Sensitivity analysis on the calculation of collective impairment (December 2023)
Variable
Estimated impact (% variation)
100 bp Unemployment Rate aggravation
4,68%
100 bp 3 months Euribor aggravation
6,76%
100 bp Savings Rate aggravation
0,55%
100 bp Inflation Rate aggravation
4,62%
ii. Impairment overlays
In order to incorporate an additional level of conservatism in the impairment values, the Bank defined and
implemented a methodology of complementary of identification of significant increase in credit risk situations and
potential signs of impairment.
This approach adopts differentiated criteria in relation to the base methodologies in force, with distinct processes
having been adopted for the calculation of overlays for the corporate and individual customers segments.
The overlays currently in force seek in particular to address the context of uncertainty that continues to prevail,
associated with a context of multiple geopolitical crisis, the constraints that still exist with regard to economic growth,
inflationary pressures and the high level of interest rates, an environment that constitutes a disruption of the context
that prevailed until the end of 2021, characterized by low levels of interest rates and inflation.
This positioning is in line with the guidelines on this matter issued by the Supervisors in what regards the identification
and measurement of credit risk in contexts of uncertainty, so that the release of overlays initially constituted in the
context of the pandemic should be carried out with prudence and taking into account the possible need for new
overlays to respond to the current context.
The exercise carried out reflected, in terms of impairment value, in the calculation of the estimated impact arising
from potential migrations of customers with higher risk to Stage 2 and Stage 3, based on the various factors considered
in the analysis. It should be noted that the most significant impact occurred in the corporate segment. The
methodology developed by the Bank was considered for the calculation and recording of impairment at the reference
date of the accounts, without affecting the classification of credit exposures by stages in the Bank's loan portfolio.
In Poland, the Bank also adopted a policy of recording overlays. Taking into consideration the country's specific reality,
adjustments to the overlay's methodology had already been incorporated in 2022 to address the impacts of the
geopolitical crisis.
As a result of the implementation of this methodology, the Bank calculated an additional impairment to that resulting
from the collective analysis model, therefore with characteristics of overlays, whose amount on 31 December 2023 was
approximately Euros 99.0 million in Portugal (Euros 95.0 million in December 2022), Euros 48.3 million in Poland (Euros
33.9 million in December 2022) and Euros 2.8 million in Mozambique (in the end of 2022 there weren\u2019t overlay
allocations in this geography).
Government measures to mitigate the impacts on mortgage contracts
Decree-Law 80-A/2022
Specifically with regard to Decree-Law 80-A/2022, a Portuguese Government act of 25 November 2022 that established
measures to mitigate the effects of the increase in the reference indexing factors of credit contracts for the acquisition
or construction of permanent house ownership, it is worth highlighting the fact that it introduced the obligation for
Financial Institutions to approach individual customers with mortgage credit who potentially fit into the requirements
set out in that act.
In what concerns Millennium bcp, a contact was promoted with about 180 thousand customers, requesting information
in order to calculate the respective effort rate.
On 31 December 2023, date when the period to adhere to this measure expired, the number of clients that had shown
interest in evaluating the support mechanisms provided for under Decree Law 80-A/2022 amounted to around 15
thousand.
Decree-Law 20-B/2023
Decree-Law 20-B/2023, a Portuguese Government regulation of 22 March 2023, embodied the legislative package \"Mais
Habita\u00e7\u00e3o\", providing extraordinary support to families, namely through the creation of support for borrowers of credit
agreements for permanent own housing in the form of a temporary subsidy of the interest component, in situations
where the index rate exceeds a certain threshold.
On 13 February 2024, loans with subsidies already processed amounted to exposures of approximately Euros 520 million,
with an average monthly subsidy of Euros 49.
Decree-Law 91/2023
Also with regard to the promotion of support measures for borrowers of mortgage loan contracts, it is worth noting the
publication of Decree-Law 91/2023, a Portuguese government decree of 11 October 2023, which allows to fix the
installment over a period of 24 months, taking into account an interest rate benchmark defined in the decree-law, and
with an adherence period until 31 March 2024.
By 31 January 2024, at the request of customers, the Bank had implemented this measure in around 1,800 contracts.
Credit concentration risk
The Group\u2019s policy relating to the identification, measurement, and evaluation of the concentration risk in credit risk is
approved by the Bank\u2019s management body, applied to all Group entities, and is based on the following guidelines:
The monitoring of the concentration risk and the follow-up of major risks is made, at Group level, based on the concept
of \"Economic Groups\" and \u201cCustomer Groups\u201d - sets of connected Customers (individual persons or companies), which
represent a single entity from a credit risk perspective, such that if one of them is affected by financial problems, one
or all of the others, will probably face difficulties to fulfil their debtor obligations. The Customer connections that
originate a Customer group include the formal participation on the same economic group, the evidence that a direct or
indirect control relationship exists, including the control by an individual Customer (criteria of capacity of control) of a
company or the existence of a strong commercial interdependency or common sources of funding that cannot be
replaced on a short term (criteria of economic dependency).The identification of connected clients is an integral part
of the credit granting and monitoring processes of each entity, with the Risk Office monitoring the economic and
customers\u2019 groups maintenance.
For the control of credit concentration risk and limit the exposure to this risk, there are limits defined for:
1) Exposures to Sovereigns;
2) Exposures to Institutions (Banks/financial institutions);
3) Single-name exposures (Large Corporate exposures);
4) Geographic concentration (country risk);
5) Exposure to sectors of activity.
These limits apply to the \u2018Net exposures\u2019 (*), relating either to a counterparty or a group of counterparties \u2013 cases for
1), 2) and 3) \u2013 or to the set of exposures to an activity sector or to a country (the counterparty country of residence) \u2013
cases for 4) and 5). The metrics regarding the concentration of exposure to Sovereigns and geographic concentration
exclude the countries in which the Group has significant operations (Portugal, Poland and Mozambique) and the
respective Sovereigns.
Except for exposure to sectors of activity, the concentration limits are established by taking into consideration the
credit worthiness of the debtors at stake in what concerns their rating grades/probability of Default (PD) (internal or
external ratings; country rating in the case of geographic concentration).
The concentration limits for Corporate single-name exposures apply only to non-NPE positions, since the NPE (Non-
performing exposures) positions are considered \u201calways in excess\u201d and its framed by the actions covered by the NPE
reduction Plan defined and executed at Group BCP level.
The limits in force as at 31 December 2023, for the exposure to Single-name, in terms of the Net Exposure weight over
the Consolidated Own Funds, are the following:
Risk quality
Risk grade
Single-name
High quality
1 - 5
7.0%
Average/good quality
6 - 7
4.5%
Average low/quality
8 - 9
2.8%
Low quality
10 - 11
0.5%
Restricted credit
12 - 13
0.3%
(*) Net exposure = EAD x LGD, considering LGD=45% whenever own estimates for LGD are not available or applicable. EAD = Exposure at
default ; LGD = Loss given Default.
As at 31 December 2023:
- There were no exposure excesses to Sovereigns, Institutions or countries;
- There were 4 Economic Groups with net exposure above the established Single-name limits for their respective risk
grade. For each client with an exposure excess a specific plan is prepared, aiming at reducing the exposure and
bringing it within the established limits.
It should also be referred that the assessment of the Single-name concentration is also performed within the Group RAS
(Risk Appetite Statement) scope.
In what concerns the limit for exposure to sectors of activity, in force on 31 December 2023, this is defined as a
maximum of 40% per sector of activity, in terms of the weight of the Net Exposure for each sector of activity over the
Own Funds of each Group Entity. At this date, there was no excess over this limit.
The Bank's management body and the Risk Assessment Committee are regularly informed on the evolution of the credit
concentration risk metrics (against the mentioned limits) and on major risks.
The credit concentration risk is measured and monitored by the Risk Office supported on a database on credit
exposures (the Risk Office Datamart), monthly updated by the Group\u2019s systems, which feeds the risk management
system of the Group.
The Risk Office maintains a simulation tool for supporting the analysis of the impact on changes on the Customers
exposures in the consumption of the respective concentration limits, which is used by the Credit Division and by the
Commercial Networks within the scope of credit analysis for large clients with the purpose of ensuring exposures are
kept within the approved limits.
Real state risk
Real estate risk materializes through losses associated with changes in the value of assets held by the Bank or,
indirectly, through funds and/or real estate companies.
The Group detains a real estate portfolio, that comes from repossessed assets linked with recovery processes of non-
performing exposures, that is subject to fluctuations and risks in the real estate market and the obligations arising from
ownership of the properties.
As a credit institution operating in the financial market, the Bank does not operate directly in the real estate sector,
neither as a sales agent nor as an operator in the rental segment.
In this context, the management of this portfolio is based on the following objectives:
\u2022 Minimize the risks associated with the real estate portfolio;
\u2022 Minimize management costs, maintenance and sale of properties;
\u2022 Maximize the financial results from the sale of foreclosed assets;
\u2022 Mitigate the portfolio's impact on the Bank's cost of capital and liquidity.
Within this framework, the Bank should optimize the outflow of foreclosed assets from the real estate portfolio,
developing appropriate commercial strategies and exploring the distribution channels that are expected to be most
effective at any given time to sell the different types of properties held by the Bank.
By managing this portfolio, the following risks were identified and monitored by the Bank:
\u2022 Price risk \u2013 Risk associated with the devaluation of the property due to unfavourable developments in the real estate
market, whether due to a decrease in demand or strong pressure on property sales;
\u2022 Liquidity risk - Inherent to the nature of real estate assets and the impact on the Bank's liquidity position and
respective financial costs of holding the property;
\u2022 Operational risk - associated with the processes of acquiring, maintaining and selling properties, which can result in
costs or lost revenue (includes the risks of vandalization and deterioration of properties);
\u2022 Compliance risk - compliance with legal standards from the property acquisition process, to the requirements to be
observed in its sale, including the responsibility associated with your status as owner;
\u2022 Fiscal risk \u2013 associated with possible tax contingencies relating to properties owned by the Bank and monitoring the
administrative and judicial processes;
\u2022 Reputational risk - related to the risks mentioned above, but also with the image projected by the Bank in the way it
manages its operations in the real estate market.
The risks associated above are mitigated by the Bank through the existence of a team specialized in the management of
this type of assets; a set of internal policies and standards that regulate the asset management processes on the
balance sheet; and an insurance policy.
The portfolio of real estate assets has been progressively reduced by the Bank over the last few years.
Market risk
Market risks consist of the potential losses that may arise within a portfolio as a result of changes in interest or
exchange rates, and/or in the prices of the different financial instruments within the portfolio, considering not only the
correlations that exist between those instruments but also their volatilities.
For the purpose of profitability analysis and market risks quantification and control, the following management areas
are defined for each entity within the Group:
- Trading: Management of positions aimed at achieving short-term gains through sale or revaluation. These positions are
actively managed, tradable without restriction, and may be valued frequently and accurately. These positions include
securities and derivatives resulting from sales activities;
- Funding: Management of institutional funding (wholesale funding) and money market positions;
\u2013 Investment: Management of all positions in securities to be held to maturity or for an extended period, or positions
not tradable on liquid markets;
- Commercial: Management of positions arising from commercial activities with Customers;
- Structural: Management of balance sheet items or operations which, due to their nature, are not directly related to
any of the management areas referred to above; and
- ALM: Assets and Liabilities Management.
The definition of these areas allows for an effective management separation between trading and banking books, as
well as a proper allocation of each operation to the most suitable management area, according to the respective
context and strategy.
To ensure that risk levels incurred in the different portfolios of the Group align with predefined tolerance risk levels,
various market risks limits are established, typically on an annual basis, applying to all portfolios of the risk
management areas where the risks are incident. These limits are monitored daily (or intra-daily, in the case of financial
markets) by the Risk Office.
Stop loss limits are also set for portfolios in the financial markets' areas \u2013 Trading and Funding \u2013 based on multiples of
the risk limits defined for them, aiming to limit the maximum losses that may occur in these areas. If these limits are
breached, a mandatory review of the underlying business strategy and assumptions regarding the management of the
positions in question ensues.
Market risks of the prudential trading book (1)
For the daily measurement of generic market risk, which includes interest rate risk, exchange rate risk, equity risk and
credit default swap price risk (indexes) - a Value-at-Risk (VaR) model is used, considering a time horizon of 10 business
days and a 99% significance level.
Additionally, the Group uses an integrated market risk measure that monitors all relevant sub-types of risk. This
measure integrates assessment of generic, specific, non-linear and commodity risks. Each sub-type of risk is measured
individually using appropriate risk models, with the integrated measure calculated from individual measures for each,
without considering any type of diversification between the sub-types (worst-case scenario approach).
For non-linear risk, an internally developed methodology is applied, replicating the effect of main non-linear elements
of options on P&L results of the different portfolios in which these are included, similarly to what is considered in the
VaR methodology, using the same time horizon and significance level.
Specific and commodity risks are measured using standard methodologies defined in the applicable regulations, with an
appropriate change of the time horizon considered.
The table below presents the amounts at risk for the Trading Book, measured by the methodologies referred to above:
(Thousands of euros)
2023
Max of global risk
in the period
Min of global risk
in the period
2022
(restated)
Generic Risk ( VaR )
889
4,250
683
1,322
Interest Rate Risk
587
4,458
555
1,011
FX Risk
551
1,438
566
841
Equity Risk
499
218
80
585
Diversification effects
(748)
(1,864)
(518)
(1,114)
Specific Risk
624
428
16
13
Non-Linear Risk
\u2014
\u2014
\u2014
\u2014
Commodities Risk
\u2014
\u2014
\u2014
\u2014
Global Risk
1,513
4,678
699
1,335
Validation of the internal VaR model\u2019s appropriateness for the assessment of risks involved in the positions held, is
conducted over time, with different scopes and frequency, including back testing, diversification effects estimation,
and analysis of risk factor comprehensiveness.
In addition to VaR assessment, the Group continuously tests a broad range of stress scenarios analysing the respective
results to identify risk concentrations not captured by the VaR model.
(1) Trading Book - positions allocated to the Trading Management Area (and not specifically to the accounting trading book)
Interest rate risk
The evaluation of interest rate risk derived from Banking Book operations is assessed through a process of risk
sensitivity analysis, undertaken every month, covering all the operations included in the Group's consolidated Balance
Sheet and discriminated by exposure currency.
Variations of market interest rates influence the Group's net interest income, both in the short term and medium/long
term, affecting its economic value in a long-term perspective. The main risk factors arise from the repricing mismatch
of portfolio positions (repricing risk) and from the risk of variation in market interest rates (yield curve risk). Besides
this, although with less impact, there is the risk of unequal variations in different reference rates with the same
repricing period (basis risk).
In order to identify the exposure of the Group's banking book to these risks, the monitoring of the interest rate risk
takes into consideration the financial characteristics of each of the relevant contracts, with the respective expected
cash-flows (principal and interest, without the spread component but including costs for liquidity, capital, operational
and other) being projected according to the repricing dates, thus calculating the impact on economic value resulting
from alternative scenarios of change of market interest rate curves.
The interest rate sensitivity of the balance sheet, by currency, is calculated as the difference between the present
value of the interest rate mismatch discounted at market interest rates and the discounted value of the same cash
flows simulating parallel shifts of the market interest rates.
The following tables show the expected impact on the banking book economic value of parallel shifts of the yield curve
by +/- 100 and +/- 200 basis points, for each of the main currencies in which the Group holds material positions:
(Thousands of euros)
2023
Currency
-200 bp(*)
- 100 bp (*)
+ 100 bp
+ 200 bp
CHF
2,726
1,368
(1,378)
(2,763)
EUR
(52,312)
(24,650)
21,646
38,925
PLN
130,883
63,939
(61,469)
(120,974)
USD
(8,362)
(4,103)
3,954
7,764
72,935
36,554
(37,247)
(77,048)
(*) Decrease in rates scenario, limited to non-negative rates (which implies effective variations of lesser amplitude than 100 bp, especially in
shorter periods).
(Thousands of euros)
2022 (restated)
Currency
-200 bp(*)
- 100 bp (*)
+ 100 bp
+ 200 bp
CHF
1,422
741
(763)
(1,544)
EUR
(99,549)
(50,069)
50,011
99,465
PLN
(71,253)
(35,436)
34,996
69,502
USD
(32,091)
(15,661)
14,937
29,193
(201,471)
(100,425)
99,181
196,616
(*) Decrease in rates scenario, limited to non-negative rates (which implies effective variations of lesser amplitude than 100 bp, especially in
shorter periods).
As described in accounting policy 1.B, the financial statements of the Group's subsidiaries and associates placed abroad
are prepared in their functional currency and translated into Euros at the end of each financial period. The exchange
rates used for the conversion of balance sheet foreign currency amounts are the ECB reference rates at the end of each
period. In foreign currency conversion of results, are calculated average exchange rates according to the closing
exchange rates of each month of the year. The rates used by the Group are as follows:
Closing exchange rates
Average exchange rates
(Balance sheet)
(Income statement)
Currency
2023
2022
(restated)
2023
2022
(restated)
AOA
924.8560
543.2680
748.1139
487.7116
BRL
5.3614
5.6390
5.4066
5.4153
CHF
0.9297
0.9872
0.9729
1.0042
MOP
8.8865
8.5744
8.8865
8.5744
MZN
70.5700
68.1850
69.2471
67.5585
PLN
4.3437
4.6816
4.5396
4.6823
USD
1.1049
1.0667
1.0819
1.0537
Foreign exchange and equity risk of the banking book
The foreign exchange risk of the banking book is transferred internally to the Trading Area, in accordance with the
Group\u2019s risk specialization model for the management of balance sheet foreign exchange risk. Structural foreign
exchange exposures, including those resulting from financial holdings in subsidiaries, are not transferred and may be
covered by market operations, in line with the defined strategy for managing structural foreign exchange risk, aiming
at hedging against volatility in the CET1 ratio stemming from exchange rates changes.
As at 31 December 2023, the Group 's financial investments in foreign currency were not hedged.
On a consolidated basis these are identified as net investment hedges in accounting terms, according with IFRS
nomenclature. On an individual basis, they are designated as fair value hedges of equity investments.
Gains and losses on instruments used to hedge net investments in foreign institutions are recognized in foreign
exchange reserves and presented in the statement of comprehensive income.
The transfer of funds to Portugal, including dividends, owed by BCP's subsidiaries or associates in third countries,
particularly outside the European Union, may be subject to the restrictions and exchange controls that, at any given
time, are in force in the country where the subsidiaries are incorporated or associated.
Regarding equity risk, the Group maintains a set of small-scale, low-risk positions, primarily in the investment portfolio,
mainly resulting from execution/payment processes. Management of these positions is conducted by a specialized area
of the Group, with risk controlled through defined metrics and limits for market risk control.
Liquidity risk
The evaluation of the Group\u2019s liquidity risk is carried out using indicators set by the supervisory authorities on a regular
basis and other internal metrics for which exposure limits are also fixed.
The monitoring of the liquidity position of the Group's operations in short-term time horizons (up to 3 months) is based
on two internally defined indicators (immediate liquidity and quarterly liquidity). These indicators are calculated on a
daily basis, taking into account the impact in the liquidity buffers available to discount with the respective central
banks at the reference date of future estimated cash flows for each of the respective time horizon (3 days or 3 months)
considering the set of transactions intermediated by the market areas, including in this context transactions with
clients of the Corporate and Private networks, which, due to their size, must be quoted by the Trading Room. The
remaining buffer in each time bucket is then compared to the amount of customer deposits, being the indicators
assessed against exposure limits defined in the Bank's regulations.
In parallel, the evolution of the Group\u2019s structural liquidity position is calculated on a regular basis identifying all the
factors that justify the variations that occur. This analysis is submitted to the Capital and Assets and Liabilities
Committee (CALCO) for appraisal, to enable the decision making that leads to the maintenance of financing conditions
adequate to the business sustainability.
The methodological aspects of the control of liquidity risk are a responsibility of the Risk Commission. This control
includes the regular execution of stress tests, to characterize the Bank's risk profile and to ensure that the Group and
each of its subsidiaries fulfil its obligations in the event of a liquidity crisis. These tests are also used to support the
liquidity contingency plan and management decisions.
Throughout 2023, the Group's three operations - BCP, Bank Millennium and Banco Internacional de Mo\u00e7ambique -
maintained robust liquidity positions, supported mainly by retail deposit bases with proven stability and which allowed
maintaining all liquidity indicators, regulatory and internal, comfortably above the minimum requirements.
At the end of the year and on a consolidated basis, the regulatory short term standard (LCR: Liquidity Coverage Ratio)
reached 276%, compared to 212% in December 2022, well above the minimum regulatory requirement of 100%. The
other short-term liquidity indicator included in the Group's Risk Appetite Statement (RAS), which represents the degree
of coverage of customer deposits by the liquidity buffers available for discounting at European central banks, also had a
favorable evolution, having evolved from 42% to 45%.
From a structural liquidity perspective, the Group continued to reinforce its stable financing base, characterized by the
high weight of customer deposits in the funding structure, complemented by medium and long-term instruments,
consisting mainly of MREL (Minimum Requirements for Own Funds and Eligible Liabilities). The regulatory stable funding
ratio (NSFR: Net Stable Funding Ratio; Article 428 of Regulation (EU) 2019/876) reached 167% in December 2023, vs.
154% a year earlier.
As at 31 December 2023, the Group maintains a structurally comfortable liquidity profile with a loan-to-deposit ratio of
71% (according to Bank of Portugal Instruction No. 16/2004), compared to 74% as at 31 December 2022, indicating a
slight improvement over this period.
In Portugal, following the significant migration of deposits to non-bank savings products that occurred mainly in the
first quarter of 2023, the volume of customer funds showed a stable behavior throughout the 2nd half of the year,
allowing the Bank to protect its market share.
In what concerns wholesale funding, BCP carried out in January 2023 the early repayment of the second and last
tranche of the Targeted Longer-Term Refinancing Operation III (TLTRO III, \"T LTRO III\" in the English abbreviation, in
the gross amount of Euros 600,000,000), with no significant impact on the liquidity risk indicators.
In September 2023, after regaining investment grade status by the four main rating agencies, BCP returned to the
market, placing an issue of senior preferred debt eligible for MREL (Minimum Requirements for Own Funds and Eligible
Liabilities) under its Euro Note Program. The issue, in the amount of Euros 500,000,000, has a term of 3 years, with an
option for early repayment by the Bank at the end of the second year, an issue price of 99.825% and a fixed interest
rate of 5.625%, per year, during the first 2 years (corresponding to a spread of 1.90% over the 2-year mid-swaps rate).
In the third year, the interest rate will result from the sum of the 3-month Euribor with a spread of 1.90%. The issue
was placed among a very diversified base of institutional investors, with demand exceeding the transaction amount by
more than 3 times. The high demand and profile of investors involved in the issue made it possible to narrow the spread
by 30 basis points during the execution phase, also reflecting an excellent market response to the Bank's recent rating
upgrades.
The liquidity buffer available for discounting at the ECB stood at Euros 27,859,364,000 at the end of 2023, Euros
1,351,735,000 higher than a year earlier, to which contributed the cash flow from operations, the reduction in
derivative margin accounts, the placement of the MTN issuance and the market price increase of assets integrated in
the portfolio of assets discountable with the ECB, which offset the impacts in the opposite direction of the evolution of
the commercial gap and the reversal of haircuts applicable to eligible assets at the values in force before the
extraordinary measures taken by the ECB following the COVID-19 pandemic. At the end of 2023, the liquidity buffer
comprised a long position of Euros 2,050,654,000 with the ECB, slightly lower than that observed a year earlier (Euros
2,574,146,000).
Throughout 2023, Bank Millennium showed a significant growth of 11% in its retail deposits base. The operation's
liquidity position was further reinforced by the market placement of a senior non-preferred issue of Euros 500,000,000.
Initially with an amount of Euros 400,000,000, it was subsequently increased by an additional amount of Euros
100,000,000. It has a maturity of four years and a remuneration of 9.875% and qualifies for MREL purposes, thus
meaning the fulfilment of another stage of the institution's recovery plan.
Banco Internacional de Mo\u00e7ambique continued to display a resilient liquidity position, supported by a very conservative
loan to deposits ratio and a robust buffer discountable at the respective central bank, despite the strong increase in
minimum mandatory reserve rates in national and foreign currency imposed by the respective central bank in the first
half of 2023.
The pool of eligible assets for funding operations in the European Central Bank and other central banks, after haircuts,
is detailed as follows:
(Thousands of euros)
2023
2022
(restated)
European Central Bank
14,677,769
13,677,518
Other Central Banks
7,346,514
5,213,823
22,024,283
18,891,341
As at 31\u00a0December 2023 the gross amount discounted with the European Central Bank is null (31\u00a0December 2022: Euros
600,000,000). The amount discounted with the Bank of Mozambique amounts to Euros 1,469,000 (31\u00a0December 2022:
Euros 2,165,000). There are no discounted amounts with other central banks.
The evolution of the ECB\u2019s Monetary Policy Pool, the net borrows at the ECB and liquidity buffer is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Collateral eligible for ECB, after haircuts:
The pool of ECB monetary policy (i)
14,677,769
13,677,518
Outside the pool of ECB monetary policy
11,130,941
10,269,081
25,808,710
23,946,599
Net borrowing at the ECB (ii)
(2,050,654)
(2,574,146)
Liquidity buffer (iii)
27,859,364
26,520,745
i) Corresponds to the amount reported in COLMS (Bank of Portugal application).
ii) Includes as at 31\u00a0December 2023 the amount of deposits with the Bank of Portugal and other liquidity with the Eurosystem (Euros
2,050,654,000) in excess over the minimum cash reserves (Euros 499,338,000).
iii) Eligible collateral available for discount with the ECB, after haircuts, deducted from the net funding at the ECB.
The Group's counterbalancing capacity is defined by the ability to generate additional liquidity in the short term to deal
with possible situations of financial stress. The measures for its reinforcement are described in the Recovery Plan
which, as at 31 December 2023, projected a total estimated value for Portugal of Euros 2,735,000,000, arising from the
sale of corporate bonds and commercial paper, securitization of a portfolio of consumer credit and issuance of retained
covered bonds to be mobilized for the ECB's monetary policy pool.
In consolidated terms, the refinancing risk of medium and long-term instruments will remain at very low levels over the
next years, with no material expression.
Encumbered and Unencumbered assets
Within the scope of the European Banking Authority's guidance on the disclosure of encumbered assets and
unencumbered assets, taking into account the recommendation made by the European Systemic Risk Committee, the
following information is presented in accordance with Commission Implementing Regulation (EU) 2021/637 of 15 March
2021 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to
regulatory technical standards for disclosure of encumbered and unencumbered assets.
(Thousands of euros)
2023 (1)
Carrying amount of
encumbered assets
Fair value of
encumbered assets
Carrying amount of
unencumbered assets
Fair value of
unencumbered assets
of which
notionally
eligible EHQLA
and HQLA (2)
of which
notionally
eligible EHQLA
and HQLA (2)
of which
EHQLA
and HQLA
(2)
of which
EHQLA
and HQLA
(2)
Assets of the disclosing
institution
2,209,334
1,732,985
88,478,010
23,355,398
Equity instruments
\u2014
\u2014
\u2014
\u2014
108,617
\u2014
108,617
\u2014
Debt securities
1,732,985
1,732,985
1,600,621
1,600,621
24,139,055
19,569,285
23,462,376
18,923,903
of which: covered bonds
\u2014
\u2014
\u2014
\u2014
49,735
\u2014
49,735
\u2014
of which: securitisations
\u2014
\u2014
\u2014
\u2014
7,329
3,348
7,329
3,348
of which: issued by
general governments
1,693,088
1,693,088
1,561,888
1,561,888
17,567,226
17,177,757
16,922,286
16,543,663
of which: issued by
financial corporations
\u2014
\u2014
\u2014
\u2014
1,704,878
259,885
1,713,561
259,586
of which: issued by non-
financial corporations
39,897
39,897
38,734
38,734
2,939,512
491,430
2,952,759
491,430
Other assets
459,458
\u2014
64,159,488
3,797,102
(1) Table's figures are calculated by the median of the values disclosed in the regulatory information for the previous 4 quarters.
(2) EHQLA (Set as Extremely High-Quality Liquid Assets) e HQLA (High-Quality Liquid Assets).
Collateral received and own debt securities issued
(Thousands of euros)
2023 (1)
Fair value of encumbered collateral
received or own debt securities issued
Unencumbered
Fair value of collateral received or
own debt securities issued
available for encumbrance
of which notionally
eligible EHQLA and
HQLA (2)
of which EHQLA
and HQLA (2)
Collateral received by the disclosing institution
\u2014
\u2014
253,362
139,971
Debt securities
\u2014
\u2014
139,971
139,971
of which: issued by general governments
\u2014
\u2014
139,971
139,971
Loans and advances other than loans on demand
\u2014
\u2014
111,455
\u2014
Own covered bonds and securitisations issued
and not yet pledged
9,114,834
\u2014
TOTAL COLLATERAL RECEIVED AND OWN DEBT
SECURITIES ISSUED
2,209,334
1,732,985
(1) Table's figures are calculated by the median of the values disclosed in the regulatory information for the previous 4 quarters.
(2) EHQLA (Set as Extremely High-Quality Liquid Assets) e HQLA (High-Quality Liquid Assets).
Sources of encumbrance
(Thousands of euros)
Sources of encumbrance
Matching liabilities, contingent
liabilities and securities lent
Assets, collateral received and own debt
securities issued other than covered
bonds and securitisations encumbered
Carrying amount of selected financial liabilities
1,163,408
1,687,935
The table's figures are calculated by the median of the values disclosed in the regulatory information for the previous 4 quarters.
At the end of 2023, and according to the EBA methodology, the total encumbered assets represents 2% of the Group's
total balance sheet assets. The encumbered Loans to customers represents 13% of the total encumbered assets, while
Debt securities represents 78%.
The main sources of asset encumbrance stem from financing operations in Portugal, notably transactions with the
European Investment Bank (EIB), collateralization of derivative operations and securitization programs.
Collateralization of securitization operations in Poland and derivatives, as well as financing operations with the
European Investment Bank and other commitments with the Deposit Guarantee Fund, are primarily supported by
eligible sovereign debt held with central banks. On the other hand, securitization programs in Portugal are
collateralised by certain Loans to Customers\u2019 portfolios.
As at 31 December 2023, the Other assets includes unencumbered assets in the amount of Euros 3,350,705,000 related
to Loans on demand, the amount of Euros 54,466,987,000 related to Loans and advances other than loans on demand
(of which encumbered assets in the amount of Euros 276,263,000) and the amount of Euros 6,872,185,000, mostly
unencumbered and related to the Group\u2019s activity, namely, to: investments in associated companies and subsidiaries,
tangible assets and investment properties, intangible assets, assets associated with derivatives and current and
deferred taxes.
As at 31 December 2023, BCP Group has a Euros 12.5 billion BCP Covered Bond Programme (\u201cBCP Programme\u201d) with
Euros 9.2 billion of covered bonds outstanding. The BCP Programme is backed by a Euros 10.9 billion portfolio of
residential mortgages, as well as by a liquidity buffer of Euros 50 million, providing an overcollateralization of 18.8%,
which is above the minimum of 14% currently required by rating agencies.
The new Portuguese covered bond legislation, under which the BCP Programme has been recently updated and
authorised for the issuance of \u201cCovered Bonds (Premium)\u201d (label now born by all its outstanding covered bonds),
affords covered bond holders a dual-recourse, firstly over the issuer, secondly over the cover pool that may also include
other eligible assets, over which they benefit from a special preferential claim. The Portuguese covered bond
legislation ensures total segregation of the covered pool from any future issuer\u2019s insolvent estate, for the benefit of
covered bond holders, who have precedence over claims of any other of the issuer\u2019s creditors in case of issuer
insolvency, thus and to this extent superseding the general insolvency and recovery legislation. Residential mortgages
in a cover pool are subject to certain eligibility criteria inscribed in the Portuguese covered bond legislation, among
them a maximum LTV of 80%, in the case of programmes issuing Covered Bonds (Premium), delinquency of no more
than 90 days, and them being first lien mortgages (or, if otherwise, all preceding liens being in the cover pool) over
properties located in the EU. The BCP\u2019s Programme documentation limits property location to Portugal only.
The analysis of the balance sheet items by maturity dates is as follows:
(Thousands of euros)
2023
Up to 3
months
3 months
to 1 year
1 year to
5 years
Over 5
years
Undetermined
maturity
At sight
Total
Assets
Cash and deposits at Central Banks
4,545,526
\u2014
\u2014
\u2014
\u2014
\u2014
4,545,526
Loans and advances to Credit
Institutions - Repayable on demand
337,687
\u2014
\u2014
\u2014
\u2014
\u2014
337,687
Other loans and advances (a)
\u2014
703,056
205,645
\u2014
\u2014
\u2014
908,701
Loans and advances to customers (a)
\u2014
\u2014
8,758,135
13,062,576
32,451,042
616,056
54,887,809
Other financial assets (b)
\u2014
2,573,933
2,463,873
5,409,172
1,004,966
704,509
12,156,453
4,883,213
3,276,989
11,427,653
18,471,748
33,456,008
1,320,565
72,836,176
Liabilities
Resources from Credit Institutions
\u2014
516,776
312,350
\u2014
\u2014
\u2014
829,126
Resources from costumers
45,049,544
15,685,920
14,117,747
693,602
60,000
\u2014
75,606,813
Debt securities issued
\u2014
\u2014
311
2,360,372
351,999
\u2014
2,712,682
Subordinated debt
\u2014
\u2014
\u2014
328,679
1,068,746
\u2014
1,397,425
45,049,544
16,202,696
14,430,408
3,382,653
1,480,745
\u2014
80,546,046
(a) Gross of impairment
(b) Financial assets at fair value through profit or loss and Financial assets at fair value through other comprehensive income.
Operational Risk
The operational risk management system is framed by the \u201c3 Lines of Defence\u201d Corporate Governance model and is
based on an integrated structure of end-to-end processes, considering that a vision which is transversal to the
functional units of the organisational structure is the most suitable approach for the perception of risks and to estimate
the effects of the corrective measures introduced for their mitigation. Furthermore, these processes model also
underlies other strategic initiatives related to the management of this risk such as the actions to improve operating
efficiency and the management of business continuity. Hence, the most relevant Group subsidiaries have their own
process's structure, which is periodically adjusted according to business evolution, in order to ensure suitable coverage
of the business activities (or business support activities) developed, ensuring thus, the replication of the 3 Lines of
Defence model in the management of operational risk.
The responsibility for the day-to-day processes\u2019 management lies with the 1st Line of Defence: the process owners
(seconded by process managers), whose mission is to characterise the operational losses captured under their
processes, to monitor the respective Key Risk Indicators (KRI), to perform the Risks Self-Assessment (RSA) exercises, as
well as to identify and implement suitable actions to mitigate operational risk exposures, thus contributing to the
strengthening of control mechanisms and the improvement of the internal control environment. The periodic revision of
the main processes in each geography is ensured by local structure units.
The Risk Management function (materialised in the Risk Office) and the Compliance function (materialised in the
Compliance Office) represent the 2nd Line of Defence and are responsible for implementing the risk policy defined for
the Group, proposing and developing approaches for managing this risk, supervising their implementation and
challenging the 1st Line of Defence regarding the risk levels incurred. The Internal Audit function embodies the 3rd Line
of Defence and supervises the appropriate fulfilment of the functions and activities of the remaining two lines of
defence.
In 2023, the usual operational risk management activities continued to be executed by the various players involved in
the management of this risk, aiming at an efficient and systematic identification, evaluation, mitigation and control of
exposures, as well as at the appropriate reporting tasks, either to the Group\u2019s management bodies or within regulatory
duties. The results of the RSA exercises evidence a robust control environment, demonstrating the Group's commitment
to operational risk management through the continuous development of improvement actions that help mitigate
exposures to this risk. Regarding the operational losses registered, it should be highlighted that their pattern was not
different from what is usual and expected, with a higher frequency of losses of low amounts, without concentration in
significant amounts.
The monitoring of KRI has allowed to identify opportunities for improvement that, together with the RSA exercises and
the process of identification and registration of losses, provide for an effective management of this risk.
The Bank's mobilisation\u00a0to reinvent the banking experience, based on the digitization and use of new technologies,
entails relevant challenges in the management of operational risk, which include the reinforcement of the security of
digital banking channels, the reinforcement of mechanisms for the prevention and detection of potential fraud, proper
management of personal data and compliance with the information duties legally provided for in sales through digital
banking channels.
Covenants
The contractual terms of instruments of various wholesale funding instruments encompass obligations assumed by
entities belonging to the Group as borrowers or issuers, concerning general duties of corporate conduct, maintenance
of banking activity and the inexistence of special guarantees constituted for the benefit of other creditors (\u201cnegative
pledge\u201d). These terms essentially reflect the internationally adopted standards for each of the types of debt
instruments used by the Group.
The terms of the Group\u2019s intervention in rated securitization transactions involving its own assets are subject to
changes in case the Group triggers certain rating criteria. The criteria established in each transaction results mainly
from the analysis performed at the moment that the transaction was structured, being usually applied by each rating
agency in a standardised way to the securitization transactions involving the same type of assets.
Regarding the Covered Bond Programs of Banco Comercial Portugu\u00eas, there are no relevant covenants related to a
possible downgrade of BCP.
Hedge accounting
The detailed information of the strategies, hedge transactions, hedged items and hedging instruments applied by the
Group, is shown in a table below:
Strategy
Description of hedge transactions
Hedged items
Hedging
instruments
Cash flow volatility hedge of the
flows generated by the portfolio
of Euros floating rate mortgage
loans (a)
Group hedges the risk of the volatility of interest
payments from floating rate mortgages. The
volatility of cash flows results from interest rate
risk
Floating rate mortgage loans
(BCP S.A.)
IRS
transactions
Cash flow volatility hedge due to
future income and interest costs
denominated in foreign currencies
(a)
The Group hedges the risk of the volatility of cash
flows generated by income and interest costs
denominated in foreign currencies. The volatility
of cash flows results from the currency risk
Cash flows resulting from
income and interest costs
denominated in foreign
currencies (Bank Millennium
S.A.)
FX position
transactions
Cash flow volatility hedge for the
flows generated by FX mortgage
portfolio and its underlying PLN
liabilities (a)
The Group hedges the risk of the volatility of cash
flows generated by FX mortgages and by PLN
liabilities financially underlying such loans. The
volatility of cash flows results from the currency
risk and interest rate risk
Cash flows resulting from the
FX mortgage loan portfolio
and PLN deposits together
with issued debt PLN
securities funding them (Bank
Millennium S.A.)
CIRS
transactions
Hedge of volatility of the cash
flows generated by PLN
denominated financial assets (a)
The Group hedges the risk of the volatility of cash
flows generated by PLN denominated financial
assets. The volatility of cash flows results from
interest rate risk
Cash flows resulting from PLN
denominated financial assets
(Bank Millennium S.A.)
IRS
transactions
Fair value hedge of fixed rate
mortgage loans (a)
Group hedges changes in the fair value of cash
flows of fixed rate mortgage loans due to changes
in market interest rates
Fixed rate mortgage loans
(BCP S.A.)
IRS
transactions
Fair value hedge of fixed rate
debt instruments (a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate debt securities,
classified as Financial assets
at amortised cost (BCP S.A.)
IRS
transactions
Fair value hedge of fixed rate
debt instruments in Euros (a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate debt securities,
classified as Financial assets
at fair value through other
comprehensive income (BCP
S.A. and ActivoBank S.A.)
IRS
transactions
Fair value hedge of fixed rate
issued debt instruments in Euros
(a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate Issued debt (BCP
S.A.)
IRS
transactions
Fair value hedge of fixed rate
deposits in Euros (a)
Group hedges changes in the fair value of fixed
rate deposits due to changes in market interest
rates
Term deposits (BCP S.A.)
IRS
transactions
Fair value hedge of fixed rate
deposits in Euros (macro hedge)
(b)
Group hedges changes in the fair value of fixed
rate deposits due to changes in market interest
rates
Repayable demand deposits
without maturity (BCP S.A.
and ActivoBank S.A.)
IRS
transactions
Fair value hedge of fixed rate
debt instruments in USD (a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate debt securities,
classified as Financial assets
at fair value through other
comprehensive income or
amortised cost (BCP S.A.)
CIRS
transactions
Fair value hedge of a fixed
interest rate debt instrument
(macro hedge) (a)
The Group hedges part of the interest rate risk
associated with the change in the fair value of a
fixed-rate debt instrument recorded in other
comprehensive income, resulting from fluctuations
in market interest rate
A portfolio of fixed coupon
debt securities classified as
financial assets measured at
fair value through other
comprehensive income
denominated in PLN (Bank
Millennium S.A.)
IRS
transactions
Hedging the fair value of cash
flows from issued fixed-rate
liabilities denominated in foreign
currencies (b)
The Group hedges part of the interest rate risk
related to changes in the fair value of cash flows
from issued fixed-rate liabilities denominated in
foreign currencies, resulting from the volatility of
market interest rates
Cash flows from issued fixed-
rate liabilities denominated in
foreign currencies (Bank
Millennium S.A.)
IRS
transactions
(a) - Strategy applied in 2023 and 2022.
(b) - Strategy applied in 2023.
As at 31\u00a0December 2023, the table below includes the detail of the hedging instruments used in the Group's hedging
strategies and accounted at the Balance sheet item - Hedging derivatives:
(Thousands of euros)
2023
Hedging instruments
Book value
Change in fair
value (A)
Type of hedging
Notional
Assets
Liabilities
Fair value hedge
Interest rate risk
Interest rate swaps
11,482,214
34,716
8,441
(43,031)
Foreign exchange risk
Currency and interest rate swap
348,464
2,279
6,272
856
11,830,678
36,995
14,713
(42,175)
Cash flows hedging
Interest rate risk
Interest rate swaps
10,258,928
164
14,965
1,310,159
Foreign exchange risk
Currency and interest rate swap
454,268
3,469
38,147
16,544
10,713,196
3,633
53,112
1,326,703
Total
22,543,874
40,628
67,825
1,284,528
(A) Changes in fair value used to calculate the ineffectiveness of the hedge
As at 31\u00a0December 2022, the table below includes the detail of the hedging instruments used in the Group's hedging
strategies and accounted at the Balance sheet item - Hedging derivatives:
(Thousands of euros)
2022 (restated)
Hedging instruments
Book value
Change in fair
value (A)
Type of hedging
Notional
Assets
Liabilities
Fair value hedge
Interest rate risk
Interest rate swaps
11,962,045
27,696
7,031
309,506
Foreign exchange risk
Currency and interest rate swap
431,257
2,999
18,432
(717)
12,393,302
30,695
25,463
308,789
Cash flows hedging
Interest rate risk
Interest rate swaps
14,559,138
\u2014
110,562
(1,513,397)
Foreign exchange risk
Currency and interest rate swap
1,273,663
29,008
41,975
(10,527)
15,832,801
29,008
152,537
(1,523,924)
Total
28,226,103
59,703
178,000
(1,215,135)
(A) Changes in fair value used to calculate the ineffectiveness of the hedge
As at 31\u00a0December 2023, the table below includes the detail of the hedged items:
(Thousands of euros)
2023
Hedged items
Type of hedging
Balance
sheet
item
Cumulative value of
the adjustments
Change in
fair value
(A)
Cash flow hedge reserve /
Currency translation reserve
Book value
Hedging
relationships
in effect
Hedging
relationships
discontinued
Assets
Liabilities
Assets
Liabilities
Fair value hedge
Interest rate risk
Interest rate swaps
(B)
288,106
\u2014
(24,592)
13,551
(33,462)
n/a
n/a
(H)
1,599,095
\u2014
(21,780)
\u2014
55,434
n/a
n/a
(C)
2,997,010
\u2014
(126,169)
\u2014
93,925
n/a
n/a
(D)
\u2014
10,000
\u2014
(221)
221
n/a
n/a
(E)
\u2014
2,387,825
\u2014
103,603
(16,516)
n/a
n/a
(F)
\u2014
1,329,345
\u2014
(34,224)
(32,636)
n/a
n/a
(G)
\u2014
1,037,079
\u2014
(41,831)
(30,208)
n/a
n/a
Foreign exchange risk
Currency and interest rate
swap
\u2014
348,464
\u2014
51
(173)
n/a
n/a
4,884,211
5,112,713
(172,541)
40,929
36,585
n/a
n/a
Cash flows hedging
Interest rate risk
Interest rate swaps
(B)
10,258,698
\u2014
\u2014
\u2014
(1,310,159)
(470,250)
(808,471)
Foreign exchange risk
Currency and interest rate
swap
(B)
454,268
\u2014
\u2014
\u2014
(16,027)
(2,138)
(51)
10,712,966
\u2014
\u2014
\u2014
(1,326,186)
(472,388)
(808,522)
Total
15,597,177
5,112,713
(172,541)
40,929
(1,289,601)
(472,388)
(808,522)
(A) Fair value changes used to calculate the ineffectiveness of the hedge
(B) Financial assets at amortised cost - Loans and advances to customers
(C) Financial assets at fair value through other comprehensive income
(D) Financial liabilities at amortised cost - Resources from credit institutions
(E) Financial liabilities at amortised cost - Resources from customers
(F) Financial liabilities at amortised cost - Non subordinated debt securities issued
(G) Financial liabilities at amortised cost - Subordinated debt
(H) Debt securities held not associated with credit operations
As at 31\u00a0December 2022, the table below includes the detail of the hedged items:
(Thousands of euros)
2022 (restated)
Hedged items
Type of hedging
Balance
sheet
item
Cumulative value of
the adjustments
Change in
fair value
(A)
Cash flow hedge reserve /
Currency translation reserve
Book value
Hedging
relationships
in effect
Hedging
relationships
discontinued
Assets
Liabilities
Assets
Liabilities
Fair value hedge
Interest rate risk
Interest rate swaps
(B)
814,689
\u2014
(71,691)
\u2014
(70,012)
n/a
n/a
(H)
1,524,001
\u2014
(510,086)
\u2014
(181,718)
n/a
n/a
(C)
3,437,415
\u2014
(285,374)
(3,278)
(210,181)
n/a
n/a
(D)
\u2014
10,000
\u2014
517
580
n/a
n/a
(E)
\u2014
12,350
\u2014
(1,232)
718
n/a
n/a
(F)
\u2014
1,295,542
\u2014
(66,860)
65,881
n/a
n/a
(G)
\u2014
998,066
\u2014
(72,040)
67,509
n/a
n/a
Foreign exchange risk
Currency and interest
rate swap
\u2014
431,257
\u2014
(1,131)
1,079
n/a
n/a
5,776,105
2,747,215
(867,151)
(144,024)
(326,144)
n/a
n/a
Cash flows hedging
Interest rate risk
Interest rate swaps
(B)
14,558,924
\u2014
\u2014
\u2014
1,513,397
(1,775,249)
7,644
Foreign exchange risk
Currency and interest rate
swap
(B)
1,273,663
\u2014
\u2014
\u2014
11,473
(20,123)
(280)
15,832,587
\u2014
\u2014
\u2014
1,524,870
(1,795,372)
7,364
Total
21,608,692
2,747,215
(867,151)
(144,024)
1,198,726
(1,795,372)
7,364
(A) Fair value changes used to calculate the ineffectiveness of the hedge
(B) Financial assets at amortised cost - Loans and advances to customers
(C) Financial assets at fair value through other comprehensive income
(D) Financial liabilities at amortised cost - Resources from credit institutions
(E) Financial liabilities at amortised cost - Resources from customers
(F) Financial liabilities at amortised cost - Non subordinated debt securities issued
(G) Financial liabilities at amortised cost - Subordinated debt
(H) Debt securities held not associated with credit operations
The reconciliation of each equity component and an analysis of other comprehensive income attributable to hedge
accounting, with reference to 31\u00a0December 2023 and 2022, is as follows:
(Thousands of euros)
Cash flow hedge reserve
Exchange differences
2023
2022
(restated)
2023
2022
(restated)
Balance as at 1 January
(1,788,008)
(141,642)
\u2014
55,326
Amounts recognised in other comprehensive income:
\u00a0 Hedging cash flows
\u00a0 \u00a0 Changes in fair value of currency and interest rate swaps
1,326,186
(1,523,207)
\u2014
\u2014
\u00a0 \u00a0 Foreign exchange changes
(6,747)
1,725
\u2014
\u2014
\u00a0 \u00a0 Hedge breakage
(816,115)
(123,938)
\u2014
\u2014
\u00a0 \u00a0 Ineffectiveness of coverage recognised in results
(517)
1,333
\u2014
\u2014
\u00a0 \u00a0 Others
4,291
(2,279)
\u2014
\u2014
\u00a0 Hedging of net investments - foreign exchange risk
\u00a0 \u00a0 Reclassified to the income statement
\u2014
\u2014
\u2014
3,685
Change in the fair value of settled transactions
\u2014
\u2014
\u2014
(59,011)
Balance at the end of the year
(1,280,910)
(1,788,008)
\u2014
\u2014
The table below includes information on the effectiveness of hedging relationships, as well as impacts on results and
other comprehensive income, with reference to 31\u00a0December 2023:
(Thousands of euros)
2023
Income
statement
item (A)
Gains/(losses)
recognised in
Other
comprehensive
income
Hedging
ineffectiveness
recognised in
Income
statement (A)
Amounts reclassified from reserves to results
for the following reasons:
Income
statement
item (B)
Cash flows
that were
being hedged
(C)
Hedged item
with an
impact on
results
Type of hedging
Fair value hedge
Interest rate risk
Interest rate swaps
(D)
\u2014
(6,273)
\u2014
\u2014
Foreign exchange risk
Currency and interest rate swap
(D)
\u2014
683
\u2014
\u2014
\u2014
(5,590)
\u2014
\u2014
Cash flows hedging
Interest rate risk
Interest rate swaps
(D)
61,205
\u2014
(E)
(45,947)
\u2014
Foreign exchange risk
Currency and interest rate swap
(D)
19,801
517
\u2014
\u2014
81,006
517
(45,947)
\u2014
Total
81,006
(5,073)
(45,947)
\u2014
(A) Income Statement item in which the ineffectiveness of the hedge was recognised
(B) Income Statement item in which the reclassified amount was recognised
(C) but which are no longer expected to occur
(D) Net gains/(losses) from hedge accounting operations
(E) Interest income
The table below includes information on the effectiveness of hedging relationships, as well as impacts on results and
other comprehensive income, with reference to 31\u00a0December 2022:
(Thousands of euros)
2022 (restated)
Income
statement
item (A)
Gains/(losses)
recognised in
Other
comprehensive
income
Hedging
ineffectiveness
recognised in
Income
statement (A)
Amounts reclassified from reserves to results
for the following reasons:
Income
statement
item (B)
Cash flows
that were
being hedged
(C)
Hedged item
with an
impact on
results
Type of hedging
Fair value hedge
Interest rate risk
Interest rate swaps
(D)
\u2014
(17,717)
\u2014
\u2014
Foreign exchange risk
Currency and interest rate swap
(D)
\u2014
362
\u2014
\u2014
\u2014
(17,355)
\u2014
\u2014
Cash flows hedging
Interest rate risk
Interest rate swaps
(D)
(66,333)
(238)
(E)
54,861
\u2014
Foreign exchange risk
Currency and interest rate swap
(D)
(15,838)
(1,333)
\u2014
\u2014
(82,171)
(1,571)
54,861
\u2014
Total
(82,171)
(18,926)
54,861
\u2014
(A) Income Statement item in which the ineffectiveness of the hedge was recognised
(B) Income Statement item in which the reclassified amount was recognised
(C) but which are no longer expected to occur
(D) Net gains/(losses) from hedge accounting operations
(E) Interest income
The table below shows the detail of hedging instruments, as at 31\u00a0December 2023, by maturity:
(Thousands of euros)
2023
Remaining period
Fair value
Type of hedging
Up to 3
months
3 months to
1 year
Over 1 year
Total
Assets
Liabilities
Fair value hedging derivatives related to
interest rate risk changes:
OTC Market:
Interest rate swaps
Notional
7,750
508,735
10,965,729
11,482,214
34,716
8,441
Fixed interest rate (average)
3.56%
6.17%
2.91%
3.07%
Fair value hedging derivatives related to
currency risk changes
OTC Market:
Currency and interest rate swap
140,291
208,173
\u2014
348,464
2,279
6,272
Cash flow hedging derivatives related to
interest rate risk changes:
OTC Market:
\u00a0 Interest rate swaps
499,574
1,600,000
8,159,354
10,258,928
164
14,965
Cash flow hedging derivatives related to
currency risk changes:
OTC Market:
\u00a0 Currency and interest rate swap
354,009
19,885
80,374
454,268
3,469
38,147
Total derivatives traded by
OTC Market:
1,001,624
2,336,793
19,205,457
22,543,874
40,628
67,825
The table below shows the detail of hedging instruments, as at 31\u00a0December 2022, by maturity:
(Thousands of euros)
2022 (restated)
Remaining period
Fair value
Type of hedging
Up to 3
months
3 months to
1 year
Over 1 year
Total
Assets
Liabilities
Fair value hedging derivatives related to
interest rate risk changes:
OTC Market:
Interest rate swaps
Notional
293,467
377,114
11,291,464
11,962,045
27,696
7,031
Fixed interest rate (average)
1.05%
1.44%
2.44%
2.38%
Fair value hedging derivatives
related to currency risk changes
OTC Market:
Currency and interest rate swap
98,439
332,818
\u2014
431,257
2,999
18,432
Cash flow hedging derivatives related to
interest rate risk changes:
OTC Market:
Interest rate swaps
240,409
278,751
14,039,978
14,559,138
\u2014
110,562
Cash flow hedging derivatives related to
currency risk changes:
OTC Market:
Currency and interest rate swap
153,720
685,365
434,578
1,273,663
29,008
41,975
Total derivatives traded by
OTC Market:
786,035
1,674,048
25,766,020
28,226,103
59,703
178,000
Climate risks - Integration of ESG Factors in Risk Management
In its risk classification, Millennium BCP recognises the ESG category which includes factors associated with the climate
and environmental components, and also with social and governance aspects.\u00a0
These factors are not considered separately; in fact, they are seen as elements likely to affect positively or negatively
the financial performance and solvency of the Bank's customer\u2019s and counterparties. This way, the materialisation of
their impacts occurs by means of the \u201ctraditional\u201d categories: credit risk, market risk, operational & reputation risk,
liquidity and financing risks.
Within this context, and with the purpose of promoting the integration of ESG factors in risk management, the Bank
implemented a set of processes and methodologies to identify, assess, manage and monitor the impact of the ESG
category in overall risk, in accordance with the framework and policies already established for the remaining financial
and non-financial risks.
Governance Model
The governance model for risks arising from ESG factors follows a structure based on three lines of defence which,
under the leadership of the Board of Directors (and respective delegations on the Executive Committee), ensure its
adequate assessment and management.
The first-line functions comprise all the departments and business areas that interact with the Bank\u2019s customers,
counterparties and suppliers, collect the information and data that support the assessment of their risk profiles (and of
their respective operations) and structure the commercial solutions with characteristics associated with the ESG or with
the promotion of control of their impacts on the Bank's risk profile.
The Sustainability Function fits in the first line of defence and its responsibilities include:
\u2022 the overall management of the sustainability strategy and plans of Millennium BCP and of its financial group;
\u2022 the development of policies, methodologies, analyses and reports that address ESG issues;
\u2022 the management of commitments and external communications by the Bank and the Group in this area; and
\u2022 the direct orientation and operational support to the first and second lines of defence in the performance of their
main responsibilities in this scope.
In the second line of defence, the responsibility for risk control, is assumed by the Risk Office and by the Compliance
Office. These functions ensure the procedures for the design, implementation of the policies/methodologies/ risk
management models, which are paramount in keeping the risk profile of the Group in appropriate levels.
Among other, these responsibilities, include:
\u2022 Integrate the ESG dimension in risk appetite (Risk Appetite Framework - RAF);
\u2022 Syndicating with the Sustainability Function the proposal of ESG metrics to be included in the Risk Appetite Statement
(RAS);
\u2022 Carry out stress tests focused on climate and environmental risk factors;
\u2022 Introduce the ESG dimension in capital and liquidity adequacy exercises.
Specifically in terms of compliance, we emphasise the following controls:
\u2022 Reporting, disclosure and prudential obligations;
\u2022 Design and approval of new products, especially in the cases of ESG product design and labelling;
\u2022 Incorporation of ESG-related conditions and requirements into the forms and contracts;
\u2022 Ensuring the timely application of the legal and regulatory dispositions related to ESG;
\u2022 Potential for conflicting interest or litigation in the provision of ESG-related services and products.
Within the scope of the Committees of the Board of Directors, the Committee for Corporate Governance, Ethics and
Sustainability is the body responsible for recommending the adoption by the Board of Directors of policies in line with
ethical principles and social responsibility and best practices in matters of corporate governance and sustainability, but
also for monitoring the evolution of the Sustainability Master Plan and the Corporate Social Responsibility Plan and
issuing an opinion on the annual corporate governance and sustainability reports. The Committee for Risk Assessment,
among its competences and attributions, is also responsible for monitoring ESG risks, including climate risks and advise
the Board of Directors in terms of the identification, management and control of ESG risk factors, while monitoring the
Group\u2019s risk appetite and underlying performance, as well as supervising the adequacy of the ESG internal control
system, with special focus on a) the effectiveness of the risk management system to deal with the ESG risk drivers; and
b) dealing with any instance of reputational risk related to ESG to which the Group may be associated to (directly or
indirectly).
The third line of defence assumes responsibility for the independent review of all ESG aspects through the annual work
plans of the Audit Division.
Identification of ESG risks
Climate changes and environmental degradation factors are elements that potentially affect economic activity, through
factors related with issues such as climate changes (mitigation, and adaptation), sustainable use and protection of
hybrid and marine resources, transition towards a circular economy, prevention and control of pollution, protection and
restoration of biodiversity (cf. EU Taxonomy).
The materialisation of these risks fundamentally stems from the exposure of Millennium BCP's banking portfolio to
customers, counterparties and invested assets whose performance may be affected or contribute to the negative
impacts of climate change and other environmental factors.
These factors may generate negative financial impacts which are identified and assessed by means of two main
dimensions:
\u2022 Physical risk factors: arising from the physical effects of climate change and environmental degradation. They should
be categorized as a) severe risks, if they arise from extreme weather events such as wildfires or floods; b) chronic
risks, if they arise from progressive changes in weather and climate patterns or from a gradual loss of natural
ecosystems.
\u2022 Transition risk factors: are the risks of any negative financial impact arising from the effort, in progress or to happen
in the future, of transition into a low-carbon and environmentally sustainable economy. These may result, for
example, from technological changes, the impact of public policies or behavioural changes in terms of demand for
goods or services (including banking services).
\u2022 The biodiversity or nature-related risks: The depreciation of natural capital, which in this context encapsulates the
environmental-driven risks, is another key component of a holistic approach to C&E concerns. Natural capital refers
to the world\u2019s stocks of natural assets which include geology, soil, air, water and all living things as well as the
organization and distribution of ecosystems. The depreciation of natural capital undermines the ability of nature to
provide ecosystem services (provisioning services, such as food, raw materials and fresh water; maintenance and
regulating services, such as climate, water and air quality regulation, pollination, and pest and disease control; and
cultural services, supporting recreation, mental and physical health, and spiritual and religious values) on which the
Human society, economies and other species rely. Natural capital degradation can have chronic as well as acute
economic effects.
The materialisation of social risks is also assessed, considering the issues related with rights, well-being and interests of
persons and communities and include factors such as (in)equality, health, diversity, inclusion, labour relations,
workplace health and safety, human capital and communities.
In addition, the governance risk factors are also identified by Millennium BCP, through issues relating to leadership,
executive remuneration, shareholder rights, corruption and bribery, management and prevention of conflicts of
interest, quality of internal control and independent reviews/auditing, transparency and good tax practices, for
example.
A methodology for assessing the materiality of ESG risks was developed in order to determine the potential impact of
those risks on the Bank\u2019s profile.
Management and monitoring principles
ESG risks management and respective strategy follows a different logic compared to 'traditional' risks, which are based
on short-term timeframes. In contrast, the materialization of ESG risks is expected to occur over extended timeframes,
which is why the establishment of strategy and risk appetite follows different timeframes. For example, if the
assessment of physical (severe) risks can determine an action strategy more focused on the short term (e.g.,
considering the establishment of additional mitigation measures, at the level of policies for granting credit and
insurance policy), the transition risks justify a more structural approach, based on collecting information, evaluating
customers and monitoring their performance over time.
From this perspective, Millennium BCP's management of ESG impacts follows the following principles:
\u2022 Establishment of a responsible corporate financing policy, which excludes or conditions the Group's operations in
sectors and/or activities with greater environmental and social impact.
\u2022 Integration of the strategy for managing risks arising from ESG factors into the Bank's global sustainability plan, which
steers the integration of the ESG dimension into business processes, establishing goals, timelines and a model for
controlling proper observance.
\u2022 Communication Transparency: The Bank publicly discloses its sustainability objectives and key practices, as well as its
management of ESG (Environmental, Social, and Governance) impact factors. This allows all stakeholders to assess
the robustness of its approach, including its exposure to risks arising from ESG factors.
\u2022 Regular Monitoring of Exposure to Risks Arising from ESG Factors: This is done through established management
information routines for each risk category.
\u2022 Internal Standardization of ESG References: This involves implementing a corporate taxonomy that enables the
identification and classification of exposures demonstrating characteristics that actively support the transition of the
Portuguese and European economies.
\u2022 Focus on Credit Risk Management: This is achieved through models that facilitate the integration of the ESG
dimension in the risk assessment of the bank's key companies/clients. This ensures that business decisions incorporate
an evaluation of the primary impacts of ESG factors.
\u2022 Collection and Structuring of Information: Utilizing public sources and information provided directly by clients, this
approach aims to enhance understanding of clients' environmental performance and potential financial impacts
associated with any limitations in that performance.
The operationalization of these principles is facilitated through an internal policy for managing risks arising from ESG
factors, which establishes the following key risk tools:
\u2022 Regular assessment of the materiality of risks arising from ESG factors to confirm alignment with risk appetite and the
need for implementing mitigation actions.
\u2022 Methodologies for assessing risks arising from ESG factors integrated into credit risk assessment models.
\u2022 Risk classification methodologies at the portfolio level, allowing the identification of sectors, companies, and
exposures most susceptible to transition and/or physical risks and/or nature-related.
\u2022 Models for quantifying financed greenhouse gas emissions, fostering strategic discussions regarding the management
of these emissions and their alignment (in the long term) with the goals of the Paris Agreement.
\u2022 Sensitivity analyses and stress tests focusing on climate risks.
Climate risk stress tests
The Bank uses sensitivity analysis methodologies and stress tests on the risks arising from ESG factors (with a focus on
the climate risk component).
Considering the horizons of materialization of ESG risks, this is an important risk management technique, which allows
the assessment of the impacts of climate change (and respective scenarios) on the financial variables that affect the
value of Millennium bcp's banking portfolio.
Based on their results, new exposures at risk may be identified that require the Bank to take additional management
measures to mitigate the impacts of climate risks.
Mozambique's sovereign debt
Following a period of deceleration in economic activity and increase of inflation, reduction of Republic of Mozambique
rating, depreciation of Metical and decrease in foreign direct investment, the Bank of Mozambique has adopted a
restrictive policy, with increases in the reference rate since December 2015, as well as increasing the reserve ratio.
This set of factors constrained commercial banking in Mozambique, pushing it to pursue a strict liquidity management,
emphasis on raising funds, despite contributing to the improvement of net interest income.
According to an International Monetary Fund (IMF) statement dated 23 April 2016, existing debt guaranteed by the State
of Mozambique in an amount over USD 1 billion that had not been disclosed to the IMF. Following this disclosure, the
economic program supported by the IMF was suspended. According to an IMF statement dated 13 December 2016,
discussions were initiated on a possible new agreement with the Government of Mozambique and the terms of
reference for an external audit were agreed.
In June 2017, the Attorney General's Office of the Republic of Mozambique published an Executive Summary regarding
the above-mentioned external audit. On 24 June 2017, the IMF released in a statement that due to the existence of
information gaps in this audit, an IMF mission would visit the country to discuss audit results and possible follow-up
measures. Following this visit, the IMF requested the Government of Mozambique to obtain additional information on
the use of the funds.
On 14 December 2017, in a statement from the IMF staff, after the end of the mission held between 30 November and
13 December 2017, it was reiterated the need for the Mozambican State to provide missing information. In the
statement of the Mozambican Attorney General's Office dated 29 January 2018, it is mentioned, among other things,
that the Public Prosecutor submitted to the Administrative Court, on 26 January 2018, a complaint regarding the
financial responsibility of public managers and companies participated by the State, participants in the execution and
management of contracts for financing, supplying and providing services related to debts not disclosed to the IMF.
In the statements dated of 16 January 2017 and 17 July 2017, the Ministry of Economy and Finance of Mozambique
informed the holders of bonds issued by the Republic of Mozambique specifically \"US$726.524 million, 10.5%, repayable
securities in 2023\" that the interest payment due on 18 January 2017 and 18 July 2017, would not be paid by the
Republic of Mozambique. In November 2018, the Ministry of Economy and Finance of the Republic of Mozambique
announced that it has reached an agreement in principle on the key commercial terms of a proposed restructuring
transaction related to this debt securities with four members of the Global Group of Mozambique Bondholders. The
Bondholders currently own or control approximately 60% of the outstanding Bonds. The agreement in principle reached
by the parties, and the support of the Bondholders for the proposed restructuring, is conditional on the parties reaching
an agreement on mutually satisfactory documentation setting out the detailed terms of the restructuring including
implementation, and the mentioned Ministry obtaining all necessary approvals, including Parliamentary and government
approvals of Mozambique.
On 6 September 2019, the Ministry of Economy and Finance of the Republic of Mozambique announced the approval by
99.95% of the Bondholders of a written decision containing the terms and conditions of the restructuring proposal. The
Group has no exposure to this debt.
In May 2020, the Constitutional Council of the Republic of Mozambique issued a Judgment, declaring the nullity of the
acts related with the loans contracted by Proindicus, SA (\"Proindicus\") and Mozambique Asset Management, MAM, SA
(\"MAM\"), and the respective sovereign guarantees granted by the Government in 2013 and 2014, respectively, and on 19
October 2020, the dissolution of the two companies was registered based on an order issued by the Judicial Court of the
City of Maputo.
In the context of the liquidation of Proindicus and MAM, the Liquidator published, on 3 May 2022, an announcement in
the Jornal de Not\u00edcias de Mo\u00e7ambique, through which the creditors of those companies are notified to submit, within
thirty days counted from the said publication, the supporting documents of their credits. Following the publication of
the said announcement, BIM and BCP submitted, on 1 June 2022, their credit claims on Proindicus and MAM,
respectively. However, with respect to Proindicus, the BIM\u2019s credit claim is prejudiced by the settlement mentioned
below.
An action brought on 27 February 2019 (amended on 30 April 2020), by the Republic of Mozambique (represented by the
Attorney General of the Republic) against the arranger and originating lender of the loan to Proindicus and other
entities, by which the Republic of Mozambique requested, inter alia, the declaration of nullity of the sovereign
guarantee of the Mozambican State to the Proindicus loan. Following this lawsuit, on 27 April 2020, the Banco
Internacional de Mo\u00e7ambique (BIM) filed a lawsuit, in the London Commercial Court, against the arranger and lender of
the loan to Proindicus, claiming, inter alia, payment of BIM's exposure to the Proindicus, in the event that the said
sovereign guarantee of the State of Mozambique to Proindicus was, in a court of law declared null and void.
However, on 30 September 2023, the Republic of Mozambique and the arranger and originating lender of the loan to
Proindicus announced that they have settled amicably the legal proceedings in London concerning the loan to
Proindicus and associated guarantee. This settlement was subscribed by the majority lenders of the said credit facility,
including BIM. The signing parties to the agreement have mutually released each other from any liabilities and claims
relating to the loan to Proindicus.
Regarding MAM, as far as we are aware, no lawsuit with the same purpose was brought by the Republic of Mozambique
at the London Commercial Court. However, it is expected that, in the context of ongoing legal proceedings, that
several creditors of MAM (including BCP) have filed, at the London Commercial Court, against MAM and the Republic of
Mozambique in order to recover their credits, the question of the validity of the sovereign guarantee of the
Mozambican State to the MAM loan will be raised by the Republic of Mozambique. The Court decided that these lawsuits
would be judged trough a unitary trial. Trial sessions aimed at producing evidence took place between October and
December 2023 and we expect that the Judgment will occur during the second half of the current year.
As at 31 December 2023, considering the 66.7% indirect investment in BIM, the Group's interest in BIM's equity
amounted to Euros 356,514,000 (31 December 2022: Euros 347,559,000), with the exchange translation reserve
associated with this participation, accounted in Group's consolidated equity, in a negative amount of Euros 152,108,000
(31 December 2022: negative amount of Euros 139,373,000). BIM's contribution to consolidated net income for 2023,
attributable to the shareholders of the Bank, amounts to Euros 67,787,000 (2022: Euros 70,707,000).
As at 31 December 2023, the subsidiary BIM's exposure to the State of Mozambique and to the Central Bank includes
public debt securities denominated in Metical classified as Financial assets measured at amortised cost - Debt
instruments in the gross amount of MZN 40,995,115,000 corresponding to Euros 580,914,000 (31 December 2022: MZN
57,909,918,000 corresponding to Euros 849,306,000) and Financial assets at fair value through other comprehensive
income in the gross amount of MZN 6,989,511,000 corresponding to Euros 99,044,000 (31 December 2022: MZN
7,090,486,000 corresponding to Euros 103,989,000).
Additionally, the Group has also registered as at 31 December 2023, in the balance Loans and advances to customers, a
direct gross exposure to the Mozambican State in the amount of MZN 18,228,666,000 corresponding to Euros
258,306,000 (31 December 2022: MZN 19,081,523,000 corresponding to Euros 279,849,000) and in the balance
Guarantees granted revocable and irrevocable commitments, an amount of MZN 1,035,157,000 corresponding to Euros
14,663,000 (31 December 2022: MZN 4,818,871,000 corresponding to Euros 70,704,000).\u00a0
Contingent liabilities and other commitments
In accordance with accounting policy 1.U3, the main contingent liabilities and other commitments under IAS 37 are the
following:
1. In 2012, the Portuguese Competition Authority (\"PCA\") initiated an administrative proceeding relating to competition
restrictive practices (no. PRC 2012/9). On 6 March 2013, unannounced inspections were conducted in the premises of
Banco Comercial Portugu\u00eas, S.A. (\"BCP\" or \"Bank\") and other credit institutions, where documentation was seized to
investigate allegations of a commercially sensitive information exchange between Portuguese banks.
The administrative proceeding was subject to judicial secrecy by the PCA, as the publicity of the process would not be
compatible with the interests of the investigation and with the rights of the investigated companies. On 2 June 2015,
the Bank was notified of the PCA\u2019s statement of objections (\u201cSO\u201d) in connection with the administrative offence no.
2012/9, by which the Bank is accused of participating in a commercially sensitive information exchange between other
fourteen banks related to retail credit products, namely housing, consumer and small and medium enterprises credit
products.
The proceedings, including the deadline to submit a response to the SO, were suspended for several months between
2015 and 2017, following the appeals lodged by some defendants (including the Bank) before the Portuguese
Competition, Regulation and Supervision Court (\u201cCompetition Court\u201d) on procedural grounds (namely, on the right to
have access to confidential documents which were not used as evidence by the Authority \u2013 for several months, the PCA
denied the Defendant\u2019 right to have access to confidential documents not used as evidence). In the end of June 2017,
the suspension on the deadline to reply to the SO was lifted.
On 27 September 2017, BCP submitted its reply to the statement of objections. A non-confidential version of the Bank\u2019s
defence was sent to the PCA, at the latter\u2019s request, on 30 October 2017. The witnesses indicated by the Bank were
interrogated by the PCA in December 2017 (although without the presence of BCP\u2019s legal representatives).
In May 2018, the PCA refused the BCP\u2019s application for confidential treatment of some of the information in the Bank\u2019s
reply to the SO, having also imposed that the Bank protects the confidential information of the co-defendants
(providing a summary of the information). On 1 June 2018, the Bank filed an appeal with the Competition Court, which,
upholding the appeal, concluded that the PCA infringed on the right to a prior hearing. Complying with the judgment,
in November 2018, the PCA notified the Bank of its intention to deny the application for confidential treatment of some
of the information included in the Bank\u2019s defence; subsequently, in January 2019, it requested BCP to provide
summaries for the co-defendants\u2019 confidential information. The Bank filed an appeal before the Competition Court,
which ruled in favour of BCP, as it considered that the elaboration by the Bank of summaries for its co-defendants\u2019
confidential information an illegitimate burden.
In April 2019, at the PCA\u2019s request, BCP declared to be in favour of the re-examination of its witnesses, requested in its
defence and previously held. The witnesses were re-inquired on 16-17 April 2019 with the presence of the Bank\u2019s legal
representatives.
The PCA denied the request of BCP to be allowed to conduct cross-examination of the witnesses appointed by its co-
defendants. The Bank appealed to the Competition Court, which denied the appeal, through a decision which was latter
upheld by the Lisbon Court of Appeal. BCP then lodged an appeal before the Portuguese Constitutional Court for breach
of the constitutional right of defence. The Constitutional Court dismissed the appeal on 29 April 2021, on the grounds
that the requested cross-examination was not required by the Portuguese Constitution, at that stage of the
proceedings. On 12 August 2020, the Bank lodged a complaint before the European Court of Human Rights on this
matter.
On 2 July 2019, the Bank submitted its observations to the PCA\u2019s report on complementary evidence measures.
On 3 June 2019, BCP was notified of the partial dismissal of the complementary evidence measures it had requested in
its reply to the SO, which it judicially contested. By judgment of September 2019, the Competition Court declared the
nullity of the PCA\u2019s decision, for breach of the right of the parties to be heard on the PCA\u2019s draft decision. The Bank
appealed to the Lisbon Court of Appeal in what concerned the limitation by the Competition Court of the effects of the
nullity declaration of the PCA\u2019s decision. Although this appeal was ultimately admitted by the panel of judges of the
Lisbon Court of Appeal, it ends up being denied.
In order to give compliance to BCP\u2019s right to be heard, the PCA notified the BCP of its intention to reject the above-
mentioned complementary evidence measures. Following BCP\u2019s observations in November 2019, the PCA adopted its
final decision rejecting the measures, which was judicially contested by the BCP in December 2019. In March 2020, the
Competition Court rejected the appeal. This judgment was upheld by the Lisbon Court of Appeal in October 2020.
On 9 September 2019, the PCA adopted its final decision in this proceeding, fining the Bank in a Euros 60 million fine
for its alleged participation in an information exchange system with its competitors in the housing, consumer and SME
credit segments. The BCP considers that the Decision contains serious factual and legal errors, having, on 21 October
2019, filed an appeal before the Competition Court requesting the annulation of the Decision and the suspensory effect
of the appeal. On 8 May 2020, BCP\u2019s appeal was admitted. On 8 June 2020, the BCP submitted a request before the
Court, claiming that the rule according to which appeals do not have, in principle, suspensory effect violates the
Portuguese Constitution, submitting elements aimed at demonstrating considerable harm in the advance provisional
payment of the fine, and offering a guarantee in lieu (indicating the respective percentage of the fine to be offered as
a guarantee). On 14 December 2020, a hearing was held before the Competition Court, and a consensual solution was
reached between the PCA and the defendant banks, including BCP, as to the dosimetry (i.e., 50% of the amount of the
fine) and the forms of the guarantee to be provided, in order for the appeal of the PCA\u2019s decision to have suspensory
effect. On 21 December 2020, BCP submitted a bank guarantee issued by the BCP, which was accepted by the
Competition Court. On 1 March 2021, the Competition Court notified BCP that the guarantee had been presented in a
timely manner and in the agreed form, and, as a result, attributed suspensory effect to the appeal. By order of 20
March 2021, the Competition Court lifted the judicial secrecy and informed the appellants that the trial would, in
principle, start in September 2021.
On 9 July 2020, the BCP requested the Court to declare the nullity of the fining decision of the PCA for failure to assess
the economic and legal context, as determined by the recent case-law of the Court of Justice of the European Union.
The Competition Court clarified that this and other prior questions would not be assessed before the hearing phase.
On 13 January 2021, BCP was notified of an application submitted by \"Associa\u00e7\u00e3o Ius Omnibus \u2013 Nova Associa\u00e7\u00e3o de
Consumidores\" to the Competition Court asking it to have access to a non-confidential version of the file, based on the
need to assert the \u201crights to indemnification of the consumers whose rights and interests it represents, and the possible
exercise and proof of those rights in the context of an action for damages\u201d. On the same date, BCP was notified by the
Competition Court of its decision authorizing the news agency \"Lusa\" to access the file of the administrative phase of
the case. BCP appeal of this decision to the Appeal Court of Lisbon, on 25 January 2021 and opposed to the request of
\"Ius Omnibus\" on 2 February 2021.
On 20 March 2021, the Competition Court determined: (i) the lifting of the judicial secrecy; (ii) the forwarding to the
Public Prosecutor of the appeal of BCP against the decision of the Competition Court relating to \"Lusa\", for reply; (iii)
the provisional start date of the judgement hearing on September 2021, having requested suggestions by the co-
appellants for venues.
By decision of 9 April 2021 of the Competition Court, a preparatory hearing took place on 30 April 2021 for discussion of
issues precedent to the begging of the judgment hearings, in which the procedures relating to the treatment of
confidential information of the co-appellants in the appeals was defined, as well as the conditions relating to access to
file. The Competition Court also set forth preliminary dates for the judgement hearing and scheduled a preparatory
hearing for 7 July 2021.
On 28 June 2021, BCP was notified by the Competition Court to reply to the requests submitted by some of the co-
appellants and confirm that all confidential information had been duly eliminated from non-confidential versions
submitted by each co-appellant. The Competition Court also determined that the hearing of 7 July 2021 was cancelled
and its object would be transferred to the next hearing date (6 September 2021).
On 8 July 2021, BCP presented its reply to the notification of 28 June 2021, having also requested confirmation in
relation to the scheduling of the judgement hearing, namely confirmation of whether it was actually scheduled for 6
September 2021 the preparatory hearing and the start of the judgement hearing sessions.
Several representatives of the banks raised the question of the possible unconstitutionality of the seizure proceedings
of e-mail messages used as evidence in the PCA\u2019s decision, which objection appeal will now take place. This issue was
raised bearing in mind the recent Decision of the Constitutional Court no. 687/2021 on the administrative offence case
no. 225/15.4YUSTR-W. A petition on this matter was filed with the Court on 10 October 2021, requesting the Court to
take a position on the matter before the beginning of the trial. The Court issued an order rejecting the banks' request
to rule on those nullities raised by them, having refused to prohibit the use during the judgment of electronic messages
seized, allowing witnesses to be confronted with their content. The requesting banks lodged an appeal against this
order, which was admitted by the Lisbon Court of Appeal.
On 28 April 2022, TCRS (\"Tribunal da Concorr\u00eancia, Regula\u00e7\u00e3o e Supervis\u00e3o\") handed down a decision under the scope
of Proc. 225/15.4YUSTR-W, regarding the appeal to challenge the decision of the Portuguese Competition Authority of
September 2019 (PRC/2012/09), which imposed fines on a number of banking institutions for alleged violation of
competition rules in virtue of participating in a process of exchanging information on mortgage loans, consumer credit
and credit to SMEs.
In this extensive decision, TCRS lists the facts given as proven, bearing in mind the testimonial evidence produced and
the documents attached to the case file, both in the administrative phase and in the trial, however, at this stage, the
TCRS does not yet conclude by the legal framework of the facts as proven, nor, consequently, by the imposition of
fines, having the TCRS instead chosen to make the reference for a preliminary ruling to the Court of Justice of the
European Union (CJEU) in order to answer two preliminary questions that it sets out, requesting that this reference
follows further terms in the form of an accelerated procedure, taking into account the risk of prescription. It should be
noted that it is not up to the CJEU to adjudicate on the case, but only to interpret the rules of community law by
answering in abstract to the questions submitted to it by the referring court.
CJEU rejected TCRS's request for an accelerated procedure and for priority to be given in the assessment of this case,
hence CJEU's assessment must be given within the normal deadline for these prejudicial proceedings, after which the
judgment of this Court will then be concluded.
The Bank has been notified by the CJEU to, if it wishes, submit its written observations, and must do so by 2 September
2022.
The Bank forwarded its observations to the CJEU on 1 September 2022.
The Oral Hearing took place on 22 June 2023 at the CJEU, and the parties' lawyers made their respective presentations
and answered the questions that the Judge and the Advocate General intended to raise. The reading of the Opinion by
the Advocate General was scheduled to take place on 5 October 2023.
If this judicial ruling so determines, the trial may be \"reopened\" for some additional evidence to be produced. This not
being the case, the CRSC will deliver the corresponding sentence, which can also be appealed to the Lisbon Court of
Appeal and the Constitutional Court.
After receiving an answer from the CJEU, it is expected that the CRSC will be able to issue a Judgment, where it may
cancel, confirm, reduce or increase the fine applied by the CA (Competition Authority) to the Bank.
On the appeal submitted, and at the trial hearing, arguments of fact and law were presented, which we believe to be
solid and sufficient to justify the acquittal of BCP from the conviction against it. However, given the complexity of the
case, its several legal and extra-legal implications, and the position that the CRSC has already taken on the facts, it is
not possible to anticipate the final decision of the case.
The Bank does not anticipate that this lawsuit may result in any responsibility that could have impact on the respective
financial statements.
The Advocate General's conclusions were made public on 5 October 2023:
1) Article 101 TFEU must be interpreted as meaning that it does not preclude the classification as a restriction of
competition by object of an exchange between competitors of information concerning the commercial conditions
applicable to transactions (in particular, current and future credit spreads and risk variables) and production figures for
home loan offers, corporate lending offers and consumer credit offers in the banking sector, where such a practice has
artificially increased transparency and reduced uncertainty as to the functioning of the market.
2) Article 101 TFEU does not preclude such classification where it has been impossible to identify or establish any gain
in efficiency or any uncertain or positive effect on competition resulting from that exchange of information.
The Advocate General's conclusions are not in the nature of a judgement by the CJEU, they are not binding on the
Court of Justice, and it is therefore necessary to await the subsequent delivery of the CJEU judgement which in that
case will set out the interpretation of Community law on the questions referred to it for a preliminary ruling by the
TCRS in case no. 225/15.4YUSTR-W.
On 11 March 2024, BCP, along with 8 banking institutions, was served in order to, once willing, contest a \u201cpopular
declaratory action of condemnation in the form of a common process aimed at protecting competition, the rights of
consumers, and diffuse and/or collective interests associated with the consumption of goods and services\u201d, an action
brought by the Ius Omnibus Association, under the terms n.\u00ba 2/24.1YQSRT at the TCRS, entirely based on the alleged
infringement of competition in mortgage and consumer credit transactions declared in the AdC Decision of 9 September
2019 (PRC/2012/09), a decision that was subject to judicial opposition by BCP, an opposition that has not yet been
definitively judged.
The Bank is analysing that class action in order to present its response in a timely manner.
2. On 7 June 2022, the Bank was notified by the Court to contest a lawsuit brought by Funda\u00e7\u00e3o Jos\u00e9 Berardo and Jos\u00e9
Manuel Rodrigues Berardo against Banco Comercial Portugu\u00eas, S.A., Caixa Geral de Dep\u00f3sitos, S.A., Novo Banco, S.A.
and Banco Esp\u00edrito Santo, S.A., in liquidation.
In this lawsuit, the Plaintiffs allege that they incurred in a mistake regarding the endogenous situation of the defendant
banks and the financial system, without which they would have sold the pledged shares and paid their loans. If this is
not the case, the plaintiffs request the defendant banks to be ordered to pay compensation to Funda\u00e7\u00e3o Jos\u00e9 Berardo
for damages caused by breach of contract, since the moment when they should have been sold in execution of the
pledge due to failure to verify coverage ratios until the moment\u00a0 when they were sold, that is, the difference between
the price at which the pledged shares would have been sold on the dates of coverage ratios default and the price at
which they were actually sold, plus interest and all other loan charges since those dates, in any case the global amount
of compensation not being less than Euros 800,000,000. In any case, the plaintiffs ask the defendant banks to be jointly
condemned to pay Jos\u00e9 Manuel Rodrigues Berardo compensation for moral damages, in the already calculated amount
of Euros 100,000,000 and also in the amount that is settled as soon as the full extent of the damages is known.
In the meantime, through Order No. 8765/2022 of Mr. Secretary of State for the Presidency of the Council of Ministers,
published in Republic Diary, Series 2, part C, of 19 July 2022, the Plaintiff of this lawsuit, Funda\u00e7\u00e3o Jos\u00e9 Berardo, was
declared extinct. This decision was legally contested by the Jos\u00e9 Berardo Foundation, and in April 2023, the
Administrative and Fiscal Court of Funchal cancel the decision that ordered its extinction. Dissatisfied, the Portuguese
State appealed against this latter and is awaiting the outcome.
The lawsuit was contested on 27 September 2022 and is awaiting subsequent terms.
Nothing relevant to the judgment on the merit of the case happened. The lawsuit is suspended until the motions
submitted by FJB in the execution filed by the Banks (8489/19.8T8LSB) have been definitively judged.
The Bank does not anticipate that this lawsuit may result in any responsibility that could have impact on the respective
financial statements.
3. On 3 January 2018, Bank Millennium received decision of the Chairman of the Office for Protection of Competition
and Consumers (OPCC Chairman), in which the OPCC Chairman found infringement by Bank Millennium of the rights of
consumers. In the opinion of the OPCC Chairman the essence of the violation is that Bank Millennium informed
consumers (it regards 78 agreements) in responses to their complaints, that the court verdict stating the abusiveness of
the provisions of the loan agreement regarding exchange rates does not apply to them. According to the position of the
OPCC Chairman the abusiveness of contract\u2019s clauses determined by the court\u00a0 in the course of abstract control is
constitutive and effective for every contract from the beginning. As a result of the decision, Bank Millennium was
obliged to:
1) send information on the UOKiK\u2019s decision to the said 78 clients;
2) place the information on\u00a0 decision and the decision itself on the website and on Twitter;
3) to pay a fine amounting to PLN 20.7 million (Euros 4.8 million).
Bank Millennium lodged an appeal within the statutory time limit.
On 7 January 2020, the first instance court dismissed Bank Millennium's appeal in its entirety. Bank Millennium appealed
against the judgment within the statutory deadline. The court presented the view that the judgment issued in the
course of the control of a contractual template (in the course of an abstract control), recognizing the provisions of the
template as abusive, determines the abusiveness of similar provisions in previously concluded contracts. Therefore, the
information provided to consumers was incorrect and misleading. As regards the penalty imposed by OPCC, the court
pointed out that the policy of imposing penalties by the Office had changed in the direction of tightening penalties and
that the court agrees with this direction.
In Bank Millennium's assessment, the Court should not assess Bank Millennium's behaviour in 2015 from the perspective
of today's case-law views on the importance of abstract control (it was not until January 2016 that the Supreme Court's
resolution supporting the view of the OPCC Chairman was published), the more penalties for these behaviours should
not be imposed using current policy. The above constitutes a significant argument against the validity of the judgment
and supports the appeal which Bank Millennium submitted to the Court of second instance.
The second instance court, in its judgment of 24 February 2022, completely revoked the decision of the OPCC
Chairman. On 31 August 2022, the OPCC Chairman lodged a cassation appeal to the Supreme Court. Bank Millennium
believes that the prognosis regarding the litigation chances of winning the case before the Supreme Court is positive.
Bank Millennium (along with other banks) is also a party to the dispute with OPCC, in which the OPCC Chairman
recognized the practice of participating banks, including Bank Millennium, in an agreement aimed at jointly setting
interchange fee rates charged on transactions made with Visa and Mastercard cards as restrictive of competition, and
by decision of 29 December 2006 imposed a fine on Bank Millennium in the amount of PLN 12.2 million (Euros 2.8
million). Bank Millennium, along with other banks, appealed the decision.
In connection with the judgment of the Supreme Court and the judgment of the Court of Appeal in Warsaw of 23
November 2020, the case is currently pending before the court of first instance - the Court of Competition and
Consumer Protection. Bank Millennium has created a provision in the amount equal to the imposed penalty.
4. On 22 September 2020, Bank Millennium received decision of the Chairman of the Office for Protection of
Competition and Consumers (OPCC Chairman) recognising clauses stipulating principles of currency exchange applied in
the so-called anti-spread annex as abusive and prohibited the use thereof.
Penalty was imposed upon Bank Millennium in the amount of PLN 10.5 million (Euros 2.4 million). Penalty amount takes
account of two mitigating circumstances: cooperation with the Office for Protection of Competition and Consumers and
discontinuation of the use of provisions in question.
Bank Millennium was also requested, after the decision becomes final and binding, to inform consumers, by registered
mail, to the effect that the said clauses were deemed to be abusive and therefore not binding upon them (without need
to obtain court\u2019s decision confirming this circumstance) and publish the decision of the case on Bank Millennium\u2019s
website.
In the decision justification delivered in writing the OPCC Chairman stated that FX rates determined by Bank Millennium
were determined at Bank Millennium\u2019s discretion (on the basis of a concept, not specified in any regulations, of average
inter-bank market rate). Moreover, client had no precise knowledge on where to look for said rates since provision
referred to Reuters, without precisely defining the relevant site.
Provisions relating to FX rates in Bank Millennium\u2019s tables were challenged since Bank Millennium failed to define when
and how many times a day these tables were prepared and published.
In justification of the decision, the OPCC Chairman also indicated that in the course of the proceeding, Bank Millennium
presented various proposed solutions, which the OPCC Chairman deemed to be insufficient.
Bank Millennium appealed against the said decision within statutory term.
On 31 March 2022, the first instance court revoked the entire decision of the Chairman of the OPCC. On 23 May 2022,
the Chairman of the OPCC filed an appeal. On 26 October 2022, the Court of Appeals changed the judgment of the
court of first instance and shared the position of the Chairman of the OPCC as to the abusiveness of the provisions
regarding the determination of exchange rates in the annexes concluded with foreign currency borrowers. On 21
November 2022, the Court of Appeal, at the request of Bank Millennium, suspended the execution of the judgment until
the end of the cassation proceedings. On 30 January 2023, Bank Millennium filled a cassation appeal to the Supreme
Court.
5. Bank Millennium is a defendant in court proceedings brought by PKN Orlen SA, in which the subject of the dispute is
the amount of the interchange fee and the plaintiff demands payment of PLN 635.7 million (Euros 146.3 million). The
plaintiff in this proceeding alleges that the banks acted under an agreement restricting competition on the acquiring
services market by jointly setting the level of the national interchange fee in the years 2006-2014. In this case, Bank
Millennium was sued jointly with another bank and card organizations. According to current estimates of the risk of
losing a dispute in these matters, Bank Millennium did not create a provision. In addition, we point out that Bank
Millennium participates as a side intervener in four other proceedings regarding the interchange fee. Other banks are
the defendant. Plaintiffs in these cases also accuse banks of acting as part of an agreement restricting competition on
the acquiring services market by jointly setting the level of the national interchange fee in the years 2008-2014.
- A lawsuit brought up by shareholder of PCZ S.A. in bankruptcy (PHM, then the European Foundation for Polish-Belgian
Cooperation - EFWP-B, currently called The European Foundation for Polish-Kenyan Cooperation) against Bank
Millennium S.A., worth of the dispute PLN 521.9 million (Euros 120.2 million) with statutory interest from 5 April 2016
until the day of payment. The plaintiff filed the suit dated 23 October 2015 to the Regional Court in Warsaw; the suit\u00a0
was served to Bank Millennium on 4 April 2016. According to the plaintiff, the basis for the claim is damage to their
assets, due to the actions taken by Bank Millennium and consisting in the wrong interpretation of the Agreement for
working capital loan concluded between Bank Millennium and PCZ S.A., which resulted in placing the loan on demand.
Bank Millennium is requesting complete dismissal of the suit, stating disagreement with the charges raised in the claim.
Supporting the position of Bank Millennium, Bank Millennium\u2019s attorney submitted a binding copy of final verdict of
Appeal Court in Wroc\u0142aw favourable to Bank Millennium, issued in the same legal state in the action brought by PCZ SA
against Bank Millennium. On 10 May 2023, the Court of first instance announced a judgment dismissing the claim in its
entirety. The verdict is not final, the plaintiff filed an appeal, the date of the appeal hearing has not yet been set.
As at 31 December 2023, the total value of the subjects of the other litigations in which the Bank Millennium Group\u2019s
companies appeared as defendant, stood at PLN 5,547.3 million (Euros 1,277.1 million) (excluding the class actions
described below and in note 57). In this group the most important category are cases related with FX loans mortgage
portfolio.
6. On 3 December 2015 a class action was served on Bank Millennium. A group of Bank Millennium's debtors (454
borrowers party to 275 loan agreements) is represented by the Municipal Consumer Ombudsman in Olsztyn. The
plaintiffs demanded payment of the amount of PLN 3.5 million (Euros 0.8 million), claiming that the clauses of the
agreements, pertaining to the low down payment insurance, are unfair and thus not binding. Plaintiff extended the
group in the court letter filed on 4 April 2018, therefore the claims increased from PLN 3.5 million (Euros 0.8 million) to
over PLN 5 million (Euros 1.2 million).
Actual status:
On 1 October 2018, the group's representative corrected the total amount of claims pursued in the proceedings and
submitted a revised list of all group members, covering the total of 697 borrowers \u2013 432 loan agreements. The value of
the subject of the dispute, as updated by the claimant, is PLN 7,371,107.94 (Euros 1,696,986).
By the resolution of 1 April 2020 the court established the composition of the group as per request of the plaintiff and
decided to take witness evidence in writing. The hearing date was set for 18 October 2024.
As at 31 December 2023, there were also 138 individual court cases regarding LTV (loans-to-value) insurance (cases in
which only a claim for the reimbursement of the commission or LTV insurance fee is presented).
7. On 13 August 2020, Bank Millennium received lawsuit from the Financial Ombudsman. The Financial Ombudsman, in
the lawsuit, demands that Bank Millennium and the Insurer (TU Europa) be ordered to discontinue performing unfair
market practices involving, as follows:
- presenting the offered loan repayment insurance as protecting interests of the insured in case when insurance
structure indicates that it protects Bank Millennium\u2019s interests;
- use of clauses linking the value of insurance benefit with the amount of borrower\u2019s debt;
- use of clauses determining the amount of insurance premium without prior risk assessment (underwriting);
- use of clauses excluding insurer\u2019s liability for insurance accidents resulting from earlier causes.
Furthermore, the Ombudsman requires Bank Millennium to be ordered to publish, on its website, information on use of
unfair market practices.
The lawsuit does not include any demand for payment, by Bank Millennium, of any specified amounts. Nonetheless, if
the practice is deemed to be abusive it may constitute grounds for future claims to be filed by individual clients.
The case is being examined by the court of first instance.
8. By 31 December 2023, Bank Millennium recorded the receipt of 63 lawsuits by borrowers of mortgage loans in PLN
for reimbursement of benefits provided under the loan agreement. One final judgment was issued dismissing the
borrowers' claim. The borrowers' allegations focus on the WIBOR ratio as an incomprehensible, unverifiable element
affecting the consumer's liability, as well as the issue of insufficient information on the effects of variable interest
rates provided to the consumer by the bank before the conclusion of the contract.
Based on publicly available information, it can be assumed that there will be an increase in the number of lawsuits
concerning mortgage loans in PLN. This phenomenon affects the entire sector of banking services. It is possible that a
\"new business model\" will be created in the area of law firms, which consists in questioning mortgage contracts
containing a variable interest rate clause based on the WIBOR reference index.
On 29 June 2023, the Polish Financial Supervision Authority (KNF) announced that it had assessed the ability of the
WIBOR interest rate reference index to measure the market and economic realities. The KNF stated that the WIBOR
interest rate reference index is capable of measuring the market and economic realities for which it was established.
According to the Commission's assessment, the WIBOR ratio responds appropriately to changes in liquidity conditions,
changes in central bank rates and economic realities.
On 26 July 2023, the Polish Financial Supervision Authority (KNF) presented its position on legal and economic issues
related to mortgage loan agreements in Polish currency in which the WIBOR interest rate\u00a0 reference\u00a0 index\u00a0 is\u00a0 used.
This position can be used in court proceedings and can then be treated as an 'amicus curiae' opinion. The Polish
Financial Supervision Authority stated that the WIBOR reference index meets all legal requirements. In the opinion of
the Polish Financial Supervision Authority, there are no grounds to question the credibility and legality of WIBOR, in
particular in the context of the use of this indicator in mortgage loan agreements in the Polish currency.
9. By 31 December 2023, Bank Millennium received 419 lawsuits in which the plaintiffs (both clients and companies
purchasing claims), alleging violation of the information obligations provided in Art. 30 of the Consumer Credit Act,
demand reimbursement of interest and other costs incurred in connection with taking out a loan (free loan sanction
within the meaning of Article 45). As of 31 December 2023, 16 cases have been legally concluded, and in all these cases
the Bank won the dispute. The Bank believes that the prognosis regarding the litigation chances of winning the
remaining disputes are positive and therefore it has not created provisions in this respect.
10. On 22 December 2023, the Polish Financial Supervision Authority (KNF) started administrative proceedings against
bank Millennium S.A. that might result in a penalty being imposed on the Bank under Article 176i(1)(4) of the Act on
trading in financial instruments. At this stage of the proceedings, the amount of the potential penalty cannot be
estimated.
11. On 1 October 2015, a set of entities connected to a group with debts in default to BCP amounting to Euros 170
million, resulting from a loan agreement signed in 2009 - debts already fully provisioned in the Bank's accounts -, filed
against BCP, after receiving the Bank's notice for mandatory payment, a lawsuit requesting that:
a) the court declares that two of the defendants are mere fiduciary owners of 340,265,616 BCP shares, since they acted
pursuant to a request made by the Bank for the making of the respective purchases, and also that the court orders the
cancellation of the registration of those shares in the name of those companies;
b) the court declares the nullity of the financing agreement established between the plaintiffs and the Bank, due to
relative simulation;
c) the court sentences the Bank, in accordance with the legal regime of the mandate without representation, to
become liable for the amounts due to the institution, abstaining from requesting those amounts to the plaintiffs and to
refund them the cost they incurred while complying with that mandate, namely, Euros 90,483,816.83 regarding Banco
Esp\u00edrito Santo, S.A. (BES) and Euros 52,021,558.11 regarding Caixa Geral de Dep\u00f3sitos, S.A. (CGD), plus default
interests;
d) the amount of the lawsuit determined by the plaintiffs is Euros 317,200,644.90;
e) the Bank opposed and presented a counter claim, wherein it requests the conviction, namely, of a plaintiff company
in the amount of Euros 185,169,149.23 for the loans granted, plus default interests and stamp tax.
The court issued a curative act and already ascertained the factual basis that are proven and that must be proven.
The expertise was carried out and the expert report was submitted. There is a deadline for completing and concluding
the expert report, in its final version, since the Bank presented a complaint about various aspects of the expert's
report, in its first version.
The expertise was carried out and the expert report submitted.
In November 2022 the Bank complained about the Experts' Report: (i) they considered documents that the Court had
ordered to be removed from the proceedings, which had not been done due to the Court's inertia, (ii) they considered
written notes on documents, that may have been written by Mr. Gois Ferreira, and (iii) they did not consider much
information that was contained in the statements, and (iv) they made errors in the calculation of interest and the
amount of financing granted. In view of the experts' new reply, BCP claimed all the expertise, in March 2023. For the
Court's final decision, BCP added, in June this year, thousands of documents supporting its position.
12. Resolution Fund
Resolution measure of Banco Esp\u00edrito Santo, S.A.
On 3 August 2014, with the purpose of safeguarding the stability of the financial system, Banco de Portugal applied a
resolution measure to Banco Esp\u00edrito Santo, S.A. (BES) in accordance with the Article 145-C (1.b) of the Decree-law no.
298/92, of 31 December 1992, as amended (the \u201cBanking Law\u201d), which entailed, inter alia, the partial transfer of
assets, liabilities, off-balance sheet items and assets under management into a transition bank, Novo Banco, S.A. (Novo
Banco), incorporated on that date by a decision issued by Banco de Portugal. Within the scope of this process, the
Resolution Fund made a capital contribution to Novo Banco amounting to Euros 4,900 million, becoming, on that date,
the sole shareholder. Further, in accordance with information published on the Resolution Fund\u2019s website, the
Resolution Fund borrowed Euros 4,600 million, of which Euros 3,900 million were granted by the Portuguese State and
Euros 700 million by a group of credit institutions, including the Bank.
As announced on 29 December 2015, Banco de Portugal transferred to the Resolution Fund the liabilities emerging from
the \u201ceventual negative effects of future decisions regarding the resolution process that may result in liabilities or
contingencies\u201d.
On 7 July 2016, the Resolution Fund declared that it would analyse and evaluate the diligences to be taken, following
the publication of the report on the result of the independent evaluation, made to estimate the level of credit recovery
for each category of creditors under a hypothetical scenario of a normal insolvency process of BES on 3 August 2014.
In accordance with the applicable law, when the BES liquidation process is over, if it is verified that the creditors,
whose credits were not transferred to Novo Banco, would take on a higher loss than the one they would hypothetically
take if BES had gone into liquidation right before the application of the resolution measure, such creditors shall be
entitled to receive the difference from the Resolution Fund.
On 31 May 2019, the Liquidation Committee of BES presented a list of all the acknowledged and a list of the non-
acknowledged creditors before the court and the subsequent terms of the proceedings. These lists detail that the total
acknowledged credits, including capital, remunerative and default interest amounts to Euros 5,056,814,588, of which
Euros 2,221,549,499 are common credits and Euros 2,835,265,089 are subordinated claims, and no guaranteed or
privileged claims exist. Both the total number of acknowledged creditors and the total value of the acknowledged
credits and their ranking will only be ultimately determined upon the definitive judicial judgment of the verification
and ranking of credits to be given in the liquidation proceedings.
According to the Resolution Fund's 2022 Annual Report, the Resolution Fund filed an appeal against the list of creditors
with the Judicial Court of the District of Lisbon, requesting the recognition of its claims. The appeal was upheld, and
the Liquidation Committee of BES filed an appeal. In 2023, the Lisbon Court of Appeal rejected the appeal filed by the
Liquidation Committee of BES and, in favour of the position defended by the Resolution Fund, confirmed the decision of
the Court of First Instance and the recognition, in the amount of Euros 1,242,568.9 thousand of the credits claimed by
the Resolution Fund as privileged credits. In February 2023, the Liquidation Committee of BES filed a review appeal
with the Supreme Court of Justice, which decision is expected during 2023.
On 11 August 2023, the BES Liquidation Committee announced that this amount had been recognized and qualified as
privileged by a judgment of the Supreme Court of 11 July 2023. On 10 August 2023, an order was issued in the BES
liquidation proceedings, which reads as follows: \"(...) On 11 July 2023, the Supreme Court of Justice dismissed the
appeal filed by the Banco Esp\u00edrito Santo, S.A. bankruptcy estate, recognizing that the Resolution Fund's claim is
privileged in these proceedings. This means that only the Resolution Fund, as a creditor, will have its claim satisfied
from the funds available to the Banco Esp\u00edrito Santo, S.A. bankruptcy estate (...)\".
Following the resolution measure of BES, a significant number of lawsuits against the Resolution Fund was filed and is
underway. According to note 20 of the Resolution Fund\u2019s annual report of 2022, \u201cLegal actions related to the
application of resolution measures have no definitive legal precedents, which makes it impossible to use case law in
its evaluation, as well as to obtain a reliable estimate of the associated contingent financial impact. (\u2026) The
Resolution Fund, supported by legal advice of the attorneys for these actions, and in light of the legal and procedural
information available so far, considers that there is no evidence to cast doubt on their belief that the probability of
success is higher than the probability of failure\u201d.
According to note 22 of the Resolution Fund\u2019s annual report of 2022, \"In addition to the Portuguese courts, it is
important to take into account the litigation of Novo Banco, S.A., in other jurisdictions, being noteworthy, for its
materiality and respective procedural stage, the litigation in the Spanish jurisdiction. Regarding litigation in the
Spanish jurisdiction, during the years 2018 to 2022, twelve (decisions) have become final and unappealable
condemning Novo Banco, Spanish branch, as well as four sentences in relation to which due compensation has been
requested from the Resolution Fund\u201d.
On 31 March 2017, Banco de Portugal communicated the sale of Novo Banco, where it states the following: \"Banco de
Portugal today selected Lone Star to complete the sale of Novo Banco. The Resolution Fund has consequently signed
the contractual documents of the transaction. Under the terms of the agreement, Lone Star will inject a total of Euros
1,000 million in Novo Banco, of which Euros 750 million at completion and Euros 250 million within a period of up to 3
years. Through the capital injection, Lone Star will hold 75% of the share capital of Novo Banco and the Resolution
Fund will maintain 25% of the share capital\u201d.
The terms agreed also included a Contingent Capital Agreement (CCA), under which the Resolution Fund, as a
shareholder, undertakes to make capital injections if certain cumulative conditions are met related to the performance
of a specific portfolio of assets and to the capital ratios of Novo Banco going forward.
If these conditions are met, the Resolution Fund may be called upon to make a payment to Novo Banco for the lesser of
the accumulated losses in the covered assets and the amount necessary to restore the capital ratios at the agreed
levels. Any capital injections to be carried out pursuant to this contingent mechanism are limited to an absolute cap.
The terms agreed also provide for mechanisms to safeguard the interests of the Resolution Fund, to align incentives as
well as monitoring mechanisms, notwithstanding the limitations arising from State Aid rules.
On 18 October 2017, following the resolution of the Council of Ministers no. 151-A/2017 of 2 October 2017, Banco de
Portugal communicated the conclusion of the sale of Novo Banco to Lone Star, with an injection by the new shareholder
of Euros 750 million, followed by a further capital increase of Euros 250 million by the end of 2017. Upon completion of
the transaction, the status of Novo Banco as a bridge institution ceased, fully complying with the purposes of the
resolution of BES.
On 26 February 2018, the European Commission published the non-confidential version of its decision regarding the
approval of State aid underlying Novo Banco\u2019s sale process. This statement identifies the three support measures by the
Resolution Fund and the Portuguese State that are part of the sale agreement associated with a total gross book value
of around Euros [10-20] billion(1) that revealed significant uncertainties regarding adequacy in provisioning(2):
(i) Contingent Capital Agreement (CCA) which allows Lone Star to reclaim, from the Resolution Fund, funding costs,
realised losses and provisions related to an ex-ante agreed portfolio of existing loan stock, up to a maximum of
Euros 3.89 billion, subject to a capital ratio trigger (CET1 below 8%-13%) as well as to some additional
conditions(1)(2)(3);
(ii) underwriting by the Resolution Fund of a Tier 2 instrument to be issued by Novo Banco up to the amount necessary
(but no more than Euros 400 million). The amount that can be reclaimed by the Resolution Fund under the CCA is
subject to the cap of Euros 3.89 billion(2);
(iii) in case the Supervisory Review and Evaluation Process (\u201cSREP\u201d) total capital ratio of Novo Banco falls below the
SREP total capital requirement, the Portuguese State will provide additional capital in certain conditions and
through different instruments(2). According to the audit report on the management of Novo Banco conducted by the
Court of Auditors and released on 12 July 2022, \"the risk of triggering the additional capital mechanism (capital
backstop), up to Euros 1.6 billion, provided for in the commitments made by the Portuguese State to ensure the
viability of NB, exists\u201d.
According to an Investor Presentation dated January 2024, from Novo Banco\u2019s, Novo Banco still has Euros 485 million
under the MCC in addition to the Euros 209 million included in the capital call for 2021. The mechanism is in place until
December 2025, date that can be extended, under certain conditions, by one additional year.
(1) Exact value not disclosed by the European Commission for confidentiality reasons
(2) As referred to in the respective European Commission Decision
(3) According to 2018 Novo Banco\u2019s earnings institutional presentation, the \u201cminimum capital condition\u201d is (i) CET1 or Tier 1 < CET1 or
Tier 1 SREP requirement plus a buffer for the first three years (2017-2019); (ii) CET1 < 12%
According to a statement issued by the Resolution Fund on 13 February 2023, \"the Ministry of Finance has disclosed that
the European Commission intends to consider the restructuring process of Novo Banco as completed. The information
disclosed today confirms the successful restructuring of Novo Banco, resulting from the combined execution of the
restructuring plan agreed in 2017, under the sale transaction conducted by Banco de Portugal, and the sale
agreements, namely the CCA, under which the Resolution Fund transferred to Novo Banco Euros 485 million, less than
the maximum amount set in the contract (Euros 3,890 million). The completion of the restructuring of Novo Banco, is
also another indicator that Novo Banco should not need to request any further payment to the Resolution Fund under
the CCA, without prejudice to the ongoing litigation or that still may occur regarding the amounts already requested by
Novo Banco in relation to past years and that the Resolution Fund considers that are not due. On the same day, Banco
de Portugal issued the following statement \"The conclusion of the Novo Banco restructuring process also results in the
end of the backstop mechanism, which provided for the possibility, which was always considered remote, of the
Portuguese State providing extraordinary support to Novo Banco in extreme scenarios. This mechanism protected Novo
Banco and the national financial system from more adverse scenarios, which did not materialize. With the end of the
backstop, the financial risk for the Portuguese State is eliminated\".
According to the 2018 Resolution Fund\u2019s annual report, the Resolution Fund and Novo Banco have agreed that a
Verification Agent - an independent entity which is essentially responsible for clarifying any differences that may exist
between Novo Banco and the Resolution Fund regarding the set of calculations inherent to the CCA or regarding the
practical application of the principles stipulated in the contract - is in charge of confirming that the perimeter of the
mechanism is correct and that the balance sheet values of Novo Banco are being correctly reflected in the mechanism,
as well as verifying the underlying set of calculations, namely by confirming the correct calculation of losses and the
reference value of the assets. According to the 2022 Resolution Fund\u2019s annual report, the Resolution Fund follows the
work carried out by the Verification Agent, while specific analyses are being requested.
The Resolution Fund disclosed on 17 June 2019 a set of clarifications related to the payment due in 2019 under the CCA
with Novo Banco, namely:
- For payments from the Resolution Fund to be made (limited to a maximum of Euros 3,890 million over the lifetime of
the mechanism), losses on the assets under the contingent mechanism should be incurred and the capital ratios of Novo
Banco should stand below the agreed reference thresholds;
- The payment to be made by the Resolution Fund corresponds to the lower of the accumulated losses on the assets
covered and the amount necessary to restore the capital ratios above the minimum reference threshold;
- The reference capital ratios are, in 2017, 2018 and 2019, linked to the regulatory requirements applicable to Novo
Banco (CET1 ratio of 11.25% and Tier 1 ratio of 12.75%), but, as from 2020, the reference ratio will correspond to a
CET1 ratio of 12%;
- The initial reference value of the portfolio comprising the CCA was, as of 30 June 2016, Euros 7,838 million (book
value of the associated assets, net of impairments);
In a statement dated 2 February 2024, the Resolution Fund clarifies that it has been informed of the Supreme Court's
ruling on the appeal filed by Novo Banco, following the decision of the Lisbon Court of Appeal, which rejected the
petition for annulment of the decision of the Court of Arbitration, issued in October 2021, relating to the first
arbitration between the Resolution Fund and Novo Banco, which began in 2020.
This ruling definitively confirms the validity and correctness of the position taken by the Resolution Fund in 2019, when
it opposed being charged, through the CCM, for the impact of Novo Banco's intention to waive the transitional regime
related to the implementation of IFRS 9. The Resolution Fund's action in this process resulted in a saving of its
resources of Euros 169 million.
Regarding the intervention of the Resolution Fund concerning the transitional regime of the implementation of the
dynamic component of IFRS 9, Novo Banco estimates a positive impact on its own funds in the amount of Euros 171
million (which implies a reduction in the capital requirements that Novo Banco intended to pass on to the CCM in the
amount of Euros 161.6 million). Accordingly, the Resolution Fund has an arbitration proceeding underway, also under
the aegis of the International Chamber of Commerce, with a view to settling the difference between the parties. This
process is in progress, and it is estimated that an award will be rendered in the first half of 2024.
According to a statement by the Resolution Fund on 3 September 2020, following the payment made in May 2019 by the
Resolution Fund to Novo Banco in compliance with the CCA, a special audit determined by the Government was carried
out. The information was presented by the independent entity that carried out the special audit, showed that Novo
Banco has been operating with a strong influence of the vast legacy of non-productive assets, originated in BES, which
resulted in impairment charges and provisions, but have also contributed to rendering Novo Banco\u2019s internal procedures
more robust. Regarding the exercise of the powers of the Resolution Fund under the CCA, the audit results reflect the
adequacy of the principles and the adopted criteria.
According to Resolution Fund\u2019s annual report of 2022, Novo Banco submitted to the International Chamber of
Commerce a request for arbitration to have recognized the right to receive an aggregate amount of Euros 165,441.9
thousand (divestment of Novo Banco's activity in Spain in the amount of Euros 147,441.9 thousand and valuation
differences regarding a set of assets held by Novo Banco in the amount of Euros 18,000 thousand) which the Resolution
Fund considered, and considers, not to merit the coverage of the CCM.
On 3 May 2021, following the request of the Portuguese parliament in October 2020 to review the operations and
management of Novo Banco that led to the need to transfer funds from the Resolution Fund to Novo Banco, the
Resolution Fund announced that the audit report conducted by Tribunal de Contas (\u201cCourt of Auditors\u201d) was released.
The Court of Auditors concluded that the public financing of Novo Banco through the CCA contributed to the stability of
the financial system, particularly as it avoided the bank\u2019s liquidation and reduced systemic risk. According to the
Resolution Fund, the audit does not identify any impediment to the fulfilment of commitments and contracts arising
from BES\u2019s resolution process, initiated in August 2014.
On 9 September 2020, BCP informed that it has decided not to continue with the legal proceeding before the General
Court of the European Union with a view to partially annul the European Commission\u2019s decision regarding its approval
of the CCA of Novo Banco.
According to Novo Banco\u2019s 2023 annual report (note 28), Novo Banco adhered to the Special Regime applicable to
Deferred Tax Assets under Law No. 61/2014, of 26 August (REAID), according to which, the deferred tax assets recorded
until 31 December 2015 can be converted into tax credits when the taxable entity reports an annual net loss, in
accordance to the proportion of the amount of the said net loss to total equity at the individual company level, A
special reserve was established with an amount identical to the tax credit approved, increased by 10%. The conversion
rights are securities that entitle the State to require Novo Banco to increase its share capital by incorporating the
amount of the special reserve and consequently issuing and delivering free of charge ordinary shares. The shareholders
have the right to acquire the conversion rights attributed to the Portuguese State.
According to the Resolution Fund\u2019s 2022 annual report, under the terms of the sale of Novo Banco, the 75% of the share
capital of Novo Banco held by Nani Holdings is not affected by the dilution associated with the REAID.
On 17 December 2021, Novo Banco, carried out a capital increase in the amount of Euros 154,907.3 thousand, through
the conversion of the rights that had been attributed to the State due to the conversion of the deferred tax assets of
Novo Banco, into tax credits, with reference to the 2015 tax period, under the REAID. As of that date, the State
became a shareholder of Novo Banco, having been attributed a participation corresponding to 1.56% of the share
capital. Later, on 4 November 2022, Novo Banco made a further capital increase of Euros 249,753 thousand conferred
the State an additional stake of 4.13% in Novo Banco.
In April 2023, a capital increase of Euros 263,183 thousand was carried out through a rights conversion related to 2018
and 2019, which gave the State an additional stake of 6.27% in Novo Banco. With reference to the 2020 financial year,
conversion rights representing 3.64% of the capital were issued which will only dilute, in accordance with the sale
contract, the Resolution Fund's participation if the shareholders do not exercise their potestative right to acquire the
conversion rights.
According to Novo Banco's 2023 annual report, Lone Star owns 75% of Novo Banco, the Resolution Fund 13%, and the
Portuguese State 12%.
Resolution measure of Banif \u2013 Banco Internacional do Funchal, S.A.
On 19 December 2015, the Board of Directors of Banco de Portugal announced that Banif \u201cwas failing or likely to fail\u201d
and started an urgent resolution process of the institution through the partial or total sale of its activity, which was
completed on 20 December 2015 through the sale to Banco Santander Totta S.A. (BST) of the rights and obligations of
Banif, formed by the assets, liabilities, off-balance sheet items and assets under management. The largest portion of
the assets that were not sold, were transferred to an asset management vehicle denominated Oitante, S.A. (Oitante)
specifically created for that purpose, having the Resolution Fund as the sole shareholder. For that matter, Oitante
issued bonds representing debt in the amount of Euros 746 million. The Resolution Fund provided a guarantee and the
Portuguese State a counter-guarantee. The operation also involved State aid, of which Euros 489 million were provided
by the Resolution Fund, which was funded by a loan granted by the State.
On 4 July 2022, Oitante - 100% owned by the Resolution Fund - completed the process of repayment of the bonds issued
in connection with the resolution of BANIF. Oitante's debt, which initially amounted to Euros 746 million, was thus fully
repaid. With the repayment of the debt, the Resolution Fund's responsibility as guarantor also ceases, as well as the
Portuguese State's responsibility as provider of a counter-guarantee.
According to the Resolution Fund (press release dated 29 December 2023), Oitante has already paid a total of Euros
78.8 million to the Resolution Fund, of which Euros 63.8 million will be paid in 2023. The amounts received and to be
received by the Resolution Fund, given its 100% participation in Oitante's capital, will contribute to reducing the losses
of Euro 489 million incurred by this Fund in the resolution of BANIF and will be used to repay the debts of the
Resolution Fund, namely to the State.
On 16 January 2023, the Liquidation Committee of Banif announced a list of all the acknowledged and a list of the non-
acknowledged creditors. According to the Resolution Fund\u2019s 2022 annual report, the Resolution Fund holds a claim on
Banif of Euros 489 million, which has a higher claim ranking provided for in article 166-A of the RGICSF. Under the
judicial liquidation process of Banif, which was initiated following the resolution, the independent evaluator estimates
that the level of recovery of the financial support made available by the Resolution Fund, as having a higher ranking at
the end of the liquidation, is expected to be 7.6%.
On 12 January 2021, Banco de Portugal was informed that the Administrative and Fiscal Court of Funchal dismissed a
lawsuit involving several disputes associated to Banif\u2019s resolution measures applied by Banco de Portugal. In its
decision, the Court determined the legality and maintenance of Banco de Portugal\u2019s measures.
Liabilities and financing of the Resolution Fund
Pursuant to the resolution measures applied to BES and Banif, the Resolution Fund incurred on loans and assumed other
responsibilities and contingent liabilities resulting from:
- The State loans, on 31 December 2021, included the amounts made available (i) in 2014 for the financing of the
resolution measure applied to BES (Euros 3,900 million); (ii) to finance the absorption of Banif's losses (Euros 353
million); (iii) under the framework agreement concluded with the State in October 2017 for the financing of the
measures under the CCA (Euros 430 million plus Euros 850 million of additional funding requested in 2019 and Euros 850
million made available in 2020);
- Other funding granted:
\u2022 in 2014 by the institutions participating in the Resolution Fund in the amount of Euros 700 million, in which the
Bank participates, within the scope of BES resolution measure;
\u2022 in 2021 by seven domestic credit institutions, including BCP, to finance payments due under the CCA up to a
maximum of Euros 429 million;
- The underwriting by the Resolution Fund of a Tier 2 instrument to be issued by Novo Banco up to the amount of Euros
400 million did not take place as the instruments were placed with third party investors as disclosed by Novo Banco on
29 July 2018;
- Effects of the application of the principle that no creditor of the credit institution under resolution may assume a loss
greater than the one it would take if that institution did not go into liquidation;
- Negative effects resulting from the resolution process that result in additional liabilities or contingencies for Novo
Banco, which must be neutralized by the Resolution Fund;
- Legal proceedings filed against the Resolution Fund;
- Guarantee granted to secure the bonds issued by Oitante, totally reimbursed, as described above.
- CCA allows Lone Star to claim, from the Resolution Fund, funding costs, realised losses and provisions related to the
aforementioned ex-ante portfolio of existing loan stock agreed upon the sale process to Lone Star up to Euros 3.89
billion under the aforementioned conditions, among which a reduction of Novo Banco\u2019s CET1 below 8%-13%;
- In case the Supervisory Review and Evaluation Process (SREP) total capital ratio of Novo Banco falls below the SREP
total capital requirement, the State will provide additional capital in certain conditions and through different
instruments as referred to in the respective European Commission Decision.
According to Resolution Fund\u2019s annual report of 2022, contingent liabilities from the CCA are limited to a maximum
aggregate amount of Euros 3,890 million and that the aggregate amount of this contingent liability, which corresponds
to the difference between that maximum amount and the amounts already paid by the Resolution Fund, amounts to
Euros 485 million.
The expectation of the Resolution Fund is that, except for what may eventually result from the pending arbitration
disputes with Novo Banco, no further payments will occur under the CCA. On the other hand, the value of payments
already made may be compensated, under the terms of the contracts, by the eventual recovery of credits that may
occur, to which the value of the shareholding of the Resolution Fund in Novo Banco must be added.
According to note 22 of the Resolution Fund\u2019s 2022 annual report, the Resolution Fund considers that, to date, there
are no elements that allow a reliable estimate of the potential financial effect of these potential liabilities.
By a public statement on 28 September 2016, the Resolution Fund and the Ministry of Finance communicated the
agreement based on a review of the terms of the Euros 3,900 million loan originally granted by the State to the
Resolution Fund in August 2014 to finance the resolution measure applied to BES. According to the Resolution Fund, the
extension of the maturity of the loan was intended to ensure the ability of the Resolution Fund to meet its obligations
through its regular revenues, regardless of the contingencies to which the Resolution Fund is exposed. On the same day,
the Office of the Minister of Finance also announced that increases in the liabilities arising from the materialization of
future contingencies will determine the maturity adjustment of State and bank loans to the Resolution Fund, required
from to maintain the contributory effort required from the banking sector at prevailing levels at that time.
According to the statement of the Resolution Fund of 21 March 2017:
- \u201cThe conditions of the loans obtained from the Fund to finance the resolution measures applied to Banco Esp\u00edrito
Santo, S.A. and to Banif \u2013 Banco Internacional do Funchal, S.A. were changed. These loans amount to Euros 4,953
million, of which Euros 4,253 million were granted by the Portuguese State and Euros 700 million were granted by a
group of banks\";
- \u201cThose loans are now due in December 2046, without prejudice to the possibility of early repayment based on the
use of the Resolution Fund's revenues. The revision of the loan\u2019s terms aimed to ensure the sustainability and financial
balance of the Resolution Fund. The terms allow the Resolution Fund to fully meet its liabilities based on regular
revenues and without the need for special contributions or any other type of extraordinary contributions\".
According to the audit report on the management of Novo Banco conducted by the Court of Auditors and released on 12
July 2022, \"the repayment of the Euros 2,130 million loans granted by the Portuguese State to the Resolution Fund will
not end in 2046, as expected, rather in 2056 (without payments under the CCA after 2021) or in 2059 (with the use of
the CCA cap). (...) In other, more pessimistic scenarios, these loans will still be being repaid in 2062\u201d.
On 2 October 2017, by Resolution no. 151-A/2017, of the Council of Ministers of the Portuguese State, as the ultimate
guarantor of financial stability, was authorised to enter into a framework agreement with the Resolution Fund, to make
available the necessary financial resources to the Resolution Fund, if and when the State deemed necessary, to satisfy
any contractual obligations that may arise from the sale of the 75% stake in Novo Banco. The above-mentioned
resolution further set out that the framework agreement should be subject to a time period that is consistent with the
undertakings of the Resolution Fund and should preserve the Resolution Fund\u2019s capacity to satisfy said obligations in
due time.
On 31 December 2022, the Resolution Fund's own resources had a negative equity of Euros 6,974.7 million, as opposed
to Euros 7,207.6 million at the end of 2021, according to the latest 2022 annual report of the Resolution Fund.
To repay the loans obtained and to meet other liabilities that it may take on, the Resolution Fund receives proceeds
from the initial and regular contributions from the participating institutions (including the Bank) and from the
contribution over the banking sector (created under Law no. 55-A/2010). It is also provided for the possibility of the
member of the Government responsible for the area of Finance to determine, by ordinance that the participating
institutions make special contributions, in the situations provided for in the applicable legislation, particularly if the
Resolution Fund does not have resources to satisfy its obligations.
Pursuant to Decree-Law no. 24/2013 of 19 February, which establishes the method for determining the initial, periodic
and special contributions to the Resolution Fund, provided for in the Banking Law, the Bank has been paying, since
2013, its mandatory contributions set out in the aforementioned decree-law.
On 3 November 2015, the Banco de Portugal issued Circular Letter no. 085/2015/DES, under which it is clarified that
the periodic contribution to the Resolution Fund should be recognised as an expense at the time of the occurrence of
the event which creates the obligation to pay the contribution, i.e. on the last day of April of each year, as stipulated
in Article 9 of the referred Decree-Law no. 24/2013, of 19 February, thus the Bank is recognising as an expense the
contribution to the Resolution Fund in the year in which it becomes due.
Decree-Law no. 24/2013 of 19 February further sets out that Banco de Portugal has the authority to determine, by way
of instruction (\u201cinstru\u00e7\u00e3o\u201d), the applicable yearly rate based on objective incidence of periodic contributions. The
instruction of Banco de Portugal no. 28/2023, published on 15 December 2023, set the base rate for 2024 for the
determination of periodic contributions to the Resolution Fund at 0.032% (0.029% in 2023).
The Resolution Fund issued, on 15 November 2015, a public statement declaring: \"...it is further clarified that it is not
expected that the Resolution Fund will propose the setting up of a special contribution to finance the resolution
measure applied to BES. Therefore, the potential collection of a special contribution appears to be unlikely\".
In 2015, following the establishment of the Single Resolution Fund (SRF), the Group made an initial contribution in the
amount of Euros 31,364 thousand. In accordance with the Intergovernmental Agreement on the Transfer and
Mutualisation of Contributions to the SRF, this amount was not transferred to the SRF but was used instead to partially
cover for the disbursements made by the RF in respect of resolution measures prior to the date of application of this
Agreement. This amount will have to be reinstated over a period of 8 years (started in 2016) through the periodic
contributions to the SRF. The Single Resolution Fund does not cover undergoing situations with the National Resolution
Fund as at 31 December 2015. The total amount of the contribution attributable to the Group of 2023 was Euros 22,861
thousand, of which the Group delivered Euros 17,729 thousand and the remaining was constituted as irrevocable
payment commitment.
In 2023, the Group made regular contributions to the Portuguese Resolution Fund in the amount of Euros 9,491
thousand. The amount related to the contribution on the banking sector in Portugal, registered in this period was Euros
44,807 thousand. These contributions were recognized as a cost in 2023, in accordance with IFRIC no. 21 \u2013 Levies.
It is not possible, on this date, to assess the effects on the Resolution Fund due to: (i) the sale of the shareholding in
Novo Banco in accordance with the communication of Banco de Portugal dated 18 October 2017 and the information
provided by the European Commission on this subject under the terms described above, including the effects of the
application of the Contingent Capital Agreement and the Special Regime applicable to Deferred Tax Assets; (ii) the
application of the principle that no creditor of the credit institution under resolution may take on a loss greater than
the one it would take if that institution did not go into liquidation; (iii) additional liabilities or contingencies for Novo
Banco which need to be neutralized by the Resolution Fund; and, (iv) legal proceedings against the Resolution Fund.
According to Article 5 (e) of the Regulation of the Resolution Fund, approved by the Ministerial Order no. 420/2012, of
21 December, the Resolution Fund may submit to the member of the Government responsible for finance a proposal
with respect to the determination of amounts, time limits, payment methods, and any other terms related to the
special contributions to be made by the institutions participating in the Resolution Fund. According to public
communications from both the Resolution Fund and from the Government, there is no indication that any such special
contributions are foreseen.
According to the Resolution Fund\u2019s 2022 annual report, under note 8, \"the Resolution Fund is not obliged to present
positive equity. In case of insufficient resources, the Resolution Fund may receive special contributions, as determined
by the member of the Government responsible for finance, in accordance with article 153-I of the Banking Act,
although no such contributions are expected. The Resolution Fund may also, exceptionally, obtain financial support
from the State, namely through loans or guarantees, as set out in article 153-J of the same regime\".
To meet a payment from the Resolution Fund to Novo Banco, as per to Resolution no. 63-A/2021 of 27 May 2021 of the
Council of Ministers and Order from the Minister of State and Finance, of 31 May 2021 - intended to provide the
Resolution Fund with the financial resources necessary to meet any obligations arising from the Contingent
Capitalization Agreement in the years 2021 and 2022 \u2013 rendering a new loan from the State to the Resolution Fund, a
number of national financial institutions offered to finance the Resolution Fund, increasing up to Euros 475 million the
direct financing of banks to the Resolution Fund and waiving a Portuguese State loan to the Resolution Fund.
According to the Resolution Fund\u2019s 2022 annual report from the maximum amount of Euros 475 million. The Resolution
Fund used Euros 429 million, which corresponds to the payment made to Novo Banco in 2021. The loan matures in 2046
and bears interest at a rate corresponding to the sovereign cost of funding for the period between the contract date (31
May 2021) and 31 December 2026, plus a margin of 15 b.p. The interest rate will be reviewed on 31 December 2026
and, after that, every five-years. The payment obligations arising from this loan benefit from a pari passu treatment
with the payment obligations of the loans entered into with the Portuguese State on 7 August 2014 and 31 December
2015 and with the Portuguese credit institutions on 28 August 2014. The funding costs of the Resolution Fund (from the
State and from banks) will continue to be exclusively borne by periodic revenues, corresponding to the contributions
paid by the banking sector.
13. Banco Comercial Portugu\u00eas, S.A., Banco ActivoBank S.A. and Banco de Investimento Imobili\u00e1rio, S.A. (company
merged into Banco Comercial Portugu\u00eas, S.A.) initiated an administrative proceeding to contest the resolution adopted
by Bank of Portugal on 31 March 2017 to sell Novo Banco (NB), and also, as a precaution, the deliberation adopted by
the Resolution Fund on the same date, as they foresee the sale of NB by resorting to a contingent capitalization
agreement under which the Resolution Fund commits to inject capital in Novo Banco up to Euros 3,9 billion, under
determined circumstances. In the proceedings, the claimants request the declaration of nullity or annulment of those
acts.
The proceedings were filed based on the information contained in the Communication from Bank of Portugal dated 31
March 2017, of which the claimants were not notified. The proceedings were filed in court on 4 September 2017. Bank
of Portugal and the Resolution Fund presented their arguments and, only very recently, Nani Holdings SGPS, S.A. did
the same since, by delay of the court, this company was only very recently notified to act as a party in the proceedings.
In addition to opposing to it, the defendants invoke three objections (i) the illegitimacy of the claimants, (ii) the
argument that the act performed by Bank of Portugal cannot be challenged and (iii) the material incompetence of the
court. The opponent party invoked the issue of passive illegitimacy since Novo Banco was not notified as an opponent
party.
The claimants replied to the arguments presented by the defendants and to the arguments presented by the opponent
party. After the presentation of the arguments, Bank of Portugal attached to the proceedings what it called an
evidence process (allegedly in compliance with the law) but most of the documents delivered were truncated in such a
way that neither the court nor the claimants are able to obtain adequate knowledge thereof. That issue was already
raised in the proceedings (requesting the court to order Bank of Portugal to deliver a true evidence process) but no
decision thereon has been made yet.
Currently, the proceedings are prepared for confirmation of the decision accepting the formalities of the right of action
(with the making of a decision on the specific objections invoked). In case the judge considers that Novo Banco is an
opponent party, the judge must start by issuing a pre-confirmation in order to request the claimants to identify it.
Afterwards, that Bank will be notified to present its opposition arguments.
The case was sent to the judge on 23 September 2019 and the Bank is awaiting a decision. BCP added legal opinions to
the records (Professors M\u00e1rio Aroso de Almeida and Manuel Fontaine de Campos).
14. Following the restructuring process agreed with the Directorate-General for Competition (DGComp) and the
Portuguese State, Group Banco Comercial Portugu\u00eas implemented in 2014 a salary adjustment process for employees,
with a temporary effect. Additionally, it was agreed between the Bank and the Unions that, in the years after the State
intervention and if there are distributable profits, the Board of Directors and the Executive Committee would submit
for approval of the Shareholders\u2019 General Meeting a proposal of distribution of profits to the employees, which allows
the distribution of an accumulated total global amount at least equal to the total amount that was not received over
the temporary term of the salary adjustment, as described in the clause no. 151-E of BCP\u2019s Collective Labour
Agreement, effective between 2014 and 2017.
At the General Meeting held on 24 May 2023, the proposal submitted by the Board of Directors, the application of
profits relating to the financial year of 2022 was approved, which included an extraordinary distribution to the
employees to Euros 9,972,000, with the concrete determination of the amount to be attributed to each employee to be
fixed by the Executive Committee to employees who, having not already been fully compensated with the results
distributed in 2019 and 2020 and 2022, remain in office on the date of payment of the remuneration of June 2023. This
extraordinary distribution of results, together with those of 2019, 2020 and 2022 allowed the distribution to the
employees in office in June 2023 of an accumulated amount equal to the total amount not received during the period
of temporary salary adjustment indicated in the previous paragraph.
15. The Bank was subject to tax inspections for the years up to 2019. As a result of the inspections in question,
corrections were made by the tax authorities, arising from the different interpretation of some tax rules. The main
impact of these corrections occurred regarding IRC, including in terms of the tax loss carry forwards and, in the case of
indirect tax, in the calculation of the Value-Added Tax (VAT) deduction pro rata used for the purpose of determining
the amount of deductible VAT and at the Stamp Duty level. Most of additional liquidations/corrections made by the tax
administration were the object of contestation by administrative and/or judicial means.
The Bank recorded provisions, current tax liabilities or deferred tax liabilities at the amount considered sufficient to
offset the tax or tax loss carry forwards, as well as the contingencies related to the fiscal years not yet reviewed by the
tax administration.
Provisions for legal risk related to foreign currency-indexed mortgage loans in
Bank Millennium (Poland)
1. Court claims and current provisions for legal risk
On 31 December 2023, Bank Millennium had 20,914 loan agreements and additionally 1,780 loan agreements from
former Euro Bank under individual ongoing litigations (excluding claims submitted by Bank Millennium against clients
i.e. debt collection cases) concerning indexation clauses of FX mortgage loans submitted to the courts (64% loans
agreements before the courts of first instance and 36% loans agreements before the courts of second instance) with the
total value of claims filed by the plaintiffs amounting to PLN 4,130.6 million (Euros 950.9 million) and CHF 281.5 million
(Euros 302.8 million) [(Bank Millennium portfolio: PLN 3,780.2 million (Euros 870.3 million) and CHF 272.6 million (Euros
293.2 million) and former Euro Bank portfolio: PLN 350.4 million (Euros 80.7 million) and CHF 8.8 million (Euros 9.5
million)]. Out of 20,914 Bank Millennium's loan agreements in ongoing individual cases 240 are also part of class action.
From the total number of individual litigations against the Bank approximately 2,260 or 11% were submitted by
borrowers that had already naturally or early fully repaid the loan or were converted to polish zloty at the moment of
submission and had not a settlement agreement and approximately another 730 cases correspond to loans that were
fully repaid since then (as court proceedings are lengthy).
The claims formulated by the clients in individual proceedings primarily concern the declaration of invalidity of the
contract and payment for reimbursement of paid principal and interest instalments as undue performance, due to the
abusive nature of indexation clauses, or maintenance of the agreement in PLN with interest rate indexed to CHF Libor.
In addition, Bank Millennium is a party to the group proceedings (class action) subject matter of which is to determine
Bank Millennium's liability towards the group members based on unjust enrichment (undue benefit) ground in
connection with the foreign currency mortgage loans concluded. It is not a payment dispute. The judgment in these
proceedings will not directly grant any amounts to the group members. The number of credit agreements covered by
these proceedings is 3,273. Out of 3,273 loan agreements in class action 240 are also part of ongoing individual cases,
858 concluded settlements and 7 received final verdicts (invalidation of loan agreement). On 24 May 2022 the court
issued a judgment on the merits, dismissing the claim in full. On 13 December 2022 the claimant filed an appeal against
the judgment of 24 May 2022. On 20 November 2023 the claimant requested granting interim measures to secure the
claims against the Bank. In a decision of 27 December 2023, the request for granting interim measures was dismissed.
The pushy advertising campaign observed in the public domain affects the number of court disputes. Until the end of
2019, 1,985 individual claims were filed against Bank Millennium (in addition, 236 against former Euro Bank), in 2020
the number increased by 3,005 (265), in 2021 the number increased by 6,159 (423), in 2022 the number increased by
5,755 (408), while in 2023 the number increased by 6,871 (647).
Based on ZBP (the Polish Banking Association) data gathered from all banks having FX mortgage loans, vast majority of
disputes were finally resolved against the banks. As far as Bank Millennium (including the former Euro Bank portfolio) is
concerned, from 2015 until the end of 2023, 3,341 cases were finally resolved (3,263 in claims submitted by clients
against Bank Millennium and 78 in claims submitted by Bank Millennium against clients i.e. debt collection cases) out of
which 925 were settlements, 56 were remissions, 64 rulings were favourable for Bank Millennium and 2,296 were
unfavourable including both invalidation of loan agreements as well as conversions into PLN+LIBOR. Bank Millennium
files appeals against negative judgements of the courts of 1st instance declaring invalidation of loan agreements.
Simultaneously Bank Millennium undertakes proper legal actions in order to secure repayment of initially disbursed
capital of the loan.
The outstanding gross balance of the loan agreements under individual court cases and class action against Bank
Millennium (including the former Euro Bank portfolio) on 31 December 2023 was PLN 6,264 million (Euros 1,442.1
million) [of which the outstanding amount of the loan agreements under the class action proceeding was PLN 763
million (Euros 175.7 million)].
If all Bank Millennium\u2019s originated loan agreements currently under individual and class action court proceedings would
be declared invalid without any compensation for the use of capital, the pre-tax cost could reach PLN 6,955 million
(Euros 1,601.2 million), excluding potential amounts connected with interest. Overall losses would be higher or lower
depending on the final court jurisprudence in this regard.
In the 12 months of 2023, Bank Millennium created PLN 2,828.1 million (Euros 623 million) provisions for Bank
Millennium originated portfolio and PLN 237.3 million (Euros 52.2 million) for former Euro Bank originated portfolio.
The balance sheet value of provisions for Bank Millennium's portfolio at the end of December 2023 was at the level of
PLN 7,268.8 million (Euros 1,673.4 million), and PLN 603 million (Euros 138.8 million) for former Euro Bank originated
portfolio.
The methodology developed by Bank Millennium of calculating provisions for legal risk involved with indexed loans is
based on the following main parameters:
(1) the number of ongoing cases (including class action agreements) and potential future lawsuits that will arise within
the specified (three-year) time horizon. As regards the number of future court cases, Bank Millennium monitors
customer behaviours, follows market trends and expert comments, which resulted in the adjustment of previous
assumptions. As a result, in the methodology of calculating provisions for legal risk in the case of active loans (loans
with an outstanding balance as at the date of filing the lawsuit), Bank Millennium increased the estimated percentage
of customers covered by methodology in this group of clients to 83% of the total number of currently active loans
compared to 77% at the end of 3rd quarter of 2023. Regarding loans already fully repaid or converted to polish zloty,
Bank Millennium attributes a much lower probability of becoming the subject of a court case based on statistical
analysis. In particular: a) Bank Millennium assesses the risk connected with the settlements reached with the clients in
the past as negligible\u00a0 b) from the group of loans that have been repaid (naturally or early or converted into polish zloty
loan) and were not subject of a settlement agreement, Bank Millennium assumes that circa 16% sued or will decide to
sue the Bank in the future;
(2) the currently estimated amount of Bank Millennium's potential loss in the event of a specific court judgment;
(3) the probability of obtaining a specific court judgment calculated on the basis of statistics of judgments in cases
where Bank Millennium is a party and legal opinions obtained;
(4) Bank Millennium does not include in the methodology of calculating an element related to the potential claim for
remuneration for the client in connection with the repayments made by him or her;
(5) estimates involved with amicable settlements with clients, concluded in court or out of court:
a. Bank Millennium assumes 12% probability of success of reaching a settlement within negotiations made with
clients during court proceedings;
b. negotiations in court or out of court are conducted on a case-by-case basis and can be stopped at any time by
Bank Millennium;
c. due to significant negotiation efforts already made in the past, the probability of success in these negotiations
in the future is decreasing, and at the same time most customers have already been contacted by or contacted
the Bank regarding the possible conversion of loans into PLN, so at the moment the Bank adopts a conservative
approach when taking into account the potential impact of this factor.
Bank Millennium is open to negotiate case by case favourable conditions for early repayment or conversion of loans to
PLN. As a result of these negotiations, the number of active FX mortgage loans originated by Bank Millennium decreased
by 21,428: 1,363 in 2020; 8,450 in 2021; 7,943 in 2022 and 3,672 in 2023. As of the end of 2023, the Bank had 32,425
active FX mortgage loans. Cost incurred in conjunctions with these negotiations totalled PLN 1,340.1 million (Euros
295.2 million): PLN 44.5 million (Euros 9.8 million) in 2020; PLN 364.6 million (Euros 80.3 million) in 2021; PLN 515.2
million (Euros 113.5 million) in 2022 and PLN 415.8 million (Euros 91.6 million) in 2023 and is presented mainly in
\u2018Result on exchange differences\u2019 and also in \u2018Result on modification\u2019 in the profit and loss statement.
Legal risk from former Euro Bank portfolio is fully covered by Indemnity Agreement with Soci\u00e9t\u00e9 G\u00e9n\u00e9rale.
Bank Millennium analysed the sensitivity of the methodology for calculating provisions, for which a change in the
parameters would affect the value of the estimated loss to the legal risk of litigation:
Parameter
Scenario
Impact on the loss
Change in the assumed number of
court cases
In addition to above assumed numbers,
1,000 new customers file a lawsuit against
the Bank
PLN 167 million (Euros 36.8 million)
Change of estimated losses for each
variant of judgment
Change of losses for each judgment variant
by 1 p.p
PLN 75 million (Euros 16.5 million)
Change in probability of success in
negotiations with court client
Change of probability by 1 p.p
PLN 18 million (Euros 4 million)
On 8 December 2020, Mr. Jacek Jastrz\u0119bski, the Chairman of the Polish Financial Supervision Authority (\u2018PFSA\u2019)
proposed a \u2018sector\u2019 solution to address the sector risks related to FX mortgages. The solution would consist in offering
banks\u2019 clients a voluntary possibility of concluding arrangements based on which a client would settle a CHF Mortgage
Loan as if it was a PLN loan bearing interest at an appropriate WIBOR rate increased by the margin historically
employed for such loans. The decision to generally implement this solution could imply the need of creating upfront
provisions for the losses resulting from the conversion of CHF Mortgage Loans. Bank Millennium in practice has been
using elements of the proposal of above system solution on many individual negotiations with FX mortgage borrowers,
including in the course of court proceedings.
Due to the circumstances stemming from the CJEU which excludes demanding by the Bank amounts exceeding the
return of disbursed capital, the possibility of successful implementation of a general offer of KNF solution is low.
Finally, it should also be mentioned that Bank Millennium, as at 31 December 2023, had to maintain additional own
funds for the coverage of additional capital requirements related to FX mortgage portfolio risks (Pillar II FX buffer) in
the amount of 1.47 p.p. (1.46 p.p. at the Group level), part of which is allocated to operational/legal risk.
Taking into consideration the recent negative evolution in the court verdicts regarding FX mortgage loans, the Bank will
have to regularly review and may need to continue to increase the balance of provisions allocated to court litigations.
It can reasonably be assumed that the legal issues relating to foreign currency mortgage loans will be further examined
by the polish courts within the framework of disputes considered which would possibly result in the emergence of
further interpretations, which are relevant for the assessment of the risks associated with subject matter proceedings.
This circumstance indicates the need for constant analysis of these matters.
The Court of Justice of the European Union and the Polish Supreme Court rulings relevant to risk assessment
Jurisprudence of the Court of Justice of the European Union
On 3 October 2019, the Court of Justice of the European Union (the CJEU) issued the judgment in Case C-260/18 in
connection with the preliminary questions formulated by the District Court of Warsaw in the case against Raiffeisen
Bank International AG. The judgment of the CJEU, as regards the interpretation of European Union law made therein, is
binding on domestic courts. The judgment in question interpreted Article 6 of Directive 93/13. In the light of the
subject matter judgment the said provision must be interpreted in such a way that:
(i) the national court may invalidate a credit agreement if the removal of unfair terms detected in this agreement
would alter the nature of the main subject-matter of the contract;
(ii) the effects for the consumer\u2019s situation resulting from the cancellation of the contract must be assessed in the light
of the circumstances existing or foreseeable at the time when the dispute arose and the will of the consumer is decisive
as to whether he wishes to maintain the contract;
(iii) Article 6 of the Directive precludes the filling-in of gaps in the contract caused by the removal of unfair terms from
the contract solely on the basis of national legislation of a general nature or established customs;
(iv) Article 6 of the Directive precludes the maintenance of unfair terms in the contract if the consumer has not
consented to the maintenance of such terms. It can be noticed the CJEU found doubtful the possibility of a credit
agreement being performed further in PLN while keeping interest calculated according to LIBOR.
The CJEU judgment concerns only the situation where the national court has previously found the contract term to be
abusive. It is the exclusive competence of the national courts to assess, in the course of judicial proceedings, whether a
particular contract term can be regarded as abusive in the circumstances of the case.
On 29 April 2021, the CJEU issued the judgement in the case C-19/20 in connection with the preliminary questions
formulated by the District Court in Gda\u0144sk in the case against of ex-BPH S.A., the CJEU said that:
(i) it is for the national court to find that a term in a contract is unfair, even if it has been contractually amended by
those parties. Such a finding leads to the restoration of the situation that the consumer would have been in in the
absence of the term found to be unfair, except where the consumer, by means of amendment of the unfair term, has
waived such restoration by free and informed consent. However, it does not follow from Council Directive 93/13 that a
finding that the original term is unfair would, in principle, lead to annulment of the contract, since the amendment of
that term made it possible to restore the balance between the obligations and rights of those parties arising under the
contract and to remove the defect which vitiated it;
(ii) the national court may remove only the unfair element of a term in a contract concluded between a seller or
supplier and a consumer where the deterrent objective pursued by Council Directive 93/13 is ensured by national
legislative provisions governing the use of that term, provided that that element consists of a separate contractual
obligation, capable of being subject to an individual examination of its unfair nature. At the same time, provisions of
the Directive preclude the referring court from removing only the unfair element of a term in a contract concluded
between a seller or supplier and a consumer where such removal would amount to revising the content of that term by
altering its substance;
(iii) the consequences of a judicial finding that a term if a contract concluded between a seller or supplier and a
consumer is unfair are covered by national law and the question of continuity of the contract should be assessed by the
national court of its own motion in accordance with an objective approach on the basis of those provisions;
(iv) the national court, finding that a term in a contract concluded between a seller or supplier and a consumer is
unfair, shall inform the consumer, in the context of the national procedural rules after both parties have been heard,
of the legal consequences entailed by annulment of the contract, irrespective of whether the consumer is represented
by a professional representative.
On 18 November 2021, the Court of Justice of the European Union (CJEU) issued a judgment in case C-212/20 in
connection with questions submitted by the District Court for Warsaw Wola in Warsaw in the case against Raiffeisen
Bank International AG. The CJEU stated that:
(i) the content of the clause of the loan agreement concluded between the entrepreneur and the consumer fixing the
purchase and sale price of the foreign currency to which the loan is indexed should, on the basis of clear and
comprehensible criteria, enable the consumer who is reasonably well informed and sufficiently observant and rational
to understand how the exchange rate of the foreign currency used to calculate the amount of the loan instalments is
determined, so that the consumer is able to determine himself at any time the exchange rate used by the
entrepreneur;
(ii) a national court which has found that a term of the agreement concluded between an entrepreneur and a consumer
is unfair cannot interpret that term in order to mitigate its unfairness, even if such an interpretation would correspond
to the common will of the parties.
On 10 June 2021, the Court of Justice of the European Union (CJEU) issued an order in case C-198/20 in connection
with questions submitted by the District Court for Warsaw Wola in Warsaw in the case against Santander Bank Polska
SA. The CJEU stated that the protection provided for in Council Directive 93/13/EEC is granted to all consumers, not
just those who can be considered to be 'duly informed and reasonably observant and circumspect average consumer'.
On 8 September 2022, the Court of Justice of the European Union (CJEU) issued a judgment in joined cases C-80/21,
C-81/21, C-82/21 in connection with questions submitted by the District Court for Warsaw \u015ar\u00f3dmie\u015bcie in Warsaw in
cases against Deutsche Bank SA and mBank SA. The CJEU stated that:
(i) a national court may find that the parts of a contractual term of the agreement concluded between a consumer and
an entrepreneur which render it unfair are unfair, if such a deletion would not amount to a change in the content of
that term that affects its substance, which is for the referring court to verify;
(ii) a national court cannot, after annulling an unfair term contained in an agreement concluded between a consumer
and an entrepreneur which does not render the agreement invalid in its entirety, replace that term with a
supplementary provision of the national law;
(iii) a national court may not, after having declared invalid an unfair term contained in an agreement concluded
between a consumer and an entrepreneur which entails the invalidity of that agreement in its entirety, replace the
contractual term which has been declared invalid either by interpretation of the parties' declaration of intent in order
to avoid the cancellation of that agreement or by a provision of national law of a supplementary nature, even if the
consumer has been informed of the effects of the invalidity of that agreement, and\u00a0 accepted them;
(iv) the ten-year limitation period for a consumer's claim seeking reimbursement of sums unduly paid to the
entrepreneur in performance of an unfair term of a loan agreement does not start to run on the date of each
performance made by the consumer if the consumer was not able on that date to assess on his own the unfairness of
the contractual term or if he had not become aware of the unfair nature of that term and without taking into account
the circumstances that the agreement provided for a repayment period \u2013 in this case thirty years \u2013 well in excess of the
ten-year statutory limitation period.
On 16 March 2023, the Court of Justice of the European Union issued a judgment in a case registered under case
number C-6/22, following preliminary questions submitted by the District Court for Warsaw-Wola in a case against the
former Getin Noble Bank S.A.. In the judgment, the CJEU ruled that:
(i) in the event that a contract concluded between a consumer and a seller or supplier is declared invalid because one
of its terms is unfair, it is for the Member States, by means of their national law, to make provision for the effects of
that invalidation, in compliance with the protection granted to the consumer by that directive, in particular, by
ensuring the restoration of the legal and factual situation that he or she would have been in if that unfair term had not
existed.
(ii) a national court is not allowed:
a. to examine of its own motion, without any prerogative conferred on it by national law in that regard, the
financial situation of a consumer who has sought the invalidation of the contract between him or her and a seller or
supplier on account of the presence of an unfair term without which the contract cannot legally continue to exist,
even if that invalidation is liable to expose the consumer to particularly unfavourable consequences and,
b. to refuse to declare that invalidation where the consumer has expressly sought it, after being objectively and
exhaustively informed of the legal consequences and the particularly unfavourable financial consequences which it
may have for him or her.
(iii) a national court is not allowed, after it has found that a term in a contract concluded between a seller or supplier
and a consumer is unfair, to fill gaps resulting from the removal of the unfair term contained therein by the application
of a provision of national law which cannot be characterised as a supplementary provision. However, it is for the
national court, taking account of its domestic law as a whole, to take all the measures necessary to protect the
consumer from the particularly unfavourable consequences which annulment of the contract might entail for him or
her.
On 8 June 2023, the Court of Justice of the European Union issued a judgment in a case registered under case number
C-570/21, following preliminary questions submitted by the District Court in Warsaw in a case against the former Getin
Noble Bank S.A. In the judgment, the CJEU ruled that:
(i) provisions of Council Directive 93/13 must be interpreted as meaning that the concept of \u2018consumer\u2019, within the
meaning of that provision, covers a person who has concluded a loan contract intended for a purpose in part within and
in part outside his or her trade, business or profession, together with a joint-borrower who did not act within his or her
trade, business or profession, where the trade, business or professional purpose is so limited as not to be predominant
in the overall context of that contract.
(ii) provisions of Directive 93/13 must be interpreted as meaning that in order to determine whether a person falls
within the concept of \u2018consumer\u2019, within the meaning of that provision, and, specifically, whether the trade, business
or professional purpose of a loan contract concluded by that person is so limited as not to be predominant in the overall
context of that contract, the referring court is required to take into consideration all the relevant circumstances
surrounding that contract, both quantitative and qualitative, such as, in particular, the distribution of the borrowed
capital between, on the one hand, a trade, business or profession and, on the other hand, a non-professional activity
and, where there are several borrowers, the fact that only one of them is pursuing a professional purpose or that the
lender made the grant of credit intended for consumer purposes conditional on a partial allocation of the amount
borrowed to the repayment of debts connected with a trade, business or profession.
On 15 June 2023, the Court of Justice of the European Union issued a judgment in a case registered under case number
C-287/22, following preliminary questions submitted by the District Court in Warsaw in a case against the former Getin
Noble Bank S.A. In the judgment, the CJEU ruled that provisions of the Directive 93/13 must be interpreted as
precluding national case-law according to which a national court may dismiss an application for the grant of interim
measures lodged by a consumer seeking the suspension, pending a final decision on the invalidity of the loan agreement
concluded by that consumer on the ground that that loan agreement contains unfair terms, of the payment of the
monthly instalments due under that loan agreement, where the grant of those interim measures is necessary to ensure
the full effectiveness of that decision.
On 15 June 2023, the CJEU issued a judgment in a case registered under case number C-520/21, following preliminary
questions submitted by the District Court in Warsaw in a case against Bank Millennium, in which indicated that Directive
93/13 does not expressly regulate the consequences of invalidity of a contract concluded between a credit institution
and a consumer after the removal of unfair terms contained therein. The CJEU stated that:
(i) the provisions of the Directive do not preclude a judicial interpretation of national law, according to which the
consumer has the right to demand compensation from the credit institution beyond the reimbursement of monthly
instalments and costs paid for the performance of this contract and the payment of statutory default interest from the
date of the request for payment provided that the objectives of Directive 93/13 and the principle of proportionality are
respected.
(ii) the provisions of Directive 93/13 preclude the judicial interpretation of national law, according to which a credit
institution has the right to demand compensation from the consumer that goes beyond the return of the capital paid for
the performance of this contract and beyond the payment of statutory default interest from the date of the request for
payment.
On 21 September 2023, the CJEU issued a judgement in a case registered under case number C-139/22, following
preliminary questions submitted by the District Court in Warsaw in a case against mBank. The CJEU stated that:
(i) provisions of the Directive 93/13 must be interpreted as not precluding a contractual term which has not been
individually negotiated from being regarded as unfair by the national authorities concerned merely by virtue of the fact
that its content is equivalent to that of a standard contract term entered in the national register of standard business
terms held to be unlawful;
(ii) the contractual term which, because of the circumstances for the performance of certain obligations of the
consumer concerned provided for in that term, must be regarded as unfair, may not cease to be considered unfair on
account of another term of that contract which provides for the possibility for that consumer to perform those
obligations under different circumstances;
(iii) a seller or supplier is obliged to inform the consumer concerned of the essential characteristics of the contract
concluded with that seller or supplier and the risks associated with that contract, even though that consumer is its
employee and has relevant knowledge in the field of the contract.
On 7 December 2023, the CJEU issued the judgement in the case C-140/22 in connection with the preliminary questions
formulated by the District Court in Warsaw in the case against of mBank S.A. The Court stated that provisions of the
Directive 93/13 must be interpreted as meaning that, in the context of the cancellation, in its entirety, of a mortgage
loan agreement concluded with a consumer by a banking institution on the ground that that agreement contains an
unfair term without which it cannot continue in existence:
(i) they preclude the judicial interpretation of national law according to which the exercise of the rights which that
consumer draws from that directive is conditional on the lodging, by that consumer, before a court, of a declaration by
which he or she states, first, not to consent to that unfair term remaining effective, secondly, to be aware of the fact
that the nullity of that term entails the cancellation of that agreement and, moreover, of the consequences of that
cancellation and, thirdly, to consent to the cancellation of that agreement;
(ii) they preclude the compensation sought by the consumer concerned in respect of the restitution of the sums paid by
him or her in the performance of the agreement at issue being reduced by the equivalent of the interest which that
banking institution would have received if that agreement had remained in force.
The Court of Justice of European Union by an order of 11 December 2023, closed the case registered under case number
C-756/22 initiated by the District Court in Warsaw in the case brought by Bank Millennium and ruled that the provisions
of Directive 93/13 must be interpreted as meaning that, in the context of declaring a mortgage loan agreement
concluded with a consumer by a banking institution to be invalid in its entirety on the grounds that, that the contract
contains unfair terms without which it cannot be continued, they preclude a judicial interpretation of the law of a
Member State according to which that institution is entitled to recover from that consumer amounts other than the
capital paid in performance of that contract and statutory interest for delay from the time of the demand for payment.
On 14 December 2023, the CJEU issued the judgement in the case C-28/22 in connection with the preliminary questions
referred by the District Court in Warsaw in the case of ex-Getin Noble Bank S.A. The Court stated that:
(i) provisions of Directive 93/13 read in the light of the principle of effectiveness must be interpreted as precluding a
judicial interpretation of national law according to which, following the cancellation of a mortgage loan agreement
concluded with a consumer by a seller or supplier, on account of unfair terms contained in that agreement, the
limitation period for the claims of that seller or supplier stemming from the nullity of that agreement starts to run only
as from the date on which the agreement becomes definitively unenforceable, whereas the limitation period for the
claims of that consumer stemming from the nullity of that agreement begins to run as from the day on which the
consumer became aware, or should reasonably have become aware, of the unfair nature of the term entailing such
nullity;
(ii) provisions of the Directive 93/13 must be interpreted as not precluding a judicial interpretation of national law
according to which it is not for a seller or supplier who has concluded a mortgage loan agreement with a consumer to
ascertain whether the consumer is aware of the consequences of the removal of the unfair terms contained in that
agreement or of that agreement being no longer capable of continuing in existence if those terms were removed;
(iii) provisions of the Directive 93/13, read in the light of the principle of effectiveness, must be interpreted as
precluding a judicial interpretation of national law according to which, where a mortgage loan agreement concluded
with a consumer by a seller or supplier is no longer capable of continuing in existence after the unfair terms in that
agreement have been removed, that seller or supplier may rely on a right of retention which allows him or her to make
the restitution of the sums which it has received from that consumer conditional on that consumer making an offer to
repay the sums which he or she has himself or herself received from that seller or supplier or to provide a security for
the repayment of those sums, where the exercise by that seller or supplier of that right of retention entails the loss, for
that consumer, of the right to obtain default interest as from the expiry of the time limit set for performance by the
seller or supplier concerned, following receipt by that seller or supplier of a request to repay the sums he or she had
been paid in performance of that agreement.
The Court of Justice of the European Union by an order of January 15, 2024, closed the case registered under case
number C-488/23 following a question from the District Court of Warsaw, indicating that the right of a financial
institution to demand the valorization of the disbursed capital after a loan agreement has been declared invalid was
excluded in the judgment of June 15, 2023 issued in case C-520/21.
On January 18, 2024, the CJEU issued the judgement in the case C-531/22 in connection with the preliminary questions
referred by the District Court in Warsaw in the case of ex-Getin Noble Bank S.A. The Court stated that:
(i) the provisions of Directive 93/13 preclude national legislation which provides that a national court may not examine
of its own motion the potentially unfair nature of the terms contained in a contract and draw the consequences
thereof, where it is supervising enforcement proceedings carried out on the basis of a final decision to issue an order
for payment which is subject to res judicata:
a. if the regulations do not provide for such an examination at the stage of issuing a payment order, or
b. if such examination is provided for only at the stage of opposition to the order for payment in question,
provided that there is a significant risk that the consumer in question will not file the required opposition
either because the time limit specified for this purpose is very short, or because of the cost of the proceedings
before the court in relation to the amount of the disputed debt, or because the national legislation does not
provide for the obligation to provide that consumer with all the information necessary for him to establish the
extent of his rights;
(ii) the provisions of Directive 93/13 do not preclude national case law according to which the entry of a term of a
contract in a national register of prohibited clauses has the effect of declaring that term unfair in any proceedings
involving a consumer, including against a trader other than the one against whom proceedings for the entry of the said
term in that national register were pending, and where that term does not have the same wording as the term entered
in the said register, but has the same meaning and has the same effect with respect to the consumer in question.
Jurisprudence of the Polish Supreme Court
On 7 May 2021, the Supreme Court composed of 7 judges of the Supreme Court, issued a resolution for which the
meaning of legal principle has been granted, stating that:
1. An abusive contractual clause (art. 385(1) \u00a7 1 of the Polish Civil Code), by force of the law itself, is ineffective to the
benefit of the consumer who may consequently give conscious and free consent to this clause and thus restore its
effectiveness retroactively.
2. If without the ineffective clause the loan agreement cannot bind, the consumer and the lender shall be eligible for
separate claims for return of monetary performances made in exercising this agreement (art. 410 \u00a7 1 in relation to art.
405 of the Polish Civil Code). The lender may demand return of the performance from the moment the loan agreement
becomes permanently ineffective.
On 28 April 2022 the Supreme Court issued a resolution (III CZP 40/22) in which it indicated that in disputes with
consumers, the provision of Article 358(1) of the Polish Civil Code is a special provision to Article 353(1) of the Polish
Civil Code, which means that if the prerequisites for the application of both provisions exist, the court should apply the
special provision and declare the contractual provision permanently ineffective, rather than invalid. This decision of
the Supreme Court should be perceived as significantly limiting the risk of Bank Millennium's claims for return of capital
being time-barred.
The effect of the Supreme Court's resolution of 7 May 2021 is that Bank Millennium is entitled to a refund of the cash
benefit provided by Bank Millennium in performance of a permanently ineffective contract. Taking into account the
uncertainty as to the starting point of the limitation period for the bank's claims, Bank Millennium, in order to protect
its interests, files lawsuits for payment against borrowers in a court dispute with the bank. Bank Millennium's demand
consists of a claim for return of the capital made available to the borrower under the contract. By 31 December 2023
the Bank filed\u00a0 about 8.1 thousand lawsuits against the borrowers.
Due to the CJEU jurisprudence interpreting the causes and effects of invalidity of foreign currency mortgage loan
agreements, the area of interpretation of regulations by Polish courts in this respect appears to be limited. However,
further jurisprudential practice of the Polish courts will play an important role in fulfilling the content of the CJEU's
guidance and, moreover, this practice will be of significant importance as regards issues that, given the scope of the
CJEU's competence, are subject to national jurisprudence.
2. Events that may impact foreign currency-indexed mortgage loans legal risk and related
provision
The issues related to the statute of limitations for the Bank's and the customer's restitutionary claims following the
invalidation of a loan agreement remain an area that may be subject to further analysis in the jurisprudence of Polish
courts. Legal interpretations in this subject may be particularly significant for the Bank's claims as to the
commencement of the running of the limitation period of its claims, by eliminating or confirming the risk of its claims
being deemed time-barred in a given case.\u00a0
In addition, the extent of the consumer's and the bank's entitlement to statutory interest for delay on restitution claims
may be an important legal issue.
The issue that remains unresolved in the jurisprudence of common courts and the Supreme Court is also the issue of the
admissibility of borrowers\u2019 claims in the event of the invalidity of a loan agreement for payment of amounts beyond the
reimbursement of monthly instalments and costs paid for the execution of that agreement and beyond the payment of
statutory default interest from the date of the demand for payment, which, in light of the CJEU's judgment of 15 June
2023 in case C-520/21, remains not excluded. Due to the uncertainty of the direction of case law in this area, as of the
date of publication of the Bank Millennium's report, it is difficult to reliably assess the impact of potential rulings.
Recently issued accounting standards
1 - Recently issued accounting standards and interpretations that came into force in the
current financial year
At the date of approval of these financial statements, the following accounting standards, interpretations, amendments
and revisions were endorsed by the European Union (EU) with mandatory application for the financial year of the Group
started on 1 January 2023:
IFRS 17 \u2014 Insurance contracts
This standard establishes, for insurance contracts within its scope, the principles for their recognition, measurement,
presentation and disclosure. This standard replaced IFRS 4 \u2013 Insurance contracts.
The impacts resulting from the adoption of this standard are disclosed in note 59 - Adoption of IFRS 17 - Insurance
Contracts and IFRS 9 \u2013 Financial instruments by Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A..
Amendment to IAS 8: Definition of accounting estimates
This amendment emphasizes how companies should distinguish changes in accounting policies from changes in
accounting estimates, which is relevant since changes in accounting estimates are applied prospectively, only to future
transactions and other events, while changes in accounting policies are generally applied retrospectively to past
transactions and other events. The definition of a change in accounting estimates is replaced with a definition of
accounting estimates. Under the new definition, accounting estimates are \u201cmonetary amounts in financial statements
that are subject to measurement uncertainty\u201d, used to achieve the objective(s) of an accounting policy.
There were no material impacts on the application of this amendment in the Group's financial statements.
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of accounting policies
Amendments to IAS 1 require companies to disclose their material accounting policy information rather than their
significant accounting policies, further explaining how an entity can identify a material accounting policy. On the other
hand, Amendments to IFRS Practice Statement 2 provide guidance on how to apply the concept of materiality to
accounting policy disclosures.
There were no material impacts on the application of this amendment in the Group's financial statements.
Amendment to IAS 12: Deferred tax related to assets and liabilities arising from a single transaction
This amendment requires companies to recognise deferred tax on particular transactions that, on initial recognition,
give rise to equal amounts of taxable and deductible temporary differences. The proposed amendment will mostly
apply to transactions such as leases and decommissioning obligations.
There were no material impacts on the application of this amendment in the Group's financial statements.
Amendment to IFRS 17: Initial application of IFRS 17 and IFRS 9 \u2014 Comparative information
This amendment is aimed at helping entities to avoid temporary accounting mismatches between financial assets and
insurance contract liabilities by providing insurers with an option for the presentation of comparative information about
financial assets, thus improving the usefulness of comparative information for users of financial statements.
There were no material impacts on the application of this amendment in the Group's financial statements.
Amendments to IAS 12 Income taxes: International Tax Reform \u2013 Pilar Two Model Rules
The amendments introduce a temporary exception to the recognition of disclosures of information on deferred tax
assets and liabilities related to the application of the OECD Pillar 2 model rules and new additional disclosure
requirements for affected entities (entities belonging to multinational groups with consolidated revenues of Euros 750
million in at least two of the last four years).
The amendments are mandatory for annual reporting periods beginning on or after 1 January 2023.
There were no material impacts on the application of this amendment in the Group\u2019s financial statements.
2 - Standards, interpretations, amendments and revisions that will take effect in future
financial years
The following standards, interpretations, amendments and revisions, with mandatory application in future financial
years, have been endorsed by the European Union until the date of approval of these financial statements:
Amendment to IAS 1: Classification of liabilities as current or non-current and Classification of liabilities as current
or non-current \u2014 Deferral of effective date (applicable for years beginning on or after 1 January 2024)
On 23 January 2020, Amendment to IAS 1: Classification of liabilities as current or non-current was issued, which aims
to clarify that the classification of liabilities as current or non-current should be made based on the existing rights at
the end of the financial reporting period, not being affected by expectations related to the exercise of the right to
defer the settlement of a liability and, additionally, that the settlement corresponds to the extinction of a liability by
transferring cash, equity instruments, other assets or services to a counterparty.
On 15 July 2020, it was decided to postpone by a year the effective date of the referred amendment.
This amendment, although endorsed by the European Union, was not adopted by the Group in 2023 as its application is
not mandatory yet.
Amendment to IFRS 16: Lease liability in a sale and leaseback (applicable for years beginning on or after 1 January
2024)
This amendment was issued on 22 September 2022 and it provides changes that specify how a seller-lessee should apply
the subsequent measurement requirements in IFRS 16 to the lease liability that arises in sale and leaseback operations.
This amendment, although endorsed by the European Union, was not adopted by the Group in 2023 as its application is
not mandatory yet.
3 - Standards, interpretations, amendments and revisions not adopted by the European
Union yet
The following standards, interpretations, amendments and revisions, with mandatory application in future financial
years, have not been endorsed by the European Union until the date of approval of these financial statements, and,
therefore, have not been applied by the Group:
Amendment to IAS 7: Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance
Arrangements (applicable for years beginning on or after 1 January 2024)
This amendment was issued on 25 May 2023 and it which address the disclosure requirements to enhance the
transparency of supplier finance arrangements and their effects on a company\u2019s liabilities, cash flows and exposure to
liquidity risk. Supplier finance arrangements are often referred to as supply chain finance, trade payables finance or
reverse factoring arrangements.
Amendment to IAS 21: The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (applicable for
years beginning on or after 1 January 2025)
This amendment was issued on 15 August 2023 and it provides changes in specify when a currency is exchangeable into
another currency and when it is not, specify how an entity determines the exchange rate to apply when a currency is
not exchangeable and require the disclosure of additional information when a currency is not exchangeable.
List of subsidiary and associated companies of Banco Comercial Portugu\u00eas
Group
As at 31\u00a0December 2023, the Group's subsidiary companies included in the consolidated accounts using the full
consolidation method were as follows:
Group
Bank
Subsidiary companies
Head
office
Share
capital
Currency
Sector of activity
% economic
interests
% effective
held
% direct
held
Banco ActivoBank, S.A.
Lisbon
127,600,000
EUR
Banking
100%
100%
100%
Bank Millennium, S.A.
Warsaw
1,213,116,777
PLN
Banking
50.1%
50.1%
50.1%
Millennium Bank Hipoteczny S.A.
Warsaw
90,000,000
PLN
Banking
100%
50.1%
\u2014
BCP \u00c1frica, S.G.P.S., Lda.
Funchal
214,223,800
EUR
Holding company
100%
100%
100%
BIM - Banco Internacional de
Mo\u00e7ambique, S.A.
Maputo
4,500,000,000
MZN
Banking
66.7%
66.7%
\u2014
BCP Finance Bank, Ltd.
George
Town
246,000,000
USD
Banking
100%
100%
\u2014
BCP International B.V.
Amsterdam
18,000
EUR
Holding company
100%
100%
100%
M Representa\u00e7\u00f5es Ltda
S\u00e3o Paulo
77,780,760
BRL
Financial Services
100%
100%
100%
Millennium bcp Participa\u00e7\u00f5es,
S.G.P.S., Sociedade Unipessoal,
Lda.
Funchal
25,000
EUR
Holding company
100%
100%
100%
Interfundos - Sociedade Gestora de
Organismos de\u00a0 Investimento
Coletivo, S.A.
Oeiras
1,500,000
EUR
Real estate
investment fund
management
100%
100%
100%
Monumental Residence - Sociedade
de investimento coletivo
imobili\u00e1ria fechada, S.A.
Oeiras
31,900,000
EUR
Real-estate
management
100%
100%
100%
Millennium bcp - Presta\u00e7\u00e3o de
Servi\u00e7os, A.C.E.
Lisbon
331,750
EUR
Services
98.6%
97.7%
93.2%
Millennium bcp Teleservi\u00e7os -
Servi\u00e7os de Com\u00e9rcio Electr\u00f3nico,
S.A.
Lisbon
50,004
EUR
E-commerce
100%
100%
100%
Imoserit, S.A.
Oeiras
50,000
EUR
Real-estate
company
100%
100%
100%
Bichorro \u2013 Empreendimentos
Tur\u00edsticos\u00a0 e Imobili\u00e1rios S.A.
Oeiras
2,150,000
EUR
Real-estate
management
100%
100%
\u2014
Finalgarve \u2013 Sociedade de
Promo\u00e7\u00e3o Imobili\u00e1ria\u00a0 Tur\u00edstica,
S.A.
Oeiras
250,000
EUR
Real-estate
management
100%
100%
\u2014
Fiparso \u2013 Sociedade Imobili\u00e1ria S.A
Oeiras
50,000
EUR
Real-estate
company
100%
100%
\u2014
Millennium Consulting S.A.
Warsaw
4,339,500
PLN
Consulting services
100%
50.1%
\u2014
Millennium Goodie Sp.z.o.o.
Warsaw
500,000
PLN
Web portals
100%
50.1%
\u2014
Millennium Leasing, Sp.z o.o.
Warsaw
48,195,000
PLN
Leasing
100%
50.1%
\u2014
Millennium Service, Sp.z o.o.
Warsaw
1,000,000
PLN
Services
100%
50.1%
\u2014
Piast Expert Sp. z o.o (em
liquida\u00e7\u00e3o)
Tychy
100,000
PLN
Marketing services
100%
50.1%
\u2014
Millennium Telecommunication
Services Sp. z o.o.
Warsaw
100,000
PLN
Brokerage services
100%
50.1%
\u2014
Millennium TFI - Towarzystwo
Funduszy Inwestycyjnych, S.A.
Warsaw
10,300,000
PLN
Investment fund
management
100%
50.1%
\u2014
BCPBT CI Liquidation Company I
George
Town
1
USD
Liquidation trust
100%
100%
\u2014
BCPBT CI Liquidation Company II
George
Town
1
USD
Liquidation trust
100%
100%
\u2014
As at 31\u00a0December 2023, the investment funds included in the consolidated accounts using the full consolidation
method, as referred in the accounting policy presented in note 1 B, were as follows:
Group
Bank
Investment funds
Head
office
Share
capital
Currency
Activity
% economic
interests
% effective
held
% direct
held
Imosotto acumula\u00e7\u00e3o \u2013 Fundo de
Investimento Imobili\u00e1rio Fechado
Oeiras
102,385,157
EUR
Real-estate
investment fund
100%
100%
100%
Imorenda \u2013 Fundo de Investimento
Imobili\u00e1rio Fechado
Oeiras
85,156,715
EUR
Real-estate
investment fund
100%
100%
100%
Sand Capital - Fundo de
Investimento Imobili\u00e1rio Fechado
Oeiras
88,082,695
EUR
Real-estate
investment fund
100%
100%
100%
Fundial \u2013 Fundo de Investimento\u00a0
Imobili\u00e1rio Fechado
Oeiras
17,340,985
EUR
Real-estate
investment fund
100%
100%
100%
Fundipar \u2013 Fundo de Investimento\u00a0
Imobili\u00e1rio Fechado
Oeiras
11,345,348
EUR
Real-estate
investment fund
100%
100%
100%
Domus Capital\u2013 Fundo de
Investimento\u00a0 Imobili\u00e1rio Fechado
Oeiras
3,799,969
EUR
Real-estate
investment fund
95.8%
95.8%
95.8%
Predicapital \u2013 Fundo de Investimento\u00a0
Imobili\u00e1rio Fechado (*)
Oeiras
88,951,500
EUR
Real-estate
investment fund
60%
60%
60%
(*) - Company classified as non-current assets held for sale.
During 2023, the Group proceeded with the liquidation of the funds Oce\u00e2nico II \u2013 Fundo de Investimento Imobili\u00e1rio
Fechado and\u00a0 Funsita - Fundo de Investimento\u00a0 Imobili\u00e1rio Fechado.
The Group holds a securitization transaction regarding mortgage loans which was set through specifically created SPE.
As referred in accounting policy 1 B, when the substance of the relationships with the SPEs indicates that the Group
holds control of its activities, the SPE is fully consolidated, following the application of IFRS 10.
As at 31\u00a0December 2023, the Special Purpose Entity included in the consolidated accounts under the full consolidation
method is as follows:
Group
Bank
Special Purpose Entities
Head
office
Share capital
Currency
Activity
% economic
interests
% effective
held
% direct
held
Magellan Mortgages No.3 Limited
Dublin
40,000
EUR
Special Purpose
Entities
82.4%
82.4%
82.4%
During the 3rd quarter of 2023, the Group settled the Magellan Mortgages No.1 securitization operation.
As at 31\u00a0December 2023, the Group's associated companies included in the consolidated accounts under the equity
method are as follows:
Group
Bank
Associated companies
Head
office
Share capital
Currency
Activity
% economic
interests
% effective
held
% direct
held
Banco Millennium Atl\u00e2ntico, S.A.
Luanda
53,821,603,000
AOA
Banking
22.7%
22.5%
\u2014
Banque BCP, S.A.S.
Paris
215,335,898
EUR
Banking
19%
19%
19%
Lubuskie Fabryki Mebli, S.A. (em
liquida\u00e7\u00e3o)
Swiebodzin
13,400,050
PLN
Furniture
manufacturer
50%
25.1%
\u2014
Europa Millennium Financial
Services sp. z o.o. (*)
Warsaw
100,000
PLN
Services
20%
10%
\u2014
SIBS, S.G.P.S., S.A.
Lisbon
24,642,300
EUR
Banking services
23.3%
21.9%
\u2014
UNICRE - Institui\u00e7\u00e3o Financeira
de Cr\u00e9dito, S.A.
Lisbon
10,000,000
EUR
Credit cards
32%
32%
0.5%
Webspectator Corporation
Delaware
950
USD
Digital advertising
services
25.1%
25.1%
25.1%
(*) previous Millennium Financial Services sp. z o.o.
As described in note 48, the Group sold 80% of shares of Millennium Financial Services sp. z o.o. so now holds a minority
stake of 20%.
As at 31\u00a0December 2023, the Group's associated insurance companies included in the consolidated accounts under the
equity method were as follows:
Group
Bank
Associated companies
Head
office
Share capital
Currency
Activity
% economic
interests
% effective
held
% direct
held
Millenniumbcp Ageas Grupo
Segurador,\u00a0 S.G.P.S., S.A.
Lisbon
50,002,375
EUR
Holding company
49%
49%
49%
Ocidental - Companhia Portuguesa
de Seguros de Vida, S.A.
Lisbon
22,375,000
EUR
Life insurance
49%
49%
\u2014
Ageas - Sociedade Gestora de
Fundos de Pens\u00f5es, S.A.
Lisbon
1,200,000
EUR
Pension fund
management
49%
49%
\u2014
Fidelidade Mo\u00e7ambique -
Companhia de Seguros S.A.
Maputo
295,000,000
MZN
Insurance
22%
14.7%
\u2014
Some indicators of the main subsidiaries and associated companies are analysed as follows:
(Thousands of euros)
2023
2022
Subsidiaries and associated companies
Total
Assets
Total
Equity
Net
income for
the year
Total
Assets
Total
Equity
Net
income for
the year
Banco Comercial Portugu\u00eas, S.A.
61,519,392
6,127,916
680,276
62,649,975
5,266,068
478,408
Banco ActivoBank, S.A.
3,501,901
254,201
39,400
3,271,355
213,017
19,142
Bank Millennium, S.A. (1)
28,897,024
1,587,332
126,821
23,697,447
1,173,617
(216,683)
BIM - Banco Internacional de Mo\u00e7ambique, S.A. (1)
2,711,174
534,619
105,099
2,824,409
521,192
106,030
BCP International B.V.
523,962
523,935
(691)
524,966
524,627
87,434
BCP Finance Bank, Ltd.
519,337
519,331
(647)
520,294
519,976
4,996
BCP \u00c1frica, S.G.P.S., Lda.
280,742
279,680
2,338
561,713
560,269
60,975
Millennium bcp Participa\u00e7\u00f5es, S.G.P.S., Sociedade
Unipessoal, Lda.
175,824
174,679
7,788
179,441
178,297
11,406
Interfundos - Sociedade Gestora de Organismos de\u00a0
Investimento Coletivo, S.A.
9,301
7,625
1,724
9,731
8,113
2,084
Millenniumbcp Ageas Grupo Segurador, S.G.P.S.,
S.A. (1) (3)
8,295,959
497,686
82,494
8,876,759
401,717
74,425
Banco Millennium Atl\u00e2ntico, S.A. (2)
2,224,997
196,853
13,097
2,910,070
292,893
10,693
Banque BCP, S.A.S.
5,732,286
279,722
14,477
4,944,774
268,097
23,499
1) Consolidated accounts.
2) These indicators correspond to the statutory financial statements that do not include the effects of applying IAS 29.
3) The 2023 amounts refer to the estimated financial statements.
Subsequent events
In addition to the aspects disclosed in the other notes and according to the accounting policy 1 Z, the events that
occurred after the date of the financial statements and until the date of its approval, were as follows:
S&P Global Ratings upgraded BCP's Outlook
On 12 March 2024, S&P Global Ratings upgraded BCP's Outlook from Stable to Positive.
Bank Millennium Poland - Credit holidays
The Bank Millennium is aware of risks connected with a potential extension of the so-called credit holidays for 2024. A
legislative proposal was made public and approved by the Government on 5 March 2024 and submitted to the Polish
Parliament for appreciation. At the time of publication of these financial statements, the proposal has not yet been
approved by Parliament. If such risk would materialize, it could imply upfront provision for such cost that would
decrease the net interest income and the net result of the Bank/Group.
EIB signed an agreement with Millennium bcp
As at 11 January 2024, the EIB signed an agreement with Millennium bcp to provide 400 million euros in new loans to
Portuguese companies.
Banco Comercial Portugu\u00eas, S.A. informed about the issuance of perpetual subordinated
notes (Additional Tier 1)
As at 11 January 2024, Banco Comercial Portugu\u00eas, S.A. (\u201cMillennium bcp\u201d) informed it has set the conditions for a new
issue of Additional Tier 1, in the amount of Euros 400 million, with the option of early repayment by Millennium bcp
from the end of 5th year onwards with a coupon of 8.125% per year for the first 5.5 years, which will be refixed from
that date every 5 years, with reference to the then prevailing 5-year mid-swap rate plus a spread of 5.78%.
Banco Comercial Portugu\u00eas, S.A. informed about the resignation of a member of the Board of
Directors
As at 5 January 2024, Banco Comercial Portugu\u00eas, S.A. (\u201cBank\u201d) informed, under the terms and for the purposes of
article 6 of CMVM Regulation No. 1/2023, that the Non-Executive Director Xiaoxu Gu (also known as Julia Gu) presented
today its resignation to the position of non-executive member of the Board of Directors, effective from February 29,
2024.
The Bank informs that it will begin the process of identifying and selecting a new non-executive member to join its
Board of Directors in accordance with the applicable Bank's regulations. The conclusion of this process will be
announced in due course and will not affect the regular functioning of the Board of Directors.
Banco Comercial Portugu\u00eas S.A. informed about decision to call the currently outstanding
Additional Tier 1 instrument (\u201cAT1\u201d) in the amount of Euros 400 million
As at 1 January 2024, Banco Comercial Portugu\u00eas, S.A. informed that it has decided to exercise its option to early
redeem all of its Additional Tier 1 notes \u201cFixed Rate Reset Perpetual Temporary Write Down Additional Tier 1 Capital
Notes\u201d (ISIN: PTBCPFOM0043), issued on 31 January 2019 (the \u201cNotes\u201d), in accordance with Condition 9.2 of the terms
and conditions of the Notes. The early redemption of the Notes took place on their first call date according with its
terms and conditions, 31 January 2024, at their outstanding principal amount together with accrued interest.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNotesAndOtherExplanatoryInformationExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-547": { "value": "
Banco Comercial Portugu\u00eas, S.A. (the \u2018Bank\u2019) is a private capital bank, established in Portugal in 1985. It started
operating on 5 May 1986, and these consolidated financial statements reflect the results of the operations of the Bank
and all its subsidiaries (together referred to as the \u2018Group\u2019) and the Group\u2019s interest in associates, for the years ended
on 31 December 2023 and 2022.
In accordance with Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002, and
Bank of Portugal Notice no. 5/2015 (which revoked Bank of Portugal Notice no. 1/2005), the Group\u2019s consolidated
financial statements are required to be prepared, since 2005, in accordance with International Financial Reporting
Standards (IFRS) as endorsed by the European Union (EU). IFRS comprise accounting standards issued by the
International Accounting Standards Board (IASB), as well as interpretations issued by the International Financial
Reporting Interpretations Committee (IFRIC) and its predecessor bodies. The consolidated financial statements and the
accompanying notes were approved on 25 March 2024 by the Bank's Board of Directors and are presented in thousands
of euros, rounded to the nearest thousand.
All the references in this document related to any normative always report to the respective current version.
The consolidated financial statements for the year ended on 31 December 2023 were prepared for the purpose of
recognition and measurement, in accordance with the IFRS approved by the EU that are effective on that date.
These consolidated financial statements are a translation of the financial statements originally issued in Portuguese. In
the event of discrepancies, the Portuguese version prevails.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-549": { "value": "
In accordance with Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002, and
Bank of Portugal Notice no. 5/2015 (which revoked Bank of Portugal Notice no. 1/2005), the Group\u2019s consolidated
financial statements are required to be prepared, since 2005, in accordance with International Financial Reporting
Standards (IFRS) as endorsed by the European Union (EU). IFRS comprise accounting standards issued by the
International Accounting Standards Board (IASB), as well as interpretations issued by the International Financial
Reporting Interpretations Committee (IFRIC) and its predecessor bodies. The consolidated financial statements and the
accompanying notes were approved on 25 March 2024 by the Bank's Board of Directors and are presented in thousands
of euros, rounded to the nearest thousand.
The Group's financial statements were prepared under the going concern assumption, the accrual-based accounting
regime and under the historical cost convention, as modified by the application of fair value for derivative financial
instruments, financial assets and liabilities at fair value through profit or loss and financial assets at fair value through
other comprehensive income. Financial assets and liabilities that are covered under hedge accounting are stated at fair
value in respect of the risk that is being hedged, if applicable. Other financial assets and liabilities and non-financial
assets and liabilities are stated at amortised cost or historical cost. Non-current assets and disposal groups held for sale
are stated at the lower of carrying amount or fair value less costs to sell. The liability for defined benefit obligations is
recognised as the present value of the past liabilities with pensions net of the value of the fund's assets.
The preparation of the financial statements in accordance with IFRS requires the Board of Directors, under advice of
the Executive Committee, to make judgments, estimations and assumptions that affect the application of the
accounting policies and reported amounts of assets, liabilities, income and expenses. The estimations and associated
assumptions are based on historical experience and other factors that are believed to be reasonable under the
circumstances and form the basis for making the judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these estimations. The issues involving a higher
degree of judgment or complexity or for which assumptions and estimations are significant are presented in note 1.Y.", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-548": { "value": "
In accordance with Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002, and
Bank of Portugal Notice no. 5/2015 (which revoked Bank of Portugal Notice no. 1/2005), the Group\u2019s consolidated
financial statements are required to be prepared, since 2005, in accordance with International Financial Reporting
Standards (IFRS) as endorsed by the European Union (EU). IFRS comprise accounting standards issued by the
International Accounting Standards Board (IASB), as well as interpretations issued by the International Financial
Reporting Interpretations Committee (IFRIC) and its predecessor bodies. The consolidated financial statements and the
accompanying notes were approved on 25 March 2024 by the Bank's Board of Directors and are presented in thousands
of euros, rounded to the nearest thousand.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-550": { "value": "
The consolidated financial statements for the year ended on 31 December 2023 were prepared for the purpose of
recognition and measurement, in accordance with the IFRS approved by the EU that are effective on that date.
The Group has adopted IFRS and interpretations mandatory for accounting periods beginning on or after 1 January 2023.
The accounting policies were applied consistently to all entities of the Group and are consistent with those used in the
preparation of the financial statements of the previous period, except for the changes resulting from the adoption of
IFRS 17 - Insurance Contracts with reference to 1 January 2023. IFRS 17 establishes the principles for the recognition,
measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 - Insurance Contracts. IFRS 17
outlines a general model, which is modified for insurance contracts with direct participation features, described as the
variable fee approach. The general model is simplified if certain criteria are met by measuring the liability for
remaining coverage using the premium allocation approach. The general model uses current assumptions to estimate
the amount, timing and uncertainty of future cash flows and it explicitly measures the cost of that uncertainty. It takes
into account market interest rates and the impact of policyholders\u2019 options and guarantees.
As the Group owns 49% of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., which is dedicated to the management
of life insurance and pension funds, on 1 January 2023 Millenniumbcp Ageas made the simultaneous adoption of IFRS 9 -
Financial Instruments and IFRS 17 - Insurance Contracts. It opted for the possibility given to Insurance Companies to
defer the application of IFRS 9, since the combined implementation with IFRS 17 would minimize the distortion of
results.
Initial application of IFRS 17 and IFRS 9 requires comparative information. Therefore, Millenniumbcp Ageas made the
transition exercise on 1 January 2022, and the impacts resulting from its implementation are detailed in note 59.
Application of IFRS 17 \u2013 Insurance Contracts, and IFRS 9 - Financial Instruments by Millenniumbcp Ageas Grupo
Segurador, S.G.P.S., S.A.
In order to ensure the comparability of information, the Group made the appropriate adjustments in the 2022
consolidated balance sheet and income statement, as detailed in note 59.
", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-551": { "value": "
The Group has adopted IFRS and interpretations mandatory for accounting periods beginning on or after 1 January 2023.
The accounting policies were applied consistently to all entities of the Group and are consistent with those used in the
preparation of the financial statements of the previous period, except for the changes resulting from the adoption of
IFRS 17 - Insurance Contracts with reference to 1 January 2023. IFRS 17 establishes the principles for the recognition,
measurement, presentation and disclosure of insurance contracts and supersedes IFRS 4 - Insurance Contracts. IFRS 17
outlines a general model, which is modified for insurance contracts with direct participation features, described as the
variable fee approach. The general model is simplified if certain criteria are met by measuring the liability for
remaining coverage using the premium allocation approach. The general model uses current assumptions to estimate
the amount, timing and uncertainty of future cash flows and it explicitly measures the cost of that uncertainty. It takes
into account market interest rates and the impact of policyholders\u2019 options and guarantees.
As the Group owns 49% of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., which is dedicated to the management
of life insurance and pension funds, on 1 January 2023 Millenniumbcp Ageas made the simultaneous adoption of IFRS 9 -
Financial Instruments and IFRS 17 - Insurance Contracts. It opted for the possibility given to Insurance Companies to
defer the application of IFRS 9, since the combined implementation with IFRS 17 would minimize the distortion of
results.
Initial application of IFRS 17 and IFRS 9 requires comparative information. Therefore, Millenniumbcp Ageas made the
transition exercise on 1 January 2022, and the impacts resulting from its implementation are detailed in note 59.
Application of IFRS 17 \u2013 Insurance Contracts, and IFRS 9 - Financial Instruments by Millenniumbcp Ageas Grupo
Segurador, S.G.P.S., S.A.
In order to ensure the comparability of information, the Group made the appropriate adjustments in the 2022
consolidated balance sheet and income statement, as detailed in note 59.
Adoption of IFRS 17 - Insurance Contracts and IFRS 9 - Financial Instruments by
Millenniumbcp Ageas Grupo Segurador , S.G.P.S., S.A.
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. dedicates to the management of life insurance and pension funds.
On 1 January 2023 Millenniumbcp Ageas made the simultaneous adoption of IFRS 9 - Financial Instruments and IFRS 17 -
Insurance Contracts. It opted for the possibility given to Insurance Companies to defer the application of IFRS9, since
the combined implementation with IFRS 17 would minimize the distortion of results.
IFRS 17 replaces IFRS 4 - \"Insurance Contracts\" and is applicable to all entities that issue insurance contracts,
reinsurance contracts and investment contracts with discretionary participation features if they are also issuers of
insurance contracts.
In accordance with IFRS 17, at initial recognition, Millenniumbcp Ageas Grupo Segurador has identified the contracts
that are subject to similar risks and that are managed together, being aggregated in portfolios. For measurement
purposes, further divides portfolios of insurance contracts into groups of insurance contracts. A group of insurance
contracts is determined by first dividing the portfolio of insurance contracts into annual cohorts. Each annual cohort is
then further divided in the following groups: i) group of contracts that are onerous at initial recognition; ii) group of
contracts that at initial recognition have no significant possibility of becoming onerous subsequently; and iii) a group of
the remaining contracts in the portfolio.
Insurance contracts are now measured using estimates and updated assumptions that reflect the timing of cash flows
discounted and any uncertainty related to insurance contracts. Income is now recognized as it provides insurance
services (rather than when it receives premiums) provide information on the insurance contract earnings that it expects
to recognize in the future.
In the measurement of insurance contracts, Millenniumbcp Ageas Grupo Segurador has opted for two measurement
methods: i) Premium allocation approach (\"PAA\") for contracts with duration equal to or less than one year and ii)
General measurement model measurement model (\"GMM\") for the remaining contracts.
Initial application of IFRS 17 and IFRS 9 requires comparative information. Therefore, Millenniumbcp Ageas Grupo
Segurador made the transition exercise on 1 January 2022. The estimated impacts of the Transition to IFRS 9 / 17 on
that date on the Equity of Millenniumbcp Ageas Grupo Segurador represent a reduction of approximately Euros 206.6
million, changing from Euros 827.3 million in IFRS 4/IAS 39, for Euros 620.7 million. Euros 206.6 million incorporate the
negative value of Euros 250.6 million of impact from the adoption of IFRS 17, offset by a positive value of Euros 44
million resulting from the adoption of IFRS 9.
IFRS 17 is retrospective with exemptions provided for the transition date. These exemptions are related to the
impracticability and complexity involved e.g. in calculating the liability, the current service margin (\"CSM\"), loss
component, or other comprehensive income (\"OCI option\") at transition date. When impracticable, the standard
provides for the use of the Modified Retrospective Approach or the Fair Value Approach. Millenniumbcp Ageas Grupo
Segurador, for contracts prior to 2018 adopted the fair value and for contracts after 2018 the full retrospective
approach.
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., ('Millenniumbcp Ageas' or 'Group'), is owned by Ageas Insurance
International, N.V. (51%), through Ageas Portugal Holdings S.G.P.S., S.A. (51%), and by Banco Comercial Portugu\u00eas, S.A.
(49%).
In terms of accounting policies that present the greatest changes compared to the past, they are those relating to
Insurance Contracts (IFRS 17) and Financial Investments (IFRS 9) and also the issue of costs, which are now divided into
those attributable to the insurance contract and those not attributable.
IFRS 17 \u2013 Insurance Contracts
Ocidental adopted IFRS 17 \u2013 Insurance Contracts from 1 January 2023. This change resulted in significant changes in the
accounting of insurance and reinsurance contracts.
Transition
At the time of transition, the regulations require the Company to apply the retrospective approach to recognize and
measure both insurance and reinsurance contracts ceded. In light of this approach, IFRS 17 would have to be applied as
if it had always been in force.
However, if this is impracticable, the regulations provide for two possible alternatives: the modified retrospective
approach and the fair value approach.
The Company can only apply the retrospective approach if there is complete necessary historical data for all accounting
movements in question. Given some limitations in some available historical data, the Company decided to apply, in
addition to the total retrospective approach, the two alternative approaches according to the availability of
information and data.
On the transition date, Ocidental Vida identified, evaluated and recognized each group of insurance contracts,
reinsurance contracts and investment contracts with discretionary participation features retrospectively, as if the
requirements of IFRS 17 applied to these groups of contracts from the date of its initial recognition (i.e. the
'Retrospective Approach') unless it is impracticable. This included the identification, measurement and recognition of
any insurance acquisition cash flows (assets). On the transition date, an assessment of the recoverability of cash flows
from the acquisition of insurance (assets) was carried out. No recoverability assessment was performed prior to this
date.
In some situations, Ocidental was unable to measure a group of contracts retrospectively on the transition date. This is
what happened when:
\u2022 The information in Ocidental's existing reporting systems about historical cash flows was based on assumptions
that were developed based on retrospective;
\u2022 Some reasonable and sustainable information about historical cash flows was not available in Occidental's
existing reporting systems, or was only available at levels of aggregation higher than or different from the
contract grouping requirements under IFRS 17;
\u2022 The information in Ocidental's existing reporting systems did not allow to adequately estimate the movement
of CSM before the transition date.
In these cases, Ocidental measured these groups of contracts at the transition date applying the \u201cModified
Retrospective Approach\u201d or applying the \u201cFair Value Approach\u201d (see below). The aim of these alternative measurement
approaches in the transition was to achieve the closest possible result to the retrospective approach, using reasonable
and sustainable information that was available without undue cost or effort at the transition date.
The approaches used by Ocidental Vida can be summarized as:
Liabilities for future services /
Liabilities for incurred claims
IFRS 17 measurement models
Year
Transition Approach
Liabilities for future services
General Measurement Model
2018-2021
Retrospective approach
Before 2018
Fair Value Approach
Premium Allocation Approach
All
Retrospective approach
Liabilities for claims incurred
General Measurement Model
2016-2021
Retrospective approach
Before 2016
Modified retrospective
approach
Modified retrospective approach
The objective of the modified retrospective approach is to achieve the closest outcome to retrospective application
possible using reasonable and supportable information available without undue cost or effort. However, this approach
introduces some simplifications to the retrospective approach, namely with regard to:
\u2022 the assessments of insurance contracts or groups of insurance contracts that would have been made at the
date of inception or initial recognition;;
\u2022 the amounts related to the contractual service margin or the loss component for insurance contracts without
direct participation features;
\u2022 the amounts related to the contractual service margin or the loss component for insurance contracts with
direct participation features;
\u2022 the insurance finance income or expenses.
Fair value approach
The application of the fair value approach only requires the measurement of contracts at the transition date, so it is
not necessary to use historical information about them.
Considering this approach, the contractual service margin or the loss component of the remaining coverage liability, at
transition, corresponds to the difference between the fair value of a group of insurance contracts at that date and the
fulfilment cash flows measured at that date.
To determine the previously mentioned fair value, the Company applied, when necessary, IFRS 13 \u2013 Fair value
measurement.
Financial Instruments (IFRS 9)
The classification of financial assets depends on the business model followed by the Company in managing financial
assets (receipt of cash flows or appropriation of changes in fair value) and the contractual terms of the cash flows
receivable. Changes to the classification of financial assets can only be made when the business model is changed,
except for financial assets at fair value through other comprehensive income, which constitute equity instruments,
which can never be reclassified to another category.
Financial assets can be classified into the following measurement categories::
\u2013 Financial assets at amortized cost
\u2013 Financial assets at fair value through other comprehensive income\u00a0 (FVOCI)
\u2013 Financial assets at fair value through profit or loss (FVPL)
Impacts on the consolidated financial statements of Millenniumbcp Ageas Grupo Segurador,
S.G.P.S., S.A. as at 1 January 2022
IAS39/IFRS9 transition
With the adoption of IFRS 9, investments that were at amortized cost are now recorded at fair value through
comprehensive income, with a positive impact of Euros 51.6 million on financial investments and Euros 10.8 million on
loans.
In gross terms, the impact on retained earnings was Euros 118.4 million gross: a positive amount of Euros 24.4 million
from the reclassification of ETFs from Financial assets available for sale (AFS) to Financial assets at fair value through
profit or loss (FVPL), a positive impact of Euros 50.6 million from the reclassification of investment funds from AFS to
FVPL, a positive impact of impairment of shares of Euros 44.2 million and a negative impact of Euros 0.8 million related
to expected credit losses (ECL). The net tax value was a positive impact of Euros 83.5 million.
At the level of the remaining equity items of Millenniumbcp Ageas, the gross impact was negative at Euros 55.9 million:
a positive impact on the measurement of securities at amortized cost for Financial assets at fair value through other
comprehensive income (FVOCI) of Euros 51.6 million, a positive impact on the fair value of loans of Euros 10.8 million, a
negative impact of Euros 24.4 million from reclassification of ETFs from AFS to FVPL, a negative impact of Euros 50.6
million from reclassification of investment funds from AFS to FVPL, a negative impact on impairment of shares of Euros
44.2 million and positive impact of Euros 0.8 million on ECL. The net tax value was a negative impact of Euros 39.4
million.
Thus, the net tax value was a positive impact of Euros 44.075 million related to the adoption of IFRS 9, considering the
financial statements of Millenniumbcp Ageas that were part of the consolidation.
IFRS 4/IFRS 17 transition
With regard to the liabilities for remaining coverage, the contractual service margin for insurance contracts issued
before 2018 and measured according to the General Measurement Model was determined by applying the fair value
approach (according to IFRS 13). To determine the OCI, a retrospective \"replicating portfolio\" technique was used. For
insurance contracts issued during and after 2018, the Full Retrospective Approach was used.
Liabilities with Insurance Contracts registered an increase of Euros 322.7 thousand compared to the previous
regulations (excluding Euros 1.2 million related to reclassified debtors and creditors). It should be noted that, in
addition to the recalculation of provisions according to the new standard, the liabilities for remaining coverage include
the contractual service margin (CSM) of Euros 112 thousand (of which, Euros 96.5 thousand relate to the CSM of
contracts for which the fair value approach was used in the Transition, according to IFRS 13).
A negative impact was also recorded resulting from the cancellation of the VOBA of Euros 32.840 million relating to the
Value of Business Acquired (\u201cVOBA\u201d) which was recorded as intangible assets under IFRS 4, this impact had no effect
BCP Group's consolidated accounts.
Considering others effects related to the adoption of IFRS 17, the net tax value was a negative impact of Euros 250.611
million, considering the financial statements of Millenniumbcp Ageas that were part of the consolidation.
Impacts on the BCP Group\u00b4s consolidated financial statements
The Group owns 49% of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., being accounted for under the equity
method, as Investments in associated companies.
The impacts of the adoption of IFRS 17 and IFRS 9 by Millenniumbcp Ageas Group Segurador, SGPS, SA on the
consolidated balance sheet with reference to 1 January 2022 (transition date), are detailed as follows:
(Thousands of euros)
31 December
2021
(reported)
Transition
adjustments
1 January 2022
ASSETS
Cash and deposits at Central Banks
7,796,299
\u2014
7,796,299
Loans and advances to credit institutions repayable on demand
361,786
\u2014
361,786
Financial assets at amortised cost
Loans and advances to credit institutions
453,213
\u2014
453,213
Loans and advances to customers
54,972,401
\u2014
54,972,401
Debt securities
8,205,196
\u2014
8,205,196
Financial assets at fair value through profit or loss
Financial assets held for trading
931,485
\u2014
931,485
Financial assets not held for trading mandatorily at fair value through
profit or loss
990,938
\u2014
990,938
Financial assets at fair value through other comprehensive income
12,890,988
\u2014
12,890,988
Hedging derivatives
109,059
\u2014
109,059
Investments in associated companies
462,338
(89,858)
372,480
Non-current assets held for sale
780,514
\u2014
780,514
Investment property
2,870
\u2014
2,870
Other tangible assets
600,721
\u2014
600,721
Goodwill and intangible assets
256,213
\u2014
256,213
Current tax assets
17,283
\u2014
17,283
Deferred tax assets
2,688,216
\u2014
2,688,216
Other assets
1,385,292
\u2014
1,385,292
TOTAL ASSETS
92,904,812
(89,858)
92,814,954
LIABILITIES
Financial liabilities at amortised cost
Resources from credit institutions
8,896,074
\u2014
8,896,074
Resources from customers
69,560,227
\u2014
69,560,227
Non subordinated debt securities issued
2,188,363
\u2014
2,188,363
Subordinated debt
1,394,780
\u2014
1,394,780
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading
231,241
\u2014
231,241
Financial liabilities at fair value through profit or loss
1,581,778
\u2014
1,581,778
Hedging derivatives
377,206
\u2014
377,206
Provisions
458,744
\u2014
458,744
Current tax liabilities
20,427
\u2014
20,427
Deferred tax liabilities
16,932
\u2014
16,932
Other liabilities
1,116,983
\u2014
1,116,983
TOTAL LIABILITIES
85,842,755
\u2014
85,842,755
EQUITY
Share capital
4,725,000
\u2014
4,725,000
Share premium
16,471
\u2014
16,471
Other equity instruments
400,000
\u2014
400,000
Legal and statutory reserves
259,528
\u2014
259,528
Reserves and retained earnings
580,304
(89,858)
490,446
Net income for the year attributable to Bank's Shareholders
138,082
\u2014
138,082
Non-controlling interests
942,672
\u2014
942,672
TOTAL EQUITY
7,062,057
(89,858)
6,972,199
TOTAL LIABILITIES AND EQUITY
92,904,812
(89,858)
92,814,954
The impacts of adopting IFRS 17 and IFRS 9 on equity of Millenniumbcp Ageas Grupo Segurador, S.G.P.S, S.A. and of BCP
Group, on the transition date, 1 January 2022, are as follows:
(Thousands of euros)
IFRS 9 transition
44,075
IFRS 17 transition
(250,611)
Impact of transition on equity (Ageas)
(206,536)
VOBA\u00a0 (Value of business acquired)*
23,152
Impact of transition on equity (Ageas - BCP Gaap) *
(183,384)
Impact of the transition on the equity of the BCP Group (49%) *
(89,858)
(*) The VOBA corresponds to the estimated current value of the future cash flows of the contracts in force at the date of acquisition under IFRS
4. On 31 December 2021, the gross value of VOBA was reflected in the caption Other intangible assets of Millenniumbcp Ageas in accordance
with IFRS 4, and with the implementation of IFRS 17 this concept was cancelled in the consolidated accounts of Millenniumbcp Ageas.
Considering that the VOBA recorded in the accounts of Millenniumbcp Ageas was not included in the value of this investment in the accounts of
the BCP Group (note 26), the derecognition of the VOBA in the accounts of Millenniumbcp Ageas had no impact on the BCP Group's consolidated
accounts (note 26).
The impacts of the adoption of IFRS 17 and IFRS 9 on the balance Investments in associates (note 26) of Group, are as
follows:
(Thousands of euros)
1 January 2022
(restated)
31 December 2022
(restated)
Investment held in Millennium Ageas ( IAS 39 and IFRS 4)
261,446
59,766
Transition to IFRS 9 and IFRS 17
(89,858)
(89,858)
Other comprehensive income
\u2014
116,152
Other reserves
\u2014
19
Net income
\u2014
(10,111)
Investment held in Millennium Ageas (IFRS 9 and IFRS 17)
171,588
75,968
The consolidated balance sheet with reference to 31 December 2022 was restated as a result of the adoption of IFRS 17
and IFRS 9 by Millenniumbcp Ageas Group Segurador, SGPS, SA, with the impacts detailed as follows:
(Thousands of euros)
31 December
2022
(reported)
Impact of the
adoption of IFRS
17 and IFRS 9
31 December
2022
(restated)
ASSETS
Cash and deposits at Central Banks
6,022,001
\u2014
6,022,001
Loans and advances to credit institutions repayable on demand
213,460
\u2014
213,460
Financial assets at amortised cost
Loans and advances to credit institutions
963,434
\u2014
963,434
Loans and advances to customers
54,675,793
\u2014
54,675,793
Debt securities
13,035,582
\u2014
13,035,582
Financial assets at fair value through profit or loss
Financial assets held for trading
766,597
\u2014
766,597
Financial assets not held for trading mandatorily at fair value through
profit or loss
552,679
\u2014
552,679
Financial assets at fair value through other comprehensive income
7,461,553
\u2014
7,461,553
Hedging derivatives
59,703
\u2014
59,703
Investments in associated companies
298,717
16,202
314,919
Non-current assets held for sale
499,035
\u2014
499,035
Investment property
15,217
\u2014
15,217
Other tangible assets
574,697
\u2014
574,697
Goodwill and intangible assets
182,687
\u2014
182,687
Current tax assets
17,945
\u2014
17,945
Deferred tax assets
2,938,986
\u2014
2,938,986
Other assets
1,582,455
\u2014
1,582,455
TOTAL ASSETS
89,860,541
16,202
89,876,743
LIABILITIES
Financial liabilities at amortised cost
Resources from credit institutions
1,468,360
\u2014
1,468,360
Resources from customers
75,430,143
\u2014
75,430,143
Non subordinated debt securities issued
1,482,086
\u2014
1,482,086
Subordinated debt
1,333,056
\u2014
1,333,056
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading
241,506
\u2014
241,506
Financial liabilities at fair value through profit or loss
1,817,678
\u2014
1,817,678
Hedging derivatives
178,000
\u2014
178,000
Provisions
561,786
\u2014
561,786
Current tax liabilities
23,680
\u2014
23,680
Deferred tax liabilities
11,708
\u2014
11,708
Other liabilities
1,391,973
\u2014
1,391,973
TOTAL LIABILITIES
83,939,976
\u2014
83,939,976
EQUITY
Share capital
3,000,000
\u2014
3,000,000
Share premium
16,471
\u2014
16,471
Other equity instruments
400,000
\u2014
400,000
Legal and statutory reserves
268,534
\u2014
268,534
Reserves and retained earnings
1,245,949
26,313
1,272,262
Net income for the year attributable to Bank's Shareholders
207,497
(10,111)
197,386
Non-controlling interests
782,114
\u2014
782,114
TOTAL EQUITY
5,920,565
16,202
5,936,767
TOTAL LIABILITIES AND EQUITY
89,860,541
16,202
89,876,743
The Consolidated Income Statement with reference to 31 December 2022 was restated resulting from the adoption of
IFRS 17 and IFRS 9 by Millenniumbcp Ageas Group Segurador, SGPS, SA, which impacts are detailed as follows:
(Thousands of euros)
31 December 2022
(reported)
Impact of the
adoption of IFRS 17
and IFRS 9
31 December 2022
(restated)
Interest and similar income
2,737,235
\u2014
2,737,235
Interest expense and similar charges
(587,463)
\u2014
(587,463)
NET INTEREST INCOME
2,149,772
\u2014
2,149,772
Dividends from equity instruments
10,086
\u2014
10,086
Net fees and commissions income
771,908
\u2014
771,908
Gains/(losses) on financial operations at fair value through profit or
loss
27,306
\u2014
27,306
Foreign exchange gains/(losses)
19,390
\u2014
19,390
Gains/(losses) on hedge accounting
(2,233)
\u2014
(2,233)
Gains/(losses) arising from derecognition of financial assets and
liabilities not measured at fair value through profit or loss
5,497
\u2014
5,497
Other operating income/(losses)
(193,112)
\u2014
(193,112)
TOTAL OPERATING INCOME
2,788,614
\u2014
2,788,614
Staff costs
580,807
\u2014
580,807
Other administrative costs
352,961
\u2014
352,961
Amortisations and depreciations
139,250
\u2014
139,250
TOTAL OPERATING EXPENSES
1,073,018
\u2014
1,073,018
NET OPERATING INCOME BEFORE PROVISIONS AND IMPAIRMENTS
1,715,596
\u2014
1,715,596
Impairment of financial assets at amortised cost
(300,829)
\u2014
(300,829)
Impairment of financial assets at fair value through other
comprehensive income
5,023
\u2014
5,023
Impairment of other assets
(192,059)
\u2014
(192,059)
Other provisions
(568,297)
\u2014
(568,297)
NET OPERATING INCOME
349,569
\u2014
349,569
Share of profit of associates accounted for using the equity method
68,722
(10,111)
58,611
Gains/(losses) on disposal of subsidiaries and other assets
10,167
\u2014
10,167
NET INCOME BEFORE INCOME TAXES
428,458
(10,111)
418,347
Income taxes
Current
(109,632)
\u2014
(109,632)
Deferred
(194,688)
\u2014
(194,688)
NET INCOME AFTER INCOME TAXES FROM CONTINUING
OPERATIONS
124,138
(10,111)
114,027
Net income from discontinued or discontinuing operations
5,537
\u2014
5,537
NET INCOME AFTER INCOME TAXES
129,675
(10,111)
119,564
Net income for the year attributable to:
Bank's Shareholders
207,497
(10,111)
197,386
Non-controlling interests
(77,822)
\u2014
(77,822)
NET INCOME FOR THE YEAR
129,675
(10,111)
119,564
", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationsOrChangesInPresentationExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-552": { "value": "
As from 1 January 2010, the Group began to apply IFRS 3 (revised) for the accounting of business combinations. The
changes in the accounting policies resulting from the application of IFRS 3 (revised) are applied prospectively.
The consolidated financial statements now presented reflect the assets, liabilities, income and expenses of the Bank
and its subsidiaries (the Group), and the results attributable to the Group financial investments in associates.
B1. Investments in subsidiaries
Subsidiaries are entities controlled by the Group (including structure entities and investment funds). The Group controls
an entity when it holds the power to direct the relevant activities of the entity, and when it is exposed, or has rights,
to variable returns from its involvement with the entity and can take possession of these results through the power it
holds over the relevant activities of that entity (de facto control). The financial statements of subsidiaries are included
in the consolidated financial statements from the date on which control commences until the date on which control
ceases.
Accumulated losses are attributed to non-controlling interests in the respective proportion, implying that the Group can
recognise negative non-controlling interests.
On a step acquisition process resulting in the acquisition of control, the revaluation of any participation previously
acquired is recorded against the profit and loss account when goodwill is calculated. On a partial disposal resulting in
loss of control over a subsidiary, any participation retained is revalued at market value on the sale date and the gain or
loss resulting from this revaluation is booked against the income statement.
B2. Investments in associates
Investments in associated companies are registered by the equity method from the date that the Group acquires
significant influence until the date it ceases to exist. Associates are those entities in which the Group has significant
influence but not control over the financial and operating policy decisions of the investee. It is assumed that the Group
has significant influence when it holds, directly or indirectly, more than 20% or of the voting rights of the investee. If
the Group holds, directly or indirectly, less than 20% of the voting rights of the investee, it is presumed that the Group
does not have significant influence, unless such influence can be clearly demonstrated.
The existence of significant influence by the Group is usually evidenced in one or more of the following ways:
-representation on the Board of Directors or equivalent governing body of the investee;
-participation in policy-making processes, including participation in decisions about dividends or other distributions;
-material transactions between the Group and the investee;
-interchange of the management team;
-provision of essential technical information.
The consolidated financial statements include the part that is attributable to the Group of the total reserves and
results of associated companies accounted on an equity basis. When the Group\u2019s share of losses exceeds its interest in
the associate, the carrying amount is reduced to zero and recognition of further losses is discontinued, with exception
of the part in which the Group incurs in a legal obligation to assume these losses on behalf of an associate.
B3. Goodwill
Business combinations are accounted under the purchase method. The acquisition cost corresponds to the fair value,
determined at the acquisition date, of the assets given and liabilities incurred or assumed. Costs directly attributable
to the acquisition of a subsidiary are recorded directly in the income statement.
Positive goodwill arising from acquisitions is recognised as an asset carried at acquisition cost and is not subject to
amortisation, however, it is subject to impairment tests. Goodwill arising from the acquisition of subsidiaries and
associates is defined as the difference between the cost of acquisition and the total or corresponding share of the fair
value of the net assets and contingent liabilities acquired, depending on the option taken.
Negative goodwill arising from an acquisition is recognised directly in the income statement of the period in which the
business combination occurs.
Goodwill is not adjusted due to changes in the initial estimation of the contingent purchase price, being the difference
recorded in the income statement or in equity, when applicable.
According to IFRS 3 \u2013 Business combinations, if the initial accounting of a business combination is not concluded until
the end of the first financial reporting period in which the combination occurs, it is recorded at the respective
provisional values. These provisional values can be adjusted over the measurement period, which can\u2019t exceed a year
since the acquisition date. Over this period, the Group should retrospectively adjust the amounts recognised previously
on the acquisition date, to reflect newly obtained information about facts and circumstances that existed at the
acquisition date and that, if they were known by then, would have impacted the measurement of the amounts
recognised at that date.
During this period, the Group should also recognise additional assets and liabilities in the case of obtaining new
information about facts and circumstances that existed at the acquisition date and that, if they were known by then,
would have resulted in the recognition of those assets and liabilities at that time.
The recoverable amount of the goodwill registered in the Group's asset is assessed annually in the preparation of the
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. Impairment
losses are recognised in the income statement. The recoverable amount is determined based on the higher of the asset
value in use and the market value after deducting selling costs, calculated using valuation methodologies supported by
discounted cash flow techniques, considering market conditions, the time value of money and the business risks.
B4. Purchases and dilution of non-controlling interests
The acquisition of non-controlling interests that do not impact the control position of a subsidiary is accounted as a
transaction with shareholders and, therefore, no additional goodwill resulting from this transaction is recognised. The
difference between the acquisition cost and the fair value of non-controlling interests acquired is recognised directly in
reserves. On this basis, the gains and losses resulting from the sale of controlling interests that do not impact the
control position of a subsidiary are always recognised against reserves.
B5. Loss of control
The gains or losses resulting from the dilution or sale of a financial position in a subsidiary, with loss of control, are
recognised by the Group in the income statement.
B6. Investments in foreign subsidiaries and associates
The financial statements of foreign subsidiaries and associates of the Group are prepared in their functional currency,
defined as the currency of the primary economic environment in which they operate or the currency in which the
subsidiaries obtain their income or finance their activity. In the consolidation process, assets and liabilities, including
goodwill, of foreign subsidiaries are converted into euros at the official exchange rate on the balance sheet date.
Regarding the investments in foreign operations that are consolidated under the full consolidation or equity methods,
exchange differences, between the conversion to euros of the equity at the beginning of the year and its value in euros
at the exchange rate on the balance sheet date in which the consolidated accounts are reported, are recognised against
\u201cReserves - exchange differences\u201d. The changes in fair value resulting from instruments that are designated and
qualified as hedging instruments related to foreign operations are recorded in equity under \"Reserves and retained
earnings\". Whenever the hedge is not fully effective, the ineffective portion is accounted against profit and loss of the
year.
The income and expenses of these subsidiaries are converted to euros at an approximate rate of the rates on the dates
of the transactions, using a monthly average considering the initial and final exchange rates of each month. Exchange
differences from the conversion to euros of the profits and losses for the reporting period, arising from the difference
between the exchange rate used in the income statement and the exchange rate prevailing at the balance sheet date,
are recognised in \"Reserves and retained earnings - exchange differences resulting from the consolidation of Group's
companies\". The exchange rates used by the Group are detailed in note 54.
On disposal of investments in foreign subsidiaries for which there is loss of control, exchange differences related to the
investment in the foreign operation and to the associated hedge transaction previously recognised in reserves are
transferred to profit and loss, as part of the gains or loss arising from the disposal.
The Group applies IAS 29 \u2013 Financial reporting in hyperinflationary economies in financial statements of entities that
present accounts in functional currency of an economy that has hyperinflation. In applying this policy, non-monetary
assets and liabilities are adjusted based on the price index from the date of acquisition or the date of the last
revaluation until 31 December 2021. The restated values of assets are reduced by the amount that exceeds their
recoverable amount, in accordance with the applicable IFRS.
Equity components are also updated considering the price index from the beginning of the period or date of the
contribution if it is earlier.
When the classification as a hyperinflationary economy is applied to associated companies, its effects are included in
the Group's financial statements by applying the equity method of accounting on the financial statements restated in
accordance with the requirements of IAS 29. The effects of the application of IAS 29 with impact on capital items are
recognised against the item \"Reserves and retained earnings\".
In accordance with the requirements provided in IAS 29, Angola was considered as a hyperinflationary economy until 31
December 2018. This classification is no longer applicable as of 1 January 2019.
B7. Transactions eliminated on consolidation
The balances and transactions between Group's companies, as well as any unrealised gains and losses arising from these
transactions, are eliminated in the preparation of the consolidated financial statements. Unrealised gains and losses
arising from transactions with associates and jointly controlled entities are eliminated in the proportion of the Group's
investment in these entities.
Entities included in the consolidation perimeter
For the purposes of determining entities to include in the consolidation perimeter, the Group assesses whether it is
exposed to, or has rights to, the variable returns from its involvement with the entity and if it can take possession of
these results through the power it holds (de facto control). The decision if an entity needs to be consolidated by the
Group requires the use of judgment, estimations and assumptions to determine at what extent the Group is exposed to
the variable returns and its ability to use its power to affect these returns. Different estimations and assumptions could
lead the Group to a different scope of consolidation perimeter with a direct impact in consolidated income.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-554": { "value": "Investments in subsidiaries
Subsidiaries are entities controlled by the Group (including structure entities and investment funds). The Group controls
an entity when it holds the power to direct the relevant activities of the entity, and when it is exposed, or has rights,
to variable returns from its involvement with the entity and can take possession of these results through the power it
holds over the relevant activities of that entity (de facto control). The financial statements of subsidiaries are included
in the consolidated financial statements from the date on which control commences until the date on which control
ceases.
Accumulated losses are attributed to non-controlling interests in the respective proportion, implying that the Group can
recognise negative non-controlling interests.
On a step acquisition process resulting in the acquisition of control, the revaluation of any participation previously
acquired is recorded against the profit and loss account when goodwill is calculated. On a partial disposal resulting in
loss of control over a subsidiary, any participation retained is revalued at market value on the sale date and the gain or
loss resulting from this revaluation is booked against the income statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-553": { "value": "Investments in subsidiaries
Subsidiaries are entities controlled by the Group (including structure entities and investment funds). The Group controls
an entity when it holds the power to direct the relevant activities of the entity, and when it is exposed, or has rights,
to variable returns from its involvement with the entity and can take possession of these results through the power it
holds over the relevant activities of that entity (de facto control). The financial statements of subsidiaries are included
in the consolidated financial statements from the date on which control commences until the date on which control
ceases.
Accumulated losses are attributed to non-controlling interests in the respective proportion, implying that the Group can
recognise negative non-controlling interests.
On a step acquisition process resulting in the acquisition of control, the revaluation of any participation previously
acquired is recorded against the profit and loss account when goodwill is calculated. On a partial disposal resulting in
loss of control over a subsidiary, any participation retained is revalued at market value on the sale date and the gain or
loss resulting from this revaluation is booked against the income statement.
Loss of control
The gains or losses resulting from the dilution or sale of a financial position in a subsidiary, with loss of control, are
recognised by the Group in the income statement.
Investments in foreign subsidiaries and associates
The financial statements of foreign subsidiaries and associates of the Group are prepared in their functional currency,
defined as the currency of the primary economic environment in which they operate or the currency in which the
subsidiaries obtain their income or finance their activity. In the consolidation process, assets and liabilities, including
goodwill, of foreign subsidiaries are converted into euros at the official exchange rate on the balance sheet date.
Regarding the investments in foreign operations that are consolidated under the full consolidation or equity methods,
exchange differences, between the conversion to euros of the equity at the beginning of the year and its value in euros
at the exchange rate on the balance sheet date in which the consolidated accounts are reported, are recognised against
\u201cReserves - exchange differences\u201d. The changes in fair value resulting from instruments that are designated and
qualified as hedging instruments related to foreign operations are recorded in equity under \"Reserves and retained
earnings\". Whenever the hedge is not fully effective, the ineffective portion is accounted against profit and loss of the
year.
The income and expenses of these subsidiaries are converted to euros at an approximate rate of the rates on the dates
of the transactions, using a monthly average considering the initial and final exchange rates of each month. Exchange
differences from the conversion to euros of the profits and losses for the reporting period, arising from the difference
between the exchange rate used in the income statement and the exchange rate prevailing at the balance sheet date,
are recognised in \"Reserves and retained earnings - exchange differences resulting from the consolidation of Group's
companies\". The exchange rates used by the Group are detailed in note 54.
On disposal of investments in foreign subsidiaries for which there is loss of control, exchange differences related to the
investment in the foreign operation and to the associated hedge transaction previously recognised in reserves are
transferred to profit and loss, as part of the gains or loss arising from the disposal.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-556": { "value": "Investments in associates
Investments in associated companies are registered by the equity method from the date that the Group acquires
significant influence until the date it ceases to exist. Associates are those entities in which the Group has significant
influence but not control over the financial and operating policy decisions of the investee. It is assumed that the Group
has significant influence when it holds, directly or indirectly, more than 20% or of the voting rights of the investee. If
the Group holds, directly or indirectly, less than 20% of the voting rights of the investee, it is presumed that the Group
does not have significant influence, unless such influence can be clearly demonstrated.
The existence of significant influence by the Group is usually evidenced in one or more of the following ways:
-representation on the Board of Directors or equivalent governing body of the investee;
-participation in policy-making processes, including participation in decisions about dividends or other distributions;
-material transactions between the Group and the investee;
-interchange of the management team;
-provision of essential technical information.
The consolidated financial statements include the part that is attributable to the Group of the total reserves and
results of associated companies accounted on an equity basis. When the Group\u2019s share of losses exceeds its interest in
the associate, the carrying amount is reduced to zero and recognition of further losses is discontinued, with exception
of the part in which the Group incurs in a legal obligation to assume these losses on behalf of an associate.
B3.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-555": { "value": "Investments in associates
Investments in associated companies are registered by the equity method from the date that the Group acquires
significant influence until the date it ceases to exist. Associates are those entities in which the Group has significant
influence but not control over the financial and operating policy decisions of the investee. It is assumed that the Group
has significant influence when it holds, directly or indirectly, more than 20% or of the voting rights of the investee. If
the Group holds, directly or indirectly, less than 20% of the voting rights of the investee, it is presumed that the Group
does not have significant influence, unless such influence can be clearly demonstrated.
The existence of significant influence by the Group is usually evidenced in one or more of the following ways:
-representation on the Board of Directors or equivalent governing body of the investee;
-participation in policy-making processes, including participation in decisions about dividends or other distributions;
-material transactions between the Group and the investee;
-interchange of the management team;
-provision of essential technical information.
The consolidated financial statements include the part that is attributable to the Group of the total reserves and
results of associated companies accounted on an equity basis. When the Group\u2019s share of losses exceeds its interest in
the associate, the carrying amount is reduced to zero and recognition of further losses is discontinued, with exception
of the part in which the Group incurs in a legal obligation to assume these losses on behalf of an associate.
B3. Investments in foreign subsidiaries and associates
The financial statements of foreign subsidiaries and associates of the Group are prepared in their functional currency,
defined as the currency of the primary economic environment in which they operate or the currency in which the
subsidiaries obtain their income or finance their activity. In the consolidation process, assets and liabilities, including
goodwill, of foreign subsidiaries are converted into euros at the official exchange rate on the balance sheet date.
When the classification as a hyperinflationary economy is applied to associated companies, its effects are included in
the Group's financial statements by applying the equity method of accounting on the financial statements restated in
accordance with the requirements of IAS 29. The effects of the application of IAS 29 with impact on capital items are
recognised against the item \"Reserves and retained earnings\".
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-557": { "value": "Goodwill
Business combinations are accounted under the purchase method. The acquisition cost corresponds to the fair value,
determined at the acquisition date, of the assets given and liabilities incurred or assumed. Costs directly attributable
to the acquisition of a subsidiary are recorded directly in the income statement.
Positive goodwill arising from acquisitions is recognised as an asset carried at acquisition cost and is not subject to
amortisation, however, it is subject to impairment tests. Goodwill arising from the acquisition of subsidiaries and
associates is defined as the difference between the cost of acquisition and the total or corresponding share of the fair
value of the net assets and contingent liabilities acquired, depending on the option taken.
Negative goodwill arising from an acquisition is recognised directly in the income statement of the period in which the
business combination occurs.
Goodwill is not adjusted due to changes in the initial estimation of the contingent purchase price, being the difference
recorded in the income statement or in equity, when applicable.
According to IFRS 3 \u2013 Business combinations, if the initial accounting of a business combination is not concluded until
the end of the first financial reporting period in which the combination occurs, it is recorded at the respective
provisional values. These provisional values can be adjusted over the measurement period, which can\u2019t exceed a year
since the acquisition date. Over this period, the Group should retrospectively adjust the amounts recognised previously
on the acquisition date, to reflect newly obtained information about facts and circumstances that existed at the
acquisition date and that, if they were known by then, would have impacted the measurement of the amounts
recognised at that date.
During this period, the Group should also recognise additional assets and liabilities in the case of obtaining new
information about facts and circumstances that existed at the acquisition date and that, if they were known by then,
would have resulted in the recognition of those assets and liabilities at that time.
The recoverable amount of the goodwill registered in the Group's asset is assessed annually in the preparation of the
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. Impairment
losses are recognised in the income statement. The recoverable amount is determined based on the higher of the asset
value in use and the market value after deducting selling costs, calculated using valuation methodologies supported by
discounted cash flow techniques, considering market conditions, the time value of money and the business risks.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-558": { "value": "
Business combinations are accounted under the purchase method. The acquisition cost corresponds to the fair value,
determined at the acquisition date, of the assets given and liabilities incurred or assumed. Costs directly attributable
to the acquisition of a subsidiary are recorded directly in the income statement.
According to IFRS 3 \u2013 Business combinations, if the initial accounting of a business combination is not concluded until
the end of the first financial reporting period in which the combination occurs, it is recorded at the respective
provisional values. These provisional values can be adjusted over the measurement period, which can\u2019t exceed a year
since the acquisition date. Over this period, the Group should retrospectively adjust the amounts recognised previously
on the acquisition date, to reflect newly obtained information about facts and circumstances that existed at the
acquisition date and that, if they were known by then, would have impacted the measurement of the amounts
recognised at that date.
During this period, the Group should also recognise additional assets and liabilities in the case of obtaining new
information about facts and circumstances that existed at the acquisition date and that, if they were known by then,
would have resulted in the recognition of those assets and liabilities at that time.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-560": { "value": "
Positive goodwill arising from acquisitions is recognised as an asset carried at acquisition cost and is not subject to
amortisation, however, it is subject to impairment tests. Goodwill arising from the acquisition of subsidiaries and
associates is defined as the difference between the cost of acquisition and the total or corresponding share of the fair
value of the net assets and contingent liabilities acquired, depending on the option taken.
Negative goodwill arising from an acquisition is recognised directly in the income statement of the period in which the
business combination occurs.
Goodwill is not adjusted due to changes in the initial estimation of the contingent purchase price, being the difference
recorded in the income statement or in equity, when applicable.
The recoverable amount of the goodwill registered in the Group's asset is assessed annually in the preparation of the
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. Impairment
losses are recognised in the income statement. The recoverable amount is determined based on the higher of the asset
value in use and the market value after deducting selling costs, calculated using valuation methodologies supported by
discounted cash flow techniques, considering market conditions, the time value of money and the business risks.
Goodwill impairment
The recoverable amount of the goodwill recorded in the Group's assets is assessed annually in the preparation of
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. For this
purpose, the carrying amount of the business units of the Group for which goodwill has been recognised is compared
with the respective recoverable amount. A goodwill impairment loss is recognised when the carrying amount of the
business unit exceeds the respective recoverable amount.
In the absence of an available market value, the recoverable amount is determined using cash flows predictions,
applying a discount rate that includes a risk premium appropriated to the business unit being tested. Determining the
cash flows to discount and the discount rate, involves judgment.
Y3.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-559": { "value": "
Positive goodwill arising from acquisitions is recognised as an asset carried at acquisition cost and is not subject to
amortisation, however, it is subject to impairment tests. Goodwill arising from the acquisition of subsidiaries and
associates is defined as the difference between the cost of acquisition and the total or corresponding share of the fair
value of the net assets and contingent liabilities acquired, depending on the option taken.
Negative goodwill arising from an acquisition is recognised directly in the income statement of the period in which the
business combination occurs.
Goodwill is not adjusted due to changes in the initial estimation of the contingent purchase price, being the difference
recorded in the income statement or in equity, when applicable.
The recoverable amount of the goodwill registered in the Group's asset is assessed annually in the preparation of the
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. Impairment
losses are recognised in the income statement. The recoverable amount is determined based on the higher of the asset
value in use and the market value after deducting selling costs, calculated using valuation methodologies supported by
discounted cash flow techniques, considering market conditions, the time value of money and the business risks.
The recoverable amount of the goodwill recorded in the Group's assets is assessed annually in the preparation of
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. For this
purpose, the carrying amount of the business units of the Group for which goodwill has been recognised is compared
with the respective recoverable amount. A goodwill impairment loss is recognised when the carrying amount of the
business unit exceeds the respective recoverable amount.
In the absence of an available market value, the recoverable amount is determined using cash flows predictions,
applying a discount rate that includes a risk premium appropriated to the business unit being tested. Determining the
cash flows to discount and the discount rate, involves judgment.
Y3.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-561": { "value": "Purchases and dilution of non-controlling interests
The acquisition of non-controlling interests that do not impact the control position of a subsidiary is accounted as a
transaction with shareholders and, therefore, no additional goodwill resulting from this transaction is recognised. The
difference between the acquisition cost and the fair value of non-controlling interests acquired is recognised directly in
reserves. On this basis, the gains and losses resulting from the sale of controlling interests that do not impact the
control position of a subsidiary are always recognised against reserves.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-562": { "value": "
The financial statements of foreign subsidiaries and associates of the Group are prepared in their functional currency,
defined as the currency of the primary economic environment in which they operate or the currency in which the
subsidiaries obtain their income or finance their activity. In the consolidation process, assets and liabilities, including
goodwill, of foreign subsidiaries are converted into euros at the official exchange rate on the balance sheet date.
The Group applies IAS 29 \u2013 Financial reporting in hyperinflationary economies in financial statements of entities that
present accounts in functional currency of an economy that has hyperinflation. In applying this policy, non-monetary
assets and liabilities are adjusted based on the price index from the date of acquisition or the date of the last
revaluation until 31 December 2021. The restated values of assets are reduced by the amount that exceeds their
recoverable amount, in accordance with the applicable IFRS.
Transactions in foreign currencies are converted into the respective functional currency of the operation at the foreign
exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
converted into the respective functional currency of the operation at the foreign exchange rate on the reporting date.
Foreign exchange differences arising from conversion are recognised in the income statement. Non-monetary assets and
liabilities denominated in foreign currencies, which are stated at historical cost, are converted into the respective
functional currency of the operation at the foreign exchange rate on the date of the transaction. Non-monetary assets
and liabilities denominated in foreign currencies that are stated at fair value are converted into the respective
functional currency of the operation at the foreign exchange rate on the date that the fair value was determined
against profit and loss, except for financial assets at fair value through other comprehensive income, for which the
difference is recognised against equity.
R.
As described in accounting policy 1.B, the financial statements of the Group's subsidiaries and associates placed abroad
are prepared in their functional currency and translated into Euros at the end of each financial period. The exchange
rates used for the conversion of balance sheet foreign currency amounts are the ECB reference rates at the end of each
period. In foreign currency conversion of results, are calculated average exchange rates according to the closing
exchange rates of each month of the year. The rates used by the Group are as follows:
Closing exchange rates
Average exchange rates
(Balance sheet)
(Income statement)
Currency
2023
2022
(restated)
2023
2022
(restated)
AOA
924.8560
543.2680
748.1139
487.7116
BRL
5.3614
5.6390
5.4066
5.4153
CHF
0.9297
0.9872
0.9729
1.0042
MOP
8.8865
8.5744
8.8865
8.5744
MZN
70.5700
68.1850
69.2471
67.5585
PLN
4.3437
4.6816
4.5396
4.6823
USD
1.1049
1.0667
1.0819
1.0537
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-563": { "value": "
The Group applies IAS 29 \u2013 Financial reporting in hyperinflationary economies in financial statements of entities that
present accounts in functional currency of an economy that has hyperinflation. In applying this policy, non-monetary
assets and liabilities are adjusted based on the price index from the date of acquisition or the date of the last
revaluation until 31 December 2021. The restated values of assets are reduced by the amount that exceeds their
recoverable amount, in accordance with the applicable IFRS.
", "dimensions": { "concept": "ifrs-full:DisclosureOfHyperinflationaryReportingExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-564": { "value": "Financial instruments (IFRS 9)
C1. Financial assets
C1.1. Classification, initial recognition and subsequent measurement
At the initial recognition, financial assets are classified into one of the following categories:
\u2013 \u201cFinancial assets at amortised cost\u201d;
\u2013 \u201cFinancial assets at fair value through other comprehensive income\u201d; or,
\u2013 \u201cFinancial assets at fair value through profit or loss\u201d.
The classification is made taking into consideration the following aspects:
\u2013 the Group's business model for the management of the financial asset; and,
\u2013 the characteristics of the contractual cash flows of the financial asset.
Business Model Evaluation
With reference to 1 January 2018, the Group carried out an evaluation of the business model in which the financial
instruments are held at portfolio level, since this approach reflects how assets are managed and how that information
is made available to management bodies. The information considered in this evaluation included:
\u2013 the policies and purposes established for the portfolio and the practical operability of these policies, including how
the management strategy focuses on receiving contractual interest, maintaining a certain interest rate profile,
adjusting the duration of financial assets to the duration of liabilities that finance these assets or on the realization
of cash flows through the sale of the assets;
\u2013 how the performance of the portfolio is evaluated and reported to the Group's management bodies;
\u2013 the evaluation of the risks that affect the performance of the business model (and of the financial assets held under
this business model) and the way these risks are managed;
\u2013 the remuneration of business managers, i.e., in what way the compensation depends on the fair value of the assets
under management or on contractual cash flows received; and,
\u2013 the frequency, volume and sales periodicity in previous periods, the reasons for these sales and the expectations
about future sales. However, sales information should not be considered individually, but as part of an overall
assessment of how the Group establishes financial asset management objectives and how cash flows are obtained.
Financial assets held for trading and financial assets managed and evaluated at fair value by option are measured at
fair value through profit or loss because they are not held either for the collection of contractual cash flows (HTC), nor
for the collection of cash flows and sale of these financial assets (HTC and Sell).
Evaluation if the contractual cash flows correspond to Solely Payments of Principal and Interest (SPPI)
For the purposes of this assessment, \"principal\" is defined as the fair value of the financial asset at initial recognition.
\"Interest\" is defined as the counterparty for the time value of money, for the credit risk associated with the amount
owed over a given period and for other risks and costs associated with the activity (e.g., liquidity risk and
administrative costs), as well as for a profit margin.
In the evaluation of the financial instruments in which contractual cash flows refer exclusively to the receipt of
principal and interest, the Group considered the original contractual terms of the instrument. This evaluation included
the analysis of the existence of situations in which the contractual terms can modify the periodicity and the amount of
the cash flows so that they do not fulfil the SPPI condition. In the evaluation process, the Group considered:
\u2013 contingent events that may change the periodicity and the amount of the cash flows;
\u2013 characteristics that result in leverage;
\u2013 terms of prepayment and extension of maturity;
\u2013 terms that may limit the right of the Group to claim cash flows in relation to specific assets (e.g., contracts with
terms that prevent access to assets in case of default \u2013 non-recourse asset); and,
\u2013 characteristics that may change the time value of money.
In addition, an advance payment is consistent with the SPPI criterion if:
\u2013 the financial asset is acquired or originated with a premium or discount in relation to the contractual nominal value;
\u2013 the prepayment represents substantially the nominal amount of the contract plus accrued contractual interest, but
not paid (may include reasonable compensation for prepayment); and,
\u2013 the prepaid fair value is insignificant at initial recognition.
C1.1.1. Financial assets at amortised cost
Classification
A financial asset is classified under the category \"Financial assets at amortised cost\" if both of the following conditions
are met:
\u2013 the financial asset is held within a business model whose objective is to hold financial assets in order to collect their
contractual cash flows; and,
\u2013 its contractual cash flows occur on specific dates and are solely payments of principal and interest on the principal
amount outstanding (SPPI).
The \"Financial assets at amortised cost\" category includes loans and advances to credit institutions, loans and advances
to customers and debt instruments managed based on a business model whose purpose is to receive their contractual
cash flows (government bonds, bonds issued by companies and commercial paper).
Initial recognition and subsequent measurement
Loans and advances to credit institutions and loans and advances to customers are recognised at the date the funds are
made available to the counterparty (settlement date). Debt instruments are recognised on the trade date, that is, on
the date the Group accepts to acquire them.
Financial assets at amortised cost are initially recognised at fair value plus transaction costs and are subsequently
measured at amortised cost. In addition, they are subject, at their initial recognition, to the measurement of
impairment losses for expected credit losses (note C1.5), which are recognised in \"'Impairment of financial assets
measured at amortised cost\".
Interest of financial assets at amortised cost is recognised under \"Interest and similar income\", based on the effective
interest rate method and in accordance with the criteria described in note C3.
Gains or losses generated at the time of derecognition are registered in \"Gains/(losses) arising from derecognition of
financial assets and liabilities not measured at fair value through profit or loss\".
C1.1.2. Financial assets at fair value through other comprehensive income
Classification
A financial asset is classified under the category of \"Financial assets at fair value through other comprehensive income\"
if both of the following conditions are met:
\u2013 the financial asset is held within a business model whose objective is both to collect its contractual cash flows and
to sell this financial asset; and,
\u2013 its contractual cash flows occur on specific dates and are solely payments of principal and interest on the principal
amount outstanding (SPPI).
In addition, at the initial recognition of an equity instrument that is not held for trading, nor a contingent retribution
recognised by an acquirer in a business combination to which IFRS 3 applies, the Group may irrevocably choose to
classify it in the category of \"Financial assets at fair value through other comprehensive income\" (FVOCI). This option is
exercised on a case-by-case basis and is only available for financial instruments that comply with the definition of
equity instruments provided in IAS 32 and cannot be used for financial instruments whose classification as an equity
instrument under the scope of the issuer is made under the exceptions provided in paragraphs 16A to 16D of IAS 32.
Initial recognition and subsequent measurement
Debt instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. Changes in the fair value of these financial assets are
recognised against other comprehensive income and, at the time of their disposal, the respective gains or losses
accumulated in other comprehensive income are reclassified to a specific income statement item designated \"Gains or
losses on derecognition of financial assets at fair value through other comprehensive income\u201d.
Debt instruments at fair value through other comprehensive income are also subject from their initial recognition to the
measurement of impairment losses for expected credit losses (note C1.5). Impairment losses are recognised in the
income statement under \"Impairment of financial assets at fair value through other comprehensive income\", against
\u201cOther comprehensive income\u201d, and do not reduce the carrying amount of the financial asset in the balance sheet.
Interest, premiums or discounts on financial assets at fair value through other comprehensive income are recognised in
\"Interest and similar income\", based on the effective interest rate method and in accordance with the criteria described
in note C3.
Equity instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. The changes in the fair value of these financial assets
are recognised against \u201cOther comprehensive income\u201d. Dividends are recognised in the income statement when the
right to receive them is attributed.
Impairment is not recognised for equity instruments at fair value through other comprehensive income, and the
respective accumulated gains or losses recognised in \u201cFair value changes\u201d are transferred to \u201cRetained earnings\u201d at the
time of their derecognition.
C1.1.3. Financial assets at fair value through profit or loss
Classification
A financial asset is classified in the category \"Financial assets at fair value through profit and loss\" if the business model
defined by the Group for its management or the characteristics of its contractual cash flows do not meet the conditions
described above to be measured at amortised cost or at fair value through other comprehensive income (FVOCI).
In addition, the Group may irrevocably designate a financial asset at fair value through profit or loss that meets the
criteria to be measured at amortised cost or at FVOCI at the time of its initial recognition if this eliminates or
significantly reduces an inconsistency in measurement or recognition (accounting mismatch), that will otherwise arise
from measuring assets or liabilities or recognising their gains and losses in different bases.
The Group classified \"Financial assets at fair value through profit and loss\" in the following items:
a) \u201cFinancial assets held for trading\u201d
These financial assets are acquired with the purpose of short-term selling; at the initial recognition, they are part of a
portfolio of identified financial instruments and for which there is evidence of profit-taking in the short-term; or they
can be defined as derivatives (except for hedging derivatives).
b) \u201cFinancial assets not held for trading mandatorily at fair value through profit or loss\u201d
This item classifies debt instruments whose contractual cash flows do not correspond only to repayments of principal
and interest on the principal amount outstanding (SPPI).
c) \u201cFinancial assets designated at fair value through profit or loss\u201d (Fair Value Option)
This item includes the financial assets that the Group has chosen to designate at fair value through profit or loss to
eliminate accounting mismatch.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Group in the normal course of its business are in market conditions,
financial assets at fair value through profit or loss are initially recognised at their fair value, with the costs or income
associated with the transactions recognised in profit and loss at the initial moment. Subsequent changes in the fair
value of these assets are recognised in profit and loss.
The accrual of interest and of the premium/discount (when applicable) is recognised in \"Net interest income\", based on
the effective interest rate of each transaction, except the accrual of interest from trading derivatives that are
recognised in \u201cGains/(losses) on financial operations at fair value through profit or loss\u201d. Dividends are recognised in
profit and loss when the right to receive them is attributed.
Trading derivatives with a positive fair value are included in the item \"Financial assets held for trading\", while trading
derivatives with negative fair value are included in \"Financial liabilities held for trading\".
C1.2. Reclassification between categories of financial assets
Financial assets should be reclassified into other categories only if the business model used in their management has
changed. In this case, all financial assets affected must be reclassified.
The reclassification must be applied prospectively from the date of reclassification and any gains, losses (including the
ones related to impairment) or interest previously recognised should not be restated.
The reclassification of investments in equity instruments measured at fair value through other comprehensive income is
not allowed, nor of financial instruments designated at fair value through profit or loss.
C1.3. Modification and derecognition of financial assets
General principles
i) The Group shall derecognise a financial asset when, and only when:
\u2013 the contractual rights to the cash flows from the financial asset expire; or,
\u2013 it transfers the financial asset as set out in notes ii) and iii) below and the transfer qualifies for derecognition in
accordance with note iv).
ii) The Group transfers a financial asset if, and only if, it either:
\u2013 transfers the contractual rights to receive the cash flows of the financial asset; or,
\u2013 retains the contractual rights to receive the cash flows of the financial asset but assumes a contractual obligation to
pay the cash flows to one or more recipients in an arrangement that meets the conditions presented in note iii).
iii) When the Group retains the contractual rights to receive the cash flows of a financial asset (the 'original asset'), but
assumes a contractual obligation to pay these cash flows to one or more entities (the 'eventual recipients'), the
Group shall treat the transaction as a transfer of a financial asset if all the following three conditions are met:
\u2013 the Group does not have any obligation to pay amounts to the eventual recipients, unless it collects equivalent
amounts from the original asset. Short-term advances with the right of full recovery of the amount lent, plus
accrued interest at market rates, do not violate this condition;
\u2013 the Group is contractually prohibited from selling or pledging the original asset other than as a security to the
eventual recipients due its obligation to pay them cash flows; and,
\u2013 the Group has an obligation to remit any cash flows it collects on behalf of the eventual recipients without material
delay. In addition, it is not entitled to reinvest such cash flows, except for investments in cash or cash equivalents
(as defined in IAS 7 \u2013 Statement of Cash Flows) during the short settlement period from the collection date until the
date of required remittance to the eventual recipients, and interest earned on such investments is passed to the
eventual recipients.
iv) When the Group transfers a financial asset (see note ii) above), it shall evaluate the extent to which it retains the
risks and benefits arising from owning the financial asset. In this case:
\u2013 if the Group transfers substantially all the risks and benefits arising from owning the financial asset, it shall
derecognise the financial asset and recognise separately any rights and obligations created or retained in the
transfer, as assets or liabilities;
\u2013 if the Group retains substantially all the risks and benefits arising from owning the financial asset, it shall continue
to recognise the financial asset;
\u2013 if the Group neither transfers nor retains substantially all the risks and benefits arising from owning the financial
asset, it shall determine whether it retained control of the financial asset. In this case:
a) if the Group did not retain control, it shall derecognise the financial asset and recognise separately, as assets or
liabilities, any rights and obligations created or retained in the transfer;
b) if the Group retained control, it shall continue to recognise the financial asset to the extent of its continued
involvement in the financial asset.
v)\u00a0 The transfer of risks and benefits (see prior note) is evaluated by comparing the Group\u2019s exposure, before and after
the transfer, with the variability in the amounts and timing of the net cash flows of the transferred asset.
vi) The question of whether the Group retained or not control (see note iv) above) over the transferred asset depends
on the transferee's ability to sell the asset. If the transferee has the practical ability to sell the asset in its entirety
to an unrelated third party and can exercise that ability unilaterally without needing to impose additional
restrictions on the transfer, the entity did not retain control. In all other cases, the entity retained control.
Derecognition criteria
In the context of the general principles listed in the previous section, and considering that contract modification
processes may lead, in some circumstances, to the derecognition of the original financial assets and recognition of new
ones (subject to POCI identification), the purpose of this section is to set the criteria and circumstances that may lead
to the derecognition of a financial asset.
The Group considers that a modification of the terms and conditions of a credit exposure will result in derecognition of
the transaction and in recognition of a new transaction when the modification translates into at least one of the
following conditions:
\u2013 Creation of a new exposure that results from a debt consolidation, without any of the derecognized instruments
having a nominal value higher than 90% of the nominal amount of the new instrument;
\u2013 Double extension of the residual maturity, provided that the extension is not shorter than 3 years compared to the
residual maturity in the moment of the modification;
\u2013 Increase of on balance exposure by more than 10% compared to the nominal amount (refers to the last approved
amount on the operation subject to modification);
\u2013 Change in qualitative features, namely:
i) Change of currency, unless the exchange rate between the old and the new currency is pegged or managed
within limits restricted by law or the relevant monetary authorities;
ii) Exclusion or addition of a substantial equity conversion feature to a debt instrument, unless it is not
reasonably possible that it will be exercised over its term;
iii) Transfer of the instrument\u2019s credit risk to another borrower, or a significant change in the structure of
borrowers within the instrument.
iv) Deletion or addition to the debt instrument of features of the \"Pay If You Can\" type or dependent on the
financial performance of the debt instrument.
In the case of a restructuring due to financial difficulties of the debtor, only the criteria set out in items ii, iii and iv of
the above paragraphs should be checked (the other criteria listed in this paragraph are not relevant in such situations).
Under the regulatory changes that occurred in Poland and the negotiations with customers holding mortgage loans in
foreign currency described in note 57, and which correspond to contractual modifications made in accordance with IFRS
9, when the cash flows resulting from the agreement are subject to modification and a given asset is not derecognised,
Bank Millennium adjusts the gross book value of the financial asset and recognises the profit or loss due to the
modification in the Income Statement - Results on modification. The adjustment to the gross carrying amount of a
financial asset is the difference between the discounted cash flows before and after contract modification.
Loans written-off
The Group writes off a loan when it does not have reasonable expectations of recovering a financial asset in its entirety
or partially. Loans written-off are recognised in off-balance sheet accounts.
C1.4. Purchased or originated credit-impaired assets
Purchased or originated credit-impaired (POCI) assets are assets that present objective evidence of credit impairment
in the moment of their initial recognition. An asset is credit-impaired if one or more events have occurred with a
negative impact on the estimated future cash flows of the asset.
The two events that lead to the origin of a POCI exposure are presented as follows:
\u2013 financial assets arising from a recovery process, where there have been changes to the terms and conditions of the
original agreement, which presented objective evidence of impairment that resulted in its derecognition (note C1.3)
and recognition of a new contract that reflects the credit losses incurred;
\u2013 financial assets acquired with a significant discount, where the existence of a significant discount reflects credit
losses incurred at the time of their initial recognition.
At initial recognition, POCI assets do not carry an impairment allowance. Instead, lifetime expected credit losses (ECL)
are incorporated into the calculation of the effective interest rate (EIR). Consequently, at initial recognition, the gross
book value of POCI (initial balance) is accounted for at fair value and it's equal to the net book value before being
recognised as POCI (difference between the initial balance and the total discounted cash flows).
C1.5. Impairment losses
C1.5.1. Financial instruments subject to impairment losses recognition
The Group recognises impairment losses for expected credit losses on financial instruments recognised in the following
accounting items:
C1.5.1.1. Financial assets at amortised cost
Impairment losses on financial assets at amortised cost reduce the balance sheet value of these financial assets against
the item \"Impairment of financial assets at amortised cost\" (in the income statement).
C1.5.1.2. Debt instruments at fair value through other comprehensive income
Impairment losses for debt instruments at fair value through other comprehensive income are recognised in the income
statement under \"Impairment of financial assets at fair value through other comprehensive income\", against other
comprehensive income (they do not reduce the balance sheet amount of these financial assets).
C1.5.1.3. Credit commitments, documentary credits and financial guarantees
Impairment losses associated with credit commitments, documentary credits and financial guarantees are recognised in
liabilities, under the balance \"Provisions for guarantees and other commitments\", against \"Other provisions\" (in the
income statement).
C1.5.2. Classification of financial instruments by stages
Changes in credit risk since the initial recognition
Stage 1
Stage 2
Stage 3
Classification criterion
Initial recognition
Significant increase in credit
risk since initial recognition
Impaired
Impairment losses
12-month expected credit
losses
Lifetime expected credit losses
The Group determines the expected credit losses of each operation as a result of the deterioration of credit risk since
its initial recognition. For this purpose, operations are classified into one of the following three stages:
\u2013 Stage 1: the operations in which there is no significant increase in credit risk since its initial recognition are
classified in this stage. Impairment losses associated with operations classified in this stage correspond to expected
credit losses resulting from a default event that may occur within 12 months after the reporting date (12-month
expected credit losses);
\u2013 Stage 2: the operations in which there is a significant increase in credit risk since its initial recognition (note C1.5.3)
but are not impaired (note C1.5.4) are classified in this stage. Impairment losses associated with operations
classified in this stage correspond to the expected credit losses resulting from default events that may occur over
the expected residual life of the operations (lifetime expected credit losses);
\u2013 Stage 3: impaired operations are classified in this stage. Impairment losses associated with operations classified at
this stage correspond to lifetime expected credit losses.
C1.5.3. Significant increase in credit risk (SICR)
Significant increase in credit risk (SICR) is determined according to a set of mostly quantitative, but also qualitative
criteria. These criteria are mainly based on the risk grades of customers, according to the Bank's Rating Master Scale,
and on its evolution, in order to detect significant increases in Probability of Default (PD), complemented by other
information regarding the customers\u2019 behaviour towards the financial system.
C1.5.4. Definition of financial assets in default and impaired
All customers who meet at least one of the following conditions are marked as default and, consequently, in NPE:
a) Delay over 90 days of material payment:
- Amounts of principal, interest or fees not paid on the due date that, cumulatively, represent:
i) more than Euros 100 (retail) or more than Euros 500 (non-retail); and,
ii) more than 1% of the total debt (direct liabilities).
After these two conditions are met, the counting of days of delay begins: if more than 90 consecutive days in which the
customer is in this situation have been counted, it is classified as default (or GR15).
The existence of a material payment delay gives rise to the default setting (GR15) of all holders of the operation (or
operations).
b) Signs of low probability of payment:
i. Credit restructuring due to financial difficulties with loss of value;
ii. Delay after restructuring due to financial difficulties;
iii. Recurrence of restructuring due to financial difficulties;
iv. Credit with signs of impairment (or stage 3 of IFRS 9);
v. Insolvency or equivalent proceedings;
vi. Litigation;
vii. Guarantees of operations in default;
viii. Credit sales with losses;
ix. Credit fraud;
x. Unpaid credit status;
xi. Breach of covenants in a credit agreement;
xii. Spread of default in an economic group;
xiii. Cross default in BCP Group.
C1.5.5. Estimates of expected credit losses - Individual analysis
1. Customers who are in one of the following conditions are subject to individual analysis:
Customers in default
Customers in litigation or insolvency, if the total exposure of the group members in these situations exceeds
Euros 1 million
Customers integrated into groups with an exposure over Euros 5 million, if they have a risk grade 15
Groups or customers
who are not in
default
Other customers belonging to groups in the above conditions
Groups or customers with an exposure over Euros 5 million, if a group member has a risk grade 14
Groups or customers with an exposure over Euros 5 million, if a member of the group has a restructured loan
and a risk grade 13
Groups or customers with an exposure over Euros 10 million, if at least one member of the group is in stage 2
Groups or customers not included in the preceding paragraphs, whose exposure exceeds Euros 25 million
2. Regardless of the criteria described in the previous point, the individual analysis is only performed for customers
with a credit exposure over Euros 500,000, while customers with exposure below this limit are not considered for
the purpose of determining the exposure referred to in the previous point.
3. Other customers that do not meet the criteria defined in 1 will also be subject to individual analysis, if under the
following conditions:
\u2013 they have impairment as a result of the latest individual analysis;
\u2013 are classified in stage 2 as a result of the last revision of the questionnaire analysing the indications of financial
difficulties;
\u2013 according to recent information, they show a significant deterioration in risk levels; or,
\u2013 are a Special Purpose Vehicle (SPV).
4. The individual analysis includes the following procedures:
\u2013 for customers that are not in default, the analysis of financial difficulties indicators to determine whether the
customer has objective signs of impairment, or whether it should be classified in stage 2 given the occurrence of a
significant increase in credit risk, considering for this purpose a set of predetermined signs;
\u2013 for customers in default or for which the previous analysis has allowed to conclude that the customer has objective
signs of impairment, determination of the loss.
5. For the situations identified in the first paragraph of the previous point involving corporate clients, the analysis is
the responsibility of the Rating Division, and the responsibility of the Credit Division for the remaining clients.
6. For the situations identified in the second paragraph of the previous point, the individual analysis to determine the
loss is the responsibility of the client's management divisions and of the Credit Division, the latter with regard to the
customers managed by the Commercial Networks.
The assessment of existence of impairment losses in individual terms is determined through an analysis of the total
credit exposure on a case-by-case basis. For each loan considered individually significant, the Group assessed at each
balance sheet date the existence of objective evidence of impairment. In the assessment of impairment losses in
individual terms, the following factors were considered:
\u2013 total exposure of each customer towards the Group and the existence of overdue loans;
\u2013 viability of the customer\u2019s business and its capacity to generate enough cash flows to service debt obligations in the
future;
\u2013 the existence, nature and estimated value of the collaterals associated to each loan;
\u2013 significant deterioration of the customer's rating;
\u2013 the customer\u2019s available assets in liquidation or insolvency situations;
\u2013 the existence of preferential creditors;
\u2013 the amount and expected recovery term.
7. Each of the units referred to in the previous point is responsible for assigning an expectation and a recovery period
to exposures relating to customers subject to individual analysis, which must be transmitted to the Risk Office as
part of the regular process of collecting information, accompanied by detailed justification of the proposed
impairment.
8. The expected recovery shall be represented by a recovery rate of the total outstanding exposure, which may be a
weighted rate considering the different recovery prospects for each part of the customer's liabilities.
9. The recovery estimation referred to in the previous point should be influenced by future prospects (forward-
looking), contemplating not only a more expected scenario but also alternative scenarios (an unbiased and
probability-weighted amount). The application and weighting of the scenarios should be carried out both in a
global perspective and in an individualized perspective, the latter when cases that, due to their specificity, have a
high degree of uncertainty regarding the expected recovery estimation are identified.
10. The macroeconomic adjustment set out in point 8 should be analysed annually and weighted according to the type
of recovery strategy associated with the exposure under analysis:
\u2013 for Going Concern strategies (i.e., the estimation is based on the cash flows of the business), the possibility of
applying the 2 additional macroeconomic scenarios (optimistic and pessimistic) should be analysed in a global way,
to ascertain if there is the risk of a skewed view of the expected losses from the consideration of only one scenario;
\u2013 for Gone Concern strategies (i.e., the recovery estimation is based on the realization of the collateral), the impact
of the macroeconomic scenario on collaterals should be analysed, for example, to what extent the projected real
estate index indicates significant changes ahead for the current valuation values.
11. It is the responsibility of the units referred to in point 5 to consider in their projection macroeconomic expectations
that may influence the recoverability of the debt.
12. For the purposes of the preceding paragraphs, the Economic Studies, Sustainability and Cryptoassets Department
shall disclose the macroeconomic data that allow the estimations to be made.
13. The decision to consider global impacts related to the going and gone concern scenarios should be made by the Risk
Committee, as proposed by the Risk Office.
14. For specific cases with a high degree of uncertainty, the allocation of alternative scenarios should be considered
casuistically. Examples of recovery situations with a degree of uncertainty include:
\u2013 recovery of collateral in geographies in which the Bank has no relevant recovery experience;
\u2013 recovery of debt related to geographies in which there is strong political instability;
\u2013 recovery of non-real estate collateral for which there is no evidence of market liquidity;
\u2013 recovery of related collateral or government guarantees in a currency other than the country's own;
\u2013 recovery of debt related to debtors for whom there is a strong negative public exposure.
15. The Risk Office is responsible for reviewing the information collected and for clarifying all identified
inconsistencies, as well as for the final decision on the customer's impairment.
16. Customers that have objective signs of impairment, but an individual impairment amount is equal to zero, are
included in the collective analysis, assuming a PD 12-month equivalent to the risk grade 12 of the Master Scale.
17. The individual impairment analysis must be carried out annually, and may be lower for clients who fall into certain
situations of possible increased risk. In case significant signs of deterioration or improvement in the customer\u2019s
economic and financial situation are detected, as well as the macroeconomic conditions affecting the customer's
ability to accomplish debt, it is the responsibility of the Risk Office to promote the review of the expected
impairment of this customer.
C1.5.6. Estimates of expected credit losses - Collective analysis
Transactions that are not subject to an individual impairment analysis are grouped considering their risk characteristics
and subject to a collective impairment analysis. The Group's credit portfolio is divided by internal risk grades and
according to the following segments:
a) Segments with a reduced history of defaults, designated \u2018low default\u2019: Large corporate exposures, Project finance,
Institutions (banks/financial institutions) and Sovereigns;
b) Segments not \u2018low default\u2019: - Retail: Mortgages; Overdrafts; Credit cards; Small and medium enterprises - Retail
(\u2018SME Retail\u2019); and Others - Corporate: Small and medium enterprises - Corporate (\u2018Large SME\u2019); and Real Estate.
The Group performs statistical tests in order to prove the homogeneity of the segments mentioned above, with a
minimum period of one year.
Expected credit losses are estimates of credit losses that are determined as follows:
\u2013 financial assets with no signs of impairment at the reporting date: the present value of the difference between the
contractual cash flows and the cash flows that the Group expects to receive;
\u2013 financial assets with impairment at the reporting date: the difference between the gross book value and the present
value of the estimated cash flows;
\u2013 unused credit commitments: the present value of the difference between the resulting contractual cash flows if the
commitment is made and the cash flows that the Group expects to receive;
\u2013 financial guarantees: the current value of the expected repayments less the amounts that the Group expects to
recover.
The main inputs used to measure ECLs on a collective basis should include the following variables:
\u2013 Probability of Default \u2013 PD;
\u2013 Loss Given Default \u2013 LGD; and,
\u2013 Exposure at Default \u2013 EAD.
These parameters are obtained through internal statistical models and other relevant historical data, considering the
already existing regulatory models adapted to the requirements of IFRS 9.
PDs are estimated based on a certain historical period and will be calculated based on statistical models. These models
are based on internal data including both quantitative and qualitative factors. If there is a change in the risk of the
counterparty or exposure, the estimate of the associated PD will also vary. The PDs will be calculated considering the
contractual maturities of exposures.
The risk grades are a highly relevant input for determining the PD associated with each exposure.
The Group collects performance and default indicators about their credit risk exposures with analysis by types of
customers and products.
LGD is the magnitude of the loss that is expected to occur if an exposure goes into default. The Group estimates the
LGD parameters based on the historical recovery rates after entry into counterparty defaults. The LGD models consider
the associated collaterals, the counterparty activity sector, the default time, as well as the recovery costs. In the case
of contracts secured by real estate, it is expected that the LTV (loan-to-value) ratios are a parameter of high relevance
in the determination of LGD.
The EAD represents the expected exposure if the exposure and/or customer defaults. The Group obtains the EAD values
from the counterparty's current exposure and potential changes to its current value as a result of the contractual
conditions, including amortisations and prepayments. For commitments and financial guarantees, the value of the EAD
will consider both the amount of credit used and the expectation of future potential value that may be used in
accordance with the agreement.
As described above, except for financial assets that consider a 12-month PD as they do not present a significant
increase in credit risk, the Group will calculate the ECL value considering the risk of default during the maximum
contractual maturity period of the contract, even if, for the purpose of risk management, it is considered to be a longer
period. The maximum contractual period shall be considered as the period up to the date on which the Group has the
right to require payment or end the commitment or guarantee.
The Group adopted as a residual term criterion for renewable operations, when in stage 2, a term of 5 years. This term
was determined based on the behavioural models of this type of product applied by the Bank in the liquidity risk and
interest rate (ALM) analysis. According to these models, the maximum period of repayment of these operations is the 5
years considered conservatively in the scope of the calculation of credit impairment.
The Group uses models to forecast the evolution of the most relevant parameters for the expected credit losses,
namely probability of default, which incorporate forward-looking information. This incorporation of forward-looking
information is carried out in the relevant elements considered for the calculation of expected credit losses (ECL).
In particular, the PD point-in-time (PDpit) considered for the determination of the probability of performing exposures
at the reference date becoming defaulted exposures considers the expected values for a set of macroeconomic
variables, based on three scenarios (Central, Upside and Downside Scenario) prepared by the Bank's Economic Studies
area. These scenarios, which are used across the Bank for various purposes besides calculating impairment, consider
existing projections by reference entities.
In December 2023 the Bank carried out an update of the macroeconomic scenarios and of the corresponded adjustment
of the parameters considered in the collective impairment model.
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Classification
A financial asset is classified under the category \"Financial assets at amortised cost\" if both of the following conditions
are met:
\u2013 the financial asset is held within a business model whose objective is to hold financial assets in order to collect their
contractual cash flows; and,
\u2013 its contractual cash flows occur on specific dates and are solely payments of principal and interest on the principal
amount outstanding (SPPI).
The \"Financial assets at amortised cost\" category includes loans and advances to credit institutions, loans and advances
to customers and debt instruments managed based on a business model whose purpose is to receive their contractual
cash flows (government bonds, bonds issued by companies and commercial paper).
Initial recognition and subsequent measurement
Loans and advances to credit institutions and loans and advances to customers are recognised at the date the funds are
made available to the counterparty (settlement date). Debt instruments are recognised on the trade date, that is, on
the date the Group accepts to acquire them.
Financial assets at amortised cost are initially recognised at fair value plus transaction costs and are subsequently
measured at amortised cost. In addition, they are subject, at their initial recognition, to the measurement of
impairment losses for expected credit losses (note C1.5), which are recognised in \"'Impairment of financial assets
measured at amortised cost\".
Interest of financial assets at amortised cost is recognised under \"Interest and similar income\", based on the effective
interest rate method and in accordance with the criteria described in note C3.
Gains or losses generated at the time of derecognition are registered in \"Gains/(losses) arising from derecognition of
financial assets and liabilities not measured at fair value through profit or loss\".
C1.1.2. Financial assets at fair value through other comprehensive income
Classification
A financial asset is classified under the category of \"Financial assets at fair value through other comprehensive income\"
if both of the following conditions are met:
\u2013 the financial asset is held within a business model whose objective is both to collect its contractual cash flows and
to sell this financial asset; and,
\u2013 its contractual cash flows occur on specific dates and are solely payments of principal and interest on the principal
amount outstanding (SPPI).
In addition, at the initial recognition of an equity instrument that is not held for trading, nor a contingent retribution
recognised by an acquirer in a business combination to which IFRS 3 applies, the Group may irrevocably choose to
classify it in the category of \"Financial assets at fair value through other comprehensive income\" (FVOCI). This option is
exercised on a case-by-case basis and is only available for financial instruments that comply with the definition of
equity instruments provided in IAS 32 and cannot be used for financial instruments whose classification as an equity
instrument under the scope of the issuer is made under the exceptions provided in paragraphs 16A to 16D of IAS 32.
Initial recognition and subsequent measurement
Debt instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. Changes in the fair value of these financial assets are
recognised against other comprehensive income and, at the time of their disposal, the respective gains or losses
accumulated in other comprehensive income are reclassified to a specific income statement item designated \"Gains or
losses on derecognition of financial assets at fair value through other comprehensive income\u201d.
Debt instruments at fair value through other comprehensive income are also subject from their initial recognition to the
measurement of impairment losses for expected credit losses (note C1.5). Impairment losses are recognised in the
income statement under \"Impairment of financial assets at fair value through other comprehensive income\", against
\u201cOther comprehensive income\u201d, and do not reduce the carrying amount of the financial asset in the balance sheet.
Interest, premiums or discounts on financial assets at fair value through other comprehensive income are recognised in
\"Interest and similar income\", based on the effective interest rate method and in accordance with the criteria described
in note C3.
Equity instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. The changes in the fair value of these financial assets
are recognised against \u201cOther comprehensive income\u201d. Dividends are recognised in the income statement when the
right to receive them is attributed.
Impairment is not recognised for equity instruments at fair value through other comprehensive income, and the
respective accumulated gains or losses recognised in \u201cFair value changes\u201d are transferred to \u201cRetained earnings\u201d at the
time of their derecognition.
C1.1.3. Financial assets at fair value through profit or loss
Classification
A financial asset is classified in the category \"Financial assets at fair value through profit and loss\" if the business model
defined by the Group for its management or the characteristics of its contractual cash flows do not meet the conditions
described above to be measured at amortised cost or at fair value through other comprehensive income (FVOCI).
In addition, the Group may irrevocably designate a financial asset at fair value through profit or loss that meets the
criteria to be measured at amortised cost or at FVOCI at the time of its initial recognition if this eliminates or
significantly reduces an inconsistency in measurement or recognition (accounting mismatch), that will otherwise arise
from measuring assets or liabilities or recognising their gains and losses in different bases.
The Group classified \"Financial assets at fair value through profit and loss\" in the following items:
a) \u201cFinancial assets held for trading\u201d
These financial assets are acquired with the purpose of short-term selling; at the initial recognition, they are part of a
portfolio of identified financial instruments and for which there is evidence of profit-taking in the short-term; or they
can be defined as derivatives (except for hedging derivatives).
b) \u201cFinancial assets not held for trading mandatorily at fair value through profit or loss\u201d
This item classifies debt instruments whose contractual cash flows do not correspond only to repayments of principal
and interest on the principal amount outstanding (SPPI).
c) \u201cFinancial assets designated at fair value through profit or loss\u201d (Fair Value Option)
This item includes the financial assets that the Group has chosen to designate at fair value through profit or loss to
eliminate accounting mismatch.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Group in the normal course of its business are in market conditions,
financial assets at fair value through profit or loss are initially recognised at their fair value, with the costs or income
associated with the transactions recognised in profit and loss at the initial moment. Subsequent changes in the fair
value of these assets are recognised in profit and loss.
The accrual of interest and of the premium/discount (when applicable) is recognised in \"Net interest income\", based on
the effective interest rate of each transaction, except the accrual of interest from trading derivatives that are
recognised in \u201cGains/(losses) on financial operations at fair value through profit or loss\u201d. Dividends are recognised in
profit and loss when the right to receive them is attributed.
Trading derivatives with a positive fair value are included in the item \"Financial assets held for trading\", while trading
derivatives with negative fair value are included in \"Financial liabilities held for trading\".
Recognition of income from services and commissions
In accordance with IFRS 15, the Bank recognizes revenue associated with services and commissions when (or as) a
performance obligation is satisfied when transferring a service, based on the transaction price associated with this
performance obligation. In this context, the Bank takes the following steps to recognize revenue associated with
services and commissions:
- Recognition (satisfaction of the performance obligation): (i) identification of the contract associated with the service
provided and whether it should be covered by IFRS 15; (ii) identification of performance obligations associated with
each contract; (iii) definition of the criteria for the fulfilment of performance obligations, also considering the
contractual terms established with the counterparty. According to this definition, a service is transferred when the
customer obtains the benefits and control associated with the service provided. In this context, the Bank also identifies
whether performance obligations are met over time (\u201cover time\u201d) or at an exact moment (\u201cpoint in time\u201d), with
revenue being recognized accordingly.
- Measurement (price to be recognized associated with each performance obligation): (i) determine the transaction
price associated with the service provided, considering the contractual terms established with the counterparty and its
usual commercial practices. The transaction price is the amount of consideration to which the Bank expects to be
entitled in exchange for transferring promised services to the customer, excluding amounts collected on behalf of third
parties. The Bank includes in the transaction price part or all of the estimated amount of the variable consideration
associated with a performance obligation, only to the extent that it is highly probable that a significant reversal in the
amount of the accrued revenue recognized will not occur when the uncertainty associated with that variable
consideration is subsequently resolved; and (ii) allocate the transaction price to each of the performance obligations
identified under the contract established with the customer.
It should be noted that when services or commissions are an integral part of the effective interest rate of a financial
instrument, income resulting from services and commissions is recorded in net interest income (Note C.3).
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-566": { "value": "
Initial recognition and subsequent measurement
Loans and advances to credit institutions and loans and advances to customers are recognised at the date the funds are
made available to the counterparty (settlement date). Debt instruments are recognised on the trade date, that is, on
the date the Group accepts to acquire them.
Financial assets at amortised cost are initially recognised at fair value plus transaction costs and are subsequently
measured at amortised cost. In addition, they are subject, at their initial recognition, to the measurement of
impairment losses for expected credit losses (note C1.5), which are recognised in \"'Impairment of financial assets
measured at amortised cost\".
Interest of financial assets at amortised cost is recognised under \"Interest and similar income\", based on the effective
interest rate method and in accordance with the criteria described in note C3.
Gains or losses generated at the time of derecognition are registered in \"Gains/(losses) arising from derecognition of
financial assets and liabilities not measured at fair value through profit or loss\".
C1.1.2.
Initial recognition and subsequent measurement
Debt instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. Changes in the fair value of these financial assets are
recognised against other comprehensive income and, at the time of their disposal, the respective gains or losses
accumulated in other comprehensive income are reclassified to a specific income statement item designated \"Gains or
losses on derecognition of financial assets at fair value through other comprehensive income\u201d.
Debt instruments at fair value through other comprehensive income are also subject from their initial recognition to the
measurement of impairment losses for expected credit losses (note C1.5). Impairment losses are recognised in the
income statement under \"Impairment of financial assets at fair value through other comprehensive income\", against
\u201cOther comprehensive income\u201d, and do not reduce the carrying amount of the financial asset in the balance sheet.
Interest, premiums or discounts on financial assets at fair value through other comprehensive income are recognised in
\"Interest and similar income\", based on the effective interest rate method and in accordance with the criteria described
in note C3.
Equity instruments at fair value through other comprehensive income are initially recognised at fair value plus
transaction costs and are subsequently measured at fair value. The changes in the fair value of these financial assets
are recognised against \u201cOther comprehensive income\u201d. Dividends are recognised in the income statement when the
right to receive them is attributed.
Impairment is not recognised for equity instruments at fair value through other comprehensive income, and the
respective accumulated gains or losses recognised in \u201cFair value changes\u201d are transferred to \u201cRetained earnings\u201d at the
time of their derecognition.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Group in the normal course of its business are in market conditions,
financial assets at fair value through profit or loss are initially recognised at their fair value, with the costs or income
associated with the transactions recognised in profit and loss at the initial moment. Subsequent changes in the fair
value of these assets are recognised in profit and loss.
The accrual of interest and of the premium/discount (when applicable) is recognised in \"Net interest income\", based on
the effective interest rate of each transaction, except the accrual of interest from trading derivatives that are
recognised in \u201cGains/(losses) on financial operations at fair value through profit or loss\u201d. Dividends are recognised in
profit and loss when the right to receive them is attributed.
Trading derivatives with a positive fair value are included in the item \"Financial assets held for trading\", while trading
derivatives with negative fair value are included in \"Financial liabilities held for trading\".
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognisingDifferenceBetweenFairValueAtInitialRecognitionAndAmountDeterminedUsingValuationTechniqueExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-567": { "value": "Financial assets at fair value through profit or loss
Classification
A financial asset is classified in the category \"Financial assets at fair value through profit and loss\" if the business model
defined by the Group for its management or the characteristics of its contractual cash flows do not meet the conditions
described above to be measured at amortised cost or at fair value through other comprehensive income (FVOCI).
In addition, the Group may irrevocably designate a financial asset at fair value through profit or loss that meets the
criteria to be measured at amortised cost or at FVOCI at the time of its initial recognition if this eliminates or
significantly reduces an inconsistency in measurement or recognition (accounting mismatch), that will otherwise arise
from measuring assets or liabilities or recognising their gains and losses in different bases.
The Group classified \"Financial assets at fair value through profit and loss\" in the following items:
a) \u201cFinancial assets held for trading\u201d
These financial assets are acquired with the purpose of short-term selling; at the initial recognition, they are part of a
portfolio of identified financial instruments and for which there is evidence of profit-taking in the short-term; or they
can be defined as derivatives (except for hedging derivatives).
b) \u201cFinancial assets not held for trading mandatorily at fair value through profit or loss\u201d
This item classifies debt instruments whose contractual cash flows do not correspond only to repayments of principal
and interest on the principal amount outstanding (SPPI).
c) \u201cFinancial assets designated at fair value through profit or loss\u201d (Fair Value Option)
This item includes the financial assets that the Group has chosen to designate at fair value through profit or loss to
eliminate accounting mismatch.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Group in the normal course of its business are in market conditions,
financial assets at fair value through profit or loss are initially recognised at their fair value, with the costs or income
associated with the transactions recognised in profit and loss at the initial moment. Subsequent changes in the fair
value of these assets are recognised in profit and loss.
The accrual of interest and of the premium/discount (when applicable) is recognised in \"Net interest income\", based on
the effective interest rate of each transaction, except the accrual of interest from trading derivatives that are
recognised in \u201cGains/(losses) on financial operations at fair value through profit or loss\u201d. Dividends are recognised in
profit and loss when the right to receive them is attributed.
Trading derivatives with a positive fair value are included in the item \"Financial assets held for trading\", while trading
derivatives with negative fair value are included in \"Financial liabilities held for trading\".
Financial liabilities at fair value through profit or loss
Classification
Financial liabilities classified under \"Financial liabilities at fair value through profit or loss\" include:
a) \u201cFinancial liabilities held for trading\u201d
In this balance the issued liabilities are classified with the purpose of repurchasing in the near term, those that form
part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a
recent actual pattern of short-term profit-taking; or is a derivative (except for a derivative classified as hedging
instrument).
b) \u201cFinancial liabilities designated at fair value through profit or loss\u201d
The Group may irrevocably assign a financial liability at fair value through profit or loss at the time of its initial
recognition if at least one of the following conditions is met:
\u2013 the financial liability is managed, evaluated and reported internally at its fair value; or,
\u2013 the designation eliminates or significantly reduces the accounting mismatch of transactions.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Group in the normal course of its business are made in market
conditions, financial liabilities at fair value through profit or loss are initially recognised at fair value with the costs or
income associated with the transactions recognised in profit or loss at the initial moment.
Subsequent changes in the fair value of these financial liabilities are recognised as follows:
\u2013 the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of
that liability shall be presented in other comprehensive income;
\u2013 the remaining amount of change in the fair value of the liability shall be presented in profit or loss.
The accrual of interest and the premium/discount (when applicable) is recognised in \"Interest expense and similar
charges\" based on the effective interest rate of each transaction.
Gains/(losses) on financial operations at fair value through profit or loss, Foreign exchange
gains/(losses), Gains/(losses) on hedge accounting and Gains/(losses) arising from
derecognition of financial assets and liabilities not measured at fair value through profit or
loss
These balances include gains and losses on financial assets and liabilities at fair value through profit and loss, i.e., fair
value changes and interest on trading derivatives and embedded derivatives, as well as the corresponding dividends
received. This balance also includes the gains and losses on sale of financial assets at fair value through other
comprehensive income and financial assets and financial liabilities at amortised cost. The changes in fair value of
hedging derivatives and hedged items, when fair value hedge is applicable, are also recognised in this balance, as well
as the foreign exchange gains or losses.
Financial assets and liabilities measured at fair value through profit or loss (except
derivatives), financial assets at fair value through other comprehensive income
These financial instruments are accounted for at fair value. Fair value is based on market prices (\"Bid-price\"), whenever
these are available. If market prices are not available, fair value is estimated through numerical models based on cash-
flow discounting techniques, using the market interest rate curve adjusted for factors associated, predominantly credit
risk and liquidity risk, determined in accordance with the market conditions and time frame. In this class of assets, the
fair value corresponds to their book value.
Market interest rates are determined based on information released by the suppliers of financial content - Reuters and
Bloomberg - more specifically because of prices of interest rate swaps. The values for the very short-term rates are
obtained from similar sources but regarding interbank money market. The interest rate curve obtained is calibrated
with the values of interest rate short-term futures. Interest rates for specific periods of the cash flows are determined
by appropriate interpolation methods. The same interest rate curves are used in the projection of the non-
deterministic cash flows such as indexes.
When optionality is involved, the standard templates (Black-Scholes, Black, Ho and others) are used considering the
volatility areas applicable. Whenever there are no references in the market of sufficient quality or that the available
models do not fully apply to meet the characteristics of the financial instrument, specific quotations supplied by an
external entity are applied, typically a counterparty of the business.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-568": { "value": "Reclassification between categories of financial assets
Financial assets should be reclassified into other categories only if the business model used in their management has
changed. In this case, all financial assets affected must be reclassified.
The reclassification must be applied prospectively from the date of reclassification and any gains, losses (including the
ones related to impairment) or interest previously recognised should not be restated.
The reclassification of investments in equity instruments measured at fair value through other comprehensive income is
not allowed, nor of financial instruments designated at fair value through profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForReclassificationOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-570": { "value": "Impairment losses
C1.5.1. Financial instruments subject to impairment losses recognition
The Group recognises impairment losses for expected credit losses on financial instruments recognised in the following
accounting items:
C1.5.1.1. Financial assets at amortised cost
Impairment losses on financial assets at amortised cost reduce the balance sheet value of these financial assets against
the item \"Impairment of financial assets at amortised cost\" (in the income statement).
C1.5.1.2. Debt instruments at fair value through other comprehensive income
Impairment losses for debt instruments at fair value through other comprehensive income are recognised in the income
statement under \"Impairment of financial assets at fair value through other comprehensive income\", against other
comprehensive income (they do not reduce the balance sheet amount of these financial assets).
C1.5.1.3. Credit commitments, documentary credits and financial guarantees
Impairment losses associated with credit commitments, documentary credits and financial guarantees are recognised in
liabilities, under the balance \"Provisions for guarantees and other commitments\", against \"Other provisions\" (in the
income statement).
C1.5.2. Classification of financial instruments by stages
Changes in credit risk since the initial recognition
Stage 1
Stage 2
Stage 3
Classification criterion
Initial recognition
Significant increase in credit
risk since initial recognition
Impaired
Impairment losses
12-month expected credit
losses
Lifetime expected credit losses
The Group determines the expected credit losses of each operation as a result of the deterioration of credit risk since
its initial recognition. For this purpose, operations are classified into one of the following three stages:
\u2013 Stage 1: the operations in which there is no significant increase in credit risk since its initial recognition are
classified in this stage. Impairment losses associated with operations classified in this stage correspond to expected
credit losses resulting from a default event that may occur within 12 months after the reporting date (12-month
expected credit losses);
\u2013 Stage 2: the operations in which there is a significant increase in credit risk since its initial recognition (note C1.5.3)
but are not impaired (note C1.5.4) are classified in this stage. Impairment losses associated with operations
classified in this stage correspond to the expected credit losses resulting from default events that may occur over
the expected residual life of the operations (lifetime expected credit losses);
\u2013 Stage 3: impaired operations are classified in this stage. Impairment losses associated with operations classified at
this stage correspond to lifetime expected credit losses.
C1.5.3.
The assessment of existence of impairment losses in individual terms is determined through an analysis of the total
credit exposure on a case-by-case basis. For each loan considered individually significant, the Group assessed at each
balance sheet date the existence of objective evidence of impairment. In the assessment of impairment losses in
individual terms, the following factors were considered:
\u2013 total exposure of each customer towards the Group and the existence of overdue loans;
\u2013 viability of the customer\u2019s business and its capacity to generate enough cash flows to service debt obligations in the
future;
\u2013 the existence, nature and estimated value of the collaterals associated to each loan;
\u2013 significant deterioration of the customer's rating;
\u2013 the customer\u2019s available assets in liquidation or insolvency situations;
\u2013 the existence of preferential creditors;
\u2013 the amount and expected recovery term.
Whenever there is an indication that a fixed tangible asset might be impaired, its recoverable amount is estimated and
an impairment loss shall be recognised if the net value of the asset exceeds its recoverable amount. The recoverable
amount is determined as the highest between the fair value less costs to sell and its value in use calculated based on
the present value of future cash flows estimated to be obtained from the continued use of the asset and its sale at the
end of the useful life. The impairment losses of the fixed tangible assets are recognised in the income statement of the
period.
M.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-569": { "value": "Impairment losses
C1.5.1. Financial instruments subject to impairment losses recognition
The Group recognises impairment losses for expected credit losses on financial instruments recognised in the following
accounting items:
C1.5.1.1. Financial assets at amortised cost
Impairment losses on financial assets at amortised cost reduce the balance sheet value of these financial assets against
the item \"Impairment of financial assets at amortised cost\" (in the income statement).
Impairment losses on financial assets at amortised cost and debt instruments at fair value through
other comprehensive income
The determination of impairment losses on financial instruments involves judgments and estimations regarding, among
others, the following:
Significant increase in credit risk:
Impairment losses correspond to the expected losses on a 12-month for the assets in Stage 1 and the expected losses
considering the probability of a default event occurring at some point up to the maturity date of the instrument
financial assets for assets in Stages 2 and 3. An asset is classified in Stage 2 whenever there is a significant increase in
its credit risk since its initial recognition. In assessing the existence of a significant increase in credit risk, the Group
considers qualitative and quantitative information, reasonable and sustainable.
In order to comply with the Supervisors' guidelines, namely regarding to the identification and measurement of credit
risk in the context of of uncertainty associated with the current geopolitical crises, the disruption in distribution chains,
rising energy costs and inflationary pressures, the Bank proceeded to record additional impairments in relation to the
current models of collective impairment calculation (overlays).
The exercise carried out was based on an analysis of migrations from customers identified as having the highest risk for
Stage 2 and Stage 3, with the greatest impact on the corporate segment.
Definition of groups of assets with common credit risk characteristics:
When expected credit losses are measured on a collective basis, the financial instruments are grouped based on
common risk characteristics. The Group monitors the adequacy of credit risk characteristics on a regular basis to assess
whether it maintains its similarity. This procedure is necessary to ensure that, in the event of a change in the credit
risk characteristics, the asset segmentation is reviewed. This review may result in the creation of new portfolios or in
transferring assets to existing portfolios that better reflect their credit risk characteristics.
Definition of the number and relative weight of prospective information for each type of product/market and
determination of relevant prospective information:
In estimating expected credit losses, the Group uses reasonable and sustainable forecasting information that is based
on assumptions about the future evolution of different economic drivers and how each of the drivers impacts the
remaining drivers.
Probability of default:
The probability of default represents a determining factor in the measurement of expected credit losses and
corresponds to an estimation of the probability of default in each period, which is calculated based on historical data,
assumptions and expectations about future conditions.
Loss given default:
It corresponds to a loss estimation in a default scenario. It is based on the difference between the contractual cash
flows and those that the Bank expects to receive, through the cash flows generated by the customers' business or credit
collaterals. The estimation of loss given default is based on, among other aspects, the different recovery scenarios,
historical information, the costs involved in the recovery process and the estimation of the valuation of collaterals
associated with credit operations.
Y6.3.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-571": { "value": "Classification of financial instruments by stages
Changes in credit risk since the initial recognition
Stage 1
Stage 2
Stage 3
Classification criterion
Initial recognition
Significant increase in credit
risk since initial recognition
Impaired
Impairment losses
12-month expected credit
losses
Lifetime expected credit losses
The Group determines the expected credit losses of each operation as a result of the deterioration of credit risk since
its initial recognition. For this purpose, operations are classified into one of the following three stages:
\u2013 Stage 1: the operations in which there is no significant increase in credit risk since its initial recognition are
classified in this stage. Impairment losses associated with operations classified in this stage correspond to expected
credit losses resulting from a default event that may occur within 12 months after the reporting date (12-month
expected credit losses);
\u2013 Stage 2: the operations in which there is a significant increase in credit risk since its initial recognition (note C1.5.3)
but are not impaired (note C1.5.4) are classified in this stage. Impairment losses associated with operations
classified in this stage correspond to the expected credit losses resulting from default events that may occur over
the expected residual life of the operations (lifetime expected credit losses);
\u2013 Stage 3: impaired operations are classified in this stage. Impairment losses associated with operations classified at
this stage correspond to lifetime expected credit losses.
C1.5.3. Significant increase in credit risk (SICR)
Significant increase in credit risk (SICR) is determined according to a set of mostly quantitative, but also qualitative
criteria. These criteria are mainly based on the risk grades of customers, according to the Bank's Rating Master Scale,
and on its evolution, in order to detect significant increases in Probability of Default (PD), complemented by other
information regarding the customers\u2019 behaviour towards the financial system.
C1.5.4.
Credit Risk
Credit granting is based on a prior classification of the customers\u2019 risk and on a thorough assessment of the level of
protection provided by the underlying collateral. In order to do so, a single risk-notation system has been introduced,
the Rating Master Scale, based on the expected probability of default, allowing greater discrimination in the
assessment of the customers and better establishment of the hierarchies of the associated risk.
The Rating Master Scale also identifies those customers that show a worsening credit capacity and, in particular, those
classified as being in default. All rating and scoring models used by the Group have been duly calibrated for the Rating
Master Scale. The protection-level concept has been introduced as a crucial element of evaluation of the effectiveness
of the collateral in credit-risk mitigation, leading to a more active collateralization of loans and to a better adequacy
of pricing regarding the risk incurred.
The gross Group\u2019s exposure to credit risk (original exposure) is presented in the following table:
(Thousands of euros)
Risk items
2023
2022
(restated)
Central Governments or Central Banks
26,982,937
22,898,387
Regional Governments or Local Authorities
1,210,789
1,012,723
Administrative and non-profit Organisations
1,098,748
412,223
Multilateral Development Banks
227,711
114,633
Other Credit Institutions
3,283,571
3,279,977
Retail and Corporate customers
67,789,725
69,798,319
Other items (*)
11,597,622
10,153,154
112,191,103
107,669,416
Note: gross exposures of impairment and amortization, in accordance with the prudential consolidation perimeter. Includes securitization
positions.
(*) In addition to positions in equity, collective investment and securitization, the Other items contain other assets subject to credit risk in
accordance with Article 156 of the CRR.
The evaluation of the risk associated to the loan portfolio and quantification of the respective losses expected
considers the following methodological notes.
a) Collaterals and Guarantees
On the risk evaluation of an operation or of a group of operations, the mitigation elements of credit risk associated to
those operations are considered in accordance with the rules and internal procedures that fulfil the requirements
defined by the regulations in force, also reflecting the experience of the loan's recovery areas and the Legal
Department opinions with respect to the entailment of the various mitigation instruments.
The collaterals and the relevant guarantees can be aggregated in the following categories:
- financial collaterals, real estate collaterals or other collaterals;
- receivables;
- first demand guarantees, issued by banks or other entities with Risk Grade 7 or better on the Rating Master Scale;
- personal guarantees when the persons are classified with Risk Grade 7 or better;
- credit derivatives. \u00a0
The financial collaterals accepted are those that are traded in a recognised stock exchange, i.e., on an organized
secondary market, liquid and transparent, with public bid-ask prices, located in countries of the European Union,
United Kingdom, United States, Japan, Canada, Hong Kong or Switzerland.
In this context, it is important to refer that the Bank\u2019s shares are not accepted as financial collaterals of new credit
operations and are only accepted for the reinforcement of guarantees of existing credit operations, or in restructuring
process associated to credit recoveries.
Regarding guarantees and credit derivatives, it can be applied the substitution principle by replacing the Risk Grade of
the client by the Risk Grade of the guarantor, (if the Risk of Grade Degree of the guarantor is better than the client\u2019s),
when the protection is formalized through:
- State, Financial Institutions or Mutual Guarantee Societies guarantees exist;
- personal guarantees (or, in the case of Leasing, there is a recovery agreement of the provider);
- Credit derivatives;
- Formalization of the clause of the contracting party in leasing contracts in which it is an entity that is in a relationship
of dominion or group with the lessee.
An internal level of protection is attributed to all credit operations at the moment of the credit granting decision,
considering the credit amount as well as the value and type of the collaterals involved. The protection level
corresponds to the loss reduction in case of default that is linked to the various collateral types, considering their
market value and the amount of the associated exposure.
In the case of financial collaterals, adjustments are made to the protection value by the use of a set of haircuts, in
order to reflect the price volatility of the financial instruments.
In the case of real estate mortgages, the initial appraisal of the real estate value is done during the credit analysis and
before decision process.
Either the initial evaluations or the subsequent reviews carried out are performed by external expert valuers and the
ratification process is centralized in the Appraisals Unit, which is independent of the clients\u2019 areas.
In any case, they are the subject to a written report, in a standardized digital format, based on a group of predefined
methods that are aligned with the sector practices \u2013 income, replacement cost and/or market comparative -
mentioning the obtained value, for both the market value and for purposes of the mortgage guarantee, depending on
the type of the real estate. The evaluations have a declaration/certification of an expert valuer since 2008, as
requested by Regulation (EU) 575/2013 and Law 153/2015 of 14 September and are ratified by the Appraisals Unit.
Regarding residential real estate, after the initial valuation and in accordance with Notice n. 5/2006 of Bank of
Portugal and e CRR 575/2013, the Bank monitors the respective values through market indexes. If the index is lower
than 0.9, the Bank revaluates choosing one of the following two methods:
i) - depreciation of the property by direct application of the index, if the amount owed does not exceed Euros 300,000;
ii) - review of the property value by external valuators, depending on the value of the credit operation, and in
accordance with the established standards from ECB and Bank of Portugal.
For all non-residential real estate, the Bank also monitors its values through market indexes and to the regular
valuation reviews with the minimum periodicities in accordance with the Regulation (EU) 575/2013, in the case of
offices, commercial spaces, warehouses and industrial premises.
For all real estate (residential or non-residential) for which the monitoring result in significant devaluation of the real
estate value (more than 10%), a valuation review is subsequently carried out by an expert valuer, preserving the
referred i) above.
For the remaining real estate (land or countryside buildings for example) there are no market indexes available for the
monitoring of appraisal values, after the initial valuations. Therefore, for these cases and in accordance with the
minimum periodicity established for the monitoring and reviewing of this type of real estate, valuation reviews are
carried out by expert valuers.
The indexes currently used are supplied to the Bank by an external specialized entity that, for more than a decade, has
been collecting and processing the data upon which the indexes are built.
In the case of financial collaterals, their market value is daily and automatically updated, through the IT connection
between the collaterals management system and the relevant financial markets data.
b) Risk grades
Credit granting is based on the previous risk assessment of clients and also on a rigorous assessment of the protection
level provided by the underlying collaterals. For this purpose, a single risk grading system is used - the Rating Master
Scale - based on Probability of Default (PD), allowing for a greater discriminating power in clients' assessment and for a
better hierarchy of the associated risk. The Rating Master Scale also allows to identify clients that show signs of
degradation in their credit capacity and, in particular, those that are classified in a default situation. All rating systems
and models used by the Group were calibrated for the Rating Master Scale.
Aiming at an adequate assessment of credit risk, the Group defined a set of macro segments and segments which are
treated through different rating systems and models that relate the internal risk grades and the clients\u2019 PD, ensuring a
risk assessment that considers the clients\u2019 specific features in terms of their respectively risk profiles.
The assessment made by these rating systems and models result in the risk grades of the Master Scale, that has fifteen
grades, where the last three correspond to relevant downgrades of the clients\u2019 credit quality and are referred to by
\u201cprocedural risk grades\u201d: 13, 14 and 15, that correspond, in this order, to situations of increased severity in terms
default, as risk grade 15 is a Default situation.
The non-procedural risk grades are attributed by the rating systems through automatic decision models or by the Rating
Division \u2013 a unit which is independent from the credit analysis and decision areas and bodies- and are reviewed/updated
periodically or whenever this is justified by events.
The models within the various rating systems are regularly subject to validation, made by the Models Validation and
Monitoring Office, which is independent from the units that are responsible for the development and maintenance of
the rating models.
The conclusions of the validations by the Models Validation and Monitoring Office, as well the respective
recommendations and proposal for changes and/or improvements, are analysed and ratified by a specific Validation
Committee, composed in accordance to the type of model analysed. The proposals for models\u2019 changes originated by
the Validation Committee are submitted to the approval of the Risk Committee.
The following table lists the equivalence between the internal rating levels (Rating Master Scale) and the external
ratings of the international rating agencies:
Internal risk grade
External ratings
Fitch
S&P
Moody's
DBRS
1
AAA
AAA
Aaa
AAA
1
AA+
AA+
Aa1
AA (high)
2
AA
AA
Aa2
AA
2
AA-
AA-
Aa3
AA (low)
3
A+
A+
A1
A (high)
3
A
A
A2
A
4
A-
A-
A3
A (low)
4
BBB+
BBB+
Baa1
BBB (high)
5
BBB
BBB
Baa2
BBB
6
BBB-
BBB-
Baa3
BBB (low)
7
BB+
BB+
Ba1
BB (high)
8
BB
BB
Ba2
BB
9
BB-
BB-
Ba3
BB (low)
10
B+
B+
B1
B (high)
11
B
B
B2
B
12
\u2264 B-
\u2264 B-
\u2264 B3
\u2264 B-
c) Impairment and Write-offs
The credit impairment calculation as at 31\u00a0December 2023 and 2022 integrates the general principles defined in
International Financial Reporting Standards (IFRS 9) and the guidelines issued by the Bank of Portugal through Circular
Letter CC/2018/00000062, in order to align the calculation process used in the Group with the best international
practices in this area.
As at 31\u00a0December 2023, the financial instruments subject to impairment requirements under IFRS 9, (do not include
equity instruments as accounting policy 1.C1.1.2), analysed by stage, are detailed in the following tables:
(Thousands of euros)
Category
2023
Gross exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
908,701
\u2014
\u2014
\u2014
908,701
Loans and advances to customers (note 22)
45,651,670
7,290,622
1,914,768
30,749
54,887,809
Debt instruments (note 23)
17,536,547
62,872
5,105
\u2014
17,604,524
Debt instruments at fair value through other
comprehensive income (note 24) (*)
10,809,872
\u2014
1,150
\u2014
10,811,022
Guarantees and other commitments (note 45) (**)
14,934,354
1,433,594
336,497
2,574
16,707,019
Total
89,841,144
8,787,088
2,257,520
33,323
100,919,075
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments
(Thousands of euros)
Category
2023
Impairment losses
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
224
\u2014
\u2014
\u2014
224
Loans and advances to customers (note 22)
268,948
291,752
1,007,481
14,469
1,582,650
Debt instruments (note 23)
23,066
797
1,525
\u2014
25,388
Debt instruments at fair value through other
comprehensive income (note 24) (*)
\u2014
\u2014
1,150
\u2014
1,150
Guarantees and other commitments (note 39)
12,880
14,686
94,008
\u2014
121,574
Total
305,118
307,235
1,104,164
14,469
1,730,986
(Thousands of euros)
Category
2023
Net exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
908,477
\u2014
\u2014
\u2014
908,477
Loans and advances to customers (note 22)
45,382,722
6,998,870
907,287
16,280
53,305,159
Debt instruments (note 23)
17,513,481
62,075
3,580
\u2014
17,579,136
Debt instruments at fair value through other
comprehensive income (note 24) (*)
10,809,872
\u2014
\u2014
\u2014
10,809,872
Guarantees and other commitments (note 45) (**)
14,921,474
1,418,908
242,489
2,574
16,585,445
Total
89,536,026
8,479,853
1,153,356
18,854
99,188,089
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments.
As at 31\u00a0December 2022, the financial instruments subject to impairment requirements under IFRS 9 (do not include
equity instruments as accounting policy 1.C1.1.2), analysed by stage, are detailed in the following tables:
(Thousands of euros)
Category
2022 (restated)
Gross exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
964,296
\u2014
\u2014
\u2014
964,296
Loans and advances to customers (note 22)
46,395,996
7,564,235
2,170,979
46,956
56,178,166
Debt instruments (note 23)
12,990,232
55,787
3,802
\u2014
13,049,821
Debt instruments at fair value through other
comprehensive income (note 24) (*)
7,434,152
\u2014
1,067
\u2014
7,435,219
Guarantees and other commitments (note 45) (**)
14,303,231
1,768,595
364,691
921
16,437,438
Total
82,087,907
9,388,617
2,540,539
47,877
94,064,940
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments.
(Thousands of euros)
Category
2022 (restated)
Impairment losses
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
862
\u2014
\u2014
\u2014
862
Loans and advances to customers (note 22)
214,470
284,448
985,557
17,898
1,502,373
Debt instruments (note 23)
13,409
720
110
\u2014
14,239
Debt instruments at fair value through other
comprehensive income (note 24) (*)
\u2014
\u2014
1,067
\u2014
1,067
Guarantees and other commitments (note 39)
11,307
14,893
84,435
119
110,754
Total
240,048
300,061
1,071,169
18,017
1,629,295
(Thousands of euros)
Category
2022 (restated)
Net exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
963,434
\u2014
\u2014
\u2014
963,434
Loans and advances to customers (note 22)
46,181,526
7,279,787
1,185,422
29,058
54,675,793
Debt instruments (note 23)
12,976,823
55,067
3,692
\u2014
13,035,582
Debt instruments at fair value through other
comprehensive income (note 24) (*)
7,434,152
\u2014
\u2014
\u2014
7,434,152
Guarantees and other commitments (note 45) (**)
14,291,924
1,753,702
280,256
802
16,326,684
Total
81,847,859
9,088,556
1,469,370
29,860
92,435,645
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1 C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments
The maximum exposure to credit risk of financial assets not subject to impairment requirements is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Financial assets held for trading (note 24)
Debt instruments
355,526
338,813
Derivatives
437,155
394,183
Financial assets designated at fair value through profit or loss - Debt instruments (note 24)
32,004
\u2014
Financial assets not held for trading mandatorily at fair value through profit or loss
Debt instruments (note 24)
280,558
311,404
Hedging derivatives (note 25)
40,628
59,703
Total
1,145,871
1,104,103
- In the case of financial assets, excluding derivatives, it is considered that its credit risk exposure is equal to its book value;
- In the case of derivatives, the maximum exposure to credit risk is its market value, plus its potential risk (\"add-on\").
During 2023, the changes occurred in Loans and advances to customers - gross amount are as follows:
(Thousands of euros)
2023
Financial assets at amortised cost - Loans and advances to customers -
Gross amount
Stage 1
Stage 2
Stage 3
POCI
Total
Gross amount as at 1 January
46,395,996
7,564,235
2,170,979
46,956
56,178,166
Changes in gross book value:
Transfers from stage 1 to stage 2
(2,100,816)
2,100,816
\u2014
\u2014
\u2014
Transfers from stage 1 to stage 3
(285,020)
\u2014
285,020
\u2014
\u2014
Transfers from stage 2 to stage 1
1,889,217
(1,889,217)
\u2014
\u2014
\u2014
Transfers from stage 2 to stage 3
\u2014
(415,277)
415,277
\u2014
\u2014
Transfers from stage 3 to stage 1
36,667
\u2014
(36,667)
\u2014
\u2014
Transfers from stage 3 to stage 2
\u2014
291,025
(291,025)
\u2014
\u2014
Write-offs
(811)
(2,261)
(186,529)
(2,872)
(192,473)
Net balance of new financial assets and derecognised\u00a0
financial assets and other variations
(283,563)
(358,699)
(442,287)
(13,335)
(1,097,884)
Gross amount at the end of the year
45,651,670
7,290,622
1,914,768
30,749
54,887,809
During 2023, the changes occurred in Loans and advances to customers - impairment are as follows:
(Thousands of euros)
2023
Financial assets at amortised cost - Loans and advances to customers
impairment
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment losses as at 1 January
214,470
284,448
985,557
17,898
1,502,373
Change in impairment losses:
Transfer to Stage 1
64,091
(55,424)
(8,587)
(80)
\u2014
Transfer to Stage 2
(12,326)
129,062
(116,736)
\u2014
\u2014
Transfer to Stage 3
(4,882)
(36,867)
42,105
(356)
\u2014
Changes occurred due to changes in credit risk
(26,368)
(45,099)
376,483
2,155
307,171
Write-offs
(811)
(2,261)
(186,529)
(2,872)
(192,473)
Changes due to new financial assets and derecognised
financial assets and other variations
34,774
17,893
(84,812)
(2,276)
(34,421)
Impairment losses at the end of the year
268,948
291,752
1,007,481
14,469
1,582,650
During 2022, the changes occurred in Loans and advances to customers - gross amount are as follows:
(Thousands of euros)
2022 (restated)
Financial assets at amortised cost - Loans and advances to customers - Gross
amount
Stage 1
Stage 2
Stage 3
POCI
Total
Gross amount as at 1 January
46,113,653
7,964,052
2,686,267
57,713
56,821,685
Changes in gross book value:
Transfers from stage 1 to stage 2
(2,111,726)
2,111,726
\u2014
\u2014
\u2014
Transfers from stage 1 to stage 3
(258,614)
\u2014
258,614
\u2014
\u2014
Transfers from stage 2 to stage 1
1,946,027
(1,946,027)
\u2014
\u2014
\u2014
Transfers from stage 2 to stage 3
\u2014
(631,859)
631,859
\u2014
\u2014
Transfers from stage 3 to stage 1
26,176
\u2014
(26,176)
\u2014
\u2014
Transfers from stage 3 to stage 2
\u2014
174,249
(174,249)
\u2014
\u2014
Write-offs
(922)
(2,996)
(440,667)
(13,820)
(458,405)
Net balance of new financial assets and
derecognised financial assets and other variations
681,402
(104,910)
(764,669)
3,063
(185,114)
Gross amount at the end of the year
46,395,996
7,564,235
2,170,979
46,956
56,178,166
During 2022, the changes occurred in Loans and advances to customers - impairment are as follows:
(Thousands of euros)
2022 (restated)
Financial assets at amortised cost - Loans and advances to customers
impairment
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment losses as at 1 January
207,328
288,642
1,336,612
16,702
1,849,284
Change in impairment losses:
Transfer to Stage 1
50,530
(50,139)
(4,778)
4,387
\u2014
Transfer to Stage 2
(14,016)
47,552
(33,614)
78
\u2014
Transfer to Stage 3
(4,314)
(55,508)
58,004
1,818
\u2014
Changes occurred due to changes in credit risk
(51,425)
25,711
196,355
4,816
175,457
Write-offs
(922)
(2,996)
(440,667)
(13,820)
(458,405)
Changes due to new financial assets and derecognised
financial assets and other variations
27,289
31,186
(126,355)
3,917
(63,963)
Impairment losses at the end of the year
214,470
284,448
985,557
17,898
1,502,373
Financial assets modified during the period that have not resulted in derecognition (with impairment losses based on
expected lifetime losses) are analysed as follows:
(Thousands of euros)
Financial assets modified
2023
2022
(restated)
Amortised cost before changes
457,237
396,049
Impairment losses before changes
(61,984)
(47,337)
Net amortised cost before changes
395,253
348,712
Net gain/loss arising on changes
(9,926)
(32,993)
Net amortised cost after changes
385,327
315,719
The financial assets changed since the initial recognition at a time when the impairment loss was measured based on
the expected credit losses lifetime, are analysed as follows:
(Thousands of euros)
Financial assets changed
2023
2022
(restated)
Amortised cost of financial assets for which credit losses expected to go from \"lifetime\" to 12 months
106,778
65,942
As at 31\u00a0December 2023, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by segment and stage, are as follows:
(Thousands of euros)
2023
Stage 2
Stage 3
Segment
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <=
90 days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Individuals-Mortgage
24,913,323
2,317,570
217,742
106,027
2,641,339
269,211
149,473
418,684
11,247
27,984,593
Individuals-Other
8,455,374
996,879
138,926
50,292
1,186,097
256,328
320,458
576,786
14,263
10,232,520
Financial Companies
3,275,624
53,152
42
1
53,195
46,841
10
46,851
\u2014
3,375,670
Non-financial companies -
Corporate
10,825,177
716,737
13,734
1,961
732,432
198,010
29,407
227,417
2,209
11,787,235
Non-financial companies - SME-
Corporate
8,777,780
2,327,698
13,722
3,902
2,345,322
582,545
102,199
684,744
2,959
11,810,805
Non-financial companies -SME-
Retail
6,672,112
1,429,586
45,468
19,621
1,494,675
161,067
138,539
299,606
2,645
8,469,038
Non-financial companies -
Other
515,637
22,791
4
16
22,811
269
2,010
2,279
\u2014
540,727
Other loans
15,596,245
308,938
2,266
13
311,217
1
2
3
\u2014
15,907,465
Total
79,031,272
8,173,351
431,904
181,833
8,787,088
1,514,272
742,098
2,256,370
33,323
90,108,053
Impairment
Individuals-Mortgage
30,606
21,789
4,435
5,736
31,960
59,673
54,599
114,272
5,376
182,214
Individuals-Other
65,165
42,205
23,950
13,973
80,128
104,578
211,238
315,816
9,093
470,202
Financial Companies
23,475
1,381
3
\u2014
1,384
34,559
6
34,565
\u2014
59,424
Non-financial companies -
Corporate
36,533
25,712
247
312
26,271
91,151
20,578
111,729
\u2014
174,533
Non-financial companies - SME-
Corporate
49,075
78,177
1,490
760
80,427
313,575
59,279
372,854
\u2014
502,356
Non-financial companies -SME-
Retail
83,013
75,676
4,281
4,152
84,109
92,830
59,457
152,287
\u2014
319,409
Non-financial companies -
Other
370
74
\u2014
2
76
8
1,482
1,490
\u2014
1,936
Other loans
16,881
2,763
116
1
2,880
\u2014
1
1
\u2014
19,762
Total
305,118
247,777
34,522
24,936
307,235
696,374
406,640
1,103,014
14,469
1,729,836
Net exposure
Individuals-Mortgage
24,882,717
2,295,781
213,307
100,291
2,609,379
209,538
94,874
304,412
5,871
27,802,379
Individuals-Other
8,390,209
954,674
114,976
36,319
1,105,969
151,750
109,220
260,970
5,170
9,762,318
Financial Companies
3,252,149
51,771
39
1
51,811
12,282
4
12,286
\u2014
3,316,246
Non-financial companies -
Corporate
10,788,644
691,025
13,487
1,649
706,161
106,859
8,829
115,688
2,209
11,612,702
Non-financial companies - SME-
Corporate
8,728,705
2,249,521
12,232
3,142
2,264,895
268,970
42,920
311,890
2,959
11,308,449
Non-financial companies -SME-
Retail
6,589,099
1,353,910
41,187
15,469
1,410,566
68,237
79,082
147,319
2,645
8,149,629
Non-financial companies -
Other
515,267
22,717
4
14
22,735
261
528
789
\u2014
538,791
Other loans
15,579,364
306,175
2,150
12
308,337
1
1
2
\u2014
15,887,703
Total
78,726,154
7,925,574
397,382
156,897
8,479,853
817,898
335,458
1,153,356
18,854
88,378,217
% of impairment coverage
Individuals-Mortgage
0.12%
0.94%
2.04%
5.41%
1.21%
22.17%
36.53%
27.29%
47.80%
0.65%
Individuals-Other
0.77%
4.23%
17.24%
27.78%
6.76%
40.80%
65.92%
54.75%
63.75%
4.60%
Financial Companies
0.72%
2.60%
7.14%
0.00%
2.60%
73.78%
60.00%
73.78%
0.00%
1.76%
Non-financial companies -
Corporate
0.34%
3.59%
1.80%
15.91%
3.59%
46.03%
69.98%
49.13%
0.00%
1.48%
Non-financial companies - SME-
Corporate
0.56%
3.36%
10.86%
19.48%
3.43%
53.83%
58.00%
54.45%
0.00%
4.25%
Non-financial companies -SME-
Retail
1.24%
5.29%
9.42%
21.16%
5.63%
57.63%
42.92%
50.83%
0.00%
3.77%
Non-financial companies -
Other
0.07%
0.32%
0.00%
12.50%
0.33%
2.97%
73.73%
65.38%
0.00%
0.36%
Other loans
0.11%
0.89%
5.12%
7.69%
0.93%
0.00%
50.00%
33.33%
0.00%
0.12%
Total
0.39%
3.03%
7.99%
13.71%
3.50%
45.99%
54.80%
48.88%
43.42%
1.92%
As at 31\u00a0December 2022, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by segment and stage, are as follows:
(Thousands of euros)
2022 (restated)
Stage 2
Stage 3
Segment
Stage 1
No delays
Days past
due <=
30 days
Days past
due > 30
days
Total
Days past
due <=
90 days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Individuals-Mortgage
25,213,881
2,320,624
151,906
89,857
2,562,387
284,276
142,817
427,093
10,525
28,213,886
Individuals-Other
7,614,004
958,714
118,276
42,895
1,119,885
252,456
284,486
536,942
19,621
9,290,452
Financial Companies
3,569,566
80,945
61
\u2014
81,006
72,980
1,494
74,474
7,545
3,732,591
Non-financial companies -
Corporate
9,621,830
700,538
660
13
701,211
204,523
91,575
296,098
\u2014
10,619,139
Non-financial companies - SME-
Corporate
10,238,522
2,798,567
5,339
2,559
2,806,465
761,101
95,135
856,236
6,733
13,907,956
Non-financial companies -SME-
Retail
6,024,603
1,683,407
30,867
14,532
1,728,806
231,377
117,109
348,486
3,453
8,105,348
Non-financial companies -
Other
558,812
46,613
2
\u2014
46,615
113
\u2014
113
\u2014
605,540
Other loans
11,812,537
342,203
39
\u2014
342,242
\u2014
30
30
\u2014
12,154,809
Total
74,653,755
8,931,611
307,150
149,856
9,388,617
1,806,826
732,646
2,539,472
47,877
86,629,721
Impairment
Individuals-Mortgage
15,380
23,667
4,083
5,262
33,012
56,519
56,440
112,959
5,452
166,803
Individuals-Other
52,559
31,277
18,676
11,224
61,177
104,108
180,916
285,024
12,436
411,196
Financial Companies
8,491
1,701
4
\u2014
1,705
36,543
1,245
37,788
\u2014
47,984
Non-financial companies -
Corporate
27,484
18,218
22
\u2014
18,240
87,043
43,500
130,543
\u2014
176,267
Non-financial companies - SME-
Corporate
46,296
81,667
506
660
82,833
298,455
46,890
345,345
129
474,603
Non-financial companies -SME-
Retail
78,239
92,784
4,090
3,226
100,100
106,533
51,896
158,429
\u2014
336,768
Non-financial companies -
Other
512
129
\u2014
\u2014
129
5
\u2014
5
\u2014
646
Other loans
11,087
2,860
5
\u2014
2,865
\u2014
9
9
\u2014
13,961
Total
240,048
252,303
27,386
20,372
300,061
689,206
380,896
1,070,102
18,017
1,628,228
Net exposure
Individuals-Mortgage
25,198,501
2,296,957
147,823
84,595
2,529,375
227,757
86,377
314,134
5,073
28,047,083
Individuals-Other
7,561,445
927,437
99,600
31,671
1,058,708
148,348
103,570
251,918
7,185
8,879,256
Financial Companies
3,561,075
79,244
57
\u2014
79,301
36,437
249
36,686
7,545
3,684,607
Non-financial companies -
Corporate
9,594,346
682,320
638
13
682,971
117,480
48,075
165,555
\u2014
10,442,872
Non-financial companies - SME-
Corporate
10,192,226
2,716,900
4,833
1,899
2,723,632
462,646
48,245
510,891
6,604
13,433,353
Non-financial companies -SME-
Retail
5,946,364
1,590,623
26,777
11,306
1,628,706
124,844
65,213
190,057
3,453
7,768,580
Non-financial companies -
Other
558,300
46,484
2
\u2014
46,486
108
\u2014
108
\u2014
604,894
Other loans
11,801,450
339,343
34
\u2014
339,377
\u2014
21
21
\u2014
12,140,848
Total
74,413,707
8,679,308
279,764
129,484
9,088,556
1,117,620
351,750
1,469,370
29,860
85,001,493
% of impairment coverage
Individuals-Mortgage
0.06%
1.02%
2.69%
5.86%
1.29%
19.88%
39.52%
26.45%
51.80%
0.59%
Individuals-Other
0.69%
3.26%
15.79%
26.17%
5.46%
41.24%
63.59%
53.08%
63.38%
4.43%
Financial Companies
0.24%
2.10%
6.56%
0.00%
2.10%
50.07%
83.33%
50.74%
0.00%
1.29%
Non-financial companies -
Corporate
0.29%
2.60%
3.33%
0.00%
2.60%
42.56%
47.50%
44.09%
0.00%
1.66%
Non-financial companies - SME-
Corporate
0.45%
2.92%
9.48%
25.79%
2.95%
39.21%
49.29%
40.33%
1.92%
3.41%
Non-financial companies -SME-
Retail
1.30%
5.51%
13.25%
22.20%
5.79%
46.04%
44.31%
45.46%
0.00%
4.15%
Non-financial companies -
Other
0.09%
0.28%
0.00%
0.00%
0.28%
4.42%
0.00%
4.42%
0.00%
0.11%
Other loans
0.09%
0.84%
12.82%
0.00%
0.84%
0.00%
30.00%
30.00%
0.00%
0.11%
Total
0.32%
2.82%
8.92%
13.59%
3.20%
38.14%
51.99%
42.14%
37.63%
1.88%
As at 31\u00a0December 2023, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by sector of activity and stage, are as follows:
(Thousands of euros)
2023
Stage 2
Stage 3
Sector of activity
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <= 90
days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Loans to individuals
33,368,697
3,314,449
356,668
156,319
3,827,436
525,539
469,931
995,470
25,510
38,217,113
Non-financial companies -
Trade
5,299,609
735,392
16,114
3,998
755,504
91,961
44,149
136,110
604
6,191,827
Non-financial companies -
Construction
2,346,987
583,617
7,508
2,523
593,648
272,067
30,830
302,897
4,141
3,247,673
Non-financial companies -
Manufacturing industries
5,596,512
934,013
14,368
7,458
955,839
137,257
71,289
208,546
560
6,761,457
Non-financial companies -
Other activities
2,265,462
372,268
12,087
954
385,309
56,211
15,197
71,408
50
2,722,229
Non-financial companies -
Other services
11,282,136
1,871,522
22,851
10,567
1,904,940
384,395
110,690
495,085
2,458
13,684,619
Other Services /Other
activities
18,871,869
362,090
2,308
14
364,412
46,842
12
46,854
\u2014
19,283,135
Total
79,031,272
8,173,351
431,904
181,833
8,787,088
1,514,272
742,098
2,256,370
33,323
90,108,053
Impairment
Loans to individuals
95,771
63,994
28,385
19,709
112,088
164,251
265,837
430,088
14,469
652,416
Non-financial companies -
Trade
28,456
25,648
863
1,084
27,595
40,537
19,292
59,829
\u2014
115,880
Non-financial companies -
Construction
15,896
13,624
978
645
15,247
91,537
17,927
109,464
\u2014
140,607
Non-financial companies -
Manufacturing industries
54,770
57,777
1,909
1,842
61,528
53,536
35,826
89,362
\u2014
205,660
Non-financial companies -
Other activities
10,608
18,371
771
170
19,312
38,378
8,562
46,940
\u2014
76,860
Non-financial companies -
Other services
59,261
64,219
1,497
1,485
67,201
273,576
59,189
332,765
\u2014
459,227
Other Services /Other
activities
40,356
4,144
119
1
4,264
34,559
7
34,566
\u2014
79,186
Total
305,118
247,777
34,522
24,936
307,235
696,374
406,640
1,103,014
14,469
1,729,836
Net exposure
Loans to individuals
33,272,926
3,250,455
328,283
136,610
3,715,348
361,288
204,094
565,382
11,041
37,564,697
Non-financial companies -
Trade
5,271,153
709,744
15,251
2,914
727,909
51,424
24,857
76,281
604
6,075,947
Non-financial companies -
Construction
2,331,091
569,993
6,530
1,878
578,401
180,530
12,903
193,433
4,141
3,107,066
Non-financial companies -
Manufacturing industries
5,541,742
876,236
12,459
5,616
894,311
83,721
35,463
119,184
560
6,555,797
Non-financial companies -
Other activities
2,254,854
353,897
11,316
784
365,997
17,833
6,635
24,468
50
2,645,369
Non-financial companies -
Other services
11,222,875
1,807,303
21,354
9,082
1,837,739
110,819
51,501
162,320
2,458
13,225,392
Other Services /Other
activities
18,831,513
357,946
2,189
13
360,148
12,283
5
12,288
\u2014
19,203,949
Total
78,726,154
7,925,574
397,382
156,897
8,479,853
817,898
335,458
1,153,356
18,854
88,378,217
% of impairment coverage
Loans to individuals
0.29%
1.93%
7.96%
12.61%
2.93%
31.25%
56.57%
43.20%
56.72%
1.71%
Non-financial companies -
Trade
0.54%
3.49%
5.36%
27.11%
3.65%
44.08%
43.70%
43.96%
0.00%
1.87%
Non-financial companies -
Construction
0.68%
2.33%
13.03%
25.56%
2.57%
33.65%
58.15%
36.14%
0.00%
4.33%
Non-financial companies -
Manufacturing industries
0.98%
6.19%
13.29%
24.70%
6.44%
39.00%
50.25%
42.85%
0.00%
3.04%
Non-financial companies -
Other activities
0.47%
4.93%
6.38%
17.82%
5.01%
68.27%
56.34%
65.73%
0.00%
2.82%
Non-financial companies -
Other services
0.53%
3.43%
6.55%
14.05%
3.53%
71.17%
53.47%
67.21%
0.00%
3.36%
Other Services /Other
activities
0.21%
1.14%
5.16%
7.14%
1.17%
73.78%
58.33%
73.77%
0.00%
0.41%
Total
0.39%
3.03%
7.99%
13.71%
3.50%
45.99%
54.80%
48.88%
43.42%
1.92%
As at 31\u00a0December 2022, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by sector of activity and stage, are as follows:
(Thousands of euros)
2022 (restated)
Stage 2
Stage 3
Sector of activity
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <= 90
days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Loans to individuals
32,827,885
3,279,338
270,182
132,752
3,682,272
536,732
427,303
964,035
30,146
37,504,338
Non-financial companies -
Trade
5,312,463
827,990
9,921
4,283
842,194
91,204
45,688
136,892
4,715
6,296,264
Non-financial companies -
Construction
2,010,021
771,490
3,040
1,033
775,563
363,418
32,791
396,209
1,851
3,183,644
Non-financial companies -
Manufacturing industries
5,836,145
1,013,888
9,380
4,983
1,028,251
162,228
117,804
280,032
928
7,145,356
Non-financial companies -
Other activities
2,107,745
395,981
3,587
1,007
400,575
101,252
17,354
118,606
44
2,626,970
Non-financial companies -
Other services
11,177,393
2,219,776
10,940
5,798
2,236,514
479,012
90,182
569,194
2,648
13,985,749
Other Services /Other
activities
15,382,103
423,148
100
\u2014
423,248
72,980
1,524
74,504
7,545
15,887,400
Total
74,653,755
8,931,611
307,150
149,856
9,388,617
1,806,826
732,646
2,539,472
47,877
86,629,721
Impairment
Loans to individuals
67,939
54,944
22,759
16,486
94,189
160,627
237,356
397,983
17,888
577,999
Non-financial companies -
Trade
22,306
26,555
1,168
1,110
28,833
35,530
20,294
55,824
129
107,092
Non-financial companies -
Construction
11,517
16,055
551
288
16,894
154,391
18,769
173,160
\u2014
201,571
Non-financial companies -
Manufacturing industries
54,925
54,821
1,293
1,258
57,372
65,474
58,761
124,235
\u2014
236,532
Non-financial companies -
Other activities
7,701
15,667
529
154
16,350
44,356
8,459
52,815
\u2014
76,866
Non-financial companies -
Other services
56,082
79,700
1,077
1,076
81,853
192,285
36,003
228,288
\u2014
366,223
Other Services /Other
activities
19,578
4,561
9
\u2014
4,570
36,543
1,254
37,797
\u2014
61,945
Total
240,048
252,303
27,386
20,372
300,061
689,206
380,896
1,070,102
18,017
1,628,228
Net exposure
Loans to individuals
32,759,946
3,224,394
247,423
116,266
3,588,083
376,105
189,947
566,052
12,258
36,926,339
Non-financial companies -
Trade
5,290,157
801,435
8,753
3,173
813,361
55,674
25,394
81,068
4,586
6,189,172
Non-financial companies -
Construction
1,998,504
755,435
2,489
745
758,669
209,027
14,022
223,049
1,851
2,982,073
Non-financial companies -
Manufacturing industries
5,781,220
959,067
8,087
3,725
970,879
96,754
59,043
155,797
928
6,908,824
Non-financial companies -
Other activities
2,100,044
380,314
3,058
853
384,225
56,896
8,895
65,791
44
2,550,104
Non-financial companies -
Other services
11,121,311
2,140,076
9,863
4,722
2,154,661
286,727
54,179
340,906
2,648
13,619,526
Other Services /Other
activities
15,362,525
418,587
91
\u2014
418,678
36,437
270
36,707
7,545
15,825,455
Total
74,413,707
8,679,308
279,764
129,484
9,088,556
1,117,620
351,750
1,469,370
29,860
85,001,493
% of impairment coverage
Loans to individuals
0.21%
1.68%
8.42%
12.42%
2.56%
29.93%
55.55%
41.28%
59.34%
1.54%
Non-financial companies -
Trade
0.42%
3.21%
11.77%
25.92%
3.42%
38.96%
44.42%
40.78%
2.74%
1.70%
Non-financial companies -
Construction
0.57%
2.08%
18.13%
27.88%
2.18%
42.48%
57.24%
43.70%
0.00%
6.33%
Non-financial companies -
Manufacturing industries
0.94%
5.41%
13.78%
25.25%
5.58%
40.36%
49.88%
44.36%
0.00%
3.31%
Non-financial companies -
Other activities
0.37%
3.96%
14.75%
15.29%
4.08%
43.81%
48.74%
44.53%
0.00%
2.93%
Non-financial companies -
Other services
0.50%
3.59%
9.84%
18.56%
3.66%
40.14%
39.92%
40.11%
0.00%
2.62%
Other Services /Other
activities
0.13%
1.08%
9.00%
0.00%
1.08%
50.07%
82.28%
50.73%
0.00%
0.39%
Total
0.32%
2.82%
8.92%
13.59%
3.20%
38.14%
51.99%
42.14%
37.63%
1.88%
As at 31\u00a0December 2023, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by geography and stage, are as follows:
(Thousands of euros)
2023
Stage 2
Stage 3
Geography
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <= 90
days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Portugal
54,817,070
6,507,490
243,837
97,956
6,849,283
1,101,355
321,902
1,423,257
14,814
63,104,424
Poland
22,932,079
1,254,639
168,557
76,684
1,499,880
404,395
394,011
798,406
18,509
25,248,874
Mozambique
1,282,123
411,222
19,510
7,193
437,925
8,522
26,185
34,707
\u2014
1,754,755
Total
79,031,272
8,173,351
431,904
181,833
8,787,088
1,514,272
742,098
2,256,370
33,323
90,108,053
Impairment
Portugal
190,234
201,637
10,867
9,419
221,923
551,673
145,912
697,585
\u2014
1,109,742
Poland
103,505
40,435
22,551
14,419
77,405
143,301
245,864
389,165
14,469
584,544
Mozambique
11,379
5,705
1,104
1,098
7,907
1,400
14,864
16,264
\u2014
35,550
Total
305,118
247,777
34,522
24,936
307,235
696,374
406,640
1,103,014
14,469
1,729,836
Net exposure
Portugal
54,626,836
6,305,853
232,970
88,537
6,627,360
549,682
175,990
725,672
14,814
61,994,682
Poland
22,828,574
1,214,204
146,006
62,265
1,422,475
261,094
148,147
409,241
4,040
24,664,330
Mozambique
1,270,744
405,517
18,406
6,095
430,018
7,122
11,321
18,443
\u2014
1,719,205
Total
78,726,154
7,925,574
397,382
156,897
8,479,853
817,898
335,458
1,153,356
18,854
88,378,217
% of impairment
coverage
Portugal
0.35%
3.10%
4.46%
9.62%
3.24%
50.09%
45.33%
49.01%
0.00%
1.76%
Poland
0.45%
3.22%
13.38%
18.80%
5.16%
35.44%
62.40%
48.74%
78.17%
2.32%
Mozambique
0.89%
1.39%
5.66%
15.26%
1.81%
16.43%
56.77%
46.86%
0.00%
2.03%
Total
0.39%
3.03%
7.99%
13.71%
3.50%
45.99%
54.80%
48.88%
43.42%
1.92%
As at 31\u00a0December 2022, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by geography and stage, are as follows:
(Thousands of euros)
2022 (restated)
Stage 2
Stage 3
Geography
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <= 90
days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Portugal
54,604,642
7,155,127
159,209
66,646
7,380,982
1,410,285
306,213
1,716,498
19,011
63,721,133
Poland
18,184,099
1,377,667
142,519
81,498
1,601,684
386,990
343,753
730,743
28,866
20,545,392
Mozambique
1,865,014
398,817
5,422
1,712
405,951
9,551
82,680
92,231
\u2014
2,363,196
Total
74,653,755
8,931,611
307,150
149,856
9,388,617
1,806,826
732,646
2,539,472
47,877
86,629,721
Impairment
Portugal
150,039
205,954
7,124
5,447
218,525
550,372
124,012
674,384
\u2014
1,042,948
Poland
83,818
42,151
19,641
14,566
76,358
136,847
210,573
347,420
18,017
525,613
Mozambique
6,191
4,198
621
359
5,178
1,987
46,311
48,298
\u2014
59,667
Total
240,048
252,303
27,386
20,372
300,061
689,206
380,896
1,070,102
18,017
1,628,228
Net exposure
Portugal
54,454,603
6,949,173
152,085
61,199
7,162,457
859,913
182,201
1,042,114
19,011
62,678,185
Poland
18,100,281
1,335,516
122,878
66,932
1,525,326
250,143
133,180
383,323
10,849
20,019,779
Mozambique
1,858,823
394,619
4,801
1,353
400,773
7,564
36,369
43,933
\u2014
2,303,529
Total
74,413,707
8,679,308
279,764
129,484
9,088,556
1,117,620
351,750
1,469,370
29,860
85,001,493
% of impairment
coverage
Portugal
0.27%
2.88%
4.47%
8.17%
2.96%
39.03%
40.50%
39.29%
0.00%
1.64%
Poland
0.46%
3.06%
13.78%
17.87%
4.77%
35.36%
61.26%
47.54%
62.42%
2.56%
Mozambique
0.33%
1.05%
11.45%
20.97%
1.28%
20.80%
56.01%
52.37%
0.00%
2.52%
Total
0.32%
2.82%
8.92%
13.59%
3.20%
38.14%
51.99%
42.14%
37.63%
1.88%
As at 31\u00a0December 2023, the gross exposure, by type of financial instrument, internal rating and stage, is analysed as
follows:
(Thousands of euros)
2023
Gross Exposure
Higher quality
(GR 1-6)
Average
quality
(GR 7-9)
Lower
quality
(GR 10-12)
Procedural
(GR 13/14/15)
Not classified
(without risk
grade)
Total
Impairment
losses
Net
exposure
Financial assets at
amortised cost
stage 1
48,884,930
9,891,705
4,050,015
800
1,269,469
64,096,919
292,238
63,804,681
stage 2
1,338,150
1,942,276
3,215,313
379,810
477,945
7,353,494
292,549
7,060,945
stage 3
\u2014
\u2014
\u2014
1,896,329
23,543
1,919,872
1,009,006
910,866
POCI
2,152
2,448
1,202
24,831
115
30,748
14,469
16,279
50,225,232
11,836,429
7,266,530
2,301,770
1,771,072
73,401,033
1,608,262
71,792,771
Debt instruments at fair
value through other
comprehensive income (*)
stage 1
10,490,205
153,637
11,687
50
154,294
10,809,873
\u2014
10,809,873
stage 3
\u2014
\u2014
\u2014
\u2014
1,150
1,150
1,150
\u2014
10,490,205
153,637
11,687
50
155,444
10,811,023
1,150
10,809,873
Guarantees and other
commitments (**)
stage 1
9,603,432
3,927,153
1,224,614
3,511
175,643
14,934,353
12,880
14,921,473
stage 2
169,847
400,684
670,786
13,250
179,027
1,433,594
14,686
1,418,908
stage 3
\u2014
\u2014
\u2014
336,351
147
336,498
94,008
242,490
POCI
6
5
1
2,563
\u2014
2,575
\u2014
2,575
9,773,285
4,327,842
1,895,401
355,675
354,817
16,707,020
121,574
16,585,446
Total
70,488,722
16,317,908
9,173,618
2,657,495
2,281,333
100,919,076
1,730,986
99,188,090
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements indicated in the
accounting policy 1 C1.5.1.2.
(**) The gross exposure includes the guarantees granted, irrevocable credit lines and revocable commitments (note 45).
As at 31\u00a0December 2022, the gross exposure, by type of financial instrument, internal rating and stage, is analysed as
follows:
(Thousands of euros)
2022 (restated)
Gross Exposure
Higher quality
(GR 1-6)
Average
quality
(GR 7-9)
Lower
quality
(GR 10-12)
Procedural
(GR 13/14/15)
Not classified
(without risk
grade)
Total
Impairment
losses
Net
exposure
Financial assets at
amortised cost
stage 1
44,625,339
10,468,892
3,984,622
2,862
1,268,808
60,350,523
228,741
60,121,782
stage 2
1,456,028
1,911,502
3,321,694
373,651
557,148
7,620,023
285,168
7,334,855
stage 3
\u2014
\u2014
\u2014
2,165,309
9,472
2,174,781
985,667
1,189,114
POCI
1,928
9,048
1,122
34,782
77
46,957
17,898
29,059
46,083,295
12,389,442
7,307,438
2,576,604
1,835,505
70,192,284
1,517,474
68,674,810
Debt instruments at fair
value through other
comprehensive income (*)
stage 1
6,600,955
169,240
34,790
\u2014
629,167
7,434,152
\u2014
7,434,152
stage 3
\u2014
\u2014
\u2014
\u2014
1,067
1,067
1,067
\u2014
6,600,955
169,240
34,790
\u2014
630,234
7,435,219
1,067
7,434,152
Guarantees and other
commitments (**)
stage 1
9,105,641
3,673,579
1,312,038
57
211,917
14,303,232
11,307
14,291,925
stage 2
219,327
390,858
832,431
34,840
291,138
1,768,594
14,893
1,753,701
stage 3
\u2014
\u2014
\u2014
364,627
64
364,691
84,435
280,256
POCI
\u2014
\u2014
\u2014
921
\u2014
921
119
802
9,324,968
4,064,437
2,144,469
400,445
503,119
16,437,438
110,754
16,326,684
Total
62,009,218
16,623,119
9,486,697
2,977,049
2,968,858
94,064,941
1,629,295
92,435,646
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements indicated in the
accounting policy 1 C1.5.1.2.
(**) The gross exposure includes the guarantees granted, irrevocable credit lines and revocable commitments (note 45).
As at 31\u00a0December 2023, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by segment, are presented in the following table:
(Thousands of euros)
2023
Gross Exposure
Impairment losses
Segment
Individual
Collective
Total
Individual
Collective
Total
Individuals - Mortgage
27,960
27,956,633
27,984,593
9,347
172,867
182,214
Individuals - Other
8,531
10,223,989
10,232,520
4,709
465,493
470,202
Financial Companies
48,444
3,327,226
3,375,670
34,439
24,985
59,424
Non-financial companies-Corporate
204,869
11,582,366
11,787,235
105,559
68,974
174,533
Non-financial companies-SME-Corporate
517,062
11,293,743
11,810,805
326,269
176,087
502,356
Non-financial companies-SME-Retail
84,903
8,384,136
8,469,039
77,852
241,557
319,409
Non-financial companies-Other
702
540,025
540,727
567
1,369
1,936
Other loans
\u2014
15,907,464
15,907,464
\u2014
19,762
19,762
Total
892,471
89,215,582
90,108,053
558,742
1,171,094
1,729,836
As at 31\u00a0December 2022, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by segment, are presented in the following table:
(Thousands of euros)
2022 (restated)
Gross Exposure
Impairment losses
Segment
Individual
Collective
Total
Individual
Collective
Total
Individuals - Mortgage
30,700
28,183,186
28,213,886
9,386
157,417
166,803
Individuals - Other
26,953
9,263,499
9,290,452
18,543
392,653
411,196
Financial Companies
81,059
3,651,532
3,732,591
37,622
10,362
47,984
Non-financial companies-Corporate
276,046
10,343,093
10,619,139
126,378
49,889
176,267
Non-financial companies-SME-Corporate
654,073
13,253,883
13,907,956
301,952
172,651
474,603
Non-financial companies -SME - Retail
158,552
7,946,796
8,105,348
94,878
241,890
336,768
Non-financial companies-Other
\u2014
605,540
605,540
\u2014
646
646
Other loans
\u2014
12,154,809
12,154,809
\u2014
13,961
13,961
Total
1,227,383
85,402,338
86,629,721
588,759
1,039,469
1,628,228
As at 31\u00a0December 2023, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by sector of activity are presented in the following table:
(Thousands of euros)
2023
Gross Exposure
Impairment losses
Sector of activity
Individual
Collective
Total
Individual
Collective
Total
Loans to individuals
36,491
38,180,622
38,217,113
14,056
638,360
652,416
Non-financial companies-Trade
63,282
6,128,545
6,191,827
33,799
82,081
115,880
Non-financial companies-Construction
212,160
3,035,513
3,247,673
88,160
52,447
140,607
Non-financial companies-Manufacturing
industry
110,203
6,651,255
6,761,458
57,795
147,865
205,660
Non-financial companies-Other activities
48,448
2,673,781
2,722,229
37,216
39,644
76,860
Non-financial companies-Other services
373,443
13,311,176
13,684,619
293,277
165,950
459,227
Other Services/Other activities
48,444
19,234,690
19,283,134
34,439
44,747
79,186
Total
892,471
89,215,582
90,108,053
558,742
1,171,094
1,729,836
As at 31\u00a0December 2022, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by sector of activity are presented in the following table:
(Thousands of euros)
2022 (restated)
Gross Exposure
Impairment losses
Sector of activity
Individual
Collective
Total
Individual
Collective
Total
Loans to individuals
57,653
37,446,685
37,504,338
27,929
550,070
577,999
Non-financial companies-Trade
56,649
6,239,615
6,296,264
30,640
76,452
107,092
Non-financial companies-Construction
308,289
2,875,355
3,183,644
158,454
43,117
201,571
Non-financial companies-Manufacturing
industry
173,248
6,972,108
7,145,356
93,885
142,647
236,532
Non-financial companies-Other activities
95,832
2,531,138
2,626,970
44,541
32,325
76,866
Non-financial companies-Other services
454,653
13,531,096
13,985,749
195,688
170,535
366,223
Other Services/Other activities
81,059
15,806,341
15,887,400
37,622
24,323
61,945
Total
1,227,383
85,402,338
86,629,721
588,759
1,039,469
1,628,228
As at 31\u00a0December 2023, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by geography, are presented in the following table:
(Thousands of euros)
2023
Gross Exposure
Impairment losses
Geography
Individual
Collective
Total
Individual
Collective
Total
Portugal
758,022
62,346,402
63,104,424
516,336
593,406
1,109,742
Poland
121,548
25,127,326
25,248,874
36,255
548,289
584,544
Mozambique
12,901
1,741,854
1,754,755
6,151
29,399
35,550
Total
892,471
89,215,582
90,108,053
558,742
1,171,094
1,729,836
As at 31\u00a0December 2022, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by geography, are presented in the following table:
(Thousands of euros)
2022 (restated)
Gross Exposure
Impairment losses
Geography
Individual
Collective
Total
Individual
Collective
Total
Portugal
1,053,955
62,667,178
63,721,133
511,657
531,291
1,042,948
Poland
98,717
20,446,675
20,545,392
37,219
488,394
525,613
Mozambique
74,711
2,288,485
2,363,196
39,883
19,784
59,667
Total
1,227,383
85,402,338
86,629,721
588,759
1,039,469
1,628,228
The columns Gross exposure and Collective impairment losses of the previous tables include loans subject to individual
analysis for which the Group has concluded that there is no objective evidence of impairment.
As at 31\u00a0December 2023, the following table includes the loans portfolio (including guarantees and commitments) by
segment and by year of production (date of the beginning of the operations, in the portfolio at the date of balance
sheet - it does not include restructured loans):
2023
Year of production
Construction
and Commercial
Real Estate
Companies -
Other Activities
Mortgage
loans
Individuals -
Other
Other loans
Total
2013 and previous
Number of operations
13,988
27,550
275,796
637,888
380
955,602
Value (Euros '000)
928,757
3,261,687
8,790,207
1,229,144
89,608
14,299,403
Impairment constituted (Euros '000)
73,508
58,659
113,180
22,494
812
268,653
2014
Number of operations
1,310
5,156
7,877
63,545
85
77,973
Value (Euros '000)
69,788
447,850
327,925
111,200
184,307
1,141,070
Impairment constituted (Euros '000)
7,137
5,895
5,441
4,563
873
23,909
2015
Number of operations
1,740
7,093
9,709
84,470
114
103,126
Value (Euros '000)
85,463
591,723
464,924
145,749
8,498
1,296,357
Impairment constituted (Euros '000)
1,952
22,286
4,621
7,655
577
37,091
2016
Number of operations
2,053
8,438
10,979
110,408
49
131,927
Value (Euros '000)
141,513
1,117,972
542,229
213,263
3,067
2,018,044
Impairment constituted (Euros '000)
2,314
12,494
5,106
13,662
179
33,755
2017
Number of operations
2,482
9,808
17,985
120,635
99
151,009
Value (Euros '000)
157,801
978,292
1,047,446
246,833
14,258
2,444,630
Impairment constituted (Euros '000)
10,391
17,786
6,592
17,477
774
53,020
2018
Number of operations
4,819
15,084
23,954
213,882
165
257,904
Value (Euros '000)
384,262
1,901,330
1,604,675
530,572
301,822
4,722,661
Impairment constituted (Euros '000)
5,771
33,804
8,220
37,433
1,227
86,455
2019
Number of operations
7,245
21,732
27,329
521,238
150
577,694
Value (Euros '000)
499,121
1,658,088
1,956,352
982,211
79,619
5,175,391
Impairment constituted (Euros '000)
7,673
43,210
7,137
67,067
1,144
126,231
2020
Number of operations
9,258
31,822
32,966
244,303
189
318,538
Value (Euros '000)
862,852
2,855,711
2,410,351
617,566
104,195
6,850,675
Impairment constituted (Euros '000)
14,538
76,473
8,944
38,516
1,913
140,384
2021
Number of operations
9,130
33,058
48,727
363,405
219
454,539
Value (Euros '000)
792,772
2,539,394
3,981,918
1,016,489
333,477
8,664,050
Impairment constituted (Euros '000)
11,334
42,963
10,857
67,703
3,131
135,988
2022
Number of operations
9,311
34,292
35,724
571,063
396
650,786
Value (Euros '000)
1,397,283
4,265,544
3,490,509
1,677,789
126,587
10,957,712
Impairment constituted (Euros '000)
15,286
51,293
6,233
79,493
1,704
154,009
2023
Number of operations
14,388
113,890
31,737
1,312,681
4,733
1,477,429
Value (Euros '000)
1,967,654
6,445,098
3,317,913
2,949,518
179,760
14,859,943
Impairment constituted (Euros '000)
16,782
217,800
6,768
70,824
2,232
314,406
Total
Number of operations
75,724
307,923
522,783
4,243,518
6,579
5,156,527
Value (Euros '000)
7,287,266
26,062,689
27,934,449
9,720,334
1,425,198
72,429,936
Impairment constituted (Euros '000)
166,686
582,663
183,099
426,887
14,566
1,373,901
In the year of the current production, are included operations that, by their nature, are contractually subject to
renewals. In these cases, the date of the last renewal is considered, namely for overdraft operations, secured current
account and factoring operations.
As at 31\u00a0December 2022, the following table includes the loans portfolio (including guarantees and commitments) by
segment and by year of production (date of the beginning of the operations, in the portfolio at the date of balance
sheet - it does not include restructured loans):
2022 (restated)
Year of production
Construction
and Commercial
Real Estate
Companies -
Other Activities
Mortgage
loans
Individuals -
Other
Other loans
Total
2012 and previous
Number of operations
15,703
25,791
293,344
677,001
384
1,012,223
Value (Euros '000)
970,246
3,194,423
10,117,624
1,228,014
81,780
15,592,087
Impairment constituted (Euros '000)
73,617
51,428
106,931
17,378
646
250,000
2013
Number of operations
1,121
3,600
10,115
65,523
17
80,376
Value (Euros '000)
64,192
510,025
376,049
106,759
2,537
1,059,562
Impairment constituted (Euros '000)
3,236
3,441
5,681
3,329
6
15,693
2014
Number of operations
1,234
4,859
8,737
82,035
86
96,951
Value (Euros '000)
76,217
509,250
356,743
126,516
183,780
1,252,506
Impairment constituted (Euros '000)
5,049
9,235
4,719
4,618
855
24,476
2015
Number of operations
1,691
6,284
10,836
112,676
124
131,611
Value (Euros '000)
106,007
908,354
515,361
185,482
44,947
1,760,151
Impairment constituted (Euros '000)
1,947
23,398
3,874
9,116
27,758
66,093
2016
Number of operations
1,911
8,196
12,280
134,403
55
156,845
Value (Euros '000)
154,183
1,209,277
616,181
256,858
4,248
2,240,747
Impairment constituted (Euros '000)
5,274
13,961
4,432
17,195
174
41,036
2017
Number of operations
2,568
11,100
20,277
142,014
96
176,055
Value (Euros '000)
219,318
1,228,140
1,202,742
305,913
13,230
2,969,343
Impairment constituted (Euros '000)
2,807
17,900
5,830
21,347
720
48,604
2018
Number of operations
5,312
19,488
26,701
286,638
203
338,342
Value (Euros '000)
498,338
2,227,925
1,833,809
655,719
309,885
5,525,676
Impairment constituted (Euros '000)
7,262
32,931
6,511
43,836
1,607
92,147
2019
Number of operations
8,703
27,962
30,166
595,430
185
662,446
Value (Euros '000)
632,970
2,098,246
2,198,981
1,221,662
144,135
6,295,994
Impairment constituted (Euros '000)
7,295
45,754
5,735
75,179
3,002
136,965
2020
Number of operations
9,891
37,416
36,088
313,758
255
397,408
Value (Euros '000)
1,148,968
4,324,442
2,656,294
809,745
165,228
9,104,677
Impairment constituted (Euros '000)
13,228
83,686
7,361
42,424
1,638
148,337
2021
Number of operations
10,744
37,545
53,486
524,347
340
626,462
Value (Euros '000)
1,146,704
3,355,457
4,464,436
1,376,201
388,696
10,731,494
Impairment constituted (Euros '000)
15,760
51,953
8,848
61,243
2,299
140,103
2022
Number of operations
14,046
117,544
38,354
1,108,878
4,678
1,283,500
Value (Euros '000)
2,097,778
7,566,584
3,822,846
2,514,949
364,556
16,366,713
Impairment constituted (Euros '000)
19,365
169,939
5,788
64,160
2,593
261,845
Total
Number of operations
72,924
299,785
540,384
4,042,703
6,423
4,962,219
Value (Euros '000)
7,114,921
27,132,123
28,161,066
8,787,818
1,703,022
72,898,950
Impairment constituted (Euros '000)
154,840
503,626
165,710
359,825
41,298
1,225,299
In the year of the current production, are included operations that, by their nature, are contractually subject to
renewals. In these cases, the date of the last renewal is considered, namely for overdraft operations, secured current
account and factoring operations.
As at 31\u00a0December 2023, the following table includes the fair value of the collaterals by segments (not limited by the
value of the collateral) associated to the loan's portfolio:
2023
Construction and Commercial
Real Estate
Companies - Other Activities
Mortgage loans
Fair Value
Real Estate
(*)
Other real
Collateral (**)
Real Estate
(*)
Other real
Collateral (**)
Real Estate
(*)
Other real
Collateral (**)
< 0.5 M\u20ac
Number
7,433
10,521
8,995
74,256
453,097
247
Value (Euros '000)
957,351
270,085
1,360,898
1,715,200
64,939,467
14,258
>= 0.5 M\u20ac and < 1 M\u20ac
Number
788
68
1,221
261
6,910
5
Value (Euros '000)
548,653
46,495
856,785
181,934
4,459,854
2,833
>= 1 M\u20ac and < 5 M\u20ac
Number
752
49
1,137
180
1,169
1
Value (Euros '000)
1,564,212
90,200
2,317,694
351,774
1,828,625
1,121
>= 5 M\u20ac and < 10 M\u20ac
Number
126
1
128
15
16
\u2014
Value (Euros '000)
883,759
5,424
892,174
111,364
102,113
\u2014
>= 10 M\u20ac and < 20 M\u20ac
Number
52
1
62
12
2
\u2014
Value (Euros '000)
705,360
10,415
882,748
176,111
21,129
\u2014
>= 20 M\u20ac and < 50 M\u20ac
Number
32
1
47
2
\u2014
\u2014
Value (Euros '000)
900,127
20,241
1,393,377
46,125
\u2014
\u2014
>= 50 M\u20ac
Number
4
\u2014
15
4
\u2014
\u2014
Value (Euros '000)
263,193
\u2014
1,124,438
855,609
\u2014
\u2014
Total Number
9,187
10,641
11,605
74,730
461,194
253
Total Value (Euros '000)
5,822,655
442,860
8,828,114
3,438,117
71,351,188
18,212
(*) The fair value of real estate collateral relates to the PVT included in valuations.
(**) Includes, namely, securities, deposits and fixed assets pledges.
As at 31\u00a0December 2022, the following table includes the fair value of the collaterals by segments (not limited by the
value of the collateral) associated to the loan's portfolio:
2022 (restated)
Construction and Commercial
Real Estate
Companies - Other Activities
Mortgage loans
Fair Value
Real Estate
(*)
Other real
Collateral (**)
Real Estate
(*)
Other real
Collateral (**)
Real Estate
(*)
Other real
Collateral (**)
< 0.5 M\u20ac
Number
6,822
9,575
9,030
71,315
468,372
303
Value (Euros '000)
882,242
223,661
1,369,613
1,489,242
62,924,078
17,038
>= 0.5 M\u20ac and < 1 M\u20ac
Number
741
70
1,189
236
6,321
4
Value (Euros '000)
520,105
47,186
832,819
162,741
4,080,818
2,230
>= 1 M\u20ac and < 5 M\u20ac
Number
634
47
1,110
205
1,062
1
Value (Euros '000)
1,307,513
84,190
2,223,387
395,940
1,636,182
1,267
>= 5 M\u20ac and < 10 M\u20ac
Number
108
2
118
15
14
\u2014
Value (Euros '000)
737,705
10,838
852,256
102,251
86,476
\u2014
>= 10 M\u20ac and < 20 M\u20ac
Number
50
2
57
13
1
\u2014
Value (Euros '000)
651,146
21,833
809,825
194,916
11,110
\u2014
>= 20 M\u20ac and < 50 M\u20ac
Number
22
\u2014
40
1
\u2014
\u2014
Value (Euros '000)
636,352
\u2014
1,208,432
20,452
\u2014
\u2014
>= 50 M\u20ac
Number
6
\u2014
14
2
\u2014
\u2014
Value (Euros '000)
455,600
\u2014
1,245,381
523,630
\u2014
\u2014
Total Number
8,383
9,696
11,558
71,787
475,770
308
Total Value (Euros '000)
5,190,663
387,708
8,541,713
2,889,172
68,738,664
20,535
(*) The fair value of real estate collateral relates to the PVT included in valuations.
(**) Includes, namely, securities, deposits and fixed assets pledges.
As at 31\u00a0December 2023, the following table includes the LTV (loan-to-value) ratio by segments Construction and
Commercial Real Estate (CRE), Companies - Other Activities and Mortgage loans:
(Thousands of euros)
2023
Segment/Ratio
Number
of properties
Stage 1
Stage 2
Stage 3
Impairment
Construction and CRE
Without associated collateral
n.a.
1,325,209
368,506
61,341
69,194
<60%
26,471
1,231,512
314,464
27,331
22,492
>=60% and <80%
4,107
405,123
124,352
25,326
17,357
>=80% and <100%
858
115,631
26,141
2,513
3,689
>=100%
915
83,185
56,059
49,530
30,584
Companies - Other Activities
Without associated collateral
n.a.
9,520,386
1,406,516
244,982
438,065
<60%
49,955
1,888,694
528,115
128,724
75,157
>=60% and <80%
15,150
965,433
277,671
80,993
42,715
>=80% and <100%
9,050
457,684
378,185
48,634
34,873
>=100%
2,328
492,635
159,776
258,397
208,054
Mortgage loans
Without associated collateral
n.a.
62,011
3,510
9,719
12,435
<60%
380,896
13,666,658
1,351,098
264,041
119,276
>=60% and <80%
119,725
8,368,284
896,151
117,924
39,255
>=80% and <100%
33,465
2,594,964
349,466
50,104
20,302
>=100%
4,814
168,138
53,712
19,770
10,447
As at 31\u00a0December 2022, the following table includes the LTV (loan-to-value) ratio by segments Construction and
Commercial Real Estate (CRE), Companies - Other Activities and Mortgage loans:
(Thousands of euros)
2022 (restated)
Segment/Ratio
Number
of properties
Stage 1
Stage 2
Stage 3
Impairment
Construction and CRE
Without associated collateral
n.a.
1,528,695
453,957
73,399
70,799
<60%
25,799
1,019,694
259,169
42,667
31,589
>=60% and <80%
2,771
376,094
81,106
21,337
9,536
>=80% and <100%
1,067
131,874
46,414
58,121
49,541
>=100%
979
74,888
73,472
61,705
40,249
Companies - Other Activities
Without associated collateral
n.a.
10,285,172
1,651,463
284,131
393,519
<60%
49,259
1,563,296
495,030
141,344
65,781
>=60% and <80%
16,491
991,449
329,502
128,863
48,995
>=80% and <100%
11,106
576,326
406,133
72,826
47,386
>=100%
2,741
654,901
202,769
280,711
146,244
Mortgage loans
Without associated collateral
n.a.
53,715
2,892
10,403
10,816
<60%
383,344
13,363,029
1,310,064
261,616
102,636
>=60% and <80%
129,126
8,530,613
844,549
112,000
32,431
>=80% and <100%
39,677
2,884,194
357,767
58,421
19,953
>=100%
6,013
235,017
60,244
30,008
15,674
As at 31\u00a0December 2023, the following table includes the fair value and the net book value of the properties classified
as Non-current assets held for sale (note 27) and as Other assets (note 32), by type of asset:
(Thousands of euros)
2023
Assets arising from recovered
loans results
Assets belong to investments
funds and
real estate companies
Total
Asset
Appraised
value
Book value
Appraised
value (1)
Book value
Appraised
value
Book value
Land
Urban
80,526
49,779
84,684
84,684
165,210
134,463
Rural
4,622
2,188
17,560
17,560
22,182
19,748
Buildings in development
Commercials
790
529
\u2014
\u2014
790
529
Mortgage loans
2,474
1,438
\u2014
\u2014
2,474
1,438
Constructed buildings
Commercials
29,968
15,391
\u2014
\u2014
29,968
15,391
Mortgage loans
52,120
35,758
\u2014
\u2014
52,120
35,758
Other
30,495
30,261
\u2014
\u2014
30,495
30,261
Other assets
5,400
5,400
\u2014
\u2014
5,400
5,400
206,395
140,744
102,244
102,244
308,639
242,988
(1) Value deducted from haircuts or other applicable impairments
As at 31\u00a0December 2022, the following table includes the fair value and the net book value of the properties classified
as Non-current assets held for sale (note 27), by type of asset:
(Thousands of euros)
2022 (restated)
Assets arising from recovered
loans
Assets belong to investments
funds and
real estate companies
Total
Asset
Appraised
value
Book value
Appraised
value (1)
Book value
Appraised
value
Book value
Land
Urban
126,593
84,970
199,094
199,094
325,687
284,064
Rural
5,318
2,996
20,768
20,768
26,086
23,764
Buildings in development
Commercials
869
517
\u2014
\u2014
869
517
Mortgage loans
2,550
1,491
\u2014
\u2014
2,550
1,491
Other
11
11
\u2014
\u2014
11
11
Constructed buildings
Commercials
62,390
43,304
\u2014
\u2014
62,390
43,304
Mortgage loans
82,549
64,015
185
185
82,734
64,200
Other
38,697
38,574
\u2014
\u2014
38,697
38,574
318,977
235,878
220,047
220,047
539,024
455,925
(1) Value deducted from haircuts or other applicable impairments
Credit portfolio monitoring process
The Bank has in place a credit portfolio management and monitoring processes, namely with regard to the assessment
of the risk profile of the exposure in different portfolios/segments. These procedures have the purpose of identifying
and closely monitoring the customers potentially more affected by the prevailing macroeconomic context, anticipating
possible difficulties in complying the responsibilities and defining credit and performance strategies adjusted to the
specificities of each customer/group of customers, with a view to both maintaining support to customers considered
viable and mitigating credit risk in cases where there are risks of loss in the exposure value.
The importance of this approach is reinforced by the uncertainty that has marked the activity in recent years, with
special emphasis on the pandemic context that emerged at the beginning of 2020 and the effects resulting from
multiple geopolitical conflicts, with impacts on various aspects such as a more modest level of economic growth,
budgetary pressures to cope with the impacts felt by economic agents, the need to allocate budgetary amounts to
areas such as Defence, limitations on the transportation of goods, pressure on energy costs, inflationary impacts, high
levels of interest rates and rising unemployment rates.
In the specific case of Portugal, the context described translated into lower demand for credit instruments from
customers, especially in the corporate segment.
The main guidelines of the credit portfolio monitoring approach can be characterized as presented below:
- Global and transversal: Analysis of the entire credit portfolio of the Bank, being excluded from the monitoring process
only customers with a better risk profile (in the case of retail) or with exposures of a lower size (in the case of retail
and corporate).
- Specialized: Monitoring by the \u201cComit\u00e9 de Acompanhamento de Risco de Empresas\u201d (CARE), and Credit Division in
coordination with the Rating Division for the corporate segment and by the Credit Division and Retail Recovery Division
for individuals and small businesses. The cases monitored by the CARE committee, are related to clients covered by a
set of criteria that combine exposure size and risk factors like the rating assigned, IFRS 9 staging and, for the corporate
segment, the level of leverage and whether the sector in which it operates is considered highly vulnerable.
- Segmented: Prioritization of approach/analysis recurrence based on risk signs, in order to gather additional
information and agree on appropriate and sustainable financial restructuring solutions in a timely manner.
- Prospective: Use of predictive models, in order to anticipate potential future defaults, avoiding a reactive approach.
- Standardized: Both in terms of risk models and monitoring, and in terms of credit solutions for which it is possible to
identify pre-defined alternatives (retail segments).
- Convenient and innovative: Making the restructuring journey simpler and more convenient both in terms of credit
solutions and channels, extending the restructuring offer to the App for consumer credit and mortgages.
Specifically in the corporate segment, the process of portfolio follow-up and monitoring can be generically
characterized as described below, having as a fundamental component the attribution of credit strategies, among pre-
defined options, with review periods differentiated according to the level of risk associated to the strategy attributed:
1. Client Assessment and presentation of Indicative Credit Strategy by the Rating Division (for customers with ratings
assigned by corporate rating models);
2. Approval, by the competent credit decision levels, of a credit strategy for each customer, taking into consideration
the Indicative Credit Strategy from the Rating Division, the information received from the area that follows the
client and the inputs received as a result of the customer interaction process;
3. Decision, negotiation and formalisation of the operations that will ensure that the approved strategy is pursued and
the approved credit limits are met (Credit Division, Areas that follow the client and Operations Division);
4. Monitoring the Credit Strategy and the evolution of the customer's activity (Credit Division, Areas that follow the
client and Specialised Committees - CARE);
5. Monitoring of the credit portfolio and effectiveness of the portfolio monitoring process and credit strategy
attribution (Risk Office), based on a set of KPIs, (e.g. percentage of the credit portfolio with valid risk strategy;
evolution of credit exposure to customers with a reduction strategy; adequacy of the credit strategy to the
customer's performance);
6. In the attribution of the customer's credit strategy, besides the intrinsic factors of the customer, more transversal
factors are taken into consideration, such as the evaluation of the sectorial risk and ESG impacts (periodically
reviewed with the support of the Economic, Sustainability and Criptoactives Studies Division) and taking into
consideration the attribution of a ESG rating regarding the clients with most relevant exposures;
7. The occurrence of effective and/or potential risk events (signs of default/delinquency; breach of contractual
covenants; severe alteration in sector risk; alteration in the corporate/shareholder structure), trigger an
extraordinary/anticipated revision of the strategy.
Within the scope of this monitoring process and with an impact on other complementary procedures adopted by the
Bank, namely for reporting purposes, the Bank defines a list of sectors considered as more vulnerable to the
macroeconomic environment, which is reviewed periodically (at least annually), also involving the preparation of report
presenting a detailed characterisation of its loan portfolio under a sectoral perspective.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-572": { "value": "Estimates of expected credit losses - Individual analysis
1. Customers who are in one of the following conditions are subject to individual analysis:
Customers in default
Customers in litigation or insolvency, if the total exposure of the group members in these situations exceeds
Euros 1 million
Customers integrated into groups with an exposure over Euros 5 million, if they have a risk grade 15
Groups or customers
who are not in
default
Other customers belonging to groups in the above conditions
Groups or customers with an exposure over Euros 5 million, if a group member has a risk grade 14
Groups or customers with an exposure over Euros 5 million, if a member of the group has a restructured loan
and a risk grade 13
Groups or customers with an exposure over Euros 10 million, if at least one member of the group is in stage 2
Groups or customers not included in the preceding paragraphs, whose exposure exceeds Euros 25 million
2. Regardless of the criteria described in the previous point, the individual analysis is only performed for customers
with a credit exposure over Euros 500,000, while customers with exposure below this limit are not considered for
the purpose of determining the exposure referred to in the previous point.
3. Other customers that do not meet the criteria defined in 1 will also be subject to individual analysis, if under the
following conditions:
\u2013 they have impairment as a result of the latest individual analysis;
\u2013 are classified in stage 2 as a result of the last revision of the questionnaire analysing the indications of financial
difficulties;
\u2013 according to recent information, they show a significant deterioration in risk levels; or,
\u2013 are a Special Purpose Vehicle (SPV).
4. The individual analysis includes the following procedures:
\u2013 for customers that are not in default, the analysis of financial difficulties indicators to determine whether the
customer has objective signs of impairment, or whether it should be classified in stage 2 given the occurrence of a
significant increase in credit risk, considering for this purpose a set of predetermined signs;
\u2013 for customers in default or for which the previous analysis has allowed to conclude that the customer has objective
signs of impairment, determination of the loss.
5. For the situations identified in the first paragraph of the previous point involving corporate clients, the analysis is
the responsibility of the Rating Division, and the responsibility of the Credit Division for the remaining clients.
6. For the situations identified in the second paragraph of the previous point, the individual analysis to determine the
loss is the responsibility of the client's management divisions and of the Credit Division, the latter with regard to the
customers managed by the Commercial Networks.
The assessment of existence of impairment losses in individual terms is determined through an analysis of the total
credit exposure on a case-by-case basis. For each loan considered individually significant, the Group assessed at each
balance sheet date the existence of objective evidence of impairment. In the assessment of impairment losses in
individual terms, the following factors were considered:
\u2013 total exposure of each customer towards the Group and the existence of overdue loans;
\u2013 viability of the customer\u2019s business and its capacity to generate enough cash flows to service debt obligations in the
future;
\u2013 the existence, nature and estimated value of the collaterals associated to each loan;
\u2013 significant deterioration of the customer's rating;
\u2013 the customer\u2019s available assets in liquidation or insolvency situations;
\u2013 the existence of preferential creditors;
\u2013 the amount and expected recovery term.
7. Each of the units referred to in the previous point is responsible for assigning an expectation and a recovery period
to exposures relating to customers subject to individual analysis, which must be transmitted to the Risk Office as
part of the regular process of collecting information, accompanied by detailed justification of the proposed
impairment.
8. The expected recovery shall be represented by a recovery rate of the total outstanding exposure, which may be a
weighted rate considering the different recovery prospects for each part of the customer's liabilities.
9. The recovery estimation referred to in the previous point should be influenced by future prospects (forward-
looking), contemplating not only a more expected scenario but also alternative scenarios (an unbiased and
probability-weighted amount). The application and weighting of the scenarios should be carried out both in a
global perspective and in an individualized perspective, the latter when cases that, due to their specificity, have a
high degree of uncertainty regarding the expected recovery estimation are identified.
10. The macroeconomic adjustment set out in point 8 should be analysed annually and weighted according to the type
of recovery strategy associated with the exposure under analysis:
\u2013 for Going Concern strategies (i.e., the estimation is based on the cash flows of the business), the possibility of
applying the 2 additional macroeconomic scenarios (optimistic and pessimistic) should be analysed in a global way,
to ascertain if there is the risk of a skewed view of the expected losses from the consideration of only one scenario;
\u2013 for Gone Concern strategies (i.e., the recovery estimation is based on the realization of the collateral), the impact
of the macroeconomic scenario on collaterals should be analysed, for example, to what extent the projected real
estate index indicates significant changes ahead for the current valuation values.
11. It is the responsibility of the units referred to in point 5 to consider in their projection macroeconomic expectations
that may influence the recoverability of the debt.
12. For the purposes of the preceding paragraphs, the Economic Studies, Sustainability and Cryptoassets Department
shall disclose the macroeconomic data that allow the estimations to be made.
13. The decision to consider global impacts related to the going and gone concern scenarios should be made by the Risk
Committee, as proposed by the Risk Office.
14. For specific cases with a high degree of uncertainty, the allocation of alternative scenarios should be considered
casuistically. Examples of recovery situations with a degree of uncertainty include:
\u2013 recovery of collateral in geographies in which the Bank has no relevant recovery experience;
\u2013 recovery of debt related to geographies in which there is strong political instability;
\u2013 recovery of non-real estate collateral for which there is no evidence of market liquidity;
\u2013 recovery of related collateral or government guarantees in a currency other than the country's own;
\u2013 recovery of debt related to debtors for whom there is a strong negative public exposure.
15. The Risk Office is responsible for reviewing the information collected and for clarifying all identified
inconsistencies, as well as for the final decision on the customer's impairment.
16. Customers that have objective signs of impairment, but an individual impairment amount is equal to zero, are
included in the collective analysis, assuming a PD 12-month equivalent to the risk grade 12 of the Master Scale.
17. The individual impairment analysis must be carried out annually, and may be lower for clients who fall into certain
situations of possible increased risk. In case significant signs of deterioration or improvement in the customer\u2019s
economic and financial situation are detected, as well as the macroeconomic conditions affecting the customer's
ability to accomplish debt, it is the responsibility of the Risk Office to promote the review of the expected
impairment of this customer.
C1.5.6. Estimates of expected credit losses - Collective analysis
Transactions that are not subject to an individual impairment analysis are grouped considering their risk characteristics
and subject to a collective impairment analysis. The Group's credit portfolio is divided by internal risk grades and
according to the following segments:
a) Segments with a reduced history of defaults, designated \u2018low default\u2019: Large corporate exposures, Project finance,
Institutions (banks/financial institutions) and Sovereigns;
b) Segments not \u2018low default\u2019: - Retail: Mortgages; Overdrafts; Credit cards; Small and medium enterprises - Retail
(\u2018SME Retail\u2019); and Others - Corporate: Small and medium enterprises - Corporate (\u2018Large SME\u2019); and Real Estate.
The Group performs statistical tests in order to prove the homogeneity of the segments mentioned above, with a
minimum period of one year.
Expected credit losses are estimates of credit losses that are determined as follows:
\u2013 financial assets with no signs of impairment at the reporting date: the present value of the difference between the
contractual cash flows and the cash flows that the Group expects to receive;
\u2013 financial assets with impairment at the reporting date: the difference between the gross book value and the present
value of the estimated cash flows;
\u2013 unused credit commitments: the present value of the difference between the resulting contractual cash flows if the
commitment is made and the cash flows that the Group expects to receive;
\u2013 financial guarantees: the current value of the expected repayments less the amounts that the Group expects to
recover.
The main inputs used to measure ECLs on a collective basis should include the following variables:
\u2013 Probability of Default \u2013 PD;
\u2013 Loss Given Default \u2013 LGD; and,
\u2013 Exposure at Default \u2013 EAD.
These parameters are obtained through internal statistical models and other relevant historical data, considering the
already existing regulatory models adapted to the requirements of IFRS 9.
PDs are estimated based on a certain historical period and will be calculated based on statistical models. These models
are based on internal data including both quantitative and qualitative factors. If there is a change in the risk of the
counterparty or exposure, the estimate of the associated PD will also vary. The PDs will be calculated considering the
contractual maturities of exposures.
The risk grades are a highly relevant input for determining the PD associated with each exposure.
The Group collects performance and default indicators about their credit risk exposures with analysis by types of
customers and products.
LGD is the magnitude of the loss that is expected to occur if an exposure goes into default. The Group estimates the
LGD parameters based on the historical recovery rates after entry into counterparty defaults. The LGD models consider
the associated collaterals, the counterparty activity sector, the default time, as well as the recovery costs. In the case
of contracts secured by real estate, it is expected that the LTV (loan-to-value) ratios are a parameter of high relevance
in the determination of LGD.
The EAD represents the expected exposure if the exposure and/or customer defaults. The Group obtains the EAD values
from the counterparty's current exposure and potential changes to its current value as a result of the contractual
conditions, including amortisations and prepayments. For commitments and financial guarantees, the value of the EAD
will consider both the amount of credit used and the expectation of future potential value that may be used in
accordance with the agreement.
As described above, except for financial assets that consider a 12-month PD as they do not present a significant
increase in credit risk, the Group will calculate the ECL value considering the risk of default during the maximum
contractual maturity period of the contract, even if, for the purpose of risk management, it is considered to be a longer
period. The maximum contractual period shall be considered as the period up to the date on which the Group has the
right to require payment or end the commitment or guarantee.
The Group adopted as a residual term criterion for renewable operations, when in stage 2, a term of 5 years. This term
was determined based on the behavioural models of this type of product applied by the Bank in the liquidity risk and
interest rate (ALM) analysis. According to these models, the maximum period of repayment of these operations is the 5
years considered conservatively in the scope of the calculation of credit impairment.
The Group uses models to forecast the evolution of the most relevant parameters for the expected credit losses,
namely probability of default, which incorporate forward-looking information. This incorporation of forward-looking
information is carried out in the relevant elements considered for the calculation of expected credit losses (ECL).
In particular, the PD point-in-time (PDpit) considered for the determination of the probability of performing exposures
at the reference date becoming defaulted exposures considers the expected values for a set of macroeconomic
variables, based on three scenarios (Central, Upside and Downside Scenario) prepared by the Bank's Economic Studies
area. These scenarios, which are used across the Bank for various purposes besides calculating impairment, consider
existing projections by reference entities.
In December 2023 the Bank carried out an update of the macroeconomic scenarios and of the corresponded adjustment
of the parameters considered in the collective impairment model.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-573": { "value": "Financial liabilities
C2.1. Classification, initial recognition and subsequent measurement
At initial recognition, financial liabilities are classified in one of the following categories:
\u2013 \u201cFinancial liabilities at amortised cost\u201d;
\u2013 \u201cFinancial liabilities at fair value through profit or loss\u201d.
C2.1.1. Financial liabilities at fair value through profit or loss
Classification
Financial liabilities classified under \"Financial liabilities at fair value through profit or loss\" include:
a) \u201cFinancial liabilities held for trading\u201d
In this balance the issued liabilities are classified with the purpose of repurchasing in the near term, those that form
part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a
recent actual pattern of short-term profit-taking; or is a derivative (except for a derivative classified as hedging
instrument).
b) \u201cFinancial liabilities designated at fair value through profit or loss\u201d
The Group may irrevocably assign a financial liability at fair value through profit or loss at the time of its initial
recognition if at least one of the following conditions is met:
\u2013 the financial liability is managed, evaluated and reported internally at its fair value; or,
\u2013 the designation eliminates or significantly reduces the accounting mismatch of transactions.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Group in the normal course of its business are made in market
conditions, financial liabilities at fair value through profit or loss are initially recognised at fair value with the costs or
income associated with the transactions recognised in profit or loss at the initial moment.
Subsequent changes in the fair value of these financial liabilities are recognised as follows:
\u2013 the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of
that liability shall be presented in other comprehensive income;
\u2013 the remaining amount of change in the fair value of the liability shall be presented in profit or loss.
The accrual of interest and the premium/discount (when applicable) is recognised in \"Interest expense and similar
charges\" based on the effective interest rate of each transaction.
C2.1.2. Financial guarantees
If they are not designated at fair value through profit or loss at the time of initial recognition, the financial guarantee
contracts are subsequently measured at the highest of the following amounts:
\u2013 the provision for losses determined according to the criteria described in note C1.5;
\u2013 the amount initially recognised deducted, when appropriate, from the accumulated amount of income recognised
according to IFRS 15 - Revenue from contracts with customers.
Financial guarantee contracts that are not designated at fair value through profit or loss are presented under
\"Provisions\".
C2.1.3. Financial liabilities at amortised cost
Classification
Financial liabilities that were not classified at fair value through profit or loss, or correspond to financial guarantee
contracts, are measured at amortised cost.
The category \"Financial assets at amortised cost\" includes resources from credit institutions and from customers, as
well as subordinated and non-subordinated debt securities.
Initial recognition and subsequent measurement
Financial liabilities at amortised cost are initially recognised at fair value plus transaction costs and are subsequently
measured at amortised cost. Interest on financial liabilities at amortised cost are recognised in \"Interest expense and
similar charges\", based on the effective interest rate method.
C2.2. Reclassification between categories of financial liabilities
Reclassifications of financial liabilities are not allowed.
C2.3. Derecognition of financial liabilities
The Group derecognises financial liabilities when these are cancelled or extinct.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-574": { "value": "Financial guarantees
If they are not designated at fair value through profit or loss at the time of initial recognition, the financial guarantee
contracts are subsequently measured at the highest of the following amounts:
\u2013 the provision for losses determined according to the criteria described in note C1.5;
\u2013 the amount initially recognised deducted, when appropriate, from the accumulated amount of income recognised
according to IFRS 15 - Revenue from contracts with customers.
Financial guarantee contracts that are not designated at fair value through profit or loss are presented under
\"Provisions\".
C2.1.3.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialGuaranteesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-575": { "value": "Derecognition of financial liabilitiesThe Group derecognises financial liabilities when these are cancelled or extinct.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-578": { "value": "Interest recognition
Income and expense related to interest from financial instruments measured at amortised cost are recognised in
\"Interest and similar income\" and \"Interest expense and similar charges\" (net interest income) through the effective
interest rate method. Interest related to financial assets at fair value through other comprehensive income is also
recognised in net interest income.
The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected
life of the financial instrument (or, when appropriate, for a shorter period), to the net carrying amount of the financial
asset or financial liability.
For calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of
the financial instrument (e.g., early payment options) but without considering future impairment losses. The
calculation includes all fees paid or received considered as included in the effective interest rate, transaction costs and
all other premiums or discounts directly related to the transaction, except for assets and liabilities at fair value through
profit and loss.
Interest income recognised in income associated with contracts classified in stage 1 or 2 are determined by applying the
effective interest rate for each contract on its gross book value. The gross balance of a contract is its amortised cost,
before deducting the respective impairment. For financial assets included in stage 3, interest is recognised in the
income statement based on its net book value (less impairment). The interest recognition is always made in a
prospective way, i.e., for financial assets entering stage 3, interest is recognised at the amortised cost (net of
impairment) in subsequent periods.
For purchased or originated credit-impaired assets (POCI), the effective interest rate reflects the expected credit losses
in determining the expected future cash flows receivable from the financial asset.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-577": { "value": "Interest recognition
Income and expense related to interest from financial instruments measured at amortised cost are recognised in
\"Interest and similar income\" and \"Interest expense and similar charges\" (net interest income) through the effective
interest rate method. Interest related to financial assets at fair value through other comprehensive income is also
recognised in net interest income.
The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected
life of the financial instrument (or, when appropriate, for a shorter period), to the net carrying amount of the financial
asset or financial liability.
For calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of
the financial instrument (e.g., early payment options) but without considering future impairment losses. The
calculation includes all fees paid or received considered as included in the effective interest rate, transaction costs and
all other premiums or discounts directly related to the transaction, except for assets and liabilities at fair value through
profit and loss.
Interest income recognised in income associated with contracts classified in stage 1 or 2 are determined by applying the
effective interest rate for each contract on its gross book value. The gross balance of a contract is its amortised cost,
before deducting the respective impairment. For financial assets included in stage 3, interest is recognised in the
income statement based on its net book value (less impairment). The interest recognition is always made in a
prospective way, i.e., for financial assets entering stage 3, interest is recognised at the amortised cost (net of
impairment) in subsequent periods.
For purchased or originated credit-impaired assets (POCI), the effective interest rate reflects the expected credit losses
in determining the expected future cash flows receivable from the financial asset.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceCostsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-576": { "value": "Interest recognition
Income and expense related to interest from financial instruments measured at amortised cost are recognised in
\"Interest and similar income\" and \"Interest expense and similar charges\" (net interest income) through the effective
interest rate method. Interest related to financial assets at fair value through other comprehensive income is also
recognised in net interest income.
The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected
life of the financial instrument (or, when appropriate, for a shorter period), to the net carrying amount of the financial
asset or financial liability.
For calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of
the financial instrument (e.g., early payment options) but without considering future impairment losses. The
calculation includes all fees paid or received considered as included in the effective interest rate, transaction costs and
all other premiums or discounts directly related to the transaction, except for assets and liabilities at fair value through
profit and loss.
Interest income recognised in income associated with contracts classified in stage 1 or 2 are determined by applying the
effective interest rate for each contract on its gross book value. The gross balance of a contract is its amortised cost,
before deducting the respective impairment. For financial assets included in stage 3, interest is recognised in the
income statement based on its net book value (less impairment). The interest recognition is always made in a
prospective way, i.e., for financial assets entering stage 3, interest is recognised at the amortised cost (net of
impairment) in subsequent periods.
For purchased or originated credit-impaired assets (POCI), the effective interest rate reflects the expected credit losses
in determining the expected future cash flows receivable from the financial asset.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-580": { "value": "Hedge accounting
As allowed by IFRS 9, the Group opted to continue to apply the hedge accounting requirements in accordance with IAS
39.
The Group designates derivatives and other financial instruments to hedge its exposure to interest rate and foreign
exchange risk, resulting from financing and investment activities. Derivatives that do not qualify for hedge accounting
are accounted for as trading instruments.
Derivative hedging instruments are stated at fair value and gains and losses on revaluation are recognised in accordance
with the hedge accounting model adopted by the Group. A hedge relationship exists when:
\u2013 at the inception of the hedge there is formal documentation of the hedge;
\u2013 the hedge is expected to be highly effective;
\u2013 the effectiveness of the hedge can be reliably measured;
\u2013 the hedge is assessed in a continuous basis and highly effective throughout the reporting period; and,
\u2013 for hedges of a forecasted transaction, the transaction is highly probable and presents an exposure to variations in
cash flows that could ultimately affect profit or loss.
When a derivative financial instrument is used to hedge foreign exchange variations arising from monetary assets or
liabilities, no hedge accounting model is applied. Any gain or loss associated to the derivative is recognised through
profit and loss, as well as changes in currency risk of the monetary items.
C4.1. Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedge instruments are recognised
in profit and loss, together with changes in the fair value attributable to the hedged risk of the asset or liability or
group of assets and liabilities. If the hedge relationship no longer meets the criteria for hedge accounting, the
cumulative gains and losses due to variations of hedged risk linked to the hedge item recognised until the
discontinuance of the hedge accounting are amortised through profit and loss over the residual term of the hedged
item.
C4.2. Cash flow hedge
In a hedge relationship, the effective portion of changes in fair value of derivatives that are designated and qualify as
cash flow hedges are recognised in equity - cash flow hedge reserves in the effective part of the hedge relations. Any
gain or loss relating to the ineffective portion of the hedge is immediately recognised in profit and loss when occurred.
Amounts accumulated in equity are reclassified to profit and loss in the periods in which the hedged item will affect
profit or loss.
In case of hedging variability of cash flows, when the hedge instrument expires or is disposed or when the hedging
relationship no longer meets the criteria for hedge accounting, or when the hedge relation is revoked, the hedge
relationship is discontinued on a prospective basis. Therefore, the fair value changes of the derivative accumulated in
equity until the date of the discontinued hedge accounting can be:
\u2013 deferred over the residual period of the hedged instrument; or,
\u2013 recognised immediately in results if the hedged instrument is extinguished.
In the case of a discontinued hedge of a forecast transaction, the change in fair value of the derivative recognised in
equity at that time remains in equity until the forecasted transaction is ultimately recognised in the income statement.
When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is
immediately transferred to profit and loss.
C4.3. Hedge effectiveness
For a hedge relationship to be classified as such according to IAS 39, effectiveness must be demonstrated. As such, the
Group performs prospective tests at the beginning date of the initial hedge, if applicable, and retrospective tests in
order to demonstrate at each reporting period the effectiveness of the hedging relationships, demonstrating that the
variations in fair value of the hedging instrument are hedged by the fair value variations of the hedged item in the
portion assigned to the risk covered. Any ineffectiveness is recognised immediately in profit and loss when incurred.
C4.4. Hedge of a net investment in a foreign operation
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any exchange gain or
loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity. The gain or loss
relating to the ineffective portion is immediately recognised in profit and loss. Gains and losses accumulated in equity
related to the investment in a foreign operation and to the associated hedge operation are recognised in equity and
transferred to profit and loss, on the disposal of the foreign operation as part of the gain or loss from the disposal.
The detailed information of the strategies, hedge transactions, hedged items and hedging instruments applied by the
Group, is shown in a table below:
Strategy
Description of hedge transactions
Hedged items
Hedging
instruments
Cash flow volatility hedge of the
flows generated by the portfolio
of Euros floating rate mortgage
loans (a)
Group hedges the risk of the volatility of interest
payments from floating rate mortgages. The
volatility of cash flows results from interest rate
risk
Floating rate mortgage loans
(BCP S.A.)
IRS
transactions
Cash flow volatility hedge due to
future income and interest costs
denominated in foreign currencies
(a)
The Group hedges the risk of the volatility of cash
flows generated by income and interest costs
denominated in foreign currencies. The volatility
of cash flows results from the currency risk
Cash flows resulting from
income and interest costs
denominated in foreign
currencies (Bank Millennium
S.A.)
FX position
transactions
Cash flow volatility hedge for the
flows generated by FX mortgage
portfolio and its underlying PLN
liabilities (a)
The Group hedges the risk of the volatility of cash
flows generated by FX mortgages and by PLN
liabilities financially underlying such loans. The
volatility of cash flows results from the currency
risk and interest rate risk
Cash flows resulting from the
FX mortgage loan portfolio
and PLN deposits together
with issued debt PLN
securities funding them (Bank
Millennium S.A.)
CIRS
transactions
Hedge of volatility of the cash
flows generated by PLN
denominated financial assets (a)
The Group hedges the risk of the volatility of cash
flows generated by PLN denominated financial
assets. The volatility of cash flows results from
interest rate risk
Cash flows resulting from PLN
denominated financial assets
(Bank Millennium S.A.)
IRS
transactions
Fair value hedge of fixed rate
mortgage loans (a)
Group hedges changes in the fair value of cash
flows of fixed rate mortgage loans due to changes
in market interest rates
Fixed rate mortgage loans
(BCP S.A.)
IRS
transactions
Fair value hedge of fixed rate
debt instruments (a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate debt securities,
classified as Financial assets
at amortised cost (BCP S.A.)
IRS
transactions
Fair value hedge of fixed rate
debt instruments in Euros (a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate debt securities,
classified as Financial assets
at fair value through other
comprehensive income (BCP
S.A. and ActivoBank S.A.)
IRS
transactions
Fair value hedge of fixed rate
issued debt instruments in Euros
(a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate Issued debt (BCP
S.A.)
IRS
transactions
Fair value hedge of fixed rate
deposits in Euros (a)
Group hedges changes in the fair value of fixed
rate deposits due to changes in market interest
rates
Term deposits (BCP S.A.)
IRS
transactions
Fair value hedge of fixed rate
deposits in Euros (macro hedge)
(b)
Group hedges changes in the fair value of fixed
rate deposits due to changes in market interest
rates
Repayable demand deposits
without maturity (BCP S.A.
and ActivoBank S.A.)
IRS
transactions
Fair value hedge of fixed rate
debt instruments in USD (a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate debt securities,
classified as Financial assets
at fair value through other
comprehensive income or
amortised cost (BCP S.A.)
CIRS
transactions
Fair value hedge of a fixed
interest rate debt instrument
(macro hedge) (a)
The Group hedges part of the interest rate risk
associated with the change in the fair value of a
fixed-rate debt instrument recorded in other
comprehensive income, resulting from fluctuations
in market interest rate
A portfolio of fixed coupon
debt securities classified as
financial assets measured at
fair value through other
comprehensive income
denominated in PLN (Bank
Millennium S.A.)
IRS
transactions
Hedging the fair value of cash
flows from issued fixed-rate
liabilities denominated in foreign
currencies (b)
The Group hedges part of the interest rate risk
related to changes in the fair value of cash flows
from issued fixed-rate liabilities denominated in
foreign currencies, resulting from the volatility of
market interest rates
Cash flows from issued fixed-
rate liabilities denominated in
foreign currencies (Bank
Millennium S.A.)
IRS
transactions
(a) - Strategy applied in 2023 and 2022.
(b) - Strategy applied in 2023.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-579": { "value": "Hedge accounting
As allowed by IFRS 9, the Group opted to continue to apply the hedge accounting requirements in accordance with IAS
39.
The Group designates derivatives and other financial instruments to hedge its exposure to interest rate and foreign
exchange risk, resulting from financing and investment activities. Derivatives that do not qualify for hedge accounting
are accounted for as trading instruments.
Derivative hedging instruments are stated at fair value and gains and losses on revaluation are recognised in accordance
with the hedge accounting model adopted by the Group. A hedge relationship exists when:
\u2013 at the inception of the hedge there is formal documentation of the hedge;
\u2013 the hedge is expected to be highly effective;
\u2013 the effectiveness of the hedge can be reliably measured;
\u2013 the hedge is assessed in a continuous basis and highly effective throughout the reporting period; and,
\u2013 for hedges of a forecasted transaction, the transaction is highly probable and presents an exposure to variations in
cash flows that could ultimately affect profit or loss.
When a derivative financial instrument is used to hedge foreign exchange variations arising from monetary assets or
liabilities, no hedge accounting model is applied. Any gain or loss associated to the derivative is recognised through
profit and loss, as well as changes in currency risk of the monetary items.
C4.1. Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedge instruments are recognised
in profit and loss, together with changes in the fair value attributable to the hedged risk of the asset or liability or
group of assets and liabilities. If the hedge relationship no longer meets the criteria for hedge accounting, the
cumulative gains and losses due to variations of hedged risk linked to the hedge item recognised until the
discontinuance of the hedge accounting are amortised through profit and loss over the residual term of the hedged
item.
C4.2. Cash flow hedge
In a hedge relationship, the effective portion of changes in fair value of derivatives that are designated and qualify as
cash flow hedges are recognised in equity - cash flow hedge reserves in the effective part of the hedge relations. Any
gain or loss relating to the ineffective portion of the hedge is immediately recognised in profit and loss when occurred.
Amounts accumulated in equity are reclassified to profit and loss in the periods in which the hedged item will affect
profit or loss.
In case of hedging variability of cash flows, when the hedge instrument expires or is disposed or when the hedging
relationship no longer meets the criteria for hedge accounting, or when the hedge relation is revoked, the hedge
relationship is discontinued on a prospective basis. Therefore, the fair value changes of the derivative accumulated in
equity until the date of the discontinued hedge accounting can be:
\u2013 deferred over the residual period of the hedged instrument; or,
\u2013 recognised immediately in results if the hedged instrument is extinguished.
In the case of a discontinued hedge of a forecast transaction, the change in fair value of the derivative recognised in
equity at that time remains in equity until the forecasted transaction is ultimately recognised in the income statement.
When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is
immediately transferred to profit and loss.
C4.3. Hedge effectiveness
For a hedge relationship to be classified as such according to IAS 39, effectiveness must be demonstrated. As such, the
Group performs prospective tests at the beginning date of the initial hedge, if applicable, and retrospective tests in
order to demonstrate at each reporting period the effectiveness of the hedging relationships, demonstrating that the
variations in fair value of the hedging instrument are hedged by the fair value variations of the hedged item in the
portion assigned to the risk covered. Any ineffectiveness is recognised immediately in profit and loss when incurred.
C4.4. Hedge of a net investment in a foreign operation
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any exchange gain or
loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity. The gain or loss
relating to the ineffective portion is immediately recognised in profit and loss. Gains and losses accumulated in equity
related to the investment in a foreign operation and to the associated hedge operation are recognised in equity and
transferred to profit and loss, on the disposal of the foreign operation as part of the gain or loss from the disposal.
C5. Embedded Derivatives
An embedded derivative is a component of a hybrid agreement, which also includes a non-derived host instrument.
If the main instrument included in the hybrid contract is considered a financial asset, the classification and
measurement of the entire hybrid contract is carried out in accordance with the criteria described in note C1.1.3.
Derivatives embedded in contracts that are not considered financial assets are treated separately whenever the
economic risks and benefits of the derivative are not related to those of the main instrument, since the hybrid
instrument is not initially recognised at fair value through profit or loss. Embedded derivatives are recorded at fair
value with subsequent fair value changes recorded in profit or loss for the period and presented in the trading
derivatives portfolio.
D.
The detailed information of the strategies, hedge transactions, hedged items and hedging instruments applied by the
Group, is shown in a table below:
Strategy
Description of hedge transactions
Hedged items
Hedging
instruments
Cash flow volatility hedge of the
flows generated by the portfolio
of Euros floating rate mortgage
loans (a)
Group hedges the risk of the volatility of interest
payments from floating rate mortgages. The
volatility of cash flows results from interest rate
risk
Floating rate mortgage loans
(BCP S.A.)
IRS
transactions
Cash flow volatility hedge due to
future income and interest costs
denominated in foreign currencies
(a)
The Group hedges the risk of the volatility of cash
flows generated by income and interest costs
denominated in foreign currencies. The volatility
of cash flows results from the currency risk
Cash flows resulting from
income and interest costs
denominated in foreign
currencies (Bank Millennium
S.A.)
FX position
transactions
Cash flow volatility hedge for the
flows generated by FX mortgage
portfolio and its underlying PLN
liabilities (a)
The Group hedges the risk of the volatility of cash
flows generated by FX mortgages and by PLN
liabilities financially underlying such loans. The
volatility of cash flows results from the currency
risk and interest rate risk
Cash flows resulting from the
FX mortgage loan portfolio
and PLN deposits together
with issued debt PLN
securities funding them (Bank
Millennium S.A.)
CIRS
transactions
Hedge of volatility of the cash
flows generated by PLN
denominated financial assets (a)
The Group hedges the risk of the volatility of cash
flows generated by PLN denominated financial
assets. The volatility of cash flows results from
interest rate risk
Cash flows resulting from PLN
denominated financial assets
(Bank Millennium S.A.)
IRS
transactions
Fair value hedge of fixed rate
mortgage loans (a)
Group hedges changes in the fair value of cash
flows of fixed rate mortgage loans due to changes
in market interest rates
Fixed rate mortgage loans
(BCP S.A.)
IRS
transactions
Fair value hedge of fixed rate
debt instruments (a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate debt securities,
classified as Financial assets
at amortised cost (BCP S.A.)
IRS
transactions
Fair value hedge of fixed rate
debt instruments in Euros (a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate debt securities,
classified as Financial assets
at fair value through other
comprehensive income (BCP
S.A. and ActivoBank S.A.)
IRS
transactions
Fair value hedge of fixed rate
issued debt instruments in Euros
(a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate Issued debt (BCP
S.A.)
IRS
transactions
Fair value hedge of fixed rate
deposits in Euros (a)
Group hedges changes in the fair value of fixed
rate deposits due to changes in market interest
rates
Term deposits (BCP S.A.)
IRS
transactions
Fair value hedge of fixed rate
deposits in Euros (macro hedge)
(b)
Group hedges changes in the fair value of fixed
rate deposits due to changes in market interest
rates
Repayable demand deposits
without maturity (BCP S.A.
and ActivoBank S.A.)
IRS
transactions
Fair value hedge of fixed rate
debt instruments in USD (a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate debt securities,
classified as Financial assets
at fair value through other
comprehensive income or
amortised cost (BCP S.A.)
CIRS
transactions
Fair value hedge of a fixed
interest rate debt instrument
(macro hedge) (a)
The Group hedges part of the interest rate risk
associated with the change in the fair value of a
fixed-rate debt instrument recorded in other
comprehensive income, resulting from fluctuations
in market interest rate
A portfolio of fixed coupon
debt securities classified as
financial assets measured at
fair value through other
comprehensive income
denominated in PLN (Bank
Millennium S.A.)
IRS
transactions
Hedging the fair value of cash
flows from issued fixed-rate
liabilities denominated in foreign
currencies (b)
The Group hedges part of the interest rate risk
related to changes in the fair value of cash flows
from issued fixed-rate liabilities denominated in
foreign currencies, resulting from the volatility of
market interest rates
Cash flows from issued fixed-
rate liabilities denominated in
foreign currencies (Bank
Millennium S.A.)
IRS
transactions
(a) - Strategy applied in 2023 and 2022.
(b) - Strategy applied in 2023.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-581": { "value": "Embedded Derivatives
An embedded derivative is a component of a hybrid agreement, which also includes a non-derived host instrument.
If the main instrument included in the hybrid contract is considered a financial asset, the classification and
measurement of the entire hybrid contract is carried out in accordance with the criteria described in note C1.1.3.
Derivatives embedded in contracts that are not considered financial assets are treated separately whenever the
economic risks and benefits of the derivative are not related to those of the main instrument, since the hybrid
instrument is not initially recognised at fair value through profit or loss. Embedded derivatives are recorded at fair
value with subsequent fair value changes recorded in profit or loss for the period and presented in the trading
derivatives portfolio.
D. Fair value of derivative financial instruments
Fair values are based on listed market prices if available, otherwise fair value is determined either by dealer price
quotations (either for that transaction or for similar instruments traded) or by pricing models, based on net present
value of estimated future cash flows which considers the market conditions for the underlying instruments, time value,
yield curve and volatility factors. These pricing models may require assumptions or judgments in estimating their fair
values. Consequently, the use of a different model or of different assumptions or judgments in applying a particular
model could result in different results from the ones reported.
Due to market stress conditions, the Bank needed to reallocate the risk limits, especially in the sensitivity limit of the
trading portfolio and to review the stress-test scenarios and their methodologies.
In the context of the uncertainty associated with the current macroeconomic framework, the calculation of fair value
adjustments was revised considering liquidity discounts, the costs of closing positions (widening the buy and sell
spread), credit risk, spreads of financing and increased volatility.
Y7.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-583": { "value": "
A financial instrument is an equity instrument only if: i) the instrument includes no contractual obligation to deliver
cash or another financial asset to another entity or to exchange financial assets or financial liabilities with another
entity under conditions that are potentially unfavourable to the entity; and, ii) the instrument will or may be settled in
the issuer's own equity instruments, it is either a non-derivative that includes no contractual obligation for the issuer to
deliver a variable number of its own equity instruments or a derivative that will be settled only by the issuer
exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments.
An equity instrument, independently from its legal form, evidences a residual interest in the assets of an entity after
deducting all its liabilities.
Transaction costs directly attributable to an equity instrument issuance are recognised in equity as a deduction to the
amount issued. Amounts paid or received related to sales or acquisitions of equity instruments are recognised in equity,
net of transaction costs.
Preference shares issued by the Group are considered as an equity instrument when redemption of the shares is solely
at the discretion of the Group and dividends are paid at the discretion of the Group.
Income from equity instruments (dividends) are recognised when the obligation to pay is established and are deducted
to equity.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-582": { "value": "
A financial instrument is an equity instrument only if: i) the instrument includes no contractual obligation to deliver
cash or another financial asset to another entity or to exchange financial assets or financial liabilities with another
entity under conditions that are potentially unfavourable to the entity; and, ii) the instrument will or may be settled in
the issuer's own equity instruments, it is either a non-derivative that includes no contractual obligation for the issuer to
deliver a variable number of its own equity instruments or a derivative that will be settled only by the issuer
exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments.
An equity instrument, independently from its legal form, evidences a residual interest in the assets of an entity after
deducting all its liabilities.
Transaction costs directly attributable to an equity instrument issuance are recognised in equity as a deduction to the
amount issued. Amounts paid or received related to sales or acquisitions of equity instruments are recognised in equity,
net of transaction costs.
Preference shares issued by the Group are considered as an equity instrument when redemption of the shares is solely
at the discretion of the Group and dividends are paid at the discretion of the Group.
Income from equity instruments (dividends) are recognised when the obligation to pay is established and are deducted
to equity.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-584": { "value": "Securities borrowing
Securities lent under securities lending arrangements continue to be recognised in the balance sheet and are measured
in accordance with the applicable accounting policy. Cash collateral received in respect of securities lent is recognised
as a financial liability. Securities borrowed under securities borrowing agreements are not recognised. Cash collateral
placements in respect of securities borrowed are recognised under loans and advances to either banks or customers.
Income and expenses arising from the securities borrowing and lending business are recognised on an accrual basis over
the period of the transactions and are included in interest income or expense (net interest income).
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-586": { "value": "Repurchase agreements
The Group performs acquisition/sale of securities under reselling/repurchase agreements of securities substantially
equivalent in a future date at a predetermined price ('repos'/'reverse repos'). The securities related to reselling
agreements in a future date are not recognised in the balance sheet. The amounts paid are recognised in loans and
advances to customers or loans and advances to credit institutions. The receivables are collateralised by the related
securities. Securities sold through repurchase agreements continue to be recognised in the balance sheet and are
revaluated in accordance with the applicable accounting policy. The amounts received from the proceeds of these
securities are considered as deposits from customers and deposits from credit institutions. The difference between the
acquisition/sale and reselling/repurchase conditions is recognised on an accrual basis over the period of the transaction
and is included in interest income or expenses.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRepurchaseAndReverseRepurchaseAgreementsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-585": { "value": "Repurchase agreements
The Group performs acquisition/sale of securities under reselling/repurchase agreements of securities substantially
equivalent in a future date at a predetermined price ('repos'/'reverse repos'). The securities related to reselling
agreements in a future date are not recognised in the balance sheet. The amounts paid are recognised in loans and
advances to customers or loans and advances to credit institutions. The receivables are collateralised by the related
securities. Securities sold through repurchase agreements continue to be recognised in the balance sheet and are
revaluated in accordance with the applicable accounting policy. The amounts received from the proceeds of these
securities are considered as deposits from customers and deposits from credit institutions. The difference between the
acquisition/sale and reselling/repurchase conditions is recognised on an accrual basis over the period of the transaction
and is included in interest income or expenses.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRepurchaseAndReverseRepurchaseAgreementsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-590": { "value": "Non-current assets held for sale and Discontinued or discontinuing operations
Non-current assets, groups of non-current assets held for sale (groups of assets together with related liabilities that
include at least\u00a0 a non-current asset) and discontinued operations are classified as held for sale when the intention is
to sell the referred assets and liabilities and when the referred assets or group of assets are available for immediate
sale, subject to the terms of sale usually applicable to these types of assets, and its sale is highly probable, in
accordance with IFRS 5. For the sale to be considered highly probable, the Group must be committed to a plan to sell
the asset (or disposal group) and must have initiated an active program to locate a buyer and complete the plan. In
addition, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its
current fair value. Furthermore, it should be expected that the sale qualifies for recognition as a completed sale within
one year from the date of classification, except as permitted by paragraph 9 of IFRS 5, and that the Group remains
committed to the asset sales plan and the delay is caused by events or circumstances beyond its control.
If the requirements set out in IFRS 5 for these assets are not met, the balance sheet value and respective impairment
are reflected in the caption \"Other assets\". In 2023, a group of properties was reclassified, as described in notes 27 and
32.
The Group also classifies as non-current assets held for sale those non-current assets or groups of assets acquired
exclusively with a view to its subsequent disposal, which are available for immediate sale and its sale is highly
probable. Immediately before classification as held for sale, the measurement of the non-current assets or all assets
and liabilities in a disposal group, is performed in accordance with the applicable IFRS. After their reclassification,
these assets or disposal groups are measured at the lower of their cost and fair value less costs to sell.
Discontinued operations and the subsidiaries acquired exclusively with the purpose to sell in the short-term are
consolidated until the moment of their sale.
G1. Non-operating real estate (INAE)
The Group also classifies as non-current assets held for sale the non-operating real estate (INAE), which include
properties acquired by the Group as a result of the resolution of customer credit processes, as well as own properties
that are no longer used by the Group's services.
Properties held by real estate companies and real estate investment funds, which are part of the Group's consolidation
perimeter, whose capital or units acquired by the Group as a result of the recovery loans are treated as INAE.
At the time of acquisition, real estate classified as INAE is recognised at the lower of the value of the loans existing on
the date on which the recovery occurs, or the judicial decision is formalised, and the fair value of the property, net of
estimated costs for sale. Subsequent measurement of INAE is made at the lower of their book value and the
corresponding fair value, net of the estimated costs for their sale and are not subject to amortisation. Impairment
losses are recorded in the results of the period in which they arise.
The fair value is determined based on the market value, which is determined based on the expected sales price
obtained through periodic evaluations made by expert external evaluators accredited to the Comiss\u00e3o do Mercado de
Valores Mobili\u00e1rios (CMVM).
The principles used to determine the net fair value of selling costs of a property apply, whenever possible, to real
estate like INAE held by Real Estate Companies and Real Estate Investment Funds for the purpose of consolidating
Group accounts.
Whenever the net fair value of the selling costs calculated for an INAE is less than the amount by which the same is
recognised in the Group's balance sheet, an impairment loss is recorded in the amount of the decrease in value
ascertained. Impairment losses are recorded against income for the year.
If the net fair value of the selling costs of an INAE, after recognition of impairment, indicates a gain, the Group may
reflect that gain up to the maximum of the impairment that has been recorded on that property.
H.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-589": { "value": "Non-current assets held for sale and Discontinued or discontinuing operations
Non-current assets, groups of non-current assets held for sale (groups of assets together with related liabilities that
include at least\u00a0 a non-current asset) and discontinued operations are classified as held for sale when the intention is
to sell the referred assets and liabilities and when the referred assets or group of assets are available for immediate
sale, subject to the terms of sale usually applicable to these types of assets, and its sale is highly probable, in
accordance with IFRS 5. For the sale to be considered highly probable, the Group must be committed to a plan to sell
the asset (or disposal group) and must have initiated an active program to locate a buyer and complete the plan. In
addition, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its
current fair value. Furthermore, it should be expected that the sale qualifies for recognition as a completed sale within
one year from the date of classification, except as permitted by paragraph 9 of IFRS 5, and that the Group remains
committed to the asset sales plan and the delay is caused by events or circumstances beyond its control.
If the requirements set out in IFRS 5 for these assets are not met, the balance sheet value and respective impairment
are reflected in the caption \"Other assets\". In 2023, a group of properties was reclassified, as described in notes 27 and
32.
The Group also classifies as non-current assets held for sale those non-current assets or groups of assets acquired
exclusively with a view to its subsequent disposal, which are available for immediate sale and its sale is highly
probable. Immediately before classification as held for sale, the measurement of the non-current assets or all assets
and liabilities in a disposal group, is performed in accordance with the applicable IFRS. After their reclassification,
these assets or disposal groups are measured at the lower of their cost and fair value less costs to sell.
Discontinued operations and the subsidiaries acquired exclusively with the purpose to sell in the short-term are
consolidated until the moment of their sale.
G1. Non-operating real estate (INAE)
The Group also classifies as non-current assets held for sale the non-operating real estate (INAE), which include
properties acquired by the Group as a result of the resolution of customer credit processes, as well as own properties
that are no longer used by the Group's services.
Properties held by real estate companies and real estate investment funds, which are part of the Group's consolidation
perimeter, whose capital or units acquired by the Group as a result of the recovery loans are treated as INAE.
At the time of acquisition, real estate classified as INAE is recognised at the lower of the value of the loans existing on
the date on which the recovery occurs, or the judicial decision is formalised, and the fair value of the property, net of
estimated costs for sale. Subsequent measurement of INAE is made at the lower of their book value and the
corresponding fair value, net of the estimated costs for their sale and are not subject to amortisation. Impairment
losses are recorded in the results of the period in which they arise.
The fair value is determined based on the market value, which is determined based on the expected sales price
obtained through periodic evaluations made by expert external evaluators accredited to the Comiss\u00e3o do Mercado de
Valores Mobili\u00e1rios (CMVM).
The principles used to determine the net fair value of selling costs of a property apply, whenever possible, to real
estate like INAE held by Real Estate Companies and Real Estate Investment Funds for the purpose of consolidating
Group accounts.
Whenever the net fair value of the selling costs calculated for an INAE is less than the amount by which the same is
recognised in the Group's balance sheet, an impairment loss is recorded in the amount of the decrease in value
ascertained. Impairment losses are recorded against income for the year.
If the net fair value of the selling costs of an INAE, after recognition of impairment, indicates a gain, the Group may
reflect that gain up to the maximum of the impairment that has been recorded on that property.
H. Non-current assets held for sale
This balance is analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Gross value
Impairment
Net value
Gross value
Impairment
Net value
Real estate
Assets arising from recovered loans
87,735
(39,327)
48,408
326,577
(90,699)
235,878
Assets belong to investments funds and
real estate companies
19,854
(6,149)
13,705
266,544
(46,497)
220,047
Assets for own use (closed branches)
3,472
(1,671)
1,801
20,556
(6,626)
13,930
Equipment and other
5,006
(696)
4,310
22,117
(5,743)
16,374
Other assets (*)
16,446
(4,353)
12,093
12,806
\u2014
12,806
132,513
(52,196)
80,317
648,600
(149,565)
499,035
(*) includes Shares, Price Deposit and Property Adjudication Proposals
In 2023, a set of assets with a balance sheet value of Euros 264.127.000 (of which Euros 237,816,000 in Assets arising
from recovered loans) and respective impairment of Euros 51,802,000 (of which Euros 50,856,000 in Assets arising from
recovered loans), were transferred to \"Other assets\u201d (note 32) following the analysis of the requirements provided in
IFRS 5.
The assets included in this balance are accounted for in accordance with the accounting policy described in note 1 G.
The balance Real estate - Assets arising from recovered loans includes, essentially, real estate resulted from process of
recovered loans or judicial auction being accounted for at the time the Group assumes control of the asset, which is
usually associated with the transfer of their legal ownership. Additional information on these assets is presented in note
54.
The Group has a strategy for sale these assets, consistent with the characteristic of each asset as well as with the
breakdown of underlying valuations. However, considering the formal constraints, it was not possible in all instances to
conclude the sales in the expected time. The sale strategy is based in an active search of buyers, with the Group having
a website where advertises these properties and through partnerships with the mediation of companies having more
ability for the product that each time the Group has for sale. Prices are periodically reviewed and adjusted for
continuous adaptation to the market. The Group requests, regularly, to the European Central Bank, the extension of
the period of holding these properties.
As at 31 December 2023, this balance includes properties for which the Group has already entered sales contracts in
the gross amount of Euros 54,014,000 (31\u00a0December 2022: Euros 97,975,000). The impairment associated with these
contracts amounts to Euros 24,127,000 (31\u00a0December 2022: Euros 11,296,000), and it was calculated considering the
value of the respective contracts. With reference to 31 December 2022, from the total of the entered sales contracts
Euros 70,169,000 were related to properties held by investment funds and for which was recorded impairment in the
amount of Euros 6,059,000.
The changes occurred in Impairment of non-current assets held for sale are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
149,565
190,714
Transfer to other assets
(51,802)
\u2014
Other transfers
(21,143)
\u2014
Charge for the year (note 13)
12,899
78,318
Reversals for the year (note 13)
(1,656)
(1,116)
Amounts charged-off
(35,249)
(119,073)
Exchange rate differences
(418)
722
Balance at the end of the year
52,196
149,565
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-588": { "value": "Non-current assets held for sale and Discontinued or discontinuing operations
Non-current assets, groups of non-current assets held for sale (groups of assets together with related liabilities that
include at least\u00a0 a non-current asset) and discontinued operations are classified as held for sale when the intention is
to sell the referred assets and liabilities and when the referred assets or group of assets are available for immediate
sale, subject to the terms of sale usually applicable to these types of assets, and its sale is highly probable, in
accordance with IFRS 5. For the sale to be considered highly probable, the Group must be committed to a plan to sell
the asset (or disposal group) and must have initiated an active program to locate a buyer and complete the plan. In
addition, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its
current fair value. Furthermore, it should be expected that the sale qualifies for recognition as a completed sale within
one year from the date of classification, except as permitted by paragraph 9 of IFRS 5, and that the Group remains
committed to the asset sales plan and the delay is caused by events or circumstances beyond its control.
If the requirements set out in IFRS 5 for these assets are not met, the balance sheet value and respective impairment
are reflected in the caption \"Other assets\". In 2023, a group of properties was reclassified, as described in notes 27 and
32.
The Group also classifies as non-current assets held for sale those non-current assets or groups of assets acquired
exclusively with a view to its subsequent disposal, which are available for immediate sale and its sale is highly
probable. Immediately before classification as held for sale, the measurement of the non-current assets or all assets
and liabilities in a disposal group, is performed in accordance with the applicable IFRS. After their reclassification,
these assets or disposal groups are measured at the lower of their cost and fair value less costs to sell.
Discontinued operations and the subsidiaries acquired exclusively with the purpose to sell in the short-term are
consolidated until the moment of their sale.
G1. Non-operating real estate (INAE)
The Group also classifies as non-current assets held for sale the non-operating real estate (INAE), which include
properties acquired by the Group as a result of the resolution of customer credit processes, as well as own properties
that are no longer used by the Group's services.
Properties held by real estate companies and real estate investment funds, which are part of the Group's consolidation
perimeter, whose capital or units acquired by the Group as a result of the recovery loans are treated as INAE.
At the time of acquisition, real estate classified as INAE is recognised at the lower of the value of the loans existing on
the date on which the recovery occurs, or the judicial decision is formalised, and the fair value of the property, net of
estimated costs for sale. Subsequent measurement of INAE is made at the lower of their book value and the
corresponding fair value, net of the estimated costs for their sale and are not subject to amortisation. Impairment
losses are recorded in the results of the period in which they arise.
The fair value is determined based on the market value, which is determined based on the expected sales price
obtained through periodic evaluations made by expert external evaluators accredited to the Comiss\u00e3o do Mercado de
Valores Mobili\u00e1rios (CMVM).
The principles used to determine the net fair value of selling costs of a property apply, whenever possible, to real
estate like INAE held by Real Estate Companies and Real Estate Investment Funds for the purpose of consolidating
Group accounts.
Whenever the net fair value of the selling costs calculated for an INAE is less than the amount by which the same is
recognised in the Group's balance sheet, an impairment loss is recorded in the amount of the decrease in value
ascertained. Impairment losses are recorded against income for the year.
If the net fair value of the selling costs of an INAE, after recognition of impairment, indicates a gain, the Group may
reflect that gain up to the maximum of the impairment that has been recorded on that property.
H.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-587": { "value": "Non-current assets held for sale and Discontinued or discontinuing operations
Non-current assets, groups of non-current assets held for sale (groups of assets together with related liabilities that
include at least\u00a0 a non-current asset) and discontinued operations are classified as held for sale when the intention is
to sell the referred assets and liabilities and when the referred assets or group of assets are available for immediate
sale, subject to the terms of sale usually applicable to these types of assets, and its sale is highly probable, in
accordance with IFRS 5. For the sale to be considered highly probable, the Group must be committed to a plan to sell
the asset (or disposal group) and must have initiated an active program to locate a buyer and complete the plan. In
addition, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its
current fair value. Furthermore, it should be expected that the sale qualifies for recognition as a completed sale within
one year from the date of classification, except as permitted by paragraph 9 of IFRS 5, and that the Group remains
committed to the asset sales plan and the delay is caused by events or circumstances beyond its control.
If the requirements set out in IFRS 5 for these assets are not met, the balance sheet value and respective impairment
are reflected in the caption \"Other assets\". In 2023, a group of properties was reclassified, as described in notes 27 and
32.
The Group also classifies as non-current assets held for sale those non-current assets or groups of assets acquired
exclusively with a view to its subsequent disposal, which are available for immediate sale and its sale is highly
probable. Immediately before classification as held for sale, the measurement of the non-current assets or all assets
and liabilities in a disposal group, is performed in accordance with the applicable IFRS. After their reclassification,
these assets or disposal groups are measured at the lower of their cost and fair value less costs to sell.
Discontinued operations and the subsidiaries acquired exclusively with the purpose to sell in the short-term are
consolidated until the moment of their sale.
G1. Non-operating real estate (INAE)
The Group also classifies as non-current assets held for sale the non-operating real estate (INAE), which include
properties acquired by the Group as a result of the resolution of customer credit processes, as well as own properties
that are no longer used by the Group's services.
Properties held by real estate companies and real estate investment funds, which are part of the Group's consolidation
perimeter, whose capital or units acquired by the Group as a result of the recovery loans are treated as INAE.
At the time of acquisition, real estate classified as INAE is recognised at the lower of the value of the loans existing on
the date on which the recovery occurs, or the judicial decision is formalised, and the fair value of the property, net of
estimated costs for sale. Subsequent measurement of INAE is made at the lower of their book value and the
corresponding fair value, net of the estimated costs for their sale and are not subject to amortisation. Impairment
losses are recorded in the results of the period in which they arise.
The fair value is determined based on the market value, which is determined based on the expected sales price
obtained through periodic evaluations made by expert external evaluators accredited to the Comiss\u00e3o do Mercado de
Valores Mobili\u00e1rios (CMVM).
The principles used to determine the net fair value of selling costs of a property apply, whenever possible, to real
estate like INAE held by Real Estate Companies and Real Estate Investment Funds for the purpose of consolidating
Group accounts.
Whenever the net fair value of the selling costs calculated for an INAE is less than the amount by which the same is
recognised in the Group's balance sheet, an impairment loss is recorded in the amount of the decrease in value
ascertained. Impairment losses are recorded against income for the year.
If the net fair value of the selling costs of an INAE, after recognition of impairment, indicates a gain, the Group may
reflect that gain up to the maximum of the impairment that has been recorded on that property.
H.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-591": { "value": "Lease transactions (IFRS 16)
This standard establishes the requirements regarding the scope, classification/recognition and measurement of leases:
\u2013 from the lessor's perspective, leases will continue to be classified as finance leases or operating leases;
\u2013 from the lessee\u2019s perspective, the standard defines a single model of accounting for lease contracts, which results
in the recognition of a right-of-use asset and a lease liability for all leases, except for those which the lease term
ends within 12 months or for those which the underlying asset is of low-value and, in these cases, the lessee may
opt for the exemption from recognition under IFRS 16 and shall recognise the lease payments associated with these
leases as an expense.
The Group chose not to apply this standard to short-term lease contracts, i.e. contracts with a term shorter than or
equal to one year, and to lease contracts in which the underlying asset\u2019s value is below Euros 5,000. Additionally, this
standard was not applied to leases of intangible assets.
Lease definition
The lease definition focuses on the control of the identified asset, establishing that a contract constitutes or contains a
lease if it carries the right to control the use of an identified asset, i.e., the right to obtain substantially all the
economic benefits of using it, and the right to choose how to use the identified asset over a period in exchange of a
payment.
Impacts from the lessee\u2019s perspective
The Group recognises for all leases, except for those with a term under 12 months or for leases of low-value assets:
\u2013 a right-of-use asset initially measured at cost must consider the Net Present Value (NPV) of the lease liability plus
the value of payments made (fixed and/or variable), deducted from any lease incentives received, penalties for
terminating the lease (if reasonably certain), as well as any cost estimates to be supported by the lessee with the
dismantling and removal of the underlying asset and/or with the recovery of its location. Subsequently, it will be
measured according to the cost model (subject to depreciations/amortisations and impairment tests);
\u2013 a lease liability initially recorded at the present value of the remaining lease payments (NPV), which includes:
\u2013 fixed payments deducted from any lease incentives receivable;
\u2013 variable lease payments that depend on a rate or an index, initially measured considering the rate or index as at
the commencement date;
\u2013 amounts expected to be paid by the lessee under residual values guarantees;
\u2013 the exercise price of a purchase option, if the lessee is reasonably certain to exercise that option;
\u2013 payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to end
the lease.
Since it is not possible to easily determine the implicit interest rate in the lease (paragraph 26 of IFRS 16), lease
payments are discounted according to the lessee\u2019s incremental borrowing rate, which embodies the risk-free rate curve
(swap curve) plus the Group\u2019s spread of risk, applied over the weighted average term of each lease contract. For term
contracts, that date is considered as the end of lease date, while for contracts without term, or with renewable terms,
it is assessed using the date in which the contract is enforceable, as well as eventual economic penalties associated
with the lease contract. In the evaluation of enforceability, the particular clauses of the contracts are considered, as
well as the current law on Urban Leases.
Subsequently, lease payments are measured as follows:
\u2013 by increasing their carrying amount to reflect interest;
\u2013 by reducing their carrying amount to reflect lease payments;
\u2013 carrying amount shall be remeasured to reflect any leases\u2019 revaluations or changes, as well as to reflect the review
of in -substance fixed payments and the review of the lease term.
The Group remeasures the lease liability (and makes a corresponding adjustment to the right-of-use asset) whenever:
\u2013 the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case
the lease liability is remeasured by discounting the revised lease payments using the revised discount rate;
\u2013 the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed
residual value, in which cases the liability is remeasured by discounting the revised lease payments using the initial
discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a
revised discount rate is used;
\u2013 a lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the
lease liability is remeasured by discounting the revised lease payments using the revised discount rate.
The Group did not make any adjustment during the periods presented.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If the
lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to
exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset.
The depreciation starts at the commencement date of the lease.
The implementation of this standard implies changes in the Group\u2019s financial statements, namely:
\u2013 in the consolidated income statement:
(i) recording in \u201cInterest Income\u201d the interest expenses related to lease liabilities;
(ii) recording in \u201cOther administrative costs\u201d the amounts related to short-term lease contracts and to lease
contracts of low-value assets; and,
(iii) recording in \u201cAmortisations and depreciations\u201d the depreciation expenses related to right-to-use assets.
\u2013 in the consolidated balance sheet:
(i) recording in \u201cFinancial assets at amortised cost \u2013 Loans and advances to customers\u201d the recognition of financial
assets related to sublease operations measured accordingly to IFRS 9;
(ii) recording in \u201cOther tangible assets\u201d the recognition of right-to-use assets; and,
(iii) recording in \u201cOther liabilities\u201d the amount of recognised lease liabilities.
\u2013 in the consolidated statement of cash flows, the balance \u201cCash flows arising from operating activities \u2013 Payments
(cash) to suppliers and employees\u201d includes amounts related to short-term lease contracts and to lease contracts of
low-value assets, and the balance \u201cCash flows arising from financing activities - Decrease in other sundry liabilities
and non-controlling interests\u201d includes amounts related to payments of lease liabilities\u2019 capital portions, as detailed
in the consolidated statement of cash flows.
Impact from the lessor\u2019s perspective
In accordance with IFRS 16, paragraph 62, lessors shall classify leases as finance or operational leases.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards inherent to ownership of an
underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards
inherent to ownership of an underlying asset.
Subleases
A sublease implies that the lessee establishes a lease contract with a third party, which acts as an intermediary, and
the lease contract with the original lessor is kept in force.
IFRS 16 \u2013 Leases requires that the lessor evaluates subleases regarding right-to-use and not regarding the underlying
asset.
The sublease\u2019s lessor, simultaneously lessee regarding the original lease, shall recognise an asset in the financial
statement \u2013 a right-to-use related to the initial lease (if the lease is classified as operating) or a financial asset,
measured according to IFRS 9, related to the sublease (if the lease is classified as financing).
In case the primary lease is short-term, then the sublease should be classified as an operating lease.
I.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-592": { "value": "Recognition of income from services and commissions
In accordance with IFRS 15, the Bank recognizes revenue associated with services and commissions when (or as) a
performance obligation is satisfied when transferring a service, based on the transaction price associated with this
performance obligation. In this context, the Bank takes the following steps to recognize revenue associated with
services and commissions:
- Recognition (satisfaction of the performance obligation): (i) identification of the contract associated with the service
provided and whether it should be covered by IFRS 15; (ii) identification of performance obligations associated with
each contract; (iii) definition of the criteria for the fulfilment of performance obligations, also considering the
contractual terms established with the counterparty. According to this definition, a service is transferred when the
customer obtains the benefits and control associated with the service provided. In this context, the Bank also identifies
whether performance obligations are met over time (\u201cover time\u201d) or at an exact moment (\u201cpoint in time\u201d), with
revenue being recognized accordingly.
- Measurement (price to be recognized associated with each performance obligation): (i) determine the transaction
price associated with the service provided, considering the contractual terms established with the counterparty and its
usual commercial practices. The transaction price is the amount of consideration to which the Bank expects to be
entitled in exchange for transferring promised services to the customer, excluding amounts collected on behalf of third
parties. The Bank includes in the transaction price part or all of the estimated amount of the variable consideration
associated with a performance obligation, only to the extent that it is highly probable that a significant reversal in the
amount of the accrued revenue recognized will not occur when the uncertainty associated with that variable
consideration is subsequently resolved; and (ii) allocate the transaction price to each of the performance obligations
identified under the contract established with the customer.
It should be noted that when services or commissions are an integral part of the effective interest rate of a financial
instrument, income resulting from services and commissions is recorded in net interest income (Note C.3).
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFeeAndCommissionIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-593": { "value": "Gains/(losses) on financial operations at fair value through profit or loss, Foreign exchange
gains/(losses), Gains/(losses) on hedge accounting and Gains/(losses) arising from
derecognition of financial assets and liabilities not measured at fair value through profit or
loss
These balances include gains and losses on financial assets and liabilities at fair value through profit and loss, i.e., fair
value changes and interest on trading derivatives and embedded derivatives, as well as the corresponding dividends
received. This balance also includes the gains and losses on sale of financial assets at fair value through other
comprehensive income and financial assets and financial liabilities at amortised cost. The changes in fair value of
hedging derivatives and hedged items, when fair value hedge is applicable, are also recognised in this balance, as well
as the foreign exchange gains or losses.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradingIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-594": { "value": "Other tangible assets
Other tangible assets are stated at acquisition cost less accumulated depreciation and impairment losses. Subsequent
costs are recognised as a separate asset only when it is probable that future economic benefits will result for the
Group. All other repairs and maintenance expenses are charged to the income statement during the financial period in
which they are incurred, under the principle of accrual-based accounting.
Depreciation is calculated on a straight-line basis, over the following periods which correspond to their estimated
useful life:
Number of years
Buildings
50
Expenditure on freehold and leasehold buildings
10
Equipment
4 to 12
Other tangible assets
3
Whenever there is an indication that a fixed tangible asset might be impaired, its recoverable amount is estimated and
an impairment loss shall be recognised if the net value of the asset exceeds its recoverable amount. The recoverable
amount is determined as the highest between the fair value less costs to sell and its value in use calculated based on
the present value of future cash flows estimated to be obtained from the continued use of the asset and its sale at the
end of the useful life. The impairment losses of the fixed tangible assets are recognised in the income statement of the
period.
M.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-596": { "value": "
Depreciation is calculated on a straight-line basis, over the following periods which correspond to their estimated
useful life:
Number of years
Buildings
50
Expenditure on freehold and leasehold buildings
10
Equipment
4 to 12
Other tangible assets
3
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-595": { "value": "
Depreciation is calculated on a straight-line basis, over the following periods which correspond to their estimated
useful life:
Number of years
Buildings
50
Expenditure on freehold and leasehold buildings
10
Equipment
4 to 12
Other tangible assets
3
Amortisations and depreciations
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Amortisations of intangible assets (note 30):
Software
33,928
36,168
Other intangible assets
5,289
4,166
39,217
40,334
Depreciations of other tangible assets (note 29):
Properties
14,324
14,917
Equipment
Computers
17,738
16,375
Security equipment
958
862
Installations
3,167
3,007
Machinery
1,649
1,535
Furniture
2,540
2,717
Motor vehicles
5,054
4,636
Other equipment
1,662
1,498
Right-of-use
Real estate
51,190
53,365
Vehicles and equipment
\u2014
4
98,282
98,916
137,499
139,250
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-597": { "value": "Investment properties
Real estate properties owned by the Group are recognised as \u2018Investment properties\u2019 considering that the main
objective of these buildings is their capital appreciation on a long-term basis and not their sale in a short-term period,
nor their maintenance for own use.
These investments are initially recognised at their acquisition cost, including transaction costs, and subsequently
revaluated at their fair value. The fair value of investment properties should reflect the market conditions at the
balance sheet date. Changes in fair value are recognised in the income statement, as \"Other operating income/
(losses)\" (note 6).
The experts responsible for the valuation of the assets are properly certified for that purpose, being registered in
CMVM.
N.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-598": { "value": "Intangible assets
N1. Research and development expenditure
The Group does not capitalise any research and development costs. All expenses are recognised as costs in the period in
which they occur.
N2. Software
The Group recognises as intangible assets the costs associated to software acquired from external entities and
depreciates them on a straight-line basis by an estimated lifetime of 6 years. The Group does not capitalise internal
costs arising from software development.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-599": { "value": "Research and development expenditure
The Group does not capitalise any research and development costs. All expenses are recognised as costs in the period in
which they occur.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-602": { "value": "Cash and cash equivalents
For the purposes of the cash flow statement, the item \u201cCash and cash equivalents\u201d comprises balances with less than
three months maturity from the balance sheet date, where the items \"Cash and deposits at Central Banks\" and \"Loans
and advances to credit institutions\" are included.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-601": { "value": "Cash and cash equivalents
For the purposes of the cash flow statement, the item \u201cCash and cash equivalents\u201d comprises balances with less than
three months maturity from the balance sheet date, where the items \"Cash and deposits at Central Banks\" and \"Loans
and advances to credit institutions\" are included.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-600": { "value": "Cash and cash equivalents
For the purposes of the cash flow statement, the item \u201cCash and cash equivalents\u201d comprises balances with less than
three months maturity from the balance sheet date, where the items \"Cash and deposits at Central Banks\" and \"Loans
and advances to credit institutions\" are included.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCashFlowsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-603": { "value": "Offsetting
Financial assets and liabilities are offset and recognised at their net book value when: i) the Group has a legal right to
offset the amounts recognised and transactions can be settled at their net value; and, ii) the Group intends to settle on
a net basis or realize the asset and settle the liability simultaneously. Considering the current operations of the Group,
no compensation of material amount is made. In case of reclassification of comparative amounts, the provisions of IAS
1.41 are disclosed: i) the nature of the reclassification; ii) the amount of each item (or class of items) reclassified; and,
iii) the reason for the reclassification.
Q.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForOffsettingOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-604": { "value": "Foreign currency transactions
Transactions in foreign currencies are converted into the respective functional currency of the operation at the foreign
exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
converted into the respective functional currency of the operation at the foreign exchange rate on the reporting date.
Foreign exchange differences arising from conversion are recognised in the income statement. Non-monetary assets and
liabilities denominated in foreign currencies, which are stated at historical cost, are converted into the respective
functional currency of the operation at the foreign exchange rate on the date of the transaction. Non-monetary assets
and liabilities denominated in foreign currencies that are stated at fair value are converted into the respective
functional currency of the operation at the foreign exchange rate on the date that the fair value was determined
against profit and loss, except for financial assets at fair value through other comprehensive income, for which the
difference is recognised against equity.
R.
As described in accounting policy 1.B, the financial statements of the Group's subsidiaries and associates placed abroad
are prepared in their functional currency and translated into Euros at the end of each financial period. The exchange
rates used for the conversion of balance sheet foreign currency amounts are the ECB reference rates at the end of each
period. In foreign currency conversion of results, are calculated average exchange rates according to the closing
exchange rates of each month of the year. The rates used by the Group are as follows:
Closing exchange rates
Average exchange rates
(Balance sheet)
(Income statement)
Currency
2023
2022
(restated)
2023
2022
(restated)
AOA
924.8560
543.2680
748.1139
487.7116
BRL
5.3614
5.6390
5.4066
5.4153
CHF
0.9297
0.9872
0.9729
1.0042
MOP
8.8865
8.5744
8.8865
8.5744
MZN
70.5700
68.1850
69.2471
67.5585
PLN
4.3437
4.6816
4.5396
4.6823
USD
1.1049
1.0667
1.0819
1.0537
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-605": { "value": "Employee benefits
R1. Defined benefit plans
The Group has the responsibility to pay its employees' retirement pensions, invalidity pensions and survivor\u2019s pensions
for their death, in accordance with the terms of the two collective labour agreements approved. These benefits are
provided for in the pension plans \u2018Plano ACT\u2019 and \u2018Plano ACTQ\u2019 of the Banco Comercial Portugu\u00eas Group Pension Fund.
Following the publication of Decree-Law no. 54/2009, of 2 March, banking entities are obligatorily enrolling new
employees in the General Social Security System (RGSS). These employees have the RGSS as their basic retirement
scheme, and do not have any benefits under the ACT (base plan). Under the scope of its management and human
resources, the Group had already adopted as a rule the inclusion of new employees in the RGSS since July 2005.
However, until the transposition into the ACT of the alterations resulting from the referred Decree-Law no. 54/2009, all
employees were covered by the provisions of the social security chapter of the ACT, and for employees who were
already registered with the RGSS, the ACT benefit worked as a complement to the RGSS. As of 1 July 2009, in
accordance with the ACT, all new employees only have the RGSS as their basic social security scheme.
Until 2011, in addition to the benefits provided for in the two plans above-mentioned, the Group had assumed the
responsibility, if certain conditions of profitability were verified in each year, of assigning retirement supplements to
the Group's employees hired up to 21 September 2006 (Complementary Plan). The Group, at the end of 2012,
determined the extinction (cut) of the old-age benefit of the Complementary Plan. On 14 December 2012, Instituto de
Seguros de Portugal (ISP) formally approved this change to the Group\u2019s benefit plan, effective from 1 January 2012. The
plan was cut, and employees were given individual acquired rights. On that date, the Group also proceeded to the
settlement of the respective liability.
From 1 January 2011, Bank employees were integrated in the General Social Security Scheme which now covers their
maternity, paternity, adoption and pension benefits. However, the banks remain liable for benefits that concern
illness, disability and life insurance (Decree-Law no. 1-A/2011, of 3 January).
The contributory rate is 26.6% divided between 23.6% supported by the employer and 3% supported by the employee,
replacing the Banking Social Healthcare System which was extinguished by the decree law referred above. As a
consequence of this amendment the capability to receive pensions by the actual employees are covered by the General
Social Security Scheme regime, considering the service period between 1 January 2011 and the retirement age. The
banks support the remaining difference for the total pension assured in the Collective Labour Agreement (ACT).
This integration has led to a decrease in the present value of the total benefits reported to the retirement age to be
borne by the Pension Fund, and this effect is to be recorded in accordance with the Projected Unit Credit during the
average lifetime of the pension until the normal retirement age is reached. The calculation of the liability for pensions
carried out periodically by the actuary considers this effect and is calculated considering the actuarial assumptions in
force, ensuring that the liabilities calculated with reference to 31 December 2010, not considering the effect of the
integration of bank employees into the General Social Security Scheme are fully covered and deducted from the amount
of the effect recognised until the date. The component of this effect for the year is recognised under the heading
\"Current service costs\".
Following the approval by the Government of the Decree-Law no. 127/2011, which was published on 31 December, an
agreement was established between the Government, the Portuguese Banking Association and the Banking Labour
Unions in order to transfer, to the Social Security, the liabilities related to pensions currently being paid to pensioners
and retirees, as at 31 December 2011.
This agreement established that the responsibilities to be transferred related to the pensions in payment as at 31
December 2011 at fixed amounts (discount rate 0%) in the component established in the IRCT - Instrument of Collective
Regulation of Work of the retirees and pensioners. The responsibilities related to the increase in pensions as well as any
other complements, namely, contributions to the Health System (SAMS), death benefit and death before retirement
benefit continued to be under the responsibility of the Financial Institutions.
At the end of December 2016, a revision of the ACT was reached between the BCP Group and four unions from the two
union federations of the unions that represent the Group's employees, which introduced changes in the Social Security
clause and consequently in the pension plan financed by the BCP Group Pension Fund. The new ACT was published by
the Ministry of Labour in the Bulletin of Labour and Employment on 15 February 2017 and the effects were recorded in
the financial statements of 31 December 2016, for employees associated with these four unions.
The negotiation with Sindicato dos Banc\u00e1rios do Norte (SBN), which was also involved in the negotiations of the new
ACT, was concluded in April 2017 with the publication of the Bulletin of Labour and Employment, with the effects of
this new ACT recorded in the financial statements as at 31 December 2017, for employees associates of SBN.
The most relevant changes in the ACT were the change in the retirement age (presumed disability) from 65 years to 66
years and two months in 2016 and the subsequent update of an additional month in each year, which cannot, in any
case, be higher than the one in force at any moment in the General Regime of Social Security, the change in the
formula for determining the employer's contribution to SAMS and, lastly, the introduction of a new benefit called the
End of Career Premium, which replaces the Seniority Premium.
These changes were framed by the Group as a change to the pension plan under the terms of IAS 19, as such had an
impact on the present value of the liabilities with services rendered and were recognised in the income statement for
the year under \"Staff costs\".
In 2017, after the authorization of the Autoridade de Supervis\u00e3o de Seguros e Fundos de Pens\u00f5es (ASF - Portuguese
Insurance and Pension Funds Supervision Authority), the BCP Group's pension fund agreement was amended. The main
purpose of the process was to incorporate into the pension fund the changes introduced in the Group's ACT in terms of
retirement benefits, as well as to transfer to the pension fund the responsibilities that were directly chargeable to the
company (extra-fund liabilities). The pension fund has a part exclusively for the financing of these liabilities which, in
the scope of the fund, is called Additional Complement. The End of Career Premium also became the responsibility of
the pension fund under the basic pension plan.
The Group\u2019s net obligation in respect of pension plans (defined benefit pensions plan) is calculated on a half year basis
on 31 December and 30 June of each year, and whenever there are significant market fluctuations or significant
specific events, such as changes in the plan, curtailments or settlements since the last estimation. The responsibilities
with past service are calculated using the Projected Unit Credit method and actuarial assumptions considered
adequate.
Pension liabilities are calculated by the responsible actuary, who is certified by the ASF.
The Group\u2019s net obligation in respect of defined benefit pension plans and other benefits is calculated separately for
each plan by estimating the amount of future benefit that employees have earned in return for their service in the
current and prior periods. The benefit is discounted to determine its present value, using a discount rate determined by
reference to interest rates of high- quality corporate bonds that have maturity dates approximating the terms of the
Group\u2019s obligations. The net obligations are determined after the deduction of the fair value of the Pension Plan's
assets.
The income/cost of interest with the pension plan is calculated by the Group, multiplying the net asset/liability with
retirement pension (liabilities less the fair value of the plan's assets) by the discount rate used in the determination of
the retirement pension liabilities. On this basis, the income/cost net of interest includes the interest costs associated
with retirement pension liabilities and the expected return of the plan's assets, both measured based on the discount
rate used to calculate the liabilities.
Gains and losses from the re-measurement, namely (i) actuarial gains and losses resulting from differences between
actuarial assumptions used and the amounts actually observed (experienced gains and losses) and changes in actuarial
assumptions and (ii) gains and losses arising from the difference between the expected return of the plan's assets and
the amounts obtained, are recognised against equity under \"Other comprehensive income\".
The Group recognises in its income statement a net total amount that comprises (i) the current service cost, (ii) the
income/cost net of interest with the pension plan, (iii) the effect of early retirement, (iv) past service costs and, (v)
the effects of any settlement or curtailment occurred during the period. The net income/cost with the pension plan is
recognised as interest and similar income or interest expense and similar costs depending on their nature. The costs of
early retirements correspond to the increase in liabilities due to the employee's retirement before reaching the age of
retirement.
Employee benefits, other than pension plans, namely post-retirement health care benefits and benefits for the spouse
and descendants for death before retirement are also included in the benefit plan calculation.
The contributions to the funds are made annually by each company of the Group, according to a specific contribution
plan that ensures the solvency of the fund. In the end of each year, according to Bank of Portugal Notice no. 12/2001,
the minimum level required for the responsibilities funding must be 100% regarding pension payments and 95%
regarding past services of active employees.
R2. Revision of the salary tables for employees in service and pensions in payment
In 2023, negotiations continued with all the unions subscribing to the Group's Collective Labour Agreements, for the
conclusion of the full review of the respective clauses, negotiations which are still ongoing.
At the same time, negotiations took place with all the unions that subscribed the Group's Collective Labour
Agreements, for the review of the Salary Tables and remaining pecuniary clauses relating to the year 2023, having been
agreed on 9 and 17 October with all the Unions subscribing to the Group's Collective Labour Agreements, the update of
the Salary Tables in 2023 with differentiated increases by contractual level between 4.00% and 7.80%. An increase of
4.50% was agreed for the Bank's Contributions to SAMS and other pecuniary clauses, such as study subsidies,
diuturnities, among others, and an increase of 21.43% was agreed for the lunch subsidy, whose daily value increased to
Euros 12.75. The agreed updates took effect on 1 January 2023, with the exception of remuneration related to
subsistence and travel allowances, which were updated after the agreed updates were operationalized.
Regarding the unions SNQTB \u2013 Sindicato Nacional dos Quadros e T\u00e9cnicos Banc\u00e1rios e SIB \u2013 Sindicato Independente da
Banca, an agreement was also reached regarding the revision of the Salary Tables and other pecuniary clauses relating
to the year 2022, as already agreed in 2022 with the remaining unions.
R3. Defined contribution plan
For the defined contribution plans, the responsibilities related to the benefits attributed to the Group's employees are
recognised as expenses when incurred.
As at 31 December 2023, the Group has two defined contribution plans. One plan covers employees who were hired
before 1 July 2009. For this plan, called non-contributory, Group's contributions will be made annually and equal to 1%
of the annual remuneration paid to employees in the previous year. Contributions shall only be made if the following
requirements are met: (i) the Bank's ROE equals or exceeds the rate of government bonds of 10 years plus 5 percentage
points, and (ii) distributable profits or reserves exist in the accounts of Banco Comercial Portugu\u00eas. In 2022 the
indicated requirements were fulfilled, in 2023 the planned annual contribution was accomplished, the expect value of
which was recorded in the costs of 2022. As in the year 2023, the indicated requirements were also fulfilled, a provision
for the annual contribution to be made during 2024 was recorded in the 2023 costs.
The other plan covers employees who have been hired after 1 July 2009. For this plan, designated contributory,
monthly contributions will be made equal to 1.5% of the monthly remuneration received by employees in the current
month, either by themselves or by the Group and employees. This contribution has a mandatory character and is
defined in the Collective Labour Agreement of the BCP Group and does not have a performance criterion.
R4. Variable remuneration paid to employees
In the remuneration policy for employees in force it is foreseen an annual variable remuneration system for employees
not covered by commercial incentive systems, based on the performance assessment of each employee, in accordance
with quantitative and qualitative criteria, that is carried out annually. As a result of this assessment and of the annual
fixed remuneration of reference for the role performed, and provided that the Bank's minimum level of performance,
as measured by a set of quantitative indicators, is met, the amount of the variable remuneration to be attributed to
each employee is determined.
The Executive Committee is responsible, under the terms defined in the remuneration policy, for setting the respective
allocation criteria for each employee, whenever it is attributed. The variable remuneration attributed to employees is
recorded against the income statement in the period to which it relates.
R5. Share-based compensation plan
As at 31 December 2023, a variable compensation plan with BCP shares is in force for the members of the Executive
Committee and for the employees considered Key Function Holders (includes Key Management Members), resulting from
the Remuneration Policies for the members of the management and supervisory bodies and for the Employees, both
approved for the financial year of 2023 and following years, with the changes that may be approved in each financial
year, namely by the General Shareholders\u2019 Meeting regarding the Remuneration Policy for the members of the
management and supervisory bodies, and by the Board of Directors regarding the Remuneration Policy for Employees.
Key Function Holders include Key Management Members, which are the first line directors who report directly to the
Board of Directors and the remaining employees whose professional activities have a significant impact on the Bank's
risk profile.
As defined in the Remuneration Policy for the members of the management and supervisory bodies, an annual variable
remuneration system is foreseen, for which an assessment of the performance of each member of the Executive
Committee is carried out on an annual basis based on quantitative and qualitative criteria. According to this assessment
and the annual fixed remuneration, and provided that the Bank's minimum level of performance as measured by a set
of quantitative indicators is met, the amount of the variable remuneration to be attributed to each member of the
Executive Committee is decided by the Remuneration and Welfare Board. The payment of the amount of the variable
remuneration attributed is subject to a deferral period of 5 years for 50% of its value, being 50% of its value paid in the
year following the financial year in question. The amounts related to the non-deferred and deferred portion are paid
50% in cash and 50% in BCP shares. The number of BCP shares attributed results from their valuation at a price defined
in accordance with the approved Remuneration Policy.
The Remuneration Policy for Employees foresees an annual variable remuneration system for Employees not covered by
Commercial Incentives Systems, based on the performance assessment of each employee, in accordance with
quantitative and qualitative criteria, that is carried out annually. As a result of this assessment and the fixed reference
remuneration for the function performed, and provided that the Bank's minimum level of performance in a set of
quantitative indicators is met, the value of the variable remuneration to be attributed to each Employee is decided by
the Executive Committee. For Employees considered as Key Function Holders, the payment of the amount of the
variable remuneration to be attributed to each Employee is decided by the Nominations and Remunerations Committee,
and its payment subject to a deferral period of 5 years for 40% of its value, with 60% of its value paid in the year
following the financial year in question. The amounts related to the non-deferred and deferred portion are paid 50% in
cash and 50% in BCP shares. The number of BCP shares attributed and to be attributed results from their valuation at a
price defined in accordance with the approved Remuneration Policy. As provided for in the Remuneration Policy for
Employees, if the amount of the annual variable remuneration awarded to a Key Function Holder is less than Euros
50,000 and does not represent more than one third of the total annual remuneration of the Key Function Holder the
payment of the annual variable remuneration will be 100% in cash and there will be no deferral.
Employees considered as Key Function Holders are not covered by Commercial Incentives Systems.
For the remaining Employees not covered by Commercial Incentive Systems, the payment of the variable remuneration
amount awarded is fully paid in cash in the following year to which it relates.
As foreseen in the approved Remuneration Policy and in the applicable legislation, the amounts of variable
remuneration attributed to the members of the Executive Committee and to the Employees Key Function Holders are
subject to reduction and reversal mechanisms, to be applied in case of verification of extremely significant events, duly
identified, in which the people covered have had a direct participation.
For the members of the Executive Committee and to the employees considered as Key Function Holders, a long-term
variable remuneration system is also foreseen, through which these members may receive variable remuneration fully
paid in BCP shares after the end of the assessment period, from 1 January 2022 until 31 December 2025 (from 1 January
2023 until 31 December 2025 to the Employees Key Function Holders), provided that a certain level of performance is
achieved in a set of long-term objectives. The amount of the long-term variable remuneration attributed is subject to a
deferral period of 5 years for 50% of its value, being 50% of its value paid in the year following the assessment period to
which it relates. The number of BCP shares attributed results from their valuation at a price defined in accordance with
the approved Remuneration Policy.
All the shares attributed to the members of the Executive Committee and to the Key Function Holders, within the scope
of the payment of variable remuneration, including long-term, are subject to a retention period of 1 year after their
payment.
The total variable remuneration to be attributed, each year, to each member of the Executive Committee and to the
Key Function Holders, regarding the proportion between its amount and the annual fixed remuneration, is limited to
the limits provided in the respective Remuneration Policy.
S. Pension and other employees\u2019 benefits
Determining pension liabilities requires the use of assumptions and estimations, including the use of actuarial
projections, estimated returns on investment, and other factors, such as discount rate, pensions and salary growth
rates, mortality tables, that could impact the cost and liability of the pension plan.
The discount rate used to update the Bank's pension fund liabilities, regarding the defined benefit pension plans of its
employees and managers, was determined based on an analysis carried out on a set of available information, which
includes, among other elements, the market references for this indicator published by internationally recognized
specialized entities and which are based, as defined by IAS 19, on market yields of a universe of high quality bond
issues (low risk), different maturities, called in Euros and relating to a diverse and representative range of issuers (non-
sovereign).
Y6.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-607": { "value": "Share-based compensation plan
As at 31 December 2023, a variable compensation plan with BCP shares is in force for the members of the Executive
Committee and for the employees considered Key Function Holders (includes Key Management Members), resulting from
the Remuneration Policies for the members of the management and supervisory bodies and for the Employees, both
approved for the financial year of 2023 and following years, with the changes that may be approved in each financial
year, namely by the General Shareholders\u2019 Meeting regarding the Remuneration Policy for the members of the
management and supervisory bodies, and by the Board of Directors regarding the Remuneration Policy for Employees.
Key Function Holders include Key Management Members, which are the first line directors who report directly to the
Board of Directors and the remaining employees whose professional activities have a significant impact on the Bank's
risk profile.
As defined in the Remuneration Policy for the members of the management and supervisory bodies, an annual variable
remuneration system is foreseen, for which an assessment of the performance of each member of the Executive
Committee is carried out on an annual basis based on quantitative and qualitative criteria. According to this assessment
and the annual fixed remuneration, and provided that the Bank's minimum level of performance as measured by a set
of quantitative indicators is met, the amount of the variable remuneration to be attributed to each member of the
Executive Committee is decided by the Remuneration and Welfare Board. The payment of the amount of the variable
remuneration attributed is subject to a deferral period of 5 years for 50% of its value, being 50% of its value paid in the
year following the financial year in question. The amounts related to the non-deferred and deferred portion are paid
50% in cash and 50% in BCP shares. The number of BCP shares attributed results from their valuation at a price defined
in accordance with the approved Remuneration Policy.
The Remuneration Policy for Employees foresees an annual variable remuneration system for Employees not covered by
Commercial Incentives Systems, based on the performance assessment of each employee, in accordance with
quantitative and qualitative criteria, that is carried out annually. As a result of this assessment and the fixed reference
remuneration for the function performed, and provided that the Bank's minimum level of performance in a set of
quantitative indicators is met, the value of the variable remuneration to be attributed to each Employee is decided by
the Executive Committee. For Employees considered as Key Function Holders, the payment of the amount of the
variable remuneration to be attributed to each Employee is decided by the Nominations and Remunerations Committee,
and its payment subject to a deferral period of 5 years for 40% of its value, with 60% of its value paid in the year
following the financial year in question. The amounts related to the non-deferred and deferred portion are paid 50% in
cash and 50% in BCP shares. The number of BCP shares attributed and to be attributed results from their valuation at a
price defined in accordance with the approved Remuneration Policy. As provided for in the Remuneration Policy for
Employees, if the amount of the annual variable remuneration awarded to a Key Function Holder is less than Euros
50,000 and does not represent more than one third of the total annual remuneration of the Key Function Holder the
payment of the annual variable remuneration will be 100% in cash and there will be no deferral.
Employees considered as Key Function Holders are not covered by Commercial Incentives Systems.
For the remaining Employees not covered by Commercial Incentive Systems, the payment of the variable remuneration
amount awarded is fully paid in cash in the following year to which it relates.
As foreseen in the approved Remuneration Policy and in the applicable legislation, the amounts of variable
remuneration attributed to the members of the Executive Committee and to the Employees Key Function Holders are
subject to reduction and reversal mechanisms, to be applied in case of verification of extremely significant events, duly
identified, in which the people covered have had a direct participation.
For the members of the Executive Committee and to the employees considered as Key Function Holders, a long-term
variable remuneration system is also foreseen, through which these members may receive variable remuneration fully
paid in BCP shares after the end of the assessment period, from 1 January 2022 until 31 December 2025 (from 1 January
2023 until 31 December 2025 to the Employees Key Function Holders), provided that a certain level of performance is
achieved in a set of long-term objectives. The amount of the long-term variable remuneration attributed is subject to a
deferral period of 5 years for 50% of its value, being 50% of its value paid in the year following the assessment period to
which it relates. The number of BCP shares attributed results from their valuation at a price defined in accordance with
the approved Remuneration Policy.
All the shares attributed to the members of the Executive Committee and to the Key Function Holders, within the scope
of the payment of variable remuneration, including long-term, are subject to a retention period of 1 year after their
payment.
The total variable remuneration to be attributed, each year, to each member of the Executive Committee and to the
Key Function Holders, regarding the proportion between its amount and the annual fixed remuneration, is limited to
the limits provided in the respective Remuneration Policy.
S.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-606": { "value": "Share-based compensation plan
As at 31 December 2023, a variable compensation plan with BCP shares is in force for the members of the Executive
Committee and for the employees considered Key Function Holders (includes Key Management Members), resulting from
the Remuneration Policies for the members of the management and supervisory bodies and for the Employees, both
approved for the financial year of 2023 and following years, with the changes that may be approved in each financial
year, namely by the General Shareholders\u2019 Meeting regarding the Remuneration Policy for the members of the
management and supervisory bodies, and by the Board of Directors regarding the Remuneration Policy for Employees.
Key Function Holders include Key Management Members, which are the first line directors who report directly to the
Board of Directors and the remaining employees whose professional activities have a significant impact on the Bank's
risk profile.
As defined in the Remuneration Policy for the members of the management and supervisory bodies, an annual variable
remuneration system is foreseen, for which an assessment of the performance of each member of the Executive
Committee is carried out on an annual basis based on quantitative and qualitative criteria. According to this assessment
and the annual fixed remuneration, and provided that the Bank's minimum level of performance as measured by a set
of quantitative indicators is met, the amount of the variable remuneration to be attributed to each member of the
Executive Committee is decided by the Remuneration and Welfare Board. The payment of the amount of the variable
remuneration attributed is subject to a deferral period of 5 years for 50% of its value, being 50% of its value paid in the
year following the financial year in question. The amounts related to the non-deferred and deferred portion are paid
50% in cash and 50% in BCP shares. The number of BCP shares attributed results from their valuation at a price defined
in accordance with the approved Remuneration Policy.
The Remuneration Policy for Employees foresees an annual variable remuneration system for Employees not covered by
Commercial Incentives Systems, based on the performance assessment of each employee, in accordance with
quantitative and qualitative criteria, that is carried out annually. As a result of this assessment and the fixed reference
remuneration for the function performed, and provided that the Bank's minimum level of performance in a set of
quantitative indicators is met, the value of the variable remuneration to be attributed to each Employee is decided by
the Executive Committee. For Employees considered as Key Function Holders, the payment of the amount of the
variable remuneration to be attributed to each Employee is decided by the Nominations and Remunerations Committee,
and its payment subject to a deferral period of 5 years for 40% of its value, with 60% of its value paid in the year
following the financial year in question. The amounts related to the non-deferred and deferred portion are paid 50% in
cash and 50% in BCP shares. The number of BCP shares attributed and to be attributed results from their valuation at a
price defined in accordance with the approved Remuneration Policy. As provided for in the Remuneration Policy for
Employees, if the amount of the annual variable remuneration awarded to a Key Function Holder is less than Euros
50,000 and does not represent more than one third of the total annual remuneration of the Key Function Holder the
payment of the annual variable remuneration will be 100% in cash and there will be no deferral.
Employees considered as Key Function Holders are not covered by Commercial Incentives Systems.
For the remaining Employees not covered by Commercial Incentive Systems, the payment of the variable remuneration
amount awarded is fully paid in cash in the following year to which it relates.
As foreseen in the approved Remuneration Policy and in the applicable legislation, the amounts of variable
remuneration attributed to the members of the Executive Committee and to the Employees Key Function Holders are
subject to reduction and reversal mechanisms, to be applied in case of verification of extremely significant events, duly
identified, in which the people covered have had a direct participation.
For the members of the Executive Committee and to the employees considered as Key Function Holders, a long-term
variable remuneration system is also foreseen, through which these members may receive variable remuneration fully
paid in BCP shares after the end of the assessment period, from 1 January 2022 until 31 December 2025 (from 1 January
2023 until 31 December 2025 to the Employees Key Function Holders), provided that a certain level of performance is
achieved in a set of long-term objectives. The amount of the long-term variable remuneration attributed is subject to a
deferral period of 5 years for 50% of its value, being 50% of its value paid in the year following the assessment period to
which it relates. The number of BCP shares attributed results from their valuation at a price defined in accordance with
the approved Remuneration Policy.
All the shares attributed to the members of the Executive Committee and to the Key Function Holders, within the scope
of the payment of variable remuneration, including long-term, are subject to a retention period of 1 year after their
payment.
The total variable remuneration to be attributed, each year, to each member of the Executive Committee and to the
Key Function Holders, regarding the proportion between its amount and the annual fixed remuneration, is limited to
the limits provided in the respective Remuneration Policy.
S. Staff costs
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Remunerations
517,492
470,285
Mandatory social security charges
Post-employment benefits (note 50)
Service cost
(9,616)
(11,727)
Net interest cost / (income) in the liability coverage balance
(17,062)
(5,929)
Cost with early retirement programs
7,043
2,223
Amount transferred to the Fund resulting from acquired rights
unassigned related to the Complementary Plan
(9)
(6)
(19,644)
(15,439)
Other mandatory social security charges
113,622
104,784
93,978
89,345
Voluntary social security charges
15,538
12,326
Other staff costs
4,798
8,851
631,806
580,807
The balance Remunerations includes the amount of Euros 9,740,000 (2022: Euros 5,630,000) related to the distribution
of profits to Bank's employees.
In 2023, the Group paid severance payments in the amount of 3,718,000 (2022: Euros 1,588,000), of which the highest
amounted to Euros 565,000 (2022: Euros 217,000). Of the total severance payments, Euros 3,113,000 had already been
recorded as staff costs in the 2022 financial year, given that these were agreements concluded in that year, but whose
effective departures only occurred in 2023, as described in note 39.
The average number of employees by professional category, at service in the Group, is analysed as follows by category:
2023
2022
(restated)
Portugal
Top Management
880
854
Intermediary Management
1,426
1,416
Specific/Technical functions
2,926
2,867
Other functions
1,032
1,119
6,264
6,256
Abroad
9,318
9,314
15,582
15,570
Remunerations
In compliance with the provisions of Article 47 of Banco de Portugal Notice no. 3/2020, quantitative information is
disclosed regarding the remuneration paid to different categories of members of governing bodies and categories of
employees provided for in Article 115 C no. 2 of the RGICS, as well as the information provided for in Article 450 g) to i)
of Regulation (EU) 2019/876 of the European Parliament and of the Council.
A. BCP Board of Directors
The fixed remuneration and social charges paid to members of the Board of Directors of Banco Comercial Portugu\u00eas,
S.A. are analysed as follows:
(Thousands of euros)
Board of Directors
Executive Committee
Non-executive directors
2023
2022
(restated)
2023
2022
(restated)
Fixed remuneration
3,177
3,055
2,083
1,856
Variable remuneration
Pecuniary
461
370
\u2014
\u2014
Shares
460
1,322
\u2014
\u2014
Deferred
534
1,024
\u2014
\u2014
Supplementary retirement pension
635
611
144
138
Post-employment benefits
(14)
(42)
\u2014
\u2014
Other mandatory social security charges
763
734
491
443
6,016
7,074
2,718
2,437
Number of beneficiaries
6
6
11
11
Considering that the remuneration of members of the Executive Committee and Directors, with an exclusivity contract,
intends to compensate the functions that are performed in the Bank and in all other functions performed in subsidiaries
or governing bodies for which they have been designated by indication or in representation of the Bank, in the latter
case, the net amount of the remuneration annually received by each member of the Executive Committee will be
deducted from the fixed annual remuneration attributed by the Bank, ensuring that the effective payable amount
corresponds to the one approved by the Remuneration and Welfare Board.
In 2023, the amount of remuneration paid to the Executive Committee includes the amount of Euros 113,000 (2022:
Euros 101,000) supported by subsidiaries or companies whose governing bodies represent the Group's interests.
Regarding the Non-executive directors, this amount was Euros 27,000 (2022: Euros 26,000).
In 2023, it was assigned variable remuneration in accordance with the remuneration policies for the members of the
management and supervisory bodies and for employees, approved for 2022, as described in accounting policies 1 R4 and
1 R5.
In 2023, the variable remuneration attributed was Euros 923,000 in cash, of which Euros 463,000 are deferred for 5
years, and 4,136,539 shares corresponding to Euros 1,846,000, of which 2,068,268 shares are deferred for 5 years.
In 2023, the deferred variable remuneration paid refers to the years 2021, 2020, 2019 and 2018, of which Euros 131,000
in cash and 1,811,526 BCP shares in the amount of Euros 403,000.
In 2022, the variable remuneration attributed was Euros 616,000 in cash, of which Euros 246,000 are deferred for 5
years, and 12,416,223 shares corresponding to Euros 2,567,000, of which 1,568,846 shares are deferred for 5 years, and
3,397,643 shares are deferred for 3 years.
In 2022 the deferred variable remuneration of 2021, 2020 and 2019 attributed to the Executive Committee is related to
2020, 2019 and 2018 years, and amounts to Euros 590,000 in cash and 2,443,549 BCP shares in the amount of Euros
434,000.
In 2023 and 2022, no severance payments were paid to members of the Board of Directors.
B. Key Function Holders (KFH)
In 2023, the remunerations and social security charges supported with the Group's Key Function Holders are, detailed
by segment, as follows:
(Thousands of euros)
2023
Retail
Corporate
Control
functions
Others
Total
Fixed remuneration
1,391
2,387
2,838
5,098
11,714
Variable remuneration
Pecuniary
287
335
475
1,028
2,125
Shares
98
119
166
369
752
Deferred
42
36
19
125
222
Post-employment benefits
(72)
(39)
(146)
(234)
(491)
Other mandatory social security charges
368
504
708
1,283
2,863
2,114
3,342
4,060
7,669
17,185
Number of beneficiaries
10
13
31
38
92
Arising from the application of the Remuneration Policies for Employees, approved for the financial year 2022, as
described in accounting policies 1 R4 and 1 R5, in 2023, the 92 Key Function Holders were awarded with variable
remuneration, in the amount of Euros 337,000 in cash and 1,494,050 shares deferred for 5 years, as well as 229
participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
In 2023, deferred variable remunerations were paid to KFH deferred from 2022, 2021 and 2020 years, corresponding in
cash to Euros 102,000 and shares in the amount of Euros 120,000.
In 2023, severance payments were paid to 5 KFH in the amount of Euros 267,000, of which the highest payment was
Euros 110.000 and end-of-career bonuses in the amount of Euros 35,000.
In 2022, the remunerations and social security charges supported with the Group's Key Function Holders are, detailed
by segment, as follows:
(Thousands of euros)
2022 (restated)
Retail
Corporate
Control
functions
Others
Total
Fixed remuneration
1,317
2,657
2,474
5,494
11,942
Variable remuneration
Pecuniary
129
176
224
491
1,020
Shares
80
105
139
280
604
Deferred
48
42
20
129
239
Post-employment benefits
(112)
(108)
(191)
(373)
(784)
Other mandatory social security charges
331
547
649
1,320
2,847
1,793
3,419
3,315
7,341
15,868
Number of beneficiaries
9
15
26
40
90
Arising from the application of the Remuneration Policies for Employees, approved for the financial year 2021, as
described in accounting policies 1 R4 and 1 R5, in 2022, the 90 Key Function Holders were awarded with variable
remuneration, in the amount of Euros 236,000 in cash and 1,534,941 shares deferred for 5 years, as well as 174
participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
In 2022, deferred variable remunerations were paid to KFH deferred from 2021, 2020 and 2019 years, corresponding in
cash to Euros 57,000 and shares in the amount of Euros 182,000.
In 2022, severance payments were paid to 3 Bank's Key Function Holders in the amount of Euros 255,000 of which the
highest amounts to Euros 200,000 and end-of-career bonuses in the amount of Euros 65,000.
The remunerations and social security charges supported with the Group's Key Function Holders, discriminated by Key
management members and by members whose professional activities have significant impact in the risk profile of the
Bank (Other KFH), are as follows:
(Thousands of euros)
Key Function Holders
Key management members
Other KFH
Total
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
Fixed remuneration
7,785
7,865
3,929
4,077
11,714
11,942
Variable remuneration
Pecuniary
1,497
705
628
315
2,125
1,020
Shares
538
417
214
187
752
604
Deferred
217
230
5
9
222
239
Post-employment benefits
(265)
(453)
(226)
(331)
(491)
(784)
Other mandatory social security
charges
1,944
1,934
919
913
2,863
2,847
11,716
10,698
5,469
5,170
17,185
15,868
Number of beneficiaries
54
53
38
37
92
90
In 2023, referring to the 2022 financial year, the Key management members were awarded with deferred variable
remuneration in the amount of Euros 337,000 and 1,494,050 shares deferred for 5 years, as well as 229 participation
units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
In 2023 deferred variable remunerations from 2022, 2021 and 2020 years were paid in cash to Key management
members, in the amount of Euros 99,000, as well as BCP shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio
Fund corresponding to Euros 118,000. Regarding the other KFH, were paid Euros 2,000 in cash deferred from 2020, BCP
shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund, from the years 2020, corresponding to Euros 3,000.
During 2022, with reference to the financial year of 2021, the Key management members were awarded with deferred
variable remuneration in the amount of Euros 236,000 and 1,534,941 shares deferred for 5 years, as well as 174
participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
During 2022, deferred variable remunerations from 2021 and 2020 years were paid Euros 55,000 in cash to Key
management members, BCP shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund from the years 2021, 2020
and 2019 corresponding to Euros 175,000. Relatedly to the other KFH, were paid Euros 3,000 in cash deferred from 2020
and BCP shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund, from the years 2020 and 2019, corresponding
to Euros 7,000.
In accordance with regulation (EU) 11\u00ba 575/2013, Article 450 point 1.i), in the year 2023 the Bank has 1 employee on
the Board of Directors with remuneration between Euros 1 and Euros 1.5 million. In 2022, the Bank had no employees
earning more than Euros 1 million.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-609": { "value": "Income taxes
The Group is subject to income tax in several jurisdictions. The Bank is subject, in individual terms, to the regime
established by the Corporate Income Tax Code (CIRC), the Special Regime applicable to Deferred Tax Assets approved
by Law no. 61/2014 of 26 August, to which it adhered, and individual legislation. Additionally, deferred taxes relating
to tax losses and to temporary differences between the accounting net income and the net income accepted by the Tax
Authorities for Income Taxes calculation are accounted for, whenever there is a reasonable probability that these taxes
will be paid or recovered in the future.
Income tax registered in net income for the year comprises current and deferred tax effects. Income tax is recognised
in the income statement, except when related to items recognised directly in equity, which implies its recognition in
equity. Deferred taxes arising from the revaluation of financial assets at fair value through other comprehensive income
and cash flow hedging derivatives are recognised in shareholders\u2019 equity and are recognised after in the income
statement at the moment the profit and loss that originated the deferred taxes are recognised.
Current tax is the value that determines the taxable income for the year, using tax rates enacted or substantively
enacted by authorities at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred taxes are calculated in accordance with the liability method based on the balance sheet, considering
temporary differences, between the carrying amounts of assets and liabilities and the amounts used for taxation
purposes using the tax rates approved or substantially approved at balance sheet date and that is expected to be
applied when the temporary difference is reversed.
Deferred tax liabilities are recognised for all taxable temporary differences except for non-deductible goodwill for tax
purposes, differences arising from initial recognition of assets and liabilities that affect neither accounting nor taxable
profit and differences relating to investments in subsidiaries to the extent that probably they will not reverse in the
foreseeable future.
The item \u201cDeferred tax assets\u201d includes amounts associated with credit impairments not accepted for tax purposes
whose credits have been written-off, according to the expectation that the use of such impairments will be deductible
for the purposes of determining taxable income for the tax periods in which the legal conditions required for their tax
deductibility are met.
Deferred tax assets are recognised when it is probable that there will be future taxable profits that absorb the
deductible temporary differences for tax purposes (including reportable tax losses).
The Group, as established in IAS 12, paragraph 74, compensates the deferred tax assets and liabilities if, and only if: (i)
it has a legally enforceable right to offset current tax assets and current tax liabilities; and, (ii) the deferred tax assets
and the deferred tax liabilities relate to income taxes released by the same Tax Authority on the same taxable entity.
The Group complies with the guidelines of IFRIC 23 \u2013 Uncertainty over Income Tax Treatments on the determination of
taxable profit, tax bases, tax losses to be reported, tax credits to be used and tax rates in scenarios of uncertainty
regarding the income tax treatment, not having occurred any material impact on the Bank\u2019s financial statements
resulting from its application.
In 2016, the Banco Comercial Portugu\u00eas adhered to the Special Tax Regime for Groups of Companies (RETGS) for the
purposes of corporate income (IRC) taxation, with BCP being the dominant entity. In the financial years of 2023 and
2022, RETGS application was maintained. The group's taxable profit is calculated by the algebraic sum of taxable profits
and individual tax losses of the companies that integrate it.
T. Income taxes
Interpretations and estimations were required to determine the total amount of income taxes in each of the
jurisdictions where the Group operates. There are many transactions and calculations for which the tax determination
is uncertain during the ordinary course of business. Different interpretations and estimations could result in a different
level of income taxes, current and deferred, recognised in the year.
This aspect assumes greater relevance for the purposes of the analysis of the recoverability of deferred taxes, in which
the Group considers projections of future taxable income based on a set of assumptions, including the estimate of
income before tax, adjustments to taxable income, evolution of tax legislation and its interpretation. Thus, the
recoverability of deferred tax assets depends on the implementation of the Bank's Board of Directors strategy, namely
the ability to generate the estimated taxable income, the evolution of tax law and its interpretation.
Regarding the activity in Portugal, the Law No. 98/2019, of 4 September established the tax regime for credit
impairments and provisions for guarantees for tax periods beginning on or after 1 January 2019, providing for
approximation between the accounting and tax rules for the purposes of deductibility of expenses with the
reinforcement of credit impairments. The rules in force until 2018 could continue to be applied until the end of the
2023 financial year, unless the option to apply the new regime was exercised in advance.
In 2022, the Banco Comercial Portugu\u00eas, S.A. and the Banco ActivoBank, S.A. exercised the option to apply the new
regime, under the terms of which the impairment losses for credit risk relating to exposures analysed on an individual
or on a collective basis recognized in accordance with the applicable accounting standards and regulations are fully
deductible for the purposes of determining taxable profit, with the exceptions provided for in the Corporate Income
Tax Code. The exceptions apply to impairment losses relating to credits and other rights over natural or legal persons
who hold, directly or indirectly, more than 10 % of the Bank's capital, over members of its corporate bodies, over
companies in which the Bank holds, directly or indirectly, more than 10 % of the capital or over entities with which it is
in a situation of special relations.
The Impairment losses and other value corrections for specific credit risk recorded until 31 December 2021 and still not
accepted for tax purposes are only deductible up to the amount that, in each tax period, corresponds to the application
of the mandatory minimum limits set out in Notice of Bank of Portugal No. 3/95, as amended before its repeal by
Notice of Bank of Portugal No. 5/2015, and, between other conditions, provided that they are not credits covered by
real estate rights.
Following the amendments provided for in Law No. 24-D/2022, of 30 December, within the scope of the State Budget
for 2023, the time limit applicable to the carrying forward of tax losses in Portugal was eliminated. This amendment
applies to tax losses calculated in tax periods beginning on or after 1 January 2023, as well as to tax losses calculated in
tax periods prior to 1 January 2023 and whose deduction period is still in progress on that date. Thus, tax losses
calculated in 2014 and subsequent years may be deducted from future taxable income. The deduction limit for tax
losses went from 70% to 65%, being increased by ten percentage points when the difference results from the deduction
of tax losses calculated in the 2020 and 2021 tax periods, under the terms of the special regime provided for in Law n.
27-A/2020, of 24 July.
In the projections of future taxable income, namely for purposes of the analysis of the recoverability of deferred taxes
assets carried out with reference to 31 December 2023, the approximation between the accounting and tax rules
provided for in the aforementioned Law n.\u00ba 98/2019, of 4 September, taking into account the option for applying the
new regime exercised in 2022, as well as the changes in terms of the elimination of the time limit on the use of tax
losses provided for in said Law no. 24-D/2022, of 30 December.
The taxable profit or tax loss calculated by the Bank or its subsidiaries residing in Portugal can be corrected by the
Portuguese tax administration within a period of four years, except in the case of any tax losses deduction has been
made or tax credit has been used, in which the expiry period is the exercise of that right. The Bank recorded
provisions, current tax liabilities or deferred taxes liabilities in the amount it considers appropriate to cover tax
corrections or tax losses incurred, as well as contingencies relating to years not yet reviewed by the tax authorities.
Y4.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-608": { "value": "Income taxes
The Group is subject to income tax in several jurisdictions. The Bank is subject, in individual terms, to the regime
established by the Corporate Income Tax Code (CIRC), the Special Regime applicable to Deferred Tax Assets approved
by Law no. 61/2014 of 26 August, to which it adhered, and individual legislation. Additionally, deferred taxes relating
to tax losses and to temporary differences between the accounting net income and the net income accepted by the Tax
Authorities for Income Taxes calculation are accounted for, whenever there is a reasonable probability that these taxes
will be paid or recovered in the future.
Income tax registered in net income for the year comprises current and deferred tax effects. Income tax is recognised
in the income statement, except when related to items recognised directly in equity, which implies its recognition in
equity. Deferred taxes arising from the revaluation of financial assets at fair value through other comprehensive income
and cash flow hedging derivatives are recognised in shareholders\u2019 equity and are recognised after in the income
statement at the moment the profit and loss that originated the deferred taxes are recognised.
Current tax is the value that determines the taxable income for the year, using tax rates enacted or substantively
enacted by authorities at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred taxes are calculated in accordance with the liability method based on the balance sheet, considering
temporary differences, between the carrying amounts of assets and liabilities and the amounts used for taxation
purposes using the tax rates approved or substantially approved at balance sheet date and that is expected to be
applied when the temporary difference is reversed.
Deferred tax liabilities are recognised for all taxable temporary differences except for non-deductible goodwill for tax
purposes, differences arising from initial recognition of assets and liabilities that affect neither accounting nor taxable
profit and differences relating to investments in subsidiaries to the extent that probably they will not reverse in the
foreseeable future.
The item \u201cDeferred tax assets\u201d includes amounts associated with credit impairments not accepted for tax purposes
whose credits have been written-off, according to the expectation that the use of such impairments will be deductible
for the purposes of determining taxable income for the tax periods in which the legal conditions required for their tax
deductibility are met.
Deferred tax assets are recognised when it is probable that there will be future taxable profits that absorb the
deductible temporary differences for tax purposes (including reportable tax losses).
The Group, as established in IAS 12, paragraph 74, compensates the deferred tax assets and liabilities if, and only if: (i)
it has a legally enforceable right to offset current tax assets and current tax liabilities; and, (ii) the deferred tax assets
and the deferred tax liabilities relate to income taxes released by the same Tax Authority on the same taxable entity.
The Group complies with the guidelines of IFRIC 23 \u2013 Uncertainty over Income Tax Treatments on the determination of
taxable profit, tax bases, tax losses to be reported, tax credits to be used and tax rates in scenarios of uncertainty
regarding the income tax treatment, not having occurred any material impact on the Bank\u2019s financial statements
resulting from its application.
In 2016, the Banco Comercial Portugu\u00eas adhered to the Special Tax Regime for Groups of Companies (RETGS) for the
purposes of corporate income (IRC) taxation, with BCP being the dominant entity. In the financial years of 2023 and
2022, RETGS application was maintained. The group's taxable profit is calculated by the algebraic sum of taxable profits
and individual tax losses of the companies that integrate it.
T.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-610": { "value": "Segmental reporting
The Group adopted IFRS 8 \u2013 Operating Segments for the purpose of disclosing financial information by operating and
geographic segments. A business segment is a Group's component: (i) which develops business activities that can obtain
revenues or expenses; (ii) whose operating results are regularly reviewed by the management with the aim of taking
decisions about allocating resources to the segment and assess its performance; and, (iii) for which separate financial
information is available.
The Group controls its activity through the following major operating segments:
Portugal activity:
\u2013 Retail Banking, also including ActivoBank;
\u2013 Companies and Corporate;
\u2013 Private Banking;
\u2013 Other.
The Other segment (Portugal activity) includes activities that are not allocated to remaining segments, namely
centralized management of financial investments, corporate activities, and insurance activity.
Foreign activity:
\u2013 Poland;
\u2013 Mozambique;
\u2013 Other.
The \"Other\" segment (foreign activity) includes the contribution of the participation in an associate in Angola and the
activity arising from the discontinued operations in Cayman Islands (operation liquidated in 2022). It should also be
noted that, following the sale of the operation in Switzerland, which took place at the end of 2021, the sale price and
the corresponding capital gain generated with the completion of this operation was adjusted pursuant to typical clauses
adopted in this type of transactions in 2022 and again in 2023, as final adjustment, records reflected as income arising
from discontinued operations, as provided for in IFRS 5.
U.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-611": { "value": "Provisions
Provisions are recognised when (i) the Group has a present obligation (legal or resulting from past practices or
published policies that imply the recognition of certain responsibilities); (ii) it is probable that a payment will be
required to settle; and, (iii) a reliable estimation can be made of the amount of the obligation.
Additionally, when fundamental reorganizations occur that have a material effect on the nature and focus of the
company's operations, and the criteria for recognition of provisions referred to above are met, provisions are
recognized for restructuring costs.
The measurement of provisions considers the principles set in IAS 37 regarding the best estimate of the expected cost,
the most likely result of current actions and considering the risks and uncertainties inherent to the process result. On
the cases that the discount effect is material, provision corresponds to the actual value of the expected future
payments, discounted at a rate that considers the associated risk of the obligation.
Provisions are reviewed at each balance sheet date and adjusted to reflect the best estimate, being reverted through
profit and loss in the proportion of the payments that are not probable.
Provisions are derecognised through their use in the obligations for which they were initially created, or in the case
that these obligations cease to exist.
Provisions for legal risk related to foreign currency-indexed mortgage loans (mostly to Swiss franc)
The Group creates provisions for legal contingencies related foreign currency-indexed mortgage loans, mostly to Swiss
franc granted by Bank Millennium, S.A.
The assumptions used by Bank Millennium are essentially based on historical observations and will have to be updated
in subsequent periods, which may have a relevant impact on the provision\u2019s estimation. The methodology developed by
Bank Millennium is based on the following parameters: (i) the number of ongoing cases (including class action
agreements) and potential future lawsuits that will arise within the specified (three-year) time horizon; (ii) the
currently estimated amount of Bank Millennium's potential loss in the event of a specific court judgment; (iii) the
probability of obtaining a specific court judgment calculated on the basis of statistics of judgments in cases where Bank
Millennium is a party and legal opinions obtained; (iv) Bank Millennium does not include in the methodology for
calculating provisions the element related to the potential claim for remuneration for the client in connection with the
repayments made by him/her; and (v) estimates involved with amicable settlements with clients, concluded in court or
out of court.
The evolution of responsibilities with legal contingencies related to mortgage loans indexed to the Swiss franc and the
amount of the Bank Millennium\u2019s actual losses depend, namely, on the number of ongoing and potential lawsuits, as
well as on the final court decisions about each case and amicable settlement with clients.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-612": { "value": "Contingent assets
Contingent assets are not recognised in the financial statements and are disclosed when a future economic inflow of
resources is probable.
U3. Contingent liabilities
Contingent liabilities are not recognised in the financial statements, being framed under IAS 37 whenever the possibility
of an outflow of resources regarding economic benefits is not remote. The Group registers a contingent liability when:
i) it is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence
or non- occurrence of one or more uncertain future events that are not wholly within the control of the Group; or,
ii) it is a present obligation that arises from past events but is not recognised because:
a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the
obligation; or,
b) the amount of the obligation cannot be measured with sufficient reliability.
The contingent liabilities identified are subject to disclosure, unless the possibility of an outflow of resources
incorporating economic benefits is remote.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-613": { "value": "Earnings per share
Basic earnings per share are calculated by dividing net income attributable to shareholders of the Group by the
weighted average number of ordinary shares outstanding, excluding the average number of ordinary shares purchased
by the Group and held as treasury shares.
For the diluted earnings per share, the weighted average number of ordinary shares outstanding is adjusted to consider
conversion of all dilutive potential ordinary shares. Potential or contingent share issues are treated as dilutive when
their conversion to shares would decrease net earnings per share. If the earnings per share are changed because of an
issue with premium or discount or other event that changed the potential number of ordinary shares or because of
changes in the accounting policies, the earnings per share for all presented periods should be adjusted retrospectively.
W.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEarningsPerShareExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-615": { "value": "Insurance contracts
W1. Classification
IFRS 17 is the new accounting standard for insurance contracts, reinsurance contracts and for Investment contracts with
discretionary participation features, covering aspects such as recognition and measurement, presentation and
disclosure of information, replacing IFRS 4 \u2013 Insurance contracts.
The Group issues contracts that include insurance risk, financial risk or a combination of both insurance and financial
risk. A contract, in which the Group accepts a significant insurance risk from another party, by agreeing to compensate
that party on the occurrence of a specified uncertain future event, is classified as an insurance contract.
A contract issued by the Group without significant insurance risk, but on which financial risk is transferred with
discretionary participating features is classified as an investment contract recognised and measured in accordance with
the accounting policies applicable to insurance contracts. A contract issued by the Group that transfers only financial
risk, without discretionary participating features, is accounted for as a financial instrument.
W2. Recognition and measurement
IFRS 17 defines new principles for recognition, measurement, presentation and disclosure of insurance contracts,
reinsurance contracts and Investment contracts with discretionary participation features. The references below apply
to these three types of contracts.
In terms of recognition and measurement, insurance contracts are divided into portfolios, annual cohorts and groups of
contracts. In the initial recognition, contracts that have similar risk and can be managed together, must be identified,
grouping them into portfolios. For measurement purposes, these portfolios are further subdivided into annual cohorts,
according to the issuance year. Each of the cohorts, according to the expected future return, is then divided into the
following groups: i) contracts that are onerous at initial recognition; ii) contracts that do not present a significant
possibility of subsequently becoming onerous; and iii) remaining contracts in the portfolio.
The liability of an insurance contract begins when one of the following conditions is met: i) beginning of the coverage
period of the contract, ii) date on which the first payment is made by the insured and this becomes due or iii) in the
case of an onerous contract, when it becomes onerous.
IFRS 17 defines 3 measurement models of the insurance liabilities: GMM (General Measurement Model) as a general
modal, VFA (Variable Fee Approach) to be applied for investment contracts, which does not include a transfer of
significant insurance risk and PAA (Premium Allocation Approach), which can be applied for short term contracts (less
than 1 year).
The measurement of the value of a contract is the sum of (except where contracts are being measured using the
premium allocation approach): (i) the present value of future cash flows; (ii) a non-financial risk adjustment; and the
amount of future profit that is estimated that this contract will generate the Contractual Service Margin (CSM), unless
the contract group is onerous. In this case, the estimated loss is recognized immediately.
The liability for future services in contracts measured using the premium allocation approach is based on premiums
received, less amounts recognized in profit or loss already incurred in the period.
In terms of the discount rate for determining future cash flows, it should: (i) reflect the time value of money; ii) be
consistent with similar ones applied in the market for situations with similar characteristics and iii) exclude the effect
of factors that do not affect the future cash flows of the insurance contract.
In the subsequent valuation, the Statement of Financial Position shall include liabilities for insurance contracts, divided
into i) liabilities for future services and ii) liabilities for past services. In terms of the Income Statement, it should
include: i) income from insurance contracts, ii) expenses from insurance contracts and iii) losses from the financial
component of insurance contracts.
W3. Presentation and disclosures
In the Statement of Financial Position should appear in disaggregated form i) insurance contract assets, ii) reinsurance
ceded contract assets iii) insurance contracts liabilities and iv) reinsurance ceded contract liabilities.
In terms of the Income Statement, it should be evidenced i) insurance revenue, ii) insurance service expense and iii)
Insurance finance result, as well as iv) the net result arising from reinsurance contracts.
Together with the Financial Statements, the standard provides for additional qualitative and quantitative disclosures of
i) amounts recognized in the financial statements that fall within the scope of IFRS 17; ii) significant judgments and
changes to those judgments made with the application of IFRS 17 and iii) nature and extent of the risks inherent in
contracts that fall within the scope of IFRS 17.
For risks falling within the scope of IFRS 17, the entity shall analyze: (i) concentration risk, (ii) sensitivity analysis to
the most significant risks, (iii) claims development, (iv) credit risk and (v) liquidity risk.
W4. Transition
IFRS 17 is applied retrospectively with exemptions provided for the transition date, exemptions related to the
impracticality and complexity involved, for example in the calculation of liabilities, the Contractual Service Margin
(CSM) or the Loss Component, or the Reserve of the Financial Component of Insurance/Reinsurance Contracts (\u201cOCI
option\u201d) at the transition date. When impractical the Standard provides for the use of the Modified Retrospective
Approach or the Fair Value Approach.
The impacts of applying IFRS 17 are detailed in note 59.
X. Insurance or reinsurance intermediation services
Banco Comercial Portugu\u00eas and Banco ActivoBank are entities authorized by the Insurance and Pension Funds
Supervisory Authority (ASF - Autoridade de Supervis\u00e3o de Seguros e Fundos de Pens\u00f5es) for the practice of the activity
of insurance mediation, in the category of tied Insurance Intermediary, in accordance with article 8(a)(i) of Decree-Law
no. 144/2006, of 31 July, developing the activity of insurance intermediation in the life and non-life branches.
Within the scope of insurance mediation services, these Banks sell insurance contracts. As remuneration for the services
provided of insurance mediation, they receive commissions for the mediation of insurance contracts and investment
contracts, which are defined in agreements/protocols established with the Insurers.
Commissions received by insurance mediation services are recognized in accordance with the accrual principle, so that
commissions received at a time other than the period to which it relates are recorded as receivables under \"Other
assets\". Commissions received for insurance mediation services are recognized in accordance with the policy described
in note I. Recognition of income from services and commissions.
Y.
Under the scope of the Group's insurance mediation activities, the remuneration from services provided is analysed as
follows:\u00a0
(Thousands of euros)
2023
2022
(restated)
Life insurance
Saving products
24,166
27,966
Mortgage and consumer loans
20,424
20,699
Others
1
\u2014
44,591
48,665
Non-Life insurance
Accidents and health
24,007
21,612
Motor
4,066
3,956
Multi-Risk Housing
8,516
7,753
Others
1,843
1,660
38,432
34,981
83,023
83,646
The receivable balances from insurance intermediation activities, by nature, are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Funds receivable for payment of life insurance commissions
10,546
11,467
Funds receivable for payment of non-life insurance commissions
9,713
8,835
20,259
20,302
", "dimensions": { "concept": "ifrs-full:DisclosureOfInsuranceContractsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-614": { "value": "Insurance contracts
W1. Classification
IFRS 17 is the new accounting standard for insurance contracts, reinsurance contracts and for Investment contracts with
discretionary participation features, covering aspects such as recognition and measurement, presentation and
disclosure of information, replacing IFRS 4 \u2013 Insurance contracts.
The Group issues contracts that include insurance risk, financial risk or a combination of both insurance and financial
risk. A contract, in which the Group accepts a significant insurance risk from another party, by agreeing to compensate
that party on the occurrence of a specified uncertain future event, is classified as an insurance contract.
A contract issued by the Group without significant insurance risk, but on which financial risk is transferred with
discretionary participating features is classified as an investment contract recognised and measured in accordance with
the accounting policies applicable to insurance contracts. A contract issued by the Group that transfers only financial
risk, without discretionary participating features, is accounted for as a financial instrument.
W2. Recognition and measurement
IFRS 17 defines new principles for recognition, measurement, presentation and disclosure of insurance contracts,
reinsurance contracts and Investment contracts with discretionary participation features. The references below apply
to these three types of contracts.
In terms of recognition and measurement, insurance contracts are divided into portfolios, annual cohorts and groups of
contracts. In the initial recognition, contracts that have similar risk and can be managed together, must be identified,
grouping them into portfolios. For measurement purposes, these portfolios are further subdivided into annual cohorts,
according to the issuance year. Each of the cohorts, according to the expected future return, is then divided into the
following groups: i) contracts that are onerous at initial recognition; ii) contracts that do not present a significant
possibility of subsequently becoming onerous; and iii) remaining contracts in the portfolio.
The liability of an insurance contract begins when one of the following conditions is met: i) beginning of the coverage
period of the contract, ii) date on which the first payment is made by the insured and this becomes due or iii) in the
case of an onerous contract, when it becomes onerous.
IFRS 17 defines 3 measurement models of the insurance liabilities: GMM (General Measurement Model) as a general
modal, VFA (Variable Fee Approach) to be applied for investment contracts, which does not include a transfer of
significant insurance risk and PAA (Premium Allocation Approach), which can be applied for short term contracts (less
than 1 year).
The measurement of the value of a contract is the sum of (except where contracts are being measured using the
premium allocation approach): (i) the present value of future cash flows; (ii) a non-financial risk adjustment; and the
amount of future profit that is estimated that this contract will generate the Contractual Service Margin (CSM), unless
the contract group is onerous. In this case, the estimated loss is recognized immediately.
The liability for future services in contracts measured using the premium allocation approach is based on premiums
received, less amounts recognized in profit or loss already incurred in the period.
In terms of the discount rate for determining future cash flows, it should: (i) reflect the time value of money; ii) be
consistent with similar ones applied in the market for situations with similar characteristics and iii) exclude the effect
of factors that do not affect the future cash flows of the insurance contract.
In the subsequent valuation, the Statement of Financial Position shall include liabilities for insurance contracts, divided
into i) liabilities for future services and ii) liabilities for past services. In terms of the Income Statement, it should
include: i) income from insurance contracts, ii) expenses from insurance contracts and iii) losses from the financial
component of insurance contracts.
W3. Presentation and disclosures
In the Statement of Financial Position should appear in disaggregated form i) insurance contract assets, ii) reinsurance
ceded contract assets iii) insurance contracts liabilities and iv) reinsurance ceded contract liabilities.
In terms of the Income Statement, it should be evidenced i) insurance revenue, ii) insurance service expense and iii)
Insurance finance result, as well as iv) the net result arising from reinsurance contracts.
Together with the Financial Statements, the standard provides for additional qualitative and quantitative disclosures of
i) amounts recognized in the financial statements that fall within the scope of IFRS 17; ii) significant judgments and
changes to those judgments made with the application of IFRS 17 and iii) nature and extent of the risks inherent in
contracts that fall within the scope of IFRS 17.
For risks falling within the scope of IFRS 17, the entity shall analyze: (i) concentration risk, (ii) sensitivity analysis to
the most significant risks, (iii) claims development, (iv) credit risk and (v) liquidity risk.
W4. Transition
IFRS 17 is applied retrospectively with exemptions provided for the transition date, exemptions related to the
impracticality and complexity involved, for example in the calculation of liabilities, the Contractual Service Margin
(CSM) or the Loss Component, or the Reserve of the Financial Component of Insurance/Reinsurance Contracts (\u201cOCI
option\u201d) at the transition date. When impractical the Standard provides for the use of the Modified Retrospective
Approach or the Fair Value Approach.
The impacts of applying IFRS 17 are detailed in note 59.
X. Insurance or reinsurance intermediation services
Banco Comercial Portugu\u00eas and Banco ActivoBank are entities authorized by the Insurance and Pension Funds
Supervisory Authority (ASF - Autoridade de Supervis\u00e3o de Seguros e Fundos de Pens\u00f5es) for the practice of the activity
of insurance mediation, in the category of tied Insurance Intermediary, in accordance with article 8(a)(i) of Decree-Law
no. 144/2006, of 31 July, developing the activity of insurance intermediation in the life and non-life branches.
Within the scope of insurance mediation services, these Banks sell insurance contracts. As remuneration for the services
provided of insurance mediation, they receive commissions for the mediation of insurance contracts and investment
contracts, which are defined in agreements/protocols established with the Insurers.
Commissions received by insurance mediation services are recognized in accordance with the accrual principle, so that
commissions received at a time other than the period to which it relates are recorded as receivables under \"Other
assets\". Commissions received for insurance mediation services are recognized in accordance with the policy described
in note I. Recognition of income from services and commissions.
Y.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInsuranceContracts", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-616": { "value": "Insurance or reinsurance intermediation services
Banco Comercial Portugu\u00eas and Banco ActivoBank are entities authorized by the Insurance and Pension Funds
Supervisory Authority (ASF - Autoridade de Supervis\u00e3o de Seguros e Fundos de Pens\u00f5es) for the practice of the activity
of insurance mediation, in the category of tied Insurance Intermediary, in accordance with article 8(a)(i) of Decree-Law
no. 144/2006, of 31 July, developing the activity of insurance intermediation in the life and non-life branches.
Within the scope of insurance mediation services, these Banks sell insurance contracts. As remuneration for the services
provided of insurance mediation, they receive commissions for the mediation of insurance contracts and investment
contracts, which are defined in agreements/protocols established with the Insurers.
Commissions received by insurance mediation services are recognized in accordance with the accrual principle, so that
commissions received at a time other than the period to which it relates are recorded as receivables under \"Other
assets\". Commissions received for insurance mediation services are recognized in accordance with the policy described
in note I. Recognition of income from services and commissions.
Y.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForReinsuranceExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-617": { "value": "Accounting estimates and judgments in applying accounting policies
IFRS set forth a range of accounting treatments that require the Board of Directors, under advice of the Executive
Committee, to apply judgments and to make estimations when deciding which treatment is the most appropriate.
These estimates were made considering the best information available at the date of preparation of the consolidated
financial statements, considering the context of uncertainty that results from the current economic scope and the
geopolitical conflict in Eastern Europe. The most significant of these accounting estimates and judgments used when
applying accounting principles are discussed in this section to improve understanding of how they affect the Group\u2019s
reported results and related disclosure.
Considering that in some cases there are several alternatives to the accounting treatment chosen by the Board of
Directors, under advice of the Executive Committee, the Group\u2019s reported results would differ if a different treatment
was chosen. The Executive Committee believes that the choices made are appropriate and that the financial
statements present the Group\u2019s financial position and results fairly in all material relevant aspects.
The alternative outcomes discussed below are presented solely to assist the reader in understanding the financial
statements and are not intended to suggest that other alternatives or estimations would be more appropriate.
Y1. Entities included in the consolidation perimeter
For the purposes of determining entities to include in the consolidation perimeter, the Group assesses whether it is
exposed to, or has rights to, the variable returns from its involvement with the entity and if it can take possession of
these results through the power it holds (de facto control). The decision if an entity needs to be consolidated by the
Group requires the use of judgment, estimations and assumptions to determine at what extent the Group is exposed to
the variable returns and its ability to use its power to affect these returns. Different estimations and assumptions could
lead the Group to a different scope of consolidation perimeter with a direct impact in consolidated income.
Y2. Goodwill impairment
The recoverable amount of the goodwill recorded in the Group's assets is assessed annually in the preparation of
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. For this
purpose, the carrying amount of the business units of the Group for which goodwill has been recognised is compared
with the respective recoverable amount. A goodwill impairment loss is recognised when the carrying amount of the
business unit exceeds the respective recoverable amount.
In the absence of an available market value, the recoverable amount is determined using cash flows predictions,
applying a discount rate that includes a risk premium appropriated to the business unit being tested. Determining the
cash flows to discount and the discount rate, involves judgment.
Y3. Income taxes
Interpretations and estimations were required to determine the total amount of income taxes in each of the
jurisdictions where the Group operates. There are many transactions and calculations for which the tax determination
is uncertain during the ordinary course of business. Different interpretations and estimations could result in a different
level of income taxes, current and deferred, recognised in the year.
This aspect assumes greater relevance for the purposes of the analysis of the recoverability of deferred taxes, in which
the Group considers projections of future taxable income based on a set of assumptions, including the estimate of
income before tax, adjustments to taxable income, evolution of tax legislation and its interpretation. Thus, the
recoverability of deferred tax assets depends on the implementation of the Bank's Board of Directors strategy, namely
the ability to generate the estimated taxable income, the evolution of tax law and its interpretation.
Regarding the activity in Portugal, the Law No. 98/2019, of 4 September established the tax regime for credit
impairments and provisions for guarantees for tax periods beginning on or after 1 January 2019, providing for
approximation between the accounting and tax rules for the purposes of deductibility of expenses with the
reinforcement of credit impairments. The rules in force until 2018 could continue to be applied until the end of the
2023 financial year, unless the option to apply the new regime was exercised in advance.
In 2022, the Banco Comercial Portugu\u00eas, S.A. and the Banco ActivoBank, S.A. exercised the option to apply the new
regime, under the terms of which the impairment losses for credit risk relating to exposures analysed on an individual
or on a collective basis recognized in accordance with the applicable accounting standards and regulations are fully
deductible for the purposes of determining taxable profit, with the exceptions provided for in the Corporate Income
Tax Code. The exceptions apply to impairment losses relating to credits and other rights over natural or legal persons
who hold, directly or indirectly, more than 10 % of the Bank's capital, over members of its corporate bodies, over
companies in which the Bank holds, directly or indirectly, more than 10 % of the capital or over entities with which it is
in a situation of special relations.
The Impairment losses and other value corrections for specific credit risk recorded until 31 December 2021 and still not
accepted for tax purposes are only deductible up to the amount that, in each tax period, corresponds to the application
of the mandatory minimum limits set out in Notice of Bank of Portugal No. 3/95, as amended before its repeal by
Notice of Bank of Portugal No. 5/2015, and, between other conditions, provided that they are not credits covered by
real estate rights.
Following the amendments provided for in Law No. 24-D/2022, of 30 December, within the scope of the State Budget
for 2023, the time limit applicable to the carrying forward of tax losses in Portugal was eliminated. This amendment
applies to tax losses calculated in tax periods beginning on or after 1 January 2023, as well as to tax losses calculated in
tax periods prior to 1 January 2023 and whose deduction period is still in progress on that date. Thus, tax losses
calculated in 2014 and subsequent years may be deducted from future taxable income. The deduction limit for tax
losses went from 70% to 65%, being increased by ten percentage points when the difference results from the deduction
of tax losses calculated in the 2020 and 2021 tax periods, under the terms of the special regime provided for in Law n.
27-A/2020, of 24 July.
In the projections of future taxable income, namely for purposes of the analysis of the recoverability of deferred taxes
assets carried out with reference to 31 December 2023, the approximation between the accounting and tax rules
provided for in the aforementioned Law n.\u00ba 98/2019, of 4 September, taking into account the option for applying the
new regime exercised in 2022, as well as the changes in terms of the elimination of the time limit on the use of tax
losses provided for in said Law no. 24-D/2022, of 30 December.
The taxable profit or tax loss calculated by the Bank or its subsidiaries residing in Portugal can be corrected by the
Portuguese tax administration within a period of four years, except in the case of any tax losses deduction has been
made or tax credit has been used, in which the expiry period is the exercise of that right. The Bank recorded
provisions, current tax liabilities or deferred taxes liabilities in the amount it considers appropriate to cover tax
corrections or tax losses incurred, as well as contingencies relating to years not yet reviewed by the tax authorities.
Y4. Valuation of real estate recorded in Non-current assets held for sale and in Others assets
The valuation of these assets, and consequently the impairment losses, is supported by evaluations carried out by
external experts, which incorporate several assumptions, namely the selling price per square meter, discount rate,
better use of the real estate and expectations regarding the development of real estate projects, as applicable, and
also considers the Bank's historical experience in the commercialization of real estate, its perspectives on the evolution
of the real estate market and the intentions of the management body regarding the commercialization of these assets.
The assumptions used in the valuations of these assets have an impact on their valuation and consequently on the
determination of impairment.
Y5. Pension and other employees\u2019 benefits
Determining pension liabilities requires the use of assumptions and estimations, including the use of actuarial
projections, estimated returns on investment, and other factors, such as discount rate, pensions and salary growth
rates, mortality tables, that could impact the cost and liability of the pension plan.
The discount rate used to update the Bank's pension fund liabilities, regarding the defined benefit pension plans of its
employees and managers, was determined based on an analysis carried out on a set of available information, which
includes, among other elements, the market references for this indicator published by internationally recognized
specialized entities and which are based, as defined by IAS 19, on market yields of a universe of high quality bond
issues (low risk), different maturities, called in Euros and relating to a diverse and representative range of issuers (non-
sovereign).
Y6. Financial instruments \u2013 IFRS 9
Y6.1. Classification and measurement
The classification and measurement of financial assets depends on the results of the SPPI test (analysis of the
characteristics of the contractual cash flows to determine if they correspond only to payments of principal and interest
on the outstanding capital) and the testing of the business model.
The Group determines the business model at a level that reflects how financial asset groups are managed together to
achieve a specific business objective. This evaluation requires judgment, since the following aspects, among others,
must be considered: the way in which the performance of assets is evaluated; the risks that affect the performance of
the assets and the way these risks are managed; and how asset managers are rewarded.
The Group monitors the financial assets measured at amortised cost and at fair value through other comprehensive
income that are derecognised prior to their maturity to understand the underlying reasons for their disposal and to
determine whether they are consistent with the purpose of the business model defined for these assets. This monitoring
is part of a process of continuous evaluation by the Group of the business model of the financial assets that remain in
the portfolio, to determine if it is adequate and, if it is not, if there was a change in the business model and,
consequently, a prospective classification change of these financial assets.
Y6.2. Impairment losses on financial assets at amortised cost and debt instruments at fair value through
other comprehensive income
The determination of impairment losses on financial instruments involves judgments and estimations regarding, among
others, the following:
Significant increase in credit risk:
Impairment losses correspond to the expected losses on a 12-month for the assets in Stage 1 and the expected losses
considering the probability of a default event occurring at some point up to the maturity date of the instrument
financial assets for assets in Stages 2 and 3. An asset is classified in Stage 2 whenever there is a significant increase in
its credit risk since its initial recognition. In assessing the existence of a significant increase in credit risk, the Group
considers qualitative and quantitative information, reasonable and sustainable.
In order to comply with the Supervisors' guidelines, namely regarding to the identification and measurement of credit
risk in the context of of uncertainty associated with the current geopolitical crises, the disruption in distribution chains,
rising energy costs and inflationary pressures, the Bank proceeded to record additional impairments in relation to the
current models of collective impairment calculation (overlays).
The exercise carried out was based on an analysis of migrations from customers identified as having the highest risk for
Stage 2 and Stage 3, with the greatest impact on the corporate segment.
Definition of groups of assets with common credit risk characteristics:
When expected credit losses are measured on a collective basis, the financial instruments are grouped based on
common risk characteristics. The Group monitors the adequacy of credit risk characteristics on a regular basis to assess
whether it maintains its similarity. This procedure is necessary to ensure that, in the event of a change in the credit
risk characteristics, the asset segmentation is reviewed. This review may result in the creation of new portfolios or in
transferring assets to existing portfolios that better reflect their credit risk characteristics.
Definition of the number and relative weight of prospective information for each type of product/market and
determination of relevant prospective information:
In estimating expected credit losses, the Group uses reasonable and sustainable forecasting information that is based
on assumptions about the future evolution of different economic drivers and how each of the drivers impacts the
remaining drivers.
Probability of default:
The probability of default represents a determining factor in the measurement of expected credit losses and
corresponds to an estimation of the probability of default in each period, which is calculated based on historical data,
assumptions and expectations about future conditions.
Loss given default:
It corresponds to a loss estimation in a default scenario. It is based on the difference between the contractual cash
flows and those that the Bank expects to receive, through the cash flows generated by the customers' business or credit
collaterals. The estimation of loss given default is based on, among other aspects, the different recovery scenarios,
historical information, the costs involved in the recovery process and the estimation of the valuation of collaterals
associated with credit operations.
Y6.3. Fair value of derivative financial instruments
Fair values are based on listed market prices if available, otherwise fair value is determined either by dealer price
quotations (either for that transaction or for similar instruments traded) or by pricing models, based on net present
value of estimated future cash flows which considers the market conditions for the underlying instruments, time value,
yield curve and volatility factors. These pricing models may require assumptions or judgments in estimating their fair
values. Consequently, the use of a different model or of different assumptions or judgments in applying a particular
model could result in different results from the ones reported.
Due to market stress conditions, the Bank needed to reallocate the risk limits, especially in the sensitivity limit of the
trading portfolio and to review the stress-test scenarios and their methodologies.
In the context of the uncertainty associated with the current macroeconomic framework, the calculation of fair value
adjustments was revised considering liquidity discounts, the costs of closing positions (widening the buy and sell
spread), credit risk, spreads of financing and increased volatility.
Y7. Provisions for legal risk related to foreign currency-indexed mortgage loans (mostly to Swiss franc)
The Group creates provisions for legal contingencies related foreign currency-indexed mortgage loans, mostly to Swiss
franc granted by Bank Millennium, S.A.
The assumptions used by Bank Millennium are essentially based on historical observations and will have to be updated
in subsequent periods, which may have a relevant impact on the provision\u2019s estimation. The methodology developed by
Bank Millennium is based on the following parameters: (i) the number of ongoing cases (including class action
agreements) and potential future lawsuits that will arise within the specified (three-year) time horizon; (ii) the
currently estimated amount of Bank Millennium's potential loss in the event of a specific court judgment; (iii) the
probability of obtaining a specific court judgment calculated on the basis of statistics of judgments in cases where Bank
Millennium is a party and legal opinions obtained; (iv) Bank Millennium does not include in the methodology for
calculating provisions the element related to the potential claim for remuneration for the client in connection with the
repayments made by him/her; and (v) estimates involved with amicable settlements with clients, concluded in court or
out of court.
The evolution of responsibilities with legal contingencies related to mortgage loans indexed to the Swiss franc and the
amount of the Bank Millennium\u2019s actual losses depend, namely, on the number of ongoing and potential lawsuits, as
well as on the final court decisions about each case and amicable settlement with clients.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-618": { "value": "Goodwill impairment
The recoverable amount of the goodwill recorded in the Group's assets is assessed annually in the preparation of
accounts with reference to the end of the year or whenever there are indications of eventual loss of value. For this
purpose, the carrying amount of the business units of the Group for which goodwill has been recognised is compared
with the respective recoverable amount. A goodwill impairment loss is recognised when the carrying amount of the
business unit exceeds the respective recoverable amount.
In the absence of an available market value, the recoverable amount is determined using cash flows predictions,
applying a discount rate that includes a risk premium appropriated to the business unit being tested. Determining the
cash flows to discount and the discount rate, involves judgment.
Y3. Impairment of financial assets at amortised cost
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Loans and advances to credit institutions (note 21)
Charge for the year
92
349
Reversals for the year
(762)
(673)
(670)
(324)
Loans and advances to customers (note 22)
Charge for the year
805,500
830,750
Reversals for the year
(511,733)
(506,926)
Recoveries of loans and interest charged-off
(57,731)
(20,836)
236,036
302,988
Debt securities (note 23)
Associated to credit operations
Charge for the year
3,991
8
Reversals for the year
\u2014
(2,393)
3,991
(2,385)
Not associated to credit operations
Charge for the year
9,323
3,329
Reversals for the year
(688)
(2,779)
8,635
550
12,626
(1,835)
247,992
300,829
Impairment of financial assets at fair value through other comprehensive
income
The detail of this balance is comprised of:
(Thousands of euros)
2023
2022
(restated)
Impairment of financial assets at fair value through other comprehensive income (note 24)
Charge for the year
2,641
545
Reversals for the year
(1,319)
(5,568)
1,322
(5,023)
Impairment of other assets
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Impairment of investments in associated companies (note 26)
Charge for the year
\u2014
1,435
\u2014
1,435
Impairment of non-current assets held for sale (note 27)
Charge for the year
12,899
78,318
Reversals for the year
(1,656)
(1,116)
11,243
77,202
Impairment of goodwill of subsidiaries (note 30)
Charge for the year
\u2014
102,770
\u2014
102,770
Impairment of other assets (note 32)
Charge for the year
17,673
17,699
Reversals for the year
(7,150)
(7,047)
10,523
10,652
Impairment of real estate and other assets arising from recovered loans (note 32) (*)
Charge for the year
34,706
\u2014
Reversals for the year
(98)
\u2014
34,608
\u2014
56,374
192,059
(*) The 2023 values regard to impairment associated with real estate and assets arising from recovered loans.
The changes occurred in Loans impairment are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
1,502,373
1,849,284
Charge for the year in net income interest
3,545
32,942
Transfers resulting from changes in the Group's structure
411
\u2014
Other transfers
(1,054)
(53,634)
Impairment charge for the year (note 11)
805,500
830,750
Reversals for the year (note 11)
(511,733)
(506,926)
Loans charged-off
Write-offs
(192,473)
(458,405)
Credit assignments
(62,044)
(189,061)
Exchange rate differences
38,125
(2,577)
Balance at the end of the year
1,582,650
1,502,373
The balance Other transfers included, as at 31 December 2022, the amount of Euros 52,794,000 related to impairment
for loans that were reclassified to Financial assets not held for trading mandatorily at fair value through profit or loss -
Loans and advances to customers at fair value.
The movements occurred in Impairment of investments in associated companies are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
66,263
78,268
Transfers from Other provisions (Banco Millennium Atl\u00e2ntico, S.A.) (note 39)
\u2014
5,000
Impairment charge for the year (note 13)
\u2014
1,435
Impairment write-off (Banco Millennium Atl\u00e2ntico, S.A.)
\u2014
(16,787)
Exchange rate differences
(19,908)
(1,653)
Balance at the end of the year
46,355
66,263
The changes occurred in Impairment of non-current assets held for sale are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
149,565
190,714
Transfer to other assets
(51,802)
\u2014
Other transfers
(21,143)
\u2014
Charge for the year (note 13)
12,899
78,318
Reversals for the year (note 13)
(1,656)
(1,116)
Amounts charged-off
(35,249)
(119,073)
Exchange rate differences
(418)
722
Balance at the end of the year
52,196
149,565
The changes occurred in Impairment of other assets, with the exception of impairment for Real estate and other assets
arising from recovered loans are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
191,752
260,199
Transfers resulting from changes in the Group's structure
\u2014
(1,038)
Other transfers
(513)
908
Charge for the year (note 13)
17,673
17,699
Reversals for the year (note 13)
(7,150)
(7,047)
Amounts charged-off
(17,232)
(78,835)
Exchange rate differences
462
(134)
Balance at the end of the year
184,992
191,752
The changes occurred in impairment for Real Estate and other assets arising from recovered loans, are analysed as
follow:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
\u2014
\u2014
Transfer of Non-current assets held for sale (note 27)
51,802
\u2014
Other transfers
52,488
\u2014
Charge for the year (note 13)
34,706
\u2014
Reversals for the year (note 13)
(98)
\u2014
Amounts charged-off
(1,953)
\u2014
Exchange rate differences
(105)
\u2014
Balance at the end of the year
136,840
\u2014
Additionally, are booked in Loans and advances to customer\u2019s portfolio and in balances Guarantees granted and
Irrevocable credit lines, the following exposures and respective impairment, in relation to entities controlled by these
funds:
(Thousands of euros)
Items
2023
2022
(restated)
Loans and advances to customers
35,978
248,439
Guarantees granted and irrevocable credit lines
24,018
74,834
Gross exposure
59,996
323,273
Impairment
(6,176)
(15,183)
Net exposure
53,820
308,090
As at 31\u00a0December 2023, the financial instruments subject to impairment requirements under IFRS 9, (do not include
equity instruments as accounting policy 1.C1.1.2), analysed by stage, are detailed in the following tables:
(Thousands of euros)
Category
2023
Gross exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
908,701
\u2014
\u2014
\u2014
908,701
Loans and advances to customers (note 22)
45,651,670
7,290,622
1,914,768
30,749
54,887,809
Debt instruments (note 23)
17,536,547
62,872
5,105
\u2014
17,604,524
Debt instruments at fair value through other
comprehensive income (note 24) (*)
10,809,872
\u2014
1,150
\u2014
10,811,022
Guarantees and other commitments (note 45) (**)
14,934,354
1,433,594
336,497
2,574
16,707,019
Total
89,841,144
8,787,088
2,257,520
33,323
100,919,075
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments
(Thousands of euros)
Category
2023
Impairment losses
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
224
\u2014
\u2014
\u2014
224
Loans and advances to customers (note 22)
268,948
291,752
1,007,481
14,469
1,582,650
Debt instruments (note 23)
23,066
797
1,525
\u2014
25,388
Debt instruments at fair value through other
comprehensive income (note 24) (*)
\u2014
\u2014
1,150
\u2014
1,150
Guarantees and other commitments (note 39)
12,880
14,686
94,008
\u2014
121,574
Total
305,118
307,235
1,104,164
14,469
1,730,986
(Thousands of euros)
Category
2023
Net exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
908,477
\u2014
\u2014
\u2014
908,477
Loans and advances to customers (note 22)
45,382,722
6,998,870
907,287
16,280
53,305,159
Debt instruments (note 23)
17,513,481
62,075
3,580
\u2014
17,579,136
Debt instruments at fair value through other
comprehensive income (note 24) (*)
10,809,872
\u2014
\u2014
\u2014
10,809,872
Guarantees and other commitments (note 45) (**)
14,921,474
1,418,908
242,489
2,574
16,585,445
Total
89,536,026
8,479,853
1,153,356
18,854
99,188,089
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments.
As at 31\u00a0December 2022, the financial instruments subject to impairment requirements under IFRS 9 (do not include
equity instruments as accounting policy 1.C1.1.2), analysed by stage, are detailed in the following tables:
(Thousands of euros)
Category
2022 (restated)
Gross exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
964,296
\u2014
\u2014
\u2014
964,296
Loans and advances to customers (note 22)
46,395,996
7,564,235
2,170,979
46,956
56,178,166
Debt instruments (note 23)
12,990,232
55,787
3,802
\u2014
13,049,821
Debt instruments at fair value through other
comprehensive income (note 24) (*)
7,434,152
\u2014
1,067
\u2014
7,435,219
Guarantees and other commitments (note 45) (**)
14,303,231
1,768,595
364,691
921
16,437,438
Total
82,087,907
9,388,617
2,540,539
47,877
94,064,940
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments.
(Thousands of euros)
Category
2022 (restated)
Impairment losses
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
862
\u2014
\u2014
\u2014
862
Loans and advances to customers (note 22)
214,470
284,448
985,557
17,898
1,502,373
Debt instruments (note 23)
13,409
720
110
\u2014
14,239
Debt instruments at fair value through other
comprehensive income (note 24) (*)
\u2014
\u2014
1,067
\u2014
1,067
Guarantees and other commitments (note 39)
11,307
14,893
84,435
119
110,754
Total
240,048
300,061
1,071,169
18,017
1,629,295
(Thousands of euros)
Category
2022 (restated)
Net exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
963,434
\u2014
\u2014
\u2014
963,434
Loans and advances to customers (note 22)
46,181,526
7,279,787
1,185,422
29,058
54,675,793
Debt instruments (note 23)
12,976,823
55,067
3,692
\u2014
13,035,582
Debt instruments at fair value through other
comprehensive income (note 24) (*)
7,434,152
\u2014
\u2014
\u2014
7,434,152
Guarantees and other commitments (note 45) (**)
14,291,924
1,753,702
280,256
802
16,326,684
Total
81,847,859
9,088,556
1,469,370
29,860
92,435,645
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1 C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments
During 2023, the changes occurred in Loans and advances to customers - impairment are as follows:
(Thousands of euros)
2023
Financial assets at amortised cost - Loans and advances to customers
impairment
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment losses as at 1 January
214,470
284,448
985,557
17,898
1,502,373
Change in impairment losses:
Transfer to Stage 1
64,091
(55,424)
(8,587)
(80)
\u2014
Transfer to Stage 2
(12,326)
129,062
(116,736)
\u2014
\u2014
Transfer to Stage 3
(4,882)
(36,867)
42,105
(356)
\u2014
Changes occurred due to changes in credit risk
(26,368)
(45,099)
376,483
2,155
307,171
Write-offs
(811)
(2,261)
(186,529)
(2,872)
(192,473)
Changes due to new financial assets and derecognised
financial assets and other variations
34,774
17,893
(84,812)
(2,276)
(34,421)
Impairment losses at the end of the year
268,948
291,752
1,007,481
14,469
1,582,650
During 2022, the changes occurred in Loans and advances to customers - impairment are as follows:
(Thousands of euros)
2022 (restated)
Financial assets at amortised cost - Loans and advances to customers
impairment
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment losses as at 1 January
207,328
288,642
1,336,612
16,702
1,849,284
Change in impairment losses:
Transfer to Stage 1
50,530
(50,139)
(4,778)
4,387
\u2014
Transfer to Stage 2
(14,016)
47,552
(33,614)
78
\u2014
Transfer to Stage 3
(4,314)
(55,508)
58,004
1,818
\u2014
Changes occurred due to changes in credit risk
(51,425)
25,711
196,355
4,816
175,457
Write-offs
(922)
(2,996)
(440,667)
(13,820)
(458,405)
Changes due to new financial assets and derecognised
financial assets and other variations
27,289
31,186
(126,355)
3,917
(63,963)
Impairment losses at the end of the year
214,470
284,448
985,557
17,898
1,502,373
Financial assets modified during the period that have not resulted in derecognition (with impairment losses based on
expected lifetime losses) are analysed as follows:
(Thousands of euros)
Financial assets modified
2023
2022
(restated)
Amortised cost before changes
457,237
396,049
Impairment losses before changes
(61,984)
(47,337)
Net amortised cost before changes
395,253
348,712
Net gain/loss arising on changes
(9,926)
(32,993)
Net amortised cost after changes
385,327
315,719
The financial assets changed since the initial recognition at a time when the impairment loss was measured based on
the expected credit losses lifetime, are analysed as follows:
(Thousands of euros)
Financial assets changed
2023
2022
(restated)
Amortised cost of financial assets for which credit losses expected to go from \"lifetime\" to 12 months
106,778
65,942
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-619": { "value": "Valuation of real estate recorded in Non-current assets held for sale and in Others assets
The valuation of these assets, and consequently the impairment losses, is supported by evaluations carried out by
external experts, which incorporate several assumptions, namely the selling price per square meter, discount rate,
better use of the real estate and expectations regarding the development of real estate projects, as applicable, and
also considers the Bank's historical experience in the commercialization of real estate, its perspectives on the evolution
of the real estate market and the intentions of the management body regarding the commercialization of these assets.
The assumptions used in the valuations of these assets have an impact on their valuation and consequently on the
determination of impairment.
Y5.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-620": { "value": "Classification and measurement
The classification and measurement of financial assets depends on the results of the SPPI test (analysis of the
characteristics of the contractual cash flows to determine if they correspond only to payments of principal and interest
on the outstanding capital) and the testing of the business model.
The Group determines the business model at a level that reflects how financial asset groups are managed together to
achieve a specific business objective. This evaluation requires judgment, since the following aspects, among others,
must be considered: the way in which the performance of assets is evaluated; the risks that affect the performance of
the assets and the way these risks are managed; and how asset managers are rewarded.
The Group monitors the financial assets measured at amortised cost and at fair value through other comprehensive
income that are derecognised prior to their maturity to understand the underlying reasons for their disposal and to
determine whether they are consistent with the purpose of the business model defined for these assets. This monitoring
is part of a process of continuous evaluation by the Group of the business model of the financial assets that remain in
the portfolio, to determine if it is adequate and, if it is not, if there was a change in the business model and,
consequently, a prospective classification change of these financial assets.
Y6.2. Impairment losses on financial assets at amortised cost and debt instruments at fair value through
other comprehensive income
The determination of impairment losses on financial instruments involves judgments and estimations regarding, among
others, the following:
Significant increase in credit risk:
Impairment losses correspond to the expected losses on a 12-month for the assets in Stage 1 and the expected losses
considering the probability of a default event occurring at some point up to the maturity date of the instrument
financial assets for assets in Stages 2 and 3. An asset is classified in Stage 2 whenever there is a significant increase in
its credit risk since its initial recognition. In assessing the existence of a significant increase in credit risk, the Group
considers qualitative and quantitative information, reasonable and sustainable.
In order to comply with the Supervisors' guidelines, namely regarding to the identification and measurement of credit
risk in the context of of uncertainty associated with the current geopolitical crises, the disruption in distribution chains,
rising energy costs and inflationary pressures, the Bank proceeded to record additional impairments in relation to the
current models of collective impairment calculation (overlays).
The exercise carried out was based on an analysis of migrations from customers identified as having the highest risk for
Stage 2 and Stage 3, with the greatest impact on the corporate segment.
Definition of groups of assets with common credit risk characteristics:
When expected credit losses are measured on a collective basis, the financial instruments are grouped based on
common risk characteristics. The Group monitors the adequacy of credit risk characteristics on a regular basis to assess
whether it maintains its similarity. This procedure is necessary to ensure that, in the event of a change in the credit
risk characteristics, the asset segmentation is reviewed. This review may result in the creation of new portfolios or in
transferring assets to existing portfolios that better reflect their credit risk characteristics.
Definition of the number and relative weight of prospective information for each type of product/market and
determination of relevant prospective information:
In estimating expected credit losses, the Group uses reasonable and sustainable forecasting information that is based
on assumptions about the future evolution of different economic drivers and how each of the drivers impacts the
remaining drivers.
Probability of default:
The probability of default represents a determining factor in the measurement of expected credit losses and
corresponds to an estimation of the probability of default in each period, which is calculated based on historical data,
assumptions and expectations about future conditions.
Loss given default:
It corresponds to a loss estimation in a default scenario. It is based on the difference between the contractual cash
flows and those that the Bank expects to receive, through the cash flows generated by the customers' business or credit
collaterals. The estimation of loss given default is based on, among other aspects, the different recovery scenarios,
historical information, the costs involved in the recovery process and the estimation of the valuation of collaterals
associated with credit operations.
Y6.3. Fair value of derivative financial instruments
Fair values are based on listed market prices if available, otherwise fair value is determined either by dealer price
quotations (either for that transaction or for similar instruments traded) or by pricing models, based on net present
value of estimated future cash flows which considers the market conditions for the underlying instruments, time value,
yield curve and volatility factors. These pricing models may require assumptions or judgments in estimating their fair
values. Consequently, the use of a different model or of different assumptions or judgments in applying a particular
model could result in different results from the ones reported.
Due to market stress conditions, the Bank needed to reallocate the risk limits, especially in the sensitivity limit of the
trading portfolio and to review the stress-test scenarios and their methodologies.
In the context of the uncertainty associated with the current macroeconomic framework, the calculation of fair value
adjustments was revised considering liquidity discounts, the costs of closing positions (widening the buy and sell
spread), credit risk, spreads of financing and increased volatility.
Y7.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-625": { "value": "Net interest income
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Interest and similar income
Interest on deposits at Central Banks and on loans and advances to credit
institutions repayable on demand
105,333
55,281
Interest on financial assets at amortised cost
Loans and advances to credit institutions
74,377
74,519
Loans and advances to customers
3,243,794
2,150,214
Debt securities
491,969
242,165
Interest on financial assets at fair value through profit or loss
Financial assets held for trading
53,684
2,543
Financial assets not held for trading mandatorily at fair value through profit or loss
2,202
6,109
Financial assets designated at fair value through profit or loss
452
\u2014
Interest on financial assets at fair value through other comprehensive income
268,650
152,066
Interest on hedging derivatives
114,085
47,212
Interest on other assets
16,743
7,126
4,371,289
2,737,235
Interest expense and similar charges
Interest on financial liabilities at amortised cost
Resources from credit institutions
(50,838)
18,156
Resources from customers
(873,330)
(421,674)
Non subordinated debt securities issued
(90,084)
(27,703)
Subordinated debt
(84,234)
(68,546)
Interest on financial liabilities at fair value through profit or loss
Financial liabilities held for trading
Derivatives associated to financial instruments at fair value through profit or loss
(33,724)
(14,130)
Financial liabilities at fair value through profit or loss
Resources from customers
(8,582)
\u2014
Non subordinated debt securities issued
(631)
(3,565)
Interest on hedging derivatives
(392,995)
(62,159)
Interest on leasing
(10,983)
(5,633)
Interest on other liabilities
(164)
(2,209)
(1,545,565)
(587,463)
2,825,724
2,149,772
The balance Interest and similar income - Interest on deposits at Central Banks and on loans and advances to credit
institutions repayable on demand has accounted for a positive interest of Euros 11,884,000 (2022: negative interest
Euros 6,572,000) associated with demand deposits with the Bank of Portugal (do not include overnight operations).
The balance Interest and similar income - Interest on financial assets at amortised cost - Loans and advances to
customers includes the amount of Euros 54,823,000 (2022: Euros 55,967,000) related to commissions and other gains
accounted for under the effective interest method, as referred in the accounting policy described in note 1 C3. The
balance also includes the amount of Euros 92,894,000 (2022: Euros 76,249,000) related to interest income arising from
customers classified in stage 3.\u00a0
The balance Interest and similar income includes the following amounts related to hedge breakages: Interest on
financial assets at amortized cost - Loans and advances to customers, negative interest of Euros 32,558,000 (2022:
positive interests of Euros 58,153,000), Interest on financial assets at amortized cost - Debt securities, positive
interests of Euros 64,385,000 (2022: positive interests of Euros 30,752,000), Interest on financial assets at fair value
through other comprehensive income, positive interests of Euros 5,360,000 (2022: positive interests of Euros
11,301,000), no hedge breaks were recorded for customer's deposits.
The balances Interest expense and similar charges - Interest on non-subordinated debt securities issued and Interest on
subordinated debt include the amount of Euros 2,892,000 and Euros 712,000, respectively (2022: Euros 2,553,000 and
Euros 970,000, respectively) related to commissions and other costs accounted for under the effective interest method,
as referred in the accounting policy described in note 1 C3.
In 2022, the balance Interest expense and similar charges - Interest on financial liabilities at amortised cost - Resources
from credit institutions had recorded a negative cost of Euros 41,555,000 associated with the TLTRO III operation
described in note 33.
The balance Interest expense and similar charges -\u00a0 Interest on leasing refers to the interest cost related to the leasing
liabilities recognised under IFRS 16, as referred in accounting policy described 1 H.
Dividends from equity instruments
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Dividends from financial assets through other comprehensive income
1,783
10,086
1,783
10,086
The balances Dividends from financial assets through other comprehensive income include dividends from shares of
Tiicc, Sarl and Octal Group, Ltd. in the amount of Euros 615,000 and Euros 412,000, respectively (2022: Euros 7,950,000
and Euros 1,325,000 of Octal Group, Ltd. and Tiicc, Sarl, respectively). This balance also includes income from
investment fund units received during the year.
Net fees and commissions income
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Fees and commissions received
Banking services provided
489,255
484,454
Management and maintenance of accounts
168,859
170,372
Bancassurance
120,702
121,824
Securities operations
65,917
70,775
From guarantees granted
49,551
46,834
From commitments to third parties
5,243
5,195
Management and intervention commissions
23,381
23,624
Other commissions
21,403
20,696
944,311
943,774
Fees and commissions paid
Banking services provided by third parties
(131,769)
(132,751)
Securities operations
(7,520)
(8,991)
From guarantees received
(8,357)
(7,699)
Other commissions
(24,992)
(22,425)
(172,638)
(171,866)
771,673
771,908
Gains / (losses) on financial operations
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial operations at fair value through profit or loss
Gains/(losses) on financial assets held for trading
172,618
(151,915)
Gains/(losses) on financial assets not held for trading mandatorily
at fair value through profit or loss
(3,111)
8,962
Gains/(losses) on financial assets and liabilities designated at fair value
through profit or loss
(176,057)
170,259
(6,550)
27,306
Foreign exchange gains/(losses)
17,469
19,390
Gains/(losses) on hedge accounting
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
112,088
5,497
144,815
49,960
The balances Gains/(losses) on financial operations at fair value through profit or loss is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial assets held for trading
Gains
Debt securities portfolio
12,001
7,122
Equity instruments
13,414
202
Derivative financial instruments
335,620
336,772
Other operations
1,374
1,962
362,409
346,058
Losses
Debt securities portfolio
(7,578)
(16,543)
Equity instruments
(9,613)
(8,062)
Derivative financial instruments
(171,890)
(472,534)
Other operations
(710)
(834)
(189,791)
(497,973)
172,618
(151,915)
(continues)
(continuation)
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial assets not held for trading
mandatorily at fair value through profit or loss
Gains
Loans and advances to customers
3,011
10,280
Debt securities portfolio
48,269
38,336
Equity instruments
10,307
22,674
61,587
71,290
Losses
Loans and advances to customers
(3,222)
(7,610)
Debt securities portfolio
(42,769)
(42,847)
Equity instruments
(18,707)
(11,871)
(64,698)
(62,328)
(3,111)
8,962
Gains/(losses) on financial assets and liabilities designated at fair value
through profit or loss
Gains
Debt securities portfolio
207
\u2014
Resources from customers
6,243
3,936
Debt securities issued
Certificates and structured securities issued
66,658
142,982
Other debt securities issued
188
25,993
73,296
172,911
Losses
Resources from customers
(11,495)
\u2014
Debt securities issued
Certificates and structured securities issued
(224,547)
\u2014
Other debt securities issued
(13,311)
(2,652)
(249,353)
(2,652)
(176,057)
170,259
The balances Gains / (losses) on financial assets and liabilities designated at fair value through profit or loss - Gains/
(Losses) - Certificates and structured securities issued record the valuations and devaluations of certificates issued by
the Group. These liabilities are covered by futures, which valuation and devaluation are recorded in Gains / (losses) on
financial assets held for trading - Gains/(Losses) - Derivative financial instruments.
The balances Foreign exchange gains/(losses), Gains/(losses) on hedge accounting and Gains/(losses) arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss, are presented as
follows:
(Thousands of euros)
2023
2022
(restated)
Foreign exchange gains/(losses)
Gains
3,714,151
2,637,014
Losses
(3,696,682)
(2,617,624)
17,469
19,390
Gains/(losses) on hedge accounting
Gains
Hedging derivatives
274,230
1,303,985
Hedged items
214,420
199,940
488,650
1,503,925
Losses
Hedging derivatives
(289,761)
(376,843)
Hedged items
(177,081)
(1,129,315)
(466,842)
(1,506,158)
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
Gains
Credit sales
9,840
13,040
Debt securities portfolio at amortized cost
1,070
10,466
Debt securities portfolio at fair value through other comprehensive income
2,102
40,019
Debt securities issued
1,614
1,224
Others
128,825
933
143,451
65,682
Losses
Credit sales
(15,082)
(4,683)
Debt securities portfolio at fair value through other comprehensive income
(14,744)
(53,405)
Debt securities issued
(1,027)
(630)
Others
(510)
(1,467)
(31,363)
(60,185)
112,088
5,497
In 2023, the main contributions for the balance Gains/(losses) on hedge accounting were the gains of Euros 12,755,000
and Euros 8,713,000 relating to the deposits portfolio hedge and subordinated issues portfolio hedge, respectively.
Regarding the sale of financial assets at fair value through other comprehensive income subject to hedge accounting,
the balance Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value
through profit or loss - Debt securities portfolio at fair value through other comprehensive income, includes a net gain
of Euros 853,000 (2022: net gain Euros 114,278,000), which is offset in the balance Gains/(losses) on hedge accounting.
The balance Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value
through profit or loss - Gains - Debt securities portfolio at fair value through other comprehensive income includes the
amount of Euros 12,000 (2022: Euros 479,000) related to gains resulting from the sale of Portuguese Treasury bonds.
As described in note 48, the Bank Millennium's Management Board announced that after obtaining the necessary
corporate approvals, on 13 February 2023, the Bank concluded an agreement (\"Agreement\") for the sale of 80% of
shares in Millennium Financial Services sp. z o. o. (\"Company\") to Towarzystwo Ubezpiecze\u0144 na \u017bycie Europa S.A., which
acquires 72% of the Company's shares, and Towarzystwo Ubezpiecze\u0144 Europa S.A., which acquires 8% of the Company's
shares (collectively, the \"Buyer\").
Bank Millennium also concluded agreements with the Buyers and the Company regarding the exclusive insurance
distribution model, including cooperation agreements, distribution agreements and agency agreements. Strategic
insurance cooperation provides for long-term (10 years) cooperation in the field of bancassurance in relation to specific
insurance related to credit products offered by the Bank Millennium.
The essence of the transaction provided for in the Agreement was the direct purchase of Shares by the Buyers from the
Bank for a defined initial price, which could be subject to a price adjustment mechanism after the closing of the
Transaction.
On 29 March 2023, 80% of the shares in the company were transferred to the Buyers, and the final settlement of the
transaction, together with the price adjustment, took place in December 2023.
Since as part of the transaction, in addition to Agreement, Bank Millennium also concluded other agreements with the
Buyers and the Company, the Bank analysed individual agreements and their economic effects in accordance with the
requirements of IFRS 10, IFRS 15 and IFRS 9. As a result, Millennium identified contractual obligations and assessed the
assignment of contractual remuneration for individual elements of the transaction, determining the appropriate
method of recognizing revenues from single contractual obligations.
As a result, Bank Millennium recognized in 2023 in the Profit and Loss Account a result of Euros 143.7 million (PLN 652.4
million) (gross), which consisted of:
1. profit realized on sale: payment of the price less the fair value of the shares at the moment of loss of control
in the amount of Euros 122 million (PLN 553.9 million) (gross) was included in the item \u201cGains arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss - Others\u201d;
2. an inflow of Euros 10.1 million (PLN 46 million) (gross) as a valuation of the derivative at the time of final
settlement of the transaction in December 2023, resulting from the agreed potential future remuneration
payments, was recognized as \u201cGains on financial assets held for trading\u201d;
3. At the same time, due to the loss of control over the Company, the Bank valued the remaining non-controlling
share in the Company at fair value of\u00a0 Euros 11.6 million (PLN 52.5 million) (gross), this amount was included
in \"Gains/(losses) on disposal of subsidiaries and other assets\" (note 16).
Starting from the moment of loss of control, the investment in the Company is treated as an involvement in an
associated entity (Bank Millennium holds 20% of the shares in the Company) and is valued at the Group level using the
equity method, while in the Bank Millennium's financial statements the valuation model is fair value with the valuation
effect recorded in the Profit and Loss Account.
The Bank Millennium's assessment was made on the basis of IFRS and their interpretations applicable as at the date of
these financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-624": { "value": "Net interest income
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Interest and similar income
Interest on deposits at Central Banks and on loans and advances to credit
institutions repayable on demand
105,333
55,281
Interest on financial assets at amortised cost
Loans and advances to credit institutions
74,377
74,519
Loans and advances to customers
3,243,794
2,150,214
Debt securities
491,969
242,165
Interest on financial assets at fair value through profit or loss
Financial assets held for trading
53,684
2,543
Financial assets not held for trading mandatorily at fair value through profit or loss
2,202
6,109
Financial assets designated at fair value through profit or loss
452
\u2014
Interest on financial assets at fair value through other comprehensive income
268,650
152,066
Interest on hedging derivatives
114,085
47,212
Interest on other assets
16,743
7,126
4,371,289
2,737,235
Interest expense and similar charges
Interest on financial liabilities at amortised cost
Resources from credit institutions
(50,838)
18,156
Resources from customers
(873,330)
(421,674)
Non subordinated debt securities issued
(90,084)
(27,703)
Subordinated debt
(84,234)
(68,546)
Interest on financial liabilities at fair value through profit or loss
Financial liabilities held for trading
Derivatives associated to financial instruments at fair value through profit or loss
(33,724)
(14,130)
Financial liabilities at fair value through profit or loss
Resources from customers
(8,582)
\u2014
Non subordinated debt securities issued
(631)
(3,565)
Interest on hedging derivatives
(392,995)
(62,159)
Interest on leasing
(10,983)
(5,633)
Interest on other liabilities
(164)
(2,209)
(1,545,565)
(587,463)
2,825,724
2,149,772
The balance Interest and similar income - Interest on deposits at Central Banks and on loans and advances to credit
institutions repayable on demand has accounted for a positive interest of Euros 11,884,000 (2022: negative interest
Euros 6,572,000) associated with demand deposits with the Bank of Portugal (do not include overnight operations).
The balance Interest and similar income - Interest on financial assets at amortised cost - Loans and advances to
customers includes the amount of Euros 54,823,000 (2022: Euros 55,967,000) related to commissions and other gains
accounted for under the effective interest method, as referred in the accounting policy described in note 1 C3. The
balance also includes the amount of Euros 92,894,000 (2022: Euros 76,249,000) related to interest income arising from
customers classified in stage 3.\u00a0
The balance Interest and similar income includes the following amounts related to hedge breakages: Interest on
financial assets at amortized cost - Loans and advances to customers, negative interest of Euros 32,558,000 (2022:
positive interests of Euros 58,153,000), Interest on financial assets at amortized cost - Debt securities, positive
interests of Euros 64,385,000 (2022: positive interests of Euros 30,752,000), Interest on financial assets at fair value
through other comprehensive income, positive interests of Euros 5,360,000 (2022: positive interests of Euros
11,301,000), no hedge breaks were recorded for customer's deposits.
The balances Interest expense and similar charges - Interest on non-subordinated debt securities issued and Interest on
subordinated debt include the amount of Euros 2,892,000 and Euros 712,000, respectively (2022: Euros 2,553,000 and
Euros 970,000, respectively) related to commissions and other costs accounted for under the effective interest method,
as referred in the accounting policy described in note 1 C3.
In 2022, the balance Interest expense and similar charges - Interest on financial liabilities at amortised cost - Resources
from credit institutions had recorded a negative cost of Euros 41,555,000 associated with the TLTRO III operation
described in note 33.
The balance Interest expense and similar charges -\u00a0 Interest on leasing refers to the interest cost related to the leasing
liabilities recognised under IFRS 16, as referred in accounting policy described 1 H.
Dividends from equity instruments
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Dividends from financial assets through other comprehensive income
1,783
10,086
1,783
10,086
The balances Dividends from financial assets through other comprehensive income include dividends from shares of
Tiicc, Sarl and Octal Group, Ltd. in the amount of Euros 615,000 and Euros 412,000, respectively (2022: Euros 7,950,000
and Euros 1,325,000 of Octal Group, Ltd. and Tiicc, Sarl, respectively). This balance also includes income from
investment fund units received during the year.
Net fees and commissions income
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Fees and commissions received
Banking services provided
489,255
484,454
Management and maintenance of accounts
168,859
170,372
Bancassurance
120,702
121,824
Securities operations
65,917
70,775
From guarantees granted
49,551
46,834
From commitments to third parties
5,243
5,195
Management and intervention commissions
23,381
23,624
Other commissions
21,403
20,696
944,311
943,774
Fees and commissions paid
Banking services provided by third parties
(131,769)
(132,751)
Securities operations
(7,520)
(8,991)
From guarantees received
(8,357)
(7,699)
Other commissions
(24,992)
(22,425)
(172,638)
(171,866)
771,673
771,908
Gains / (losses) on financial operations
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial operations at fair value through profit or loss
Gains/(losses) on financial assets held for trading
172,618
(151,915)
Gains/(losses) on financial assets not held for trading mandatorily
at fair value through profit or loss
(3,111)
8,962
Gains/(losses) on financial assets and liabilities designated at fair value
through profit or loss
(176,057)
170,259
(6,550)
27,306
Foreign exchange gains/(losses)
17,469
19,390
Gains/(losses) on hedge accounting
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
112,088
5,497
144,815
49,960
The balances Gains/(losses) on financial operations at fair value through profit or loss is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial assets held for trading
Gains
Debt securities portfolio
12,001
7,122
Equity instruments
13,414
202
Derivative financial instruments
335,620
336,772
Other operations
1,374
1,962
362,409
346,058
Losses
Debt securities portfolio
(7,578)
(16,543)
Equity instruments
(9,613)
(8,062)
Derivative financial instruments
(171,890)
(472,534)
Other operations
(710)
(834)
(189,791)
(497,973)
172,618
(151,915)
(continues)
(continuation)
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial assets not held for trading
mandatorily at fair value through profit or loss
Gains
Loans and advances to customers
3,011
10,280
Debt securities portfolio
48,269
38,336
Equity instruments
10,307
22,674
61,587
71,290
Losses
Loans and advances to customers
(3,222)
(7,610)
Debt securities portfolio
(42,769)
(42,847)
Equity instruments
(18,707)
(11,871)
(64,698)
(62,328)
(3,111)
8,962
Gains/(losses) on financial assets and liabilities designated at fair value
through profit or loss
Gains
Debt securities portfolio
207
\u2014
Resources from customers
6,243
3,936
Debt securities issued
Certificates and structured securities issued
66,658
142,982
Other debt securities issued
188
25,993
73,296
172,911
Losses
Resources from customers
(11,495)
\u2014
Debt securities issued
Certificates and structured securities issued
(224,547)
\u2014
Other debt securities issued
(13,311)
(2,652)
(249,353)
(2,652)
(176,057)
170,259
The balances Gains / (losses) on financial assets and liabilities designated at fair value through profit or loss - Gains/
(Losses) - Certificates and structured securities issued record the valuations and devaluations of certificates issued by
the Group. These liabilities are covered by futures, which valuation and devaluation are recorded in Gains / (losses) on
financial assets held for trading - Gains/(Losses) - Derivative financial instruments.
The balances Foreign exchange gains/(losses), Gains/(losses) on hedge accounting and Gains/(losses) arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss, are presented as
follows:
(Thousands of euros)
2023
2022
(restated)
Foreign exchange gains/(losses)
Gains
3,714,151
2,637,014
Losses
(3,696,682)
(2,617,624)
17,469
19,390
Gains/(losses) on hedge accounting
Gains
Hedging derivatives
274,230
1,303,985
Hedged items
214,420
199,940
488,650
1,503,925
Losses
Hedging derivatives
(289,761)
(376,843)
Hedged items
(177,081)
(1,129,315)
(466,842)
(1,506,158)
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
Gains
Credit sales
9,840
13,040
Debt securities portfolio at amortized cost
1,070
10,466
Debt securities portfolio at fair value through other comprehensive income
2,102
40,019
Debt securities issued
1,614
1,224
Others
128,825
933
143,451
65,682
Losses
Credit sales
(15,082)
(4,683)
Debt securities portfolio at fair value through other comprehensive income
(14,744)
(53,405)
Debt securities issued
(1,027)
(630)
Others
(510)
(1,467)
(31,363)
(60,185)
112,088
5,497
In 2023, the main contributions for the balance Gains/(losses) on hedge accounting were the gains of Euros 12,755,000
and Euros 8,713,000 relating to the deposits portfolio hedge and subordinated issues portfolio hedge, respectively.
Regarding the sale of financial assets at fair value through other comprehensive income subject to hedge accounting,
the balance Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value
through profit or loss - Debt securities portfolio at fair value through other comprehensive income, includes a net gain
of Euros 853,000 (2022: net gain Euros 114,278,000), which is offset in the balance Gains/(losses) on hedge accounting.
The balance Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value
through profit or loss - Gains - Debt securities portfolio at fair value through other comprehensive income includes the
amount of Euros 12,000 (2022: Euros 479,000) related to gains resulting from the sale of Portuguese Treasury bonds.
As described in note 48, the Bank Millennium's Management Board announced that after obtaining the necessary
corporate approvals, on 13 February 2023, the Bank concluded an agreement (\"Agreement\") for the sale of 80% of
shares in Millennium Financial Services sp. z o. o. (\"Company\") to Towarzystwo Ubezpiecze\u0144 na \u017bycie Europa S.A., which
acquires 72% of the Company's shares, and Towarzystwo Ubezpiecze\u0144 Europa S.A., which acquires 8% of the Company's
shares (collectively, the \"Buyer\").
Bank Millennium also concluded agreements with the Buyers and the Company regarding the exclusive insurance
distribution model, including cooperation agreements, distribution agreements and agency agreements. Strategic
insurance cooperation provides for long-term (10 years) cooperation in the field of bancassurance in relation to specific
insurance related to credit products offered by the Bank Millennium.
The essence of the transaction provided for in the Agreement was the direct purchase of Shares by the Buyers from the
Bank for a defined initial price, which could be subject to a price adjustment mechanism after the closing of the
Transaction.
On 29 March 2023, 80% of the shares in the company were transferred to the Buyers, and the final settlement of the
transaction, together with the price adjustment, took place in December 2023.
Since as part of the transaction, in addition to Agreement, Bank Millennium also concluded other agreements with the
Buyers and the Company, the Bank analysed individual agreements and their economic effects in accordance with the
requirements of IFRS 10, IFRS 15 and IFRS 9. As a result, Millennium identified contractual obligations and assessed the
assignment of contractual remuneration for individual elements of the transaction, determining the appropriate
method of recognizing revenues from single contractual obligations.
As a result, Bank Millennium recognized in 2023 in the Profit and Loss Account a result of Euros 143.7 million (PLN 652.4
million) (gross), which consisted of:
1. profit realized on sale: payment of the price less the fair value of the shares at the moment of loss of control
in the amount of Euros 122 million (PLN 553.9 million) (gross) was included in the item \u201cGains arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss - Others\u201d;
2. an inflow of Euros 10.1 million (PLN 46 million) (gross) as a valuation of the derivative at the time of final
settlement of the transaction in December 2023, resulting from the agreed potential future remuneration
payments, was recognized as \u201cGains on financial assets held for trading\u201d;
3. At the same time, due to the loss of control over the Company, the Bank valued the remaining non-controlling
share in the Company at fair value of\u00a0 Euros 11.6 million (PLN 52.5 million) (gross), this amount was included
in \"Gains/(losses) on disposal of subsidiaries and other assets\" (note 16).
Starting from the moment of loss of control, the investment in the Company is treated as an involvement in an
associated entity (Bank Millennium holds 20% of the shares in the Company) and is valued at the Group level using the
equity method, while in the Bank Millennium's financial statements the valuation model is fair value with the valuation
effect recorded in the Profit and Loss Account.
The Bank Millennium's assessment was made on the basis of IFRS and their interpretations applicable as at the date of
these financial statements.
Other operating income / (losses)
The amount of this account is comprised of
(Thousands of euros)
2023
2022
(restated)
Operating income
Gains on leasing operations
3,783
3,266
Income from services provided
30,026
28,614
Rents
2,133
4,053
Sales of cheques and others
8,357
9,730
Other operating income
80,583
50,125
124,882
95,788
Operating costs
Donations and contributions
(4,151)
(4,435)
Contribution to the banking sector
(44,807)
(43,484)
Contributions to Resolution Funds
(22,716)
(36,489)
Contribution to the Single Resolution Fund
(17,729)
(25,847)
Contributions to the Deposit Guarantee Fund
(665)
(8,805)
Institutional protection scheme (Poland)
\u2014
(58,972)
Special tax on the polish banking sector
\u2014
(36,107)
Taxes
(16,098)
(18,137)
Losses on financial leasing operations
(25)
(37)
Other operating costs
(79,106)
(56,587)
(185,297)
(288,900)
(60,415)
(193,112)
The balance Contribution to the banking sector in Portugal is estimated according to the terms of the Decree-Law no.
55-A/2010. The determination of the amount payable is based on: (i) the annual average liabilities deducted by core
capital (Tier 1) and supplementary capital (Tier 2) and deposits covered by the Deposit Guarantee Fund, and (ii)
notional amount of derivatives.
The balance Contributions to Resolution Funds includes the periodic contributions that must be paid to the Portuguese
Fund, as stipulated in Decree-Law No 24/2013. The periodic contributions are determined by a base rate, established
by the Bank of Portugal through regulatory instruments, to be applied in each year and which may be adjusted to the
credit institution\u2019s risk profile based on the objective incidence of those contributions. The period contributions affect
the liabilities of the credit institutions members of the Fund, as per the article 10 of the referred Decree-Law,
deducted from the liability elements that are part of the core capital and supplementary and from the deposits covered
by the Deposit Guarantee Fund.
The balance Contributions to Resolution Funds also includes the mandatory contributions made by Bank Millennium, S.A
to the Bank Guarantee Fund in Poland. The current principles of financing the deposit guarantee system and resolution
in Poland, as defined in the Act of 10 June 2016 on the Bank Guarantee Fund, deposit guarantee system and forced
restructuring, and are effective from 2017.
The method of calculating contributions regarding the resolution fund of banks in Poland was defined in the Delegated
Regulation of the European Commission No. 2015/63 (amended by regulation 2016/1434), which applies directly to all
European Union countries. The contribution for a given year from each entity is calculated by BFG in accordance with
this regulation and the entity is notified by 1 May, each year.
The balance Contribution to the Single Resolution Fund (\u2018SRF\u2019) corresponds to the Bank\u2019s annual ex-ante contribution to
support the application of resolution measures at EU level. The SRF has been established by Regulation (EU) No
806/2014 (the \u201cSRM Regulation\u201d). The SRF is financed from ex-ante contributions paid annually at individual level by all
credit institutions within the Banking Union. Contributions to the SRF consider the annual target level as well as the
size and the risk profile of institutions.
In calculating the ex-ante contributions, the SRF applies the methodology as set out in the Commission Delegated
Regulation (EU) No 2015/63 and European Parliament and of the Council Regulation (EU) No 806/2014. The annual
contribution to the Fund is based on the institution's liabilities excluding own funds and covered deposits considering
adjustments due to derivatives and intra group liabilities and on a risk factor adjustment that depends on the risk
profile of the institution.
In accordance with Article 67(4) of SRM Regulation and in accordance with the Intergovernmental Agreement on the
transfer and mutualisation of contributions to the SRF, the ex-ante contributions are collected by national resolution
authorities and transferred to the SRF by 30 June of each year.
In 2023, the total value of the contribution to the Single Resolution Fund attributable to the Group (BCP and
ActivoBank) amounted to Euros 22,861,000 (2022: Euros 30,400,000). The Group delivered the amount of Euros
17,729,000 to the Single Resolution Fund (2022: Euros 25,847,000) and chose to constitute an irrevocable commitment
in the amount of Euros 5,132,000 (2022: Euros 4,553,000), under the terms set out in Decree-Law no. 24/2013, of 19
February. As a guarantee of the assumption of the irrevocable payment commitment made in the year with the Single
Resolution Fund, a deposit was set up for this purpose, in the amount of Euros 5,132,000 (2022: Euros 4,553,000), which
is fully secured and accounted for in Other assets - Deposit account applications (note 32). The accumulated
irrevocable payment commitments constituted in the amount of Euros 30,638,000 (2022: Euros 25,506,000) are
accounted for in off-balance sheet items (note 45), and are fully collateralized by assets registered in Other assets -
Deposit account applications (note 32).
In 2023, the total value of the contribution to the Deposit Guarantee Fund attributable to the Group (BCP and
ActivoBank) amounted to Euros 583,000 (2022: Euros 506,000), with the Group delivering the entire contribution to the
Deposit Guarantee Fund. Until 2011, inclusive, under the terms set out in Banco de Portugal Notice No. 11/94, the Bank
could choose to deliver part of the contribution to the Deposit Guarantee Fund and the other part to constitute an
irrevocable payment commitment. As a guarantee of the assumption of irrevocable payment commitments assumed
until 2012 with the Deposit Guarantee Fund, a security pledge has been created for this purpose, in the amount of
Euros 99,824,000 (2022: Euros 99,757,000). The accumulated irrevocable payment commitments constituted amount to
Euros 95,190,000, and are accounted for in off-balance sheet items (note 45).
Regarding the irrevocable commitments of the Single Resolution Fund and the Deposit Guarantee Fund, the Bank
considered that they qualify as contingent liabilities under IAS 37, meaning that no liabilities or provisions were
recorded for this purpose.
In 2022, the balance Institutional protection scheme (Poland) corresponded to the contribution of Bank Millennium to
the polish Institutional Protection Scheme.
Regarding the item Special tax on the polish banking sector, as a result of the implementation of the Recovery Plan
from July 2022, Bank Millennium S.A. benefited from the exemption from the special tax on the polish banking sector
starting from that date.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-623": { "value": "Net interest income
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Interest and similar income
Interest on deposits at Central Banks and on loans and advances to credit
institutions repayable on demand
105,333
55,281
Interest on financial assets at amortised cost
Loans and advances to credit institutions
74,377
74,519
Loans and advances to customers
3,243,794
2,150,214
Debt securities
491,969
242,165
Interest on financial assets at fair value through profit or loss
Financial assets held for trading
53,684
2,543
Financial assets not held for trading mandatorily at fair value through profit or loss
2,202
6,109
Financial assets designated at fair value through profit or loss
452
\u2014
Interest on financial assets at fair value through other comprehensive income
268,650
152,066
Interest on hedging derivatives
114,085
47,212
Interest on other assets
16,743
7,126
4,371,289
2,737,235
Interest expense and similar charges
Interest on financial liabilities at amortised cost
Resources from credit institutions
(50,838)
18,156
Resources from customers
(873,330)
(421,674)
Non subordinated debt securities issued
(90,084)
(27,703)
Subordinated debt
(84,234)
(68,546)
Interest on financial liabilities at fair value through profit or loss
Financial liabilities held for trading
Derivatives associated to financial instruments at fair value through profit or loss
(33,724)
(14,130)
Financial liabilities at fair value through profit or loss
Resources from customers
(8,582)
\u2014
Non subordinated debt securities issued
(631)
(3,565)
Interest on hedging derivatives
(392,995)
(62,159)
Interest on leasing
(10,983)
(5,633)
Interest on other liabilities
(164)
(2,209)
(1,545,565)
(587,463)
2,825,724
2,149,772
The balance Interest and similar income - Interest on deposits at Central Banks and on loans and advances to credit
institutions repayable on demand has accounted for a positive interest of Euros 11,884,000 (2022: negative interest
Euros 6,572,000) associated with demand deposits with the Bank of Portugal (do not include overnight operations).
The balance Interest and similar income - Interest on financial assets at amortised cost - Loans and advances to
customers includes the amount of Euros 54,823,000 (2022: Euros 55,967,000) related to commissions and other gains
accounted for under the effective interest method, as referred in the accounting policy described in note 1 C3. The
balance also includes the amount of Euros 92,894,000 (2022: Euros 76,249,000) related to interest income arising from
customers classified in stage 3.\u00a0
The balance Interest and similar income includes the following amounts related to hedge breakages: Interest on
financial assets at amortized cost - Loans and advances to customers, negative interest of Euros 32,558,000 (2022:
positive interests of Euros 58,153,000), Interest on financial assets at amortized cost - Debt securities, positive
interests of Euros 64,385,000 (2022: positive interests of Euros 30,752,000), Interest on financial assets at fair value
through other comprehensive income, positive interests of Euros 5,360,000 (2022: positive interests of Euros
11,301,000), no hedge breaks were recorded for customer's deposits.
The balances Interest expense and similar charges - Interest on non-subordinated debt securities issued and Interest on
subordinated debt include the amount of Euros 2,892,000 and Euros 712,000, respectively (2022: Euros 2,553,000 and
Euros 970,000, respectively) related to commissions and other costs accounted for under the effective interest method,
as referred in the accounting policy described in note 1 C3.
In 2022, the balance Interest expense and similar charges - Interest on financial liabilities at amortised cost - Resources
from credit institutions had recorded a negative cost of Euros 41,555,000 associated with the TLTRO III operation
described in note 33.
The balance Interest expense and similar charges -\u00a0 Interest on leasing refers to the interest cost related to the leasing
liabilities recognised under IFRS 16, as referred in accounting policy described 1 H.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-622": { "value": "Net interest income
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Interest and similar income
Interest on deposits at Central Banks and on loans and advances to credit
institutions repayable on demand
105,333
55,281
Interest on financial assets at amortised cost
Loans and advances to credit institutions
74,377
74,519
Loans and advances to customers
3,243,794
2,150,214
Debt securities
491,969
242,165
Interest on financial assets at fair value through profit or loss
Financial assets held for trading
53,684
2,543
Financial assets not held for trading mandatorily at fair value through profit or loss
2,202
6,109
Financial assets designated at fair value through profit or loss
452
\u2014
Interest on financial assets at fair value through other comprehensive income
268,650
152,066
Interest on hedging derivatives
114,085
47,212
Interest on other assets
16,743
7,126
4,371,289
2,737,235
Interest expense and similar charges
Interest on financial liabilities at amortised cost
Resources from credit institutions
(50,838)
18,156
Resources from customers
(873,330)
(421,674)
Non subordinated debt securities issued
(90,084)
(27,703)
Subordinated debt
(84,234)
(68,546)
Interest on financial liabilities at fair value through profit or loss
Financial liabilities held for trading
Derivatives associated to financial instruments at fair value through profit or loss
(33,724)
(14,130)
Financial liabilities at fair value through profit or loss
Resources from customers
(8,582)
\u2014
Non subordinated debt securities issued
(631)
(3,565)
Interest on hedging derivatives
(392,995)
(62,159)
Interest on leasing
(10,983)
(5,633)
Interest on other liabilities
(164)
(2,209)
(1,545,565)
(587,463)
2,825,724
2,149,772
The balance Interest and similar income - Interest on deposits at Central Banks and on loans and advances to credit
institutions repayable on demand has accounted for a positive interest of Euros 11,884,000 (2022: negative interest
Euros 6,572,000) associated with demand deposits with the Bank of Portugal (do not include overnight operations).
The balance Interest and similar income - Interest on financial assets at amortised cost - Loans and advances to
customers includes the amount of Euros 54,823,000 (2022: Euros 55,967,000) related to commissions and other gains
accounted for under the effective interest method, as referred in the accounting policy described in note 1 C3. The
balance also includes the amount of Euros 92,894,000 (2022: Euros 76,249,000) related to interest income arising from
customers classified in stage 3.\u00a0
The balance Interest and similar income includes the following amounts related to hedge breakages: Interest on
financial assets at amortized cost - Loans and advances to customers, negative interest of Euros 32,558,000 (2022:
positive interests of Euros 58,153,000), Interest on financial assets at amortized cost - Debt securities, positive
interests of Euros 64,385,000 (2022: positive interests of Euros 30,752,000), Interest on financial assets at fair value
through other comprehensive income, positive interests of Euros 5,360,000 (2022: positive interests of Euros
11,301,000), no hedge breaks were recorded for customer's deposits.
The balances Interest expense and similar charges - Interest on non-subordinated debt securities issued and Interest on
subordinated debt include the amount of Euros 2,892,000 and Euros 712,000, respectively (2022: Euros 2,553,000 and
Euros 970,000, respectively) related to commissions and other costs accounted for under the effective interest method,
as referred in the accounting policy described in note 1 C3.
In 2022, the balance Interest expense and similar charges - Interest on financial liabilities at amortised cost - Resources
from credit institutions had recorded a negative cost of Euros 41,555,000 associated with the TLTRO III operation
described in note 33.
The balance Interest expense and similar charges -\u00a0 Interest on leasing refers to the interest cost related to the leasing
liabilities recognised under IFRS 16, as referred in accounting policy described 1 H.
Dividends from equity instruments
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Dividends from financial assets through other comprehensive income
1,783
10,086
1,783
10,086
The balances Dividends from financial assets through other comprehensive income include dividends from shares of
Tiicc, Sarl and Octal Group, Ltd. in the amount of Euros 615,000 and Euros 412,000, respectively (2022: Euros 7,950,000
and Euros 1,325,000 of Octal Group, Ltd. and Tiicc, Sarl, respectively). This balance also includes income from
investment fund units received during the year.
Net fees and commissions income
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Fees and commissions received
Banking services provided
489,255
484,454
Management and maintenance of accounts
168,859
170,372
Bancassurance
120,702
121,824
Securities operations
65,917
70,775
From guarantees granted
49,551
46,834
From commitments to third parties
5,243
5,195
Management and intervention commissions
23,381
23,624
Other commissions
21,403
20,696
944,311
943,774
Fees and commissions paid
Banking services provided by third parties
(131,769)
(132,751)
Securities operations
(7,520)
(8,991)
From guarantees received
(8,357)
(7,699)
Other commissions
(24,992)
(22,425)
(172,638)
(171,866)
771,673
771,908
Gains / (losses) on financial operations
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial operations at fair value through profit or loss
Gains/(losses) on financial assets held for trading
172,618
(151,915)
Gains/(losses) on financial assets not held for trading mandatorily
at fair value through profit or loss
(3,111)
8,962
Gains/(losses) on financial assets and liabilities designated at fair value
through profit or loss
(176,057)
170,259
(6,550)
27,306
Foreign exchange gains/(losses)
17,469
19,390
Gains/(losses) on hedge accounting
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
112,088
5,497
144,815
49,960
The balances Gains/(losses) on financial operations at fair value through profit or loss is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial assets held for trading
Gains
Debt securities portfolio
12,001
7,122
Equity instruments
13,414
202
Derivative financial instruments
335,620
336,772
Other operations
1,374
1,962
362,409
346,058
Losses
Debt securities portfolio
(7,578)
(16,543)
Equity instruments
(9,613)
(8,062)
Derivative financial instruments
(171,890)
(472,534)
Other operations
(710)
(834)
(189,791)
(497,973)
172,618
(151,915)
(continues)
(continuation)
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial assets not held for trading
mandatorily at fair value through profit or loss
Gains
Loans and advances to customers
3,011
10,280
Debt securities portfolio
48,269
38,336
Equity instruments
10,307
22,674
61,587
71,290
Losses
Loans and advances to customers
(3,222)
(7,610)
Debt securities portfolio
(42,769)
(42,847)
Equity instruments
(18,707)
(11,871)
(64,698)
(62,328)
(3,111)
8,962
Gains/(losses) on financial assets and liabilities designated at fair value
through profit or loss
Gains
Debt securities portfolio
207
\u2014
Resources from customers
6,243
3,936
Debt securities issued
Certificates and structured securities issued
66,658
142,982
Other debt securities issued
188
25,993
73,296
172,911
Losses
Resources from customers
(11,495)
\u2014
Debt securities issued
Certificates and structured securities issued
(224,547)
\u2014
Other debt securities issued
(13,311)
(2,652)
(249,353)
(2,652)
(176,057)
170,259
The balances Gains / (losses) on financial assets and liabilities designated at fair value through profit or loss - Gains/
(Losses) - Certificates and structured securities issued record the valuations and devaluations of certificates issued by
the Group. These liabilities are covered by futures, which valuation and devaluation are recorded in Gains / (losses) on
financial assets held for trading - Gains/(Losses) - Derivative financial instruments.
The balances Foreign exchange gains/(losses), Gains/(losses) on hedge accounting and Gains/(losses) arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss, are presented as
follows:
(Thousands of euros)
2023
2022
(restated)
Foreign exchange gains/(losses)
Gains
3,714,151
2,637,014
Losses
(3,696,682)
(2,617,624)
17,469
19,390
Gains/(losses) on hedge accounting
Gains
Hedging derivatives
274,230
1,303,985
Hedged items
214,420
199,940
488,650
1,503,925
Losses
Hedging derivatives
(289,761)
(376,843)
Hedged items
(177,081)
(1,129,315)
(466,842)
(1,506,158)
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
Gains
Credit sales
9,840
13,040
Debt securities portfolio at amortized cost
1,070
10,466
Debt securities portfolio at fair value through other comprehensive income
2,102
40,019
Debt securities issued
1,614
1,224
Others
128,825
933
143,451
65,682
Losses
Credit sales
(15,082)
(4,683)
Debt securities portfolio at fair value through other comprehensive income
(14,744)
(53,405)
Debt securities issued
(1,027)
(630)
Others
(510)
(1,467)
(31,363)
(60,185)
112,088
5,497
In 2023, the main contributions for the balance Gains/(losses) on hedge accounting were the gains of Euros 12,755,000
and Euros 8,713,000 relating to the deposits portfolio hedge and subordinated issues portfolio hedge, respectively.
Regarding the sale of financial assets at fair value through other comprehensive income subject to hedge accounting,
the balance Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value
through profit or loss - Debt securities portfolio at fair value through other comprehensive income, includes a net gain
of Euros 853,000 (2022: net gain Euros 114,278,000), which is offset in the balance Gains/(losses) on hedge accounting.
The balance Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value
through profit or loss - Gains - Debt securities portfolio at fair value through other comprehensive income includes the
amount of Euros 12,000 (2022: Euros 479,000) related to gains resulting from the sale of Portuguese Treasury bonds.
As described in note 48, the Bank Millennium's Management Board announced that after obtaining the necessary
corporate approvals, on 13 February 2023, the Bank concluded an agreement (\"Agreement\") for the sale of 80% of
shares in Millennium Financial Services sp. z o. o. (\"Company\") to Towarzystwo Ubezpiecze\u0144 na \u017bycie Europa S.A., which
acquires 72% of the Company's shares, and Towarzystwo Ubezpiecze\u0144 Europa S.A., which acquires 8% of the Company's
shares (collectively, the \"Buyer\").
Bank Millennium also concluded agreements with the Buyers and the Company regarding the exclusive insurance
distribution model, including cooperation agreements, distribution agreements and agency agreements. Strategic
insurance cooperation provides for long-term (10 years) cooperation in the field of bancassurance in relation to specific
insurance related to credit products offered by the Bank Millennium.
The essence of the transaction provided for in the Agreement was the direct purchase of Shares by the Buyers from the
Bank for a defined initial price, which could be subject to a price adjustment mechanism after the closing of the
Transaction.
On 29 March 2023, 80% of the shares in the company were transferred to the Buyers, and the final settlement of the
transaction, together with the price adjustment, took place in December 2023.
Since as part of the transaction, in addition to Agreement, Bank Millennium also concluded other agreements with the
Buyers and the Company, the Bank analysed individual agreements and their economic effects in accordance with the
requirements of IFRS 10, IFRS 15 and IFRS 9. As a result, Millennium identified contractual obligations and assessed the
assignment of contractual remuneration for individual elements of the transaction, determining the appropriate
method of recognizing revenues from single contractual obligations.
As a result, Bank Millennium recognized in 2023 in the Profit and Loss Account a result of Euros 143.7 million (PLN 652.4
million) (gross), which consisted of:
1. profit realized on sale: payment of the price less the fair value of the shares at the moment of loss of control
in the amount of Euros 122 million (PLN 553.9 million) (gross) was included in the item \u201cGains arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss - Others\u201d;
2. an inflow of Euros 10.1 million (PLN 46 million) (gross) as a valuation of the derivative at the time of final
settlement of the transaction in December 2023, resulting from the agreed potential future remuneration
payments, was recognized as \u201cGains on financial assets held for trading\u201d;
3. At the same time, due to the loss of control over the Company, the Bank valued the remaining non-controlling
share in the Company at fair value of\u00a0 Euros 11.6 million (PLN 52.5 million) (gross), this amount was included
in \"Gains/(losses) on disposal of subsidiaries and other assets\" (note 16).
Starting from the moment of loss of control, the investment in the Company is treated as an involvement in an
associated entity (Bank Millennium holds 20% of the shares in the Company) and is valued at the Group level using the
equity method, while in the Bank Millennium's financial statements the valuation model is fair value with the valuation
effect recorded in the Profit and Loss Account.
The Bank Millennium's assessment was made on the basis of IFRS and their interpretations applicable as at the date of
these financial statements.
Other operating income / (losses)
The amount of this account is comprised of
(Thousands of euros)
2023
2022
(restated)
Operating income
Gains on leasing operations
3,783
3,266
Income from services provided
30,026
28,614
Rents
2,133
4,053
Sales of cheques and others
8,357
9,730
Other operating income
80,583
50,125
124,882
95,788
Operating costs
Donations and contributions
(4,151)
(4,435)
Contribution to the banking sector
(44,807)
(43,484)
Contributions to Resolution Funds
(22,716)
(36,489)
Contribution to the Single Resolution Fund
(17,729)
(25,847)
Contributions to the Deposit Guarantee Fund
(665)
(8,805)
Institutional protection scheme (Poland)
\u2014
(58,972)
Special tax on the polish banking sector
\u2014
(36,107)
Taxes
(16,098)
(18,137)
Losses on financial leasing operations
(25)
(37)
Other operating costs
(79,106)
(56,587)
(185,297)
(288,900)
(60,415)
(193,112)
The balance Contribution to the banking sector in Portugal is estimated according to the terms of the Decree-Law no.
55-A/2010. The determination of the amount payable is based on: (i) the annual average liabilities deducted by core
capital (Tier 1) and supplementary capital (Tier 2) and deposits covered by the Deposit Guarantee Fund, and (ii)
notional amount of derivatives.
The balance Contributions to Resolution Funds includes the periodic contributions that must be paid to the Portuguese
Fund, as stipulated in Decree-Law No 24/2013. The periodic contributions are determined by a base rate, established
by the Bank of Portugal through regulatory instruments, to be applied in each year and which may be adjusted to the
credit institution\u2019s risk profile based on the objective incidence of those contributions. The period contributions affect
the liabilities of the credit institutions members of the Fund, as per the article 10 of the referred Decree-Law,
deducted from the liability elements that are part of the core capital and supplementary and from the deposits covered
by the Deposit Guarantee Fund.
The balance Contributions to Resolution Funds also includes the mandatory contributions made by Bank Millennium, S.A
to the Bank Guarantee Fund in Poland. The current principles of financing the deposit guarantee system and resolution
in Poland, as defined in the Act of 10 June 2016 on the Bank Guarantee Fund, deposit guarantee system and forced
restructuring, and are effective from 2017.
The method of calculating contributions regarding the resolution fund of banks in Poland was defined in the Delegated
Regulation of the European Commission No. 2015/63 (amended by regulation 2016/1434), which applies directly to all
European Union countries. The contribution for a given year from each entity is calculated by BFG in accordance with
this regulation and the entity is notified by 1 May, each year.
The balance Contribution to the Single Resolution Fund (\u2018SRF\u2019) corresponds to the Bank\u2019s annual ex-ante contribution to
support the application of resolution measures at EU level. The SRF has been established by Regulation (EU) No
806/2014 (the \u201cSRM Regulation\u201d). The SRF is financed from ex-ante contributions paid annually at individual level by all
credit institutions within the Banking Union. Contributions to the SRF consider the annual target level as well as the
size and the risk profile of institutions.
In calculating the ex-ante contributions, the SRF applies the methodology as set out in the Commission Delegated
Regulation (EU) No 2015/63 and European Parliament and of the Council Regulation (EU) No 806/2014. The annual
contribution to the Fund is based on the institution's liabilities excluding own funds and covered deposits considering
adjustments due to derivatives and intra group liabilities and on a risk factor adjustment that depends on the risk
profile of the institution.
In accordance with Article 67(4) of SRM Regulation and in accordance with the Intergovernmental Agreement on the
transfer and mutualisation of contributions to the SRF, the ex-ante contributions are collected by national resolution
authorities and transferred to the SRF by 30 June of each year.
In 2023, the total value of the contribution to the Single Resolution Fund attributable to the Group (BCP and
ActivoBank) amounted to Euros 22,861,000 (2022: Euros 30,400,000). The Group delivered the amount of Euros
17,729,000 to the Single Resolution Fund (2022: Euros 25,847,000) and chose to constitute an irrevocable commitment
in the amount of Euros 5,132,000 (2022: Euros 4,553,000), under the terms set out in Decree-Law no. 24/2013, of 19
February. As a guarantee of the assumption of the irrevocable payment commitment made in the year with the Single
Resolution Fund, a deposit was set up for this purpose, in the amount of Euros 5,132,000 (2022: Euros 4,553,000), which
is fully secured and accounted for in Other assets - Deposit account applications (note 32). The accumulated
irrevocable payment commitments constituted in the amount of Euros 30,638,000 (2022: Euros 25,506,000) are
accounted for in off-balance sheet items (note 45), and are fully collateralized by assets registered in Other assets -
Deposit account applications (note 32).
In 2023, the total value of the contribution to the Deposit Guarantee Fund attributable to the Group (BCP and
ActivoBank) amounted to Euros 583,000 (2022: Euros 506,000), with the Group delivering the entire contribution to the
Deposit Guarantee Fund. Until 2011, inclusive, under the terms set out in Banco de Portugal Notice No. 11/94, the Bank
could choose to deliver part of the contribution to the Deposit Guarantee Fund and the other part to constitute an
irrevocable payment commitment. As a guarantee of the assumption of irrevocable payment commitments assumed
until 2012 with the Deposit Guarantee Fund, a security pledge has been created for this purpose, in the amount of
Euros 99,824,000 (2022: Euros 99,757,000). The accumulated irrevocable payment commitments constituted amount to
Euros 95,190,000, and are accounted for in off-balance sheet items (note 45).
Regarding the irrevocable commitments of the Single Resolution Fund and the Deposit Guarantee Fund, the Bank
considered that they qualify as contingent liabilities under IAS 37, meaning that no liabilities or provisions were
recorded for this purpose.
In 2022, the balance Institutional protection scheme (Poland) corresponded to the contribution of Bank Millennium to
the polish Institutional Protection Scheme.
Regarding the item Special tax on the polish banking sector, as a result of the implementation of the Recovery Plan
from July 2022, Bank Millennium S.A. benefited from the exemption from the special tax on the polish banking sector
starting from that date.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-621": { "value": "Net interest income
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Interest and similar income
Interest on deposits at Central Banks and on loans and advances to credit
institutions repayable on demand
105,333
55,281
Interest on financial assets at amortised cost
Loans and advances to credit institutions
74,377
74,519
Loans and advances to customers
3,243,794
2,150,214
Debt securities
491,969
242,165
Interest on financial assets at fair value through profit or loss
Financial assets held for trading
53,684
2,543
Financial assets not held for trading mandatorily at fair value through profit or loss
2,202
6,109
Financial assets designated at fair value through profit or loss
452
\u2014
Interest on financial assets at fair value through other comprehensive income
268,650
152,066
Interest on hedging derivatives
114,085
47,212
Interest on other assets
16,743
7,126
4,371,289
2,737,235
Interest expense and similar charges
Interest on financial liabilities at amortised cost
Resources from credit institutions
(50,838)
18,156
Resources from customers
(873,330)
(421,674)
Non subordinated debt securities issued
(90,084)
(27,703)
Subordinated debt
(84,234)
(68,546)
Interest on financial liabilities at fair value through profit or loss
Financial liabilities held for trading
Derivatives associated to financial instruments at fair value through profit or loss
(33,724)
(14,130)
Financial liabilities at fair value through profit or loss
Resources from customers
(8,582)
\u2014
Non subordinated debt securities issued
(631)
(3,565)
Interest on hedging derivatives
(392,995)
(62,159)
Interest on leasing
(10,983)
(5,633)
Interest on other liabilities
(164)
(2,209)
(1,545,565)
(587,463)
2,825,724
2,149,772
The balance Interest and similar income - Interest on deposits at Central Banks and on loans and advances to credit
institutions repayable on demand has accounted for a positive interest of Euros 11,884,000 (2022: negative interest
Euros 6,572,000) associated with demand deposits with the Bank of Portugal (do not include overnight operations).
The balance Interest and similar income - Interest on financial assets at amortised cost - Loans and advances to
customers includes the amount of Euros 54,823,000 (2022: Euros 55,967,000) related to commissions and other gains
accounted for under the effective interest method, as referred in the accounting policy described in note 1 C3. The
balance also includes the amount of Euros 92,894,000 (2022: Euros 76,249,000) related to interest income arising from
customers classified in stage 3.\u00a0
The balance Interest and similar income includes the following amounts related to hedge breakages: Interest on
financial assets at amortized cost - Loans and advances to customers, negative interest of Euros 32,558,000 (2022:
positive interests of Euros 58,153,000), Interest on financial assets at amortized cost - Debt securities, positive
interests of Euros 64,385,000 (2022: positive interests of Euros 30,752,000), Interest on financial assets at fair value
through other comprehensive income, positive interests of Euros 5,360,000 (2022: positive interests of Euros
11,301,000), no hedge breaks were recorded for customer's deposits.
The balances Interest expense and similar charges - Interest on non-subordinated debt securities issued and Interest on
subordinated debt include the amount of Euros 2,892,000 and Euros 712,000, respectively (2022: Euros 2,553,000 and
Euros 970,000, respectively) related to commissions and other costs accounted for under the effective interest method,
as referred in the accounting policy described in note 1 C3.
In 2022, the balance Interest expense and similar charges - Interest on financial liabilities at amortised cost - Resources
from credit institutions had recorded a negative cost of Euros 41,555,000 associated with the TLTRO III operation
described in note 33.
The balance Interest expense and similar charges -\u00a0 Interest on leasing refers to the interest cost related to the leasing
liabilities recognised under IFRS 16, as referred in accounting policy described 1 H.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-627": { "value": "
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Interest and similar income
Interest on deposits at Central Banks and on loans and advances to credit
institutions repayable on demand
105,333
55,281
Interest on financial assets at amortised cost
Loans and advances to credit institutions
74,377
74,519
Loans and advances to customers
3,243,794
2,150,214
Debt securities
491,969
242,165
Interest on financial assets at fair value through profit or loss
Financial assets held for trading
53,684
2,543
Financial assets not held for trading mandatorily at fair value through profit or loss
2,202
6,109
Financial assets designated at fair value through profit or loss
452
\u2014
Interest on financial assets at fair value through other comprehensive income
268,650
152,066
Interest on hedging derivatives
114,085
47,212
Interest on other assets
16,743
7,126
4,371,289
2,737,235
Interest expense and similar charges
Interest on financial liabilities at amortised cost
Resources from credit institutions
(50,838)
18,156
Resources from customers
(873,330)
(421,674)
Non subordinated debt securities issued
(90,084)
(27,703)
Subordinated debt
(84,234)
(68,546)
Interest on financial liabilities at fair value through profit or loss
Financial liabilities held for trading
Derivatives associated to financial instruments at fair value through profit or loss
(33,724)
(14,130)
Financial liabilities at fair value through profit or loss
Resources from customers
(8,582)
\u2014
Non subordinated debt securities issued
(631)
(3,565)
Interest on hedging derivatives
(392,995)
(62,159)
Interest on leasing
(10,983)
(5,633)
Interest on other liabilities
(164)
(2,209)
(1,545,565)
(587,463)
2,825,724
2,149,772
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-626": { "value": "
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Interest and similar income
Interest on deposits at Central Banks and on loans and advances to credit
institutions repayable on demand
105,333
55,281
Interest on financial assets at amortised cost
Loans and advances to credit institutions
74,377
74,519
Loans and advances to customers
3,243,794
2,150,214
Debt securities
491,969
242,165
Interest on financial assets at fair value through profit or loss
Financial assets held for trading
53,684
2,543
Financial assets not held for trading mandatorily at fair value through profit or loss
2,202
6,109
Financial assets designated at fair value through profit or loss
452
\u2014
Interest on financial assets at fair value through other comprehensive income
268,650
152,066
Interest on hedging derivatives
114,085
47,212
Interest on other assets
16,743
7,126
4,371,289
2,737,235
Interest expense and similar charges
Interest on financial liabilities at amortised cost
Resources from credit institutions
(50,838)
18,156
Resources from customers
(873,330)
(421,674)
Non subordinated debt securities issued
(90,084)
(27,703)
Subordinated debt
(84,234)
(68,546)
Interest on financial liabilities at fair value through profit or loss
Financial liabilities held for trading
Derivatives associated to financial instruments at fair value through profit or loss
(33,724)
(14,130)
Financial liabilities at fair value through profit or loss
Resources from customers
(8,582)
\u2014
Non subordinated debt securities issued
(631)
(3,565)
Interest on hedging derivatives
(392,995)
(62,159)
Interest on leasing
(10,983)
(5,633)
Interest on other liabilities
(164)
(2,209)
(1,545,565)
(587,463)
2,825,724
2,149,772
The analysis of recovered loans and interest occurred during 2023 and 2022, by sector of activity, is as follows:
(Thousands of euros)
2023
2022
(restated)
Agriculture and forestry
52
6
Food, beverage and tobacco
30
34
Textiles
29
41
Wood and cork
137
43
Chemicals
533
105
Machinery, equipment and basic metallurgical
17
165
Construction
1,065
2,719
Retail business
1,151
757
Wholesale business
1,570
113
Restaurants and hotels
22
67
Transports
301
56
Post offices
\u2014
1
Telecommunications
\u2014
2
Services
Financial intermediation
2,492
619
Real estate activities
192
483
Consulting, scientific and technical activities
1,962
8
Administrative and support services activities
31
29
Education
1
5
Health and collective service activities
1
1
Artistic, sports and recreational activities
20
3
Other services
1,206
8
Consumer loans
10,399
13,967
Mortgage credit
603
130
Other domestic activities
17
29
Other international activities
35,900
1,445
57,731
20,836
The analysis of recovered loans and interest occurred during 2023 and 2022, by type of credit, is as follows:
(Thousands of euros)
2023
2022
(restated)
Asset-backed loans
1,318
130
Other guaranteed loans
37,409
4,237
Unsecured loans
16,625
16,300
Foreign loans
1,511
80
Finance leases
868
89
57,731
20,836
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-628": { "value": "Dividends from equity instruments
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Dividends from financial assets through other comprehensive income
1,783
10,086
1,783
10,086
The balances Dividends from financial assets through other comprehensive income include dividends from shares of
Tiicc, Sarl and Octal Group, Ltd. in the amount of Euros 615,000 and Euros 412,000, respectively (2022: Euros 7,950,000
and Euros 1,325,000 of Octal Group, Ltd. and Tiicc, Sarl, respectively). This balance also includes income from
investment fund units received during the year.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-629": { "value": "Net fees and commissions income
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Fees and commissions received
Banking services provided
489,255
484,454
Management and maintenance of accounts
168,859
170,372
Bancassurance
120,702
121,824
Securities operations
65,917
70,775
From guarantees granted
49,551
46,834
From commitments to third parties
5,243
5,195
Management and intervention commissions
23,381
23,624
Other commissions
21,403
20,696
944,311
943,774
Fees and commissions paid
Banking services provided by third parties
(131,769)
(132,751)
Securities operations
(7,520)
(8,991)
From guarantees received
(8,357)
(7,699)
Other commissions
(24,992)
(22,425)
(172,638)
(171,866)
771,673
771,908
", "dimensions": { "concept": "ifrs-full:DisclosureOfFeeAndCommissionIncomeExpenseExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-631": { "value": "Gains / (losses) on financial operations
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial operations at fair value through profit or loss
Gains/(losses) on financial assets held for trading
172,618
(151,915)
Gains/(losses) on financial assets not held for trading mandatorily
at fair value through profit or loss
(3,111)
8,962
Gains/(losses) on financial assets and liabilities designated at fair value
through profit or loss
(176,057)
170,259
(6,550)
27,306
Foreign exchange gains/(losses)
17,469
19,390
Gains/(losses) on hedge accounting
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
112,088
5,497
144,815
49,960
The balances Gains/(losses) on financial operations at fair value through profit or loss is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial assets held for trading
Gains
Debt securities portfolio
12,001
7,122
Equity instruments
13,414
202
Derivative financial instruments
335,620
336,772
Other operations
1,374
1,962
362,409
346,058
Losses
Debt securities portfolio
(7,578)
(16,543)
Equity instruments
(9,613)
(8,062)
Derivative financial instruments
(171,890)
(472,534)
Other operations
(710)
(834)
(189,791)
(497,973)
172,618
(151,915)
(continues)
(continuation)
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial assets not held for trading
mandatorily at fair value through profit or loss
Gains
Loans and advances to customers
3,011
10,280
Debt securities portfolio
48,269
38,336
Equity instruments
10,307
22,674
61,587
71,290
Losses
Loans and advances to customers
(3,222)
(7,610)
Debt securities portfolio
(42,769)
(42,847)
Equity instruments
(18,707)
(11,871)
(64,698)
(62,328)
(3,111)
8,962
Gains/(losses) on financial assets and liabilities designated at fair value
through profit or loss
Gains
Debt securities portfolio
207
\u2014
Resources from customers
6,243
3,936
Debt securities issued
Certificates and structured securities issued
66,658
142,982
Other debt securities issued
188
25,993
73,296
172,911
Losses
Resources from customers
(11,495)
\u2014
Debt securities issued
Certificates and structured securities issued
(224,547)
\u2014
Other debt securities issued
(13,311)
(2,652)
(249,353)
(2,652)
(176,057)
170,259
The balances Gains / (losses) on financial assets and liabilities designated at fair value through profit or loss - Gains/
(Losses) - Certificates and structured securities issued record the valuations and devaluations of certificates issued by
the Group. These liabilities are covered by futures, which valuation and devaluation are recorded in Gains / (losses) on
financial assets held for trading - Gains/(Losses) - Derivative financial instruments.
The balances Foreign exchange gains/(losses), Gains/(losses) on hedge accounting and Gains/(losses) arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss, are presented as
follows:
(Thousands of euros)
2023
2022
(restated)
Foreign exchange gains/(losses)
Gains
3,714,151
2,637,014
Losses
(3,696,682)
(2,617,624)
17,469
19,390
Gains/(losses) on hedge accounting
Gains
Hedging derivatives
274,230
1,303,985
Hedged items
214,420
199,940
488,650
1,503,925
Losses
Hedging derivatives
(289,761)
(376,843)
Hedged items
(177,081)
(1,129,315)
(466,842)
(1,506,158)
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
Gains
Credit sales
9,840
13,040
Debt securities portfolio at amortized cost
1,070
10,466
Debt securities portfolio at fair value through other comprehensive income
2,102
40,019
Debt securities issued
1,614
1,224
Others
128,825
933
143,451
65,682
Losses
Credit sales
(15,082)
(4,683)
Debt securities portfolio at fair value through other comprehensive income
(14,744)
(53,405)
Debt securities issued
(1,027)
(630)
Others
(510)
(1,467)
(31,363)
(60,185)
112,088
5,497
In 2023, the main contributions for the balance Gains/(losses) on hedge accounting were the gains of Euros 12,755,000
and Euros 8,713,000 relating to the deposits portfolio hedge and subordinated issues portfolio hedge, respectively.
Regarding the sale of financial assets at fair value through other comprehensive income subject to hedge accounting,
the balance Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value
through profit or loss - Debt securities portfolio at fair value through other comprehensive income, includes a net gain
of Euros 853,000 (2022: net gain Euros 114,278,000), which is offset in the balance Gains/(losses) on hedge accounting.
The balance Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value
through profit or loss - Gains - Debt securities portfolio at fair value through other comprehensive income includes the
amount of Euros 12,000 (2022: Euros 479,000) related to gains resulting from the sale of Portuguese Treasury bonds.
As described in note 48, the Bank Millennium's Management Board announced that after obtaining the necessary
corporate approvals, on 13 February 2023, the Bank concluded an agreement (\"Agreement\") for the sale of 80% of
shares in Millennium Financial Services sp. z o. o. (\"Company\") to Towarzystwo Ubezpiecze\u0144 na \u017bycie Europa S.A., which
acquires 72% of the Company's shares, and Towarzystwo Ubezpiecze\u0144 Europa S.A., which acquires 8% of the Company's
shares (collectively, the \"Buyer\").
Bank Millennium also concluded agreements with the Buyers and the Company regarding the exclusive insurance
distribution model, including cooperation agreements, distribution agreements and agency agreements. Strategic
insurance cooperation provides for long-term (10 years) cooperation in the field of bancassurance in relation to specific
insurance related to credit products offered by the Bank Millennium.
The essence of the transaction provided for in the Agreement was the direct purchase of Shares by the Buyers from the
Bank for a defined initial price, which could be subject to a price adjustment mechanism after the closing of the
Transaction.
On 29 March 2023, 80% of the shares in the company were transferred to the Buyers, and the final settlement of the
transaction, together with the price adjustment, took place in December 2023.
Since as part of the transaction, in addition to Agreement, Bank Millennium also concluded other agreements with the
Buyers and the Company, the Bank analysed individual agreements and their economic effects in accordance with the
requirements of IFRS 10, IFRS 15 and IFRS 9. As a result, Millennium identified contractual obligations and assessed the
assignment of contractual remuneration for individual elements of the transaction, determining the appropriate
method of recognizing revenues from single contractual obligations.
As a result, Bank Millennium recognized in 2023 in the Profit and Loss Account a result of Euros 143.7 million (PLN 652.4
million) (gross), which consisted of:
1. profit realized on sale: payment of the price less the fair value of the shares at the moment of loss of control
in the amount of Euros 122 million (PLN 553.9 million) (gross) was included in the item \u201cGains arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss - Others\u201d;
2. an inflow of Euros 10.1 million (PLN 46 million) (gross) as a valuation of the derivative at the time of final
settlement of the transaction in December 2023, resulting from the agreed potential future remuneration
payments, was recognized as \u201cGains on financial assets held for trading\u201d;
3. At the same time, due to the loss of control over the Company, the Bank valued the remaining non-controlling
share in the Company at fair value of\u00a0 Euros 11.6 million (PLN 52.5 million) (gross), this amount was included
in \"Gains/(losses) on disposal of subsidiaries and other assets\" (note 16).
Starting from the moment of loss of control, the investment in the Company is treated as an involvement in an
associated entity (Bank Millennium holds 20% of the shares in the Company) and is valued at the Group level using the
equity method, while in the Bank Millennium's financial statements the valuation model is fair value with the valuation
effect recorded in the Profit and Loss Account.
The Bank Millennium's assessment was made on the basis of IFRS and their interpretations applicable as at the date of
these financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-630": { "value": "Gains / (losses) on financial operations
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial operations at fair value through profit or loss
Gains/(losses) on financial assets held for trading
172,618
(151,915)
Gains/(losses) on financial assets not held for trading mandatorily
at fair value through profit or loss
(3,111)
8,962
Gains/(losses) on financial assets and liabilities designated at fair value
through profit or loss
(176,057)
170,259
(6,550)
27,306
Foreign exchange gains/(losses)
17,469
19,390
Gains/(losses) on hedge accounting
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
112,088
5,497
144,815
49,960
The balances Gains/(losses) on financial operations at fair value through profit or loss is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial assets held for trading
Gains
Debt securities portfolio
12,001
7,122
Equity instruments
13,414
202
Derivative financial instruments
335,620
336,772
Other operations
1,374
1,962
362,409
346,058
Losses
Debt securities portfolio
(7,578)
(16,543)
Equity instruments
(9,613)
(8,062)
Derivative financial instruments
(171,890)
(472,534)
Other operations
(710)
(834)
(189,791)
(497,973)
172,618
(151,915)
(continues)
(continuation)
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial assets not held for trading
mandatorily at fair value through profit or loss
Gains
Loans and advances to customers
3,011
10,280
Debt securities portfolio
48,269
38,336
Equity instruments
10,307
22,674
61,587
71,290
Losses
Loans and advances to customers
(3,222)
(7,610)
Debt securities portfolio
(42,769)
(42,847)
Equity instruments
(18,707)
(11,871)
(64,698)
(62,328)
(3,111)
8,962
Gains/(losses) on financial assets and liabilities designated at fair value
through profit or loss
Gains
Debt securities portfolio
207
\u2014
Resources from customers
6,243
3,936
Debt securities issued
Certificates and structured securities issued
66,658
142,982
Other debt securities issued
188
25,993
73,296
172,911
Losses
Resources from customers
(11,495)
\u2014
Debt securities issued
Certificates and structured securities issued
(224,547)
\u2014
Other debt securities issued
(13,311)
(2,652)
(249,353)
(2,652)
(176,057)
170,259
The balances Gains / (losses) on financial assets and liabilities designated at fair value through profit or loss - Gains/
(Losses) - Certificates and structured securities issued record the valuations and devaluations of certificates issued by
the Group. These liabilities are covered by futures, which valuation and devaluation are recorded in Gains / (losses) on
financial assets held for trading - Gains/(Losses) - Derivative financial instruments.
The balances Foreign exchange gains/(losses), Gains/(losses) on hedge accounting and Gains/(losses) arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss, are presented as
follows:
(Thousands of euros)
2023
2022
(restated)
Foreign exchange gains/(losses)
Gains
3,714,151
2,637,014
Losses
(3,696,682)
(2,617,624)
17,469
19,390
Gains/(losses) on hedge accounting
Gains
Hedging derivatives
274,230
1,303,985
Hedged items
214,420
199,940
488,650
1,503,925
Losses
Hedging derivatives
(289,761)
(376,843)
Hedged items
(177,081)
(1,129,315)
(466,842)
(1,506,158)
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
Gains
Credit sales
9,840
13,040
Debt securities portfolio at amortized cost
1,070
10,466
Debt securities portfolio at fair value through other comprehensive income
2,102
40,019
Debt securities issued
1,614
1,224
Others
128,825
933
143,451
65,682
Losses
Credit sales
(15,082)
(4,683)
Debt securities portfolio at fair value through other comprehensive income
(14,744)
(53,405)
Debt securities issued
(1,027)
(630)
Others
(510)
(1,467)
(31,363)
(60,185)
112,088
5,497
In 2023, the main contributions for the balance Gains/(losses) on hedge accounting were the gains of Euros 12,755,000
and Euros 8,713,000 relating to the deposits portfolio hedge and subordinated issues portfolio hedge, respectively.
Regarding the sale of financial assets at fair value through other comprehensive income subject to hedge accounting,
the balance Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value
through profit or loss - Debt securities portfolio at fair value through other comprehensive income, includes a net gain
of Euros 853,000 (2022: net gain Euros 114,278,000), which is offset in the balance Gains/(losses) on hedge accounting.
The balance Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value
through profit or loss - Gains - Debt securities portfolio at fair value through other comprehensive income includes the
amount of Euros 12,000 (2022: Euros 479,000) related to gains resulting from the sale of Portuguese Treasury bonds.
As described in note 48, the Bank Millennium's Management Board announced that after obtaining the necessary
corporate approvals, on 13 February 2023, the Bank concluded an agreement (\"Agreement\") for the sale of 80% of
shares in Millennium Financial Services sp. z o. o. (\"Company\") to Towarzystwo Ubezpiecze\u0144 na \u017bycie Europa S.A., which
acquires 72% of the Company's shares, and Towarzystwo Ubezpiecze\u0144 Europa S.A., which acquires 8% of the Company's
shares (collectively, the \"Buyer\").
Bank Millennium also concluded agreements with the Buyers and the Company regarding the exclusive insurance
distribution model, including cooperation agreements, distribution agreements and agency agreements. Strategic
insurance cooperation provides for long-term (10 years) cooperation in the field of bancassurance in relation to specific
insurance related to credit products offered by the Bank Millennium.
The essence of the transaction provided for in the Agreement was the direct purchase of Shares by the Buyers from the
Bank for a defined initial price, which could be subject to a price adjustment mechanism after the closing of the
Transaction.
On 29 March 2023, 80% of the shares in the company were transferred to the Buyers, and the final settlement of the
transaction, together with the price adjustment, took place in December 2023.
Since as part of the transaction, in addition to Agreement, Bank Millennium also concluded other agreements with the
Buyers and the Company, the Bank analysed individual agreements and their economic effects in accordance with the
requirements of IFRS 10, IFRS 15 and IFRS 9. As a result, Millennium identified contractual obligations and assessed the
assignment of contractual remuneration for individual elements of the transaction, determining the appropriate
method of recognizing revenues from single contractual obligations.
As a result, Bank Millennium recognized in 2023 in the Profit and Loss Account a result of Euros 143.7 million (PLN 652.4
million) (gross), which consisted of:
1. profit realized on sale: payment of the price less the fair value of the shares at the moment of loss of control
in the amount of Euros 122 million (PLN 553.9 million) (gross) was included in the item \u201cGains arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss - Others\u201d;
2. an inflow of Euros 10.1 million (PLN 46 million) (gross) as a valuation of the derivative at the time of final
settlement of the transaction in December 2023, resulting from the agreed potential future remuneration
payments, was recognized as \u201cGains on financial assets held for trading\u201d;
3. At the same time, due to the loss of control over the Company, the Bank valued the remaining non-controlling
share in the Company at fair value of\u00a0 Euros 11.6 million (PLN 52.5 million) (gross), this amount was included
in \"Gains/(losses) on disposal of subsidiaries and other assets\" (note 16).
Starting from the moment of loss of control, the investment in the Company is treated as an involvement in an
associated entity (Bank Millennium holds 20% of the shares in the Company) and is valued at the Group level using the
equity method, while in the Bank Millennium's financial statements the valuation model is fair value with the valuation
effect recorded in the Profit and Loss Account.
The Bank Millennium's assessment was made on the basis of IFRS and their interpretations applicable as at the date of
these financial statements.
Other operating income / (losses)
The amount of this account is comprised of
(Thousands of euros)
2023
2022
(restated)
Operating income
Gains on leasing operations
3,783
3,266
Income from services provided
30,026
28,614
Rents
2,133
4,053
Sales of cheques and others
8,357
9,730
Other operating income
80,583
50,125
124,882
95,788
Operating costs
Donations and contributions
(4,151)
(4,435)
Contribution to the banking sector
(44,807)
(43,484)
Contributions to Resolution Funds
(22,716)
(36,489)
Contribution to the Single Resolution Fund
(17,729)
(25,847)
Contributions to the Deposit Guarantee Fund
(665)
(8,805)
Institutional protection scheme (Poland)
\u2014
(58,972)
Special tax on the polish banking sector
\u2014
(36,107)
Taxes
(16,098)
(18,137)
Losses on financial leasing operations
(25)
(37)
Other operating costs
(79,106)
(56,587)
(185,297)
(288,900)
(60,415)
(193,112)
The balance Contribution to the banking sector in Portugal is estimated according to the terms of the Decree-Law no.
55-A/2010. The determination of the amount payable is based on: (i) the annual average liabilities deducted by core
capital (Tier 1) and supplementary capital (Tier 2) and deposits covered by the Deposit Guarantee Fund, and (ii)
notional amount of derivatives.
The balance Contributions to Resolution Funds includes the periodic contributions that must be paid to the Portuguese
Fund, as stipulated in Decree-Law No 24/2013. The periodic contributions are determined by a base rate, established
by the Bank of Portugal through regulatory instruments, to be applied in each year and which may be adjusted to the
credit institution\u2019s risk profile based on the objective incidence of those contributions. The period contributions affect
the liabilities of the credit institutions members of the Fund, as per the article 10 of the referred Decree-Law,
deducted from the liability elements that are part of the core capital and supplementary and from the deposits covered
by the Deposit Guarantee Fund.
The balance Contributions to Resolution Funds also includes the mandatory contributions made by Bank Millennium, S.A
to the Bank Guarantee Fund in Poland. The current principles of financing the deposit guarantee system and resolution
in Poland, as defined in the Act of 10 June 2016 on the Bank Guarantee Fund, deposit guarantee system and forced
restructuring, and are effective from 2017.
The method of calculating contributions regarding the resolution fund of banks in Poland was defined in the Delegated
Regulation of the European Commission No. 2015/63 (amended by regulation 2016/1434), which applies directly to all
European Union countries. The contribution for a given year from each entity is calculated by BFG in accordance with
this regulation and the entity is notified by 1 May, each year.
The balance Contribution to the Single Resolution Fund (\u2018SRF\u2019) corresponds to the Bank\u2019s annual ex-ante contribution to
support the application of resolution measures at EU level. The SRF has been established by Regulation (EU) No
806/2014 (the \u201cSRM Regulation\u201d). The SRF is financed from ex-ante contributions paid annually at individual level by all
credit institutions within the Banking Union. Contributions to the SRF consider the annual target level as well as the
size and the risk profile of institutions.
In calculating the ex-ante contributions, the SRF applies the methodology as set out in the Commission Delegated
Regulation (EU) No 2015/63 and European Parliament and of the Council Regulation (EU) No 806/2014. The annual
contribution to the Fund is based on the institution's liabilities excluding own funds and covered deposits considering
adjustments due to derivatives and intra group liabilities and on a risk factor adjustment that depends on the risk
profile of the institution.
In accordance with Article 67(4) of SRM Regulation and in accordance with the Intergovernmental Agreement on the
transfer and mutualisation of contributions to the SRF, the ex-ante contributions are collected by national resolution
authorities and transferred to the SRF by 30 June of each year.
In 2023, the total value of the contribution to the Single Resolution Fund attributable to the Group (BCP and
ActivoBank) amounted to Euros 22,861,000 (2022: Euros 30,400,000). The Group delivered the amount of Euros
17,729,000 to the Single Resolution Fund (2022: Euros 25,847,000) and chose to constitute an irrevocable commitment
in the amount of Euros 5,132,000 (2022: Euros 4,553,000), under the terms set out in Decree-Law no. 24/2013, of 19
February. As a guarantee of the assumption of the irrevocable payment commitment made in the year with the Single
Resolution Fund, a deposit was set up for this purpose, in the amount of Euros 5,132,000 (2022: Euros 4,553,000), which
is fully secured and accounted for in Other assets - Deposit account applications (note 32). The accumulated
irrevocable payment commitments constituted in the amount of Euros 30,638,000 (2022: Euros 25,506,000) are
accounted for in off-balance sheet items (note 45), and are fully collateralized by assets registered in Other assets -
Deposit account applications (note 32).
In 2023, the total value of the contribution to the Deposit Guarantee Fund attributable to the Group (BCP and
ActivoBank) amounted to Euros 583,000 (2022: Euros 506,000), with the Group delivering the entire contribution to the
Deposit Guarantee Fund. Until 2011, inclusive, under the terms set out in Banco de Portugal Notice No. 11/94, the Bank
could choose to deliver part of the contribution to the Deposit Guarantee Fund and the other part to constitute an
irrevocable payment commitment. As a guarantee of the assumption of irrevocable payment commitments assumed
until 2012 with the Deposit Guarantee Fund, a security pledge has been created for this purpose, in the amount of
Euros 99,824,000 (2022: Euros 99,757,000). The accumulated irrevocable payment commitments constituted amount to
Euros 95,190,000, and are accounted for in off-balance sheet items (note 45).
Regarding the irrevocable commitments of the Single Resolution Fund and the Deposit Guarantee Fund, the Bank
considered that they qualify as contingent liabilities under IAS 37, meaning that no liabilities or provisions were
recorded for this purpose.
In 2022, the balance Institutional protection scheme (Poland) corresponded to the contribution of Bank Millennium to
the polish Institutional Protection Scheme.
Regarding the item Special tax on the polish banking sector, as a result of the implementation of the Recovery Plan
from July 2022, Bank Millennium S.A. benefited from the exemption from the special tax on the polish banking sector
starting from that date.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-632": { "value": "
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial operations at fair value through profit or loss
Gains/(losses) on financial assets held for trading
172,618
(151,915)
Gains/(losses) on financial assets not held for trading mandatorily
at fair value through profit or loss
(3,111)
8,962
Gains/(losses) on financial assets and liabilities designated at fair value
through profit or loss
(176,057)
170,259
(6,550)
27,306
Foreign exchange gains/(losses)
17,469
19,390
Gains/(losses) on hedge accounting
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
112,088
5,497
144,815
49,960
The balances Gains/(losses) on financial operations at fair value through profit or loss is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial assets held for trading
Gains
Debt securities portfolio
12,001
7,122
Equity instruments
13,414
202
Derivative financial instruments
335,620
336,772
Other operations
1,374
1,962
362,409
346,058
Losses
Debt securities portfolio
(7,578)
(16,543)
Equity instruments
(9,613)
(8,062)
Derivative financial instruments
(171,890)
(472,534)
Other operations
(710)
(834)
(189,791)
(497,973)
172,618
(151,915)
(continues)
(continuation)
(Thousands of euros)
2023
2022
(restated)
Gains/(losses) on financial assets not held for trading
mandatorily at fair value through profit or loss
Gains
Loans and advances to customers
3,011
10,280
Debt securities portfolio
48,269
38,336
Equity instruments
10,307
22,674
61,587
71,290
Losses
Loans and advances to customers
(3,222)
(7,610)
Debt securities portfolio
(42,769)
(42,847)
Equity instruments
(18,707)
(11,871)
(64,698)
(62,328)
(3,111)
8,962
Gains/(losses) on financial assets and liabilities designated at fair value
through profit or loss
Gains
Debt securities portfolio
207
\u2014
Resources from customers
6,243
3,936
Debt securities issued
Certificates and structured securities issued
66,658
142,982
Other debt securities issued
188
25,993
73,296
172,911
Losses
Resources from customers
(11,495)
\u2014
Debt securities issued
Certificates and structured securities issued
(224,547)
\u2014
Other debt securities issued
(13,311)
(2,652)
(249,353)
(2,652)
(176,057)
170,259
The balances Financial assets at fair value through profit or loss and Financial assets at fair value through other
comprehensive income are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Financial assets at fair value through profit or loss
Financial assets held for trading
Debt instruments
355,526
338,813
Equity instruments
53,432
51,540
Trading derivatives
413,946
376,244
822,904
766,597
Financial assets not held for trading mandatorily at fair value through profit or loss
Loans and advances to customers at fair value
4,454
20,929
Debt instruments
280,558
311,404
Equity instruments
182,242
220,346
467,254
552,679
\u00a0 Financial assets designated at fair value through profit or loss
\u00a0 Debt instruments
32,004
\u2014
32,004
\u2014
Financial assets at fair value through other comprehensive income
Debt instruments
10,809,872
7,434,152
Equity instruments
24,419
27,401
10,834,291
7,461,553
12,156,453
8,780,829
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive income, net of impairment, by type of asset, as
at 31\u00a0December 2023, is analysed as follows:
(Thousands of euros)
2023
At fair value through profit or loss
Held for trading
Not held for trading
mandatorily at fair
value through
profit or loss
Designated at
fair value
through profit
or loss
At fair value
through other
comprehensive
income
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
20,312
\u2014
32,004
1,950,559
2,002,875
Foreign issuers
25,452
\u2014
\u2014
3,435,176
3,460,628
Bonds issued by public companies and
other entities
Portuguese issuers
\u2014
50
\u2014
403,971
404,021
Foreign issuers
10,395
\u2014
\u2014
1,120,454
1,130,849
Treasury bills (Public Issuers and
Central Banks)
Portuguese issuers
103,661
\u2014
\u2014
\u2014
103,661
Foreign issuers
192,741
\u2014
\u2014
3,899,712
4,092,453
Shares of foreign companies (a)
\u2014
23,498
\u2014
\u2014
23,498
Investment fund units (b)
\u2014
257,010
\u2014
\u2014
257,010
Commercial paper
2,965
\u2014
\u2014
\u2014
2,965
355,526
280,558
32,004
10,809,872
11,477,960
Equity instruments
Shares
Portuguese companies
142
\u2014
\u2014
16,352
16,494
Foreign companies
28
15,335
\u2014
8,067
23,430
Investment fund units (c)
\u2014
166,907
\u2014
\u2014
166,907
Other securities (d)
53,262
\u2014
\u2014
\u2014
53,262
53,432
182,242
\u2014
24,419
260,093
Trading derivatives
413,946
\u2014
\u2014
\u2014
413,946
822,904
462,800
32,004
10,834,291
12,151,999
Level 1
405,585
\u2014
32,004
8,301,377
8,738,966
Level 2
84,614
\u2014
\u2014
2,431,483
2,516,097
Level 3
332,705
462,800
\u2014
101,431
896,936
(a) These shares are considered as debt instruments because they do not fall within the definition of equity instruments provided by IAS 32.
(b) These investment fund units are considered as debt instruments because they do not fall within the definition of equity instruments
provided by IAS 32.
(c) These investment fund units were considered as equity instruments in accordance with the terms provided in IAS 32.
(d) Includes the amount of Euros 52,854,000 in Exchange Traded Funds (ETFs).
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive income, net of impairment, by type of asset, as
at 31\u00a0December 2022, is analysed as follows:
(Thousands of euros)
2022 (restated)
At fair value through profit or loss
Held for trading
Not held for
trading
mandatorily at fair
value through
profit or loss
At fair value
through other
comprehensive
income
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
21,450
\u2014
2,448,636
2,470,086
Foreign issuers
8,353
\u2014
2,916,098
2,924,451
Bonds issued by public companies and other entities
Portuguese issuers
\u2014
51
542,765
542,816
Foreign issuers
74
\u2014
897,146
897,220
Treasury bills (Public Issuers and Central Banks)
Portuguese issuers
308,936
\u2014
993
309,929
Foreign issuers
\u2014
\u2014
628,514
628,514
Shares of foreign companies (a)
\u2014
19,387
\u2014
19,387
Investment fund units (b)
\u2014
291,966
\u2014
291,966
338,813
311,404
7,434,152
8,084,369
Equity instruments
Shares
Portuguese companies
\u2014
\u2014
18,811
18,811
Foreign companies
24
27,550
8,590
36,164
Investment fund units (c)
\u2014
192,796
\u2014
192,796
Other securities (d)
51,516
\u2014
\u2014
51,516
51,540
220,346
27,401
299,287
Trading derivatives
376,244
\u2014
\u2014
376,244
766,597
531,750
7,461,553
8,759,900
Level 1
389,954
\u2014
6,489,282
6,879,236
Level 2
81,347
\u2014
862,566
943,913
Level 3
295,296
531,750
109,705
936,751
(a) These shares are considered as debt instruments because they do not fall within the definition of equity instruments provided by IAS 32.
(b) These investment fund units are considered debt instruments because they do not fall within the definition of equity instruments provided
by IAS 32.
(c) These investment fund units were considered as equity instruments in accordance with the terms provided in IAS 32.
(d) Includes the amount of Euros 51,191,000 in Exchange Traded Funds (ETFs).
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive, net of impairment, as at 31\u00a0December 2023, by
valuation levels, is analysed as follows:
(Thousands of euros)
2023
Level 1
Level 2
Level 3
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
1,973,284
29,591
\u2014
2,002,875
Foreign issuers
3,448,941
\u2014
11,687
3,460,628
Bonds issued by public companies and other entities
Portuguese issuers
279,580
59,064
65,377
404,021
Foreign issuers
1,130,849
\u2014
\u2014
1,130,849
Treasury bills (Public Issuers and Central Banks)
Portuguese issuers
103,661
\u2014
\u2014
103,661
Foreign issuers
1,749,627
2,342,826
\u2014
4,092,453
Shares of Foreign companies
\u2014
\u2014
23,498
23,498
Investment fund units
\u2014
\u2014
257,010
257,010
Commercial paper
\u2014
\u2014
2,965
2,965
8,685,942
2,431,481
360,537
11,477,960
Equity instruments
Shares
Portuguese companies
142
\u2014
16,352
16,494
Foreign companies
28
\u2014
23,402
23,430
Investment fund units
\u2014
\u2014
166,907
166,907
Other securities
52,854
\u2014
408
53,262
53,024
\u2014
207,069
260,093
Trading derivatives
\u2014
84,616
329,330
413,946
8,738,966
2,516,097
896,936
12,151,999
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive, net of impairment, as at 31\u00a0December 2022, by
valuation levels, is analysed as follows:
(Thousands of euros)
2022 (restated)
Level 1
Level 2
Level 3
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
2,336,787
133,299
\u2014
2,470,086
Foreign issuers
2,908,924
\u2014
15,527
2,924,451
Bonds issued by public companies and other entities
Portuguese issuers
416,374
57,212
69,230
542,816
Foreign issuers
853,605
43,615
\u2014
897,220
Treasury bills (Public Issuers and Central Banks)
Portuguese issuers
309,929
\u2014
\u2014
309,929
Foreign issuers
\u2014
628,514
\u2014
628,514
Shares of Foreign companies
\u2014
\u2014
19,387
19,387
Investment fund units
\u2014
\u2014
291,966
291,966
6,825,619
862,640
396,110
8,084,369
Equity instruments
Shares
Portuguese companies
2,402
\u2014
16,409
18,811
Foreign companies
24
\u2014
36,140
36,164
Investment fund units
\u2014
\u2014
192,796
192,796
Other securities
51,191
\u2014
325
51,516
53,617
\u2014
245,670
299,287
Trading derivatives
\u2014
81,273
294,971
376,244
6,879,236
943,913
936,751
8,759,900
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances at fair value and
trading derivatives) and Financial assets at fair value through other comprehensive, by residual maturity, as at
31\u00a0December 2023, is as follows:
(Thousands of euros)
2023
Up to 3
months
3 months to 1
year
1 year to 5
years
Over
5 years
Undetermined
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
324
30,653
1,600,329
371,569
\u2014
2,002,875
Foreign issuers
65,904
501,611
2,638,954
254,159
\u2014
3,460,628
Bonds issued by public companies and
other entities
Portuguese issuers
\u2014
56,316
319,417
28,288
\u2014
404,021
Foreign issuers
31,846
140,832
644,363
313,808
\u2014
1,130,849
Treasury bills (Public Issuers and
Central Banks)
Portuguese issuers
49,648
54,013
\u2014
\u2014
\u2014
103,661
Foreign issuers
2,416,524
1,675,929
\u2014
\u2014
\u2014
4,092,453
Shares of Foreign companies
\u2014
\u2014
\u2014
\u2014
23,498
23,498
Investment fund units
6,404
3,067
205,191
37,142
5,206
257,010
Commercial paper
2,965
\u2014
\u2014
\u2014
\u2014
2,965
2,573,615
2,462,421
5,408,254
1,004,966
28,704
11,477,960
Equity instruments
Shares
Portuguese companies
16,494
16,494
Foreign companies
23,430
23,430
Investment fund units
166,907
166,907
Other securities
53,262
53,262
260,093
260,093
2,573,615
2,462,421
5,408,254
1,004,966
288,797
11,738,053
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances at fair value and
trading derivatives) and Financial assets at fair value through other comprehensive, by residual maturity, as at
31\u00a0December 2022, is as follows:
(Thousands of euros)
2022 (restated)
Up to 3
months
3 months to 1
year
1 year to 5
years
Over
5 years
Undetermined
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
\u2014
8,267
2,172,623
289,196
\u2014
2,470,086
Foreign issuers
416,699
493,389
1,863,833
150,530
\u2014
2,924,451
Bonds issued by public companies and
other entities
Portuguese issuers
163,229
58,247
300,962
20,378
\u2014
542,816
Foreign issuers
4,414
13,732
457,154
421,920
\u2014
897,220
Treasury bills (Public Issuers and
Central Banks)
Portuguese issuers
128,349
181,580
\u2014
\u2014
\u2014
309,929
Foreign issuers
56,638
571,876
\u2014
\u2014
\u2014
628,514
Shares of Foreign companies
\u2014
\u2014
\u2014
\u2014
19,387
19,387
Investment fund units
5,942
38,534
202,152
39,863
5,475
291,966
775,271
1,365,625
4,996,724
921,887
24,862
8,084,369
Equity instruments
Shares
Portuguese companies
18,811
18,811
Foreign companies
36,164
36,164
Investment fund units
192,796
192,796
Other securities
51,516
51,516
299,287
299,287
775,271
1,365,625
4,996,724
921,887
324,149
8,383,656
The balance Financial assets not held for trading mandatorily at fair value through profit or loss - Loans to customers at
fair value is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Unsecured loans
2,688
17,217
Overdue loans - less than 90 days
106
554
Overdue loans - Over 90 days
1,660
3,158
4,454
20,929
The balance Loans to customers at fair value correspond essentially to consumer loans. This balance is analysed, by
remaining period, as follows:
(Thousands of euros)
2023
2022
(restated)
Up to 3 months
318
1,733
3 months to 1 year
1,452
6,220
1 to 5 years
918
9,264
Undetermined
1,766
3,712
4,454
20,929
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances to customers at fair
value and trading derivatives) and Financial assets at fair value through other comprehensive income, by sector of
activity, as at 31\u00a0December 2023, is as follows:
(Thousands of euros)
2023
Bonds and
Treasury bills
Shares
Other Financial
Assets
Total
Mining
\u2014
6
\u2014
6
Paper, printing and publishing
47,416
\u2014
\u2014
47,416
Chemicals
7,952
2
\u2014
7,954
Machinery, equipment and basic metallurgical
2,477
8
\u2014
2,485
Electricity and gas
70,806
\u2014
\u2014
70,806
Water
5,025
\u2014
\u2014
5,025
Construction
\u2014
145
\u2014
145
Wholesale business
7,067
238
\u2014
7,305
Transports
43,767
\u2014
\u2014
43,767
Telecommunications
39,126
4,553
\u2014
43,679
Services
\u00a0 Financial intermediation
3,510,636
52,163
476,771
4,039,570
\u00a0 Consulting, scientific and technical activities
111,525
131
\u2014
111,656
\u00a0 Administrative and support services activities
24,216
6,149
\u2014
30,365
\u00a0 Public sector
10,645
\u2014
408
11,053
\u00a0 Other services
\u2014
26
\u2014
26
Other international activities
\u2014
1
\u2014
1
3,880,658
63,422
477,179
4,421,259
Government and Public securities
7,316,794
\u2014
\u2014
7,316,794
11,197,452
63,422
477,179
11,738,053
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances to customers at fair
value and trading derivatives) and Financial assets at fair value through other comprehensive income, by sector of
activity, as at 31\u00a0December 2022, is as follows:
(Thousands of euros)
2022 (restated)
Bonds and Treasury
bills
Shares
Other Financial
Assets
Total
Mining
\u2014
5
\u2014
5
Paper, printing and publishing
45,562
2
\u2014
45,564
Chemicals
\u2014
2
\u2014
2
Machinery, equipment and basic metallurgical
2,302
6
\u2014
2,308
Electricity and gas
44,627
\u2014
\u2014
44,627
Water
9,460
\u2014
\u2014
9,460
Construction
4,934
2
\u2014
4,936
Retail business
20,503
2
\u2014
20,505
Wholesale business
6,456
260
\u2014
6,716
Restaurants and hotels
\u2014
1,401
\u2014
1,401
Transports
29,491
\u2014
\u2014
29,491
Telecommunications
38,869
4,401
\u2014
43,270
Services
Financial intermediation
1,533,154
54,477
532,567
2,120,198
Consulting, scientific and technical activities
303,036
103
\u2014
303,139
Administrative and support services activities
26,691
8,629
\u2014
35,320
Public sector
\u2014
\u2014
325
325
Other services
3,465
5,054
3,386
11,905
Other international activities
\u2014
18
\u2014
18
2,068,550
74,362
536,278
2,679,190
Government and Public securities
5,704,466
\u2014
\u2014
5,704,466
7,773,016
74,362
536,278
8,383,656
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-634": { "value": "
The balances Foreign exchange gains/(losses), Gains/(losses) on hedge accounting and Gains/(losses) arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss, are presented as
follows:
(Thousands of euros)
2023
2022
(restated)
Foreign exchange gains/(losses)
Gains
3,714,151
2,637,014
Losses
(3,696,682)
(2,617,624)
17,469
19,390
Gains/(losses) on hedge accounting
Gains
Hedging derivatives
274,230
1,303,985
Hedged items
214,420
199,940
488,650
1,503,925
Losses
Hedging derivatives
(289,761)
(376,843)
Hedged items
(177,081)
(1,129,315)
(466,842)
(1,506,158)
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
Gains
Credit sales
9,840
13,040
Debt securities portfolio at amortized cost
1,070
10,466
Debt securities portfolio at fair value through other comprehensive income
2,102
40,019
Debt securities issued
1,614
1,224
Others
128,825
933
143,451
65,682
Losses
Credit sales
(15,082)
(4,683)
Debt securities portfolio at fair value through other comprehensive income
(14,744)
(53,405)
Debt securities issued
(1,027)
(630)
Others
(510)
(1,467)
(31,363)
(60,185)
112,088
5,497
In 2023, the main contributions for the balance Gains/(losses) on hedge accounting were the gains of Euros 12,755,000
and Euros 8,713,000 relating to the deposits portfolio hedge and subordinated issues portfolio hedge, respectively.
The analysis of trading derivatives, by maturity, as at 31\u00a0December 2023, is as follows:
(Thousands of euros)
2023
Notional (remaining term)
Fair value
Up to
3 months
3 months to
1 year
Over 1
year
Total
Assets
Liabilities
(note 37)
Interest rate derivatives:
OTC Market:
Interest rate swaps
885,425
602,395
4,038,102
5,525,922
56,115
49,956
Interest rate options (purchase)
13,750
32,876
295,120
341,746
2,824
\u2014
Interest rate options (sale)
13,750
32,876
295,121
341,747
\u2014
2,779
912,925
668,147
4,628,343
6,209,415
58,939
52,735
Stock Exchange transactions:
Interest rate futures
\u2014
\u2014
28,351
28,351
\u2014
\u2014
\u2014
\u2014
28,351
28,351
\u2014
\u2014
Currency derivatives:
OTC Market:
Forward exchange contract
246,896
109,064
6,591
362,551
3,855
9,235
Currency swaps
1,386,897
437,757
7,327
1,831,981
16,822
26,780
Other currency contracts
107,251
\u2014
\u2014
107,251
\u2014
\u2014
1,741,044
546,821
13,918
2,301,783
20,677
36,015
Shares/indexes:
OTC Market:
Shares/indexes swaps
815,184
1,572,063
228,377
2,615,624
5,004
19,865
Shares/indexes options (purchase)
117,574
482,355
199,637
799,566
95,945
\u2014
Shares/indexes options (sale)
779,957
17,699
1,910
799,566
\u2014
97,923
1,712,715
2,072,117
429,924
4,214,756
100,949
117,788
Stock exchange transactions:
Shares futures
\u2014
\u2014
891,352
891,352
\u2014
\u2014
\u2014
\u2014
891,352
891,352
\u2014
\u2014
Commodity derivatives:
Stock Exchange transactions:
Commodities futures
\u2014
\u2014
1
1
\u2014
\u2014
\u2014
\u2014
1
1
\u2014
\u2014
Credit derivatives:
OTC Market:
Credit default swaps (CDS)
\u2014
\u2014
358,107
358,107
233,381
223
\u2014
\u2014
358,107
358,107
233,381
223
Total derivatives traded in:
OTC Market
4,366,684
3,287,085
5,430,292
13,084,061
413,946
206,761
of which: Embedded derivatives
\u2014
\u2014
771,103
771,103
\u2014
95,357
Stock Exchange
\u2014
\u2014
919,704
919,704
\u2014
\u2014
4,366,684
3,287,085
6,349,996
14,003,765
413,946
206,761
The analysis of trading derivatives, by maturity, as at 31\u00a0December 2022, is as follows:
(Thousands of euros)
2022 (restated)
Notional (remaining term)
Fair value
Up to
3 months
3 months to
1 year
Over 1
year
Total
Assets
Liabilities
(note 37)
Interest rate derivatives:
OTC Market:
Interest rate swaps
79,053
233,349
3,425,079
3,737,481
53,994
119,637
Interest rate options (purchase)
\u2014
133,738
88,199
221,937
6,668
\u2014
Interest rate options (sale)
\u2014
133,738
88,200
221,938
\u2014
6,555
79,053
500,825
3,601,478
4,181,356
60,662
126,192
Stock Exchange transactions:
Interest rate futures
\u2014
\u2014
66,888
66,888
\u2014
\u2014
\u2014
\u2014
66,888
66,888
\u2014
\u2014
Currency derivatives:
OTC Market:
Forward exchange contract
222,128
253,830
9,349
485,307
6,013
9,418
Currency swaps
1,580,200
198,362
8,256
1,786,818
14,081
23,245
1,802,328
452,192
17,605
2,272,125
20,094
32,663
Currency and interest rate swaps:
OTC Market:
Currency and interest rate swaps:
100,177
\u2014
\u2014
100,177
432
90
100,177
\u2014
\u2014
100,177
432
90
Shares/indexes:
OTC Market:
Shares/indexes swaps
\u2014
523,118
459,431
982,549
\u2014
27,193
Shares/indexes options (sale)
\u2014
\u2014
597,213
597,213
\u2014
53,487
\u2014
523,118
1,056,644
1,579,762
\u2014
80,680
Stock exchange transactions:
Shares futures
\u2014
\u2014
835,835
835,835
\u2014
\u2014
Shares/indexes options (purchase)
\u2014
59,735
533,092
592,827
53,707
\u2014
Shares/indexes options (sale)
\u2014
4,636
11,945
16,581
\u2014
859
\u2014
64,371
1,380,872
1,445,243
53,707
859
Credit derivatives:
OTC Market:
Credit default swaps (CDS)
2,000
\u2014
395,831
397,831
241,349
\u2014
Other credit derivatives (sale)
\u2014
\u2014
4,351
4,351
\u2014
\u2014
2,000
\u2014
400,182
402,182
241,349
\u2014
Total derivatives traded in:
OTC Market
1,983,558
1,476,135
5,075,909
8,535,602
322,537
239,625
of which: Embedded derivatives
2,000
\u2014
576,242
\u2014
\u2014
53,495
Stock Exchange
\u2014
64,371
1,447,760
1,512,131
53,707
859
1,983,558
1,540,506
6,523,669
10,047,733
376,244
240,484
Hedging derivatives
This balance is analysed, by hedging instruments, as follows:
(Thousands of euros)
2023
2022 (restated)
Assets
Liabilities
Assets
Liabilities
Swaps
40,628
67,825
59,703
178,000
Hedging derivatives are measured in accordance with internal valuation techniques considering observable market
inputs and, when not available, on information prepared by the Group by extrapolation of market data. In accordance
with the hierarchy of the valuation sources, as referred in IFRS 13, these derivatives are classified in level 2. The Group
resources to derivatives to hedge interest and exchange rate exposure risks. The accounting method depends on the
nature of the hedged risk, namely if the Group is exposed to fair value changes, variability in cash flows or highly
probable forecast transactions.
As allowed by IFRS 9, the Group opted to continue to apply the hedge accounting requirements in accordance with IAS
39, using mainly interest rate and exchange rate derivatives. The fair value hedge model is adopted for debt securities,
loans granted at fixed rate and money market loans and deposits, securities and combined hedge of variable rate
financial assets and fixed rate financial liabilities. The cash flows hedge model is adopted for future transactions in
foreign currency to cover dynamic changes in cash flows from loans granted and variable rate deposits in foreign
currency and foreign currency mortgage loans.
The relationships that follow the fair value hedge model recorded ineffectiveness of a negative amount of Euros
5,590,000 (31\u00a0December 2022: negative amount of Euros 17,355,000) and the hedging relationships that follow the cash
flows model recorded ineffectiveness of a positive amount of Euros 517,000 (31\u00a0December 2022: negative amount of
Euros 1,571,000).
Reclassifications of amounts recorded in results for fair reserves were carried out related to cash flow hedge
relationships, in a negative amount of Euros 45,947,000 (31\u00a0December 2022: positive amount of Euros 54,861,000). The
accumulated adjustment on financial risks covered performed on the assets and liabilities which includes hedged items
is detailed in note 54.
The analysis of hedging derivatives portfolio, by maturity, as at 31\u00a0December 2023, is as follows:
(Thousands of euros)
2023
Notional (remaining period)
Fair value
Up to
3 months
3 months to 1
year
Over 1 year
Total
Assets
Liabilities
Fair value hedging derivatives related to
interest rate risk changes
OTC Market
\u00a0 Interest rate swaps
7,750
508,735
10,965,729
11,482,214
34,716
8,441
Fair value hedging derivatives related to
currency risk changes
OTC Market
Currency and interest rate swap (CIRS)
140,291
208,173
\u2014
348,464
2,279
6,272
Cash flow hedging derivatives related to
interest rate risk changes
OTC Market
\u00a0 Interest rate swaps
499,574
1,600,000
8,159,354
10,258,928
164
14,965
Cash flow hedging derivatives related to
currency risk changes
OTC Market
Currency and interest rate swap (CIRS)
354,009
19,885
80,374
454,268
3,469
38,147
Total derivatives traded by
OTC Market
1,001,624
2,336,793
19,205,457
22,543,874
40,628
67,825
The analysis of hedging derivatives portfolio, by maturity, as at 31\u00a0December 2022, is as follows:
(Thousands of euros)
2022 (restated)
Notional (remaining period)
Fair value
Up to
3 months
3 months to 1
year
Over 1 year
Total
Assets
Liabilities
Fair value hedging derivatives related to
interest rate risk changes
OTC Market
Interest rate swaps
293,467
377,114
11,291,464
11,962,045
27,696
7,031
Fair value hedging derivatives related to
currency risk changes
OTC Market
Currency and interest rate swap (CIRS)
98,439
332,818
\u2014
431,257
2,999
18,432
Cash flow hedging derivatives related to
interest rate risk changes
OTC Market
Interest rate swaps
240,409
278,751
14,039,978
14,559,138
\u2014
110,562
Cash flow hedging derivatives related to
currency risk changes
OTC Market
Currency and interest rate swap (CIRS)
153,720
685,365
434,578
1,273,663
29,008
41,975
Total derivatives traded by
OTC Market
786,035
1,674,048
25,766,020
28,226,103
59,703
178,000
As at 31\u00a0December 2023, the table below includes the detail of the hedging instruments used in the Group's hedging
strategies and accounted at the Balance sheet item - Hedging derivatives:
(Thousands of euros)
2023
Hedging instruments
Book value
Change in fair
value (A)
Type of hedging
Notional
Assets
Liabilities
Fair value hedge
Interest rate risk
Interest rate swaps
11,482,214
34,716
8,441
(43,031)
Foreign exchange risk
Currency and interest rate swap
348,464
2,279
6,272
856
11,830,678
36,995
14,713
(42,175)
Cash flows hedging
Interest rate risk
Interest rate swaps
10,258,928
164
14,965
1,310,159
Foreign exchange risk
Currency and interest rate swap
454,268
3,469
38,147
16,544
10,713,196
3,633
53,112
1,326,703
Total
22,543,874
40,628
67,825
1,284,528
(A) Changes in fair value used to calculate the ineffectiveness of the hedge
As at 31\u00a0December 2022, the table below includes the detail of the hedging instruments used in the Group's hedging
strategies and accounted at the Balance sheet item - Hedging derivatives:
(Thousands of euros)
2022 (restated)
Hedging instruments
Book value
Change in fair
value (A)
Type of hedging
Notional
Assets
Liabilities
Fair value hedge
Interest rate risk
Interest rate swaps
11,962,045
27,696
7,031
309,506
Foreign exchange risk
Currency and interest rate swap
431,257
2,999
18,432
(717)
12,393,302
30,695
25,463
308,789
Cash flows hedging
Interest rate risk
Interest rate swaps
14,559,138
\u2014
110,562
(1,513,397)
Foreign exchange risk
Currency and interest rate swap
1,273,663
29,008
41,975
(10,527)
15,832,801
29,008
152,537
(1,523,924)
Total
28,226,103
59,703
178,000
(1,215,135)
(A) Changes in fair value used to calculate the ineffectiveness of the hedge
As at 31\u00a0December 2023, the table below includes the detail of the hedged items:
(Thousands of euros)
2023
Hedged items
Type of hedging
Balance
sheet
item
Cumulative value of
the adjustments
Change in
fair value
(A)
Cash flow hedge reserve /
Currency translation reserve
Book value
Hedging
relationships
in effect
Hedging
relationships
discontinued
Assets
Liabilities
Assets
Liabilities
Fair value hedge
Interest rate risk
Interest rate swaps
(B)
288,106
\u2014
(24,592)
13,551
(33,462)
n/a
n/a
(H)
1,599,095
\u2014
(21,780)
\u2014
55,434
n/a
n/a
(C)
2,997,010
\u2014
(126,169)
\u2014
93,925
n/a
n/a
(D)
\u2014
10,000
\u2014
(221)
221
n/a
n/a
(E)
\u2014
2,387,825
\u2014
103,603
(16,516)
n/a
n/a
(F)
\u2014
1,329,345
\u2014
(34,224)
(32,636)
n/a
n/a
(G)
\u2014
1,037,079
\u2014
(41,831)
(30,208)
n/a
n/a
Foreign exchange risk
Currency and interest rate
swap
\u2014
348,464
\u2014
51
(173)
n/a
n/a
4,884,211
5,112,713
(172,541)
40,929
36,585
n/a
n/a
Cash flows hedging
Interest rate risk
Interest rate swaps
(B)
10,258,698
\u2014
\u2014
\u2014
(1,310,159)
(470,250)
(808,471)
Foreign exchange risk
Currency and interest rate
swap
(B)
454,268
\u2014
\u2014
\u2014
(16,027)
(2,138)
(51)
10,712,966
\u2014
\u2014
\u2014
(1,326,186)
(472,388)
(808,522)
Total
15,597,177
5,112,713
(172,541)
40,929
(1,289,601)
(472,388)
(808,522)
(A) Fair value changes used to calculate the ineffectiveness of the hedge
(B) Financial assets at amortised cost - Loans and advances to customers
(C) Financial assets at fair value through other comprehensive income
(D) Financial liabilities at amortised cost - Resources from credit institutions
(E) Financial liabilities at amortised cost - Resources from customers
(F) Financial liabilities at amortised cost - Non subordinated debt securities issued
(G) Financial liabilities at amortised cost - Subordinated debt
(H) Debt securities held not associated with credit operations
As at 31\u00a0December 2022, the table below includes the detail of the hedged items:
(Thousands of euros)
2022 (restated)
Hedged items
Type of hedging
Balance
sheet
item
Cumulative value of
the adjustments
Change in
fair value
(A)
Cash flow hedge reserve /
Currency translation reserve
Book value
Hedging
relationships
in effect
Hedging
relationships
discontinued
Assets
Liabilities
Assets
Liabilities
Fair value hedge
Interest rate risk
Interest rate swaps
(B)
814,689
\u2014
(71,691)
\u2014
(70,012)
n/a
n/a
(H)
1,524,001
\u2014
(510,086)
\u2014
(181,718)
n/a
n/a
(C)
3,437,415
\u2014
(285,374)
(3,278)
(210,181)
n/a
n/a
(D)
\u2014
10,000
\u2014
517
580
n/a
n/a
(E)
\u2014
12,350
\u2014
(1,232)
718
n/a
n/a
(F)
\u2014
1,295,542
\u2014
(66,860)
65,881
n/a
n/a
(G)
\u2014
998,066
\u2014
(72,040)
67,509
n/a
n/a
Foreign exchange risk
Currency and interest
rate swap
\u2014
431,257
\u2014
(1,131)
1,079
n/a
n/a
5,776,105
2,747,215
(867,151)
(144,024)
(326,144)
n/a
n/a
Cash flows hedging
Interest rate risk
Interest rate swaps
(B)
14,558,924
\u2014
\u2014
\u2014
1,513,397
(1,775,249)
7,644
Foreign exchange risk
Currency and interest rate
swap
(B)
1,273,663
\u2014
\u2014
\u2014
11,473
(20,123)
(280)
15,832,587
\u2014
\u2014
\u2014
1,524,870
(1,795,372)
7,364
Total
21,608,692
2,747,215
(867,151)
(144,024)
1,198,726
(1,795,372)
7,364
(A) Fair value changes used to calculate the ineffectiveness of the hedge
(B) Financial assets at amortised cost - Loans and advances to customers
(C) Financial assets at fair value through other comprehensive income
(D) Financial liabilities at amortised cost - Resources from credit institutions
(E) Financial liabilities at amortised cost - Resources from customers
(F) Financial liabilities at amortised cost - Non subordinated debt securities issued
(G) Financial liabilities at amortised cost - Subordinated debt
(H) Debt securities held not associated with credit operations
The reconciliation of each equity component and an analysis of other comprehensive income attributable to hedge
accounting, with reference to 31\u00a0December 2023 and 2022, is as follows:
(Thousands of euros)
Cash flow hedge reserve
Exchange differences
2023
2022
(restated)
2023
2022
(restated)
Balance as at 1 January
(1,788,008)
(141,642)
\u2014
55,326
Amounts recognised in other comprehensive income:
\u00a0 Hedging cash flows
\u00a0 \u00a0 Changes in fair value of currency and interest rate swaps
1,326,186
(1,523,207)
\u2014
\u2014
\u00a0 \u00a0 Foreign exchange changes
(6,747)
1,725
\u2014
\u2014
\u00a0 \u00a0 Hedge breakage
(816,115)
(123,938)
\u2014
\u2014
\u00a0 \u00a0 Ineffectiveness of coverage recognised in results
(517)
1,333
\u2014
\u2014
\u00a0 \u00a0 Others
4,291
(2,279)
\u2014
\u2014
\u00a0 Hedging of net investments - foreign exchange risk
\u00a0 \u00a0 Reclassified to the income statement
\u2014
\u2014
\u2014
3,685
Change in the fair value of settled transactions
\u2014
\u2014
\u2014
(59,011)
Balance at the end of the year
(1,280,910)
(1,788,008)
\u2014
\u2014
The table below includes information on the effectiveness of hedging relationships, as well as impacts on results and
other comprehensive income, with reference to 31\u00a0December 2023:
(Thousands of euros)
2023
Income
statement
item (A)
Gains/(losses)
recognised in
Other
comprehensive
income
Hedging
ineffectiveness
recognised in
Income
statement (A)
Amounts reclassified from reserves to results
for the following reasons:
Income
statement
item (B)
Cash flows
that were
being hedged
(C)
Hedged item
with an
impact on
results
Type of hedging
Fair value hedge
Interest rate risk
Interest rate swaps
(D)
\u2014
(6,273)
\u2014
\u2014
Foreign exchange risk
Currency and interest rate swap
(D)
\u2014
683
\u2014
\u2014
\u2014
(5,590)
\u2014
\u2014
Cash flows hedging
Interest rate risk
Interest rate swaps
(D)
61,205
\u2014
(E)
(45,947)
\u2014
Foreign exchange risk
Currency and interest rate swap
(D)
19,801
517
\u2014
\u2014
81,006
517
(45,947)
\u2014
Total
81,006
(5,073)
(45,947)
\u2014
(A) Income Statement item in which the ineffectiveness of the hedge was recognised
(B) Income Statement item in which the reclassified amount was recognised
(C) but which are no longer expected to occur
(D) Net gains/(losses) from hedge accounting operations
(E) Interest income
The table below includes information on the effectiveness of hedging relationships, as well as impacts on results and
other comprehensive income, with reference to 31\u00a0December 2022:
(Thousands of euros)
2022 (restated)
Income
statement
item (A)
Gains/(losses)
recognised in
Other
comprehensive
income
Hedging
ineffectiveness
recognised in
Income
statement (A)
Amounts reclassified from reserves to results
for the following reasons:
Income
statement
item (B)
Cash flows
that were
being hedged
(C)
Hedged item
with an
impact on
results
Type of hedging
Fair value hedge
Interest rate risk
Interest rate swaps
(D)
\u2014
(17,717)
\u2014
\u2014
Foreign exchange risk
Currency and interest rate swap
(D)
\u2014
362
\u2014
\u2014
\u2014
(17,355)
\u2014
\u2014
Cash flows hedging
Interest rate risk
Interest rate swaps
(D)
(66,333)
(238)
(E)
54,861
\u2014
Foreign exchange risk
Currency and interest rate swap
(D)
(15,838)
(1,333)
\u2014
\u2014
(82,171)
(1,571)
54,861
\u2014
Total
(82,171)
(18,926)
54,861
\u2014
(A) Income Statement item in which the ineffectiveness of the hedge was recognised
(B) Income Statement item in which the reclassified amount was recognised
(C) but which are no longer expected to occur
(D) Net gains/(losses) from hedge accounting operations
(E) Interest income
The table below shows the detail of hedging instruments, as at 31\u00a0December 2023, by maturity:
(Thousands of euros)
2023
Remaining period
Fair value
Type of hedging
Up to 3
months
3 months to
1 year
Over 1 year
Total
Assets
Liabilities
Fair value hedging derivatives related to
interest rate risk changes:
OTC Market:
Interest rate swaps
Notional
7,750
508,735
10,965,729
11,482,214
34,716
8,441
Fixed interest rate (average)
3.56%
6.17%
2.91%
3.07%
Fair value hedging derivatives related to
currency risk changes
OTC Market:
Currency and interest rate swap
140,291
208,173
\u2014
348,464
2,279
6,272
Cash flow hedging derivatives related to
interest rate risk changes:
OTC Market:
\u00a0 Interest rate swaps
499,574
1,600,000
8,159,354
10,258,928
164
14,965
Cash flow hedging derivatives related to
currency risk changes:
OTC Market:
\u00a0 Currency and interest rate swap
354,009
19,885
80,374
454,268
3,469
38,147
Total derivatives traded by
OTC Market:
1,001,624
2,336,793
19,205,457
22,543,874
40,628
67,825
The table below shows the detail of hedging instruments, as at 31\u00a0December 2022, by maturity:
(Thousands of euros)
2022 (restated)
Remaining period
Fair value
Type of hedging
Up to 3
months
3 months to
1 year
Over 1 year
Total
Assets
Liabilities
Fair value hedging derivatives related to
interest rate risk changes:
OTC Market:
Interest rate swaps
Notional
293,467
377,114
11,291,464
11,962,045
27,696
7,031
Fixed interest rate (average)
1.05%
1.44%
2.44%
2.38%
Fair value hedging derivatives
related to currency risk changes
OTC Market:
Currency and interest rate swap
98,439
332,818
\u2014
431,257
2,999
18,432
Cash flow hedging derivatives related to
interest rate risk changes:
OTC Market:
Interest rate swaps
240,409
278,751
14,039,978
14,559,138
\u2014
110,562
Cash flow hedging derivatives related to
currency risk changes:
OTC Market:
Currency and interest rate swap
153,720
685,365
434,578
1,273,663
29,008
41,975
Total derivatives traded by
OTC Market:
786,035
1,674,048
25,766,020
28,226,103
59,703
178,000
", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-633": { "value": "
The balances Foreign exchange gains/(losses), Gains/(losses) on hedge accounting and Gains/(losses) arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss, are presented as
follows:
(Thousands of euros)
2023
2022
(restated)
Foreign exchange gains/(losses)
Gains
3,714,151
2,637,014
Losses
(3,696,682)
(2,617,624)
17,469
19,390
Gains/(losses) on hedge accounting
Gains
Hedging derivatives
274,230
1,303,985
Hedged items
214,420
199,940
488,650
1,503,925
Losses
Hedging derivatives
(289,761)
(376,843)
Hedged items
(177,081)
(1,129,315)
(466,842)
(1,506,158)
21,808
(2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities
not measured at fair value through profit or loss
Gains
Credit sales
9,840
13,040
Debt securities portfolio at amortized cost
1,070
10,466
Debt securities portfolio at fair value through other comprehensive income
2,102
40,019
Debt securities issued
1,614
1,224
Others
128,825
933
143,451
65,682
Losses
Credit sales
(15,082)
(4,683)
Debt securities portfolio at fair value through other comprehensive income
(14,744)
(53,405)
Debt securities issued
(1,027)
(630)
Others
(510)
(1,467)
(31,363)
(60,185)
112,088
5,497
In 2023, the main contributions for the balance Gains/(losses) on hedge accounting were the gains of Euros 12,755,000
and Euros 8,713,000 relating to the deposits portfolio hedge and subordinated issues portfolio hedge, respectively.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-635": { "value": "Other operating income / (losses)
The amount of this account is comprised of
(Thousands of euros)
2023
2022
(restated)
Operating income
Gains on leasing operations
3,783
3,266
Income from services provided
30,026
28,614
Rents
2,133
4,053
Sales of cheques and others
8,357
9,730
Other operating income
80,583
50,125
124,882
95,788
Operating costs
Donations and contributions
(4,151)
(4,435)
Contribution to the banking sector
(44,807)
(43,484)
Contributions to Resolution Funds
(22,716)
(36,489)
Contribution to the Single Resolution Fund
(17,729)
(25,847)
Contributions to the Deposit Guarantee Fund
(665)
(8,805)
Institutional protection scheme (Poland)
\u2014
(58,972)
Special tax on the polish banking sector
\u2014
(36,107)
Taxes
(16,098)
(18,137)
Losses on financial leasing operations
(25)
(37)
Other operating costs
(79,106)
(56,587)
(185,297)
(288,900)
(60,415)
(193,112)
The balance Contribution to the banking sector in Portugal is estimated according to the terms of the Decree-Law no.
55-A/2010. The determination of the amount payable is based on: (i) the annual average liabilities deducted by core
capital (Tier 1) and supplementary capital (Tier 2) and deposits covered by the Deposit Guarantee Fund, and (ii)
notional amount of derivatives.
The balance Contributions to Resolution Funds includes the periodic contributions that must be paid to the Portuguese
Fund, as stipulated in Decree-Law No 24/2013. The periodic contributions are determined by a base rate, established
by the Bank of Portugal through regulatory instruments, to be applied in each year and which may be adjusted to the
credit institution\u2019s risk profile based on the objective incidence of those contributions. The period contributions affect
the liabilities of the credit institutions members of the Fund, as per the article 10 of the referred Decree-Law,
deducted from the liability elements that are part of the core capital and supplementary and from the deposits covered
by the Deposit Guarantee Fund.
The balance Contributions to Resolution Funds also includes the mandatory contributions made by Bank Millennium, S.A
to the Bank Guarantee Fund in Poland. The current principles of financing the deposit guarantee system and resolution
in Poland, as defined in the Act of 10 June 2016 on the Bank Guarantee Fund, deposit guarantee system and forced
restructuring, and are effective from 2017.
The method of calculating contributions regarding the resolution fund of banks in Poland was defined in the Delegated
Regulation of the European Commission No. 2015/63 (amended by regulation 2016/1434), which applies directly to all
European Union countries. The contribution for a given year from each entity is calculated by BFG in accordance with
this regulation and the entity is notified by 1 May, each year.
The balance Contribution to the Single Resolution Fund (\u2018SRF\u2019) corresponds to the Bank\u2019s annual ex-ante contribution to
support the application of resolution measures at EU level. The SRF has been established by Regulation (EU) No
806/2014 (the \u201cSRM Regulation\u201d). The SRF is financed from ex-ante contributions paid annually at individual level by all
credit institutions within the Banking Union. Contributions to the SRF consider the annual target level as well as the
size and the risk profile of institutions.
In calculating the ex-ante contributions, the SRF applies the methodology as set out in the Commission Delegated
Regulation (EU) No 2015/63 and European Parliament and of the Council Regulation (EU) No 806/2014. The annual
contribution to the Fund is based on the institution's liabilities excluding own funds and covered deposits considering
adjustments due to derivatives and intra group liabilities and on a risk factor adjustment that depends on the risk
profile of the institution.
In accordance with Article 67(4) of SRM Regulation and in accordance with the Intergovernmental Agreement on the
transfer and mutualisation of contributions to the SRF, the ex-ante contributions are collected by national resolution
authorities and transferred to the SRF by 30 June of each year.
In 2023, the total value of the contribution to the Single Resolution Fund attributable to the Group (BCP and
ActivoBank) amounted to Euros 22,861,000 (2022: Euros 30,400,000). The Group delivered the amount of Euros
17,729,000 to the Single Resolution Fund (2022: Euros 25,847,000) and chose to constitute an irrevocable commitment
in the amount of Euros 5,132,000 (2022: Euros 4,553,000), under the terms set out in Decree-Law no. 24/2013, of 19
February. As a guarantee of the assumption of the irrevocable payment commitment made in the year with the Single
Resolution Fund, a deposit was set up for this purpose, in the amount of Euros 5,132,000 (2022: Euros 4,553,000), which
is fully secured and accounted for in Other assets - Deposit account applications (note 32). The accumulated
irrevocable payment commitments constituted in the amount of Euros 30,638,000 (2022: Euros 25,506,000) are
accounted for in off-balance sheet items (note 45), and are fully collateralized by assets registered in Other assets -
Deposit account applications (note 32).
In 2023, the total value of the contribution to the Deposit Guarantee Fund attributable to the Group (BCP and
ActivoBank) amounted to Euros 583,000 (2022: Euros 506,000), with the Group delivering the entire contribution to the
Deposit Guarantee Fund. Until 2011, inclusive, under the terms set out in Banco de Portugal Notice No. 11/94, the Bank
could choose to deliver part of the contribution to the Deposit Guarantee Fund and the other part to constitute an
irrevocable payment commitment. As a guarantee of the assumption of irrevocable payment commitments assumed
until 2012 with the Deposit Guarantee Fund, a security pledge has been created for this purpose, in the amount of
Euros 99,824,000 (2022: Euros 99,757,000). The accumulated irrevocable payment commitments constituted amount to
Euros 95,190,000, and are accounted for in off-balance sheet items (note 45).
Regarding the irrevocable commitments of the Single Resolution Fund and the Deposit Guarantee Fund, the Bank
considered that they qualify as contingent liabilities under IAS 37, meaning that no liabilities or provisions were
recorded for this purpose.
In 2022, the balance Institutional protection scheme (Poland) corresponded to the contribution of Bank Millennium to
the polish Institutional Protection Scheme.
Regarding the item Special tax on the polish banking sector, as a result of the implementation of the Recovery Plan
from July 2022, Bank Millennium S.A. benefited from the exemption from the special tax on the polish banking sector
starting from that date.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-637": { "value": "
The amount of this account is comprised of
(Thousands of euros)
2023
2022
(restated)
Operating income
Gains on leasing operations
3,783
3,266
Income from services provided
30,026
28,614
Rents
2,133
4,053
Sales of cheques and others
8,357
9,730
Other operating income
80,583
50,125
124,882
95,788
Operating costs
Donations and contributions
(4,151)
(4,435)
Contribution to the banking sector
(44,807)
(43,484)
Contributions to Resolution Funds
(22,716)
(36,489)
Contribution to the Single Resolution Fund
(17,729)
(25,847)
Contributions to the Deposit Guarantee Fund
(665)
(8,805)
Institutional protection scheme (Poland)
\u2014
(58,972)
Special tax on the polish banking sector
\u2014
(36,107)
Taxes
(16,098)
(18,137)
Losses on financial leasing operations
(25)
(37)
Other operating costs
(79,106)
(56,587)
(185,297)
(288,900)
(60,415)
(193,112)
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-636": { "value": "
The amount of this account is comprised of
(Thousands of euros)
2023
2022
(restated)
Operating income
Gains on leasing operations
3,783
3,266
Income from services provided
30,026
28,614
Rents
2,133
4,053
Sales of cheques and others
8,357
9,730
Other operating income
80,583
50,125
124,882
95,788
Operating costs
Donations and contributions
(4,151)
(4,435)
Contribution to the banking sector
(44,807)
(43,484)
Contributions to Resolution Funds
(22,716)
(36,489)
Contribution to the Single Resolution Fund
(17,729)
(25,847)
Contributions to the Deposit Guarantee Fund
(665)
(8,805)
Institutional protection scheme (Poland)
\u2014
(58,972)
Special tax on the polish banking sector
\u2014
(36,107)
Taxes
(16,098)
(18,137)
Losses on financial leasing operations
(25)
(37)
Other operating costs
(79,106)
(56,587)
(185,297)
(288,900)
(60,415)
(193,112)
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-638": { "value": "Staff costs
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Remunerations
517,492
470,285
Mandatory social security charges
Post-employment benefits (note 50)
Service cost
(9,616)
(11,727)
Net interest cost / (income) in the liability coverage balance
(17,062)
(5,929)
Cost with early retirement programs
7,043
2,223
Amount transferred to the Fund resulting from acquired rights
unassigned related to the Complementary Plan
(9)
(6)
(19,644)
(15,439)
Other mandatory social security charges
113,622
104,784
93,978
89,345
Voluntary social security charges
15,538
12,326
Other staff costs
4,798
8,851
631,806
580,807
The balance Remunerations includes the amount of Euros 9,740,000 (2022: Euros 5,630,000) related to the distribution
of profits to Bank's employees.
In 2023, the Group paid severance payments in the amount of 3,718,000 (2022: Euros 1,588,000), of which the highest
amounted to Euros 565,000 (2022: Euros 217,000). Of the total severance payments, Euros 3,113,000 had already been
recorded as staff costs in the 2022 financial year, given that these were agreements concluded in that year, but whose
effective departures only occurred in 2023, as described in note 39.
The average number of employees by professional category, at service in the Group, is analysed as follows by category:
2023
2022
(restated)
Portugal
Top Management
880
854
Intermediary Management
1,426
1,416
Specific/Technical functions
2,926
2,867
Other functions
1,032
1,119
6,264
6,256
Abroad
9,318
9,314
15,582
15,570
Remunerations
In compliance with the provisions of Article 47 of Banco de Portugal Notice no. 3/2020, quantitative information is
disclosed regarding the remuneration paid to different categories of members of governing bodies and categories of
employees provided for in Article 115 C no. 2 of the RGICS, as well as the information provided for in Article 450 g) to i)
of Regulation (EU) 2019/876 of the European Parliament and of the Council.
A. BCP Board of Directors
The fixed remuneration and social charges paid to members of the Board of Directors of Banco Comercial Portugu\u00eas,
S.A. are analysed as follows:
(Thousands of euros)
Board of Directors
Executive Committee
Non-executive directors
2023
2022
(restated)
2023
2022
(restated)
Fixed remuneration
3,177
3,055
2,083
1,856
Variable remuneration
Pecuniary
461
370
\u2014
\u2014
Shares
460
1,322
\u2014
\u2014
Deferred
534
1,024
\u2014
\u2014
Supplementary retirement pension
635
611
144
138
Post-employment benefits
(14)
(42)
\u2014
\u2014
Other mandatory social security charges
763
734
491
443
6,016
7,074
2,718
2,437
Number of beneficiaries
6
6
11
11
Considering that the remuneration of members of the Executive Committee and Directors, with an exclusivity contract,
intends to compensate the functions that are performed in the Bank and in all other functions performed in subsidiaries
or governing bodies for which they have been designated by indication or in representation of the Bank, in the latter
case, the net amount of the remuneration annually received by each member of the Executive Committee will be
deducted from the fixed annual remuneration attributed by the Bank, ensuring that the effective payable amount
corresponds to the one approved by the Remuneration and Welfare Board.
In 2023, the amount of remuneration paid to the Executive Committee includes the amount of Euros 113,000 (2022:
Euros 101,000) supported by subsidiaries or companies whose governing bodies represent the Group's interests.
Regarding the Non-executive directors, this amount was Euros 27,000 (2022: Euros 26,000).
In 2023, it was assigned variable remuneration in accordance with the remuneration policies for the members of the
management and supervisory bodies and for employees, approved for 2022, as described in accounting policies 1 R4 and
1 R5.
In 2023, the variable remuneration attributed was Euros 923,000 in cash, of which Euros 463,000 are deferred for 5
years, and 4,136,539 shares corresponding to Euros 1,846,000, of which 2,068,268 shares are deferred for 5 years.
In 2023, the deferred variable remuneration paid refers to the years 2021, 2020, 2019 and 2018, of which Euros 131,000
in cash and 1,811,526 BCP shares in the amount of Euros 403,000.
In 2022, the variable remuneration attributed was Euros 616,000 in cash, of which Euros 246,000 are deferred for 5
years, and 12,416,223 shares corresponding to Euros 2,567,000, of which 1,568,846 shares are deferred for 5 years, and
3,397,643 shares are deferred for 3 years.
In 2022 the deferred variable remuneration of 2021, 2020 and 2019 attributed to the Executive Committee is related to
2020, 2019 and 2018 years, and amounts to Euros 590,000 in cash and 2,443,549 BCP shares in the amount of Euros
434,000.
In 2023 and 2022, no severance payments were paid to members of the Board of Directors.
B. Key Function Holders (KFH)
In 2023, the remunerations and social security charges supported with the Group's Key Function Holders are, detailed
by segment, as follows:
(Thousands of euros)
2023
Retail
Corporate
Control
functions
Others
Total
Fixed remuneration
1,391
2,387
2,838
5,098
11,714
Variable remuneration
Pecuniary
287
335
475
1,028
2,125
Shares
98
119
166
369
752
Deferred
42
36
19
125
222
Post-employment benefits
(72)
(39)
(146)
(234)
(491)
Other mandatory social security charges
368
504
708
1,283
2,863
2,114
3,342
4,060
7,669
17,185
Number of beneficiaries
10
13
31
38
92
Arising from the application of the Remuneration Policies for Employees, approved for the financial year 2022, as
described in accounting policies 1 R4 and 1 R5, in 2023, the 92 Key Function Holders were awarded with variable
remuneration, in the amount of Euros 337,000 in cash and 1,494,050 shares deferred for 5 years, as well as 229
participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
In 2023, deferred variable remunerations were paid to KFH deferred from 2022, 2021 and 2020 years, corresponding in
cash to Euros 102,000 and shares in the amount of Euros 120,000.
In 2023, severance payments were paid to 5 KFH in the amount of Euros 267,000, of which the highest payment was
Euros 110.000 and end-of-career bonuses in the amount of Euros 35,000.
In 2022, the remunerations and social security charges supported with the Group's Key Function Holders are, detailed
by segment, as follows:
(Thousands of euros)
2022 (restated)
Retail
Corporate
Control
functions
Others
Total
Fixed remuneration
1,317
2,657
2,474
5,494
11,942
Variable remuneration
Pecuniary
129
176
224
491
1,020
Shares
80
105
139
280
604
Deferred
48
42
20
129
239
Post-employment benefits
(112)
(108)
(191)
(373)
(784)
Other mandatory social security charges
331
547
649
1,320
2,847
1,793
3,419
3,315
7,341
15,868
Number of beneficiaries
9
15
26
40
90
Arising from the application of the Remuneration Policies for Employees, approved for the financial year 2021, as
described in accounting policies 1 R4 and 1 R5, in 2022, the 90 Key Function Holders were awarded with variable
remuneration, in the amount of Euros 236,000 in cash and 1,534,941 shares deferred for 5 years, as well as 174
participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
In 2022, deferred variable remunerations were paid to KFH deferred from 2021, 2020 and 2019 years, corresponding in
cash to Euros 57,000 and shares in the amount of Euros 182,000.
In 2022, severance payments were paid to 3 Bank's Key Function Holders in the amount of Euros 255,000 of which the
highest amounts to Euros 200,000 and end-of-career bonuses in the amount of Euros 65,000.
The remunerations and social security charges supported with the Group's Key Function Holders, discriminated by Key
management members and by members whose professional activities have significant impact in the risk profile of the
Bank (Other KFH), are as follows:
(Thousands of euros)
Key Function Holders
Key management members
Other KFH
Total
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
Fixed remuneration
7,785
7,865
3,929
4,077
11,714
11,942
Variable remuneration
Pecuniary
1,497
705
628
315
2,125
1,020
Shares
538
417
214
187
752
604
Deferred
217
230
5
9
222
239
Post-employment benefits
(265)
(453)
(226)
(331)
(491)
(784)
Other mandatory social security
charges
1,944
1,934
919
913
2,863
2,847
11,716
10,698
5,469
5,170
17,185
15,868
Number of beneficiaries
54
53
38
37
92
90
In 2023, referring to the 2022 financial year, the Key management members were awarded with deferred variable
remuneration in the amount of Euros 337,000 and 1,494,050 shares deferred for 5 years, as well as 229 participation
units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
In 2023 deferred variable remunerations from 2022, 2021 and 2020 years were paid in cash to Key management
members, in the amount of Euros 99,000, as well as BCP shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio
Fund corresponding to Euros 118,000. Regarding the other KFH, were paid Euros 2,000 in cash deferred from 2020, BCP
shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund, from the years 2020, corresponding to Euros 3,000.
During 2022, with reference to the financial year of 2021, the Key management members were awarded with deferred
variable remuneration in the amount of Euros 236,000 and 1,534,941 shares deferred for 5 years, as well as 174
participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
During 2022, deferred variable remunerations from 2021 and 2020 years were paid Euros 55,000 in cash to Key
management members, BCP shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund from the years 2021, 2020
and 2019 corresponding to Euros 175,000. Relatedly to the other KFH, were paid Euros 3,000 in cash deferred from 2020
and BCP shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund, from the years 2020 and 2019, corresponding
to Euros 7,000.
In accordance with regulation (EU) 11\u00ba 575/2013, Article 450 point 1.i), in the year 2023 the Bank has 1 employee on
the Board of Directors with remuneration between Euros 1 and Euros 1.5 million. In 2022, the Bank had no employees
earning more than Euros 1 million.
Other administrative costs
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Water, electricity and fuel
14,846
17,885
Credit cards and mortgage
8,621
8,603
Communications
25,152
24,296
Maintenance and related services
18,407
17,651
Legal expenses
5,011
4,368
Travel, hotel and representation costs
7,279
5,318
Advisory services
44,301
32,103
Training costs
1,453
1,404
Information technology services
25,708
35,277
Consumables
7,601
7,554
Outsourcing and independent labour
111,577
77,424
Advertising
27,705
24,854
Rents and leases
26,769
31,244
Insurance
4,943
4,848
Transportation
11,192
10,185
Other specialised services
28,869
28,970
Other supplies and services
23,812
20,977
393,246
352,961
The balance Rents and leases includes the amount of Euros 1,440,000 (2022: Euros 590,000) related to short-term lease
contracts and the amount of Euros 2,612,000 (2022: Euros 2,402,000) related to lease contracts of low-value assets, as
described in the accounting policy 1 H.
The balance Other specialised services includes fees for services rendered by the Statutory Auditor of the Group,
currently in functions, and by companies in its network as part of its statutory audit functions, as well as other services,
is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Auditing services
Legal certification
3,310
3,190
Other assurance services
1,180
1,388
Other services
747
310
5,237
4,888
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-639": { "value": "
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Remunerations
517,492
470,285
Mandatory social security charges
Post-employment benefits (note 50)
Service cost
(9,616)
(11,727)
Net interest cost / (income) in the liability coverage balance
(17,062)
(5,929)
Cost with early retirement programs
7,043
2,223
Amount transferred to the Fund resulting from acquired rights
unassigned related to the Complementary Plan
(9)
(6)
(19,644)
(15,439)
Other mandatory social security charges
113,622
104,784
93,978
89,345
Voluntary social security charges
15,538
12,326
Other staff costs
4,798
8,851
631,806
580,807
The balance Remunerations includes the amount of Euros 9,740,000 (2022: Euros 5,630,000) related to the distribution
of profits to Bank's employees.
In 2023, the Group paid severance payments in the amount of 3,718,000 (2022: Euros 1,588,000), of which the highest
amounted to Euros 565,000 (2022: Euros 217,000). Of the total severance payments, Euros 3,113,000 had already been
recorded as staff costs in the 2022 financial year, given that these were agreements concluded in that year, but whose
effective departures only occurred in 2023, as described in note 39.
The average number of employees by professional category, at service in the Group, is analysed as follows by category:
2023
2022
(restated)
Portugal
Top Management
880
854
Intermediary Management
1,426
1,416
Specific/Technical functions
2,926
2,867
Other functions
1,032
1,119
6,264
6,256
Abroad
9,318
9,314
15,582
15,570
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-640": { "value": "
The fixed remuneration and social charges paid to members of the Board of Directors of Banco Comercial Portugu\u00eas,
S.A. are analysed as follows:
(Thousands of euros)
Board of Directors
Executive Committee
Non-executive directors
2023
2022
(restated)
2023
2022
(restated)
Fixed remuneration
3,177
3,055
2,083
1,856
Variable remuneration
Pecuniary
461
370
\u2014
\u2014
Shares
460
1,322
\u2014
\u2014
Deferred
534
1,024
\u2014
\u2014
Supplementary retirement pension
635
611
144
138
Post-employment benefits
(14)
(42)
\u2014
\u2014
Other mandatory social security charges
763
734
491
443
6,016
7,074
2,718
2,437
Number of beneficiaries
6
6
11
11
Considering that the remuneration of members of the Executive Committee and Directors, with an exclusivity contract,
intends to compensate the functions that are performed in the Bank and in all other functions performed in subsidiaries
or governing bodies for which they have been designated by indication or in representation of the Bank, in the latter
case, the net amount of the remuneration annually received by each member of the Executive Committee will be
deducted from the fixed annual remuneration attributed by the Bank, ensuring that the effective payable amount
corresponds to the one approved by the Remuneration and Welfare Board.
In 2023, the amount of remuneration paid to the Executive Committee includes the amount of Euros 113,000 (2022:
Euros 101,000) supported by subsidiaries or companies whose governing bodies represent the Group's interests.
Regarding the Non-executive directors, this amount was Euros 27,000 (2022: Euros 26,000).
In 2023, it was assigned variable remuneration in accordance with the remuneration policies for the members of the
management and supervisory bodies and for employees, approved for 2022, as described in accounting policies 1 R4 and
1 R5.
In 2023, the variable remuneration attributed was Euros 923,000 in cash, of which Euros 463,000 are deferred for 5
years, and 4,136,539 shares corresponding to Euros 1,846,000, of which 2,068,268 shares are deferred for 5 years.
In 2023, the deferred variable remuneration paid refers to the years 2021, 2020, 2019 and 2018, of which Euros 131,000
in cash and 1,811,526 BCP shares in the amount of Euros 403,000.
In 2022, the variable remuneration attributed was Euros 616,000 in cash, of which Euros 246,000 are deferred for 5
years, and 12,416,223 shares corresponding to Euros 2,567,000, of which 1,568,846 shares are deferred for 5 years, and
3,397,643 shares are deferred for 3 years.
In 2022 the deferred variable remuneration of 2021, 2020 and 2019 attributed to the Executive Committee is related to
2020, 2019 and 2018 years, and amounts to Euros 590,000 in cash and 2,443,549 BCP shares in the amount of Euros
434,000.
In 2023 and 2022, no severance payments were paid to members of the Board of Directors.
B. Key Function Holders (KFH)
In 2023, the remunerations and social security charges supported with the Group's Key Function Holders are, detailed
by segment, as follows:
(Thousands of euros)
2023
Retail
Corporate
Control
functions
Others
Total
Fixed remuneration
1,391
2,387
2,838
5,098
11,714
Variable remuneration
Pecuniary
287
335
475
1,028
2,125
Shares
98
119
166
369
752
Deferred
42
36
19
125
222
Post-employment benefits
(72)
(39)
(146)
(234)
(491)
Other mandatory social security charges
368
504
708
1,283
2,863
2,114
3,342
4,060
7,669
17,185
Number of beneficiaries
10
13
31
38
92
Arising from the application of the Remuneration Policies for Employees, approved for the financial year 2022, as
described in accounting policies 1 R4 and 1 R5, in 2023, the 92 Key Function Holders were awarded with variable
remuneration, in the amount of Euros 337,000 in cash and 1,494,050 shares deferred for 5 years, as well as 229
participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
In 2023, deferred variable remunerations were paid to KFH deferred from 2022, 2021 and 2020 years, corresponding in
cash to Euros 102,000 and shares in the amount of Euros 120,000.
In 2023, severance payments were paid to 5 KFH in the amount of Euros 267,000, of which the highest payment was
Euros 110.000 and end-of-career bonuses in the amount of Euros 35,000.
In 2022, the remunerations and social security charges supported with the Group's Key Function Holders are, detailed
by segment, as follows:
(Thousands of euros)
2022 (restated)
Retail
Corporate
Control
functions
Others
Total
Fixed remuneration
1,317
2,657
2,474
5,494
11,942
Variable remuneration
Pecuniary
129
176
224
491
1,020
Shares
80
105
139
280
604
Deferred
48
42
20
129
239
Post-employment benefits
(112)
(108)
(191)
(373)
(784)
Other mandatory social security charges
331
547
649
1,320
2,847
1,793
3,419
3,315
7,341
15,868
Number of beneficiaries
9
15
26
40
90
Arising from the application of the Remuneration Policies for Employees, approved for the financial year 2021, as
described in accounting policies 1 R4 and 1 R5, in 2022, the 90 Key Function Holders were awarded with variable
remuneration, in the amount of Euros 236,000 in cash and 1,534,941 shares deferred for 5 years, as well as 174
participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
In 2022, deferred variable remunerations were paid to KFH deferred from 2021, 2020 and 2019 years, corresponding in
cash to Euros 57,000 and shares in the amount of Euros 182,000.
In 2022, severance payments were paid to 3 Bank's Key Function Holders in the amount of Euros 255,000 of which the
highest amounts to Euros 200,000 and end-of-career bonuses in the amount of Euros 65,000.
The remunerations and social security charges supported with the Group's Key Function Holders, discriminated by Key
management members and by members whose professional activities have significant impact in the risk profile of the
Bank (Other KFH), are as follows:
(Thousands of euros)
Key Function Holders
Key management members
Other KFH
Total
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
Fixed remuneration
7,785
7,865
3,929
4,077
11,714
11,942
Variable remuneration
Pecuniary
1,497
705
628
315
2,125
1,020
Shares
538
417
214
187
752
604
Deferred
217
230
5
9
222
239
Post-employment benefits
(265)
(453)
(226)
(331)
(491)
(784)
Other mandatory social security
charges
1,944
1,934
919
913
2,863
2,847
11,716
10,698
5,469
5,170
17,185
15,868
Number of beneficiaries
54
53
38
37
92
90
In 2023, referring to the 2022 financial year, the Key management members were awarded with deferred variable
remuneration in the amount of Euros 337,000 and 1,494,050 shares deferred for 5 years, as well as 229 participation
units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
In 2023 deferred variable remunerations from 2022, 2021 and 2020 years were paid in cash to Key management
members, in the amount of Euros 99,000, as well as BCP shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio
Fund corresponding to Euros 118,000. Regarding the other KFH, were paid Euros 2,000 in cash deferred from 2020, BCP
shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund, from the years 2020, corresponding to Euros 3,000.
During 2022, with reference to the financial year of 2021, the Key management members were awarded with deferred
variable remuneration in the amount of Euros 236,000 and 1,534,941 shares deferred for 5 years, as well as 174
participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund deferred for 3 years.
During 2022, deferred variable remunerations from 2021 and 2020 years were paid Euros 55,000 in cash to Key
management members, BCP shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund from the years 2021, 2020
and 2019 corresponding to Euros 175,000. Relatedly to the other KFH, were paid Euros 3,000 in cash deferred from 2020
and BCP shares and participation units from AF Portf\u00f3lio Imobili\u00e1rio Fund, from the years 2020 and 2019, corresponding
to Euros 7,000.
In accordance with regulation (EU) 11\u00ba 575/2013, Article 450 point 1.i), in the year 2023 the Bank has 1 employee on
the Board of Directors with remuneration between Euros 1 and Euros 1.5 million. In 2022, the Bank had no employees
earning more than Euros 1 million.
The balances with related parties discriminated in the following table, included on the consolidated balance sheet, are
analysed as follows:
(Thousands of euros)
Loans and advances to
customers
Resources from customers
2023
2022
(restated)
2023
2022
(restated)
Board of Directors
Non-executive directors
8
10
8,900
8,180
Executive Committee (*)
27
46
2,918
2,716
Closely related people
19
14
2,651
2,629
Controlled entities
\u2014
\u2014
24
24
Key management members
Key management members
5,416
6,575
10,934
10,180
Closely related people
1,948
2,475
4,433
4,497
Controlled entities
705
928
3,276
2,613
8,123
10,048
33,136
30,839
(*) The item Loans to Customers corresponds to mortgage loans granted prior to the respective election and to the amount used from private
credit cards which must be settled on the maturity date.
The transactions with related parties discriminated in the following table, included in income items of the consolidated
income statement, are as follows:
(Thousands of euros)
Interest and similar income
Commissions income
2023
2022
(restated)
2023
2022
(restated)
Board of Directors
Non-executive directors
\u2014
\u2014
27
29
Executive Committee
1
\u2014
23
10
Closely related people
\u2014
\u2014
9
9
Key management members
Key management members
174
41
62
62
Closely related people
88
22
39
43
Controlled entities
63
17
31
19
326
80
191
172
The transactions with related parties discriminated in the following table, included in cost items of the consolidated
income statement, are as follows:
(Thousands of euros)
Interest and similar expense
Commissions' expense
2023
2022
(restated)
2023
2022
(restated)
Board of Directors
Non-executive directors
128
19
\u2014
\u2014
Executive Committee (*)
26
\u2014
\u2014
1
Closely related people
33
9
\u2014
\u2014
Key management members
Key management members
101
6
1
4
Closely related people
20
2
1
2
Controlled entities
21
\u2014
2
2
329
36
4
9
The revocable credit lines granted by the Group to the following related parties are as follows:
Guarantees granted
Revocable credit lines
2023
2022
(restated)
2023
2022
(restated)
Board of Directors
Non-executive directors
\u2014
\u2014
143
113
Executive Committee (*)
\u2014
\u2014
160
140
Closely related people
\u2014
\u2014
63
43
Key management members
Key management members
5
5
844
825
Closely related people
\u2014
\u2014
180
164
Controlled entities
\u2014
\u2014
622
525
5
5
2,012
1,810
(*) Corresponds to the maximum authorized and unused limit of private credit cards and overdraft authorization in a salary account under the
same regime as all the Bank's other employees.
C)", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-641": { "value": "Other administrative costs
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Water, electricity and fuel
14,846
17,885
Credit cards and mortgage
8,621
8,603
Communications
25,152
24,296
Maintenance and related services
18,407
17,651
Legal expenses
5,011
4,368
Travel, hotel and representation costs
7,279
5,318
Advisory services
44,301
32,103
Training costs
1,453
1,404
Information technology services
25,708
35,277
Consumables
7,601
7,554
Outsourcing and independent labour
111,577
77,424
Advertising
27,705
24,854
Rents and leases
26,769
31,244
Insurance
4,943
4,848
Transportation
11,192
10,185
Other specialised services
28,869
28,970
Other supplies and services
23,812
20,977
393,246
352,961
The balance Rents and leases includes the amount of Euros 1,440,000 (2022: Euros 590,000) related to short-term lease
contracts and the amount of Euros 2,612,000 (2022: Euros 2,402,000) related to lease contracts of low-value assets, as
described in the accounting policy 1 H.
The balance Other specialised services includes fees for services rendered by the Statutory Auditor of the Group,
currently in functions, and by companies in its network as part of its statutory audit functions, as well as other services,
is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Auditing services
Legal certification
3,310
3,190
Other assurance services
1,180
1,388
Other services
747
310
5,237
4,888
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-642": { "value": "
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Water, electricity and fuel
14,846
17,885
Credit cards and mortgage
8,621
8,603
Communications
25,152
24,296
Maintenance and related services
18,407
17,651
Legal expenses
5,011
4,368
Travel, hotel and representation costs
7,279
5,318
Advisory services
44,301
32,103
Training costs
1,453
1,404
Information technology services
25,708
35,277
Consumables
7,601
7,554
Outsourcing and independent labour
111,577
77,424
Advertising
27,705
24,854
Rents and leases
26,769
31,244
Insurance
4,943
4,848
Transportation
11,192
10,185
Other specialised services
28,869
28,970
Other supplies and services
23,812
20,977
393,246
352,961
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-643": { "value": "
The balance Other specialised services includes fees for services rendered by the Statutory Auditor of the Group,
currently in functions, and by companies in its network as part of its statutory audit functions, as well as other services,
is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Auditing services
Legal certification
3,310
3,190
Other assurance services
1,180
1,388
Other services
747
310
5,237
4,888
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-644": { "value": "-19426000", "decimals": -3, "dimensions": { "concept": "ifrs-full:FinancialAssetsWithContractualCashFlowsModifiedDuringReportingPeriodWhileLossAllowanceMeasuredAtLifetimeExpectedCreditLossesModificationGainLoss", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f-646": { "value": "Share of profit of associates accounted for using the equity method
The main contributions of the investments accounted for using the equity method are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Banco Millennium Atl\u00e2ntico, S.A. (note 26)
Appropriation relating to the current year
2,977
2,431
Appropriation relating to the previous year
\u2014
(2,924)
Effect of the application of IAS 29:
Amortization of the effect calculated until 31 December 2018 (a)
(268)
(423)
2,709
(916)
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A.
40,422
29,700
Unicre - Institui\u00e7\u00e3o Financeira de Cr\u00e9dito, S.A.
6,597
11,843
SIBS, S.G.P.S, S.A.
9,851
11,687
Banque BCP, S.A.S.
2,745
4,520
Fidelidade Mo\u00e7ambique - Companhia de Seguros S.A.
1,942
1,841
Other companies
\u2014
(64)
61,557
59,527
64,266
58,611
(a) Based on the requirements of IAS 29, Angola was considered as a high inflation economy until 31 December 2018, for the purposes of
presentation of consolidated financial statements, as described in accounting policy 1 B6. This classification is no longer applied since 1 January
2019.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-645": { "value": "Share of profit of associates accounted for using the equity method
The main contributions of the investments accounted for using the equity method are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Banco Millennium Atl\u00e2ntico, S.A. (note 26)
Appropriation relating to the current year
2,977
2,431
Appropriation relating to the previous year
\u2014
(2,924)
Effect of the application of IAS 29:
Amortization of the effect calculated until 31 December 2018 (a)
(268)
(423)
2,709
(916)
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A.
40,422
29,700
Unicre - Institui\u00e7\u00e3o Financeira de Cr\u00e9dito, S.A.
6,597
11,843
SIBS, S.G.P.S, S.A.
9,851
11,687
Banque BCP, S.A.S.
2,745
4,520
Fidelidade Mo\u00e7ambique - Companhia de Seguros S.A.
1,942
1,841
Other companies
\u2014
(64)
61,557
59,527
64,266
58,611
(a) Based on the requirements of IAS 29, Angola was considered as a high inflation economy until 31 December 2018, for the purposes of
presentation of consolidated financial statements, as described in accounting policy 1 B6. This classification is no longer applied since 1 January
2019.
Investments in associated companies
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Portuguese credit institutions
51,793
49,228
Foreign credit institutions
128,467
170,045
Other Portuguese companies
179,312
131,477
Other foreign companies
43,042
30,432
402,614
381,182
Impairment
(46,355)
(66,263)
356,259
314,919
The balance Investments in associated companies, as at 31\u00a0December 2023, is analysed as follows:
(Thousands of euros)
2023
Global value of
participation
Impairment of
investments in
associated
companies
Book value of
participation
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A.
114,767
\u2014
114,767
Banco Millennium Atl\u00e2ntico, S.A.
75,430
(28,344)
47,086
Banque BCP, S.A.S.
53,037
\u2014
53,037
SIBS, S.G.P.S, S.A.
64,545
\u2014
64,545
Fidelidade Mo\u00e7ambique - Companhia de Seguros S.A.
12,942
\u2014
12,942
Unicre - Institui\u00e7\u00e3o Financeira de Cr\u00e9dito, S.A.
51,793
\u2014
51,793
Webspectator Corporation
18,011
(18,011)
\u2014
Millennium Financial Services Sp. z o.o.
12,089
\u2014
12,089
402,614
(46,355)
356,259
These investments correspond to unquoted companies. According to the accounting policy described in note 1 B, these
investments are measured at the equity method.
The balance Investments in associated companies, as at 31\u00a0December 2022, is analysed as follows:
(Thousands of euros)
2022 (restated)
Global value of
participation
Impairment of
investments in
associated
companies
Book value of
participation
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A.
75,968
\u2014
75,968
Banco Millennium Atl\u00e2ntico, S.A.
119,180
(48,252)
70,928
Banque BCP, S.A.S.
50,865
\u2014
50,865
SIBS, S.G.P.S, S.A.
55,509
\u2014
55,509
Fidelidade Mo\u00e7ambique - Companhia de Seguros S.A.
12,421
\u2014
12,421
Unicre - Institui\u00e7\u00e3o Financeira de Cr\u00e9dito, S.A.
49,228
\u2014
49,228
Webspectator Corporation
18,011
(18,011)
\u2014
381,182
(66,263)
314,919
The Group's companies included in the consolidation perimeter are presented in note 60, as well as the main indicators
of the most relevant ones.
The movements occurred in Impairment of investments in associated companies are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
66,263
78,268
Transfers from Other provisions (Banco Millennium Atl\u00e2ntico, S.A.) (note 39)
\u2014
5,000
Impairment charge for the year (note 13)
\u2014
1,435
Impairment write-off (Banco Millennium Atl\u00e2ntico, S.A.)
\u2014
(16,787)
Exchange rate differences
(19,908)
(1,653)
Balance at the end of the year
46,355
66,263
In accordance with the requirements of IFRS 12 and considering their relevance, the movements occurred in the
investment held in Banco Millennium Atl\u00e2ntico, S.A., is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Ownership held by BCP on equity of the associated company as at 1 January
70,928
60,203
Application of IAS 29 for the year:
Net non-monetary assets of the BMA
Effect of exchange rate variations (note 43)
(3,417)
1,282
Amortization of the effect of IAS 29 application calculated as at 31 December 2018 (note 15)
(268)
(423)
Goodwill of the merger operation of the BMA
Effect of exchange rate variations (note 43)
(8,223)
2,810
Transfers from Other provisions (note 39)
\u2014
(5,000)
Impairment of investments in associated companies
\u2014
(1,436)
Appropriation of the net income of the associated companies (note 15)
2,977
2,431
Appropriation of the net income of previous years (note 15)
\u2014
(2,924)
Other comprehensive income attributable to BCP
3,182
99
Exchange differences
Effect on BMA's equity
(27,994)
8,814
Goodwill associated with investment in BMA
(10,007)
3,419
Impairment of investments in associated companies (note 43)
19,908
1,653
Investment held at the end of the year
47,086
70,928
The following table presents the financial statements of Banco Millennium Atl\u00e2ntico, S.A, prepared in accordance with
IFRS, modified by the consolidation adjustments:
(Thousands of euros)
2023
2022
(restated)
Net profit for the year
13,097
10,693
Comprehensive income
13,996
435
Total comprehensive income attributable to Shareholders of the associated company
27,093
11,128
Application of IAS 29 (*)
(1,180)
(1,861)
Attributable to Shareholders of the associated companies adjusted to BCP GAAP
25,913
9,267
Attributable to the BCP Group
5,891
2,107
Balance sheet
Financial assets
1,979,566
2,562,438
Non-financial assets
245,431
347,632
Financial liabilities
(2,000,669)
(2,579,341)
Non-financial liabilities
(27,475)
(37,836)
Attributable to Shareholders of the associated companies
196,853
292,893
Application of IAS 29 (*)
20,764
36,974
Attributable to Shareholders of the associated companies adjusted to BCP GAAP
217,617
329,867
Attributable to the BCP Group
49,474
74,994
Goodwill of the merge
25,956
44,186
Impairment of investments in associated companies
(28,344)
(48,252)
Attributable to the BCP Group adjusted of consolidation items
47,086
70,928
(*) The impact of the IAS 29 adoption was calculated from the date of the merger (April 2016).
The amounts presented do not include adjustments arising from the application of IAS 29. Based on the requirements of
IAS 29, Angola was considered a hyperinflationary economy until 31 December 2018, for the purpose of presenting the
consolidated financial statements, as described in accounting policy 1 B6. This classification ceased to be applied on 1
January 2019.
In accordance with the requirements of IFRS 12 and considering their relevance, the movements occurred in the
investment held in Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Appropriation of equity of the associate on 1 January (before restatement)
59,766
261,446
Transition to IFRS 9 and IFRS 17 (note 59):
1 January 2022
(89,858)
(89,858)
Other comprehensive income for the year 2022
116,152
\u2014
Other reserves for the year 2022
19
\u2014
Net income for the year 2022
(10,111)
\u2014
Appropriation of equity of the associate on 1 January (restated)
75,968
171,588
Appropriation of net income for the year of associate:
Before the restatement
\u2014
39,811
Transition to IFRS 9 and IFRS 17 (note 59)
\u2014
(10,111)
Appropriation of net income for the year of associates (note 15)
40,422
29,700
Other comprehensive income attributable to BCP:
Before the restatement
\u2014
(109,240)
Transition to IFRS 9 and IFRS 17 (note 59)
\u2014
116,152
Other comprehensive income attributable to BCP
(1,565)
6,912
Dividends received
\u2014
(132,251)
Other changes (Transition to IFRS 9 and IFRS 17) (note 59)
\u2014
19
Other changes
(58)
\u2014
Investment held at the end of the year
114,767
75,968
The following table presents the financial statements of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A.,
prepared in accordance with IFRS, modified by the consolidation adjustments:
(Thousands of euros)
2023
2022
(restated)
Net profit for the year
82,494
60,612
Comprehensive income
(3,194)
14,106
Total comprehensive income attributable to Shareholders of the associated company
79,300
74,718
Attributable to the BCP Group (49%)
38,857
36,612
Balance sheet
Financial assets
7,813,872
8,176,426
Non-financial assets
482,087
673,510
Financial liabilities
(3,632,700)
(8,362,729)
Non-financial liabilities
(4,165,573)
(68,754)
Total equity
497,686
418,453
Attributable to non-controlling interests
10,980
10,929
Attributable to Shareholders of the associated companies
486,706
407,524
Adjustments of intra-group transactions (*)
378,415
378,415
Attributable to Shareholders of the associated company adjusted to BCP GAAP
865,121
785,939
Attributable to the BCP Group
423,909
385,110
Reverse of the initial gain in 2004 allocated to the BCP Group
(309,142)
(309,142)
Attributable to the BCP Group adjusted of consolidation items
114,767
75,968
(*) Adjustment related to the cancellation in the BCP Group consolidated accounts of the VOBA recorded by Millenniumbcp Ageas Grupo
Segurador, S.G.P.S, S.A., at the time of the initial registration of this investment. VOBA corresponds to the estimated current value of the
future cash flows of the contracts in force at the date of acquisition under IFRS 4. With the implementation of IFRS 17, this concept was
cancelled in the consolidated accounts of Millenniumbcp Ageas having no impact on the Group 's consolidated accounts as it is not recognised in
the investment.
The Group owns 49% of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., being accounted for under the equity
method, as Investments in associated companies.
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. is dedicated to the management of life insurance and pension
funds. On 1 January 2023 Millenniumbcp Ageas made the simultaneous adoption of IFRS 9 - Financial Instruments and
IFRS 17 - Insurance Contracts. It opted for the possibility given to Insurance Companies to defer the application of IFRS
9, since the combined implementation with IFRS 17 would minimize the distortion of results.
IFRS 17 replaces IFRS 4 - \"Insurance Contracts\" and is applicable to all entities that issue insurance contracts,
reinsurance contracts and investment contracts with discretionary participation features if they are also issuers of
insurance contracts.
The initial application of IFRS 17 and IFRS 9 requires comparative information. Therefore, Millenniumbcp Ageas Grupo
Segurador made the transition exercise on 1 January 2022 and the impacts resulting from its implementation are
detailed in note 59. Application of IFRS 17 \u2013 Insurance Contracts and IFRS 9 - Financial Instruments by Millenniumbcp
Ageas Grupo Segurador, S.G.P.S., S.A.
The balances with associated companies included in the consolidated balance sheet items, except for the item
investments in associated companies, are as follows:
(Thousands of euros)
2023
2022
(restated)
Assets
Loans and advances to credit institutions repayable on demand
12,220
8,834
Financial assets at amortised cost
Loans and advances to credit institutions
212,037
206,078
Loans and advances to customers
2,517
59,487
Financial assets at fair value through profit or loss
Financial assets held for trading
3,465
\u2014
Other assets
11,778
11,497
242,017
285,896
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
22,365
62,845
Resources from customers
198,627
211,193
Non subordinated debt securities issued
6,896
2,002
Financial liabilities held for trading
5,136
3,894
Other liabilities
356
8
233,380
279,942
The transactions with associated companies included in the consolidated income statement items are as follows:
(Thousands of euros)
2023
2022
(restated)
Income
Interest and similar income
10,343
4,198
Commissions
53,594
60,230
Gains on financial operations
2,513
1,020
Other operating income
2,786
1,957
69,236
67,405
Costs
Interest and similar expenses
4,785
1,104
Commissions
11
113
Other administrative costs
2,365
4,136
Losses on financial operations
2,796
\u2014
Other operating losses
1
51
9,958
5,404
The guarantees granted and revocable and irrevocable credit lines by the Group over associated companies are as
follows:
(Thousands of euros)
2023
2022
(restated)
Guarantees granted
4,824
7,539
Revocable credit lines
9,328
9,527
Other revocable commitments
16,284
\u2014
30,436
17,066
List of subsidiary and associated companies of Banco Comercial Portugu\u00eas
Group
As at 31\u00a0December 2023, the Group's subsidiary companies included in the consolidated accounts using the full
consolidation method were as follows:
Group
Bank
Subsidiary companies
Head
office
Share
capital
Currency
Sector of activity
% economic
interests
% effective
held
% direct
held
Banco ActivoBank, S.A.
Lisbon
127,600,000
EUR
Banking
100%
100%
100%
Bank Millennium, S.A.
Warsaw
1,213,116,777
PLN
Banking
50.1%
50.1%
50.1%
Millennium Bank Hipoteczny S.A.
Warsaw
90,000,000
PLN
Banking
100%
50.1%
\u2014
BCP \u00c1frica, S.G.P.S., Lda.
Funchal
214,223,800
EUR
Holding company
100%
100%
100%
BIM - Banco Internacional de
Mo\u00e7ambique, S.A.
Maputo
4,500,000,000
MZN
Banking
66.7%
66.7%
\u2014
BCP Finance Bank, Ltd.
George
Town
246,000,000
USD
Banking
100%
100%
\u2014
BCP International B.V.
Amsterdam
18,000
EUR
Holding company
100%
100%
100%
M Representa\u00e7\u00f5es Ltda
S\u00e3o Paulo
77,780,760
BRL
Financial Services
100%
100%
100%
Millennium bcp Participa\u00e7\u00f5es,
S.G.P.S., Sociedade Unipessoal,
Lda.
Funchal
25,000
EUR
Holding company
100%
100%
100%
Interfundos - Sociedade Gestora de
Organismos de\u00a0 Investimento
Coletivo, S.A.
Oeiras
1,500,000
EUR
Real estate
investment fund
management
100%
100%
100%
Monumental Residence - Sociedade
de investimento coletivo
imobili\u00e1ria fechada, S.A.
Oeiras
31,900,000
EUR
Real-estate
management
100%
100%
100%
Millennium bcp - Presta\u00e7\u00e3o de
Servi\u00e7os, A.C.E.
Lisbon
331,750
EUR
Services
98.6%
97.7%
93.2%
Millennium bcp Teleservi\u00e7os -
Servi\u00e7os de Com\u00e9rcio Electr\u00f3nico,
S.A.
Lisbon
50,004
EUR
E-commerce
100%
100%
100%
Imoserit, S.A.
Oeiras
50,000
EUR
Real-estate
company
100%
100%
100%
Bichorro \u2013 Empreendimentos
Tur\u00edsticos\u00a0 e Imobili\u00e1rios S.A.
Oeiras
2,150,000
EUR
Real-estate
management
100%
100%
\u2014
Finalgarve \u2013 Sociedade de
Promo\u00e7\u00e3o Imobili\u00e1ria\u00a0 Tur\u00edstica,
S.A.
Oeiras
250,000
EUR
Real-estate
management
100%
100%
\u2014
Fiparso \u2013 Sociedade Imobili\u00e1ria S.A
Oeiras
50,000
EUR
Real-estate
company
100%
100%
\u2014
Millennium Consulting S.A.
Warsaw
4,339,500
PLN
Consulting services
100%
50.1%
\u2014
Millennium Goodie Sp.z.o.o.
Warsaw
500,000
PLN
Web portals
100%
50.1%
\u2014
Millennium Leasing, Sp.z o.o.
Warsaw
48,195,000
PLN
Leasing
100%
50.1%
\u2014
Millennium Service, Sp.z o.o.
Warsaw
1,000,000
PLN
Services
100%
50.1%
\u2014
Piast Expert Sp. z o.o (em
liquida\u00e7\u00e3o)
Tychy
100,000
PLN
Marketing services
100%
50.1%
\u2014
Millennium Telecommunication
Services Sp. z o.o.
Warsaw
100,000
PLN
Brokerage services
100%
50.1%
\u2014
Millennium TFI - Towarzystwo
Funduszy Inwestycyjnych, S.A.
Warsaw
10,300,000
PLN
Investment fund
management
100%
50.1%
\u2014
BCPBT CI Liquidation Company I
George
Town
1
USD
Liquidation trust
100%
100%
\u2014
BCPBT CI Liquidation Company II
George
Town
1
USD
Liquidation trust
100%
100%
\u2014
As at 31\u00a0December 2023, the investment funds included in the consolidated accounts using the full consolidation
method, as referred in the accounting policy presented in note 1 B, were as follows:
Group
Bank
Investment funds
Head
office
Share
capital
Currency
Activity
% economic
interests
% effective
held
% direct
held
Imosotto acumula\u00e7\u00e3o \u2013 Fundo de
Investimento Imobili\u00e1rio Fechado
Oeiras
102,385,157
EUR
Real-estate
investment fund
100%
100%
100%
Imorenda \u2013 Fundo de Investimento
Imobili\u00e1rio Fechado
Oeiras
85,156,715
EUR
Real-estate
investment fund
100%
100%
100%
Sand Capital - Fundo de
Investimento Imobili\u00e1rio Fechado
Oeiras
88,082,695
EUR
Real-estate
investment fund
100%
100%
100%
Fundial \u2013 Fundo de Investimento\u00a0
Imobili\u00e1rio Fechado
Oeiras
17,340,985
EUR
Real-estate
investment fund
100%
100%
100%
Fundipar \u2013 Fundo de Investimento\u00a0
Imobili\u00e1rio Fechado
Oeiras
11,345,348
EUR
Real-estate
investment fund
100%
100%
100%
Domus Capital\u2013 Fundo de
Investimento\u00a0 Imobili\u00e1rio Fechado
Oeiras
3,799,969
EUR
Real-estate
investment fund
95.8%
95.8%
95.8%
Predicapital \u2013 Fundo de Investimento\u00a0
Imobili\u00e1rio Fechado (*)
Oeiras
88,951,500
EUR
Real-estate
investment fund
60%
60%
60%
(*) - Company classified as non-current assets held for sale.
During 2023, the Group proceeded with the liquidation of the funds Oce\u00e2nico II \u2013 Fundo de Investimento Imobili\u00e1rio
Fechado and\u00a0 Funsita - Fundo de Investimento\u00a0 Imobili\u00e1rio Fechado.
The Group holds a securitization transaction regarding mortgage loans which was set through specifically created SPE.
As referred in accounting policy 1 B, when the substance of the relationships with the SPEs indicates that the Group
holds control of its activities, the SPE is fully consolidated, following the application of IFRS 10.
As at 31\u00a0December 2023, the Special Purpose Entity included in the consolidated accounts under the full consolidation
method is as follows:
Group
Bank
Special Purpose Entities
Head
office
Share capital
Currency
Activity
% economic
interests
% effective
held
% direct
held
Magellan Mortgages No.3 Limited
Dublin
40,000
EUR
Special Purpose
Entities
82.4%
82.4%
82.4%
During the 3rd quarter of 2023, the Group settled the Magellan Mortgages No.1 securitization operation.
As at 31\u00a0December 2023, the Group's associated companies included in the consolidated accounts under the equity
method are as follows:
Group
Bank
Associated companies
Head
office
Share capital
Currency
Activity
% economic
interests
% effective
held
% direct
held
Banco Millennium Atl\u00e2ntico, S.A.
Luanda
53,821,603,000
AOA
Banking
22.7%
22.5%
\u2014
Banque BCP, S.A.S.
Paris
215,335,898
EUR
Banking
19%
19%
19%
Lubuskie Fabryki Mebli, S.A. (em
liquida\u00e7\u00e3o)
Swiebodzin
13,400,050
PLN
Furniture
manufacturer
50%
25.1%
\u2014
Europa Millennium Financial
Services sp. z o.o. (*)
Warsaw
100,000
PLN
Services
20%
10%
\u2014
SIBS, S.G.P.S., S.A.
Lisbon
24,642,300
EUR
Banking services
23.3%
21.9%
\u2014
UNICRE - Institui\u00e7\u00e3o Financeira
de Cr\u00e9dito, S.A.
Lisbon
10,000,000
EUR
Credit cards
32%
32%
0.5%
Webspectator Corporation
Delaware
950
USD
Digital advertising
services
25.1%
25.1%
25.1%
(*) previous Millennium Financial Services sp. z o.o.
As described in note 48, the Group sold 80% of shares of Millennium Financial Services sp. z o.o. so now holds a minority
stake of 20%.
As at 31\u00a0December 2023, the Group's associated insurance companies included in the consolidated accounts under the
equity method were as follows:
Group
Bank
Associated companies
Head
office
Share capital
Currency
Activity
% economic
interests
% effective
held
% direct
held
Millenniumbcp Ageas Grupo
Segurador,\u00a0 S.G.P.S., S.A.
Lisbon
50,002,375
EUR
Holding company
49%
49%
49%
Ocidental - Companhia Portuguesa
de Seguros de Vida, S.A.
Lisbon
22,375,000
EUR
Life insurance
49%
49%
\u2014
Ageas - Sociedade Gestora de
Fundos de Pens\u00f5es, S.A.
Lisbon
1,200,000
EUR
Pension fund
management
49%
49%
\u2014
Fidelidade Mo\u00e7ambique -
Companhia de Seguros S.A.
Maputo
295,000,000
MZN
Insurance
22%
14.7%
\u2014
Some indicators of the main subsidiaries and associated companies are analysed as follows:
(Thousands of euros)
2023
2022
Subsidiaries and associated companies
Total
Assets
Total
Equity
Net
income for
the year
Total
Assets
Total
Equity
Net
income for
the year
Banco Comercial Portugu\u00eas, S.A.
61,519,392
6,127,916
680,276
62,649,975
5,266,068
478,408
Banco ActivoBank, S.A.
3,501,901
254,201
39,400
3,271,355
213,017
19,142
Bank Millennium, S.A. (1)
28,897,024
1,587,332
126,821
23,697,447
1,173,617
(216,683)
BIM - Banco Internacional de Mo\u00e7ambique, S.A. (1)
2,711,174
534,619
105,099
2,824,409
521,192
106,030
BCP International B.V.
523,962
523,935
(691)
524,966
524,627
87,434
BCP Finance Bank, Ltd.
519,337
519,331
(647)
520,294
519,976
4,996
BCP \u00c1frica, S.G.P.S., Lda.
280,742
279,680
2,338
561,713
560,269
60,975
Millennium bcp Participa\u00e7\u00f5es, S.G.P.S., Sociedade
Unipessoal, Lda.
175,824
174,679
7,788
179,441
178,297
11,406
Interfundos - Sociedade Gestora de Organismos de\u00a0
Investimento Coletivo, S.A.
9,301
7,625
1,724
9,731
8,113
2,084
Millenniumbcp Ageas Grupo Segurador, S.G.P.S.,
S.A. (1) (3)
8,295,959
497,686
82,494
8,876,759
401,717
74,425
Banco Millennium Atl\u00e2ntico, S.A. (2)
2,224,997
196,853
13,097
2,910,070
292,893
10,693
Banque BCP, S.A.S.
5,732,286
279,722
14,477
4,944,774
268,097
23,499
1) Consolidated accounts.
2) These indicators correspond to the statutory financial statements that do not include the effects of applying IAS 29.
3) The 2023 amounts refer to the estimated financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-648": { "value": "
This balance is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains /(Losses) on disposal of investments
11,539
(283)
Gains /(Losses) on disposal of other assets
10,270
10,450
21,809
10,167
As described in notes 5 and 48, due to the sale of 80% of the shares of Millennium Financial Services sp. z o.o. by Bank
Millennium in Poland and consequently loss of control over the company, the Group measured its remaining non-
controlling stake (20%) at fair value, recording a gain of Euros 11,562,000 recorded as Gains /(Losses) on disposal of
investments.
The balance Gains /(Losses) on disposal of other assets includes essentially gains on disposal of assets held by the Group
and classified as non-current assets held for sale and as other assets, which corresponds to a gain of Euros 5,612,000
(2022: gain of Euros 11,323,000).
Other assets
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Deposit account applications
57,866
51,371
Capital supplies
173,175
178,725
Obligations with post-employment benefits
390,258
593,494
Debtors for futures and options transactions
118,472
191,290
Real estate and other assets arising from recovered loans (a)
338,486
\u2014
Debtors
Residents
Receivables from real estate,\u00a0transfers of assets and other securities
87,816
111,693
Prosecution cases / agreements with the Bank
11,163
12,163
SIBS
3,579
3,521
Others
21,779
66,744
Non-residents
50,992
30,584
Amounts due for collection
81,614
80,024
Interest and other amounts receivable
80,094
69,613
Amounts receivable on trading activity
10,736
3,234
Amounts due from customers
76,047
51,229
Artistic patrimony
28,796
28,796
Prepaid expenses
25,505
23,654
Subsidies receivables
8,347
10,764
Other recoverable tax
8,112
9,082
Gold and other precious metals
3,562
3,640
Capital supplementary contributions
165
165
Associated companies
116
145
Sundry assets
371,836
254,276
1,948,516
1,774,207
Impairment for other assets
(321,832)
(191,752)
1,626,684
1,582,455
(a) assets transferred from Non-current assets held for sale
As at 31 December 2023, the balance Deposit account applications includes the amount of Euros 30,638,000
(31\u00a0December 2022: Euros 25,506,000) relating to the collateral constituted in compliance with the assumption of
irrevocable payment commitments to Single Resolution Fund, as referred in note 6.
As referred in note 47, as at 31\u00a0December 2023, the balance Capital supplies includes the amount of Euros 165,837,000
(31\u00a0December 2022: Euros 171,397,000) arising from the transfers of assets to Specialized recovery funds which have
impairment in the same amount.
The balance Amounts receivable on trading activity includes amounts receivable within 3 business days of stock
exchange operations.
Considering the nature of these transactions and the age of the amounts of these items, the Group's procedure is to
periodically assess the collectability of these amounts and whenever impairment is identified, an impairment loss is
registered in the income statement.
The detail of the item Real estate and other assets arising from recovered loans is analysed as follows:
(Thousands\u00a0 of euros)
2023
Gross value
Impairment
Net value
Real estate
Assets arising from recovered loans
138,165
(45,829)
92,336
Assets belong to investments funds and real estate companies
173,443
(84,904)
88,539
Assets for own use (closed branches)
13,537
(5,432)
8,105
Equipment
92
(81)
11
Other assets (*)
13,249
(594)
12,655
338,486
(136,840)
201,646
(*) includes Shares, Price Deposit and Property Adjudication Proposals
The changes occurred in Impairment of other assets, with the exception of impairment for Real estate and other assets
arising from recovered loans are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
191,752
260,199
Transfers resulting from changes in the Group's structure
\u2014
(1,038)
Other transfers
(513)
908
Charge for the year (note 13)
17,673
17,699
Reversals for the year (note 13)
(7,150)
(7,047)
Amounts charged-off
(17,232)
(78,835)
Exchange rate differences
462
(134)
Balance at the end of the year
184,992
191,752
The changes occurred in impairment for Real Estate and other assets arising from recovered loans, are analysed as
follow:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
\u2014
\u2014
Transfer of Non-current assets held for sale (note 27)
51,802
\u2014
Other transfers
52,488
\u2014
Charge for the year (note 13)
34,706
\u2014
Reversals for the year (note 13)
(98)
\u2014
Amounts charged-off
(1,953)
\u2014
Exchange rate differences
(105)
\u2014
Balance at the end of the year
136,840
\u2014
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-647": { "value": "
This balance is comprised of:
(Thousands of euros)
2023
2022
(restated)
Gains /(Losses) on disposal of investments
11,539
(283)
Gains /(Losses) on disposal of other assets
10,270
10,450
21,809
10,167
As described in notes 5 and 48, due to the sale of 80% of the shares of Millennium Financial Services sp. z o.o. by Bank
Millennium in Poland and consequently loss of control over the company, the Group measured its remaining non-
controlling stake (20%) at fair value, recording a gain of Euros 11,562,000 recorded as Gains /(Losses) on disposal of
investments.
The balance Gains /(Losses) on disposal of other assets includes essentially gains on disposal of assets held by the Group
and classified as non-current assets held for sale and as other assets, which corresponds to a gain of Euros 5,612,000
(2022: gain of Euros 11,323,000).
The following table presents a summary of financial information for the main subsidiaries included in this balance,
prepared in accordance with IFRS. The information is presented before inter-company eliminations:
(Thousands of euros)
Bank Millennium Group
BIM - Banco International de
Mo\u00e7ambique Group
2023
2022
(restated)
2023
2022
(restated)
Net income for the year
126,821
(216,683)
105,099
106,030
Correction of net income from previous years
\u2014
\u2014
(3,447)
\u2014
Adjusted net income
126,821
(216,683)
101,652
106,030
Net income for the year attributable to the shareholders
63,537
(108,558)
67,787
70,707
Net income for the year attributable to non-controlling interests
63,284
(108,125)
33,865
35,323
Other comprehensive income attributable to the shareholders
143,760
(34,929)
(11,355)
23,390
Other comprehensive income attributable to non-controlling interests
143,186
(34,790)
(5,673)
11,685
Total comprehensive income
413,767
(286,402)
84,624
141,105
Balance sheet
Financial assets
28,184,289
23,055,876
2,495,727
2,606,994
Non-financial assets
752,625
641,571
215,447
217,416
Financial liabilities
(26,121,981)
(21,684,366)
(2,096,244)
(2,235,210)
Non-financial liabilities
(1,227,601)
(839,464)
(80,310)
(68,008)
Equity
1,587,332
1,173,617
534,620
521,192
Equity attributed to the shareholders
795,271
587,999
356,514
347,559
Equity attributed to the non-controlling interests
792,061
585,618
178,106
173,633
Cash flows arising from:
operating activities
3,337,195
2,134,937
101,745
104,089
investing activities
(2,828,892)
260,370
(18,862)
(12,141)
financing activities
474,329
(75,834)
(71,516)
(191,515)
Increase / (decrease) in cash and equivalents
982,632
2,319,473
11,367
(99,567)
Dividends paid during the year:
attributed to the shareholders
\u2014
\u2014
47,478
119,244
attributed to the non-controlling interests
\u2014
\u2014
23,719
59,572
\u2014
\u2014
71,197
178,816
List of subsidiary and associated companies of Banco Comercial Portugu\u00eas
Group
As at 31\u00a0December 2023, the Group's subsidiary companies included in the consolidated accounts using the full
consolidation method were as follows:
Group
Bank
Subsidiary companies
Head
office
Share
capital
Currency
Sector of activity
% economic
interests
% effective
held
% direct
held
Banco ActivoBank, S.A.
Lisbon
127,600,000
EUR
Banking
100%
100%
100%
Bank Millennium, S.A.
Warsaw
1,213,116,777
PLN
Banking
50.1%
50.1%
50.1%
Millennium Bank Hipoteczny S.A.
Warsaw
90,000,000
PLN
Banking
100%
50.1%
\u2014
BCP \u00c1frica, S.G.P.S., Lda.
Funchal
214,223,800
EUR
Holding company
100%
100%
100%
BIM - Banco Internacional de
Mo\u00e7ambique, S.A.
Maputo
4,500,000,000
MZN
Banking
66.7%
66.7%
\u2014
BCP Finance Bank, Ltd.
George
Town
246,000,000
USD
Banking
100%
100%
\u2014
BCP International B.V.
Amsterdam
18,000
EUR
Holding company
100%
100%
100%
M Representa\u00e7\u00f5es Ltda
S\u00e3o Paulo
77,780,760
BRL
Financial Services
100%
100%
100%
Millennium bcp Participa\u00e7\u00f5es,
S.G.P.S., Sociedade Unipessoal,
Lda.
Funchal
25,000
EUR
Holding company
100%
100%
100%
Interfundos - Sociedade Gestora de
Organismos de\u00a0 Investimento
Coletivo, S.A.
Oeiras
1,500,000
EUR
Real estate
investment fund
management
100%
100%
100%
Monumental Residence - Sociedade
de investimento coletivo
imobili\u00e1ria fechada, S.A.
Oeiras
31,900,000
EUR
Real-estate
management
100%
100%
100%
Millennium bcp - Presta\u00e7\u00e3o de
Servi\u00e7os, A.C.E.
Lisbon
331,750
EUR
Services
98.6%
97.7%
93.2%
Millennium bcp Teleservi\u00e7os -
Servi\u00e7os de Com\u00e9rcio Electr\u00f3nico,
S.A.
Lisbon
50,004
EUR
E-commerce
100%
100%
100%
Imoserit, S.A.
Oeiras
50,000
EUR
Real-estate
company
100%
100%
100%
Bichorro \u2013 Empreendimentos
Tur\u00edsticos\u00a0 e Imobili\u00e1rios S.A.
Oeiras
2,150,000
EUR
Real-estate
management
100%
100%
\u2014
Finalgarve \u2013 Sociedade de
Promo\u00e7\u00e3o Imobili\u00e1ria\u00a0 Tur\u00edstica,
S.A.
Oeiras
250,000
EUR
Real-estate
management
100%
100%
\u2014
Fiparso \u2013 Sociedade Imobili\u00e1ria S.A
Oeiras
50,000
EUR
Real-estate
company
100%
100%
\u2014
Millennium Consulting S.A.
Warsaw
4,339,500
PLN
Consulting services
100%
50.1%
\u2014
Millennium Goodie Sp.z.o.o.
Warsaw
500,000
PLN
Web portals
100%
50.1%
\u2014
Millennium Leasing, Sp.z o.o.
Warsaw
48,195,000
PLN
Leasing
100%
50.1%
\u2014
Millennium Service, Sp.z o.o.
Warsaw
1,000,000
PLN
Services
100%
50.1%
\u2014
Piast Expert Sp. z o.o (em
liquida\u00e7\u00e3o)
Tychy
100,000
PLN
Marketing services
100%
50.1%
\u2014
Millennium Telecommunication
Services Sp. z o.o.
Warsaw
100,000
PLN
Brokerage services
100%
50.1%
\u2014
Millennium TFI - Towarzystwo
Funduszy Inwestycyjnych, S.A.
Warsaw
10,300,000
PLN
Investment fund
management
100%
50.1%
\u2014
BCPBT CI Liquidation Company I
George
Town
1
USD
Liquidation trust
100%
100%
\u2014
BCPBT CI Liquidation Company II
George
Town
1
USD
Liquidation trust
100%
100%
\u2014
As at 31\u00a0December 2023, the investment funds included in the consolidated accounts using the full consolidation
method, as referred in the accounting policy presented in note 1 B, were as follows:
Group
Bank
Investment funds
Head
office
Share
capital
Currency
Activity
% economic
interests
% effective
held
% direct
held
Imosotto acumula\u00e7\u00e3o \u2013 Fundo de
Investimento Imobili\u00e1rio Fechado
Oeiras
102,385,157
EUR
Real-estate
investment fund
100%
100%
100%
Imorenda \u2013 Fundo de Investimento
Imobili\u00e1rio Fechado
Oeiras
85,156,715
EUR
Real-estate
investment fund
100%
100%
100%
Sand Capital - Fundo de
Investimento Imobili\u00e1rio Fechado
Oeiras
88,082,695
EUR
Real-estate
investment fund
100%
100%
100%
Fundial \u2013 Fundo de Investimento\u00a0
Imobili\u00e1rio Fechado
Oeiras
17,340,985
EUR
Real-estate
investment fund
100%
100%
100%
Fundipar \u2013 Fundo de Investimento\u00a0
Imobili\u00e1rio Fechado
Oeiras
11,345,348
EUR
Real-estate
investment fund
100%
100%
100%
Domus Capital\u2013 Fundo de
Investimento\u00a0 Imobili\u00e1rio Fechado
Oeiras
3,799,969
EUR
Real-estate
investment fund
95.8%
95.8%
95.8%
Predicapital \u2013 Fundo de Investimento\u00a0
Imobili\u00e1rio Fechado (*)
Oeiras
88,951,500
EUR
Real-estate
investment fund
60%
60%
60%
(*) - Company classified as non-current assets held for sale.
During 2023, the Group proceeded with the liquidation of the funds Oce\u00e2nico II \u2013 Fundo de Investimento Imobili\u00e1rio
Fechado and\u00a0 Funsita - Fundo de Investimento\u00a0 Imobili\u00e1rio Fechado.
The Group holds a securitization transaction regarding mortgage loans which was set through specifically created SPE.
As referred in accounting policy 1 B, when the substance of the relationships with the SPEs indicates that the Group
holds control of its activities, the SPE is fully consolidated, following the application of IFRS 10.
As at 31\u00a0December 2023, the Special Purpose Entity included in the consolidated accounts under the full consolidation
method is as follows:
Group
Bank
Special Purpose Entities
Head
office
Share capital
Currency
Activity
% economic
interests
% effective
held
% direct
held
Magellan Mortgages No.3 Limited
Dublin
40,000
EUR
Special Purpose
Entities
82.4%
82.4%
82.4%
During the 3rd quarter of 2023, the Group settled the Magellan Mortgages No.1 securitization operation.
As at 31\u00a0December 2023, the Group's associated companies included in the consolidated accounts under the equity
method are as follows:
Group
Bank
Associated companies
Head
office
Share capital
Currency
Activity
% economic
interests
% effective
held
% direct
held
Banco Millennium Atl\u00e2ntico, S.A.
Luanda
53,821,603,000
AOA
Banking
22.7%
22.5%
\u2014
Banque BCP, S.A.S.
Paris
215,335,898
EUR
Banking
19%
19%
19%
Lubuskie Fabryki Mebli, S.A. (em
liquida\u00e7\u00e3o)
Swiebodzin
13,400,050
PLN
Furniture
manufacturer
50%
25.1%
\u2014
Europa Millennium Financial
Services sp. z o.o. (*)
Warsaw
100,000
PLN
Services
20%
10%
\u2014
SIBS, S.G.P.S., S.A.
Lisbon
24,642,300
EUR
Banking services
23.3%
21.9%
\u2014
UNICRE - Institui\u00e7\u00e3o Financeira
de Cr\u00e9dito, S.A.
Lisbon
10,000,000
EUR
Credit cards
32%
32%
0.5%
Webspectator Corporation
Delaware
950
USD
Digital advertising
services
25.1%
25.1%
25.1%
(*) previous Millennium Financial Services sp. z o.o.
As described in note 48, the Group sold 80% of shares of Millennium Financial Services sp. z o.o. so now holds a minority
stake of 20%.
As at 31\u00a0December 2023, the Group's associated insurance companies included in the consolidated accounts under the
equity method were as follows:
Group
Bank
Associated companies
Head
office
Share capital
Currency
Activity
% economic
interests
% effective
held
% direct
held
Millenniumbcp Ageas Grupo
Segurador,\u00a0 S.G.P.S., S.A.
Lisbon
50,002,375
EUR
Holding company
49%
49%
49%
Ocidental - Companhia Portuguesa
de Seguros de Vida, S.A.
Lisbon
22,375,000
EUR
Life insurance
49%
49%
\u2014
Ageas - Sociedade Gestora de
Fundos de Pens\u00f5es, S.A.
Lisbon
1,200,000
EUR
Pension fund
management
49%
49%
\u2014
Fidelidade Mo\u00e7ambique -
Companhia de Seguros S.A.
Maputo
295,000,000
MZN
Insurance
22%
14.7%
\u2014
Some indicators of the main subsidiaries and associated companies are analysed as follows:
(Thousands of euros)
2023
2022
Subsidiaries and associated companies
Total
Assets
Total
Equity
Net
income for
the year
Total
Assets
Total
Equity
Net
income for
the year
Banco Comercial Portugu\u00eas, S.A.
61,519,392
6,127,916
680,276
62,649,975
5,266,068
478,408
Banco ActivoBank, S.A.
3,501,901
254,201
39,400
3,271,355
213,017
19,142
Bank Millennium, S.A. (1)
28,897,024
1,587,332
126,821
23,697,447
1,173,617
(216,683)
BIM - Banco Internacional de Mo\u00e7ambique, S.A. (1)
2,711,174
534,619
105,099
2,824,409
521,192
106,030
BCP International B.V.
523,962
523,935
(691)
524,966
524,627
87,434
BCP Finance Bank, Ltd.
519,337
519,331
(647)
520,294
519,976
4,996
BCP \u00c1frica, S.G.P.S., Lda.
280,742
279,680
2,338
561,713
560,269
60,975
Millennium bcp Participa\u00e7\u00f5es, S.G.P.S., Sociedade
Unipessoal, Lda.
175,824
174,679
7,788
179,441
178,297
11,406
Interfundos - Sociedade Gestora de Organismos de\u00a0
Investimento Coletivo, S.A.
9,301
7,625
1,724
9,731
8,113
2,084
Millenniumbcp Ageas Grupo Segurador, S.G.P.S.,
S.A. (1) (3)
8,295,959
497,686
82,494
8,876,759
401,717
74,425
Banco Millennium Atl\u00e2ntico, S.A. (2)
2,224,997
196,853
13,097
2,910,070
292,893
10,693
Banque BCP, S.A.S.
5,732,286
279,722
14,477
4,944,774
268,097
23,499
1) Consolidated accounts.
2) These indicators correspond to the statutory financial statements that do not include the effects of applying IAS 29.
3) The 2023 amounts refer to the estimated financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-649": { "value": "Net income from discontinued or discontinuing operations
The amount of this account is comprised of:
(Thousands of euros)
2023
2022
(restated)
Banque Priv\u00e9e BCP (Suisse) S.A.
Gains on disposal of the investment held (price adjustment)
(2,843)
1,765
Fidelidade Mo\u00e7ambique - Companhia de Seguros S.A.
Correction of gains on disposal of the investment held
\u2014
3,772
Millennium bcp Gest\u00e3o de Activos - Sociedade Gestora de Fundos de Investimento, S.A.
Losses (expenses)
(9)
\u2014
(2,852)
5,537
Under the agreement entered between Banco Comercial Portugu\u00eas, S.A. and Union Bancaire Priv\u00e9e, UBP SA regarding
the sale of the entire share capital of Banque Priv\u00e9e BCP (Suisse) S.A. and in accordance with the provisions of IFRS 5,
this operation was considered as discontinued in June 2021, and the impact on results presented in a separate line of
the income statement named \"Net income from discontinued or discontinuing operations\".
The sale price received and the corresponding capital gain on disposal were adjusted in 2022 and in 2023 definitively,
based on price adjustments related to the evolution of certain parameters defined contractually, as is usual in this type
of transaction, including those that result from the variation of stocks and/or flows of assets under management, in
pre-determined dates and specified portfolios.
By the end of 2021, the Group, through its subsidiary BIM - Banco Internacional de Mo\u00e7ambique, S.A., sold 70% of the
investment held in Seguradora Internacional de Mo\u00e7ambique, S.A. (now designated Fidelidade Mo\u00e7ambique - Companhia
de Seguros S.A., according to note 60), becoming to hold a minority stake of 22%. In accordance with the provisions of
IFRS 5, this operation was considered as discontinued and the impact on results presented in a separate line of the
income statement named \"Net income from discontinued or discontinuing operations\".
The final sales price was adjusted positively in 2022, depending on the price adjustment resulting from adjustments as
is usual in this type of transactions, namely the variation of the value and/or flows of assets under management, in pre-
determined dates and for specified assets. By the end of 2022, the period during which price adjustments could be
made ended.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-650": { "value": "Earnings per share
The earnings per share are calculated as follows:
(Thousands of euros)
2023
2022
(restated)
Continuing operations
Net income from continuing operations
950,461
114,027
Non-controlling interests
(91,559)
77,822
Appropriated net income from continuing operations
858,902
191,849
Interests on perpetual subordinated bonds (Additional Tier 1)
(37,000)
(37,000)
Adjusted net income from continuing operations
821,902
154,849
Discontinued or discontinuing operations (note 17)
Net income from discontinued or discontinuing operations
(2,852)
5,537
Adjusted net income
819,050
160,386
Average number of shares
15,113,989,952
15,113,989,952
Basic earnings per share (Euros):
from continuing operations
0.054
0.010
from discontinued or discontinuing operations
0.000
0.000
0.054
0.010
Diluted earnings per share (Euros):
from continuing operations
0.054
0.010
from discontinued or discontinuing operations
0.000
0.000
0.054
0.010
As at 31\u00a0December 2023, the Bank's share capital amounts to Euros 3,000,000,000 (2022: Euros 3,000,000,000) and is
represented by 15,113,989,952 nominative book-entry shares without nominal value, fully subscribed and paid up.
There were not identified another dilution effects of the earnings per share as at 31\u00a0December 2023 and 2022, so the
diluted result is equivalent to the basic result.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-652": { "value": "Cash and deposits at Central Banks
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Cash
688,501
593,033
Central Banks
Bank of Portugal
2,134,395
3,370,139
Central Banks abroad
1,722,630
2,058,829
4,545,526
6,022,001
The balance Central Banks includes deposits at Central Banks of the countries where the Group operates to satisfy the
legal requirements to maintain a cash reserve calculated based on the value of deposits and other effective liabilities.
According to the European Central Bank System for Euro Zone, the cash reserve requirements establish the
maintenance of a deposit with the Central Bank equivalent to 1% of the average value of deposits and other liabilities,
during each reserve requirement period. The rate is different for countries outside the Euro Zone.
In addition, from the reserve counting period started on 30 October 2019, the ECB introduced the tiering regime, in
which the balance with the Central Bank in excess of the minimum cash reserves, up to an estimated maximum of 6
times of the reserves, is remunerated at the central bank's lending rate instead of the deposit rate.
Loans and advances to credit institutions repayable on demand
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Credit institutions in Portugal
1,285
2,338
Credit institutions abroad
260,227
112,443
Amounts due for collection
76,175
98,679
337,687
213,460
The balance Amounts due for collection represents, essentially, cheques due for collection on other financial
institutions. These balances were settled in the first days of the following month.
Loans and advances to credit institutions
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Loans and advances to Central Banks
Central Banks abroad
184,650
382,038
184,650
382,038
Loans and advances to credit institutions in Portugal
\u00a0 Term deposits
(23)
973
\u00a0 Loans
\u2014
4,250
\u00a0 Term deposits to collateralise CIRS and IRS operations (*)
330
\u2014
\u00a0 Other
10,175
1,068
10,482
6,291
Loans and advances to credit institutions abroad
\u00a0 Term deposits
371,647
425,152
\u00a0 Term deposits to collateralise CIRS and IRS operations (*)
58,446
124,746
\u00a0 Other
283,476
26,069
713,569
575,967
908,701
964,296
Impairment for loans and advances to credit institutions
(224)
(862)
908,477
963,434
(*) Under the scope of derivative financial instruments operations (IRS and CIRS) with institutional counterparties, and as defined in the
respective contracts (\"Cash collateral\"), these deposits are held by the counterparties and are given as collateral of the referred operations (IRS
and CIRS), whose revaluation is negative for the Group.
This balance analysed by the period to maturity, before impairment, is as follows:
(Thousands of euros)
2023
2022
(restated)
Up to 3 months
703,056
752,913
3 to 6 months
1,041
79,247
6 to 12 months
204,604
132,136
908,701
964,296
The changes occurred in impairment of Loans and advances to credit institutions are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
862
1,187
Transfers
28
\u2014
Charge for the year (note 11)
92
349
Reversals for the year (note 11)
(762)
(673)
Exchange rate differences
4
(1)
Balance at the end of the year
224
862
", "dimensions": { "concept": "ifrs-full:DisclosureOfRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-651": { "value": "Cash and deposits at Central Banks
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Cash
688,501
593,033
Central Banks
Bank of Portugal
2,134,395
3,370,139
Central Banks abroad
1,722,630
2,058,829
4,545,526
6,022,001
The balance Central Banks includes deposits at Central Banks of the countries where the Group operates to satisfy the
legal requirements to maintain a cash reserve calculated based on the value of deposits and other effective liabilities.
According to the European Central Bank System for Euro Zone, the cash reserve requirements establish the
maintenance of a deposit with the Central Bank equivalent to 1% of the average value of deposits and other liabilities,
during each reserve requirement period. The rate is different for countries outside the Euro Zone.
In addition, from the reserve counting period started on 30 October 2019, the ECB introduced the tiering regime, in
which the balance with the Central Bank in excess of the minimum cash reserves, up to an estimated maximum of 6
times of the reserves, is remunerated at the central bank's lending rate instead of the deposit rate.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndBankBalancesAtCentralBanksExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-653": { "value": "Loans and advances to credit institutions repayable on demand
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Credit institutions in Portugal
1,285
2,338
Credit institutions abroad
260,227
112,443
Amounts due for collection
76,175
98,679
337,687
213,460
The balance Amounts due for collection represents, essentially, cheques due for collection on other financial
institutions. These balances were settled in the first days of the following month.
Loans and advances to credit institutions
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Loans and advances to Central Banks
Central Banks abroad
184,650
382,038
184,650
382,038
Loans and advances to credit institutions in Portugal
\u00a0 Term deposits
(23)
973
\u00a0 Loans
\u2014
4,250
\u00a0 Term deposits to collateralise CIRS and IRS operations (*)
330
\u2014
\u00a0 Other
10,175
1,068
10,482
6,291
Loans and advances to credit institutions abroad
\u00a0 Term deposits
371,647
425,152
\u00a0 Term deposits to collateralise CIRS and IRS operations (*)
58,446
124,746
\u00a0 Other
283,476
26,069
713,569
575,967
908,701
964,296
Impairment for loans and advances to credit institutions
(224)
(862)
908,477
963,434
(*) Under the scope of derivative financial instruments operations (IRS and CIRS) with institutional counterparties, and as defined in the
respective contracts (\"Cash collateral\"), these deposits are held by the counterparties and are given as collateral of the referred operations (IRS
and CIRS), whose revaluation is negative for the Group.
This balance analysed by the period to maturity, before impairment, is as follows:
(Thousands of euros)
2023
2022
(restated)
Up to 3 months
703,056
752,913
3 to 6 months
1,041
79,247
6 to 12 months
204,604
132,136
908,701
964,296
The changes occurred in impairment of Loans and advances to credit institutions are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
862
1,187
Transfers
28
\u2014
Charge for the year (note 11)
92
349
Reversals for the year (note 11)
(762)
(673)
Exchange rate differences
4
(1)
Balance at the end of the year
224
862
The average discount rates for Loans and advances to credit institutions, Loans and advances to customers, Resources
from credit institutions and Resources from customers are analysed as follows:
Loans and advances to
credit institutions
Loans and advances to
customers
Resources from credit
institutions
Resources from customers
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
EUR
4.31%
2.44%
4.76%
5.15%
4.28%
3.38%
4.32%
2.77%
AOA
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
AUD
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4.86%
3.76%
CAD
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
5.43%
5.11%
CHF
n.a.
n.a.
3.57%
4.48%
n.a.
n.a.
2.10%
1.58%
CNY
n.a.
n.a.
2.95%
n.a.
n.a.
n.a.
2.66%
1.64%
DKK
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.93%
2.77%
GBP
n.a.
n.a.
n.a.
n.a.
5.69%
4.07%
5.50%
4.18%
HKD
n.a.
n.a.
4.24%
4.73%
n.a.
n.a.
5.30%
3.89%
JPY
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
MOP
n.a.
n.a.
3.66%
4.17%
n.a.
n.a.
5.11%
4.89%
MZN
19.51%
19.51%
23.62%
22.59%
n.a.
n.a.
16.41%
15.99%
NOK
n.a.
n.a.
n.a.
6.19%
n.a.
n.a.
5.09%
3.64%
PLN
5.27%
7.27%
8.28%
10.01%
5.28%
7.39%
5.48%
7.00%
SEK
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4.37%
3.53%
TRY
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
44.94%
n.a.
USD
5.78%
5.41%
6.34%
5.74%
5.85%
5.52%
5.03%
4.51%
ZAR
8.69%
8.61%
13.08%
13.05%
n.a.
n.a.
5.87%
5.45%
", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToBanksExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-654": { "value": "Loans and advances to customers
The analysis of loans and advances to customers, by type of credit, is as follows:
(Thousands of euros)
2023
2022
(restated)
Mortgage loans
28,622,845
28,658,104
Loans
16,520,496
17,672,581
Finance leases
4,195,116
4,176,329
Factoring operations
2,909,570
3,022,248
Current account credits
847,455
822,473
Overdrafts
1,019,668
1,046,121
Discounted bills
156,603
201,081
54,271,753
55,598,937
Overdue loans - less than 90 days
110,996
94,063
Overdue loans - Over 90 days
505,060
485,166
54,887,809
56,178,166
Loans impairment
(1,582,650)
(1,502,373)
53,305,159
54,675,793
The balance Loans and advances to customers, as at 31 December 2023, is analysed as follows:
(Thousands of euros)
2023
Outstanding
loans
Overdue
loans
Gross
amount
Impairment
Net
amount
Public sector
538,721
40
538,761
(1,261)
537,500
Asset-backed loans
31,799,089
111,046
31,910,135
(564,616)
31,345,519
Other guaranteed loans
4,716,031
71,101
4,787,132
(183,142)
4,603,990
Unsecured loans
8,039,408
308,262
8,347,670
(612,363)
7,735,307
Foreign loans
2,073,818
13,816
2,087,634
(51,924)
2,035,710
Factoring operations
2,909,570
22,103
2,931,673
(59,231)
2,872,442
Finance leases
4,195,116
89,688
4,284,804
(110,113)
4,174,691
54,271,753
616,056
54,887,809
(1,582,650)
53,305,159
The balances Asset-backed loans and Other guaranteed loans follow the subsequent types of guarantees considered:
\u2013 Asset-backed loans: Financial collaterals, physical collaterals (movable or immovable) and amounts receivable (income
consignment);
\u2013 Credit with other guarantees: First-demand guarantees issued by banks or other entities and personal guarantees.
The balance Loans and advances to customers, as at 31 December 2022, is analysed as follows:
(Thousands of euros)
2022 (restated)
Outstanding
loans
Overdue
loans
Gross
amount
Impairment
Net
amount
Public sector
583,999
\u2014
583,999
(966)
583,033
Asset-backed loans
32,233,382
123,063
32,356,445
(555,500)
31,800,945
Other guaranteed loans
5,667,532
100,085
5,767,617
(222,449)
5,545,168
Unsecured loans
7,458,312
258,186
7,716,498
(476,885)
7,239,613
Foreign loans
2,457,135
2,451
2,459,586
(34,334)
2,425,252
Factoring operations
3,022,248
16,680
3,038,928
(49,411)
2,989,517
Finance leases
4,176,329
78,764
4,255,093
(162,828)
4,092,265
55,598,937
579,229
56,178,166
(1,502,373)
54,675,793
The balance Loans and advances to customers includes the amount of Euros 10,875,965,000 (31\u00a0December 2022: Euros
10,613,589,000) regarding mortgage loans assigned to the cover pool backing the Group\u2019s covered bond programme
issuances.
As part of the liquidity risk management, the Group holds a pool of eligible assets that can serve as collateral in funding
operations with the European Central Bank and other Central Banks in countries where the Group operates, which
include loans and advances to customers.
As referred in note 51, the Group provides loans and/or guarantees to qualifying shareholders holding individually or
together with their affiliates, 5% or more of the share capital identified in the Board of Directors report and in note 41.
The Group granted credit to qualifying shareholders and entities controlled by them, in the amount of Euros
112,007,000 (31\u00a0December 2022: Euros 98,658,000), as referred in note 51 a). The amount of impairment recognised for
these contracts amounts to Euros 1,481,000 (31\u00a0December 2022: Euros 914,000).
The conclusion of business between the Company and holders of qualifying holdings or individuals or legal entities
related to them in accordance with the provisions of article 33.\u00ba, n.\u00ba 3 of Notice 3/2020 of Bank of Portugal, regardless
of the amount, is always subject of consideration and deliberation by the Board of Directors, after obtaining a prior
opinion from the Audit Committee, and by proposal of the Executive Committee, which in turn deliberates under
proposal from the Credit Committee, after obtaining an analysis and opinion from the Compliance Office, which
pronounces regarding the compliance of the proposed operations with internal regulations, legal and regulatory
provisions and other conditions that may apply to them, and the Risk Office, which evaluates and issues an opinion on
the risks inherent to the operation.
As at 31\u00a0December 2022, the balance Finance leases included the amount of Euros 348,000 relative to sublease
operations, as referred in accounting policy 1 H.
The analysis of the outstanding amount of financial lease contracts, by type of client, is presented as follows:
(Thousands of euros)
2023
2022
(restated)
Individuals
Home
36,649
43,402
Consumption
26,702
27,606
Others
71,927
75,666
135,278
146,674
Companies
Equipment
1,936,577
1,890,361
Real estate
2,123,261
2,139,294
4,059,838
4,029,655
4,195,116
4,176,329
The analysis of loans and advances to customers, as at 31\u00a0December 2023, by sector of activity, is as follows:
(Thousands of euros)
2023
Outstanding
loans
Overdue
loans
Gross
amount
Impairment
Net
amount
% Gross
amount
Agriculture and forestry
433,118
5,320
438,438
(12,157)
426,281
0.80%
Fisheries
23,941
3,237
27,178
(3,835)
23,343
0.05%
Mining
64,315
1,603
65,918
(6,510)
59,408
0.12%
Food, beverage and tobacco
721,867
6,374
728,241
(33,043)
695,198
1.33%
Textiles
412,927
11,034
423,961
(54,906)
369,055
0.77%
Wood and cork
239,794
2,606
242,400
(5,411)
236,989
0.44%
Paper, printing and publishing
120,862
703
121,565
(4,018)
117,547
0.22%
Chemicals
702,032
15,497
717,529
(30,817)
686,712
1.31%
Machinery, equipment and basic
metallurgical
1,347,043
27,219
1,374,262
(61,863)
1,312,399
2.50%
Electricity and gas
234,740
255
234,995
(7,500)
227,495
0.43%
Water
190,356
608
190,964
(8,609)
182,355
0.35%
Construction
1,465,696
23,140
1,488,836
(80,773)
1,408,063
2.71%
Retail business
1,697,573
18,103
1,715,676
(38,154)
1,677,522
3.13%
Wholesale business
2,001,101
24,270
2,025,371
(72,776)
1,952,595
3.69%
Restaurants and hotels
1,358,246
16,267
1,374,513
(76,772)
1,297,741
2.50%
Transports
1,305,519
13,925
1,319,444
(29,283)
1,290,161
2.40%
Post offices
24,654
319
24,973
(571)
24,402
0.05%
Telecommunications
355,653
4,045
359,698
(7,521)
352,177
0.66%
Services
Financial intermediation
1,456,457
476
1,456,933
(40,634)
1,416,299
2.65%
Real estate activities
1,987,406
14,870
2,002,276
(53,201)
1,949,075
3.65%
Consulting, scientific and technical
activities
1,009,028
29,952
1,038,980
(156,822)
882,158
1.89%
Administrative and support services
activities
490,512
5,048
495,560
(22,072)
473,488
0.90%
Public sector
631,184
40
631,224
(2,956)
628,268
1.15%
Education
107,963
969
108,932
(2,286)
106,646
0.20%
Health and collective service activities
356,644
1,856
358,500
(9,471)
349,029
0.65%
Artistic, sports and recreational
activities
221,300
901
222,201
(32,350)
189,851
0.41%
Other services
258,037
3,808
261,845
(72,074)
189,771
0.48%
Consumer loans
6,566,398
256,681
6,823,079
(428,213)
6,394,866
12.43%
Mortgage credit
27,868,097
112,639
27,980,736
(202,120)
27,778,616
50.98%
Other domestic activities
1,501
197
1,698
(152)
1,546
0.00%
Other international activities
617,789
14,094
631,883
(25,780)
606,103
1.15%
54,271,753
616,056
54,887,809
(1,582,650)
53,305,159
100%
The analysis of loans and advances to customers, as at 31\u00a0December 2022, by sector of activity, is as follows:
(Thousands of euros)
2022 (restated)
Outstanding
loans
Overdue
loans
Gross
amount
Impairment
Net
amount
% Gross
amount
Agriculture and forestry
461,680
8,517
470,197
(13,879)
456,318
0.84%
Fisheries
25,308
3,226
28,534
(2,563)
25,971
0.05%
Mining
70,970
1,676
72,646
(5,249)
67,397
0.13%
Food, beverage and tobacco
813,359
11,634
824,993
(26,201)
798,792
1.47%
Textiles
497,338
8,989
506,327
(17,109)
489,218
0.90%
Wood and cork
260,175
3,730
263,905
(5,364)
258,541
0.47%
Paper, printing and publishing
148,937
742
149,679
(3,924)
145,755
0.27%
Chemicals
862,826
38,334
901,160
(63,538)
837,622
1.60%
Machinery, equipment and basic
metallurgical
1,526,778
25,298
1,552,076
(56,649)
1,495,427
2.76%
Electricity and gas
229,821
443
230,264
(1,285)
228,979
0.41%
Water
204,736
452
205,188
(8,371)
196,817
0.37%
Construction
1,497,114
21,639
1,518,753
(141,991)
1,376,762
2.70%
Retail business
1,705,882
18,730
1,724,612
(36,848)
1,687,764
3.07%
Wholesale business
2,225,903
26,755
2,252,658
(67,081)
2,185,577
4.01%
Restaurants and hotels
1,505,963
15,721
1,521,684
(71,192)
1,450,492
2.71%
Transports
1,320,236
7,464
1,327,700
(20,751)
1,306,949
2.36%
Post offices
19,918
254
20,172
(412)
19,760
0.04%
Telecommunications
411,885
1,508
413,393
(9,411)
403,982
0.74%
Services
Financial intermediation
2,047,265
2,149
2,049,414
(44,691)
2,004,723
3.65%
Real estate activities
1,978,182
10,931
1,989,113
(35,469)
1,953,644
3.54%
Consulting, scientific and technical
activities
969,410
8,232
977,642
(86,718)
890,924
1.74%
Administrative and support services
activities
532,237
4,296
536,533
(57,220)
479,313
0.96%
Public sector
823,904
\u2014
823,904
(2,545)
821,359
1.47%
Education
143,930
814
144,744
(14,627)
130,117
0.26%
Health and collective service activities
378,423
1,029
379,452
(7,108)
372,344
0.68%
Artistic, sports and recreational
activities
236,543
2,128
238,671
(37,124)
201,547
0.43%
Other services
234,399
2,971
237,370
(101,356)
136,014
0.42%
Consumer loans
5,775,239
237,160
6,012,399
(369,220)
5,643,179
10.70%
Mortgage credit
28,012,946
110,809
28,123,755
(181,551)
27,942,204
50.06%
Other domestic activities
1,377
332
1,709
(38)
1,671
0.00%
Other international activities
676,253
3,266
679,519
(12,888)
666,631
1.21%
55,598,937
579,229
56,178,166
(1,502,373)
54,675,793
100%
The analysis of loans and advances to customers, by maturity and by sector of activity, as at 31\u00a0December 2023, is as
follows:
(Thousands of euros)
2023
Outstanding loans
Due within
1 year
1 year to
5 years
Over 5
years
Total
Outstanding
Overdue
loans
Total
Agriculture and forestry
100,868
184,889
147,361
433,118
5,320
438,438
Fisheries
4,945
14,326
4,670
23,941
3,237
27,178
Mining
14,165
39,788
10,362
64,315
1,603
65,918
Food, beverage and tobacco
351,595
288,183
82,089
721,867
6,374
728,241
Textiles
155,018
203,731
54,178
412,927
11,034
423,961
Wood and cork
94,585
110,513
34,696
239,794
2,606
242,400
Paper, printing and publishing
28,129
67,447
25,286
120,862
703
121,565
Chemicals
272,606
335,125
94,301
702,032
15,497
717,529
Machinery, equipment and basic
metallurgical
535,951
649,954
161,138
1,347,043
27,219
1,374,262
Electricity and gas
23,025
77,272
134,443
234,740
255
234,995
Water
29,806
72,955
87,595
190,356
608
190,964
Construction
560,700
582,187
322,809
1,465,696
23,140
1,488,836
Retail business
801,913
634,450
261,210
1,697,573
18,103
1,715,676
Wholesale business
940,274
854,941
205,886
2,001,101
24,270
2,025,371
Restaurants and hotels
104,819
395,354
858,073
1,358,246
16,267
1,374,513
Transports
375,001
815,722
114,796
1,305,519
13,925
1,319,444
Post offices
13,066
9,822
1,766
24,654
319
24,973
Telecommunications
75,412
235,896
44,345
355,653
4,045
359,698
Services
Financial intermediation
242,262
395,639
818,556
1,456,457
476
1,456,933
Real estate activities
385,845
814,149
787,412
1,987,406
14,870
2,002,276
Consulting, scientific and technical
activities
204,844
368,309
435,875
1,009,028
29,952
1,038,980
Administrative and support services
activities
161,135
249,466
79,911
490,512
5,048
495,560
Public sector
48,020
330,153
253,011
631,184
40
631,224
Education
26,519
42,676
38,768
107,963
969
108,932
Health and collective service activities
75,506
147,598
133,540
356,644
1,856
358,500
Artistic, sports and recreational
activities
11,753
58,855
150,692
221,300
901
222,201
Other services
75,487
120,256
62,294
258,037
3,808
261,845
Consumer loans
2,180,784
3,153,772
1,231,842
6,566,398
256,681
6,823,079
Mortgage credit
455,670
1,751,219
25,661,208
27,868,097
112,639
27,980,736
Other domestic activities
304
543
654
1,501
197
1,698
Other international activities
408,128
57,386
152,275
617,789
14,094
631,883
8,758,135
13,062,576
32,451,042
54,271,753
616,056
54,887,809
The analysis of loans and advances to customers, by maturity and by sector of activity, as at 31\u00a0December 2022, is as
follows:
(Thousands of euros)
2022 (restated)
Outstanding loans
Due within
1 year
1 year to
5 years
Over 5
years
Total
Outstanding
Overdue
loans
Total
Agriculture and forestry
104,760
181,701
175,219
461,680
8,517
470,197
Fisheries
3,756
12,465
9,087
25,308
3,226
28,534
Mining
17,107
42,103
11,760
70,970
1,676
72,646
Food, beverage and tobacco
408,663
307,334
97,362
813,359
11,634
824,993
Textiles
154,019
265,451
77,868
497,338
8,989
506,327
Wood and cork
92,259
135,429
32,487
260,175
3,730
263,905
Paper, printing and publishing
42,397
76,818
29,722
148,937
742
149,679
Chemicals
335,828
396,647
130,351
862,826
38,334
901,160
Machinery, equipment and basic
metallurgical
559,264
742,898
224,616
1,526,778
25,298
1,552,076
Electricity and gas
55,254
67,104
107,463
229,821
443
230,264
Water
35,418
80,638
88,680
204,736
452
205,188
Construction
524,861
638,536
333,717
1,497,114
21,639
1,518,753
Retail business
668,493
729,772
307,617
1,705,882
18,730
1,724,612
Wholesale business
1,011,781
933,752
280,370
2,225,903
26,755
2,252,658
Restaurants and hotels
81,252
523,536
901,175
1,505,963
15,721
1,521,684
Transports
334,717
840,728
144,791
1,320,236
7,464
1,327,700
Post offices
12,384
6,551
983
19,918
254
20,172
Telecommunications
82,116
274,708
55,061
411,885
1,508
413,393
Services
Financial intermediation
194,026
783,252
1,069,987
2,047,265
2,149
2,049,414
Real estate activities
345,774
830,401
802,007
1,978,182
10,931
1,989,113
Consulting, scientific and technical
activities
211,357
387,691
370,362
969,410
8,232
977,642
Administrative and support services
activities
122,350
278,364
131,523
532,237
4,296
536,533
Public sector
84,965
283,426
455,513
823,904
\u2014
823,904
Education
29,436
47,613
66,881
143,930
814
144,744
Health and collective service activities
70,100
167,080
141,243
378,423
1,029
379,452
Artistic, sports and recreational
activities
11,618
64,764
160,161
236,543
2,128
238,671
Other services
70,922
121,649
41,828
234,399
2,971
237,370
Consumer loans
1,901,816
2,744,264
1,129,159
5,775,239
237,160
6,012,399
Mortgage credit
464,882
1,593,206
25,954,858
28,012,946
110,809
28,123,755
Other domestic activities
247
477
653
1,377
332
1,709
Other international activities
432,937
81,442
161,874
676,253
3,266
679,519
8,464,759
13,639,800
33,494,378
55,598,937
579,229
56,178,166
The analysis of loans and advances to customers, by type of credit and by maturity, as at 31\u00a0December 2023, is as
follows:
(Thousands of euros)
2023
Outstanding loans
Due within
1 year
1 year to
5 years
Over
5 years
Total
Outstanding
Overdue
loans
Total
Public sector
9,277
189,817
339,627
538,721
40
538,761
Asset-backed loans
1,654,088
3,658,185
26,486,816
31,799,089
111,046
31,910,135
Other guaranteed loans
843,304
3,182,893
689,834
4,716,031
71,101
4,787,132
Unsecured loans
2,791,442
3,863,145
1,384,821
8,039,408
308,262
8,347,670
Foreign loans
229,016
386,412
1,458,390
2,073,818
13,816
2,087,634
Factoring operations
2,645,855
263,715
\u2014
2,909,570
22,103
2,931,673
Finance leases
585,153
1,518,409
2,091,554
4,195,116
89,688
4,284,804
8,758,135
13,062,576
32,451,042
54,271,753
616,056
54,887,809
The analysis of loans and advances to customers, by type of credit and by maturity, as at 31\u00a0December 2022, is as
follows:
(Thousands of euros)
2022 (restated)
Outstanding loans
Due within
1 year
1 year to
5 years
Over
5 years
Total
Outstanding
Overdue
loans
Total
Public sector
21,138
19,832
543,029
583,999
\u2014
583,999
Asset-backed loans
1,608,240
3,615,091
27,010,051
32,233,382
123,063
32,356,445
Other guaranteed loans
842,171
3,866,580
958,781
5,667,532
100,085
5,767,617
Unsecured loans
2,660,372
3,452,035
1,345,905
7,458,312
258,186
7,716,498
Foreign loans
171,535
785,272
1,500,328
2,457,135
2,451
2,459,586
Factoring operations
2,592,313
426,935
3,000
3,022,248
16,680
3,038,928
Finance leases
568,990
1,474,055
2,133,284
4,176,329
78,764
4,255,093
8,464,759
13,639,800
33,494,378
55,598,937
579,229
56,178,166
The item Loans and advances to customers, split by stage according with IFRS 9, is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Stage 1
Gross amount
45,652,779
46,404,751
Impairment
(268,948)
(214,469)
45,383,831
46,190,282
Stage 2
Gross amount
7,295,904
7,567,944
Impairment
(291,928)
(284,653)
7,003,976
7,283,291
Stage 3
Gross amount
1,939,126
2,205,471
Impairment
(1,021,774)
(1,003,251)
917,352
1,202,220
Net amount
53,305,159
54,675,793
The exposure and impairment of the above table also includes the operations classified as POCI as detailed in note 54.
The analysis of the exposure covered by collaterals associated with loans and advances to customers' portfolio, by stage
according with IFRS 9, considering the collaterals' fair value, is as follows:
(Thousands of euros)
2023
2022
(restated)
Stage 1
Securities and other financial assets
1,601,275
1,533,809
Residential real estate
25,107,829
24,796,864
Other real estate
3,236,223
3,475,795
Other guarantees
7,147,794
7,654,261
37,093,121
37,460,729
Stage 2
Securities and other financial assets
177,614
192,025
Residential real estate
2,840,231
2,507,458
Other real estate
1,159,093
1,158,362
Other guarantees
1,500,324
1,744,218
5,677,262
5,602,063
Stage 3
Securities and other financial assets
20,313
28,765
Residential real estate
442,566
432,138
Other real estate
346,101
516,903
Other guarantees
214,931
235,900
1,023,911
1,213,706
43,794,294
44,276,498
The balance Other guarantees include first-demand guarantees issued by the Bank and other entities, with an internal
risk rating of 7 or better; personal guarantees, when the guarantors are classified with internal risk grade 7 or better.
This balance also includes pledges, assets subject to financial leasing operations and personal guarantees, among
others.
Considering the policy of risk management of the Group (note 54), the amounts presented do not include the fair value
of the personal guarantees provided by clients with lower risk rating. When considered, the fair value of the personal
guarantees corresponds to the guaranteed amount.
The Group is applying physical collaterals and financial guarantees as instruments to mitigate the credit risk. The
physical collaterals are mainly mortgages on residential buildings for the mortgage portfolio and other mortgages on
other types of buildings related to other types of loans. To reflect the market value, these collaterals are regularly
reviewed based on independent and certified valuation entities or through the application of revaluation coefficients
that reflect the market trends for each specific type of building and geographical area. The financial guarantees are
reviewed based on the market value of the respective assets, when available, with the subsequent application of
haircuts that reflect the volatility of their prices. The Group continued to negotiate additional physical and financial
collaterals with its customers.
The loan to customers' portfolio includes contracts that resulted in a formal restructuring with the customers and which
arise to the marking of operations as being restructured due to financial difficulties of customers. The restructuring
may include in a reinforce of guarantees, liquidation of part of the credit and imply an extension of maturities or
changes in interest rate. The analysis of the restructured loans, by sector of activity, is as follows:
(Thousands of euros)
2023
2022 (restated)
Restructured
loans
Impairment
(*)
Net amount
Restructured
loans
Impairment
(*)
Net amount
Agriculture and forestry
21,199
(1,928)
19,271
15,009
(2,216)
12,793
Fisheries
3,381
(2,708)
673
2,772
(1,762)
1,010
Mining
5,919
(3,246)
2,673
1,305
(199)
1,106
Food, beverage and tobacco
18,625
(7,781)
10,844
28,393
(10,112)
18,281
Textiles
7,766
(1,948)
5,818
14,120
(4,981)
9,139
Wood and cork
3,670
(428)
3,242
6,088
(784)
5,304
Paper, printing and publishing
6,563
(1,868)
4,695
8,698
(1,701)
6,997
Chemicals
22,807
(6,719)
16,088
30,146
(11,809)
18,337
Machinery, equipment and basic
metallurgical
35,284
(14,955)
20,329
74,637
(22,688)
51,949
Electricity and gas
951
(6)
945
1,133
(255)
878
Water
1,749
(934)
815
1,767
(734)
1,033
Construction
141,642
(27,956)
113,686
151,970
(94,787)
57,183
Retail business
22,524
(4,587)
17,937
38,861
(10,085)
28,776
Wholesale business
25,671
(6,607)
19,064
68,474
(13,627)
54,847
Restaurants and hotels
63,536
(21,319)
42,217
97,002
(16,126)
80,876
Transports
4,666
(1,513)
3,153
9,620
(1,767)
7,853
Post offices
100
(40)
60
125
(33)
92
Telecommunications
1,861
(404)
1,457
25,228
(4,066)
21,162
Services
Financial intermediation
24,992
(2,430)
22,562
54,764
(19,879)
34,885
Real estate activities
74,959
(14,492)
60,467
45,785
(9,927)
35,858
Consulting, scientific and technical
activities
192,379
(130,306)
62,073
190,444
(63,606)
126,838
Administrative and support services
activities
28,633
(10,843)
17,790
67,941
(46,519)
21,422
Public sector
60,886
(464)
60,422
63,016
(427)
62,589
Education
2,089
(234)
1,855
17,310
(11,358)
5,952
Health and collective service
activities
9,543
(1,352)
8,191
8,428
(1,206)
7,222
Artistic, sports and recreational
activities
38,720
(27,782)
10,938
19,732
(8,865)
10,867
Other services
8,596
(1,801)
6,795
11,855
(1,601)
10,254
Consumer loans
276,092
(115,154)
160,938
274,500
(99,459)
175,041
Mortgage credit
623,740
(71,001)
552,739
535,948
(69,129)
466,819
Other domestic activities
3
\u2014
3
\u2014
\u2014
\u2014
Other international activities
705
(621)
84
977
(594)
383
1,729,251
(481,427)
1,247,824
1,866,048
(530,302)
1,335,746
(*)The impairment presented in the table does not include the amounts of impairment calculated using the overlays methodology described in
point ii. of the section \"Additional measures with impact on the Impairment level\" of note 54.
The breakdown of the restructured loans as at 31\u00a0December 2023, by restructuring measure, is as follows:
(Thousands of euros)
2023
Number of
operations
Outstanding
loans
Overdue
loans
Gross
amount
Impairment
(*)
Net
amount
Extension of the repayment term
41,274
338,147
59,307
397,454
(130,610)
266,844
Introduction of the grace period for
capital and / or interest
6,318
358,580
31,700
390,280
(97,525)
292,755
Interest rate reduction
2,130
106,926
2,383
109,309
(9,963)
99,346
Payment plan change
8,891
332,029
9,784
341,813
(133,956)
207,857
Debt relief
86
22,201
1,334
23,535
(21,655)
1,880
Debt-asset swaps
2
\u2014
17
17
(1)
16
Other restructured loans
6,046
401,629
65,214
466,843
(87,717)
379,126
64,747
1,559,512
169,739
1,729,251
(481,427)
1,247,824
The breakdown of the restructured loans as at 31\u00a0December 2022, by restructuring measure, is as follows:
(Thousands of euros)
2022 (restated)
Number of
operations
Outstanding
loans
Overdue
loans
Gross
amount
Impairment
(*)
Net
amount
Extension of the repayment term
40,796
383,529
64,104
447,633
(130,635)
316,998
Introduction of the grace period for
capital and / or interest
7,359
433,555
30,187
463,742
(134,502)
329,240
Interest rate reduction
3,933
147,583
5,694
153,277
(105,411)
47,866
Payment plan change
10,832
233,879
9,338
243,217
(21,762)
221,455
Debt relief
105
935
1,693
2,628
(1,391)
1,237
Debt-asset swaps
4
368
21
389
(31)
358
Other restructured loans
6,877
507,410
47,752
555,162
(136,570)
418,592
69,906
1,707,259
158,789
1,866,048
(530,302)
1,335,746
(*) The impairment presented in the tables does not include the amounts of impairment calculated using the overlays methodology described in
point ii. of the section \"Additional measures with impact on the Impairment level\" of note 54.
The restructured loans are also subject to an impairment analysis resulting from the revaluation of expectation to meet
new cash flows inherent to the new contract terms and considering new collaterals.
The Group has implemented a process for marking operations restructured due to clients' financial difficulties. This
marking is part of the credit analysis process, being in charge of the respective decision-making bodies, according to
the corresponding competencies, established in the regulations in force.
The information on operations restructured due to financial difficulties is available in the Group's information systems,
having a relevant role in the processes of credit analysis, in the marking of customers in default and in the process of
determining impairment. In particular:
- there are several default triggers related to restructuring due to financial difficulties (restructuring with loss of value,
recidivism of restructuring, default on customers with restructured operations);
- in the process of individual impairment analysis, in addition to the existence of operations restructured due to
financial difficulties, being a reason for customer selection, the loss inherent to the change in the conditions resulting
from the restructuring is determined.
The demarcation of an operation marked as restructured due to financial difficulties, can only take place at least 2-
years periods after the date of marking, provided that a set of conditions exist that allow to conclude by the
improvement of the financial condition of the client. In the case of credits marked as Non-Performing Exposure (NPE),
this 2-year period will only start on the date of classification of the credit as performing.
The definition of Non-Performing Loans for more than 90 days (NPL > 90) incorporates total credit (past due plus
outstanding) associated with past due operations for more than 90 days. The amount calculated is Euros 749,569,000
(31\u00a0December 2022: Euros 725,300,000).
All customers who check at least one of the following conditions are marked in default and therefore as NPE:
- Material payment delay of more than 90 days in the amounts of principal, interest or unpaid commissions on the due
date that, cumulatively, represent: more than Euros 100 (retail) or more than Euros 500 (non-retail); and more than 1%
of the total debt (direct liabilities).
- Indications of low probability of payment:
a) Credit restructuring due to financial difficulties with loss of value; b) Delay after restructuring due to financial
difficulties; c) Recurrence of restructuring due to financial difficulties; d) Credit with signs of impairment (or Stage 3 of
IFRS 9); e) Insolvency or equivalent process; f) Litigation; g) Guarantees of operations in default; h) Loss of credit sales;
i) Credit fraud; j) Unpaid credit status; k) Breach of covenants in a credit agreement; l) Contagion of default in an
economic group; m) Cross default in the BCP Group.
The NPE associated with Loans and advances customers at amortized cost amounts to Euros 1,939,126,000
(31\u00a0December 2022: Euros 2,205,471,000).
The changes occurred in Loans impairment are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
1,502,373
1,849,284
Charge for the year in net income interest
3,545
32,942
Transfers resulting from changes in the Group's structure
411
\u2014
Other transfers
(1,054)
(53,634)
Impairment charge for the year (note 11)
805,500
830,750
Reversals for the year (note 11)
(511,733)
(506,926)
Loans charged-off
Write-offs
(192,473)
(458,405)
Credit assignments
(62,044)
(189,061)
Exchange rate differences
38,125
(2,577)
Balance at the end of the year
1,582,650
1,502,373
The balance Other transfers included, as at 31 December 2022, the amount of Euros 52,794,000 related to impairment
for loans that were reclassified to Financial assets not held for trading mandatorily at fair value through profit or loss -
Loans and advances to customers at fair value.
According to note 39, regarding the proceedings related to foreign currency-indexed mortgage loans of Bank Millennium
the amount of Euros 1,500,209,000 has been written-off from the gross carrying amount of loans portfolio (31\u00a0December
2022: Euros 976,782,000).
The analysis of Write-offs, by sector of activity, is as follows:
(Thousands of euros)
2023
2022
(restated)
Agriculture and forestry
1,046
271
Fisheries
\u2014
1
Mining
\u2014
46
Food, beverage and tobacco
3,799
1,696
Textiles
1,141
1,405
Wood and cork
567
2,083
Paper, printing and publishing
103
141
Chemicals
1,058
1,425
Machinery, equipment and basic metallurgical
6,091
2,613
Electricity and gas
377
615
Water
51
39
Construction
3,100
9,992
Retail business
1,714
10,324
Wholesale business
3,338
13,782
Restaurants and hotels
891
3,482
Transports
475
6,527
Post offices
134
128
Telecommunications
234
72
Services
Financial intermediation
20,210
72,244
Real estate activities
208
306
Consulting, scientific and technical activities
5,975
1,119
Administrative and support services activities
35,569
2,839
Education
10
48
Health and collective service activities
173
179
Artistic, sports and recreational activities
222
6,492
Other services
268
240,544
Consumer loans
64,537
69,019
Mortgage credit
1,968
3,581
Other domestic activities
761
838
Other international activities
38,453
6,554
192,473
458,405
According with the accounting policy described in note 1 C1.3, the Group writes off a loan when it does not have
reasonable expectations of recovering a financial asset in its entirety or partially. Loans written-off are recognised in
off-balance sheet accounts.
The analysis of Write-offs, by type of credit, is as follows:
(Thousands of euros)
2023
2022
(restated)
Asset-backed loans
2,432
3,296
Other guaranteed loans
40,982
313,915
Unsecured loans
142,768
128,131
Finance leases
6,291
13,063
192,473
458,405
The analysis of recovered loans and interest occurred during 2023 and 2022, by sector of activity, is as follows:
(Thousands of euros)
2023
2022
(restated)
Agriculture and forestry
52
6
Food, beverage and tobacco
30
34
Textiles
29
41
Wood and cork
137
43
Chemicals
533
105
Machinery, equipment and basic metallurgical
17
165
Construction
1,065
2,719
Retail business
1,151
757
Wholesale business
1,570
113
Restaurants and hotels
22
67
Transports
301
56
Post offices
\u2014
1
Telecommunications
\u2014
2
Services
Financial intermediation
2,492
619
Real estate activities
192
483
Consulting, scientific and technical activities
1,962
8
Administrative and support services activities
31
29
Education
1
5
Health and collective service activities
1
1
Artistic, sports and recreational activities
20
3
Other services
1,206
8
Consumer loans
10,399
13,967
Mortgage credit
603
130
Other domestic activities
17
29
Other international activities
35,900
1,445
57,731
20,836
The analysis of recovered loans and interest occurred during 2023 and 2022, by type of credit, is as follows:
(Thousands of euros)
2023
2022
(restated)
Asset-backed loans
1,318
130
Other guaranteed loans
37,409
4,237
Unsecured loans
16,625
16,300
Foreign loans
1,511
80
Finance leases
868
89
57,731
20,836
The balance Loans and advances to customers includes the effect of traditional securitization transactions made
through Special Purpose Entities (SPE) consolidated following the application of IFRS 10, in accordance with accounting
policy 1 B and synthetic securitization. The characterization of these operations is described in note 1 D.
Traditional securitizations
The traditional securitization transaction engaged by the BCP and still ongoing, refers to mortgage loans portfolios and
are set through securitization funds and special purpose entities (SPEs). As referred in accounting policy 1 B, when the
substance of the relationships with the referred SPEs indicates that the Group holds control of its activities, those are
consolidated by the full method.
Magellan Mortgages No. 3
On 24 June 2005, the Bank transferred, through securitization funds, an owned mortgage loans portfolio to the SPE
\u201cMagellan Mortgages No. 3 PLC\u201d. Considering that, by having acquired part of the subordinated tranche of the bonds
issued by that SPE, the Bank holds the control of the referred assets, the SPE is consolidated in the Group\u2019s Financial
Statements, as established in the accounting policy 1.B. As at 31\u00a0December 2023, the SPE's credit portfolio associated
with this operation amounts to Euros 160,845,000 (31\u00a0December 2022: Euros 188,214,000) and bonds issued with
different subordination levels amount to Euros 121,882,000 (this amount excludes bonds hold by the Group in the
amount of Euros 54,929,000) and the most subordinated tranche amounts to Euros 44,000 (this amount excludes bonds
already acquired by the Group in the amount Euros 206,000).
Synthetic securitizations
BCP has three operations in progress which form structures of synthetic securitization with similar characteristics, with
reference to credit portfolios granted by the Bank mainly to Small and Medium Enterprises (SMEs).
Caravela SME No. 3
Caravela SME No.3, supports an operation started on 28 June 2013, based on a medium and long term loans portfolio of
current accounts and authorized overdrafts. The legal maturity date of the operation is 25 March of 2036 and the
operation amounts to Euros 177,327,000 as at 31\u00a0December 2023 (31\u00a0December 2022: Euros 276,209,000). The fair value
of the relative Credit Default Swap (CDS) is recorded as a positive amount of Euros 172,994,000 (31\u00a0December 2022:
Euros 179,713,000)and the respective gain registered in 2023 amounts to Euros 959,000 (31\u00a0December 2022: loss of
Euros 4,824,000).
Caravela SME No. 4
Caravela SME No.4 is a similar operation, initiated on 5 June 2014, which portfolio contains car, real estate and
equipment leasing. The legal maturity date is 21 September of 2043 and, as at 31\u00a0December 2023, the operation
amounts to Euros 393,247,000 (31\u00a0December 2022: Euros 506,117,000). The fair value of the relative CDS is recorded as
a positive amount of Euros 60,386,000 (31\u00a0December 2022: Euros 61,551,000) and the respective gain registered in 2023
amounts to Euros 648,000 (31\u00a0December 2022: loss of Euros 2,026,000).
Caravela SME No.5
Caravela SME No.5, initiated on 20 December 2022, is supported by a portfolio of medium and long term loans, leasing
contract and commercial paper programmes. The legal maturity date is 26 September of 2035 and, as at 31\u00a0December
2023, the operation amounts to Euros 1,697,747,000 (31\u00a0December 2022: Euros 1,918,408,000). The fair value of the
relative CDS is recorded as a negative amount of Euros 46,362,000 (31\u00a0December 2022: positive amount 76,000) and the
respective cost registered\u00a0 in 2023 amounts to Euros 18,010,000 (31\u00a0December 2022: Euros 1,424,000).
In any of these transactions, the Bank contracted a Credit Default Swap (CDS) with a Special Purpose Entity (SPE),
purchasing from it form, credit risk protection on the referenced portfolio. In the case of synthetic structures, in the of
this same CDS the risk of the respective portfolios was subdivided into 3 tranches: senior, mezzanine and equity. In this
case of Caravela SME no.3 and no.4 operations, the mezzanine tranche and part of equity (20%) were placed on the
market through the issuance, by the SPE, of Credit Linked Notes (CLN's) subscribed by investors, while in Caravela SME
no.5 has been placed on the market for the entire mezzanine tranche. In turn, the Bank retained the risk of the tranche
senior and the remaining part of the equity tranche (80%) in the case of Caravela operations no. 3 and no. 4, and the
whole of the equity tranche in the case of Caravela SME no.5. The proceeds of the issuance of the CLNs were applied by
the SPE in the constitution of a deposit which fully collateralises its liabilities to its creditors in connection with the
transaction, including BCP.
These operations allowed the Bank to reduce the risk-weighted assets associated with the credit portfolios supporting
the operations, but the Bank did not transfer to third parties most of the rights and obligations arising from the credits
included in the respective portfolios, thus not meeting the derecognition criteria in the accounting policy presented in
note 1 C1.3.
Securitization operations carried out by Bank Millennium Group
In December 2023, the Bank Millennium carried out a synthetic securitization transaction of a portfolio of unsecured
cash loans with a total value of PLN 7.2 billion (Euros 1.7 billion). This was the largest synthetic securitization
transaction concluded by the Bank so far. As part of the transaction, the Bank transferred a significant part of the
credit risk of the securitized portfolio to the investor. The securitized loan portfolio remains on the Bank's balance
sheet. The risk of the securitized portfolio is transferred via a credit protection instrument in the form of credit risk-
related bonds issued in December 2023 (\"CLN Bonds\") in the amount of PLN 489 million (Euros 112.6 million).
Earlier, in July 2023, the Bank's subsidiary, Millennium Leasing, conducted another synthetic securitization transaction.
The reference portfolio of leasing transactions was worth PLN 4.0 billion (Euros 0.9 million). As part of the transaction,
Millennium Leasing transferred a significant part of the credit risk of the securitized portfolio to the investor. The
securitized loan portfolio remains on Millennium Leasing's balance sheet. The risk transfer of the securitized portfolio is
carried out through a credit protection instrument in the form of credit risk bonds issued in July 2023 (\"CLN Bonds\") in
the amount of PLN 280 million (Euros 64.5 million).
The average discount rates for Loans and advances to credit institutions, Loans and advances to customers, Resources
from credit institutions and Resources from customers are analysed as follows:
Loans and advances to
credit institutions
Loans and advances to
customers
Resources from credit
institutions
Resources from customers
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
EUR
4.31%
2.44%
4.76%
5.15%
4.28%
3.38%
4.32%
2.77%
AOA
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
AUD
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4.86%
3.76%
CAD
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
5.43%
5.11%
CHF
n.a.
n.a.
3.57%
4.48%
n.a.
n.a.
2.10%
1.58%
CNY
n.a.
n.a.
2.95%
n.a.
n.a.
n.a.
2.66%
1.64%
DKK
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.93%
2.77%
GBP
n.a.
n.a.
n.a.
n.a.
5.69%
4.07%
5.50%
4.18%
HKD
n.a.
n.a.
4.24%
4.73%
n.a.
n.a.
5.30%
3.89%
JPY
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
MOP
n.a.
n.a.
3.66%
4.17%
n.a.
n.a.
5.11%
4.89%
MZN
19.51%
19.51%
23.62%
22.59%
n.a.
n.a.
16.41%
15.99%
NOK
n.a.
n.a.
n.a.
6.19%
n.a.
n.a.
5.09%
3.64%
PLN
5.27%
7.27%
8.28%
10.01%
5.28%
7.39%
5.48%
7.00%
SEK
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4.37%
3.53%
TRY
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
44.94%
n.a.
USD
5.78%
5.41%
6.34%
5.74%
5.85%
5.52%
5.03%
4.51%
ZAR
8.69%
8.61%
13.08%
13.05%
n.a.
n.a.
5.87%
5.45%
During 2023, the changes occurred in Loans and advances to customers - gross amount are as follows:
(Thousands of euros)
2023
Financial assets at amortised cost - Loans and advances to customers -
Gross amount
Stage 1
Stage 2
Stage 3
POCI
Total
Gross amount as at 1 January
46,395,996
7,564,235
2,170,979
46,956
56,178,166
Changes in gross book value:
Transfers from stage 1 to stage 2
(2,100,816)
2,100,816
\u2014
\u2014
\u2014
Transfers from stage 1 to stage 3
(285,020)
\u2014
285,020
\u2014
\u2014
Transfers from stage 2 to stage 1
1,889,217
(1,889,217)
\u2014
\u2014
\u2014
Transfers from stage 2 to stage 3
\u2014
(415,277)
415,277
\u2014
\u2014
Transfers from stage 3 to stage 1
36,667
\u2014
(36,667)
\u2014
\u2014
Transfers from stage 3 to stage 2
\u2014
291,025
(291,025)
\u2014
\u2014
Write-offs
(811)
(2,261)
(186,529)
(2,872)
(192,473)
Net balance of new financial assets and derecognised\u00a0
financial assets and other variations
(283,563)
(358,699)
(442,287)
(13,335)
(1,097,884)
Gross amount at the end of the year
45,651,670
7,290,622
1,914,768
30,749
54,887,809
During 2022, the changes occurred in Loans and advances to customers - gross amount are as follows:
(Thousands of euros)
2022 (restated)
Financial assets at amortised cost - Loans and advances to customers - Gross
amount
Stage 1
Stage 2
Stage 3
POCI
Total
Gross amount as at 1 January
46,113,653
7,964,052
2,686,267
57,713
56,821,685
Changes in gross book value:
Transfers from stage 1 to stage 2
(2,111,726)
2,111,726
\u2014
\u2014
\u2014
Transfers from stage 1 to stage 3
(258,614)
\u2014
258,614
\u2014
\u2014
Transfers from stage 2 to stage 1
1,946,027
(1,946,027)
\u2014
\u2014
\u2014
Transfers from stage 2 to stage 3
\u2014
(631,859)
631,859
\u2014
\u2014
Transfers from stage 3 to stage 1
26,176
\u2014
(26,176)
\u2014
\u2014
Transfers from stage 3 to stage 2
\u2014
174,249
(174,249)
\u2014
\u2014
Write-offs
(922)
(2,996)
(440,667)
(13,820)
(458,405)
Net balance of new financial assets and
derecognised financial assets and other variations
681,402
(104,910)
(764,669)
3,063
(185,114)
Gross amount at the end of the year
46,395,996
7,564,235
2,170,979
46,956
56,178,166
", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToCustomersExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-655": { "value": "
The analysis of the outstanding amount of financial lease contracts, by type of client, is presented as follows:
(Thousands of euros)
2023
2022
(restated)
Individuals
Home
36,649
43,402
Consumption
26,702
27,606
Others
71,927
75,666
135,278
146,674
Companies
Equipment
1,936,577
1,890,361
Real estate
2,123,261
2,139,294
4,059,838
4,029,655
4,195,116
4,176,329
The analysis of this balance, by maturity,
is as follows:
(Thousands of euros)
2023
2022
(restated)
Until 1 year
20,728
20,402
1 to 5 years
84,482
137,949
Over 5 years
146,725
33,485
251,935
191,836
Accrued costs recognised in Net interest income
(36,221)
(6,673)
215,714
185,163
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-656": { "value": "Debt securities
The balance Debt securities is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Debt securities held associated with credit operations
Portuguese issuers
Bonds
115,629
183,260
Commercial paper
1,762,453
1,256,557
Foreign issuers
Commercial paper
38,900
65,781
1,916,982
1,505,598
Overdue securities - over 90 days
40
40
1,917,022
1,505,638
Impairment
(8,668)
(4,676)
1,908,354
1,500,962
Debt securities held not associated with credit operations
Bonds issued by public entities (*)
Portuguese issuers
3,552,807
3,517,560
Foreign issuers
11,237,924
7,317,443
Bonds issued by public companies and other entities
Portuguese issuers
459,392
248,399
Foreign issuers
395,102
124,438
Treasury bills (Public Issuers and Central Banks)
\u00a0 Foreign issuers
42,277
336,343
15,687,502
11,544,183
Impairment
(16,720)
(9,563)
15,670,782
11,534,620
17,579,136
13,035,582
(*) Includes the negative amount of Euros 356,628,000 (31\u00a0December 2022: negative amount of Euros 417,311,000) related to adjustments
resulting from the application of fair value hedge accounting.
Under the terms of IFRS 9, the balance Debt securities held not associated with credit operations - Bonds issued by
public issuers, includes essentially a portfolio of securities to support Bank's ALM (Asset and Liability Management),
whose business model seeks to receive the respective income until maturity, that is, of a portfolio Held to Collect,
whose value as at 31\u00a0December 2023 amounts to Euros 9,905,849,000 (31\u00a0December 2022: Euros 9,248,707,000).
The analysis of the balance Debt securities before impairment, by maturity, as at 31\u00a0December 2023 is as follows:
(Thousands of euros)
2023
Up to
3 months
3 months to
1 year
1 year to
5 years
Over 5
years
Overdue
Total
Debt securities held associated
with credit operations
Portuguese issuers
\u00a0 Bonds
\u2014
\u2014
10,128
105,501
\u2014
115,629
\u00a0 Commercial paper
1,382,628
379,825
\u2014
\u2014
40
1,762,493
Foreign issuers
\u00a0 Commercial paper
19,407
19,493
\u2014
\u2014
\u2014
38,900
1,402,035
399,318
10,128
105,501
40
1,917,022
Debt securities held not associated
with credit operations
Public entities
\u00a0 Portuguese issuers
\u2014
\u2014
2,876,835
675,972
\u2014
3,552,807
\u00a0 Foreign issuers
625,851
675,486
4,811,329
5,125,258
\u2014
11,237,924
Public companies and other entities
\u00a0 Portuguese issuers
\u2014
50,030
133,699
275,663
\u2014
459,392
\u00a0 Foreign issuers
\u2014
\u2014
395,102
\u2014
\u2014
395,102
Treasury bills (Public Issuers and Central Banks)
\u00a0 Foreign issuers
42,277
\u2014
\u2014
\u2014
42,277
668,128
725,516
8,216,965
6,076,893
\u2014
15,687,502
2,070,163
1,124,834
8,227,093
6,182,394
40
17,604,524
The analysis of the balance Debt securities before impairment, by maturity, as at 31\u00a0December 2022 is as follows:
(Thousands of euros)
2022 (restated)
Up to
3 months
3 months to
1 year
1 year to
5 years
Over 5
years
Overdue
Total
Debt securities held associated
with credit operations
Portuguese issuers
Bonds
\u2014
\u2014
13,480
169,780
\u2014
183,260
Commercial paper
860,395
396,162
\u2014
\u2014
40
1,256,597
Foreign issuers
Commercial paper
31,361
34,420
\u2014
\u2014
\u2014
65,781
891,756
430,582
13,480
169,780
40
1,505,638
Debt securities held not associated
with credit operations
Public entities
Portuguese issuers
\u2014
\u2014
1,865,689
1,651,871
\u2014
3,517,560
Foreign issuers
50,410
212,482
970,601
6,083,950
\u2014
7,317,443
Public companies and other entities
Portuguese issuers
\u2014
\u2014
153,548
94,851
\u2014
248,399
Foreign issuers
\u2014
97,962
\u2014
26,476
\u2014
124,438
Treasury bills (Public Issuers and Central Banks)
Foreign issuers
237,209
99,134
\u2014
\u2014
336,343
287,619
409,578
2,989,838
7,857,148
\u2014
11,544,183
1,179,375
840,160
3,003,318
8,026,928
40
13,049,821
The analysis of debt securities portfolio, net of impairment, by sector of activity, is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Debt securities held associated with credit operations
Agriculture and forestry
2,479
2,496
Mining
85,939
46,403
Food, beverage and tobacco
102,720
79,448
Textiles
45,203
58,555
Wood and cork
23,720
19,630
Paper, printing and publishing
9,206
8,104
Chemicals
215,972
179,516
Machinery, equipment and basic metallurgical
42,787
65,973
Electricity and gas
211,183
165,676
Water
31,955
5,475
Construction
10,633
13,397
Retail business
28,973
20,507
Wholesale business
64,044
56,698
Restaurants and hotels
8,857
8,789
Transports
33,392
36,591
Telecommunications
4,018
9,706
Services
\u00a0 \u00a0 Financial intermediation
114,283
107,372
\u00a0 \u00a0 Real estate activities
55,566
50,845
\u00a0 \u00a0 Consulting, scientific and technical activities
751,610
473,231
\u00a0 \u00a0 Administrative and support services activities
11,217
12,269
\u00a0 \u00a0 Health and collective service activities
4,974
\u2014
\u00a0 \u00a0 Artistic, sports and recreational activities
7,058
10,406
\u00a0 \u00a0 Other services
3,665
4,095
Other international activities
38,900
65,780
1,908,354
1,500,962
Debt securities held not associated with credit operations
Machinery, equipment and basic metallurgical
11,977
\u2014
Electricity and gas
99,846
88,873
Water
\u2014
39,704
Services
Financial intermediation
437,378
460,781
Consulting, scientific and technical activities
346,117
119,297
895,318
708,655
Government and Public securities
14,775,464
10,825,965
15,670,782
11,534,620
17,579,136
13,035,582
The analysis of restructured debt securities portfolio, by sector of activity, is analysed as follows:
(Thousands of euros)
2023
2022
Restructured
loans
Impairment
Net amount
Restructured
loans
Impairment
Net amount
Debt securities held associated with
credit operations
Food, beverage and tobacco
7,711
(126)
7,585
\u2014
\u2014
\u2014
Chemicals
\u2014
\u2014
\u2014
5,062
(101)
4,961
Services
Administrative and support services
activities
10,311
(90)
10,221
10,604
(132)
10,472
18,022
(216)
17,806
15,666
(233)
15,433
The changes occurred in impairment of debt securities are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Debt securities held associated with credit operations
Balance on 1 January
4,676
7,059
Charge for the year in net income interest
2
\u2014
Charge for the year (note 11)
3,991
8
Reversals for the year (note 11)
\u2014
(2,393)
Exchange rate differences
(1)
2
Balance at the end of the year
8,668
4,676
Debt securities held not associated with credit operations
Balance on 1 January
9,563
8,743
Charge for the year (note 11)
9,323
3,329
Reversals for the year (note 11)
(688)
(2,779)
Amounts charged-off
(1,282)
\u2014
Exchange rate differences
(196)
270
Balance at the end of the year
16,720
9,563
Non subordinated debt securities issued
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Bonds
232,866
53,799
Medium term notes (MTN)
2,347,610
1,347,967
Securitisations
121,933
142,062
2,702,409
1,543,828
Corrections to the liabilities value subject to hedging operations
(22,873)
(66,860)
Deferred cost s/ (gains)
(11,142)
(12,523)
Interests to pay
44,288
17,641
2,712,682
1,482,086
The characteristics of the bonds issued by the Group, as at 31\u00a0December 2023 are analysed as follows:
(Thousands of euros)
Issue
Issue
date
Maturity
date
Interest rate
Nominal
value
Book
value
Banco Comercial Portugu\u00eas:
Bcp 6NC5 Senior Preferred EUR
500MN NG - MTN 856
February, 2021
February, 2027
Fixed rate 1.125% year until
Feb-26 /after Euribor 3M +
Variable rate 1.55%
500,000
509,986
Bcp 1.75% Eur 500M 6.5Nc5.5 Social
Senior Preferred Notes - Mtn 857
October, 2021
April, 2028
Fixed rate 1.75% year until
Apr-27/after + Euribor 3M + 2%
500,000
466,298
BCP2022 MTN 859 BCP Senior
Preferred Notes OCT 2025
October, 2022
October, 2025
Fixed rate 8.5% until October
2024; after 5.547% + Euribor 3M
350,000
353,061
BCP2023 MTN 861 BCP Senior
Preferred Notes OCT 2026
October, 2023
October, 2026
Fixed rate 5.625% until October
2025; after 1.90% + Euribor 3M
500,000
505,554
BCP Fin.Bank - EUR 10 M (*)
March, 2004
March, 2024
Fixed rate 5.01%
300
311
Magellan Mortgages n.\u00ba 3:
Mbs Magellan Mortgages S 3 Cl.A
June, 2005
May, 2058
Euribor 3M + 0.26%
120,348
112,165
Mbs Magellan Mortgages S.3 Cl.B
June, 2005
May, 2058
Euribor 3M + 0.38%
621
579
Mbs Magellan Mortgages S. 3 Cl.C
June, 2005
May, 2058
Euribor 3M + 0.58%
964
900
Bank Millennium:
Bank Millennium - BMCN_012040
December, 2022
January, 2040
Wibor 3m 7.05%+1.39% = 19.57%
55,828
57,863
Millennium Leasing CLN 23-38
July, 2023
October, 2038
Wibor 3m 6.85%+11.75% \u00a0= 18.6%
64,461
66,739
Bank Millennium - MILP-2027/09
September, 2023
September, 2027
Fixed rate 9.875%
499,945
525,473
Bank Millennium - BMCN_082036
December, 2023
August, 2036
Wibor 3m 5,85%+12,30%\u00a0= 18,15%
112,577
113,753
2,712,682
(*) In the last quarter of 2023, the issuer was replaced by Banco Comercial Portugu\u00eas
This balance as at 31\u00a0December 2023 is analysed by the remaining period, as follows:
(Thousands of euros)
2023
Up to 3
months
3 months to 6
months
6 months to 1
year
1 year to 5
years
Over
5 years
Total
Bonds
\u2014
\u2014
\u2014
\u2014
238,355
238,355
Medium term notes (MTNs)
\u2014
311
\u2014
2,360,372
\u2014
2,360,683
Securitisations
\u2014
\u2014
\u2014
\u2014
113,644
113,644
\u2014
311
\u2014
2,360,372
351,999
2,712,682
This balance as at 31\u00a0December 2022 is analysed by the remaining period, as follows:
(Thousands of euros)
2022 (restated)
Up to 3
months
3 months to 6
months
6 months to 1
year
1 year to 5
years
Over
5 years
Total
Bonds
2,008
\u2014
\u2014
\u2014
52,066
54,074
Medium term notes (MTNs)
\u2014
\u2014
\u2014
852,706
443,148
1,295,854
Securitisations
\u2014
\u2014
\u2014
\u2014
132,158
132,158
2,008
\u2014
\u2014
852,706
627,372
1,482,086
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-657": { "value": "Financial assets at fair value through profit or loss and financial assets at fair
value through other comprehensive income
The balances Financial assets at fair value through profit or loss and Financial assets at fair value through other
comprehensive income are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Financial assets at fair value through profit or loss
Financial assets held for trading
Debt instruments
355,526
338,813
Equity instruments
53,432
51,540
Trading derivatives
413,946
376,244
822,904
766,597
Financial assets not held for trading mandatorily at fair value through profit or loss
Loans and advances to customers at fair value
4,454
20,929
Debt instruments
280,558
311,404
Equity instruments
182,242
220,346
467,254
552,679
\u00a0 Financial assets designated at fair value through profit or loss
\u00a0 Debt instruments
32,004
\u2014
32,004
\u2014
Financial assets at fair value through other comprehensive income
Debt instruments
10,809,872
7,434,152
Equity instruments
24,419
27,401
10,834,291
7,461,553
12,156,453
8,780,829
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive income, net of impairment, by type of asset, as
at 31\u00a0December 2023, is analysed as follows:
(Thousands of euros)
2023
At fair value through profit or loss
Held for trading
Not held for trading
mandatorily at fair
value through
profit or loss
Designated at
fair value
through profit
or loss
At fair value
through other
comprehensive
income
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
20,312
\u2014
32,004
1,950,559
2,002,875
Foreign issuers
25,452
\u2014
\u2014
3,435,176
3,460,628
Bonds issued by public companies and
other entities
Portuguese issuers
\u2014
50
\u2014
403,971
404,021
Foreign issuers
10,395
\u2014
\u2014
1,120,454
1,130,849
Treasury bills (Public Issuers and
Central Banks)
Portuguese issuers
103,661
\u2014
\u2014
\u2014
103,661
Foreign issuers
192,741
\u2014
\u2014
3,899,712
4,092,453
Shares of foreign companies (a)
\u2014
23,498
\u2014
\u2014
23,498
Investment fund units (b)
\u2014
257,010
\u2014
\u2014
257,010
Commercial paper
2,965
\u2014
\u2014
\u2014
2,965
355,526
280,558
32,004
10,809,872
11,477,960
Equity instruments
Shares
Portuguese companies
142
\u2014
\u2014
16,352
16,494
Foreign companies
28
15,335
\u2014
8,067
23,430
Investment fund units (c)
\u2014
166,907
\u2014
\u2014
166,907
Other securities (d)
53,262
\u2014
\u2014
\u2014
53,262
53,432
182,242
\u2014
24,419
260,093
Trading derivatives
413,946
\u2014
\u2014
\u2014
413,946
822,904
462,800
32,004
10,834,291
12,151,999
Level 1
405,585
\u2014
32,004
8,301,377
8,738,966
Level 2
84,614
\u2014
\u2014
2,431,483
2,516,097
Level 3
332,705
462,800
\u2014
101,431
896,936
(a) These shares are considered as debt instruments because they do not fall within the definition of equity instruments provided by IAS 32.
(b) These investment fund units are considered as debt instruments because they do not fall within the definition of equity instruments
provided by IAS 32.
(c) These investment fund units were considered as equity instruments in accordance with the terms provided in IAS 32.
(d) Includes the amount of Euros 52,854,000 in Exchange Traded Funds (ETFs).
The portfolios are recorded at fair value in accordance with the accounting policy described in note 1 C. As referred in
IFRS 13, financial instruments are measured according to the levels of valuation described in note 49.
The balance Financial assets held for trading include bonds issued with different levels of subordination associated with
the traditional securitization transactions Magellan Mortgages No. 4, referred in note 1 D, in the amount of Euros
66,000 (31\u00a0December 2022: Euros 74,000).
In accordance with the accounting policy C1.1.3 regarding the classification of financial assets, the securities accounted
for in Financial assets designated at fair value through profit or loss are covered by the \"Treasury Bond Certificates
October 2025\" issued by Banco Comercial Portugu\u00eas, S.A. which are recorded in Financial liabilities designated at fair
value through profit or loss (note 38).
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive income, net of impairment, by type of asset, as
at 31\u00a0December 2022, is analysed as follows:
(Thousands of euros)
2022 (restated)
At fair value through profit or loss
Held for trading
Not held for
trading
mandatorily at fair
value through
profit or loss
At fair value
through other
comprehensive
income
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
21,450
\u2014
2,448,636
2,470,086
Foreign issuers
8,353
\u2014
2,916,098
2,924,451
Bonds issued by public companies and other entities
Portuguese issuers
\u2014
51
542,765
542,816
Foreign issuers
74
\u2014
897,146
897,220
Treasury bills (Public Issuers and Central Banks)
Portuguese issuers
308,936
\u2014
993
309,929
Foreign issuers
\u2014
\u2014
628,514
628,514
Shares of foreign companies (a)
\u2014
19,387
\u2014
19,387
Investment fund units (b)
\u2014
291,966
\u2014
291,966
338,813
311,404
7,434,152
8,084,369
Equity instruments
Shares
Portuguese companies
\u2014
\u2014
18,811
18,811
Foreign companies
24
27,550
8,590
36,164
Investment fund units (c)
\u2014
192,796
\u2014
192,796
Other securities (d)
51,516
\u2014
\u2014
51,516
51,540
220,346
27,401
299,287
Trading derivatives
376,244
\u2014
\u2014
376,244
766,597
531,750
7,461,553
8,759,900
Level 1
389,954
\u2014
6,489,282
6,879,236
Level 2
81,347
\u2014
862,566
943,913
Level 3
295,296
531,750
109,705
936,751
(a) These shares are considered as debt instruments because they do not fall within the definition of equity instruments provided by IAS 32.
(b) These investment fund units are considered debt instruments because they do not fall within the definition of equity instruments provided
by IAS 32.
(c) These investment fund units were considered as equity instruments in accordance with the terms provided in IAS 32.
(d) Includes the amount of Euros 51,191,000 in Exchange Traded Funds (ETFs).
The changes occurred in impairment of financial assets at fair value through other comprehensive income, are analysed
as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
1,067
1,092
Transfers to fair value changes (note 43)
(1,322)
5,024
Impairment through profit and loss (note 12)
2,641
545
Reversals through profit and loss (note 12)
(1,319)
(5,569)
Exchange rate differences
83
(25)
Balance at the end of the year
1,150
1,067
The accumulated impairment related to credit risk associated with the financial assets at fair value through other
comprehensive income amounts to Euros 6,272,000 and is recognised against Fair value reserves (31\u00a0December 2022:
Euros 5,270,000).
The portfolio of financial assets at fair value through other comprehensive income, as at 31\u00a0December 2023, is analysed
as follows:
(Thousands of euros)
2023
Amortised cost
(a)
Fair value
hedge
adjustments
(note 43)
Fair value
adjustments
(note 43)
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
2,071,760
(78,556)
(42,645)
1,950,559
Foreign issuers
3,452,443
6,501
(23,768)
3,435,176
Bonds issued by public companies and other entities
Portuguese issuers
412,309
(9,040)
702
403,971
Foreign issuers
1,182,733
(49,114)
(13,165)
1,120,454
Treasury bills (Public Issuers and Central Banks)
Foreign issuers
3,896,162
\u2014
3,550
3,899,712
11,015,407
(130,209)
(75,326)
10,809,872
Equity instruments
Shares
Portuguese companies
23,253
\u2014
(6,901)
16,352
Foreign companies
4,913
\u2014
3,154
8,067
28,166
\u2014
(3,747)
24,419
11,043,573
(130,209)
(79,073)
10,834,291
(a) Include interest accrued and accumulated impairment for debt securities classified as financial assets at fair value through other
comprehensive income, as provided by IFRS 9, and according to the requirements defined in the accounting policy 1 C1.5.1.2.
The portfolio of financial assets at fair value through other comprehensive income, as at 31\u00a0December 2022, is analysed
as follows:
(Thousands of euros)
2022 (restated)
Amortised cost
(a)
Fair value hedge
adjustments
(note 43)
Fair value
adjustments
(note 43)
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
2,721,263
(182,643)
(89,984)
2,448,636
Foreign issuers
3,007,189
\u2014
(91,091)
2,916,098
Bonds issued by public companies and other entities
Portuguese issuers
566,480
(19,099)
(4,616)
542,765
Foreign issuers
1,023,516
(83,632)
(42,738)
897,146
Treasury bills (Public Issuers and Central Banks)
Portuguese issuers
994
\u2014
(1)
993
Foreign issuers
628,509
\u2014
5
628,514
7,947,951
(285,374)
(228,425)
7,434,152
Equity instruments
Shares
Portuguese companies
33,448
\u2014
(14,637)
18,811
Foreign companies
19,799
\u2014
(11,209)
8,590
53,247
\u2014
(25,846)
27,401
8,001,198
(285,374)
(254,271)
7,461,553
(a) Include interest accrued and accumulated impairment for debt securities classified as financial assets at fair value through other
comprehensive income, as provided by IFRS 9, and according to the requirements defined in the accounting policy 1 C1.5.1.2.
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive, net of impairment, as at 31\u00a0December 2023, by
valuation levels, is analysed as follows:
(Thousands of euros)
2023
Level 1
Level 2
Level 3
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
1,973,284
29,591
\u2014
2,002,875
Foreign issuers
3,448,941
\u2014
11,687
3,460,628
Bonds issued by public companies and other entities
Portuguese issuers
279,580
59,064
65,377
404,021
Foreign issuers
1,130,849
\u2014
\u2014
1,130,849
Treasury bills (Public Issuers and Central Banks)
Portuguese issuers
103,661
\u2014
\u2014
103,661
Foreign issuers
1,749,627
2,342,826
\u2014
4,092,453
Shares of Foreign companies
\u2014
\u2014
23,498
23,498
Investment fund units
\u2014
\u2014
257,010
257,010
Commercial paper
\u2014
\u2014
2,965
2,965
8,685,942
2,431,481
360,537
11,477,960
Equity instruments
Shares
Portuguese companies
142
\u2014
16,352
16,494
Foreign companies
28
\u2014
23,402
23,430
Investment fund units
\u2014
\u2014
166,907
166,907
Other securities
52,854
\u2014
408
53,262
53,024
\u2014
207,069
260,093
Trading derivatives
\u2014
84,616
329,330
413,946
8,738,966
2,516,097
896,936
12,151,999
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive, net of impairment, as at 31\u00a0December 2022, by
valuation levels, is analysed as follows:
(Thousands of euros)
2022 (restated)
Level 1
Level 2
Level 3
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
2,336,787
133,299
\u2014
2,470,086
Foreign issuers
2,908,924
\u2014
15,527
2,924,451
Bonds issued by public companies and other entities
Portuguese issuers
416,374
57,212
69,230
542,816
Foreign issuers
853,605
43,615
\u2014
897,220
Treasury bills (Public Issuers and Central Banks)
Portuguese issuers
309,929
\u2014
\u2014
309,929
Foreign issuers
\u2014
628,514
\u2014
628,514
Shares of Foreign companies
\u2014
\u2014
19,387
19,387
Investment fund units
\u2014
\u2014
291,966
291,966
6,825,619
862,640
396,110
8,084,369
Equity instruments
Shares
Portuguese companies
2,402
\u2014
16,409
18,811
Foreign companies
24
\u2014
36,140
36,164
Investment fund units
\u2014
\u2014
192,796
192,796
Other securities
51,191
\u2014
325
51,516
53,617
\u2014
245,670
299,287
Trading derivatives
\u2014
81,273
294,971
376,244
6,879,236
943,913
936,751
8,759,900
As referred in IFRS 13, financial instruments are measured according to the levels of valuation described in note 49.
The balance Debt instruments - Investment fund units classified as level 3, includes units in restructuring funds (note
47) which book value resulted from the last disclosure of the Net Asset Value (NAV) determined by the Management
Company, which corresponds to the NAV with reference to that date, after considering the effects of the last audited
accounts for the respective funds. These funds have a diverse set of assets and liabilities, valued in their respective
accounts at fair value through internal methodologies used by the management company.
The instruments classified as level 3 have associated net losses not performed in the amount of Euros 856,000
(31\u00a0December 2022: losses Euros 15,429,000) recorded in Other comprehensive income. The amount of impairment
created for these securities amounts to Euros 1,150,000 (31\u00a0December 2022: Euros 1,067,000).
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances at fair value and
trading derivatives) and Financial assets at fair value through other comprehensive, by residual maturity, as at
31\u00a0December 2023, is as follows:
(Thousands of euros)
2023
Up to 3
months
3 months to 1
year
1 year to 5
years
Over
5 years
Undetermined
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
324
30,653
1,600,329
371,569
\u2014
2,002,875
Foreign issuers
65,904
501,611
2,638,954
254,159
\u2014
3,460,628
Bonds issued by public companies and
other entities
Portuguese issuers
\u2014
56,316
319,417
28,288
\u2014
404,021
Foreign issuers
31,846
140,832
644,363
313,808
\u2014
1,130,849
Treasury bills (Public Issuers and
Central Banks)
Portuguese issuers
49,648
54,013
\u2014
\u2014
\u2014
103,661
Foreign issuers
2,416,524
1,675,929
\u2014
\u2014
\u2014
4,092,453
Shares of Foreign companies
\u2014
\u2014
\u2014
\u2014
23,498
23,498
Investment fund units
6,404
3,067
205,191
37,142
5,206
257,010
Commercial paper
2,965
\u2014
\u2014
\u2014
\u2014
2,965
2,573,615
2,462,421
5,408,254
1,004,966
28,704
11,477,960
Equity instruments
Shares
Portuguese companies
16,494
16,494
Foreign companies
23,430
23,430
Investment fund units
166,907
166,907
Other securities
53,262
53,262
260,093
260,093
2,573,615
2,462,421
5,408,254
1,004,966
288,797
11,738,053
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances at fair value and
trading derivatives) and Financial assets at fair value through other comprehensive, by residual maturity, as at
31\u00a0December 2022, is as follows:
(Thousands of euros)
2022 (restated)
Up to 3
months
3 months to 1
year
1 year to 5
years
Over
5 years
Undetermined
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
\u2014
8,267
2,172,623
289,196
\u2014
2,470,086
Foreign issuers
416,699
493,389
1,863,833
150,530
\u2014
2,924,451
Bonds issued by public companies and
other entities
Portuguese issuers
163,229
58,247
300,962
20,378
\u2014
542,816
Foreign issuers
4,414
13,732
457,154
421,920
\u2014
897,220
Treasury bills (Public Issuers and
Central Banks)
Portuguese issuers
128,349
181,580
\u2014
\u2014
\u2014
309,929
Foreign issuers
56,638
571,876
\u2014
\u2014
\u2014
628,514
Shares of Foreign companies
\u2014
\u2014
\u2014
\u2014
19,387
19,387
Investment fund units
5,942
38,534
202,152
39,863
5,475
291,966
775,271
1,365,625
4,996,724
921,887
24,862
8,084,369
Equity instruments
Shares
Portuguese companies
18,811
18,811
Foreign companies
36,164
36,164
Investment fund units
192,796
192,796
Other securities
51,516
51,516
299,287
299,287
775,271
1,365,625
4,996,724
921,887
324,149
8,383,656
The balance Financial assets not held for trading mandatorily at fair value through profit or loss - Loans to customers at
fair value is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Unsecured loans
2,688
17,217
Overdue loans - less than 90 days
106
554
Overdue loans - Over 90 days
1,660
3,158
4,454
20,929
The balance Loans to customers at fair value correspond essentially to consumer loans. This balance is analysed, by
remaining period, as follows:
(Thousands of euros)
2023
2022
(restated)
Up to 3 months
318
1,733
3 months to 1 year
1,452
6,220
1 to 5 years
918
9,264
Undetermined
1,766
3,712
4,454
20,929
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances to customers at fair
value and trading derivatives) and Financial assets at fair value through other comprehensive income, by sector of
activity, as at 31\u00a0December 2023, is as follows:
(Thousands of euros)
2023
Bonds and
Treasury bills
Shares
Other Financial
Assets
Total
Mining
\u2014
6
\u2014
6
Paper, printing and publishing
47,416
\u2014
\u2014
47,416
Chemicals
7,952
2
\u2014
7,954
Machinery, equipment and basic metallurgical
2,477
8
\u2014
2,485
Electricity and gas
70,806
\u2014
\u2014
70,806
Water
5,025
\u2014
\u2014
5,025
Construction
\u2014
145
\u2014
145
Wholesale business
7,067
238
\u2014
7,305
Transports
43,767
\u2014
\u2014
43,767
Telecommunications
39,126
4,553
\u2014
43,679
Services
\u00a0 Financial intermediation
3,510,636
52,163
476,771
4,039,570
\u00a0 Consulting, scientific and technical activities
111,525
131
\u2014
111,656
\u00a0 Administrative and support services activities
24,216
6,149
\u2014
30,365
\u00a0 Public sector
10,645
\u2014
408
11,053
\u00a0 Other services
\u2014
26
\u2014
26
Other international activities
\u2014
1
\u2014
1
3,880,658
63,422
477,179
4,421,259
Government and Public securities
7,316,794
\u2014
\u2014
7,316,794
11,197,452
63,422
477,179
11,738,053
The analysis of Financial assets at fair value through profit or loss (excluding loans and advances to customers at fair
value and trading derivatives) and Financial assets at fair value through other comprehensive income, by sector of
activity, as at 31\u00a0December 2022, is as follows:
(Thousands of euros)
2022 (restated)
Bonds and Treasury
bills
Shares
Other Financial
Assets
Total
Mining
\u2014
5
\u2014
5
Paper, printing and publishing
45,562
2
\u2014
45,564
Chemicals
\u2014
2
\u2014
2
Machinery, equipment and basic metallurgical
2,302
6
\u2014
2,308
Electricity and gas
44,627
\u2014
\u2014
44,627
Water
9,460
\u2014
\u2014
9,460
Construction
4,934
2
\u2014
4,936
Retail business
20,503
2
\u2014
20,505
Wholesale business
6,456
260
\u2014
6,716
Restaurants and hotels
\u2014
1,401
\u2014
1,401
Transports
29,491
\u2014
\u2014
29,491
Telecommunications
38,869
4,401
\u2014
43,270
Services
Financial intermediation
1,533,154
54,477
532,567
2,120,198
Consulting, scientific and technical activities
303,036
103
\u2014
303,139
Administrative and support services activities
26,691
8,629
\u2014
35,320
Public sector
\u2014
\u2014
325
325
Other services
3,465
5,054
3,386
11,905
Other international activities
\u2014
18
\u2014
18
2,068,550
74,362
536,278
2,679,190
Government and Public securities
5,704,466
\u2014
\u2014
5,704,466
7,773,016
74,362
536,278
8,383,656
The analysis of trading derivatives, by maturity, as at 31\u00a0December 2023, is as follows:
(Thousands of euros)
2023
Notional (remaining term)
Fair value
Up to
3 months
3 months to
1 year
Over 1
year
Total
Assets
Liabilities
(note 37)
Interest rate derivatives:
OTC Market:
Interest rate swaps
885,425
602,395
4,038,102
5,525,922
56,115
49,956
Interest rate options (purchase)
13,750
32,876
295,120
341,746
2,824
\u2014
Interest rate options (sale)
13,750
32,876
295,121
341,747
\u2014
2,779
912,925
668,147
4,628,343
6,209,415
58,939
52,735
Stock Exchange transactions:
Interest rate futures
\u2014
\u2014
28,351
28,351
\u2014
\u2014
\u2014
\u2014
28,351
28,351
\u2014
\u2014
Currency derivatives:
OTC Market:
Forward exchange contract
246,896
109,064
6,591
362,551
3,855
9,235
Currency swaps
1,386,897
437,757
7,327
1,831,981
16,822
26,780
Other currency contracts
107,251
\u2014
\u2014
107,251
\u2014
\u2014
1,741,044
546,821
13,918
2,301,783
20,677
36,015
Shares/indexes:
OTC Market:
Shares/indexes swaps
815,184
1,572,063
228,377
2,615,624
5,004
19,865
Shares/indexes options (purchase)
117,574
482,355
199,637
799,566
95,945
\u2014
Shares/indexes options (sale)
779,957
17,699
1,910
799,566
\u2014
97,923
1,712,715
2,072,117
429,924
4,214,756
100,949
117,788
Stock exchange transactions:
Shares futures
\u2014
\u2014
891,352
891,352
\u2014
\u2014
\u2014
\u2014
891,352
891,352
\u2014
\u2014
Commodity derivatives:
Stock Exchange transactions:
Commodities futures
\u2014
\u2014
1
1
\u2014
\u2014
\u2014
\u2014
1
1
\u2014
\u2014
Credit derivatives:
OTC Market:
Credit default swaps (CDS)
\u2014
\u2014
358,107
358,107
233,381
223
\u2014
\u2014
358,107
358,107
233,381
223
Total derivatives traded in:
OTC Market
4,366,684
3,287,085
5,430,292
13,084,061
413,946
206,761
of which: Embedded derivatives
\u2014
\u2014
771,103
771,103
\u2014
95,357
Stock Exchange
\u2014
\u2014
919,704
919,704
\u2014
\u2014
4,366,684
3,287,085
6,349,996
14,003,765
413,946
206,761
The analysis of trading derivatives, by maturity, as at 31\u00a0December 2022, is as follows:
(Thousands of euros)
2022 (restated)
Notional (remaining term)
Fair value
Up to
3 months
3 months to
1 year
Over 1
year
Total
Assets
Liabilities
(note 37)
Interest rate derivatives:
OTC Market:
Interest rate swaps
79,053
233,349
3,425,079
3,737,481
53,994
119,637
Interest rate options (purchase)
\u2014
133,738
88,199
221,937
6,668
\u2014
Interest rate options (sale)
\u2014
133,738
88,200
221,938
\u2014
6,555
79,053
500,825
3,601,478
4,181,356
60,662
126,192
Stock Exchange transactions:
Interest rate futures
\u2014
\u2014
66,888
66,888
\u2014
\u2014
\u2014
\u2014
66,888
66,888
\u2014
\u2014
Currency derivatives:
OTC Market:
Forward exchange contract
222,128
253,830
9,349
485,307
6,013
9,418
Currency swaps
1,580,200
198,362
8,256
1,786,818
14,081
23,245
1,802,328
452,192
17,605
2,272,125
20,094
32,663
Currency and interest rate swaps:
OTC Market:
Currency and interest rate swaps:
100,177
\u2014
\u2014
100,177
432
90
100,177
\u2014
\u2014
100,177
432
90
Shares/indexes:
OTC Market:
Shares/indexes swaps
\u2014
523,118
459,431
982,549
\u2014
27,193
Shares/indexes options (sale)
\u2014
\u2014
597,213
597,213
\u2014
53,487
\u2014
523,118
1,056,644
1,579,762
\u2014
80,680
Stock exchange transactions:
Shares futures
\u2014
\u2014
835,835
835,835
\u2014
\u2014
Shares/indexes options (purchase)
\u2014
59,735
533,092
592,827
53,707
\u2014
Shares/indexes options (sale)
\u2014
4,636
11,945
16,581
\u2014
859
\u2014
64,371
1,380,872
1,445,243
53,707
859
Credit derivatives:
OTC Market:
Credit default swaps (CDS)
2,000
\u2014
395,831
397,831
241,349
\u2014
Other credit derivatives (sale)
\u2014
\u2014
4,351
4,351
\u2014
\u2014
2,000
\u2014
400,182
402,182
241,349
\u2014
Total derivatives traded in:
OTC Market
1,983,558
1,476,135
5,075,909
8,535,602
322,537
239,625
of which: Embedded derivatives
2,000
\u2014
576,242
\u2014
\u2014
53,495
Stock Exchange
\u2014
64,371
1,447,760
1,512,131
53,707
859
1,983,558
1,540,506
6,523,669
10,047,733
376,244
240,484
The average of the reference rates of the yield curve obtained from the market prices of the different currencies used
in the determination of the fair value of the\u00a0 issues is analysed as follows:
2023
2022 (restated)
EUR
PLN
EUR
PLN
Placed in the institutional market
Subordinated
4.98%
0.00%
9.33%
0.00%
Senior
0.04%
0.00%
0.19%
0.00%
Placed in retail
Senior and collateralised
2.36%
0.04%
3.37%
6.19%
The following table presents the interest rates used in the definition of the interest rate curves of main currencies,
namely EUR, USD, GBP and PLN used to determine the fair value of the financial assets and liabilities of the Group:
2023
2022 (restated)
EUR
USD
GBP
PLN
EUR
USD
GBP
PLN
1 day
3.93%
5.28%
5.20%
5.74%
2.00%
4.45%
3.55%
6.76%
7 days
3.93%
5.29%
5.22%
5.74%
2.00%
4.47%
3.58%
6.76%
1 month
3.96%
5.37%
5.25%
5.70%
2.04%
4.57%
3.67%
6.83%
2 months
3.98%
5.41%
5.29%
5.74%
2.13%
4.66%
3.80%
6.87%
3 months
3.97%
5.44%
5.32%
5.78%
2.25%
4.77%
3.91%
6.92%
6 months
3.86%
5.37%
5.34%
5.72%
2.73%
5.07%
4.32%
7.04%
9 months
3.75%
5.33%
5.29%
5.71%
3.11%
5.28%
4.65%
7.09%
1 year
3.45%
5.05%
5.25%
5.50%
3.26%
5.11%
4.87%
7.35%
2 years
2.81%
4.37%
4.28%
4.94%
3.39%
4.69%
4.69%
6.97%
3 years
2.56%
4.04%
3.94%
4.62%
3.31%
4.33%
4.56%
6.53%
5 years
2.43%
3.81%
3.63%
4.41%
3.23%
4.02%
4.33%
6.20%
7 years
2.44%
3.75%
3.53%
4.41%
3.19%
3.89%
4.14%
6.13%
10 years
2.50%
3.74%
3.54%
4.49%
3.21%
3.82%
3.99%
6.20%
15 years
2.56%
3.76%
3.63%
4.66%
3.14%
3.79%
3.91%
6.45%
20 years
2.51%
3.74%
3.66%
4.75%
2.93%
3.72%
3.84%
6.49%
30 years
2.33%
3.57%
3.61%
4.75%
2.54%
3.48%
3.70%
6.49%
The following table shows the fair value of financial assets and liabilities of the Group, as at 31\u00a0December 2023:
(Thousands of euros)
2023
Fair value
through
profit or loss
Fair value
through other
comprehensive
income
Amortised
cost
Book value
Fair value
Assets
Cash and deposits at Central Banks
\u2014
\u2014
4,545,526
4,545,526
4,545,526
Loans and advances to credit institutions repayable
on demand
\u2014
\u2014
337,687
337,687
337,687
Financial assets at amortised cost
Loans and advances to credit institutions
\u2014
\u2014
908,477
908,477
904,728
Loans and advances to customers (i)
\u2014
\u2014
53,305,159
53,305,159
52,389,825
Debt securities
\u2014
\u2014
17,579,136
17,579,136
17,260,082
Financial assets at fair value through profit or loss
Financial assets held for trading
822,904
\u2014
\u2014
822,904
822,904
Financial assets not held for trading mandatorily
at fair value through profit or loss
467,254
\u2014
\u2014
467,254
467,254
Financial assets designated at fair value
through profit or loss
32,004
\u2014
\u2014
32,004
32,004
Financial assets at fair value through
other comprehensive income
\u2014
10,834,291
\u2014
10,834,291
10,834,291
Hedging derivatives (ii)
40,628
\u2014
\u2014
40,628
40,628
1,362,790
10,834,291
76,675,985
88,873,066
87,634,929
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
\u2014
\u2014
829,126
829,126
820,805
Resources from customers (i)
\u2014
\u2014
75,606,813
75,606,813
75,460,202
Non subordinated debt securities issued (i)
\u2014
\u2014
2,712,682
2,712,682
2,831,229
Subordinated debt (i)
\u2014
\u2014
1,397,425
1,397,425
1,456,002
Financial liabilities at fair value through profit or
loss
Financial liabilities held for trading
207,387
\u2014
\u2014
207,387
207,387
Financial liabilities designated
at fair value through profit or loss
3,608,487
\u2014
\u2014
3,608,487
3,608,487
Hedging derivatives (ii)
67,825
\u2014
\u2014
67,825
67,825
3,883,699
\u2014
80,546,046
84,429,745
84,451,937
(i) - The book value includes the effect of the adjustments resulting from the application of hedge accounting;
(ii) - Includes a portion that is recognised in reserves in the application of accounting cash flow hedge.
The Bank includes in the Book value column of the heading Financial assets at amortized cost - Debt securities the
variation in the fair value of the hedged element attributable to the hedged risk (risk of interest rate) for securities to
which the Bank is applying fair value hedge accounting.
Until 31 December 2022, the Fair value column of the heading Financial assets at cost amortized - Debt securities
corresponded to the fair value plus the variation in the fair value of the hedged element attributable to the hedged risk
(interest rate risk) for the securities in which the Bank was applying fair value hedge accounting. Since 31 December
2022, the difference between the two columns presented (Book value and Fair value) corresponded to potential gains
on debt securities recorded in accounting at amortized cost, not considering the effects of applying hedge accounting
(alternatively compared to the initial acquisition cost). As of 30 June 2023, for these instruments, the Bank began to
apply a strict definition of Fair value, no longer adding at fair value the change in the fair value of the hedged item
attributable to the hedged risk. This way, as of that date, the differential between the two columns referred to above
(Book value and Fair value) corresponds to potential gains on debt securities recorded in the accounting at amortized
cost after considering the effects of applying hedge accounting. In order to ensure the consistency and comparability of
the information disclosed, the information relating to 31 December 2022 was presented consistently with the applied
with reference to 31 December 2023.
The following table shows the fair value of financial assets and liabilities of the Group, as at 31\u00a0December 2022:
(Thousands of euros)
2022 (restated)
Fair value
through
profit or loss
Fair value
through other
comprehensive
income
Amortised
cost
Book value
Fair value
Assets
Cash and deposits at Central Banks
\u2014
\u2014
6,022,001
6,022,001
6,022,001
Loans and advances to credit institutions repayable
on demand
\u2014
\u2014
213,460
213,460
213,460
Financial assets at amortised cost
Loans and advances to credit institutions
\u2014
\u2014
963,434
963,434
953,643
Loans and advances to customers (i)
\u2014
\u2014
54,675,793
54,675,793
53,436,993
Debt securities
\u2014
\u2014
13,035,582
13,035,582
12,248,074
Financial assets at fair value through profit or loss
Financial assets held for trading
766,597
\u2014
\u2014
766,597
766,597
Financial assets not held for trading mandatorily
at fair value through profit or loss
552,679
\u2014
\u2014
552,679
552,679
Financial assets at fair value through
other comprehensive income
\u2014
7,461,553
\u2014
7,461,553
7,461,553
Hedging derivatives (ii)
59,703
\u2014
\u2014
59,703
59,703
1,378,979
7,461,553
74,910,270
83,750,802
81,714,703
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
\u2014
\u2014
1,468,360
1,468,360
1,453,270
Resources from customers (i)
\u2014
\u2014
75,430,143
75,430,143
75,129,795
Non subordinated debt securities issued (i)
\u2014
\u2014
1,482,086
1,482,086
1,554,561
Subordinated debt (i)
\u2014
\u2014
1,333,056
1,333,056
1,305,013
Financial liabilities at fair value through profit or
loss
Financial liabilities held for trading
241,506
\u2014
\u2014
241,506
241,506
Financial liabilities designated
at fair value through profit or loss
1,817,678
\u2014
\u2014
1,817,678
1,817,678
Hedging derivatives (ii)
178,000
\u2014
\u2014
178,000
178,000
2,237,184
\u2014
79,713,645
81,950,829
81,679,823
(i) - The book value includes the effect of the adjustments resulting from the application of hedge accounting;
(ii) - Includes a portion that is recognised in reserves in the application of accounting cash flow hedge.
The following table shows, by valuation levels, the fair value of financial assets and liabilities of the Group as at
31\u00a0December 2023:
(Thousands of euros)
2023
Level 1
Level 2
Level 3
Total
Assets
Cash and deposits at Central Banks
4,545,526
\u2014
\u2014
4,545,526
Loans and advances to credit institutions repayable on demand
337,687
\u2014
\u2014
337,687
Financial assets at amortised cost
Loans and advances to credit institutions
\u2014
\u2014
904,728
904,728
Loans and advances to customers
\u2014
\u2014
52,389,825
52,389,825
Debt securities
13,626,971
935,239
2,697,872
17,260,082
Financial assets at fair value through profit or loss
Financial assets held for trading
405,585
84,614
332,705
822,904
Financial assets not held for trading mandatorily
at fair value through profit or loss
\u2014
\u2014
467,254
467,254
Financial assets designated at fair value through profit or loss
32,004
\u2014
\u2014
32,004
Financial assets at fair value through other comprehensive income
8,301,377
2,431,483
101,431
10,834,291
Hedging derivatives
\u2014
40,628
\u2014
40,628
27,249,150
3,491,964
56,893,815
87,634,929
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
\u2014
\u2014
820,805
820,805
Resources from customers
\u2014
\u2014
75,460,202
75,460,202
Non subordinated debt securities issued
\u2014
\u2014
2,831,229
2,831,229
Subordinated debt
\u2014
\u2014
1,456,002
1,456,002
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading
\u2014
108,767
98,620
207,387
Financial liabilities designated at fair value through profit or loss
989,703
\u2014
2,618,784
3,608,487
Hedging derivatives
\u2014
67,825
\u2014
67,825
989,703
176,592
83,285,642
84,451,937
The following table shows, by valuation levels, the fair value of financial assets and liabilities of the Group as at
31\u00a0December 2022:
(Thousands of euros)
2022 (restated)
Level 1
Level 2
Level 3
Total
Assets
Cash and deposits at Central Banks
6,022,001
\u2014
\u2014
6,022,001
Loans and advances to credit institutions repayable on demand
213,460
\u2014
\u2014
213,460
Financial assets at amortised cost
Loans and advances to credit institutions
\u2014
\u2014
953,643
953,643
Loans and advances to customers
\u2014
\u2014
53,436,993
53,436,993
Debt securities
9,462,042
694,560
2,091,472
12,248,074
Financial assets at fair value through profit or loss
Financial assets held for trading
389,954
81,347
295,296
766,597
Financial assets not held for trading mandatorily
at fair value through profit or loss
\u2014
\u2014
552,679
552,679
Financial assets at fair value through other comprehensive income
6,489,282
862,566
109,705
7,461,553
Hedging derivatives
\u2014
59,703
\u2014
59,703
22,576,739
1,698,176
57,439,788
81,714,703
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
\u2014
\u2014
1,453,270
1,453,270
Resources from customers
\u2014
\u2014
75,129,795
75,129,795
Non subordinated debt securities issued
\u2014
\u2014
1,554,561
1,554,561
Subordinated debt
\u2014
\u2014
1,305,013
1,305,013
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading
\u2014
186,130
55,376
241,506
Financial liabilities designated at fair value through profit or loss
850,681
\u2014
966,997
1,817,678
Hedging derivatives
\u2014
178,000
\u2014
178,000
850,681
364,130
80,465,012
81,679,823
For financial assets classified at level 3 recorded in the balance sheet at fair value, the changes occurred during 2023 is
presented as follows:
(Thousands of euros)
2023
Financial assets
Held for
trading
Not held for trading
mandatorily at fair
value through profit
or loss
At fair value
through other
comprehensive
income
Financial
liabilities held
for trading (*)
Balance as at 1 January
295,296
552,679
109,705
54,354
Gains / (losses) recognised in profit or loss
Results on financial operations
11,032
(5,722)
\u2014
203
Net interest income
(31)
2,202
\u2014
\u2014
Purchases / (Sales, repayments or amortisations)
26,408
(86,915)
(14,487)
43,437
Gains / (losses) recognised in reserves
\u2014
\u2014
6,124
\u2014
Exchange differences
\u2014
5,010
(626)
\u2014
Accruals of interest
\u2014
\u2014
715
\u2014
Balance as at 31 December
332,705
467,254
101,431
97,994
(*) Do not include short sales in the amount of Euros 626,000 (note 37).
For financial assets classified at level 3 recorded in the balance sheet at fair value, the changes occurred during 2022 is
presented as follows:
(Thousands of euros)
2022 (restated)
Financial assets
Held for
trading
Not held for trading
mandatorily at fair
value through profit
or loss
At fair value
through other
comprehensive
income
Financial
liabilities held
for trading (*)
Balance as at 1 January
263,157
990,938
123,944
6,576
Gains / (losses) recognised in profit or loss
Results on financial operations
(10,027)
(90,286)
\u2014
47,221
Net interest income
\u2014
6,109
\u2014
\u2014
Transfers between levels
(1,860)
\u2014
\u2014
(145)
Purchases / (Sales, repayments or amortisations)
44,028
(351,744)
(11,130)
702
Gains / (losses) recognised in reserves
\u2014
\u2014
(4,138)
\u2014
Exchange differences
\u2014
(2,338)
1,061
\u2014
Accruals of interest
(2)
\u2014
(32)
\u2014
Balance as at 31 December
295,296
552,679
109,705
54,354
(*) Do not include short sales in the amount of Euros 1,022,000 (note 37).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-658": { "value": "
The balances Financial assets at fair value through profit or loss and Financial assets at fair value through other
comprehensive income are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Financial assets at fair value through profit or loss
Financial assets held for trading
Debt instruments
355,526
338,813
Equity instruments
53,432
51,540
Trading derivatives
413,946
376,244
822,904
766,597
Financial assets not held for trading mandatorily at fair value through profit or loss
Loans and advances to customers at fair value
4,454
20,929
Debt instruments
280,558
311,404
Equity instruments
182,242
220,346
467,254
552,679
\u00a0 Financial assets designated at fair value through profit or loss
\u00a0 Debt instruments
32,004
\u2014
32,004
\u2014
Financial assets at fair value through other comprehensive income
Debt instruments
10,809,872
7,434,152
Equity instruments
24,419
27,401
10,834,291
7,461,553
12,156,453
8,780,829
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive income, net of impairment, by type of asset, as
at 31\u00a0December 2023, is analysed as follows:
(Thousands of euros)
2023
At fair value through profit or loss
Held for trading
Not held for trading
mandatorily at fair
value through
profit or loss
Designated at
fair value
through profit
or loss
At fair value
through other
comprehensive
income
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
20,312
\u2014
32,004
1,950,559
2,002,875
Foreign issuers
25,452
\u2014
\u2014
3,435,176
3,460,628
Bonds issued by public companies and
other entities
Portuguese issuers
\u2014
50
\u2014
403,971
404,021
Foreign issuers
10,395
\u2014
\u2014
1,120,454
1,130,849
Treasury bills (Public Issuers and
Central Banks)
Portuguese issuers
103,661
\u2014
\u2014
\u2014
103,661
Foreign issuers
192,741
\u2014
\u2014
3,899,712
4,092,453
Shares of foreign companies (a)
\u2014
23,498
\u2014
\u2014
23,498
Investment fund units (b)
\u2014
257,010
\u2014
\u2014
257,010
Commercial paper
2,965
\u2014
\u2014
\u2014
2,965
355,526
280,558
32,004
10,809,872
11,477,960
Equity instruments
Shares
Portuguese companies
142
\u2014
\u2014
16,352
16,494
Foreign companies
28
15,335
\u2014
8,067
23,430
Investment fund units (c)
\u2014
166,907
\u2014
\u2014
166,907
Other securities (d)
53,262
\u2014
\u2014
\u2014
53,262
53,432
182,242
\u2014
24,419
260,093
Trading derivatives
413,946
\u2014
\u2014
\u2014
413,946
822,904
462,800
32,004
10,834,291
12,151,999
Level 1
405,585
\u2014
32,004
8,301,377
8,738,966
Level 2
84,614
\u2014
\u2014
2,431,483
2,516,097
Level 3
332,705
462,800
\u2014
101,431
896,936
(a) These shares are considered as debt instruments because they do not fall within the definition of equity instruments provided by IAS 32.
(b) These investment fund units are considered as debt instruments because they do not fall within the definition of equity instruments
provided by IAS 32.
(c) These investment fund units were considered as equity instruments in accordance with the terms provided in IAS 32.
(d) Includes the amount of Euros 52,854,000 in Exchange Traded Funds (ETFs).
The portfolios are recorded at fair value in accordance with the accounting policy described in note 1 C. As referred in
IFRS 13, financial instruments are measured according to the levels of valuation described in note 49.
The balance Financial assets held for trading include bonds issued with different levels of subordination associated with
the traditional securitization transactions Magellan Mortgages No. 4, referred in note 1 D, in the amount of Euros
66,000 (31\u00a0December 2022: Euros 74,000).
In accordance with the accounting policy C1.1.3 regarding the classification of financial assets, the securities accounted
for in Financial assets designated at fair value through profit or loss are covered by the \"Treasury Bond Certificates
October 2025\" issued by Banco Comercial Portugu\u00eas, S.A. which are recorded in Financial liabilities designated at fair
value through profit or loss (note 38).
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive income, net of impairment, by type of asset, as
at 31\u00a0December 2022, is analysed as follows:
(Thousands of euros)
2022 (restated)
At fair value through profit or loss
Held for trading
Not held for
trading
mandatorily at fair
value through
profit or loss
At fair value
through other
comprehensive
income
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
21,450
\u2014
2,448,636
2,470,086
Foreign issuers
8,353
\u2014
2,916,098
2,924,451
Bonds issued by public companies and other entities
Portuguese issuers
\u2014
51
542,765
542,816
Foreign issuers
74
\u2014
897,146
897,220
Treasury bills (Public Issuers and Central Banks)
Portuguese issuers
308,936
\u2014
993
309,929
Foreign issuers
\u2014
\u2014
628,514
628,514
Shares of foreign companies (a)
\u2014
19,387
\u2014
19,387
Investment fund units (b)
\u2014
291,966
\u2014
291,966
338,813
311,404
7,434,152
8,084,369
Equity instruments
Shares
Portuguese companies
\u2014
\u2014
18,811
18,811
Foreign companies
24
27,550
8,590
36,164
Investment fund units (c)
\u2014
192,796
\u2014
192,796
Other securities (d)
51,516
\u2014
\u2014
51,516
51,540
220,346
27,401
299,287
Trading derivatives
376,244
\u2014
\u2014
376,244
766,597
531,750
7,461,553
8,759,900
Level 1
389,954
\u2014
6,489,282
6,879,236
Level 2
81,347
\u2014
862,566
943,913
Level 3
295,296
531,750
109,705
936,751
(a) These shares are considered as debt instruments because they do not fall within the definition of equity instruments provided by IAS 32.
(b) These investment fund units are considered debt instruments because they do not fall within the definition of equity instruments provided
by IAS 32.
(c) These investment fund units were considered as equity instruments in accordance with the terms provided in IAS 32.
(d) Includes the amount of Euros 51,191,000 in Exchange Traded Funds (ETFs).
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive, net of impairment, as at 31\u00a0December 2023, by
valuation levels, is analysed as follows:
(Thousands of euros)
2023
Level 1
Level 2
Level 3
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
1,973,284
29,591
\u2014
2,002,875
Foreign issuers
3,448,941
\u2014
11,687
3,460,628
Bonds issued by public companies and other entities
Portuguese issuers
279,580
59,064
65,377
404,021
Foreign issuers
1,130,849
\u2014
\u2014
1,130,849
Treasury bills (Public Issuers and Central Banks)
Portuguese issuers
103,661
\u2014
\u2014
103,661
Foreign issuers
1,749,627
2,342,826
\u2014
4,092,453
Shares of Foreign companies
\u2014
\u2014
23,498
23,498
Investment fund units
\u2014
\u2014
257,010
257,010
Commercial paper
\u2014
\u2014
2,965
2,965
8,685,942
2,431,481
360,537
11,477,960
Equity instruments
Shares
Portuguese companies
142
\u2014
16,352
16,494
Foreign companies
28
\u2014
23,402
23,430
Investment fund units
\u2014
\u2014
166,907
166,907
Other securities
52,854
\u2014
408
53,262
53,024
\u2014
207,069
260,093
Trading derivatives
\u2014
84,616
329,330
413,946
8,738,966
2,516,097
896,936
12,151,999
The portfolio of Financial assets at fair value through profit or loss (excluding Loans and advances to customers at fair
value) and Financial assets at fair value through other comprehensive, net of impairment, as at 31\u00a0December 2022, by
valuation levels, is analysed as follows:
(Thousands of euros)
2022 (restated)
Level 1
Level 2
Level 3
Total
Debt instruments
Bonds issued by public entities
Portuguese issuers
2,336,787
133,299
\u2014
2,470,086
Foreign issuers
2,908,924
\u2014
15,527
2,924,451
Bonds issued by public companies and other entities
Portuguese issuers
416,374
57,212
69,230
542,816
Foreign issuers
853,605
43,615
\u2014
897,220
Treasury bills (Public Issuers and Central Banks)
Portuguese issuers
309,929
\u2014
\u2014
309,929
Foreign issuers
\u2014
628,514
\u2014
628,514
Shares of Foreign companies
\u2014
\u2014
19,387
19,387
Investment fund units
\u2014
\u2014
291,966
291,966
6,825,619
862,640
396,110
8,084,369
Equity instruments
Shares
Portuguese companies
2,402
\u2014
16,409
18,811
Foreign companies
24
\u2014
36,140
36,164
Investment fund units
\u2014
\u2014
192,796
192,796
Other securities
51,191
\u2014
325
51,516
53,617
\u2014
245,670
299,287
Trading derivatives
\u2014
81,273
294,971
376,244
6,879,236
943,913
936,751
8,759,900
The analysis of trading derivatives, by maturity, as at 31\u00a0December 2023, is as follows:
(Thousands of euros)
2023
Notional (remaining term)
Fair value
Up to
3 months
3 months to
1 year
Over 1
year
Total
Assets
Liabilities
(note 37)
Interest rate derivatives:
OTC Market:
Interest rate swaps
885,425
602,395
4,038,102
5,525,922
56,115
49,956
Interest rate options (purchase)
13,750
32,876
295,120
341,746
2,824
\u2014
Interest rate options (sale)
13,750
32,876
295,121
341,747
\u2014
2,779
912,925
668,147
4,628,343
6,209,415
58,939
52,735
Stock Exchange transactions:
Interest rate futures
\u2014
\u2014
28,351
28,351
\u2014
\u2014
\u2014
\u2014
28,351
28,351
\u2014
\u2014
Currency derivatives:
OTC Market:
Forward exchange contract
246,896
109,064
6,591
362,551
3,855
9,235
Currency swaps
1,386,897
437,757
7,327
1,831,981
16,822
26,780
Other currency contracts
107,251
\u2014
\u2014
107,251
\u2014
\u2014
1,741,044
546,821
13,918
2,301,783
20,677
36,015
Shares/indexes:
OTC Market:
Shares/indexes swaps
815,184
1,572,063
228,377
2,615,624
5,004
19,865
Shares/indexes options (purchase)
117,574
482,355
199,637
799,566
95,945
\u2014
Shares/indexes options (sale)
779,957
17,699
1,910
799,566
\u2014
97,923
1,712,715
2,072,117
429,924
4,214,756
100,949
117,788
Stock exchange transactions:
Shares futures
\u2014
\u2014
891,352
891,352
\u2014
\u2014
\u2014
\u2014
891,352
891,352
\u2014
\u2014
Commodity derivatives:
Stock Exchange transactions:
Commodities futures
\u2014
\u2014
1
1
\u2014
\u2014
\u2014
\u2014
1
1
\u2014
\u2014
Credit derivatives:
OTC Market:
Credit default swaps (CDS)
\u2014
\u2014
358,107
358,107
233,381
223
\u2014
\u2014
358,107
358,107
233,381
223
Total derivatives traded in:
OTC Market
4,366,684
3,287,085
5,430,292
13,084,061
413,946
206,761
of which: Embedded derivatives
\u2014
\u2014
771,103
771,103
\u2014
95,357
Stock Exchange
\u2014
\u2014
919,704
919,704
\u2014
\u2014
4,366,684
3,287,085
6,349,996
14,003,765
413,946
206,761
The analysis of trading derivatives, by maturity, as at 31\u00a0December 2022, is as follows:
(Thousands of euros)
2022 (restated)
Notional (remaining term)
Fair value
Up to
3 months
3 months to
1 year
Over 1
year
Total
Assets
Liabilities
(note 37)
Interest rate derivatives:
OTC Market:
Interest rate swaps
79,053
233,349
3,425,079
3,737,481
53,994
119,637
Interest rate options (purchase)
\u2014
133,738
88,199
221,937
6,668
\u2014
Interest rate options (sale)
\u2014
133,738
88,200
221,938
\u2014
6,555
79,053
500,825
3,601,478
4,181,356
60,662
126,192
Stock Exchange transactions:
Interest rate futures
\u2014
\u2014
66,888
66,888
\u2014
\u2014
\u2014
\u2014
66,888
66,888
\u2014
\u2014
Currency derivatives:
OTC Market:
Forward exchange contract
222,128
253,830
9,349
485,307
6,013
9,418
Currency swaps
1,580,200
198,362
8,256
1,786,818
14,081
23,245
1,802,328
452,192
17,605
2,272,125
20,094
32,663
Currency and interest rate swaps:
OTC Market:
Currency and interest rate swaps:
100,177
\u2014
\u2014
100,177
432
90
100,177
\u2014
\u2014
100,177
432
90
Shares/indexes:
OTC Market:
Shares/indexes swaps
\u2014
523,118
459,431
982,549
\u2014
27,193
Shares/indexes options (sale)
\u2014
\u2014
597,213
597,213
\u2014
53,487
\u2014
523,118
1,056,644
1,579,762
\u2014
80,680
Stock exchange transactions:
Shares futures
\u2014
\u2014
835,835
835,835
\u2014
\u2014
Shares/indexes options (purchase)
\u2014
59,735
533,092
592,827
53,707
\u2014
Shares/indexes options (sale)
\u2014
4,636
11,945
16,581
\u2014
859
\u2014
64,371
1,380,872
1,445,243
53,707
859
Credit derivatives:
OTC Market:
Credit default swaps (CDS)
2,000
\u2014
395,831
397,831
241,349
\u2014
Other credit derivatives (sale)
\u2014
\u2014
4,351
4,351
\u2014
\u2014
2,000
\u2014
400,182
402,182
241,349
\u2014
Total derivatives traded in:
OTC Market
1,983,558
1,476,135
5,075,909
8,535,602
322,537
239,625
of which: Embedded derivatives
2,000
\u2014
576,242
\u2014
\u2014
53,495
Stock Exchange
\u2014
64,371
1,447,760
1,512,131
53,707
859
1,983,558
1,540,506
6,523,669
10,047,733
376,244
240,484
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsHeldForTradingExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-659": { "value": "Investments in associated companies
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Portuguese credit institutions
51,793
49,228
Foreign credit institutions
128,467
170,045
Other Portuguese companies
179,312
131,477
Other foreign companies
43,042
30,432
402,614
381,182
Impairment
(46,355)
(66,263)
356,259
314,919
The balance Investments in associated companies, as at 31\u00a0December 2023, is analysed as follows:
(Thousands of euros)
2023
Global value of
participation
Impairment of
investments in
associated
companies
Book value of
participation
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A.
114,767
\u2014
114,767
Banco Millennium Atl\u00e2ntico, S.A.
75,430
(28,344)
47,086
Banque BCP, S.A.S.
53,037
\u2014
53,037
SIBS, S.G.P.S, S.A.
64,545
\u2014
64,545
Fidelidade Mo\u00e7ambique - Companhia de Seguros S.A.
12,942
\u2014
12,942
Unicre - Institui\u00e7\u00e3o Financeira de Cr\u00e9dito, S.A.
51,793
\u2014
51,793
Webspectator Corporation
18,011
(18,011)
\u2014
Millennium Financial Services Sp. z o.o.
12,089
\u2014
12,089
402,614
(46,355)
356,259
These investments correspond to unquoted companies. According to the accounting policy described in note 1 B, these
investments are measured at the equity method.
The balance Investments in associated companies, as at 31\u00a0December 2022, is analysed as follows:
(Thousands of euros)
2022 (restated)
Global value of
participation
Impairment of
investments in
associated
companies
Book value of
participation
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A.
75,968
\u2014
75,968
Banco Millennium Atl\u00e2ntico, S.A.
119,180
(48,252)
70,928
Banque BCP, S.A.S.
50,865
\u2014
50,865
SIBS, S.G.P.S, S.A.
55,509
\u2014
55,509
Fidelidade Mo\u00e7ambique - Companhia de Seguros S.A.
12,421
\u2014
12,421
Unicre - Institui\u00e7\u00e3o Financeira de Cr\u00e9dito, S.A.
49,228
\u2014
49,228
Webspectator Corporation
18,011
(18,011)
\u2014
381,182
(66,263)
314,919
The Group's companies included in the consolidation perimeter are presented in note 60, as well as the main indicators
of the most relevant ones.
The movements occurred in Impairment of investments in associated companies are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
66,263
78,268
Transfers from Other provisions (Banco Millennium Atl\u00e2ntico, S.A.) (note 39)
\u2014
5,000
Impairment charge for the year (note 13)
\u2014
1,435
Impairment write-off (Banco Millennium Atl\u00e2ntico, S.A.)
\u2014
(16,787)
Exchange rate differences
(19,908)
(1,653)
Balance at the end of the year
46,355
66,263
In accordance with the requirements of IFRS 12 and considering their relevance, the movements occurred in the
investment held in Banco Millennium Atl\u00e2ntico, S.A., is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Ownership held by BCP on equity of the associated company as at 1 January
70,928
60,203
Application of IAS 29 for the year:
Net non-monetary assets of the BMA
Effect of exchange rate variations (note 43)
(3,417)
1,282
Amortization of the effect of IAS 29 application calculated as at 31 December 2018 (note 15)
(268)
(423)
Goodwill of the merger operation of the BMA
Effect of exchange rate variations (note 43)
(8,223)
2,810
Transfers from Other provisions (note 39)
\u2014
(5,000)
Impairment of investments in associated companies
\u2014
(1,436)
Appropriation of the net income of the associated companies (note 15)
2,977
2,431
Appropriation of the net income of previous years (note 15)
\u2014
(2,924)
Other comprehensive income attributable to BCP
3,182
99
Exchange differences
Effect on BMA's equity
(27,994)
8,814
Goodwill associated with investment in BMA
(10,007)
3,419
Impairment of investments in associated companies (note 43)
19,908
1,653
Investment held at the end of the year
47,086
70,928
The following table presents the financial statements of Banco Millennium Atl\u00e2ntico, S.A, prepared in accordance with
IFRS, modified by the consolidation adjustments:
(Thousands of euros)
2023
2022
(restated)
Net profit for the year
13,097
10,693
Comprehensive income
13,996
435
Total comprehensive income attributable to Shareholders of the associated company
27,093
11,128
Application of IAS 29 (*)
(1,180)
(1,861)
Attributable to Shareholders of the associated companies adjusted to BCP GAAP
25,913
9,267
Attributable to the BCP Group
5,891
2,107
Balance sheet
Financial assets
1,979,566
2,562,438
Non-financial assets
245,431
347,632
Financial liabilities
(2,000,669)
(2,579,341)
Non-financial liabilities
(27,475)
(37,836)
Attributable to Shareholders of the associated companies
196,853
292,893
Application of IAS 29 (*)
20,764
36,974
Attributable to Shareholders of the associated companies adjusted to BCP GAAP
217,617
329,867
Attributable to the BCP Group
49,474
74,994
Goodwill of the merge
25,956
44,186
Impairment of investments in associated companies
(28,344)
(48,252)
Attributable to the BCP Group adjusted of consolidation items
47,086
70,928
(*) The impact of the IAS 29 adoption was calculated from the date of the merger (April 2016).
The amounts presented do not include adjustments arising from the application of IAS 29. Based on the requirements of
IAS 29, Angola was considered a hyperinflationary economy until 31 December 2018, for the purpose of presenting the
consolidated financial statements, as described in accounting policy 1 B6. This classification ceased to be applied on 1
January 2019.
In accordance with the requirements of IFRS 12 and considering their relevance, the movements occurred in the
investment held in Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Appropriation of equity of the associate on 1 January (before restatement)
59,766
261,446
Transition to IFRS 9 and IFRS 17 (note 59):
1 January 2022
(89,858)
(89,858)
Other comprehensive income for the year 2022
116,152
\u2014
Other reserves for the year 2022
19
\u2014
Net income for the year 2022
(10,111)
\u2014
Appropriation of equity of the associate on 1 January (restated)
75,968
171,588
Appropriation of net income for the year of associate:
Before the restatement
\u2014
39,811
Transition to IFRS 9 and IFRS 17 (note 59)
\u2014
(10,111)
Appropriation of net income for the year of associates (note 15)
40,422
29,700
Other comprehensive income attributable to BCP:
Before the restatement
\u2014
(109,240)
Transition to IFRS 9 and IFRS 17 (note 59)
\u2014
116,152
Other comprehensive income attributable to BCP
(1,565)
6,912
Dividends received
\u2014
(132,251)
Other changes (Transition to IFRS 9 and IFRS 17) (note 59)
\u2014
19
Other changes
(58)
\u2014
Investment held at the end of the year
114,767
75,968
The following table presents the financial statements of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A.,
prepared in accordance with IFRS, modified by the consolidation adjustments:
(Thousands of euros)
2023
2022
(restated)
Net profit for the year
82,494
60,612
Comprehensive income
(3,194)
14,106
Total comprehensive income attributable to Shareholders of the associated company
79,300
74,718
Attributable to the BCP Group (49%)
38,857
36,612
Balance sheet
Financial assets
7,813,872
8,176,426
Non-financial assets
482,087
673,510
Financial liabilities
(3,632,700)
(8,362,729)
Non-financial liabilities
(4,165,573)
(68,754)
Total equity
497,686
418,453
Attributable to non-controlling interests
10,980
10,929
Attributable to Shareholders of the associated companies
486,706
407,524
Adjustments of intra-group transactions (*)
378,415
378,415
Attributable to Shareholders of the associated company adjusted to BCP GAAP
865,121
785,939
Attributable to the BCP Group
423,909
385,110
Reverse of the initial gain in 2004 allocated to the BCP Group
(309,142)
(309,142)
Attributable to the BCP Group adjusted of consolidation items
114,767
75,968
(*) Adjustment related to the cancellation in the BCP Group consolidated accounts of the VOBA recorded by Millenniumbcp Ageas Grupo
Segurador, S.G.P.S, S.A., at the time of the initial registration of this investment. VOBA corresponds to the estimated current value of the
future cash flows of the contracts in force at the date of acquisition under IFRS 4. With the implementation of IFRS 17, this concept was
cancelled in the consolidated accounts of Millenniumbcp Ageas having no impact on the Group 's consolidated accounts as it is not recognised in
the investment.
The Group owns 49% of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., being accounted for under the equity
method, as Investments in associated companies.
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. is dedicated to the management of life insurance and pension
funds. On 1 January 2023 Millenniumbcp Ageas made the simultaneous adoption of IFRS 9 - Financial Instruments and
IFRS 17 - Insurance Contracts. It opted for the possibility given to Insurance Companies to defer the application of IFRS
9, since the combined implementation with IFRS 17 would minimize the distortion of results.
IFRS 17 replaces IFRS 4 - \"Insurance Contracts\" and is applicable to all entities that issue insurance contracts,
reinsurance contracts and investment contracts with discretionary participation features if they are also issuers of
insurance contracts.
The initial application of IFRS 17 and IFRS 9 requires comparative information. Therefore, Millenniumbcp Ageas Grupo
Segurador made the transition exercise on 1 January 2022 and the impacts resulting from its implementation are
detailed in note 59. Application of IFRS 17 \u2013 Insurance Contracts and IFRS 9 - Financial Instruments by Millenniumbcp
Ageas Grupo Segurador, S.G.P.S., S.A.
Some indicators of the main subsidiaries and associated companies are analysed as follows:
(Thousands of euros)
2023
2022
Subsidiaries and associated companies
Total
Assets
Total
Equity
Net
income for
the year
Total
Assets
Total
Equity
Net
income for
the year
Banco Comercial Portugu\u00eas, S.A.
61,519,392
6,127,916
680,276
62,649,975
5,266,068
478,408
Banco ActivoBank, S.A.
3,501,901
254,201
39,400
3,271,355
213,017
19,142
Bank Millennium, S.A. (1)
28,897,024
1,587,332
126,821
23,697,447
1,173,617
(216,683)
BIM - Banco Internacional de Mo\u00e7ambique, S.A. (1)
2,711,174
534,619
105,099
2,824,409
521,192
106,030
BCP International B.V.
523,962
523,935
(691)
524,966
524,627
87,434
BCP Finance Bank, Ltd.
519,337
519,331
(647)
520,294
519,976
4,996
BCP \u00c1frica, S.G.P.S., Lda.
280,742
279,680
2,338
561,713
560,269
60,975
Millennium bcp Participa\u00e7\u00f5es, S.G.P.S., Sociedade
Unipessoal, Lda.
175,824
174,679
7,788
179,441
178,297
11,406
Interfundos - Sociedade Gestora de Organismos de\u00a0
Investimento Coletivo, S.A.
9,301
7,625
1,724
9,731
8,113
2,084
Millenniumbcp Ageas Grupo Segurador, S.G.P.S.,
S.A. (1) (3)
8,295,959
497,686
82,494
8,876,759
401,717
74,425
Banco Millennium Atl\u00e2ntico, S.A. (2)
2,224,997
196,853
13,097
2,910,070
292,893
10,693
Banque BCP, S.A.S.
5,732,286
279,722
14,477
4,944,774
268,097
23,499
1) Consolidated accounts.
2) These indicators correspond to the statutory financial statements that do not include the effects of applying IAS 29.
3) The 2023 amounts refer to the estimated financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-660": { "value": "Non-current assets held for sale
This balance is analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Gross value
Impairment
Net value
Gross value
Impairment
Net value
Real estate
Assets arising from recovered loans
87,735
(39,327)
48,408
326,577
(90,699)
235,878
Assets belong to investments funds and
real estate companies
19,854
(6,149)
13,705
266,544
(46,497)
220,047
Assets for own use (closed branches)
3,472
(1,671)
1,801
20,556
(6,626)
13,930
Equipment and other
5,006
(696)
4,310
22,117
(5,743)
16,374
Other assets (*)
16,446
(4,353)
12,093
12,806
\u2014
12,806
132,513
(52,196)
80,317
648,600
(149,565)
499,035
(*) includes Shares, Price Deposit and Property Adjudication Proposals
In 2023, a set of assets with a balance sheet value of Euros 264.127.000 (of which Euros 237,816,000 in Assets arising
from recovered loans) and respective impairment of Euros 51,802,000 (of which Euros 50,856,000 in Assets arising from
recovered loans), were transferred to \"Other assets\u201d (note 32) following the analysis of the requirements provided in
IFRS 5.
The assets included in this balance are accounted for in accordance with the accounting policy described in note 1 G.
The balance Real estate - Assets arising from recovered loans includes, essentially, real estate resulted from process of
recovered loans or judicial auction being accounted for at the time the Group assumes control of the asset, which is
usually associated with the transfer of their legal ownership. Additional information on these assets is presented in note
54.
The Group has a strategy for sale these assets, consistent with the characteristic of each asset as well as with the
breakdown of underlying valuations. However, considering the formal constraints, it was not possible in all instances to
conclude the sales in the expected time. The sale strategy is based in an active search of buyers, with the Group having
a website where advertises these properties and through partnerships with the mediation of companies having more
ability for the product that each time the Group has for sale. Prices are periodically reviewed and adjusted for
continuous adaptation to the market. The Group requests, regularly, to the European Central Bank, the extension of
the period of holding these properties.
As at 31 December 2023, this balance includes properties for which the Group has already entered sales contracts in
the gross amount of Euros 54,014,000 (31\u00a0December 2022: Euros 97,975,000). The impairment associated with these
contracts amounts to Euros 24,127,000 (31\u00a0December 2022: Euros 11,296,000), and it was calculated considering the
value of the respective contracts. With reference to 31 December 2022, from the total of the entered sales contracts
Euros 70,169,000 were related to properties held by investment funds and for which was recorded impairment in the
amount of Euros 6,059,000.
The changes occurred in Impairment of non-current assets held for sale are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
149,565
190,714
Transfer to other assets
(51,802)
\u2014
Other transfers
(21,143)
\u2014
Charge for the year (note 13)
12,899
78,318
Reversals for the year (note 13)
(1,656)
(1,116)
Amounts charged-off
(35,249)
(119,073)
Exchange rate differences
(418)
722
Balance at the end of the year
52,196
149,565
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-661": { "value": "Investment property
The balance Investment property corresponds to real estate evaluated in accordance with the accounting policy
presented in note 1 N, based on independent assessments and compliance with legal requirements.
The rents received related to these assets amounted to Euros 851,000 (31\u00a0December 2022: Euros 681,000).
The changes occurred in this balance are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
15,217
2,870
Transfers from / (to) non-current assets held for sale
\u2014
12,532
Revaluations
94
(185)
Disposals
23,789
\u2014
Balance at the end of the year
39,100
15,217
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-662": { "value": "Other tangible assets
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Real estate
669,847
670,000
Equipment
Computer equipment
346,220
334,864
Security equipment
67,587
67,687
Interior installations
151,649
149,986
Machinery
49,712
47,283
Furniture
84,154
84,516
Motor vehicles
35,839
32,529
Other equipment
31,842
28,224
Right of use
Real estate
390,625
366,363
Vehicles and equipment
\u2014
431
Work in progress
20,563
21,279
Other tangible assets
36
39
1,848,074
1,803,201
Accumulated depreciation
Relative to the current year (note 9)
(98,282)
(98,916)
Relative to the previous years
(1,143,345)
(1,129,588)
(1,241,627)
(1,228,504)
606,447
574,697
The balance Real Estate includes the amount of Euros 107,833,000 (31\u00a0December 2022: Euros 108,616,000) related to
real estate held by the Group's real estate investment funds.
The balance Right-of-use essentially corresponds to real estate (branches and central buildings) and to a residual
number of vehicles, which are amortized according to the lease term of each contract, as described in the accounting
policy 1 H.
The changes occurred in Other tangible assets during 2023 are analysed as follows:
(Thousands of euros)
2023
Balance on 1
January
Acquisitions
/ Charge
Disposals
/ Charged-off
Transfers
Exchange
differences
Balance on
31 December
Real estate
670,000
3,552
(13,520)
6,778
3,037
669,847
Equipment:
Computer equipment
334,864
13,297
(10,799)
7,318
1,540
346,220
Security equipment
67,687
459
(548)
183
(194)
67,587
Interior installations
149,986
916
(1,691)
2,944
(506)
151,649
Machinery
47,283
115
(605)
1,388
1,531
49,712
Furniture
84,516
494
(1,467)
803
(192)
84,154
Motor vehicles
32,529
7,649
(5,407)
561
507
35,839
Other equipment
28,224
22
(859)
2,436
2,019
31,842
Right of use
Real estate
366,363
138,697
(122,744)
\u2014
8,309
390,625
Vehicles and equipment
431
\u2014
(444)
\u2014
13
\u2014
Work in progress
21,279
23,188
(571)
(24,351)
1,018
20,563
Other tangible assets
39
\u2014
\u2014
\u2014
(3)
36
1,803,201
188,389
(158,655)
(1,940)
17,079
1,848,074
Accumulated depreciation
Real estate
(406,065)
(14,324)
12,459
779
(3,304)
(410,455)
Equipment:
Computer equipment
(286,978)
(17,738)
10,729
141
(625)
(294,471)
Security equipment
(63,350)
(958)
537
27
145
(63,599)
Interior installations
(133,154)
(3,167)
1,582
37
322
(134,380)
Machinery
(39,524)
(1,649)
517
(199)
(1,160)
(42,015)
Furniture
(79,007)
(2,540)
1,428
148
149
(79,822)
Motor vehicles
(18,457)
(5,054)
4,594
(37)
(234)
(19,188)
Other equipment
(22,660)
(1,662)
806
(21)
(1,564)
(25,101)
Right of use
Real estate
(178,839)
(51,190)
61,845
(1)
(4,375)
(172,560)
Vehicles and equipment
(431)
\u2014
444
\u2014
(13)
\u2014
Other tangible assets
(39)
\u2014
\u2014
\u2014
3
(36)
(1,228,504)
(98,282)
94,941
874
(10,656)
(1,241,627)
574,697
90,107
(63,714)
(1,066)
6,423
606,447
The changes occurred in Other tangible assets during 2022 are analysed as follows:
(Thousands of euros)
2022 (restated)
Balance on 1
January
Acquisitions
/ Charge
Disposals
/ Charged-off
Transfers
Exchange
differences
Balance on
31 December
Real estate
708,803
2,442
(37,606)
(6,690)
3,051
670,000
Equipment:
Computer equipment
337,457
15,238
(31,600)
12,186
1,583
334,864
Security equipment
67,542
844
(1,372)
382
291
67,687
Interior installations
148,532
1,339
(1,880)
1,198
797
149,986
Machinery
49,455
611
(2,068)
(380)
(335)
47,283
Furniture
84,923
440
(3,583)
2,371
365
84,516
Motor vehicles
29,703
7,033
(4,869)
306
356
32,529
Other equipment
30,711
180
(2,223)
107
(551)
28,224
Right of use
Real estate
352,346
35,010
(20,114)
(8)
(871)
366,363
Vehicles and equipment
505
\u2014
(65)
\u2014
(9)
431
Work in progress
20,656
24,408
(1,133)
(22,808)
156
21,279
Other tangible assets
38
\u2014
\u2014
\u2014
1
39
1,830,671
87,545
(106,513)
(13,336)
4,834
1,803,201
Accumulated depreciation
Real estate
(428,656)
(14,917)
31,982
5,702
(176)
(406,065)
Equipment:
Computer equipment
(300,560)
(16,375)
31,432
(116)
(1,359)
(286,978)
Security equipment
(63,723)
(862)
1,337
152
(254)
(63,350)
Interior installations
(131,897)
(3,007)
1,828
446
(524)
(133,154)
Machinery
(41,681)
(1,535)
1,997
1,427
268
(39,524)
Furniture
(78,344)
(2,717)
3,543
(1,232)
(257)
(79,007)
Motor vehicles
(17,743)
(4,636)
4,189
(53)
(214)
(18,457)
Other equipment
(23,811)
(1,498)
2,222
12
415
(22,660)
Right of use
Real estate
(142,996)
(53,365)
17,094
1
427
(178,839)
Vehicles and equipment
(501)
(4)
65
\u2014
9
(431)
Other tangible assets
(38)
\u2014
\u2014
\u2014
(1)
(39)
(1,229,950)
(98,916)
95,689
6,339
(1,666)
(1,228,504)
600,721
(11,371)
(10,824)
(6,997)
3,168
574,697
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-663": { "value": "Goodwill and intangible assets
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Goodwill - Differences arising on consolidation
Bank Millennium, S.A. (Poland)
110,640
102,655
Euro Bank, S.A. (Poland)
44,231
41,038
Others
10,172
10,182
165,043
153,875
Impairment
Bank Millennium, S.A. (Poland)
(110,640)
(102,655)
Others
(9,880)
(9,880)
(120,520)
(112,535)
44,523
41,340
Intangible assets
Software
309,776
277,205
Other intangible assets
80,598
73,607
390,374
350,812
Accumulated amortisation
Charge for the year (note 9)
(39,217)
(40,334)
Charge for the previous years
(172,575)
(169,131)
(211,792)
(209,465)
178,582
141,347
223,105
182,687
According to the accounting policy described in note 1 B, the recoverable amount of the Goodwill is annually assessed
in the second half of each year or whenever there are indications of eventual loss of value. In accordance with IAS 36
the recoverable amount of goodwill resulting from the consolidation of the subsidiaries, should be the greater between
its value in use (the present value of the future cash flows expected from its use) and its fair value less costs to sell.
Based on these criteria, the Group made in 2022, valuations of their investments for which there is goodwill recognised
considering among other factors:
(i) an estimate of future cash flows generated by each cash generating unit;
(ii) an expectation of potential changes in the amounts and timing of cash flows;
(iii) the time value of money;
(iv) a risk premium associated with the uncertainty by holding the asset; and
(v) other factors associated with the current situation of financial markets.
The valuations are based on reasonable and sustainable assumptions representing the best estimate of the Executive
Committee on the economic conditions that affect each subsidiary, the budgets and the latest projections approved for
those subsidiaries and their extrapolation to future periods. The assumptions made for these valuations might vary with
the change in economic conditions and in the market.
In 2023, there were no factors pointing to the deterioration of the value of those financial participations that could
lead to impairment charges in respect of goodwill. In the case of Bank Millennium S.A. (Poland), in which case factors
were identified during 2022 that showed a deterioration in the value of this financial participation, which led to a total
impairment of the goodwill then associated with the acquisition by the BCP Group of the percentage of control over
Bank Millennium S.A. (Poland) in the amount of Euros 102.3 million in the first half of 2022.
The changes occurred in Goodwill and intangible assets, during 2023, are analysed as follows:
(Thousands of euros)
2023
Balance on
1 January
Acquisitions
/ Charge
Disposals
/ Charged-off
Transfers
Exchange
differences
Balance on
31 December
Goodwill - Differences arising
on consolidation
153,875
\u2014
\u2014
\u2014
11,168
165,043
Impairment for goodwill
(112,535)
\u2014
\u2014
\u2014
(7,985)
(120,520)
41,340
\u2014
\u2014
\u2014
3,183
44,523
Intangible assets
Software
277,205
75,177
(47,120)
(2,396)
6,910
309,776
Other intangible assets
73,607
14
(1,154)
2,403
5,728
80,598
350,812
75,191
(48,274)
7
12,638
390,374
Accumulated depreciation
Software
(146,799)
(33,928)
45,427
217
(3,425)
(138,508)
Other intangible assets
(62,666)
(5,289)
\u2014
(216)
(5,113)
(73,284)
(209,465)
(39,217)
45,427
1
(8,538)
(211,792)
141,347
35,974
(2,847)
8
4,100
178,582
182,687
35,974
(2,847)
8
7,283
223,105
The changes occurred in Goodwill and intangible assets during 2022 are analysed as follows:
(Thousands of euros)
2022 (restated)
Balance on
1 January
Acquisitions
/ Charge
Disposals
/ Charged-off
Transfers
Exchange
differences
Balance on
31 December
Goodwill - Differences arising
on consolidation
159,431
\u2014
(2,512)
\u2014
(3,044)
153,875
Impairment for goodwill
(11,931)
(102,770)
2,512
\u2014
(346)
(112,535)
147,500
(102,770)
\u2014
\u2014
(3,390)
41,340
Intangible assets
Software
234,192
72,441
(25,315)
(3,664)
(449)
277,205
Other intangible assets
70,823
1,213
(1,037)
4,073
(1,465)
73,607
305,015
73,654
(26,352)
409
(1,914)
350,812
Accumulated depreciation
Software
(136,360)
(36,168)
24,859
419
451
(146,799)
Other intangible assets
(59,942)
(4,166)
1,027
(828)
1,243
(62,666)
(196,302)
(40,334)
25,886
(409)
1,694
(209,465)
108,713
33,320
(466)
\u2014
(220)
141,347
256,213
(69,450)
(466)
\u2014
(3,610)
182,687
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-665": { "value": "
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Goodwill - Differences arising on consolidation
Bank Millennium, S.A. (Poland)
110,640
102,655
Euro Bank, S.A. (Poland)
44,231
41,038
Others
10,172
10,182
165,043
153,875
Impairment
Bank Millennium, S.A. (Poland)
(110,640)
(102,655)
Others
(9,880)
(9,880)
(120,520)
(112,535)
44,523
41,340
Intangible assets
Software
309,776
277,205
Other intangible assets
80,598
73,607
390,374
350,812
Accumulated amortisation
Charge for the year (note 9)
(39,217)
(40,334)
Charge for the previous years
(172,575)
(169,131)
(211,792)
(209,465)
178,582
141,347
223,105
182,687
The changes occurred in Goodwill and intangible assets, during 2023, are analysed as follows:
(Thousands of euros)
2023
Balance on
1 January
Acquisitions
/ Charge
Disposals
/ Charged-off
Transfers
Exchange
differences
Balance on
31 December
Goodwill - Differences arising
on consolidation
153,875
\u2014
\u2014
\u2014
11,168
165,043
Impairment for goodwill
(112,535)
\u2014
\u2014
\u2014
(7,985)
(120,520)
41,340
\u2014
\u2014
\u2014
3,183
44,523
Intangible assets
Software
277,205
75,177
(47,120)
(2,396)
6,910
309,776
Other intangible assets
73,607
14
(1,154)
2,403
5,728
80,598
350,812
75,191
(48,274)
7
12,638
390,374
Accumulated depreciation
Software
(146,799)
(33,928)
45,427
217
(3,425)
(138,508)
Other intangible assets
(62,666)
(5,289)
\u2014
(216)
(5,113)
(73,284)
(209,465)
(39,217)
45,427
1
(8,538)
(211,792)
141,347
35,974
(2,847)
8
4,100
178,582
182,687
35,974
(2,847)
8
7,283
223,105
The changes occurred in Goodwill and intangible assets during 2022 are analysed as follows:
(Thousands of euros)
2022 (restated)
Balance on
1 January
Acquisitions
/ Charge
Disposals
/ Charged-off
Transfers
Exchange
differences
Balance on
31 December
Goodwill - Differences arising
on consolidation
159,431
\u2014
(2,512)
\u2014
(3,044)
153,875
Impairment for goodwill
(11,931)
(102,770)
2,512
\u2014
(346)
(112,535)
147,500
(102,770)
\u2014
\u2014
(3,390)
41,340
Intangible assets
Software
234,192
72,441
(25,315)
(3,664)
(449)
277,205
Other intangible assets
70,823
1,213
(1,037)
4,073
(1,465)
73,607
305,015
73,654
(26,352)
409
(1,914)
350,812
Accumulated depreciation
Software
(136,360)
(36,168)
24,859
419
451
(146,799)
Other intangible assets
(59,942)
(4,166)
1,027
(828)
1,243
(62,666)
(196,302)
(40,334)
25,886
(409)
1,694
(209,465)
108,713
33,320
(466)
\u2014
(220)
141,347
256,213
(69,450)
(466)
\u2014
(3,610)
182,687
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-664": { "value": "
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Goodwill - Differences arising on consolidation
Bank Millennium, S.A. (Poland)
110,640
102,655
Euro Bank, S.A. (Poland)
44,231
41,038
Others
10,172
10,182
165,043
153,875
Impairment
Bank Millennium, S.A. (Poland)
(110,640)
(102,655)
Others
(9,880)
(9,880)
(120,520)
(112,535)
44,523
41,340
Intangible assets
Software
309,776
277,205
Other intangible assets
80,598
73,607
390,374
350,812
Accumulated amortisation
Charge for the year (note 9)
(39,217)
(40,334)
Charge for the previous years
(172,575)
(169,131)
(211,792)
(209,465)
178,582
141,347
223,105
182,687
The changes occurred in Goodwill and intangible assets, during 2023, are analysed as follows:
(Thousands of euros)
2023
Balance on
1 January
Acquisitions
/ Charge
Disposals
/ Charged-off
Transfers
Exchange
differences
Balance on
31 December
Goodwill - Differences arising
on consolidation
153,875
\u2014
\u2014
\u2014
11,168
165,043
Impairment for goodwill
(112,535)
\u2014
\u2014
\u2014
(7,985)
(120,520)
41,340
\u2014
\u2014
\u2014
3,183
44,523
Intangible assets
Software
277,205
75,177
(47,120)
(2,396)
6,910
309,776
Other intangible assets
73,607
14
(1,154)
2,403
5,728
80,598
350,812
75,191
(48,274)
7
12,638
390,374
Accumulated depreciation
Software
(146,799)
(33,928)
45,427
217
(3,425)
(138,508)
Other intangible assets
(62,666)
(5,289)
\u2014
(216)
(5,113)
(73,284)
(209,465)
(39,217)
45,427
1
(8,538)
(211,792)
141,347
35,974
(2,847)
8
4,100
178,582
182,687
35,974
(2,847)
8
7,283
223,105
The changes occurred in Goodwill and intangible assets during 2022 are analysed as follows:
(Thousands of euros)
2022 (restated)
Balance on
1 January
Acquisitions
/ Charge
Disposals
/ Charged-off
Transfers
Exchange
differences
Balance on
31 December
Goodwill - Differences arising
on consolidation
159,431
\u2014
(2,512)
\u2014
(3,044)
153,875
Impairment for goodwill
(11,931)
(102,770)
2,512
\u2014
(346)
(112,535)
147,500
(102,770)
\u2014
\u2014
(3,390)
41,340
Intangible assets
Software
234,192
72,441
(25,315)
(3,664)
(449)
277,205
Other intangible assets
70,823
1,213
(1,037)
4,073
(1,465)
73,607
305,015
73,654
(26,352)
409
(1,914)
350,812
Accumulated depreciation
Software
(136,360)
(36,168)
24,859
419
451
(146,799)
Other intangible assets
(59,942)
(4,166)
1,027
(828)
1,243
(62,666)
(196,302)
(40,334)
25,886
(409)
1,694
(209,465)
108,713
33,320
(466)
\u2014
(220)
141,347
256,213
(69,450)
(466)
\u2014
(3,610)
182,687
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-666": { "value": "Income tax
Income tax assets and liabilities are analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Assets
Liabilities
Net
Assets
Liabilities
Net
Deferred taxes not depending
on the future profits (a)
Impairment losses (b)
862,261
\u2014
862,261
982,465
\u2014
982,465
Employee benefits
732,273
\u2014
732,273
835,619
\u2014
835,619
1,594,534
\u2014
1,594,534
1,818,084
\u2014
1,818,084
Deferred taxes depending
on the future profits
Impairment losses (b)
419,544
\u2014
419,544
438,430
(50,303)
388,127
Tax losses carried forward
167,995
\u2014
167,995
188,693
\u2014
188,693
Employee benefits
103,938
(141,506)
(37,568)
50,770
(136,019)
(85,249)
Financial assets at fair value through other
comprehensive income
500,202
(82,879)
417,323
729,416
(134,154)
595,262
Derivatives
\u2014
(7,750)
(7,750)
\u2014
(5,482)
(5,482)
Intangible assets
968
\u2014
968
1,143
\u2014
1,143
Other tangible assets
9,401
(3,268)
6,133
8,693
(3,380)
5,313
Others
92,615
(108,258)
(15,643)
111,336
(89,949)
21,387
1,294,663
(343,661)
951,002
1,528,481
(419,287)
1,109,194
Total deferred taxes
2,889,197
(343,661)
2,545,536
3,346,565
(419,287)
2,927,278
Offset between deferred tax assets
and deferred tax liabilities\u00a0
(334,866)
334,866
\u2014
(407,579)
407,579
\u2014
Net deferred taxes
2,554,331
(8,795)
2,545,536
2,938,986
(11,708)
2,927,278
Current taxes (c)
20,469
(197,085)
\u2014
17,945
(23,680)
\u2014
(a) Special Regime applicable to deferred tax assets.
(b) The amounts as at 31 December 2023 and 2022 include deferred tax assets related with credit impairments non-accepted fiscally of which
credits were written-off, according to the expectation that the use of such impairments will be deductible for the purposes of determining
taxable income for the tax periods in which the legal conditions required for their tax deductibility are met.
(c) The amounts of current taxes assets and liabilities refer exclusively to income taxes levied on the various BCP Group companies.
As at 31 December 2023, the balance deferred tax assets amounts to Euros 2,554,331,000, of which Euros 2,439,081,000
are related to the Bank's activity. The deferred taxes assets relating to the individual activity include a net amount of
Euros 397,020,000 resulting from losses on cash flow hedging derivatives operations of interest rate risk recognized in
other comprehensive income, whose average maturity of operations is 2.5 years and Euros 447,528,000 which depends
on the existence of future profitable profits (deferred tax assets not eligible under the special regime applicable to
deferred tax assets, approved by Law No. 61/2014, of 26 August), including:
- Euros 260,047,000 (net value) related to impairment losses; and
- Euros 157,450,000 resulting from tax losses carried forward from 2016 and 2020.
Special regime applicable to deferred tax assets
The Extraordinary General Meetings of Banco Comercial Portugu\u00eas and Activobank which took place on 15 October 2014
and 5 November 2014 approved the accession of these banks to the Special Regime approved by Law No. 61/2014, of 26
August, applicable to deferred tax assets that resulted from not deduction of expenses and negative equity variations
with impairment losses on credits and post-employment or long-term employee benefits.
The special regime is applicable to those expenses and negative equity variations recorded in tax periods beginning on
or after 1 January 2015, as well as to deferred tax assets recorded in the annual accounts for the last tax period prior
to that date and to part of expenses and negative equity variations associated with them. Pursuant to Law No. 23/2016,
of 19 August, this special regime is not applicable to expenses and negative equity variations with impairment losses on
credits and with post-employment or long-term employee benefits recorded in the period's taxation commencing on or
after 1 January 2016, nor to deferred tax assets to these associates.
The special regime applicable to deferred tax assets provides for an optional framework and with the possibility of
subsequent waiver, under which:
- Expenses and negative equity variations with impairment losses on credits and with post-employment or long-term
employee benefits covered by it are deducted, under the terms and conditions set out in the Corporate income tax
Code and in relevant separate tax legislation, up to the limit of the taxable profit for the tax period determined before
these deductions. Expenses and negative equity variations not deducted because of applying this limit are deducted in
subsequent tax periods, with the same limit. In the BCP Group, deferred tax assets associated with expenses and
negative equity variations under these conditions amount to Euros 1,387,878,000 (31 December 2022: Euros
1,599,199,000), of which Euros 848,120,000 relate to impairment losses on credits (31 December 2022: Euros
967,679,000) and Euros 539,758,000 relate to post-employment or long-term employee benefits (31 December 2022:
Euros 631,520,000).
- In certain situations (those with negative net results in annual individual accounts or liquidation by voluntary
dissolution, insolvency decreed by court or revocation of the respective authorization), deferred tax assets covered by
the Special Regime are converted into tax credits, in part or in wholeness. In case of negative net income, the
conversion is made according to the proportion between the amount of the negative net income for the period and the
total of equity, and a special reserve corresponding to 110% of the tax credit must also be constituted and,
simultaneously, constituting conversion rights attributable to the State of equivalent value, rights that can be acquired
by the shareholders upon payment to the State of the same value. Tax credits may be offset against tax debts of the
beneficiaries (or an entity based in Portugal within the same prudential consolidation perimeter or included in the same
group of entities for which are applied the Special Tax Regime for Groups of Companies) or reimbursed by the State. As
neither Banco Comercial Portugu\u00eas nor Banco ActivoBank recorded negative net results in the years 2015 to 2022, there
was no conversion of deferred taxes assets into tax credits, under the terms provided for in the Special Regime.
Pursuant to the regime described, the recovery of deferred tax assets covered by the optional regime approved by Law
No. 61/2014, of 26 August, is not dependent on future profits.
The above-mentioned legal framework was densified by Ordinance no. 259/2016, of 4 October, about the control and
use of tax credits, and by the Ordinance No. 293-A/2016, of 18 November, which establishes the conditions and
procedures for the acquisition by the shareholders of the referred rights of the State. Law No. 98/2019, of 4
September, establishes a deadline for the acquisition of the referred rights of the State by the shareholders, after
which the Management Board of the issuing bank is obliged to promote the record of the capital increase by the amount
resulting from the exercise of the conversion rights. According to this legislation, among other aspects, these rights are
subject to a right of acquisition by the shareholders on the date of creation of the rights of the State, exercisable in
periods that will be established by the Board of Directors until 3 years after the confirmation date of the conversion of
the deferred tax asset into tax credit by the Portuguese Tax and Customs Authority. The issuing entity shall deposit in
favour of the State the amount of the price corresponding to all the rights issued, within 3 months beginning from the
confirmation date of the conversion of the deferred tax asset into tax credit. Such deposit shall be redeemed when and
to the extent that the rights of the State are acquired by the shareholders or exercised by the State.
Deferred taxes are calculated based on the tax rates expected to be in force when the temporary differences are
reversed, which correspond to the approved rates or substantially approved at the balance sheet date. The deferred
tax assets and liabilities are presented on a net basis whenever, in accordance with applicable law, current tax assets
and current tax liabilities can be offset with each other, and the deferred tax assets and liabilities related to income
taxes levied by the same fiscal authority over the same taxable entity.
The current tax rate for Banco Comercial Portugu\u00eas, S.A. is analysed as follows:
2023
2022
(restated)
Income tax
21%
21%
Municipal surtax rate (on taxable net income)
1.5%
1.5%
State tax rate (on taxable net income)
More than 1,500,000 to 7,500,000
3%
3%
From more than 7,500,000 to 35,000,000
5%
5%
More than 35,000,000
9%
9%
The deferred tax rate related to the Bank\u2019s tax losses is 21%, in 2023 and 2022.
The average deferred tax rate associated with temporary differences of Banco Comercial Portugu\u00eas, S.A. is 31.3%. The
income tax rate in the other main countries where the Group operates is 19% in Poland, 32% in Mozambique and 0%
(exemption) in the Cayman Islands.
Following the amendments provided for in Law No. 24-D/2022, of 30 December, within the scope of the State Budget
for 2023, the time limit applicable to the carrying forward of tax losses in Portugal was eliminated. This amendment
applies to tax losses calculated in tax periods beginning on or after 1 January 2023, as well as to tax losses calculated in
tax periods prior to 1 January 2023 and whose deduction period is still in progress on that date. Thus, tax losses
calculated in 2014 and subsequent years may be deducted from future taxable income. The deduction limit for tax
losses increased from 70% to 65%, being increased by ten percentage points when the difference results from the
deduction of tax losses calculated in the 2020 and 2021 tax periods, under the terms of the special regime provided for
in Law n. 27-A/2020, of 24 July.
The reporting period for tax losses carried forward in Poland and in Mozambique it is 5 years.
Banco Comercial Portugu\u00eas, S.A. applies the Special Tax Regime for Groups of Companies (RETGS) since 2016 for
taxation purposes under corporate income tax (IRC), in which it\u2019s the dominant company.\u00a0The remaining companies
covered by the RETGS are Banco ActivoBank, S.A., Interfundos - Sociedade Gestora de Organismos de\u00a0 Investimento
Coletivo, S.A., BCP \u00c1frica, S.G.P.S. Lda., Millennium bcp Participa\u00e7\u00f5es, S.G.P.S., Sociedade Unipessoal Lda. and
Millennium bcp Teleservi\u00e7os \u2013 Servi\u00e7os de Com\u00e9rcio Electr\u00f3nico, S.A. In 2023 and 2022, the application of RETGS was
maintained.
The balance deferred tax assets not depending on the future profits (covered by the regime approved by Law no.
61/2014, of 26 August) includes the amounts of Euros 210,686,000 and Euros 4,020,000 recorded in 2015 and 2016,
respectively, related to expenses and negative equity variations with post-employment or long-term employee benefits
and to impairment losses of loans accounted for until 31 December 2014.
Regarding the activity in Portugal, the Law No. 98/2019, of 4 September, established the tax regime for credit
impairments and provisions for guarantees for tax periods beginning on or after 1 January 2019, providing for
approximation between the accounting and tax rules for the purposes of deductibility of expenses with the
reinforcement of credit impairments. The rules in force until 2018 could continue to be applied until the end of the
2023 financial year, unless the option to apply the new regime was exercised in advance.
In 2022, the Banco Comercial Portugu\u00eas, S.A. and the Banco ActivoBank, S.A. exercised the option to apply the new
regime, under the terms of which the impairment losses for credit risk relating to exposures analysed on an individual
or on a collective basis recognized in accordance with the applicable accounting standards and regulations are fully
deductible for the purposes of determining taxable profit, with the exceptions provided for in the Corporate Income
Tax Code. The exceptions apply to impairment losses relating to credits and other rights over natural or legal persons
who hold, directly or indirectly, more than 10 % of the Bank's capital, over members of its corporate bodies, over
companies in which the Bank holds, directly or indirectly, more than 10 % of the capital or over entities with which it is
in a situation of special relations.
The Impairment losses and other value corrections for specific credit risk recorded until 31 December 2021 and still not
accepted for tax purposes are only deductible up to the amount that, in each tax period, corresponds to the application
of the mandatory minimum limits set out in Notice of Bank of Portugal No. 3/95, as amended before its repeal by
Notice of Bank of Portugal No. 5/2015 and, between other conditions, provided that they are not claims covered by real
estate rights.
The Group complies with the guidelines of IFRIC 23 - Uncertainty over Income Tax Treatments on the determination of
taxable profit, tax bases, tax losses to be reported, tax credits to be used and tax rates in scenarios of uncertainty
regarding the income tax treatment.
Analysis of the recoverability of deferred tax assets
In accordance with the accounting policy 1 Y3 and with the requirements of IAS 12, the deferred tax assets were
recognised based on the Group's expectation of their recoverability. The recoverability of deferred taxes depends on
the implementation of the strategy of the Bank's Board of Directors, namely the generation of estimated taxable
income and its interpretation of tax legislation. Any changes in the assumptions used in estimating future profits or tax
legislation may have material impacts on deferred tax assets.
The assessment of the recoverability of deferred tax assets is based on the projected results for the period from 2024
to 2030, as longer projection periods have higher underlying factors of uncertainty. The projected pre-tax results for
the years 2024, 2025 and 2026 are consistent with the budget approved by the Bank's Board of Directors in November
2023, which incorporates the priorities stemming from the 2021-2024 Strategic Plan, in a framework where the
financial targets set therein for 2024 have been achieved or exceeded in 2023, adjusted for the impact of a new issue
of additional Tier 1 securities in the amount of Euros 400 million, with an option for early repayment from the end of
the 5th year and with an annual interest rate of 8.125%. In the earnings projection for the years 2027, 2028, 2029 and
2030, a standard nominal growth rate of 2% was considered.
The projections incorporate the impact of the stabilization of interest rates at a lower level than the current one,
preserving profitability levels in line with those targets and reflecting the commercial positioning and the desired
capture of efficiency gains, enshrined in the 2021-2024 Strategic Plan approved by the governing bodies, highlighting:
- after reflecting the impacts of the normalization of interest rates, the net interest income benefits from the recovery
of volumes in deposits and loans to customers, where the Bank continues to privilege priority segments associated with
the relationship and knowledge of its customers and transactionality;
- increase in commission income based on an efficient and judicious management of commissions and price lists;
- cost of risk still showing improvement, although gradually less significant, as this indicator converges to levels in line
with the Bank's current activity, with a lower impact on the historical portfolios of NPEs, foreclosed assets and FRE
(Corporate Restructuring Funds), after the reduction of these exposures achieved over the last years;
- Preservation of high levels of efficiency based on continued cost discipline and increased use of technology.
To estimate taxable net income for the periods of 2024 to 2030, the following main assumptions were considered:
- The rules of the new tax regime of credit impairment were applied. In the application of these rules, the following
assumptions were considered, in general terms:
a) the impairment losses for credit risk related to exposures analysed on an individual or collective basis, recognised
in accordance with the applicable accounting and regulatory standards, were considered deductible for tax purposes;
b) impairment reversals created up to 31 December 2021 not accepted for tax purposes were estimated based on the\u00a0
Non-Performing Assets Reduction Plan 2024-2025 submitted to the supervisory authority in March 2023, and also on
the basis of the average percentage of reversal observed in the last years from 2016 to 2023;
c) the referred average percentages were calculated separately, depending on whether or not there was a mortgage
guarantee, the eligibility for purposes of the special regime applicable to deferred tax assets and according to the
customers\u2019 classification as Non-Performing\u00a0 Exposures (NPE).
- The deductions related to impairment of financial assets were projected based on the destination (sale or settlement)
and the estimated date of the respective operations;
- Impairment reversals of non-financial assets not accepted for tax purposes were projected considering the expected
periods of disinvestment in certain real estate assets. For the remaining assets without a forecasted term for
disinvestment, the reversals were estimated based on the average percentage of reversal observed in the years from
2016 to 2023. Non-deductible expenses related to the reinforcement of impairment of non-financial assets were
estimated on the based on the average percentage of amounts not deducted for tax purposes in the years from 2016 to
2023, compared to the amounts of reinforcements net of impairment recorded in those years;\u00a0
- The deductions related to employee benefits were projected based on their estimated payments or deduction plans,
in accordance with information provided by the pension fund actuary;\u00a0
- The realization of changes in the fair value of real estate investment funds was projected based on the information
available in the regulations of the funds in question in relation to the period foreseen for the respective liquidation.
According to the estimate of future taxable income, the deferred taxes assets recorded as at 31 December 2023 and 31
December 2022 are adequate under the IAS 12 requirements.
In accordance with these assessments, the amount of unrecognised deferred tax related to temporary differences and
to tax losses is as follows:
(Thousands of euros)
2023
2022
(restated)
Temporary differences
40,976
54,015
Tax losses carried forward
2014
161,906
161,895
2015
2
2
2016
282,498
286,419
2017
2,773
3,530
2018
118,295
118,295
2019 (*)
24,192
24,265
2020 (*)
15,213
5,704
2021
193,878
193,829
2022
19,469
16,707
2023
2,402
\u2014
Total
820,628
810,646
(*) Following the publication of the Circular n. 3/2024 issued by the Portuguese Tax Authorities on the Corporate Income tax treatment of
leased assets under IFRS 16, the DTA related to 2019 and 2020 tax losses should increase by Euros 4,886 thousands and Euros 4,616 thousands,
respectively.
The amount of unrecognized deferred taxes relating to tax losses per expiry year is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
2024
206
278
2025
13,623
77
2026
129
2,447
2027
12,051
12,797
2028
2,293
\u2014
No expiry date
792,326
795,047
Total
820,628
810,646
The impact of income taxes in Net income and in other balances of\u00a0 Group's equity, as at 31 December 2023, is analysed
as follows:
(Thousands of euros)
2023
Net income for
the year
Reserves
Exchange
differences
Deferred taxes not depending on the future profits
Impairment losses
(120,204)
\u2014
\u2014
Employee benefits
(89,567)
(13,779)
\u2014
(209,771)
(13,779)
\u2014
Deferred taxes depending on the future profits
Impairment losses
(27,671)
(1,978)
10,763
Tax losses carried forward (a)
(21,822)
500
624
Employee benefits
(56,994)
103,856
819
Financial assets at fair value through other comprehensive income
\u2014
(195,343)
17,404
Derivatives
\u2014
\u2014
(2,268)
Intangible assets
(253)
\u2014
78
Other tangible assets
851
\u2014
(31)
Others
(41,854)
(164)
(17,576)
(147,743)
(93,129)
9,813
(357,514)
(106,908)
9,813
Current taxes
Current year
(179,519)
387
\u2014
Correction of previous years
(338)
\u2014
\u2014
(179,857)
387
\u2014
(537,371)
(106,521)
9,813
The impact of income taxes in Net\u00a0 income and in other balances of Group's equity, as at 31 December 2022, is analysed
as follows:
(Thousands of euros)
2022 (restated)
Net income for
the year
Reserves
Exchange
differences
Deferred taxes not depending on the future profits
Impairment losses
(712)
\u2014
\u2014
(712)
\u2014
\u2014
Deferred taxes depending on the future profits
Impairment losses
(160,953)
\u2014
(2,542)
Tax losses carried forward (a)
2,785
(2,236)
669
Employee benefits
(6,199)
(126,957)
(449)
Financial assets at fair value through other comprehensive income
\u2014
575,491
(1,271)
Derivatives
\u2014
\u2014
(559)
Intangible assets
(463)
\u2014
(33)
Other tangible assets
503
\u2014
12
Others
(29,649)
6,803
1,755
(193,976)
453,101
(2,418)
(194,688)
453,101
(2,418)
Current taxes
Current year
(110,551)
(18)
\u2014
Correction of previous years
919
\u2014
\u2014
(109,632)
(18)
\u2014
(304,320)
453,083
(2,418)
(a) The amount recorded in reserves refers to the deferred tax on the part of tax loss arising from the deduction of negative equity changes
recorded in reserves that contribute to the calculation of taxable income.
The reconciliation between the nominal tax rate and the effective tax rate is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Net income before income taxes
1,487,832
418,347
Current tax rate (%)
31.5%
31.5%
Expected tax
(468,667)
(131,779)
Non-deductible impairment and provisions (a)
(139,548)
(145,811)
Mandatory contributions to the banking sector (b)
(16,760)
(25,502)
Results of companies accounted by the equity method
20,253
18,472
Interests on other equity instruments (c)
11,655
11,655
Effect of the tax rate difference (d)
54,764
(8,508)
Effect of recognition/derecognition net of deferred taxes (e)
7,071
(24,252)
Non-deductible costs and other corrections
(6,731)
2,013
Correction of previous years
1,353
660
Autonomous tax
(761)
(1,268)
Total
(537,371)
(304,320)
Effective rate (%)
36.1%
72.7%
(a) In 2023 includes the negative amount of Euros 113,706,000 (2022: negative Euros 85,896,000) related to the impact of the non-deductibility
for tax purposes of the provisions related to legal risks associated with the mortgage loans portfolio granted in foreign currency by Bank
Millennium, such as the negative amount of Euros 27,858,000 (2022: negative Euros 23,695,000) relating on the impact of the non-deductibility
for tax purposes of the net reinforcement of provisions for risks and charges registered with Banco Comercial Portugu\u00eas, S.A. In 2022 includes
the negative amount of Euros 32,227,000 regarding the goodwill impairment associated to this\u00a0 subsidiary. On 6 December 2023, the Supreme
Administrative Court issued a judgment on the Bank Millennium\u2019s complaint against the tax ruling of the Director of the National Tax
Information Service on the rules for recognizing the effects in CIT of cancellations of mortgage loans indexed to foreign currencies and foreign
currency loans (in particular in CHF) adjudicated by common courts. According to the ruling, Bank Millennium should recognise the tax
consequences not by recognising the resulting losses as tax-deductible costs, but by adjusting the revenues from the above-mentioned loans
and advances (FX gains, interest, commissions and fees) previously taxed with CIT, taking into account the rules of limitation of tax liabilities.
Until the above judgment was issued, Bank Millennium prudently did not recognize losses due to cancellations for CIT and deferred tax purposes
and is currently in the process of analysing and preparing a methodology and process both in order to make appropriate adjustments to CIT
liabilities due to cancellations in previous years, as well as to recognize the relevant asset in deferred tax relating in a fair manner to the
probable cancellations of the above-mentioned loans and advances in the future. Indeed, there are doubts as to the detailed rules for the
adjustment of revenues, which may change the final amounts of the adjustments.
(b) Refers to mandatory contributions to the banking sector in Portugal (contribution to the banking sector and additional solidarity on the
banking sector) and in Poland.
(c) Relates to the impact of the deduction for taxable income purposes of interest paid in respect of perpetual bonds representing subordinated
debt issued in 2019.
(d) In 2023 this balance includes the amount of Euros 18,947,000 (2022: Euros 21,668,000) related with the effect of the taxation of 20% tax on
interests of Mozambique's public debt securities and the amount of Euros 36,140,000 (2022: negative Euros 19,507,000) related to the effect of
the difference in the tax rate on profits in Poland, which is 19%, on a net income before income tax.
(e) In 2023 includes the amount of Euros 29,469,000 related to the recognition of deferred tax assets related to temporary differences
associated with potential losses in specialised credit recovery funds and the negative amount of Euros 14,788,000 (2022: negative Euros
20,981,000) related to the non-recognition/derecognition of deferred tax assets of tax losses.
Directive (EU) 2022/2523 of the Council, of 15 December 2022 \u2013 Minimum level of taxation of
15% per jurisdiction
Under Pillar 2 of the Base Erosion and Profit Shifting 2.0 (\"BEPS 2.0\") project of the Organisation for Economic Co-
operation and Development (\"OECD\"), enshrined in Council Directive (EU) 2022/2523 of 15 December 2022,
multinationals enterprises and large national groups with consolidated annual revenues of more than EUR 750 million in
at least two of the last four financial years, will become subject, as of the 2024 financial year, to a minimum level of
taxation of 15% in each of the jurisdiction they operate.
Neither Portugal nor Poland ensured the transposition of this new regime into their respective domestic legislation by
31 December 2023, under the terms determined by the Directive mentioned above, and it is expected that the Pillar 2
legislation will be enacted in the course of 2024.
The regime in question may determine the payment of a top-up tax when a minimum level of taxation of 15% is not
observed, on a jurisdictional basis.
Considering\u00a0 the consolidated annual income earned in recent years, the Group should meet the eligibility criterion for
the application of the Pillar 2 legislation.
According to the analysis carried out on the potential future impacts of this regime, the Group estimates that it will
meet, in the jurisdictions in which it operates, namely in Portugal, Poland and Mozambique, the necessary
requirements for the application of \"transitional safe harbours\", thus being excluded, between 2024-2026, from the
obligation to calculate any tup-up tax.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-667": { "value": "
Income tax assets and liabilities are analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Assets
Liabilities
Net
Assets
Liabilities
Net
Deferred taxes not depending
on the future profits (a)
Impairment losses (b)
862,261
\u2014
862,261
982,465
\u2014
982,465
Employee benefits
732,273
\u2014
732,273
835,619
\u2014
835,619
1,594,534
\u2014
1,594,534
1,818,084
\u2014
1,818,084
Deferred taxes depending
on the future profits
Impairment losses (b)
419,544
\u2014
419,544
438,430
(50,303)
388,127
Tax losses carried forward
167,995
\u2014
167,995
188,693
\u2014
188,693
Employee benefits
103,938
(141,506)
(37,568)
50,770
(136,019)
(85,249)
Financial assets at fair value through other
comprehensive income
500,202
(82,879)
417,323
729,416
(134,154)
595,262
Derivatives
\u2014
(7,750)
(7,750)
\u2014
(5,482)
(5,482)
Intangible assets
968
\u2014
968
1,143
\u2014
1,143
Other tangible assets
9,401
(3,268)
6,133
8,693
(3,380)
5,313
Others
92,615
(108,258)
(15,643)
111,336
(89,949)
21,387
1,294,663
(343,661)
951,002
1,528,481
(419,287)
1,109,194
Total deferred taxes
2,889,197
(343,661)
2,545,536
3,346,565
(419,287)
2,927,278
Offset between deferred tax assets
and deferred tax liabilities\u00a0
(334,866)
334,866
\u2014
(407,579)
407,579
\u2014
Net deferred taxes
2,554,331
(8,795)
2,545,536
2,938,986
(11,708)
2,927,278
Current taxes (c)
20,469
(197,085)
\u2014
17,945
(23,680)
\u2014
(a) Special Regime applicable to deferred tax assets.
(b) The amounts as at 31 December 2023 and 2022 include deferred tax assets related with credit impairments non-accepted fiscally of which
credits were written-off, according to the expectation that the use of such impairments will be deductible for the purposes of determining
taxable income for the tax periods in which the legal conditions required for their tax deductibility are met.
(c) The amounts of current taxes assets and liabilities refer exclusively to income taxes levied on the various BCP Group companies.
As at 31 December 2023, the balance deferred tax assets amounts to Euros 2,554,331,000, of which Euros 2,439,081,000
are related to the Bank's activity. The deferred taxes assets relating to the individual activity include a net amount of
Euros 397,020,000 resulting from losses on cash flow hedging derivatives operations of interest rate risk recognized in
other comprehensive income, whose average maturity of operations is 2.5 years and Euros 447,528,000 which depends
on the existence of future profitable profits (deferred tax assets not eligible under the special regime applicable to
deferred tax assets, approved by Law No. 61/2014, of 26 August), including:
- Euros 260,047,000 (net value) related to impairment losses; and
- Euros 157,450,000 resulting from tax losses carried forward from 2016 and 2020.
Special regime applicable to deferred tax assets
The Extraordinary General Meetings of Banco Comercial Portugu\u00eas and Activobank which took place on 15 October 2014
and 5 November 2014 approved the accession of these banks to the Special Regime approved by Law No. 61/2014, of 26
August, applicable to deferred tax assets that resulted from not deduction of expenses and negative equity variations
with impairment losses on credits and post-employment or long-term employee benefits.
The special regime is applicable to those expenses and negative equity variations recorded in tax periods beginning on
or after 1 January 2015, as well as to deferred tax assets recorded in the annual accounts for the last tax period prior
to that date and to part of expenses and negative equity variations associated with them. Pursuant to Law No. 23/2016,
of 19 August, this special regime is not applicable to expenses and negative equity variations with impairment losses on
credits and with post-employment or long-term employee benefits recorded in the period's taxation commencing on or
after 1 January 2016, nor to deferred tax assets to these associates.
The special regime applicable to deferred tax assets provides for an optional framework and with the possibility of
subsequent waiver, under which:
- Expenses and negative equity variations with impairment losses on credits and with post-employment or long-term
employee benefits covered by it are deducted, under the terms and conditions set out in the Corporate income tax
Code and in relevant separate tax legislation, up to the limit of the taxable profit for the tax period determined before
these deductions. Expenses and negative equity variations not deducted because of applying this limit are deducted in
subsequent tax periods, with the same limit. In the BCP Group, deferred tax assets associated with expenses and
negative equity variations under these conditions amount to Euros 1,387,878,000 (31 December 2022: Euros
1,599,199,000), of which Euros 848,120,000 relate to impairment losses on credits (31 December 2022: Euros
967,679,000) and Euros 539,758,000 relate to post-employment or long-term employee benefits (31 December 2022:
Euros 631,520,000).
- In certain situations (those with negative net results in annual individual accounts or liquidation by voluntary
dissolution, insolvency decreed by court or revocation of the respective authorization), deferred tax assets covered by
the Special Regime are converted into tax credits, in part or in wholeness. In case of negative net income, the
conversion is made according to the proportion between the amount of the negative net income for the period and the
total of equity, and a special reserve corresponding to 110% of the tax credit must also be constituted and,
simultaneously, constituting conversion rights attributable to the State of equivalent value, rights that can be acquired
by the shareholders upon payment to the State of the same value. Tax credits may be offset against tax debts of the
beneficiaries (or an entity based in Portugal within the same prudential consolidation perimeter or included in the same
group of entities for which are applied the Special Tax Regime for Groups of Companies) or reimbursed by the State. As
neither Banco Comercial Portugu\u00eas nor Banco ActivoBank recorded negative net results in the years 2015 to 2022, there
was no conversion of deferred taxes assets into tax credits, under the terms provided for in the Special Regime.
Pursuant to the regime described, the recovery of deferred tax assets covered by the optional regime approved by Law
No. 61/2014, of 26 August, is not dependent on future profits.
The above-mentioned legal framework was densified by Ordinance no. 259/2016, of 4 October, about the control and
use of tax credits, and by the Ordinance No. 293-A/2016, of 18 November, which establishes the conditions and
procedures for the acquisition by the shareholders of the referred rights of the State. Law No. 98/2019, of 4
September, establishes a deadline for the acquisition of the referred rights of the State by the shareholders, after
which the Management Board of the issuing bank is obliged to promote the record of the capital increase by the amount
resulting from the exercise of the conversion rights. According to this legislation, among other aspects, these rights are
subject to a right of acquisition by the shareholders on the date of creation of the rights of the State, exercisable in
periods that will be established by the Board of Directors until 3 years after the confirmation date of the conversion of
the deferred tax asset into tax credit by the Portuguese Tax and Customs Authority. The issuing entity shall deposit in
favour of the State the amount of the price corresponding to all the rights issued, within 3 months beginning from the
confirmation date of the conversion of the deferred tax asset into tax credit. Such deposit shall be redeemed when and
to the extent that the rights of the State are acquired by the shareholders or exercised by the State.
Deferred taxes are calculated based on the tax rates expected to be in force when the temporary differences are
reversed, which correspond to the approved rates or substantially approved at the balance sheet date. The deferred
tax assets and liabilities are presented on a net basis whenever, in accordance with applicable law, current tax assets
and current tax liabilities can be offset with each other, and the deferred tax assets and liabilities related to income
taxes levied by the same fiscal authority over the same taxable entity.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-668": { "value": "
Income tax assets and liabilities are analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Assets
Liabilities
Net
Assets
Liabilities
Net
Deferred taxes not depending
on the future profits (a)
Impairment losses (b)
862,261
\u2014
862,261
982,465
\u2014
982,465
Employee benefits
732,273
\u2014
732,273
835,619
\u2014
835,619
1,594,534
\u2014
1,594,534
1,818,084
\u2014
1,818,084
Deferred taxes depending
on the future profits
Impairment losses (b)
419,544
\u2014
419,544
438,430
(50,303)
388,127
Tax losses carried forward
167,995
\u2014
167,995
188,693
\u2014
188,693
Employee benefits
103,938
(141,506)
(37,568)
50,770
(136,019)
(85,249)
Financial assets at fair value through other
comprehensive income
500,202
(82,879)
417,323
729,416
(134,154)
595,262
Derivatives
\u2014
(7,750)
(7,750)
\u2014
(5,482)
(5,482)
Intangible assets
968
\u2014
968
1,143
\u2014
1,143
Other tangible assets
9,401
(3,268)
6,133
8,693
(3,380)
5,313
Others
92,615
(108,258)
(15,643)
111,336
(89,949)
21,387
1,294,663
(343,661)
951,002
1,528,481
(419,287)
1,109,194
Total deferred taxes
2,889,197
(343,661)
2,545,536
3,346,565
(419,287)
2,927,278
Offset between deferred tax assets
and deferred tax liabilities\u00a0
(334,866)
334,866
\u2014
(407,579)
407,579
\u2014
Net deferred taxes
2,554,331
(8,795)
2,545,536
2,938,986
(11,708)
2,927,278
Current taxes (c)
20,469
(197,085)
\u2014
17,945
(23,680)
\u2014
(a) Special Regime applicable to deferred tax assets.
(b) The amounts as at 31 December 2023 and 2022 include deferred tax assets related with credit impairments non-accepted fiscally of which
credits were written-off, according to the expectation that the use of such impairments will be deductible for the purposes of determining
taxable income for the tax periods in which the legal conditions required for their tax deductibility are met.
(c) The amounts of current taxes assets and liabilities refer exclusively to income taxes levied on the various BCP Group companies.
In accordance with these assessments, the amount of unrecognised deferred tax related to temporary differences and
to tax losses is as follows:
(Thousands of euros)
2023
2022
(restated)
Temporary differences
40,976
54,015
Tax losses carried forward
2014
161,906
161,895
2015
2
2
2016
282,498
286,419
2017
2,773
3,530
2018
118,295
118,295
2019 (*)
24,192
24,265
2020 (*)
15,213
5,704
2021
193,878
193,829
2022
19,469
16,707
2023
2,402
\u2014
Total
820,628
810,646
(*) Following the publication of the Circular n. 3/2024 issued by the Portuguese Tax Authorities on the Corporate Income tax treatment of
leased assets under IFRS 16, the DTA related to 2019 and 2020 tax losses should increase by Euros 4,886 thousands and Euros 4,616 thousands,
respectively.
The amount of unrecognized deferred taxes relating to tax losses per expiry year is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
2024
206
278
2025
13,623
77
2026
129
2,447
2027
12,051
12,797
2028
2,293
\u2014
No expiry date
792,326
795,047
Total
820,628
810,646
The impact of income taxes in Net income and in other balances of\u00a0 Group's equity, as at 31 December 2023, is analysed
as follows:
(Thousands of euros)
2023
Net income for
the year
Reserves
Exchange
differences
Deferred taxes not depending on the future profits
Impairment losses
(120,204)
\u2014
\u2014
Employee benefits
(89,567)
(13,779)
\u2014
(209,771)
(13,779)
\u2014
Deferred taxes depending on the future profits
Impairment losses
(27,671)
(1,978)
10,763
Tax losses carried forward (a)
(21,822)
500
624
Employee benefits
(56,994)
103,856
819
Financial assets at fair value through other comprehensive income
\u2014
(195,343)
17,404
Derivatives
\u2014
\u2014
(2,268)
Intangible assets
(253)
\u2014
78
Other tangible assets
851
\u2014
(31)
Others
(41,854)
(164)
(17,576)
(147,743)
(93,129)
9,813
(357,514)
(106,908)
9,813
Current taxes
Current year
(179,519)
387
\u2014
Correction of previous years
(338)
\u2014
\u2014
(179,857)
387
\u2014
(537,371)
(106,521)
9,813
The impact of income taxes in Net\u00a0 income and in other balances of Group's equity, as at 31 December 2022, is analysed
as follows:
(Thousands of euros)
2022 (restated)
Net income for
the year
Reserves
Exchange
differences
Deferred taxes not depending on the future profits
Impairment losses
(712)
\u2014
\u2014
(712)
\u2014
\u2014
Deferred taxes depending on the future profits
Impairment losses
(160,953)
\u2014
(2,542)
Tax losses carried forward (a)
2,785
(2,236)
669
Employee benefits
(6,199)
(126,957)
(449)
Financial assets at fair value through other comprehensive income
\u2014
575,491
(1,271)
Derivatives
\u2014
\u2014
(559)
Intangible assets
(463)
\u2014
(33)
Other tangible assets
503
\u2014
12
Others
(29,649)
6,803
1,755
(193,976)
453,101
(2,418)
(194,688)
453,101
(2,418)
Current taxes
Current year
(110,551)
(18)
\u2014
Correction of previous years
919
\u2014
\u2014
(109,632)
(18)
\u2014
(304,320)
453,083
(2,418)
(a) The amount recorded in reserves refers to the deferred tax on the part of tax loss arising from the deduction of negative equity changes
recorded in reserves that contribute to the calculation of taxable income.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-670": { "value": "Other assets
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Deposit account applications
57,866
51,371
Capital supplies
173,175
178,725
Obligations with post-employment benefits
390,258
593,494
Debtors for futures and options transactions
118,472
191,290
Real estate and other assets arising from recovered loans (a)
338,486
\u2014
Debtors
Residents
Receivables from real estate,\u00a0transfers of assets and other securities
87,816
111,693
Prosecution cases / agreements with the Bank
11,163
12,163
SIBS
3,579
3,521
Others
21,779
66,744
Non-residents
50,992
30,584
Amounts due for collection
81,614
80,024
Interest and other amounts receivable
80,094
69,613
Amounts receivable on trading activity
10,736
3,234
Amounts due from customers
76,047
51,229
Artistic patrimony
28,796
28,796
Prepaid expenses
25,505
23,654
Subsidies receivables
8,347
10,764
Other recoverable tax
8,112
9,082
Gold and other precious metals
3,562
3,640
Capital supplementary contributions
165
165
Associated companies
116
145
Sundry assets
371,836
254,276
1,948,516
1,774,207
Impairment for other assets
(321,832)
(191,752)
1,626,684
1,582,455
(a) assets transferred from Non-current assets held for sale
As at 31 December 2023, the balance Deposit account applications includes the amount of Euros 30,638,000
(31\u00a0December 2022: Euros 25,506,000) relating to the collateral constituted in compliance with the assumption of
irrevocable payment commitments to Single Resolution Fund, as referred in note 6.
As referred in note 47, as at 31\u00a0December 2023, the balance Capital supplies includes the amount of Euros 165,837,000
(31\u00a0December 2022: Euros 171,397,000) arising from the transfers of assets to Specialized recovery funds which have
impairment in the same amount.
The balance Amounts receivable on trading activity includes amounts receivable within 3 business days of stock
exchange operations.
Considering the nature of these transactions and the age of the amounts of these items, the Group's procedure is to
periodically assess the collectability of these amounts and whenever impairment is identified, an impairment loss is
registered in the income statement.
The detail of the item Real estate and other assets arising from recovered loans is analysed as follows:
(Thousands\u00a0 of euros)
2023
Gross value
Impairment
Net value
Real estate
Assets arising from recovered loans
138,165
(45,829)
92,336
Assets belong to investments funds and real estate companies
173,443
(84,904)
88,539
Assets for own use (closed branches)
13,537
(5,432)
8,105
Equipment
92
(81)
11
Other assets (*)
13,249
(594)
12,655
338,486
(136,840)
201,646
(*) includes Shares, Price Deposit and Property Adjudication Proposals
The changes occurred in Impairment of other assets, with the exception of impairment for Real estate and other assets
arising from recovered loans are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
191,752
260,199
Transfers resulting from changes in the Group's structure
\u2014
(1,038)
Other transfers
(513)
908
Charge for the year (note 13)
17,673
17,699
Reversals for the year (note 13)
(7,150)
(7,047)
Amounts charged-off
(17,232)
(78,835)
Exchange rate differences
462
(134)
Balance at the end of the year
184,992
191,752
The changes occurred in impairment for Real Estate and other assets arising from recovered loans, are analysed as
follow:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
\u2014
\u2014
Transfer of Non-current assets held for sale (note 27)
51,802
\u2014
Other transfers
52,488
\u2014
Charge for the year (note 13)
34,706
\u2014
Reversals for the year (note 13)
(98)
\u2014
Amounts charged-off
(1,953)
\u2014
Exchange rate differences
(105)
\u2014
Balance at the end of the year
136,840
\u2014
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-669": { "value": "Other assets
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Deposit account applications
57,866
51,371
Capital supplies
173,175
178,725
Obligations with post-employment benefits
390,258
593,494
Debtors for futures and options transactions
118,472
191,290
Real estate and other assets arising from recovered loans (a)
338,486
\u2014
Debtors
Residents
Receivables from real estate,\u00a0transfers of assets and other securities
87,816
111,693
Prosecution cases / agreements with the Bank
11,163
12,163
SIBS
3,579
3,521
Others
21,779
66,744
Non-residents
50,992
30,584
Amounts due for collection
81,614
80,024
Interest and other amounts receivable
80,094
69,613
Amounts receivable on trading activity
10,736
3,234
Amounts due from customers
76,047
51,229
Artistic patrimony
28,796
28,796
Prepaid expenses
25,505
23,654
Subsidies receivables
8,347
10,764
Other recoverable tax
8,112
9,082
Gold and other precious metals
3,562
3,640
Capital supplementary contributions
165
165
Associated companies
116
145
Sundry assets
371,836
254,276
1,948,516
1,774,207
Impairment for other assets
(321,832)
(191,752)
1,626,684
1,582,455
(a) assets transferred from Non-current assets held for sale
As at 31 December 2023, the balance Deposit account applications includes the amount of Euros 30,638,000
(31\u00a0December 2022: Euros 25,506,000) relating to the collateral constituted in compliance with the assumption of
irrevocable payment commitments to Single Resolution Fund, as referred in note 6.
As referred in note 47, as at 31\u00a0December 2023, the balance Capital supplies includes the amount of Euros 165,837,000
(31\u00a0December 2022: Euros 171,397,000) arising from the transfers of assets to Specialized recovery funds which have
impairment in the same amount.
The balance Amounts receivable on trading activity includes amounts receivable within 3 business days of stock
exchange operations.
Considering the nature of these transactions and the age of the amounts of these items, the Group's procedure is to
periodically assess the collectability of these amounts and whenever impairment is identified, an impairment loss is
registered in the income statement.
The detail of the item Real estate and other assets arising from recovered loans is analysed as follows:
(Thousands\u00a0 of euros)
2023
Gross value
Impairment
Net value
Real estate
Assets arising from recovered loans
138,165
(45,829)
92,336
Assets belong to investments funds and real estate companies
173,443
(84,904)
88,539
Assets for own use (closed branches)
13,537
(5,432)
8,105
Equipment
92
(81)
11
Other assets (*)
13,249
(594)
12,655
338,486
(136,840)
201,646
(*) includes Shares, Price Deposit and Property Adjudication Proposals
The changes occurred in Impairment of other assets, with the exception of impairment for Real estate and other assets
arising from recovered loans are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
191,752
260,199
Transfers resulting from changes in the Group's structure
\u2014
(1,038)
Other transfers
(513)
908
Charge for the year (note 13)
17,673
17,699
Reversals for the year (note 13)
(7,150)
(7,047)
Amounts charged-off
(17,232)
(78,835)
Exchange rate differences
462
(134)
Balance at the end of the year
184,992
191,752
The changes occurred in impairment for Real Estate and other assets arising from recovered loans, are analysed as
follow:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
\u2014
\u2014
Transfer of Non-current assets held for sale (note 27)
51,802
\u2014
Other transfers
52,488
\u2014
Charge for the year (note 13)
34,706
\u2014
Reversals for the year (note 13)
(98)
\u2014
Amounts charged-off
(1,953)
\u2014
Exchange rate differences
(105)
\u2014
Balance at the end of the year
136,840
\u2014
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-672": { "value": "Resources from credit institutions
This balance is analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Non-interest
bearing
Interest
bearing
Total
Non-interest
bearing
Interest
bearing
Total
Resources and other financing
from Central Banks
Bank of Portugal
\u2014
\u2014
\u2014
\u2014
592,740
592,740
Central Banks abroad
\u2014
110,776
110,776
\u2014
14,736
14,736
\u2014
110,776
110,776
\u2014
607,476
607,476
Resources from credit institutions in
Portugal
Sight deposits
63,128
\u2014
63,128
92,493
\u2014
92,493
Term Deposits
\u2014
79,198
79,198
\u2014
151,244
151,244
63,128
79,198
142,326
92,493
151,244
243,737
Resources from credit institutions
abroad
Repayable on demand
88,864
\u2014
88,864
74,890
\u2014
74,890
Term deposits
\u2014
127,224
127,224
\u2014
152,385
152,385
Loans obtained
\u2014
264,635
264,635
\u2014
293,387
293,387
CIRS and IRS operations collateralised
by deposits (*)
88,633
\u2014
88,633
92,299
\u2014
92,299
Other resources
\u2014
6,668
6,668
\u2014
4,186
4,186
177,497
398,527
576,024
167,189
449,958
617,147
240,625
588,501
829,126
259,682
1,208,678
1,468,360
(*) Under the scope of transactions involving derivative financial instruments (IRS and CIRS) with institutional counterparties, and in
accordance with the terms of their respective agreements (\"Cash collateral\"). These deposits are held by the Group and are reported as
collateral for the referred operations (IRS and CIRS), whose revaluation is positive.
As at 31 December 2022, the item Resources and others financing from Central Banks \u2013 Bank of Portugal included a total
amount associated with the TLTRO III program of Euros 600,000,000, having been repaid early in January 2023.
Considering the financing characteristics and the nature of the respective lender, the Bank accounted for the TLTRO III
operation under IFRS 9. The Bank considered that the operation constitutes a variable rate financing, indexed to the
Deposit Facility Rate of the European Central Bank (ECB), having fulfilled the necessary criteria for it. Specifically for
the period between 24 June 2020 and 23 June 2022, the Bank complied with the conditions required for the
application, to each of the two tranches of the financing, of a maximum interest rate of -1%. Consequently, it
recognised in the financial statements, for the referred interest counting period, the rate of -1%. For the period
between 24 June and 31 December 2022, the rate resulting from the provisions of the regulation applied for the
calculation in the different subperiods.
This balance is analysed, by remaining period, as follows:
(Thousands of euros)
2023
2022
(restated)
Up to 3 months
516,776
499,654
3 to 6 months
18,467
53,095
6 to 12 months
293,883
34,278
1 to 5 periods
\u2014
881,333
829,126
1,468,360
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromBanksExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-671": { "value": "Resources from credit institutions
This balance is analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Non-interest
bearing
Interest
bearing
Total
Non-interest
bearing
Interest
bearing
Total
Resources and other financing
from Central Banks
Bank of Portugal
\u2014
\u2014
\u2014
\u2014
592,740
592,740
Central Banks abroad
\u2014
110,776
110,776
\u2014
14,736
14,736
\u2014
110,776
110,776
\u2014
607,476
607,476
Resources from credit institutions in
Portugal
Sight deposits
63,128
\u2014
63,128
92,493
\u2014
92,493
Term Deposits
\u2014
79,198
79,198
\u2014
151,244
151,244
63,128
79,198
142,326
92,493
151,244
243,737
Resources from credit institutions
abroad
Repayable on demand
88,864
\u2014
88,864
74,890
\u2014
74,890
Term deposits
\u2014
127,224
127,224
\u2014
152,385
152,385
Loans obtained
\u2014
264,635
264,635
\u2014
293,387
293,387
CIRS and IRS operations collateralised
by deposits (*)
88,633
\u2014
88,633
92,299
\u2014
92,299
Other resources
\u2014
6,668
6,668
\u2014
4,186
4,186
177,497
398,527
576,024
167,189
449,958
617,147
240,625
588,501
829,126
259,682
1,208,678
1,468,360
(*) Under the scope of transactions involving derivative financial instruments (IRS and CIRS) with institutional counterparties, and in
accordance with the terms of their respective agreements (\"Cash collateral\"). These deposits are held by the Group and are reported as
collateral for the referred operations (IRS and CIRS), whose revaluation is positive.
As at 31 December 2022, the item Resources and others financing from Central Banks \u2013 Bank of Portugal included a total
amount associated with the TLTRO III program of Euros 600,000,000, having been repaid early in January 2023.
Considering the financing characteristics and the nature of the respective lender, the Bank accounted for the TLTRO III
operation under IFRS 9. The Bank considered that the operation constitutes a variable rate financing, indexed to the
Deposit Facility Rate of the European Central Bank (ECB), having fulfilled the necessary criteria for it. Specifically for
the period between 24 June 2020 and 23 June 2022, the Bank complied with the conditions required for the
application, to each of the two tranches of the financing, of a maximum interest rate of -1%. Consequently, it
recognised in the financial statements, for the referred interest counting period, the rate of -1%. For the period
between 24 June and 31 December 2022, the rate resulting from the provisions of the regulation applied for the
calculation in the different subperiods.
This balance is analysed, by remaining period, as follows:
(Thousands of euros)
2023
2022
(restated)
Up to 3 months
516,776
499,654
3 to 6 months
18,467
53,095
6 to 12 months
293,883
34,278
1 to 5 periods
\u2014
881,333
829,126
1,468,360
Subordinated debt
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Bonds
Non-Perpetual
1,402,278
1,376,856
Corrections to the\u00a0 liabilities value subject to hedging operations (note 54)
(41,831)
(72,040)
Deferred costs / (income)
(1,956)
(2,436)
Interests to pay
38,934
30,676
1,397,425
1,333,056
As at 31\u00a0December 2023, the subordinated debt issues are analysed as follows:
(Thousands of euros)
2023
Issue
Issue
date
Maturity
date
Interest
rate
Nominal
value
Book
value
Own funds
value (*)
Banco Comercial Portugu\u00eas
Bcp Fix Rate Reset Sub Notes-Emtn 854
December, 2017
December, 2027
See reference (i)
166,300
166,666
130,915
Bcp Subord Fix Rate Note Projeto Tagus
Mtn 855
September, 2019
March, 2030
See reference (ii)
450,000
443,394
450,000
BCP Tier 2 Subord Callable Notes Due
May 2032 - MTN 858
November, 2021
May, 2032
See reference (iii)
300,000
285,050
300,000
BCP2022 Tier 2 Sub Callable Notes Due 2
June 2033 MTN 860
December, 2022
March, 2033
See reference (iv)
133,700
141,969
133,700
Bank Millennium Group
Bank Millennium - BKMO_071227R
December, 2017
December, 2027
8.12%
161,153
162,013
51,556
Bank Millennium - BKMO_300129W
January, 2019
January, 2029
8.94%
191,081
198,289
61,131
Magellan No. 3
Magellan No. 3 Series 3 Class F
June, 2005
May, 2058
-
44
44
\u2014
1,397,425
1,127,302
(*) Amount of subordinated loans, eligible as Level 2 own funds, in accordance with Articles 62 a), 63 to 65, 66 a) and 67 of the CRR.
References - Interest rate:
(i) up to the 5th year fixed rate 4.5%; 6th year and following: mid-swap rate\u00a0 in force at the beginning of this period + 4.267%;
(ii) Annual interest rate of 3.871% during the first 5.5 years (corresponding to a spread of 4.231% over the 5.5-year mid-swap rate, for the
remaining 5 years will be applied over the mid-swap rate in force at the beginning of that period).
(iii)\u00a0 Interest rate of 4%, per annum, during the first 5 years and 6 months (corresponding to a spread of 4.065% over the average of the mid-
swap rates of 5 and 6 years). At the end of the first 5 years and 6 months the interest rate will be reset to maturity based on the 5-year mid
swaps rate prevailing at that time plus the Spread.
(iv) Fixed annual interest rate of 8.75% during the first 5.25 years. The annual interest rate from year 5.25 onwards was set at the 5-year mid-
swap rate plus a 6.051%.
As at 31\u00a0December 2022, the subordinated debt issues are analysed as follows:
(Thousands of euros)
2022 (restated)
Issue
Issue
date
Maturity
date
Interest
rate
Nominal
value
Book
value
Own funds
value (*)
Banco Comercial Portugu\u00eas
Bcp Fix Rate Reset Sub Notes-Emtn 854
December, 2017
December, 2027
See reference (i)
166,300
164,044
164,175
Bcp Subord Fix Rate Note Projeto Tagus
Mtn 855
September, 2019
March, 2030
See reference (ii)
450,000
428,740
450,000
BCP Tier 2 Subord Callable Notes Due
May 2032 - MTN 858
November, 2021
May, 2032
See reference (iii)
300,000
274,350
300,000
BCP2022 Tier 2 Sub Callable Notes Due
2 June 2033 MTN 860
December, 2022
March, 2033
See reference (iv)
133,700
130,932
133,700
Bank Millennium Group
Bank Millennium - BKMO_071227R
December, 2017
December, 2027
9.7%
149,521
150,475
98,956
Bank Millennium - BKMO_300129W
January, 2019
January, 2029
9.6%
177,290
184,471
117,334
Magellan No. 3
Magellan No. 3 Series 3 Class F
June, 2005
May, 2058
-
44
44
\u2014
1,333,056
1,264,165
(*) Amount of subordinated loans, eligible as Level 2 own funds, in accordance with Articles 62 a), 63 to 65, 66 a) and 67 of the CRR.
References - Interest rate:
(i) up to the 5th year fixed rate 4.5%; 6th year and following: mid-swap rate\u00a0 in force at the beginning of this period + 4.267%;
(ii) Annual interest rate of 3.871% during the first 5.5 years (corresponding to a spread of 4.231% over the 5.5-year mid-swap rate, for the
remaining 5 years will be applied over the mid-swap rate in force at the beginning of that period).
(iii)\u00a0 Interest rate of 4%, per annum, during the first 5 years and 6 months (corresponding to a spread of 4.065% over the average of the mid-
swap rates of 5 and 6 years). At the end of the first 5 years and 6 months the interest rate will be reset to maturity based on the 5-year mid
swaps rate prevailing at that time plus the Spread.
(iv) Fixed annual interest rate of 8.75% during the first 5.25 years. The annual interest rate from year 5.25 onwards was set at the 5-year mid-
swap rate plus a 6.051%.
The analysis of the subordinated debt by remaining period, is as follows:
(Thousands of euros)
2023
2022
(restated)
1 to 5 years
328,679
314,519
Over 5 years
1,068,746
1,018,537
1,397,425
1,333,056
The average discount rates for Loans and advances to credit institutions, Loans and advances to customers, Resources
from credit institutions and Resources from customers are analysed as follows:
Loans and advances to
credit institutions
Loans and advances to
customers
Resources from credit
institutions
Resources from customers
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
EUR
4.31%
2.44%
4.76%
5.15%
4.28%
3.38%
4.32%
2.77%
AOA
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
AUD
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4.86%
3.76%
CAD
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
5.43%
5.11%
CHF
n.a.
n.a.
3.57%
4.48%
n.a.
n.a.
2.10%
1.58%
CNY
n.a.
n.a.
2.95%
n.a.
n.a.
n.a.
2.66%
1.64%
DKK
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.93%
2.77%
GBP
n.a.
n.a.
n.a.
n.a.
5.69%
4.07%
5.50%
4.18%
HKD
n.a.
n.a.
4.24%
4.73%
n.a.
n.a.
5.30%
3.89%
JPY
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
MOP
n.a.
n.a.
3.66%
4.17%
n.a.
n.a.
5.11%
4.89%
MZN
19.51%
19.51%
23.62%
22.59%
n.a.
n.a.
16.41%
15.99%
NOK
n.a.
n.a.
n.a.
6.19%
n.a.
n.a.
5.09%
3.64%
PLN
5.27%
7.27%
8.28%
10.01%
5.28%
7.39%
5.48%
7.00%
SEK
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4.37%
3.53%
TRY
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
44.94%
n.a.
USD
5.78%
5.41%
6.34%
5.74%
5.85%
5.52%
5.03%
4.51%
ZAR
8.69%
8.61%
13.08%
13.05%
n.a.
n.a.
5.87%
5.45%
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-673": { "value": "Resources from customers and other loans
This balance is analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Non-interest
bearing
Interest
bearing
Total
Non-interest
bearing
Interest
bearing
Total
Deposits from customers
Repayable on demand
44,526,917
522,014
45,048,931
48,490,531
182,647
48,673,178
Term deposits
\u2014
25,106,121
25,106,121
\u2014
19,742,066
19,742,066
Saving accounts
\u2014
4,487,509
4,487,509
\u2014
6,315,477
6,315,477
Cheques and orders to pay
630,497
\u2014
630,497
564,369
\u2014
564,369
Other
\u2014
60,000
60,000
\u2014
60,005
60,005
45,157,414
30,175,644
75,333,058
49,054,900
26,300,195
75,355,095
Corrections to the liabilities value
subject to hedging operations
103,654
(1,846)
Deferred costs/ (income)
(621)
(716)
Interests to pay
170,722
77,610
75,606,813
75,430,143
In the terms of the Law, the Deposit Guarantee Fund was established to guarantee the reimbursement of funds
deposited in Credit Institutions. The criteria to calculate the annual contributions to the Portuguese fund are defined in
the Regulation no. 11/94 of the Bank of Portugal.
This balance is analysed, by remaining period until the next operation renewal date, as follows:
(Thousands of euros)
2023
2022
(restated)
Deposits repayable on demand
45,049,544
48,673,569
Term deposits and saving accounts
Up to 3 months
15,054,319
14,069,453
3 to 6 months
8,776,363
7,034,909
6 to 12 months
5,341,384
3,921,351
1 to 5 years
693,602
1,106,125
29,865,668
26,131,838
Cheques and orders to pay
Up to 3 months
630,497
564,369
630,497
564,369
Other
Up to 3 months
1,104
367
Over 5 years
60,000
60,000
61,104
60,367
75,606,813
75,430,143
The average discount rates for Loans and advances to credit institutions, Loans and advances to customers, Resources
from credit institutions and Resources from customers are analysed as follows:
Loans and advances to
credit institutions
Loans and advances to
customers
Resources from credit
institutions
Resources from customers
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
EUR
4.31%
2.44%
4.76%
5.15%
4.28%
3.38%
4.32%
2.77%
AOA
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
AUD
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4.86%
3.76%
CAD
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
5.43%
5.11%
CHF
n.a.
n.a.
3.57%
4.48%
n.a.
n.a.
2.10%
1.58%
CNY
n.a.
n.a.
2.95%
n.a.
n.a.
n.a.
2.66%
1.64%
DKK
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.93%
2.77%
GBP
n.a.
n.a.
n.a.
n.a.
5.69%
4.07%
5.50%
4.18%
HKD
n.a.
n.a.
4.24%
4.73%
n.a.
n.a.
5.30%
3.89%
JPY
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
MOP
n.a.
n.a.
3.66%
4.17%
n.a.
n.a.
5.11%
4.89%
MZN
19.51%
19.51%
23.62%
22.59%
n.a.
n.a.
16.41%
15.99%
NOK
n.a.
n.a.
n.a.
6.19%
n.a.
n.a.
5.09%
3.64%
PLN
5.27%
7.27%
8.28%
10.01%
5.28%
7.39%
5.48%
7.00%
SEK
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4.37%
3.53%
TRY
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
44.94%
n.a.
USD
5.78%
5.41%
6.34%
5.74%
5.85%
5.52%
5.03%
4.51%
ZAR
8.69%
8.61%
13.08%
13.05%
n.a.
n.a.
5.87%
5.45%
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromCustomersExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-674": { "value": "Subordinated debt
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Bonds
Non-Perpetual
1,402,278
1,376,856
Corrections to the\u00a0 liabilities value subject to hedging operations (note 54)
(41,831)
(72,040)
Deferred costs / (income)
(1,956)
(2,436)
Interests to pay
38,934
30,676
1,397,425
1,333,056
As at 31\u00a0December 2023, the subordinated debt issues are analysed as follows:
(Thousands of euros)
2023
Issue
Issue
date
Maturity
date
Interest
rate
Nominal
value
Book
value
Own funds
value (*)
Banco Comercial Portugu\u00eas
Bcp Fix Rate Reset Sub Notes-Emtn 854
December, 2017
December, 2027
See reference (i)
166,300
166,666
130,915
Bcp Subord Fix Rate Note Projeto Tagus
Mtn 855
September, 2019
March, 2030
See reference (ii)
450,000
443,394
450,000
BCP Tier 2 Subord Callable Notes Due
May 2032 - MTN 858
November, 2021
May, 2032
See reference (iii)
300,000
285,050
300,000
BCP2022 Tier 2 Sub Callable Notes Due 2
June 2033 MTN 860
December, 2022
March, 2033
See reference (iv)
133,700
141,969
133,700
Bank Millennium Group
Bank Millennium - BKMO_071227R
December, 2017
December, 2027
8.12%
161,153
162,013
51,556
Bank Millennium - BKMO_300129W
January, 2019
January, 2029
8.94%
191,081
198,289
61,131
Magellan No. 3
Magellan No. 3 Series 3 Class F
June, 2005
May, 2058
-
44
44
\u2014
1,397,425
1,127,302
(*) Amount of subordinated loans, eligible as Level 2 own funds, in accordance with Articles 62 a), 63 to 65, 66 a) and 67 of the CRR.
References - Interest rate:
(i) up to the 5th year fixed rate 4.5%; 6th year and following: mid-swap rate\u00a0 in force at the beginning of this period + 4.267%;
(ii) Annual interest rate of 3.871% during the first 5.5 years (corresponding to a spread of 4.231% over the 5.5-year mid-swap rate, for the
remaining 5 years will be applied over the mid-swap rate in force at the beginning of that period).
(iii)\u00a0 Interest rate of 4%, per annum, during the first 5 years and 6 months (corresponding to a spread of 4.065% over the average of the mid-
swap rates of 5 and 6 years). At the end of the first 5 years and 6 months the interest rate will be reset to maturity based on the 5-year mid
swaps rate prevailing at that time plus the Spread.
(iv) Fixed annual interest rate of 8.75% during the first 5.25 years. The annual interest rate from year 5.25 onwards was set at the 5-year mid-
swap rate plus a 6.051%.
As at 31\u00a0December 2022, the subordinated debt issues are analysed as follows:
(Thousands of euros)
2022 (restated)
Issue
Issue
date
Maturity
date
Interest
rate
Nominal
value
Book
value
Own funds
value (*)
Banco Comercial Portugu\u00eas
Bcp Fix Rate Reset Sub Notes-Emtn 854
December, 2017
December, 2027
See reference (i)
166,300
164,044
164,175
Bcp Subord Fix Rate Note Projeto Tagus
Mtn 855
September, 2019
March, 2030
See reference (ii)
450,000
428,740
450,000
BCP Tier 2 Subord Callable Notes Due
May 2032 - MTN 858
November, 2021
May, 2032
See reference (iii)
300,000
274,350
300,000
BCP2022 Tier 2 Sub Callable Notes Due
2 June 2033 MTN 860
December, 2022
March, 2033
See reference (iv)
133,700
130,932
133,700
Bank Millennium Group
Bank Millennium - BKMO_071227R
December, 2017
December, 2027
9.7%
149,521
150,475
98,956
Bank Millennium - BKMO_300129W
January, 2019
January, 2029
9.6%
177,290
184,471
117,334
Magellan No. 3
Magellan No. 3 Series 3 Class F
June, 2005
May, 2058
-
44
44
\u2014
1,333,056
1,264,165
(*) Amount of subordinated loans, eligible as Level 2 own funds, in accordance with Articles 62 a), 63 to 65, 66 a) and 67 of the CRR.
References - Interest rate:
(i) up to the 5th year fixed rate 4.5%; 6th year and following: mid-swap rate\u00a0 in force at the beginning of this period + 4.267%;
(ii) Annual interest rate of 3.871% during the first 5.5 years (corresponding to a spread of 4.231% over the 5.5-year mid-swap rate, for the
remaining 5 years will be applied over the mid-swap rate in force at the beginning of that period).
(iii)\u00a0 Interest rate of 4%, per annum, during the first 5 years and 6 months (corresponding to a spread of 4.065% over the average of the mid-
swap rates of 5 and 6 years). At the end of the first 5 years and 6 months the interest rate will be reset to maturity based on the 5-year mid
swaps rate prevailing at that time plus the Spread.
(iv) Fixed annual interest rate of 8.75% during the first 5.25 years. The annual interest rate from year 5.25 onwards was set at the 5-year mid-
swap rate plus a 6.051%.
The analysis of the subordinated debt by remaining period, is as follows:
(Thousands of euros)
2023
2022
(restated)
1 to 5 years
328,679
314,519
Over 5 years
1,068,746
1,018,537
1,397,425
1,333,056
", "dimensions": { "concept": "ifrs-full:DisclosureOfSubordinatedLiabilitiesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-675": { "value": "Financial liabilities held for trading
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Short selling securities
626
1,022
Trading derivatives (note 24)
\u00a0 Swaps
96,824
170,165
of which: Embedded derivatives
\u2014
8
\u00a0 Options
100,702
60,901
of which: Embedded derivatives
95,357
53,487
Forwards
9,235
9,418
206,761
240,484
207,387
241,506
Level 2
108,767
186,130
Level 3
98,620
55,376
As referred in IFRS 13, financial instruments are measured according to the levels of valuation described in note 49. The
balance Financial liabilities held for trading includes, as at 31\u00a0December 2023, the embedded derivatives valuation
separated from the host contracts in accordance with the accounting policy presented in note 1 C5. in the amount of
Euros 95,357,000 (31\u00a0December 2022: Euros 53,495,000). This note should be analysed together with note 24.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesHeldForTradingExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-676": { "value": "Financial liabilities designated at fair value through profit or loss
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Deposits from customers (*)
2,321,000
476,671
Certificates
989,703
850,681
Debt securities at fair value through profit and loss
Medium term notes (MTN)
297,784
490,326
3,608,487
1,817,678
(*) Deposits from customers whose remuneration is indexed to a set of shares and/or indices.
As at 31\u00a0December 2023, the analysis of Debt securities at fair value\u00a0 through profit and loss, is as follows:
(Thousands of euros)
Issue
Issue date
Maturity date
Interest rate
Nominal value
Book value
Banco Comercial Portugu\u00eas:
Bcp Cabaz 3 A\u00e7\u00f5es Fevereiro 2024 - Smtn
Sr 31
February, 2019
February, 2024
Indexed to portfolio
of 3 shares
71,904
71,170
Bcp Tit Div Mill Cabaz 3 A\u00e7\u00f5es 8Abr24
Smtn Sr 35
April, 2019
April, 2024
Indexed to portfolio
of 3 shares
64,634
63,405
Bcp Tit Div Millennium Cabaz 5 Ac
26Julho2024 Smtn 42
July, 2019
July, 2024
Indexed to portfolio
of 5 shares
75,600
73,026
Bcp Tit Divida Millennium Cabaz 5 Acoes
6Dez24 Smtn 44
December, 2019
December, 2024
Indexed to portfolio
of 5 shares
94,602
90,183
297,784
As at 31\u00a0December 2023, the analysis of Debt securities at fair value\u00a0 through profit and loss, is as follows:
(Thousands of euros)
2023
Up to
3 months
3 months to
6 months
6 months to
1 year
1 year to
5 years
Over 5
years
Total
Deposits from customers
749,199
277,406
1,059,861
234,534
\u2014
2,321,000
Certificates
\u2014
\u2014
\u2014
32,088
957,615
989,703
Debt securities at fair value
through profit and loss
MTN
71,170
63,405
163,209
\u2014
\u2014
297,784
820,369
340,811
1,223,070
266,622
957,615
3,608,487
As at 31\u00a0December 2022, the analysis of this balance, by remaining period, is as follows:
(Thousands of euros)
2022 (restated)
Up to
3 months
3 months to
6 months
6 months to
1 year
1 year to
5 years
Over 5
years
Total
Deposits from customers
315,692
160,979
476,671
Certificates
\u2014
\u2014
\u2014
\u2014
850,681
850,681
Debt securities at fair value through
profit and loss
MTN
\u2014
80,858
116,899
292,569
\u2014
490,326
\u2014
80,858
432,591
453,548
850,681
1,817,678
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsDesignatedAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-678": { "value": "Provisions
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Provision for guarantees and other commitments
121,574
110,754
Other provisions for liabilities and charges
631,529
451,032
753,103
561,786
Changes in Provisions for guarantees and other commitments are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
110,754
110,649
Transfers
(1,990)
(708)
Charge for the year (note 14)
40,602
27,864
Reversals for the year (note 14)
(28,372)
(26,939)
Exchange rate differences
580
(112)
Balance at the end of the year
121,574
110,754
Changes in Other provisions for liabilities and charges are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
451,032
348,095
Transfers
(24,858)
(5,504)
Charge of the year for restructuring costs
\u2014
4,414
Charge for the year (note 14)
785,928
569,226
Reversals for the year (note 14)
(4,000)
(1,854)
Amounts charged-off
(42,138)
(116,874)
Allocation to loan's portfolio (note 22)
(583,027)
(344,052)
Exchange rate differences
48,592
(2,419)
Balance at the end of the year
631,529
451,032
The balance Other provisions for liabilities and charges - Charge for the year refers essentially to provisions for legal
risk accounted for by Bank Millennium, related to foreign currency-indexed mortgage loans, as described in note 57,
which, in 2023, amounted to Euros 675,252,000 (2022: Euros 430,843,000).
The Other provisions for liabilities and charges were based on the probability of occurrence of certain contingencies
related to risks inherent to the Group's activity, being reviewed at each reporting date in order to reflect the best
estimate of the amount and respective probability of payment.
This balance includes provisions for lawsuits, frauds and tax contingencies. As at 31\u00a0December 2023, the provisions
constituted to cover tax contingencies totalled Euros 54,384,000 (31\u00a0December 2022: Euros 38,311,000).
At the end of December 2022, the balance of Other provisions for liabilities and charges was reinforced in the amount
of Euros 4,414,000, referring to agreements already concluded with some employees whose effective departures will
occur during the first half of 2023. By 31 December 2023, the Bank has written-off the amount of Euros 3,113,000,
relating to compensations for termination of functions (note 7).
Additionally, there are provisions for liabilities and charges recorded for corporate restructuring funds and carved-out
assets of the Project Crow, completed in December 2022.
Provisions for legal risk related to foreign currency-indexed mortgage loans in Bank Millennium (Poland)
In 2021, Bank Millennium changed the accounting policy regarding the recognition of provisions for future claims related
to active CHF mortgage loans in the balance sheet. As a result of changes in market conditions, such as the growing
number of unfavourable court judgments declaring the entire agreement or certain provisions of these credits to be
invalid, the Bank does not expect that all contractual cash flows related to these loans will be recovered. As a result,
Bank Millennium allocates provisions for future claims and recognizes them as a reduction of the gross carrying amount
of loans for which a decrease in future cash flows is expected, in accordance with paragraph B5.4.6 of IFRS 9 \"Financial
Instruments\" (previously provisions for future claims used to be recognized in accordance with IAS 37 \"Provisions,
Contingent Liabilities and Contingent Assets\"). As a result of the above change, the approach applied in accordance
with IAS 37 will be continued only regarding claims relating to already repaid (or almost fully repaid) receivables not
recognised in Bank Millennium's balance sheet.
As at 31\u00a0December 2023, the Loans and advances to customers portfolio in CHF has a gross amount of Euros
2,218,947,000 (31 December 2022: Euros 2,477,851,000).
As at 31\u00a0December 2023, the provisions estimated by Bank Millennium to address the legal risk related to foreign
currency-indexed mortgage loans amount to Euros 1,812,231,000 (PLN 7,871,789,000), of which Euros 1,500,209,000
(PLN 6,516,460,000) are presented under assets, as a deduction from the gross amount of the loan portfolio in CHF
(note 22) and Euros 312,022,000 (PLN 1,355,329,000) are presented under Provisions.\u00a0
With reference to 31\u00a0December 2022, the provisions estimated by Bank Millennium to address the legal risk related to
foreign currency-indexed mortgage loans amount to Euros 1,152,457,000 (PLN 5,395,344,000), of which Euros
976,782,000 (PLN 4,572,901,000) are presented under assets, as a deduction from the gross amount of the loan
portfolio in CHF (note 22) and Euros 175,676,000 (PLN 822,443,000) are presented under Provisions.
The variation in the level of provisions or concrete losses will depend on the final court decisions about each case and
on the number of court cases.
Provisions for legal risk related to foreign currency-indexed mortgage loans in
Bank Millennium (Poland)
1. Court claims and current provisions for legal risk
On 31 December 2023, Bank Millennium had 20,914 loan agreements and additionally 1,780 loan agreements from
former Euro Bank under individual ongoing litigations (excluding claims submitted by Bank Millennium against clients
i.e. debt collection cases) concerning indexation clauses of FX mortgage loans submitted to the courts (64% loans
agreements before the courts of first instance and 36% loans agreements before the courts of second instance) with the
total value of claims filed by the plaintiffs amounting to PLN 4,130.6 million (Euros 950.9 million) and CHF 281.5 million
(Euros 302.8 million) [(Bank Millennium portfolio: PLN 3,780.2 million (Euros 870.3 million) and CHF 272.6 million (Euros
293.2 million) and former Euro Bank portfolio: PLN 350.4 million (Euros 80.7 million) and CHF 8.8 million (Euros 9.5
million)]. Out of 20,914 Bank Millennium's loan agreements in ongoing individual cases 240 are also part of class action.
From the total number of individual litigations against the Bank approximately 2,260 or 11% were submitted by
borrowers that had already naturally or early fully repaid the loan or were converted to polish zloty at the moment of
submission and had not a settlement agreement and approximately another 730 cases correspond to loans that were
fully repaid since then (as court proceedings are lengthy).
The claims formulated by the clients in individual proceedings primarily concern the declaration of invalidity of the
contract and payment for reimbursement of paid principal and interest instalments as undue performance, due to the
abusive nature of indexation clauses, or maintenance of the agreement in PLN with interest rate indexed to CHF Libor.
In addition, Bank Millennium is a party to the group proceedings (class action) subject matter of which is to determine
Bank Millennium's liability towards the group members based on unjust enrichment (undue benefit) ground in
connection with the foreign currency mortgage loans concluded. It is not a payment dispute. The judgment in these
proceedings will not directly grant any amounts to the group members. The number of credit agreements covered by
these proceedings is 3,273. Out of 3,273 loan agreements in class action 240 are also part of ongoing individual cases,
858 concluded settlements and 7 received final verdicts (invalidation of loan agreement). On 24 May 2022 the court
issued a judgment on the merits, dismissing the claim in full. On 13 December 2022 the claimant filed an appeal against
the judgment of 24 May 2022. On 20 November 2023 the claimant requested granting interim measures to secure the
claims against the Bank. In a decision of 27 December 2023, the request for granting interim measures was dismissed.
The pushy advertising campaign observed in the public domain affects the number of court disputes. Until the end of
2019, 1,985 individual claims were filed against Bank Millennium (in addition, 236 against former Euro Bank), in 2020
the number increased by 3,005 (265), in 2021 the number increased by 6,159 (423), in 2022 the number increased by
5,755 (408), while in 2023 the number increased by 6,871 (647).
Based on ZBP (the Polish Banking Association) data gathered from all banks having FX mortgage loans, vast majority of
disputes were finally resolved against the banks. As far as Bank Millennium (including the former Euro Bank portfolio) is
concerned, from 2015 until the end of 2023, 3,341 cases were finally resolved (3,263 in claims submitted by clients
against Bank Millennium and 78 in claims submitted by Bank Millennium against clients i.e. debt collection cases) out of
which 925 were settlements, 56 were remissions, 64 rulings were favourable for Bank Millennium and 2,296 were
unfavourable including both invalidation of loan agreements as well as conversions into PLN+LIBOR. Bank Millennium
files appeals against negative judgements of the courts of 1st instance declaring invalidation of loan agreements.
Simultaneously Bank Millennium undertakes proper legal actions in order to secure repayment of initially disbursed
capital of the loan.
The outstanding gross balance of the loan agreements under individual court cases and class action against Bank
Millennium (including the former Euro Bank portfolio) on 31 December 2023 was PLN 6,264 million (Euros 1,442.1
million) [of which the outstanding amount of the loan agreements under the class action proceeding was PLN 763
million (Euros 175.7 million)].
If all Bank Millennium\u2019s originated loan agreements currently under individual and class action court proceedings would
be declared invalid without any compensation for the use of capital, the pre-tax cost could reach PLN 6,955 million
(Euros 1,601.2 million), excluding potential amounts connected with interest. Overall losses would be higher or lower
depending on the final court jurisprudence in this regard.
In the 12 months of 2023, Bank Millennium created PLN 2,828.1 million (Euros 623 million) provisions for Bank
Millennium originated portfolio and PLN 237.3 million (Euros 52.2 million) for former Euro Bank originated portfolio.
The balance sheet value of provisions for Bank Millennium's portfolio at the end of December 2023 was at the level of
PLN 7,268.8 million (Euros 1,673.4 million), and PLN 603 million (Euros 138.8 million) for former Euro Bank originated
portfolio.
The methodology developed by Bank Millennium of calculating provisions for legal risk involved with indexed loans is
based on the following main parameters:
(1) the number of ongoing cases (including class action agreements) and potential future lawsuits that will arise within
the specified (three-year) time horizon. As regards the number of future court cases, Bank Millennium monitors
customer behaviours, follows market trends and expert comments, which resulted in the adjustment of previous
assumptions. As a result, in the methodology of calculating provisions for legal risk in the case of active loans (loans
with an outstanding balance as at the date of filing the lawsuit), Bank Millennium increased the estimated percentage
of customers covered by methodology in this group of clients to 83% of the total number of currently active loans
compared to 77% at the end of 3rd quarter of 2023. Regarding loans already fully repaid or converted to polish zloty,
Bank Millennium attributes a much lower probability of becoming the subject of a court case based on statistical
analysis. In particular: a) Bank Millennium assesses the risk connected with the settlements reached with the clients in
the past as negligible\u00a0 b) from the group of loans that have been repaid (naturally or early or converted into polish zloty
loan) and were not subject of a settlement agreement, Bank Millennium assumes that circa 16% sued or will decide to
sue the Bank in the future;
(2) the currently estimated amount of Bank Millennium's potential loss in the event of a specific court judgment;
(3) the probability of obtaining a specific court judgment calculated on the basis of statistics of judgments in cases
where Bank Millennium is a party and legal opinions obtained;
(4) Bank Millennium does not include in the methodology of calculating an element related to the potential claim for
remuneration for the client in connection with the repayments made by him or her;
(5) estimates involved with amicable settlements with clients, concluded in court or out of court:
a. Bank Millennium assumes 12% probability of success of reaching a settlement within negotiations made with
clients during court proceedings;
b. negotiations in court or out of court are conducted on a case-by-case basis and can be stopped at any time by
Bank Millennium;
c. due to significant negotiation efforts already made in the past, the probability of success in these negotiations
in the future is decreasing, and at the same time most customers have already been contacted by or contacted
the Bank regarding the possible conversion of loans into PLN, so at the moment the Bank adopts a conservative
approach when taking into account the potential impact of this factor.
Bank Millennium is open to negotiate case by case favourable conditions for early repayment or conversion of loans to
PLN. As a result of these negotiations, the number of active FX mortgage loans originated by Bank Millennium decreased
by 21,428: 1,363 in 2020; 8,450 in 2021; 7,943 in 2022 and 3,672 in 2023. As of the end of 2023, the Bank had 32,425
active FX mortgage loans. Cost incurred in conjunctions with these negotiations totalled PLN 1,340.1 million (Euros
295.2 million): PLN 44.5 million (Euros 9.8 million) in 2020; PLN 364.6 million (Euros 80.3 million) in 2021; PLN 515.2
million (Euros 113.5 million) in 2022 and PLN 415.8 million (Euros 91.6 million) in 2023 and is presented mainly in
\u2018Result on exchange differences\u2019 and also in \u2018Result on modification\u2019 in the profit and loss statement.
Legal risk from former Euro Bank portfolio is fully covered by Indemnity Agreement with Soci\u00e9t\u00e9 G\u00e9n\u00e9rale.
Bank Millennium analysed the sensitivity of the methodology for calculating provisions, for which a change in the
parameters would affect the value of the estimated loss to the legal risk of litigation:
Parameter
Scenario
Impact on the loss
Change in the assumed number of
court cases
In addition to above assumed numbers,
1,000 new customers file a lawsuit against
the Bank
PLN 167 million (Euros 36.8 million)
Change of estimated losses for each
variant of judgment
Change of losses for each judgment variant
by 1 p.p
PLN 75 million (Euros 16.5 million)
Change in probability of success in
negotiations with court client
Change of probability by 1 p.p
PLN 18 million (Euros 4 million)
On 8 December 2020, Mr. Jacek Jastrz\u0119bski, the Chairman of the Polish Financial Supervision Authority (\u2018PFSA\u2019)
proposed a \u2018sector\u2019 solution to address the sector risks related to FX mortgages. The solution would consist in offering
banks\u2019 clients a voluntary possibility of concluding arrangements based on which a client would settle a CHF Mortgage
Loan as if it was a PLN loan bearing interest at an appropriate WIBOR rate increased by the margin historically
employed for such loans. The decision to generally implement this solution could imply the need of creating upfront
provisions for the losses resulting from the conversion of CHF Mortgage Loans. Bank Millennium in practice has been
using elements of the proposal of above system solution on many individual negotiations with FX mortgage borrowers,
including in the course of court proceedings.
Due to the circumstances stemming from the CJEU which excludes demanding by the Bank amounts exceeding the
return of disbursed capital, the possibility of successful implementation of a general offer of KNF solution is low.
Finally, it should also be mentioned that Bank Millennium, as at 31 December 2023, had to maintain additional own
funds for the coverage of additional capital requirements related to FX mortgage portfolio risks (Pillar II FX buffer) in
the amount of 1.47 p.p. (1.46 p.p. at the Group level), part of which is allocated to operational/legal risk.
Taking into consideration the recent negative evolution in the court verdicts regarding FX mortgage loans, the Bank will
have to regularly review and may need to continue to increase the balance of provisions allocated to court litigations.
It can reasonably be assumed that the legal issues relating to foreign currency mortgage loans will be further examined
by the polish courts within the framework of disputes considered which would possibly result in the emergence of
further interpretations, which are relevant for the assessment of the risks associated with subject matter proceedings.
This circumstance indicates the need for constant analysis of these matters.
The Court of Justice of the European Union and the Polish Supreme Court rulings relevant to risk assessment
Jurisprudence of the Court of Justice of the European Union
On 3 October 2019, the Court of Justice of the European Union (the CJEU) issued the judgment in Case C-260/18 in
connection with the preliminary questions formulated by the District Court of Warsaw in the case against Raiffeisen
Bank International AG. The judgment of the CJEU, as regards the interpretation of European Union law made therein, is
binding on domestic courts. The judgment in question interpreted Article 6 of Directive 93/13. In the light of the
subject matter judgment the said provision must be interpreted in such a way that:
(i) the national court may invalidate a credit agreement if the removal of unfair terms detected in this agreement
would alter the nature of the main subject-matter of the contract;
(ii) the effects for the consumer\u2019s situation resulting from the cancellation of the contract must be assessed in the light
of the circumstances existing or foreseeable at the time when the dispute arose and the will of the consumer is decisive
as to whether he wishes to maintain the contract;
(iii) Article 6 of the Directive precludes the filling-in of gaps in the contract caused by the removal of unfair terms from
the contract solely on the basis of national legislation of a general nature or established customs;
(iv) Article 6 of the Directive precludes the maintenance of unfair terms in the contract if the consumer has not
consented to the maintenance of such terms. It can be noticed the CJEU found doubtful the possibility of a credit
agreement being performed further in PLN while keeping interest calculated according to LIBOR.
The CJEU judgment concerns only the situation where the national court has previously found the contract term to be
abusive. It is the exclusive competence of the national courts to assess, in the course of judicial proceedings, whether a
particular contract term can be regarded as abusive in the circumstances of the case.
On 29 April 2021, the CJEU issued the judgement in the case C-19/20 in connection with the preliminary questions
formulated by the District Court in Gda\u0144sk in the case against of ex-BPH S.A., the CJEU said that:
(i) it is for the national court to find that a term in a contract is unfair, even if it has been contractually amended by
those parties. Such a finding leads to the restoration of the situation that the consumer would have been in in the
absence of the term found to be unfair, except where the consumer, by means of amendment of the unfair term, has
waived such restoration by free and informed consent. However, it does not follow from Council Directive 93/13 that a
finding that the original term is unfair would, in principle, lead to annulment of the contract, since the amendment of
that term made it possible to restore the balance between the obligations and rights of those parties arising under the
contract and to remove the defect which vitiated it;
(ii) the national court may remove only the unfair element of a term in a contract concluded between a seller or
supplier and a consumer where the deterrent objective pursued by Council Directive 93/13 is ensured by national
legislative provisions governing the use of that term, provided that that element consists of a separate contractual
obligation, capable of being subject to an individual examination of its unfair nature. At the same time, provisions of
the Directive preclude the referring court from removing only the unfair element of a term in a contract concluded
between a seller or supplier and a consumer where such removal would amount to revising the content of that term by
altering its substance;
(iii) the consequences of a judicial finding that a term if a contract concluded between a seller or supplier and a
consumer is unfair are covered by national law and the question of continuity of the contract should be assessed by the
national court of its own motion in accordance with an objective approach on the basis of those provisions;
(iv) the national court, finding that a term in a contract concluded between a seller or supplier and a consumer is
unfair, shall inform the consumer, in the context of the national procedural rules after both parties have been heard,
of the legal consequences entailed by annulment of the contract, irrespective of whether the consumer is represented
by a professional representative.
On 18 November 2021, the Court of Justice of the European Union (CJEU) issued a judgment in case C-212/20 in
connection with questions submitted by the District Court for Warsaw Wola in Warsaw in the case against Raiffeisen
Bank International AG. The CJEU stated that:
(i) the content of the clause of the loan agreement concluded between the entrepreneur and the consumer fixing the
purchase and sale price of the foreign currency to which the loan is indexed should, on the basis of clear and
comprehensible criteria, enable the consumer who is reasonably well informed and sufficiently observant and rational
to understand how the exchange rate of the foreign currency used to calculate the amount of the loan instalments is
determined, so that the consumer is able to determine himself at any time the exchange rate used by the
entrepreneur;
(ii) a national court which has found that a term of the agreement concluded between an entrepreneur and a consumer
is unfair cannot interpret that term in order to mitigate its unfairness, even if such an interpretation would correspond
to the common will of the parties.
On 10 June 2021, the Court of Justice of the European Union (CJEU) issued an order in case C-198/20 in connection
with questions submitted by the District Court for Warsaw Wola in Warsaw in the case against Santander Bank Polska
SA. The CJEU stated that the protection provided for in Council Directive 93/13/EEC is granted to all consumers, not
just those who can be considered to be 'duly informed and reasonably observant and circumspect average consumer'.
On 8 September 2022, the Court of Justice of the European Union (CJEU) issued a judgment in joined cases C-80/21,
C-81/21, C-82/21 in connection with questions submitted by the District Court for Warsaw \u015ar\u00f3dmie\u015bcie in Warsaw in
cases against Deutsche Bank SA and mBank SA. The CJEU stated that:
(i) a national court may find that the parts of a contractual term of the agreement concluded between a consumer and
an entrepreneur which render it unfair are unfair, if such a deletion would not amount to a change in the content of
that term that affects its substance, which is for the referring court to verify;
(ii) a national court cannot, after annulling an unfair term contained in an agreement concluded between a consumer
and an entrepreneur which does not render the agreement invalid in its entirety, replace that term with a
supplementary provision of the national law;
(iii) a national court may not, after having declared invalid an unfair term contained in an agreement concluded
between a consumer and an entrepreneur which entails the invalidity of that agreement in its entirety, replace the
contractual term which has been declared invalid either by interpretation of the parties' declaration of intent in order
to avoid the cancellation of that agreement or by a provision of national law of a supplementary nature, even if the
consumer has been informed of the effects of the invalidity of that agreement, and\u00a0 accepted them;
(iv) the ten-year limitation period for a consumer's claim seeking reimbursement of sums unduly paid to the
entrepreneur in performance of an unfair term of a loan agreement does not start to run on the date of each
performance made by the consumer if the consumer was not able on that date to assess on his own the unfairness of
the contractual term or if he had not become aware of the unfair nature of that term and without taking into account
the circumstances that the agreement provided for a repayment period \u2013 in this case thirty years \u2013 well in excess of the
ten-year statutory limitation period.
On 16 March 2023, the Court of Justice of the European Union issued a judgment in a case registered under case
number C-6/22, following preliminary questions submitted by the District Court for Warsaw-Wola in a case against the
former Getin Noble Bank S.A.. In the judgment, the CJEU ruled that:
(i) in the event that a contract concluded between a consumer and a seller or supplier is declared invalid because one
of its terms is unfair, it is for the Member States, by means of their national law, to make provision for the effects of
that invalidation, in compliance with the protection granted to the consumer by that directive, in particular, by
ensuring the restoration of the legal and factual situation that he or she would have been in if that unfair term had not
existed.
(ii) a national court is not allowed:
a. to examine of its own motion, without any prerogative conferred on it by national law in that regard, the
financial situation of a consumer who has sought the invalidation of the contract between him or her and a seller or
supplier on account of the presence of an unfair term without which the contract cannot legally continue to exist,
even if that invalidation is liable to expose the consumer to particularly unfavourable consequences and,
b. to refuse to declare that invalidation where the consumer has expressly sought it, after being objectively and
exhaustively informed of the legal consequences and the particularly unfavourable financial consequences which it
may have for him or her.
(iii) a national court is not allowed, after it has found that a term in a contract concluded between a seller or supplier
and a consumer is unfair, to fill gaps resulting from the removal of the unfair term contained therein by the application
of a provision of national law which cannot be characterised as a supplementary provision. However, it is for the
national court, taking account of its domestic law as a whole, to take all the measures necessary to protect the
consumer from the particularly unfavourable consequences which annulment of the contract might entail for him or
her.
On 8 June 2023, the Court of Justice of the European Union issued a judgment in a case registered under case number
C-570/21, following preliminary questions submitted by the District Court in Warsaw in a case against the former Getin
Noble Bank S.A. In the judgment, the CJEU ruled that:
(i) provisions of Council Directive 93/13 must be interpreted as meaning that the concept of \u2018consumer\u2019, within the
meaning of that provision, covers a person who has concluded a loan contract intended for a purpose in part within and
in part outside his or her trade, business or profession, together with a joint-borrower who did not act within his or her
trade, business or profession, where the trade, business or professional purpose is so limited as not to be predominant
in the overall context of that contract.
(ii) provisions of Directive 93/13 must be interpreted as meaning that in order to determine whether a person falls
within the concept of \u2018consumer\u2019, within the meaning of that provision, and, specifically, whether the trade, business
or professional purpose of a loan contract concluded by that person is so limited as not to be predominant in the overall
context of that contract, the referring court is required to take into consideration all the relevant circumstances
surrounding that contract, both quantitative and qualitative, such as, in particular, the distribution of the borrowed
capital between, on the one hand, a trade, business or profession and, on the other hand, a non-professional activity
and, where there are several borrowers, the fact that only one of them is pursuing a professional purpose or that the
lender made the grant of credit intended for consumer purposes conditional on a partial allocation of the amount
borrowed to the repayment of debts connected with a trade, business or profession.
On 15 June 2023, the Court of Justice of the European Union issued a judgment in a case registered under case number
C-287/22, following preliminary questions submitted by the District Court in Warsaw in a case against the former Getin
Noble Bank S.A. In the judgment, the CJEU ruled that provisions of the Directive 93/13 must be interpreted as
precluding national case-law according to which a national court may dismiss an application for the grant of interim
measures lodged by a consumer seeking the suspension, pending a final decision on the invalidity of the loan agreement
concluded by that consumer on the ground that that loan agreement contains unfair terms, of the payment of the
monthly instalments due under that loan agreement, where the grant of those interim measures is necessary to ensure
the full effectiveness of that decision.
On 15 June 2023, the CJEU issued a judgment in a case registered under case number C-520/21, following preliminary
questions submitted by the District Court in Warsaw in a case against Bank Millennium, in which indicated that Directive
93/13 does not expressly regulate the consequences of invalidity of a contract concluded between a credit institution
and a consumer after the removal of unfair terms contained therein. The CJEU stated that:
(i) the provisions of the Directive do not preclude a judicial interpretation of national law, according to which the
consumer has the right to demand compensation from the credit institution beyond the reimbursement of monthly
instalments and costs paid for the performance of this contract and the payment of statutory default interest from the
date of the request for payment provided that the objectives of Directive 93/13 and the principle of proportionality are
respected.
(ii) the provisions of Directive 93/13 preclude the judicial interpretation of national law, according to which a credit
institution has the right to demand compensation from the consumer that goes beyond the return of the capital paid for
the performance of this contract and beyond the payment of statutory default interest from the date of the request for
payment.
On 21 September 2023, the CJEU issued a judgement in a case registered under case number C-139/22, following
preliminary questions submitted by the District Court in Warsaw in a case against mBank. The CJEU stated that:
(i) provisions of the Directive 93/13 must be interpreted as not precluding a contractual term which has not been
individually negotiated from being regarded as unfair by the national authorities concerned merely by virtue of the fact
that its content is equivalent to that of a standard contract term entered in the national register of standard business
terms held to be unlawful;
(ii) the contractual term which, because of the circumstances for the performance of certain obligations of the
consumer concerned provided for in that term, must be regarded as unfair, may not cease to be considered unfair on
account of another term of that contract which provides for the possibility for that consumer to perform those
obligations under different circumstances;
(iii) a seller or supplier is obliged to inform the consumer concerned of the essential characteristics of the contract
concluded with that seller or supplier and the risks associated with that contract, even though that consumer is its
employee and has relevant knowledge in the field of the contract.
On 7 December 2023, the CJEU issued the judgement in the case C-140/22 in connection with the preliminary questions
formulated by the District Court in Warsaw in the case against of mBank S.A. The Court stated that provisions of the
Directive 93/13 must be interpreted as meaning that, in the context of the cancellation, in its entirety, of a mortgage
loan agreement concluded with a consumer by a banking institution on the ground that that agreement contains an
unfair term without which it cannot continue in existence:
(i) they preclude the judicial interpretation of national law according to which the exercise of the rights which that
consumer draws from that directive is conditional on the lodging, by that consumer, before a court, of a declaration by
which he or she states, first, not to consent to that unfair term remaining effective, secondly, to be aware of the fact
that the nullity of that term entails the cancellation of that agreement and, moreover, of the consequences of that
cancellation and, thirdly, to consent to the cancellation of that agreement;
(ii) they preclude the compensation sought by the consumer concerned in respect of the restitution of the sums paid by
him or her in the performance of the agreement at issue being reduced by the equivalent of the interest which that
banking institution would have received if that agreement had remained in force.
The Court of Justice of European Union by an order of 11 December 2023, closed the case registered under case number
C-756/22 initiated by the District Court in Warsaw in the case brought by Bank Millennium and ruled that the provisions
of Directive 93/13 must be interpreted as meaning that, in the context of declaring a mortgage loan agreement
concluded with a consumer by a banking institution to be invalid in its entirety on the grounds that, that the contract
contains unfair terms without which it cannot be continued, they preclude a judicial interpretation of the law of a
Member State according to which that institution is entitled to recover from that consumer amounts other than the
capital paid in performance of that contract and statutory interest for delay from the time of the demand for payment.
On 14 December 2023, the CJEU issued the judgement in the case C-28/22 in connection with the preliminary questions
referred by the District Court in Warsaw in the case of ex-Getin Noble Bank S.A. The Court stated that:
(i) provisions of Directive 93/13 read in the light of the principle of effectiveness must be interpreted as precluding a
judicial interpretation of national law according to which, following the cancellation of a mortgage loan agreement
concluded with a consumer by a seller or supplier, on account of unfair terms contained in that agreement, the
limitation period for the claims of that seller or supplier stemming from the nullity of that agreement starts to run only
as from the date on which the agreement becomes definitively unenforceable, whereas the limitation period for the
claims of that consumer stemming from the nullity of that agreement begins to run as from the day on which the
consumer became aware, or should reasonably have become aware, of the unfair nature of the term entailing such
nullity;
(ii) provisions of the Directive 93/13 must be interpreted as not precluding a judicial interpretation of national law
according to which it is not for a seller or supplier who has concluded a mortgage loan agreement with a consumer to
ascertain whether the consumer is aware of the consequences of the removal of the unfair terms contained in that
agreement or of that agreement being no longer capable of continuing in existence if those terms were removed;
(iii) provisions of the Directive 93/13, read in the light of the principle of effectiveness, must be interpreted as
precluding a judicial interpretation of national law according to which, where a mortgage loan agreement concluded
with a consumer by a seller or supplier is no longer capable of continuing in existence after the unfair terms in that
agreement have been removed, that seller or supplier may rely on a right of retention which allows him or her to make
the restitution of the sums which it has received from that consumer conditional on that consumer making an offer to
repay the sums which he or she has himself or herself received from that seller or supplier or to provide a security for
the repayment of those sums, where the exercise by that seller or supplier of that right of retention entails the loss, for
that consumer, of the right to obtain default interest as from the expiry of the time limit set for performance by the
seller or supplier concerned, following receipt by that seller or supplier of a request to repay the sums he or she had
been paid in performance of that agreement.
The Court of Justice of the European Union by an order of January 15, 2024, closed the case registered under case
number C-488/23 following a question from the District Court of Warsaw, indicating that the right of a financial
institution to demand the valorization of the disbursed capital after a loan agreement has been declared invalid was
excluded in the judgment of June 15, 2023 issued in case C-520/21.
On January 18, 2024, the CJEU issued the judgement in the case C-531/22 in connection with the preliminary questions
referred by the District Court in Warsaw in the case of ex-Getin Noble Bank S.A. The Court stated that:
(i) the provisions of Directive 93/13 preclude national legislation which provides that a national court may not examine
of its own motion the potentially unfair nature of the terms contained in a contract and draw the consequences
thereof, where it is supervising enforcement proceedings carried out on the basis of a final decision to issue an order
for payment which is subject to res judicata:
a. if the regulations do not provide for such an examination at the stage of issuing a payment order, or
b. if such examination is provided for only at the stage of opposition to the order for payment in question,
provided that there is a significant risk that the consumer in question will not file the required opposition
either because the time limit specified for this purpose is very short, or because of the cost of the proceedings
before the court in relation to the amount of the disputed debt, or because the national legislation does not
provide for the obligation to provide that consumer with all the information necessary for him to establish the
extent of his rights;
(ii) the provisions of Directive 93/13 do not preclude national case law according to which the entry of a term of a
contract in a national register of prohibited clauses has the effect of declaring that term unfair in any proceedings
involving a consumer, including against a trader other than the one against whom proceedings for the entry of the said
term in that national register were pending, and where that term does not have the same wording as the term entered
in the said register, but has the same meaning and has the same effect with respect to the consumer in question.
Jurisprudence of the Polish Supreme Court
On 7 May 2021, the Supreme Court composed of 7 judges of the Supreme Court, issued a resolution for which the
meaning of legal principle has been granted, stating that:
1. An abusive contractual clause (art. 385(1) \u00a7 1 of the Polish Civil Code), by force of the law itself, is ineffective to the
benefit of the consumer who may consequently give conscious and free consent to this clause and thus restore its
effectiveness retroactively.
2. If without the ineffective clause the loan agreement cannot bind, the consumer and the lender shall be eligible for
separate claims for return of monetary performances made in exercising this agreement (art. 410 \u00a7 1 in relation to art.
405 of the Polish Civil Code). The lender may demand return of the performance from the moment the loan agreement
becomes permanently ineffective.
On 28 April 2022 the Supreme Court issued a resolution (III CZP 40/22) in which it indicated that in disputes with
consumers, the provision of Article 358(1) of the Polish Civil Code is a special provision to Article 353(1) of the Polish
Civil Code, which means that if the prerequisites for the application of both provisions exist, the court should apply the
special provision and declare the contractual provision permanently ineffective, rather than invalid. This decision of
the Supreme Court should be perceived as significantly limiting the risk of Bank Millennium's claims for return of capital
being time-barred.
The effect of the Supreme Court's resolution of 7 May 2021 is that Bank Millennium is entitled to a refund of the cash
benefit provided by Bank Millennium in performance of a permanently ineffective contract. Taking into account the
uncertainty as to the starting point of the limitation period for the bank's claims, Bank Millennium, in order to protect
its interests, files lawsuits for payment against borrowers in a court dispute with the bank. Bank Millennium's demand
consists of a claim for return of the capital made available to the borrower under the contract. By 31 December 2023
the Bank filed\u00a0 about 8.1 thousand lawsuits against the borrowers.
Due to the CJEU jurisprudence interpreting the causes and effects of invalidity of foreign currency mortgage loan
agreements, the area of interpretation of regulations by Polish courts in this respect appears to be limited. However,
further jurisprudential practice of the Polish courts will play an important role in fulfilling the content of the CJEU's
guidance and, moreover, this practice will be of significant importance as regards issues that, given the scope of the
CJEU's competence, are subject to national jurisprudence.
2. Events that may impact foreign currency-indexed mortgage loans legal risk and related
provision
The issues related to the statute of limitations for the Bank's and the customer's restitutionary claims following the
invalidation of a loan agreement remain an area that may be subject to further analysis in the jurisprudence of Polish
courts. Legal interpretations in this subject may be particularly significant for the Bank's claims as to the
commencement of the running of the limitation period of its claims, by eliminating or confirming the risk of its claims
being deemed time-barred in a given case.\u00a0
In addition, the extent of the consumer's and the bank's entitlement to statutory interest for delay on restitution claims
may be an important legal issue.
The issue that remains unresolved in the jurisprudence of common courts and the Supreme Court is also the issue of the
admissibility of borrowers\u2019 claims in the event of the invalidity of a loan agreement for payment of amounts beyond the
reimbursement of monthly instalments and costs paid for the execution of that agreement and beyond the payment of
statutory default interest from the date of the demand for payment, which, in light of the CJEU's judgment of 15 June
2023 in case C-520/21, remains not excluded. Due to the uncertainty of the direction of case law in this area, as of the
date of publication of the Bank Millennium's report, it is difficult to reliably assess the impact of potential rulings.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-677": { "value": "Provisions
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Provision for guarantees and other commitments
121,574
110,754
Other provisions for liabilities and charges
631,529
451,032
753,103
561,786
Changes in Provisions for guarantees and other commitments are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
110,754
110,649
Transfers
(1,990)
(708)
Charge for the year (note 14)
40,602
27,864
Reversals for the year (note 14)
(28,372)
(26,939)
Exchange rate differences
580
(112)
Balance at the end of the year
121,574
110,754
Changes in Other provisions for liabilities and charges are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance on 1 January
451,032
348,095
Transfers
(24,858)
(5,504)
Charge of the year for restructuring costs
\u2014
4,414
Charge for the year (note 14)
785,928
569,226
Reversals for the year (note 14)
(4,000)
(1,854)
Amounts charged-off
(42,138)
(116,874)
Allocation to loan's portfolio (note 22)
(583,027)
(344,052)
Exchange rate differences
48,592
(2,419)
Balance at the end of the year
631,529
451,032
The balance Other provisions for liabilities and charges - Charge for the year refers essentially to provisions for legal
risk accounted for by Bank Millennium, related to foreign currency-indexed mortgage loans, as described in note 57,
which, in 2023, amounted to Euros 675,252,000 (2022: Euros 430,843,000).
The Other provisions for liabilities and charges were based on the probability of occurrence of certain contingencies
related to risks inherent to the Group's activity, being reviewed at each reporting date in order to reflect the best
estimate of the amount and respective probability of payment.
This balance includes provisions for lawsuits, frauds and tax contingencies. As at 31\u00a0December 2023, the provisions
constituted to cover tax contingencies totalled Euros 54,384,000 (31\u00a0December 2022: Euros 38,311,000).
At the end of December 2022, the balance of Other provisions for liabilities and charges was reinforced in the amount
of Euros 4,414,000, referring to agreements already concluded with some employees whose effective departures will
occur during the first half of 2023. By 31 December 2023, the Bank has written-off the amount of Euros 3,113,000,
relating to compensations for termination of functions (note 7).
Additionally, there are provisions for liabilities and charges recorded for corporate restructuring funds and carved-out
assets of the Project Crow, completed in December 2022.
Provisions for legal risk related to foreign currency-indexed mortgage loans in Bank Millennium (Poland)
In 2021, Bank Millennium changed the accounting policy regarding the recognition of provisions for future claims related
to active CHF mortgage loans in the balance sheet. As a result of changes in market conditions, such as the growing
number of unfavourable court judgments declaring the entire agreement or certain provisions of these credits to be
invalid, the Bank does not expect that all contractual cash flows related to these loans will be recovered. As a result,
Bank Millennium allocates provisions for future claims and recognizes them as a reduction of the gross carrying amount
of loans for which a decrease in future cash flows is expected, in accordance with paragraph B5.4.6 of IFRS 9 \"Financial
Instruments\" (previously provisions for future claims used to be recognized in accordance with IAS 37 \"Provisions,
Contingent Liabilities and Contingent Assets\"). As a result of the above change, the approach applied in accordance
with IAS 37 will be continued only regarding claims relating to already repaid (or almost fully repaid) receivables not
recognised in Bank Millennium's balance sheet.
As at 31\u00a0December 2023, the Loans and advances to customers portfolio in CHF has a gross amount of Euros
2,218,947,000 (31 December 2022: Euros 2,477,851,000).
As at 31\u00a0December 2023, the provisions estimated by Bank Millennium to address the legal risk related to foreign
currency-indexed mortgage loans amount to Euros 1,812,231,000 (PLN 7,871,789,000), of which Euros 1,500,209,000
(PLN 6,516,460,000) are presented under assets, as a deduction from the gross amount of the loan portfolio in CHF
(note 22) and Euros 312,022,000 (PLN 1,355,329,000) are presented under Provisions.\u00a0
With reference to 31\u00a0December 2022, the provisions estimated by Bank Millennium to address the legal risk related to
foreign currency-indexed mortgage loans amount to Euros 1,152,457,000 (PLN 5,395,344,000), of which Euros
976,782,000 (PLN 4,572,901,000) are presented under assets, as a deduction from the gross amount of the loan
portfolio in CHF (note 22) and Euros 175,676,000 (PLN 822,443,000) are presented under Provisions.
The variation in the level of provisions or concrete losses will depend on the final court decisions about each case and
on the number of court cases.
Mozambique's sovereign debt
Following a period of deceleration in economic activity and increase of inflation, reduction of Republic of Mozambique
rating, depreciation of Metical and decrease in foreign direct investment, the Bank of Mozambique has adopted a
restrictive policy, with increases in the reference rate since December 2015, as well as increasing the reserve ratio.
This set of factors constrained commercial banking in Mozambique, pushing it to pursue a strict liquidity management,
emphasis on raising funds, despite contributing to the improvement of net interest income.
According to an International Monetary Fund (IMF) statement dated 23 April 2016, existing debt guaranteed by the State
of Mozambique in an amount over USD 1 billion that had not been disclosed to the IMF. Following this disclosure, the
economic program supported by the IMF was suspended. According to an IMF statement dated 13 December 2016,
discussions were initiated on a possible new agreement with the Government of Mozambique and the terms of
reference for an external audit were agreed.
In June 2017, the Attorney General's Office of the Republic of Mozambique published an Executive Summary regarding
the above-mentioned external audit. On 24 June 2017, the IMF released in a statement that due to the existence of
information gaps in this audit, an IMF mission would visit the country to discuss audit results and possible follow-up
measures. Following this visit, the IMF requested the Government of Mozambique to obtain additional information on
the use of the funds.
On 14 December 2017, in a statement from the IMF staff, after the end of the mission held between 30 November and
13 December 2017, it was reiterated the need for the Mozambican State to provide missing information. In the
statement of the Mozambican Attorney General's Office dated 29 January 2018, it is mentioned, among other things,
that the Public Prosecutor submitted to the Administrative Court, on 26 January 2018, a complaint regarding the
financial responsibility of public managers and companies participated by the State, participants in the execution and
management of contracts for financing, supplying and providing services related to debts not disclosed to the IMF.
In the statements dated of 16 January 2017 and 17 July 2017, the Ministry of Economy and Finance of Mozambique
informed the holders of bonds issued by the Republic of Mozambique specifically \"US$726.524 million, 10.5%, repayable
securities in 2023\" that the interest payment due on 18 January 2017 and 18 July 2017, would not be paid by the
Republic of Mozambique. In November 2018, the Ministry of Economy and Finance of the Republic of Mozambique
announced that it has reached an agreement in principle on the key commercial terms of a proposed restructuring
transaction related to this debt securities with four members of the Global Group of Mozambique Bondholders. The
Bondholders currently own or control approximately 60% of the outstanding Bonds. The agreement in principle reached
by the parties, and the support of the Bondholders for the proposed restructuring, is conditional on the parties reaching
an agreement on mutually satisfactory documentation setting out the detailed terms of the restructuring including
implementation, and the mentioned Ministry obtaining all necessary approvals, including Parliamentary and government
approvals of Mozambique.
On 6 September 2019, the Ministry of Economy and Finance of the Republic of Mozambique announced the approval by
99.95% of the Bondholders of a written decision containing the terms and conditions of the restructuring proposal. The
Group has no exposure to this debt.
In May 2020, the Constitutional Council of the Republic of Mozambique issued a Judgment, declaring the nullity of the
acts related with the loans contracted by Proindicus, SA (\"Proindicus\") and Mozambique Asset Management, MAM, SA
(\"MAM\"), and the respective sovereign guarantees granted by the Government in 2013 and 2014, respectively, and on 19
October 2020, the dissolution of the two companies was registered based on an order issued by the Judicial Court of the
City of Maputo.
In the context of the liquidation of Proindicus and MAM, the Liquidator published, on 3 May 2022, an announcement in
the Jornal de Not\u00edcias de Mo\u00e7ambique, through which the creditors of those companies are notified to submit, within
thirty days counted from the said publication, the supporting documents of their credits. Following the publication of
the said announcement, BIM and BCP submitted, on 1 June 2022, their credit claims on Proindicus and MAM,
respectively. However, with respect to Proindicus, the BIM\u2019s credit claim is prejudiced by the settlement mentioned
below.
An action brought on 27 February 2019 (amended on 30 April 2020), by the Republic of Mozambique (represented by the
Attorney General of the Republic) against the arranger and originating lender of the loan to Proindicus and other
entities, by which the Republic of Mozambique requested, inter alia, the declaration of nullity of the sovereign
guarantee of the Mozambican State to the Proindicus loan. Following this lawsuit, on 27 April 2020, the Banco
Internacional de Mo\u00e7ambique (BIM) filed a lawsuit, in the London Commercial Court, against the arranger and lender of
the loan to Proindicus, claiming, inter alia, payment of BIM's exposure to the Proindicus, in the event that the said
sovereign guarantee of the State of Mozambique to Proindicus was, in a court of law declared null and void.
However, on 30 September 2023, the Republic of Mozambique and the arranger and originating lender of the loan to
Proindicus announced that they have settled amicably the legal proceedings in London concerning the loan to
Proindicus and associated guarantee. This settlement was subscribed by the majority lenders of the said credit facility,
including BIM. The signing parties to the agreement have mutually released each other from any liabilities and claims
relating to the loan to Proindicus.
Regarding MAM, as far as we are aware, no lawsuit with the same purpose was brought by the Republic of Mozambique
at the London Commercial Court. However, it is expected that, in the context of ongoing legal proceedings, that
several creditors of MAM (including BCP) have filed, at the London Commercial Court, against MAM and the Republic of
Mozambique in order to recover their credits, the question of the validity of the sovereign guarantee of the
Mozambican State to the MAM loan will be raised by the Republic of Mozambique. The Court decided that these lawsuits
would be judged trough a unitary trial. Trial sessions aimed at producing evidence took place between October and
December 2023 and we expect that the Judgment will occur during the second half of the current year.
As at 31 December 2023, considering the 66.7% indirect investment in BIM, the Group's interest in BIM's equity
amounted to Euros 356,514,000 (31 December 2022: Euros 347,559,000), with the exchange translation reserve
associated with this participation, accounted in Group's consolidated equity, in a negative amount of Euros 152,108,000
(31 December 2022: negative amount of Euros 139,373,000). BIM's contribution to consolidated net income for 2023,
attributable to the shareholders of the Bank, amounts to Euros 67,787,000 (2022: Euros 70,707,000).
As at 31 December 2023, the subsidiary BIM's exposure to the State of Mozambique and to the Central Bank includes
public debt securities denominated in Metical classified as Financial assets measured at amortised cost - Debt
instruments in the gross amount of MZN 40,995,115,000 corresponding to Euros 580,914,000 (31 December 2022: MZN
57,909,918,000 corresponding to Euros 849,306,000) and Financial assets at fair value through other comprehensive
income in the gross amount of MZN 6,989,511,000 corresponding to Euros 99,044,000 (31 December 2022: MZN
7,090,486,000 corresponding to Euros 103,989,000).
Additionally, the Group has also registered as at 31 December 2023, in the balance Loans and advances to customers, a
direct gross exposure to the Mozambican State in the amount of MZN 18,228,666,000 corresponding to Euros
258,306,000 (31 December 2022: MZN 19,081,523,000 corresponding to Euros 279,849,000) and in the balance
Guarantees granted revocable and irrevocable commitments, an amount of MZN 1,035,157,000 corresponding to Euros
14,663,000 (31 December 2022: MZN 4,818,871,000 corresponding to Euros 70,704,000).\u00a0
Contingent liabilities and other commitments
In accordance with accounting policy 1.U3, the main contingent liabilities and other commitments under IAS 37 are the
following:
1. In 2012, the Portuguese Competition Authority (\"PCA\") initiated an administrative proceeding relating to competition
restrictive practices (no. PRC 2012/9). On 6 March 2013, unannounced inspections were conducted in the premises of
Banco Comercial Portugu\u00eas, S.A. (\"BCP\" or \"Bank\") and other credit institutions, where documentation was seized to
investigate allegations of a commercially sensitive information exchange between Portuguese banks.
The administrative proceeding was subject to judicial secrecy by the PCA, as the publicity of the process would not be
compatible with the interests of the investigation and with the rights of the investigated companies. On 2 June 2015,
the Bank was notified of the PCA\u2019s statement of objections (\u201cSO\u201d) in connection with the administrative offence no.
2012/9, by which the Bank is accused of participating in a commercially sensitive information exchange between other
fourteen banks related to retail credit products, namely housing, consumer and small and medium enterprises credit
products.
The proceedings, including the deadline to submit a response to the SO, were suspended for several months between
2015 and 2017, following the appeals lodged by some defendants (including the Bank) before the Portuguese
Competition, Regulation and Supervision Court (\u201cCompetition Court\u201d) on procedural grounds (namely, on the right to
have access to confidential documents which were not used as evidence by the Authority \u2013 for several months, the PCA
denied the Defendant\u2019 right to have access to confidential documents not used as evidence). In the end of June 2017,
the suspension on the deadline to reply to the SO was lifted.
On 27 September 2017, BCP submitted its reply to the statement of objections. A non-confidential version of the Bank\u2019s
defence was sent to the PCA, at the latter\u2019s request, on 30 October 2017. The witnesses indicated by the Bank were
interrogated by the PCA in December 2017 (although without the presence of BCP\u2019s legal representatives).
In May 2018, the PCA refused the BCP\u2019s application for confidential treatment of some of the information in the Bank\u2019s
reply to the SO, having also imposed that the Bank protects the confidential information of the co-defendants
(providing a summary of the information). On 1 June 2018, the Bank filed an appeal with the Competition Court, which,
upholding the appeal, concluded that the PCA infringed on the right to a prior hearing. Complying with the judgment,
in November 2018, the PCA notified the Bank of its intention to deny the application for confidential treatment of some
of the information included in the Bank\u2019s defence; subsequently, in January 2019, it requested BCP to provide
summaries for the co-defendants\u2019 confidential information. The Bank filed an appeal before the Competition Court,
which ruled in favour of BCP, as it considered that the elaboration by the Bank of summaries for its co-defendants\u2019
confidential information an illegitimate burden.
In April 2019, at the PCA\u2019s request, BCP declared to be in favour of the re-examination of its witnesses, requested in its
defence and previously held. The witnesses were re-inquired on 16-17 April 2019 with the presence of the Bank\u2019s legal
representatives.
The PCA denied the request of BCP to be allowed to conduct cross-examination of the witnesses appointed by its co-
defendants. The Bank appealed to the Competition Court, which denied the appeal, through a decision which was latter
upheld by the Lisbon Court of Appeal. BCP then lodged an appeal before the Portuguese Constitutional Court for breach
of the constitutional right of defence. The Constitutional Court dismissed the appeal on 29 April 2021, on the grounds
that the requested cross-examination was not required by the Portuguese Constitution, at that stage of the
proceedings. On 12 August 2020, the Bank lodged a complaint before the European Court of Human Rights on this
matter.
On 2 July 2019, the Bank submitted its observations to the PCA\u2019s report on complementary evidence measures.
On 3 June 2019, BCP was notified of the partial dismissal of the complementary evidence measures it had requested in
its reply to the SO, which it judicially contested. By judgment of September 2019, the Competition Court declared the
nullity of the PCA\u2019s decision, for breach of the right of the parties to be heard on the PCA\u2019s draft decision. The Bank
appealed to the Lisbon Court of Appeal in what concerned the limitation by the Competition Court of the effects of the
nullity declaration of the PCA\u2019s decision. Although this appeal was ultimately admitted by the panel of judges of the
Lisbon Court of Appeal, it ends up being denied.
In order to give compliance to BCP\u2019s right to be heard, the PCA notified the BCP of its intention to reject the above-
mentioned complementary evidence measures. Following BCP\u2019s observations in November 2019, the PCA adopted its
final decision rejecting the measures, which was judicially contested by the BCP in December 2019. In March 2020, the
Competition Court rejected the appeal. This judgment was upheld by the Lisbon Court of Appeal in October 2020.
On 9 September 2019, the PCA adopted its final decision in this proceeding, fining the Bank in a Euros 60 million fine
for its alleged participation in an information exchange system with its competitors in the housing, consumer and SME
credit segments. The BCP considers that the Decision contains serious factual and legal errors, having, on 21 October
2019, filed an appeal before the Competition Court requesting the annulation of the Decision and the suspensory effect
of the appeal. On 8 May 2020, BCP\u2019s appeal was admitted. On 8 June 2020, the BCP submitted a request before the
Court, claiming that the rule according to which appeals do not have, in principle, suspensory effect violates the
Portuguese Constitution, submitting elements aimed at demonstrating considerable harm in the advance provisional
payment of the fine, and offering a guarantee in lieu (indicating the respective percentage of the fine to be offered as
a guarantee). On 14 December 2020, a hearing was held before the Competition Court, and a consensual solution was
reached between the PCA and the defendant banks, including BCP, as to the dosimetry (i.e., 50% of the amount of the
fine) and the forms of the guarantee to be provided, in order for the appeal of the PCA\u2019s decision to have suspensory
effect. On 21 December 2020, BCP submitted a bank guarantee issued by the BCP, which was accepted by the
Competition Court. On 1 March 2021, the Competition Court notified BCP that the guarantee had been presented in a
timely manner and in the agreed form, and, as a result, attributed suspensory effect to the appeal. By order of 20
March 2021, the Competition Court lifted the judicial secrecy and informed the appellants that the trial would, in
principle, start in September 2021.
On 9 July 2020, the BCP requested the Court to declare the nullity of the fining decision of the PCA for failure to assess
the economic and legal context, as determined by the recent case-law of the Court of Justice of the European Union.
The Competition Court clarified that this and other prior questions would not be assessed before the hearing phase.
On 13 January 2021, BCP was notified of an application submitted by \"Associa\u00e7\u00e3o Ius Omnibus \u2013 Nova Associa\u00e7\u00e3o de
Consumidores\" to the Competition Court asking it to have access to a non-confidential version of the file, based on the
need to assert the \u201crights to indemnification of the consumers whose rights and interests it represents, and the possible
exercise and proof of those rights in the context of an action for damages\u201d. On the same date, BCP was notified by the
Competition Court of its decision authorizing the news agency \"Lusa\" to access the file of the administrative phase of
the case. BCP appeal of this decision to the Appeal Court of Lisbon, on 25 January 2021 and opposed to the request of
\"Ius Omnibus\" on 2 February 2021.
On 20 March 2021, the Competition Court determined: (i) the lifting of the judicial secrecy; (ii) the forwarding to the
Public Prosecutor of the appeal of BCP against the decision of the Competition Court relating to \"Lusa\", for reply; (iii)
the provisional start date of the judgement hearing on September 2021, having requested suggestions by the co-
appellants for venues.
By decision of 9 April 2021 of the Competition Court, a preparatory hearing took place on 30 April 2021 for discussion of
issues precedent to the begging of the judgment hearings, in which the procedures relating to the treatment of
confidential information of the co-appellants in the appeals was defined, as well as the conditions relating to access to
file. The Competition Court also set forth preliminary dates for the judgement hearing and scheduled a preparatory
hearing for 7 July 2021.
On 28 June 2021, BCP was notified by the Competition Court to reply to the requests submitted by some of the co-
appellants and confirm that all confidential information had been duly eliminated from non-confidential versions
submitted by each co-appellant. The Competition Court also determined that the hearing of 7 July 2021 was cancelled
and its object would be transferred to the next hearing date (6 September 2021).
On 8 July 2021, BCP presented its reply to the notification of 28 June 2021, having also requested confirmation in
relation to the scheduling of the judgement hearing, namely confirmation of whether it was actually scheduled for 6
September 2021 the preparatory hearing and the start of the judgement hearing sessions.
Several representatives of the banks raised the question of the possible unconstitutionality of the seizure proceedings
of e-mail messages used as evidence in the PCA\u2019s decision, which objection appeal will now take place. This issue was
raised bearing in mind the recent Decision of the Constitutional Court no. 687/2021 on the administrative offence case
no. 225/15.4YUSTR-W. A petition on this matter was filed with the Court on 10 October 2021, requesting the Court to
take a position on the matter before the beginning of the trial. The Court issued an order rejecting the banks' request
to rule on those nullities raised by them, having refused to prohibit the use during the judgment of electronic messages
seized, allowing witnesses to be confronted with their content. The requesting banks lodged an appeal against this
order, which was admitted by the Lisbon Court of Appeal.
On 28 April 2022, TCRS (\"Tribunal da Concorr\u00eancia, Regula\u00e7\u00e3o e Supervis\u00e3o\") handed down a decision under the scope
of Proc. 225/15.4YUSTR-W, regarding the appeal to challenge the decision of the Portuguese Competition Authority of
September 2019 (PRC/2012/09), which imposed fines on a number of banking institutions for alleged violation of
competition rules in virtue of participating in a process of exchanging information on mortgage loans, consumer credit
and credit to SMEs.
In this extensive decision, TCRS lists the facts given as proven, bearing in mind the testimonial evidence produced and
the documents attached to the case file, both in the administrative phase and in the trial, however, at this stage, the
TCRS does not yet conclude by the legal framework of the facts as proven, nor, consequently, by the imposition of
fines, having the TCRS instead chosen to make the reference for a preliminary ruling to the Court of Justice of the
European Union (CJEU) in order to answer two preliminary questions that it sets out, requesting that this reference
follows further terms in the form of an accelerated procedure, taking into account the risk of prescription. It should be
noted that it is not up to the CJEU to adjudicate on the case, but only to interpret the rules of community law by
answering in abstract to the questions submitted to it by the referring court.
CJEU rejected TCRS's request for an accelerated procedure and for priority to be given in the assessment of this case,
hence CJEU's assessment must be given within the normal deadline for these prejudicial proceedings, after which the
judgment of this Court will then be concluded.
The Bank has been notified by the CJEU to, if it wishes, submit its written observations, and must do so by 2 September
2022.
The Bank forwarded its observations to the CJEU on 1 September 2022.
The Oral Hearing took place on 22 June 2023 at the CJEU, and the parties' lawyers made their respective presentations
and answered the questions that the Judge and the Advocate General intended to raise. The reading of the Opinion by
the Advocate General was scheduled to take place on 5 October 2023.
If this judicial ruling so determines, the trial may be \"reopened\" for some additional evidence to be produced. This not
being the case, the CRSC will deliver the corresponding sentence, which can also be appealed to the Lisbon Court of
Appeal and the Constitutional Court.
After receiving an answer from the CJEU, it is expected that the CRSC will be able to issue a Judgment, where it may
cancel, confirm, reduce or increase the fine applied by the CA (Competition Authority) to the Bank.
On the appeal submitted, and at the trial hearing, arguments of fact and law were presented, which we believe to be
solid and sufficient to justify the acquittal of BCP from the conviction against it. However, given the complexity of the
case, its several legal and extra-legal implications, and the position that the CRSC has already taken on the facts, it is
not possible to anticipate the final decision of the case.
The Bank does not anticipate that this lawsuit may result in any responsibility that could have impact on the respective
financial statements.
The Advocate General's conclusions were made public on 5 October 2023:
1) Article 101 TFEU must be interpreted as meaning that it does not preclude the classification as a restriction of
competition by object of an exchange between competitors of information concerning the commercial conditions
applicable to transactions (in particular, current and future credit spreads and risk variables) and production figures for
home loan offers, corporate lending offers and consumer credit offers in the banking sector, where such a practice has
artificially increased transparency and reduced uncertainty as to the functioning of the market.
2) Article 101 TFEU does not preclude such classification where it has been impossible to identify or establish any gain
in efficiency or any uncertain or positive effect on competition resulting from that exchange of information.
The Advocate General's conclusions are not in the nature of a judgement by the CJEU, they are not binding on the
Court of Justice, and it is therefore necessary to await the subsequent delivery of the CJEU judgement which in that
case will set out the interpretation of Community law on the questions referred to it for a preliminary ruling by the
TCRS in case no. 225/15.4YUSTR-W.
On 11 March 2024, BCP, along with 8 banking institutions, was served in order to, once willing, contest a \u201cpopular
declaratory action of condemnation in the form of a common process aimed at protecting competition, the rights of
consumers, and diffuse and/or collective interests associated with the consumption of goods and services\u201d, an action
brought by the Ius Omnibus Association, under the terms n.\u00ba 2/24.1YQSRT at the TCRS, entirely based on the alleged
infringement of competition in mortgage and consumer credit transactions declared in the AdC Decision of 9 September
2019 (PRC/2012/09), a decision that was subject to judicial opposition by BCP, an opposition that has not yet been
definitively judged.
The Bank is analysing that class action in order to present its response in a timely manner.
2. On 7 June 2022, the Bank was notified by the Court to contest a lawsuit brought by Funda\u00e7\u00e3o Jos\u00e9 Berardo and Jos\u00e9
Manuel Rodrigues Berardo against Banco Comercial Portugu\u00eas, S.A., Caixa Geral de Dep\u00f3sitos, S.A., Novo Banco, S.A.
and Banco Esp\u00edrito Santo, S.A., in liquidation.
In this lawsuit, the Plaintiffs allege that they incurred in a mistake regarding the endogenous situation of the defendant
banks and the financial system, without which they would have sold the pledged shares and paid their loans. If this is
not the case, the plaintiffs request the defendant banks to be ordered to pay compensation to Funda\u00e7\u00e3o Jos\u00e9 Berardo
for damages caused by breach of contract, since the moment when they should have been sold in execution of the
pledge due to failure to verify coverage ratios until the moment\u00a0 when they were sold, that is, the difference between
the price at which the pledged shares would have been sold on the dates of coverage ratios default and the price at
which they were actually sold, plus interest and all other loan charges since those dates, in any case the global amount
of compensation not being less than Euros 800,000,000. In any case, the plaintiffs ask the defendant banks to be jointly
condemned to pay Jos\u00e9 Manuel Rodrigues Berardo compensation for moral damages, in the already calculated amount
of Euros 100,000,000 and also in the amount that is settled as soon as the full extent of the damages is known.
In the meantime, through Order No. 8765/2022 of Mr. Secretary of State for the Presidency of the Council of Ministers,
published in Republic Diary, Series 2, part C, of 19 July 2022, the Plaintiff of this lawsuit, Funda\u00e7\u00e3o Jos\u00e9 Berardo, was
declared extinct. This decision was legally contested by the Jos\u00e9 Berardo Foundation, and in April 2023, the
Administrative and Fiscal Court of Funchal cancel the decision that ordered its extinction. Dissatisfied, the Portuguese
State appealed against this latter and is awaiting the outcome.
The lawsuit was contested on 27 September 2022 and is awaiting subsequent terms.
Nothing relevant to the judgment on the merit of the case happened. The lawsuit is suspended until the motions
submitted by FJB in the execution filed by the Banks (8489/19.8T8LSB) have been definitively judged.
The Bank does not anticipate that this lawsuit may result in any responsibility that could have impact on the respective
financial statements.
3. On 3 January 2018, Bank Millennium received decision of the Chairman of the Office for Protection of Competition
and Consumers (OPCC Chairman), in which the OPCC Chairman found infringement by Bank Millennium of the rights of
consumers. In the opinion of the OPCC Chairman the essence of the violation is that Bank Millennium informed
consumers (it regards 78 agreements) in responses to their complaints, that the court verdict stating the abusiveness of
the provisions of the loan agreement regarding exchange rates does not apply to them. According to the position of the
OPCC Chairman the abusiveness of contract\u2019s clauses determined by the court\u00a0 in the course of abstract control is
constitutive and effective for every contract from the beginning. As a result of the decision, Bank Millennium was
obliged to:
1) send information on the UOKiK\u2019s decision to the said 78 clients;
2) place the information on\u00a0 decision and the decision itself on the website and on Twitter;
3) to pay a fine amounting to PLN 20.7 million (Euros 4.8 million).
Bank Millennium lodged an appeal within the statutory time limit.
On 7 January 2020, the first instance court dismissed Bank Millennium's appeal in its entirety. Bank Millennium appealed
against the judgment within the statutory deadline. The court presented the view that the judgment issued in the
course of the control of a contractual template (in the course of an abstract control), recognizing the provisions of the
template as abusive, determines the abusiveness of similar provisions in previously concluded contracts. Therefore, the
information provided to consumers was incorrect and misleading. As regards the penalty imposed by OPCC, the court
pointed out that the policy of imposing penalties by the Office had changed in the direction of tightening penalties and
that the court agrees with this direction.
In Bank Millennium's assessment, the Court should not assess Bank Millennium's behaviour in 2015 from the perspective
of today's case-law views on the importance of abstract control (it was not until January 2016 that the Supreme Court's
resolution supporting the view of the OPCC Chairman was published), the more penalties for these behaviours should
not be imposed using current policy. The above constitutes a significant argument against the validity of the judgment
and supports the appeal which Bank Millennium submitted to the Court of second instance.
The second instance court, in its judgment of 24 February 2022, completely revoked the decision of the OPCC
Chairman. On 31 August 2022, the OPCC Chairman lodged a cassation appeal to the Supreme Court. Bank Millennium
believes that the prognosis regarding the litigation chances of winning the case before the Supreme Court is positive.
Bank Millennium (along with other banks) is also a party to the dispute with OPCC, in which the OPCC Chairman
recognized the practice of participating banks, including Bank Millennium, in an agreement aimed at jointly setting
interchange fee rates charged on transactions made with Visa and Mastercard cards as restrictive of competition, and
by decision of 29 December 2006 imposed a fine on Bank Millennium in the amount of PLN 12.2 million (Euros 2.8
million). Bank Millennium, along with other banks, appealed the decision.
In connection with the judgment of the Supreme Court and the judgment of the Court of Appeal in Warsaw of 23
November 2020, the case is currently pending before the court of first instance - the Court of Competition and
Consumer Protection. Bank Millennium has created a provision in the amount equal to the imposed penalty.
4. On 22 September 2020, Bank Millennium received decision of the Chairman of the Office for Protection of
Competition and Consumers (OPCC Chairman) recognising clauses stipulating principles of currency exchange applied in
the so-called anti-spread annex as abusive and prohibited the use thereof.
Penalty was imposed upon Bank Millennium in the amount of PLN 10.5 million (Euros 2.4 million). Penalty amount takes
account of two mitigating circumstances: cooperation with the Office for Protection of Competition and Consumers and
discontinuation of the use of provisions in question.
Bank Millennium was also requested, after the decision becomes final and binding, to inform consumers, by registered
mail, to the effect that the said clauses were deemed to be abusive and therefore not binding upon them (without need
to obtain court\u2019s decision confirming this circumstance) and publish the decision of the case on Bank Millennium\u2019s
website.
In the decision justification delivered in writing the OPCC Chairman stated that FX rates determined by Bank Millennium
were determined at Bank Millennium\u2019s discretion (on the basis of a concept, not specified in any regulations, of average
inter-bank market rate). Moreover, client had no precise knowledge on where to look for said rates since provision
referred to Reuters, without precisely defining the relevant site.
Provisions relating to FX rates in Bank Millennium\u2019s tables were challenged since Bank Millennium failed to define when
and how many times a day these tables were prepared and published.
In justification of the decision, the OPCC Chairman also indicated that in the course of the proceeding, Bank Millennium
presented various proposed solutions, which the OPCC Chairman deemed to be insufficient.
Bank Millennium appealed against the said decision within statutory term.
On 31 March 2022, the first instance court revoked the entire decision of the Chairman of the OPCC. On 23 May 2022,
the Chairman of the OPCC filed an appeal. On 26 October 2022, the Court of Appeals changed the judgment of the
court of first instance and shared the position of the Chairman of the OPCC as to the abusiveness of the provisions
regarding the determination of exchange rates in the annexes concluded with foreign currency borrowers. On 21
November 2022, the Court of Appeal, at the request of Bank Millennium, suspended the execution of the judgment until
the end of the cassation proceedings. On 30 January 2023, Bank Millennium filled a cassation appeal to the Supreme
Court.
5. Bank Millennium is a defendant in court proceedings brought by PKN Orlen SA, in which the subject of the dispute is
the amount of the interchange fee and the plaintiff demands payment of PLN 635.7 million (Euros 146.3 million). The
plaintiff in this proceeding alleges that the banks acted under an agreement restricting competition on the acquiring
services market by jointly setting the level of the national interchange fee in the years 2006-2014. In this case, Bank
Millennium was sued jointly with another bank and card organizations. According to current estimates of the risk of
losing a dispute in these matters, Bank Millennium did not create a provision. In addition, we point out that Bank
Millennium participates as a side intervener in four other proceedings regarding the interchange fee. Other banks are
the defendant. Plaintiffs in these cases also accuse banks of acting as part of an agreement restricting competition on
the acquiring services market by jointly setting the level of the national interchange fee in the years 2008-2014.
- A lawsuit brought up by shareholder of PCZ S.A. in bankruptcy (PHM, then the European Foundation for Polish-Belgian
Cooperation - EFWP-B, currently called The European Foundation for Polish-Kenyan Cooperation) against Bank
Millennium S.A., worth of the dispute PLN 521.9 million (Euros 120.2 million) with statutory interest from 5 April 2016
until the day of payment. The plaintiff filed the suit dated 23 October 2015 to the Regional Court in Warsaw; the suit\u00a0
was served to Bank Millennium on 4 April 2016. According to the plaintiff, the basis for the claim is damage to their
assets, due to the actions taken by Bank Millennium and consisting in the wrong interpretation of the Agreement for
working capital loan concluded between Bank Millennium and PCZ S.A., which resulted in placing the loan on demand.
Bank Millennium is requesting complete dismissal of the suit, stating disagreement with the charges raised in the claim.
Supporting the position of Bank Millennium, Bank Millennium\u2019s attorney submitted a binding copy of final verdict of
Appeal Court in Wroc\u0142aw favourable to Bank Millennium, issued in the same legal state in the action brought by PCZ SA
against Bank Millennium. On 10 May 2023, the Court of first instance announced a judgment dismissing the claim in its
entirety. The verdict is not final, the plaintiff filed an appeal, the date of the appeal hearing has not yet been set.
As at 31 December 2023, the total value of the subjects of the other litigations in which the Bank Millennium Group\u2019s
companies appeared as defendant, stood at PLN 5,547.3 million (Euros 1,277.1 million) (excluding the class actions
described below and in note 57). In this group the most important category are cases related with FX loans mortgage
portfolio.
6. On 3 December 2015 a class action was served on Bank Millennium. A group of Bank Millennium's debtors (454
borrowers party to 275 loan agreements) is represented by the Municipal Consumer Ombudsman in Olsztyn. The
plaintiffs demanded payment of the amount of PLN 3.5 million (Euros 0.8 million), claiming that the clauses of the
agreements, pertaining to the low down payment insurance, are unfair and thus not binding. Plaintiff extended the
group in the court letter filed on 4 April 2018, therefore the claims increased from PLN 3.5 million (Euros 0.8 million) to
over PLN 5 million (Euros 1.2 million).
Actual status:
On 1 October 2018, the group's representative corrected the total amount of claims pursued in the proceedings and
submitted a revised list of all group members, covering the total of 697 borrowers \u2013 432 loan agreements. The value of
the subject of the dispute, as updated by the claimant, is PLN 7,371,107.94 (Euros 1,696,986).
By the resolution of 1 April 2020 the court established the composition of the group as per request of the plaintiff and
decided to take witness evidence in writing. The hearing date was set for 18 October 2024.
As at 31 December 2023, there were also 138 individual court cases regarding LTV (loans-to-value) insurance (cases in
which only a claim for the reimbursement of the commission or LTV insurance fee is presented).
7. On 13 August 2020, Bank Millennium received lawsuit from the Financial Ombudsman. The Financial Ombudsman, in
the lawsuit, demands that Bank Millennium and the Insurer (TU Europa) be ordered to discontinue performing unfair
market practices involving, as follows:
- presenting the offered loan repayment insurance as protecting interests of the insured in case when insurance
structure indicates that it protects Bank Millennium\u2019s interests;
- use of clauses linking the value of insurance benefit with the amount of borrower\u2019s debt;
- use of clauses determining the amount of insurance premium without prior risk assessment (underwriting);
- use of clauses excluding insurer\u2019s liability for insurance accidents resulting from earlier causes.
Furthermore, the Ombudsman requires Bank Millennium to be ordered to publish, on its website, information on use of
unfair market practices.
The lawsuit does not include any demand for payment, by Bank Millennium, of any specified amounts. Nonetheless, if
the practice is deemed to be abusive it may constitute grounds for future claims to be filed by individual clients.
The case is being examined by the court of first instance.
8. By 31 December 2023, Bank Millennium recorded the receipt of 63 lawsuits by borrowers of mortgage loans in PLN
for reimbursement of benefits provided under the loan agreement. One final judgment was issued dismissing the
borrowers' claim. The borrowers' allegations focus on the WIBOR ratio as an incomprehensible, unverifiable element
affecting the consumer's liability, as well as the issue of insufficient information on the effects of variable interest
rates provided to the consumer by the bank before the conclusion of the contract.
Based on publicly available information, it can be assumed that there will be an increase in the number of lawsuits
concerning mortgage loans in PLN. This phenomenon affects the entire sector of banking services. It is possible that a
\"new business model\" will be created in the area of law firms, which consists in questioning mortgage contracts
containing a variable interest rate clause based on the WIBOR reference index.
On 29 June 2023, the Polish Financial Supervision Authority (KNF) announced that it had assessed the ability of the
WIBOR interest rate reference index to measure the market and economic realities. The KNF stated that the WIBOR
interest rate reference index is capable of measuring the market and economic realities for which it was established.
According to the Commission's assessment, the WIBOR ratio responds appropriately to changes in liquidity conditions,
changes in central bank rates and economic realities.
On 26 July 2023, the Polish Financial Supervision Authority (KNF) presented its position on legal and economic issues
related to mortgage loan agreements in Polish currency in which the WIBOR interest rate\u00a0 reference\u00a0 index\u00a0 is\u00a0 used.
This position can be used in court proceedings and can then be treated as an 'amicus curiae' opinion. The Polish
Financial Supervision Authority stated that the WIBOR reference index meets all legal requirements. In the opinion of
the Polish Financial Supervision Authority, there are no grounds to question the credibility and legality of WIBOR, in
particular in the context of the use of this indicator in mortgage loan agreements in the Polish currency.
9. By 31 December 2023, Bank Millennium received 419 lawsuits in which the plaintiffs (both clients and companies
purchasing claims), alleging violation of the information obligations provided in Art. 30 of the Consumer Credit Act,
demand reimbursement of interest and other costs incurred in connection with taking out a loan (free loan sanction
within the meaning of Article 45). As of 31 December 2023, 16 cases have been legally concluded, and in all these cases
the Bank won the dispute. The Bank believes that the prognosis regarding the litigation chances of winning the
remaining disputes are positive and therefore it has not created provisions in this respect.
10. On 22 December 2023, the Polish Financial Supervision Authority (KNF) started administrative proceedings against
bank Millennium S.A. that might result in a penalty being imposed on the Bank under Article 176i(1)(4) of the Act on
trading in financial instruments. At this stage of the proceedings, the amount of the potential penalty cannot be
estimated.
11. On 1 October 2015, a set of entities connected to a group with debts in default to BCP amounting to Euros 170
million, resulting from a loan agreement signed in 2009 - debts already fully provisioned in the Bank's accounts -, filed
against BCP, after receiving the Bank's notice for mandatory payment, a lawsuit requesting that:
a) the court declares that two of the defendants are mere fiduciary owners of 340,265,616 BCP shares, since they acted
pursuant to a request made by the Bank for the making of the respective purchases, and also that the court orders the
cancellation of the registration of those shares in the name of those companies;
b) the court declares the nullity of the financing agreement established between the plaintiffs and the Bank, due to
relative simulation;
c) the court sentences the Bank, in accordance with the legal regime of the mandate without representation, to
become liable for the amounts due to the institution, abstaining from requesting those amounts to the plaintiffs and to
refund them the cost they incurred while complying with that mandate, namely, Euros 90,483,816.83 regarding Banco
Esp\u00edrito Santo, S.A. (BES) and Euros 52,021,558.11 regarding Caixa Geral de Dep\u00f3sitos, S.A. (CGD), plus default
interests;
d) the amount of the lawsuit determined by the plaintiffs is Euros 317,200,644.90;
e) the Bank opposed and presented a counter claim, wherein it requests the conviction, namely, of a plaintiff company
in the amount of Euros 185,169,149.23 for the loans granted, plus default interests and stamp tax.
The court issued a curative act and already ascertained the factual basis that are proven and that must be proven.
The expertise was carried out and the expert report was submitted. There is a deadline for completing and concluding
the expert report, in its final version, since the Bank presented a complaint about various aspects of the expert's
report, in its first version.
The expertise was carried out and the expert report submitted.
In November 2022 the Bank complained about the Experts' Report: (i) they considered documents that the Court had
ordered to be removed from the proceedings, which had not been done due to the Court's inertia, (ii) they considered
written notes on documents, that may have been written by Mr. Gois Ferreira, and (iii) they did not consider much
information that was contained in the statements, and (iv) they made errors in the calculation of interest and the
amount of financing granted. In view of the experts' new reply, BCP claimed all the expertise, in March 2023. For the
Court's final decision, BCP added, in June this year, thousands of documents supporting its position.
12. Resolution Fund
Resolution measure of Banco Esp\u00edrito Santo, S.A.
On 3 August 2014, with the purpose of safeguarding the stability of the financial system, Banco de Portugal applied a
resolution measure to Banco Esp\u00edrito Santo, S.A. (BES) in accordance with the Article 145-C (1.b) of the Decree-law no.
298/92, of 31 December 1992, as amended (the \u201cBanking Law\u201d), which entailed, inter alia, the partial transfer of
assets, liabilities, off-balance sheet items and assets under management into a transition bank, Novo Banco, S.A. (Novo
Banco), incorporated on that date by a decision issued by Banco de Portugal. Within the scope of this process, the
Resolution Fund made a capital contribution to Novo Banco amounting to Euros 4,900 million, becoming, on that date,
the sole shareholder. Further, in accordance with information published on the Resolution Fund\u2019s website, the
Resolution Fund borrowed Euros 4,600 million, of which Euros 3,900 million were granted by the Portuguese State and
Euros 700 million by a group of credit institutions, including the Bank.
As announced on 29 December 2015, Banco de Portugal transferred to the Resolution Fund the liabilities emerging from
the \u201ceventual negative effects of future decisions regarding the resolution process that may result in liabilities or
contingencies\u201d.
On 7 July 2016, the Resolution Fund declared that it would analyse and evaluate the diligences to be taken, following
the publication of the report on the result of the independent evaluation, made to estimate the level of credit recovery
for each category of creditors under a hypothetical scenario of a normal insolvency process of BES on 3 August 2014.
In accordance with the applicable law, when the BES liquidation process is over, if it is verified that the creditors,
whose credits were not transferred to Novo Banco, would take on a higher loss than the one they would hypothetically
take if BES had gone into liquidation right before the application of the resolution measure, such creditors shall be
entitled to receive the difference from the Resolution Fund.
On 31 May 2019, the Liquidation Committee of BES presented a list of all the acknowledged and a list of the non-
acknowledged creditors before the court and the subsequent terms of the proceedings. These lists detail that the total
acknowledged credits, including capital, remunerative and default interest amounts to Euros 5,056,814,588, of which
Euros 2,221,549,499 are common credits and Euros 2,835,265,089 are subordinated claims, and no guaranteed or
privileged claims exist. Both the total number of acknowledged creditors and the total value of the acknowledged
credits and their ranking will only be ultimately determined upon the definitive judicial judgment of the verification
and ranking of credits to be given in the liquidation proceedings.
According to the Resolution Fund's 2022 Annual Report, the Resolution Fund filed an appeal against the list of creditors
with the Judicial Court of the District of Lisbon, requesting the recognition of its claims. The appeal was upheld, and
the Liquidation Committee of BES filed an appeal. In 2023, the Lisbon Court of Appeal rejected the appeal filed by the
Liquidation Committee of BES and, in favour of the position defended by the Resolution Fund, confirmed the decision of
the Court of First Instance and the recognition, in the amount of Euros 1,242,568.9 thousand of the credits claimed by
the Resolution Fund as privileged credits. In February 2023, the Liquidation Committee of BES filed a review appeal
with the Supreme Court of Justice, which decision is expected during 2023.
On 11 August 2023, the BES Liquidation Committee announced that this amount had been recognized and qualified as
privileged by a judgment of the Supreme Court of 11 July 2023. On 10 August 2023, an order was issued in the BES
liquidation proceedings, which reads as follows: \"(...) On 11 July 2023, the Supreme Court of Justice dismissed the
appeal filed by the Banco Esp\u00edrito Santo, S.A. bankruptcy estate, recognizing that the Resolution Fund's claim is
privileged in these proceedings. This means that only the Resolution Fund, as a creditor, will have its claim satisfied
from the funds available to the Banco Esp\u00edrito Santo, S.A. bankruptcy estate (...)\".
Following the resolution measure of BES, a significant number of lawsuits against the Resolution Fund was filed and is
underway. According to note 20 of the Resolution Fund\u2019s annual report of 2022, \u201cLegal actions related to the
application of resolution measures have no definitive legal precedents, which makes it impossible to use case law in
its evaluation, as well as to obtain a reliable estimate of the associated contingent financial impact. (\u2026) The
Resolution Fund, supported by legal advice of the attorneys for these actions, and in light of the legal and procedural
information available so far, considers that there is no evidence to cast doubt on their belief that the probability of
success is higher than the probability of failure\u201d.
According to note 22 of the Resolution Fund\u2019s annual report of 2022, \"In addition to the Portuguese courts, it is
important to take into account the litigation of Novo Banco, S.A., in other jurisdictions, being noteworthy, for its
materiality and respective procedural stage, the litigation in the Spanish jurisdiction. Regarding litigation in the
Spanish jurisdiction, during the years 2018 to 2022, twelve (decisions) have become final and unappealable
condemning Novo Banco, Spanish branch, as well as four sentences in relation to which due compensation has been
requested from the Resolution Fund\u201d.
On 31 March 2017, Banco de Portugal communicated the sale of Novo Banco, where it states the following: \"Banco de
Portugal today selected Lone Star to complete the sale of Novo Banco. The Resolution Fund has consequently signed
the contractual documents of the transaction. Under the terms of the agreement, Lone Star will inject a total of Euros
1,000 million in Novo Banco, of which Euros 750 million at completion and Euros 250 million within a period of up to 3
years. Through the capital injection, Lone Star will hold 75% of the share capital of Novo Banco and the Resolution
Fund will maintain 25% of the share capital\u201d.
The terms agreed also included a Contingent Capital Agreement (CCA), under which the Resolution Fund, as a
shareholder, undertakes to make capital injections if certain cumulative conditions are met related to the performance
of a specific portfolio of assets and to the capital ratios of Novo Banco going forward.
If these conditions are met, the Resolution Fund may be called upon to make a payment to Novo Banco for the lesser of
the accumulated losses in the covered assets and the amount necessary to restore the capital ratios at the agreed
levels. Any capital injections to be carried out pursuant to this contingent mechanism are limited to an absolute cap.
The terms agreed also provide for mechanisms to safeguard the interests of the Resolution Fund, to align incentives as
well as monitoring mechanisms, notwithstanding the limitations arising from State Aid rules.
On 18 October 2017, following the resolution of the Council of Ministers no. 151-A/2017 of 2 October 2017, Banco de
Portugal communicated the conclusion of the sale of Novo Banco to Lone Star, with an injection by the new shareholder
of Euros 750 million, followed by a further capital increase of Euros 250 million by the end of 2017. Upon completion of
the transaction, the status of Novo Banco as a bridge institution ceased, fully complying with the purposes of the
resolution of BES.
On 26 February 2018, the European Commission published the non-confidential version of its decision regarding the
approval of State aid underlying Novo Banco\u2019s sale process. This statement identifies the three support measures by the
Resolution Fund and the Portuguese State that are part of the sale agreement associated with a total gross book value
of around Euros [10-20] billion(1) that revealed significant uncertainties regarding adequacy in provisioning(2):
(i) Contingent Capital Agreement (CCA) which allows Lone Star to reclaim, from the Resolution Fund, funding costs,
realised losses and provisions related to an ex-ante agreed portfolio of existing loan stock, up to a maximum of
Euros 3.89 billion, subject to a capital ratio trigger (CET1 below 8%-13%) as well as to some additional
conditions(1)(2)(3);
(ii) underwriting by the Resolution Fund of a Tier 2 instrument to be issued by Novo Banco up to the amount necessary
(but no more than Euros 400 million). The amount that can be reclaimed by the Resolution Fund under the CCA is
subject to the cap of Euros 3.89 billion(2);
(iii) in case the Supervisory Review and Evaluation Process (\u201cSREP\u201d) total capital ratio of Novo Banco falls below the
SREP total capital requirement, the Portuguese State will provide additional capital in certain conditions and
through different instruments(2). According to the audit report on the management of Novo Banco conducted by the
Court of Auditors and released on 12 July 2022, \"the risk of triggering the additional capital mechanism (capital
backstop), up to Euros 1.6 billion, provided for in the commitments made by the Portuguese State to ensure the
viability of NB, exists\u201d.
According to an Investor Presentation dated January 2024, from Novo Banco\u2019s, Novo Banco still has Euros 485 million
under the MCC in addition to the Euros 209 million included in the capital call for 2021. The mechanism is in place until
December 2025, date that can be extended, under certain conditions, by one additional year.
(1) Exact value not disclosed by the European Commission for confidentiality reasons
(2) As referred to in the respective European Commission Decision
(3) According to 2018 Novo Banco\u2019s earnings institutional presentation, the \u201cminimum capital condition\u201d is (i) CET1 or Tier 1 < CET1 or
Tier 1 SREP requirement plus a buffer for the first three years (2017-2019); (ii) CET1 < 12%
According to a statement issued by the Resolution Fund on 13 February 2023, \"the Ministry of Finance has disclosed that
the European Commission intends to consider the restructuring process of Novo Banco as completed. The information
disclosed today confirms the successful restructuring of Novo Banco, resulting from the combined execution of the
restructuring plan agreed in 2017, under the sale transaction conducted by Banco de Portugal, and the sale
agreements, namely the CCA, under which the Resolution Fund transferred to Novo Banco Euros 485 million, less than
the maximum amount set in the contract (Euros 3,890 million). The completion of the restructuring of Novo Banco, is
also another indicator that Novo Banco should not need to request any further payment to the Resolution Fund under
the CCA, without prejudice to the ongoing litigation or that still may occur regarding the amounts already requested by
Novo Banco in relation to past years and that the Resolution Fund considers that are not due. On the same day, Banco
de Portugal issued the following statement \"The conclusion of the Novo Banco restructuring process also results in the
end of the backstop mechanism, which provided for the possibility, which was always considered remote, of the
Portuguese State providing extraordinary support to Novo Banco in extreme scenarios. This mechanism protected Novo
Banco and the national financial system from more adverse scenarios, which did not materialize. With the end of the
backstop, the financial risk for the Portuguese State is eliminated\".
According to the 2018 Resolution Fund\u2019s annual report, the Resolution Fund and Novo Banco have agreed that a
Verification Agent - an independent entity which is essentially responsible for clarifying any differences that may exist
between Novo Banco and the Resolution Fund regarding the set of calculations inherent to the CCA or regarding the
practical application of the principles stipulated in the contract - is in charge of confirming that the perimeter of the
mechanism is correct and that the balance sheet values of Novo Banco are being correctly reflected in the mechanism,
as well as verifying the underlying set of calculations, namely by confirming the correct calculation of losses and the
reference value of the assets. According to the 2022 Resolution Fund\u2019s annual report, the Resolution Fund follows the
work carried out by the Verification Agent, while specific analyses are being requested.
The Resolution Fund disclosed on 17 June 2019 a set of clarifications related to the payment due in 2019 under the CCA
with Novo Banco, namely:
- For payments from the Resolution Fund to be made (limited to a maximum of Euros 3,890 million over the lifetime of
the mechanism), losses on the assets under the contingent mechanism should be incurred and the capital ratios of Novo
Banco should stand below the agreed reference thresholds;
- The payment to be made by the Resolution Fund corresponds to the lower of the accumulated losses on the assets
covered and the amount necessary to restore the capital ratios above the minimum reference threshold;
- The reference capital ratios are, in 2017, 2018 and 2019, linked to the regulatory requirements applicable to Novo
Banco (CET1 ratio of 11.25% and Tier 1 ratio of 12.75%), but, as from 2020, the reference ratio will correspond to a
CET1 ratio of 12%;
- The initial reference value of the portfolio comprising the CCA was, as of 30 June 2016, Euros 7,838 million (book
value of the associated assets, net of impairments);
In a statement dated 2 February 2024, the Resolution Fund clarifies that it has been informed of the Supreme Court's
ruling on the appeal filed by Novo Banco, following the decision of the Lisbon Court of Appeal, which rejected the
petition for annulment of the decision of the Court of Arbitration, issued in October 2021, relating to the first
arbitration between the Resolution Fund and Novo Banco, which began in 2020.
This ruling definitively confirms the validity and correctness of the position taken by the Resolution Fund in 2019, when
it opposed being charged, through the CCM, for the impact of Novo Banco's intention to waive the transitional regime
related to the implementation of IFRS 9. The Resolution Fund's action in this process resulted in a saving of its
resources of Euros 169 million.
Regarding the intervention of the Resolution Fund concerning the transitional regime of the implementation of the
dynamic component of IFRS 9, Novo Banco estimates a positive impact on its own funds in the amount of Euros 171
million (which implies a reduction in the capital requirements that Novo Banco intended to pass on to the CCM in the
amount of Euros 161.6 million). Accordingly, the Resolution Fund has an arbitration proceeding underway, also under
the aegis of the International Chamber of Commerce, with a view to settling the difference between the parties. This
process is in progress, and it is estimated that an award will be rendered in the first half of 2024.
According to a statement by the Resolution Fund on 3 September 2020, following the payment made in May 2019 by the
Resolution Fund to Novo Banco in compliance with the CCA, a special audit determined by the Government was carried
out. The information was presented by the independent entity that carried out the special audit, showed that Novo
Banco has been operating with a strong influence of the vast legacy of non-productive assets, originated in BES, which
resulted in impairment charges and provisions, but have also contributed to rendering Novo Banco\u2019s internal procedures
more robust. Regarding the exercise of the powers of the Resolution Fund under the CCA, the audit results reflect the
adequacy of the principles and the adopted criteria.
According to Resolution Fund\u2019s annual report of 2022, Novo Banco submitted to the International Chamber of
Commerce a request for arbitration to have recognized the right to receive an aggregate amount of Euros 165,441.9
thousand (divestment of Novo Banco's activity in Spain in the amount of Euros 147,441.9 thousand and valuation
differences regarding a set of assets held by Novo Banco in the amount of Euros 18,000 thousand) which the Resolution
Fund considered, and considers, not to merit the coverage of the CCM.
On 3 May 2021, following the request of the Portuguese parliament in October 2020 to review the operations and
management of Novo Banco that led to the need to transfer funds from the Resolution Fund to Novo Banco, the
Resolution Fund announced that the audit report conducted by Tribunal de Contas (\u201cCourt of Auditors\u201d) was released.
The Court of Auditors concluded that the public financing of Novo Banco through the CCA contributed to the stability of
the financial system, particularly as it avoided the bank\u2019s liquidation and reduced systemic risk. According to the
Resolution Fund, the audit does not identify any impediment to the fulfilment of commitments and contracts arising
from BES\u2019s resolution process, initiated in August 2014.
On 9 September 2020, BCP informed that it has decided not to continue with the legal proceeding before the General
Court of the European Union with a view to partially annul the European Commission\u2019s decision regarding its approval
of the CCA of Novo Banco.
According to Novo Banco\u2019s 2023 annual report (note 28), Novo Banco adhered to the Special Regime applicable to
Deferred Tax Assets under Law No. 61/2014, of 26 August (REAID), according to which, the deferred tax assets recorded
until 31 December 2015 can be converted into tax credits when the taxable entity reports an annual net loss, in
accordance to the proportion of the amount of the said net loss to total equity at the individual company level, A
special reserve was established with an amount identical to the tax credit approved, increased by 10%. The conversion
rights are securities that entitle the State to require Novo Banco to increase its share capital by incorporating the
amount of the special reserve and consequently issuing and delivering free of charge ordinary shares. The shareholders
have the right to acquire the conversion rights attributed to the Portuguese State.
According to the Resolution Fund\u2019s 2022 annual report, under the terms of the sale of Novo Banco, the 75% of the share
capital of Novo Banco held by Nani Holdings is not affected by the dilution associated with the REAID.
On 17 December 2021, Novo Banco, carried out a capital increase in the amount of Euros 154,907.3 thousand, through
the conversion of the rights that had been attributed to the State due to the conversion of the deferred tax assets of
Novo Banco, into tax credits, with reference to the 2015 tax period, under the REAID. As of that date, the State
became a shareholder of Novo Banco, having been attributed a participation corresponding to 1.56% of the share
capital. Later, on 4 November 2022, Novo Banco made a further capital increase of Euros 249,753 thousand conferred
the State an additional stake of 4.13% in Novo Banco.
In April 2023, a capital increase of Euros 263,183 thousand was carried out through a rights conversion related to 2018
and 2019, which gave the State an additional stake of 6.27% in Novo Banco. With reference to the 2020 financial year,
conversion rights representing 3.64% of the capital were issued which will only dilute, in accordance with the sale
contract, the Resolution Fund's participation if the shareholders do not exercise their potestative right to acquire the
conversion rights.
According to Novo Banco's 2023 annual report, Lone Star owns 75% of Novo Banco, the Resolution Fund 13%, and the
Portuguese State 12%.
Resolution measure of Banif \u2013 Banco Internacional do Funchal, S.A.
On 19 December 2015, the Board of Directors of Banco de Portugal announced that Banif \u201cwas failing or likely to fail\u201d
and started an urgent resolution process of the institution through the partial or total sale of its activity, which was
completed on 20 December 2015 through the sale to Banco Santander Totta S.A. (BST) of the rights and obligations of
Banif, formed by the assets, liabilities, off-balance sheet items and assets under management. The largest portion of
the assets that were not sold, were transferred to an asset management vehicle denominated Oitante, S.A. (Oitante)
specifically created for that purpose, having the Resolution Fund as the sole shareholder. For that matter, Oitante
issued bonds representing debt in the amount of Euros 746 million. The Resolution Fund provided a guarantee and the
Portuguese State a counter-guarantee. The operation also involved State aid, of which Euros 489 million were provided
by the Resolution Fund, which was funded by a loan granted by the State.
On 4 July 2022, Oitante - 100% owned by the Resolution Fund - completed the process of repayment of the bonds issued
in connection with the resolution of BANIF. Oitante's debt, which initially amounted to Euros 746 million, was thus fully
repaid. With the repayment of the debt, the Resolution Fund's responsibility as guarantor also ceases, as well as the
Portuguese State's responsibility as provider of a counter-guarantee.
According to the Resolution Fund (press release dated 29 December 2023), Oitante has already paid a total of Euros
78.8 million to the Resolution Fund, of which Euros 63.8 million will be paid in 2023. The amounts received and to be
received by the Resolution Fund, given its 100% participation in Oitante's capital, will contribute to reducing the losses
of Euro 489 million incurred by this Fund in the resolution of BANIF and will be used to repay the debts of the
Resolution Fund, namely to the State.
On 16 January 2023, the Liquidation Committee of Banif announced a list of all the acknowledged and a list of the non-
acknowledged creditors. According to the Resolution Fund\u2019s 2022 annual report, the Resolution Fund holds a claim on
Banif of Euros 489 million, which has a higher claim ranking provided for in article 166-A of the RGICSF. Under the
judicial liquidation process of Banif, which was initiated following the resolution, the independent evaluator estimates
that the level of recovery of the financial support made available by the Resolution Fund, as having a higher ranking at
the end of the liquidation, is expected to be 7.6%.
On 12 January 2021, Banco de Portugal was informed that the Administrative and Fiscal Court of Funchal dismissed a
lawsuit involving several disputes associated to Banif\u2019s resolution measures applied by Banco de Portugal. In its
decision, the Court determined the legality and maintenance of Banco de Portugal\u2019s measures.
Liabilities and financing of the Resolution Fund
Pursuant to the resolution measures applied to BES and Banif, the Resolution Fund incurred on loans and assumed other
responsibilities and contingent liabilities resulting from:
- The State loans, on 31 December 2021, included the amounts made available (i) in 2014 for the financing of the
resolution measure applied to BES (Euros 3,900 million); (ii) to finance the absorption of Banif's losses (Euros 353
million); (iii) under the framework agreement concluded with the State in October 2017 for the financing of the
measures under the CCA (Euros 430 million plus Euros 850 million of additional funding requested in 2019 and Euros 850
million made available in 2020);
- Other funding granted:
\u2022 in 2014 by the institutions participating in the Resolution Fund in the amount of Euros 700 million, in which the
Bank participates, within the scope of BES resolution measure;
\u2022 in 2021 by seven domestic credit institutions, including BCP, to finance payments due under the CCA up to a
maximum of Euros 429 million;
- The underwriting by the Resolution Fund of a Tier 2 instrument to be issued by Novo Banco up to the amount of Euros
400 million did not take place as the instruments were placed with third party investors as disclosed by Novo Banco on
29 July 2018;
- Effects of the application of the principle that no creditor of the credit institution under resolution may assume a loss
greater than the one it would take if that institution did not go into liquidation;
- Negative effects resulting from the resolution process that result in additional liabilities or contingencies for Novo
Banco, which must be neutralized by the Resolution Fund;
- Legal proceedings filed against the Resolution Fund;
- Guarantee granted to secure the bonds issued by Oitante, totally reimbursed, as described above.
- CCA allows Lone Star to claim, from the Resolution Fund, funding costs, realised losses and provisions related to the
aforementioned ex-ante portfolio of existing loan stock agreed upon the sale process to Lone Star up to Euros 3.89
billion under the aforementioned conditions, among which a reduction of Novo Banco\u2019s CET1 below 8%-13%;
- In case the Supervisory Review and Evaluation Process (SREP) total capital ratio of Novo Banco falls below the SREP
total capital requirement, the State will provide additional capital in certain conditions and through different
instruments as referred to in the respective European Commission Decision.
According to Resolution Fund\u2019s annual report of 2022, contingent liabilities from the CCA are limited to a maximum
aggregate amount of Euros 3,890 million and that the aggregate amount of this contingent liability, which corresponds
to the difference between that maximum amount and the amounts already paid by the Resolution Fund, amounts to
Euros 485 million.
The expectation of the Resolution Fund is that, except for what may eventually result from the pending arbitration
disputes with Novo Banco, no further payments will occur under the CCA. On the other hand, the value of payments
already made may be compensated, under the terms of the contracts, by the eventual recovery of credits that may
occur, to which the value of the shareholding of the Resolution Fund in Novo Banco must be added.
According to note 22 of the Resolution Fund\u2019s 2022 annual report, the Resolution Fund considers that, to date, there
are no elements that allow a reliable estimate of the potential financial effect of these potential liabilities.
By a public statement on 28 September 2016, the Resolution Fund and the Ministry of Finance communicated the
agreement based on a review of the terms of the Euros 3,900 million loan originally granted by the State to the
Resolution Fund in August 2014 to finance the resolution measure applied to BES. According to the Resolution Fund, the
extension of the maturity of the loan was intended to ensure the ability of the Resolution Fund to meet its obligations
through its regular revenues, regardless of the contingencies to which the Resolution Fund is exposed. On the same day,
the Office of the Minister of Finance also announced that increases in the liabilities arising from the materialization of
future contingencies will determine the maturity adjustment of State and bank loans to the Resolution Fund, required
from to maintain the contributory effort required from the banking sector at prevailing levels at that time.
According to the statement of the Resolution Fund of 21 March 2017:
- \u201cThe conditions of the loans obtained from the Fund to finance the resolution measures applied to Banco Esp\u00edrito
Santo, S.A. and to Banif \u2013 Banco Internacional do Funchal, S.A. were changed. These loans amount to Euros 4,953
million, of which Euros 4,253 million were granted by the Portuguese State and Euros 700 million were granted by a
group of banks\";
- \u201cThose loans are now due in December 2046, without prejudice to the possibility of early repayment based on the
use of the Resolution Fund's revenues. The revision of the loan\u2019s terms aimed to ensure the sustainability and financial
balance of the Resolution Fund. The terms allow the Resolution Fund to fully meet its liabilities based on regular
revenues and without the need for special contributions or any other type of extraordinary contributions\".
According to the audit report on the management of Novo Banco conducted by the Court of Auditors and released on 12
July 2022, \"the repayment of the Euros 2,130 million loans granted by the Portuguese State to the Resolution Fund will
not end in 2046, as expected, rather in 2056 (without payments under the CCA after 2021) or in 2059 (with the use of
the CCA cap). (...) In other, more pessimistic scenarios, these loans will still be being repaid in 2062\u201d.
On 2 October 2017, by Resolution no. 151-A/2017, of the Council of Ministers of the Portuguese State, as the ultimate
guarantor of financial stability, was authorised to enter into a framework agreement with the Resolution Fund, to make
available the necessary financial resources to the Resolution Fund, if and when the State deemed necessary, to satisfy
any contractual obligations that may arise from the sale of the 75% stake in Novo Banco. The above-mentioned
resolution further set out that the framework agreement should be subject to a time period that is consistent with the
undertakings of the Resolution Fund and should preserve the Resolution Fund\u2019s capacity to satisfy said obligations in
due time.
On 31 December 2022, the Resolution Fund's own resources had a negative equity of Euros 6,974.7 million, as opposed
to Euros 7,207.6 million at the end of 2021, according to the latest 2022 annual report of the Resolution Fund.
To repay the loans obtained and to meet other liabilities that it may take on, the Resolution Fund receives proceeds
from the initial and regular contributions from the participating institutions (including the Bank) and from the
contribution over the banking sector (created under Law no. 55-A/2010). It is also provided for the possibility of the
member of the Government responsible for the area of Finance to determine, by ordinance that the participating
institutions make special contributions, in the situations provided for in the applicable legislation, particularly if the
Resolution Fund does not have resources to satisfy its obligations.
Pursuant to Decree-Law no. 24/2013 of 19 February, which establishes the method for determining the initial, periodic
and special contributions to the Resolution Fund, provided for in the Banking Law, the Bank has been paying, since
2013, its mandatory contributions set out in the aforementioned decree-law.
On 3 November 2015, the Banco de Portugal issued Circular Letter no. 085/2015/DES, under which it is clarified that
the periodic contribution to the Resolution Fund should be recognised as an expense at the time of the occurrence of
the event which creates the obligation to pay the contribution, i.e. on the last day of April of each year, as stipulated
in Article 9 of the referred Decree-Law no. 24/2013, of 19 February, thus the Bank is recognising as an expense the
contribution to the Resolution Fund in the year in which it becomes due.
Decree-Law no. 24/2013 of 19 February further sets out that Banco de Portugal has the authority to determine, by way
of instruction (\u201cinstru\u00e7\u00e3o\u201d), the applicable yearly rate based on objective incidence of periodic contributions. The
instruction of Banco de Portugal no. 28/2023, published on 15 December 2023, set the base rate for 2024 for the
determination of periodic contributions to the Resolution Fund at 0.032% (0.029% in 2023).
The Resolution Fund issued, on 15 November 2015, a public statement declaring: \"...it is further clarified that it is not
expected that the Resolution Fund will propose the setting up of a special contribution to finance the resolution
measure applied to BES. Therefore, the potential collection of a special contribution appears to be unlikely\".
In 2015, following the establishment of the Single Resolution Fund (SRF), the Group made an initial contribution in the
amount of Euros 31,364 thousand. In accordance with the Intergovernmental Agreement on the Transfer and
Mutualisation of Contributions to the SRF, this amount was not transferred to the SRF but was used instead to partially
cover for the disbursements made by the RF in respect of resolution measures prior to the date of application of this
Agreement. This amount will have to be reinstated over a period of 8 years (started in 2016) through the periodic
contributions to the SRF. The Single Resolution Fund does not cover undergoing situations with the National Resolution
Fund as at 31 December 2015. The total amount of the contribution attributable to the Group of 2023 was Euros 22,861
thousand, of which the Group delivered Euros 17,729 thousand and the remaining was constituted as irrevocable
payment commitment.
In 2023, the Group made regular contributions to the Portuguese Resolution Fund in the amount of Euros 9,491
thousand. The amount related to the contribution on the banking sector in Portugal, registered in this period was Euros
44,807 thousand. These contributions were recognized as a cost in 2023, in accordance with IFRIC no. 21 \u2013 Levies.
It is not possible, on this date, to assess the effects on the Resolution Fund due to: (i) the sale of the shareholding in
Novo Banco in accordance with the communication of Banco de Portugal dated 18 October 2017 and the information
provided by the European Commission on this subject under the terms described above, including the effects of the
application of the Contingent Capital Agreement and the Special Regime applicable to Deferred Tax Assets; (ii) the
application of the principle that no creditor of the credit institution under resolution may take on a loss greater than
the one it would take if that institution did not go into liquidation; (iii) additional liabilities or contingencies for Novo
Banco which need to be neutralized by the Resolution Fund; and, (iv) legal proceedings against the Resolution Fund.
According to Article 5 (e) of the Regulation of the Resolution Fund, approved by the Ministerial Order no. 420/2012, of
21 December, the Resolution Fund may submit to the member of the Government responsible for finance a proposal
with respect to the determination of amounts, time limits, payment methods, and any other terms related to the
special contributions to be made by the institutions participating in the Resolution Fund. According to public
communications from both the Resolution Fund and from the Government, there is no indication that any such special
contributions are foreseen.
According to the Resolution Fund\u2019s 2022 annual report, under note 8, \"the Resolution Fund is not obliged to present
positive equity. In case of insufficient resources, the Resolution Fund may receive special contributions, as determined
by the member of the Government responsible for finance, in accordance with article 153-I of the Banking Act,
although no such contributions are expected. The Resolution Fund may also, exceptionally, obtain financial support
from the State, namely through loans or guarantees, as set out in article 153-J of the same regime\".
To meet a payment from the Resolution Fund to Novo Banco, as per to Resolution no. 63-A/2021 of 27 May 2021 of the
Council of Ministers and Order from the Minister of State and Finance, of 31 May 2021 - intended to provide the
Resolution Fund with the financial resources necessary to meet any obligations arising from the Contingent
Capitalization Agreement in the years 2021 and 2022 \u2013 rendering a new loan from the State to the Resolution Fund, a
number of national financial institutions offered to finance the Resolution Fund, increasing up to Euros 475 million the
direct financing of banks to the Resolution Fund and waiving a Portuguese State loan to the Resolution Fund.
According to the Resolution Fund\u2019s 2022 annual report from the maximum amount of Euros 475 million. The Resolution
Fund used Euros 429 million, which corresponds to the payment made to Novo Banco in 2021. The loan matures in 2046
and bears interest at a rate corresponding to the sovereign cost of funding for the period between the contract date (31
May 2021) and 31 December 2026, plus a margin of 15 b.p. The interest rate will be reviewed on 31 December 2026
and, after that, every five-years. The payment obligations arising from this loan benefit from a pari passu treatment
with the payment obligations of the loans entered into with the Portuguese State on 7 August 2014 and 31 December
2015 and with the Portuguese credit institutions on 28 August 2014. The funding costs of the Resolution Fund (from the
State and from banks) will continue to be exclusively borne by periodic revenues, corresponding to the contributions
paid by the banking sector.
13. Banco Comercial Portugu\u00eas, S.A., Banco ActivoBank S.A. and Banco de Investimento Imobili\u00e1rio, S.A. (company
merged into Banco Comercial Portugu\u00eas, S.A.) initiated an administrative proceeding to contest the resolution adopted
by Bank of Portugal on 31 March 2017 to sell Novo Banco (NB), and also, as a precaution, the deliberation adopted by
the Resolution Fund on the same date, as they foresee the sale of NB by resorting to a contingent capitalization
agreement under which the Resolution Fund commits to inject capital in Novo Banco up to Euros 3,9 billion, under
determined circumstances. In the proceedings, the claimants request the declaration of nullity or annulment of those
acts.
The proceedings were filed based on the information contained in the Communication from Bank of Portugal dated 31
March 2017, of which the claimants were not notified. The proceedings were filed in court on 4 September 2017. Bank
of Portugal and the Resolution Fund presented their arguments and, only very recently, Nani Holdings SGPS, S.A. did
the same since, by delay of the court, this company was only very recently notified to act as a party in the proceedings.
In addition to opposing to it, the defendants invoke three objections (i) the illegitimacy of the claimants, (ii) the
argument that the act performed by Bank of Portugal cannot be challenged and (iii) the material incompetence of the
court. The opponent party invoked the issue of passive illegitimacy since Novo Banco was not notified as an opponent
party.
The claimants replied to the arguments presented by the defendants and to the arguments presented by the opponent
party. After the presentation of the arguments, Bank of Portugal attached to the proceedings what it called an
evidence process (allegedly in compliance with the law) but most of the documents delivered were truncated in such a
way that neither the court nor the claimants are able to obtain adequate knowledge thereof. That issue was already
raised in the proceedings (requesting the court to order Bank of Portugal to deliver a true evidence process) but no
decision thereon has been made yet.
Currently, the proceedings are prepared for confirmation of the decision accepting the formalities of the right of action
(with the making of a decision on the specific objections invoked). In case the judge considers that Novo Banco is an
opponent party, the judge must start by issuing a pre-confirmation in order to request the claimants to identify it.
Afterwards, that Bank will be notified to present its opposition arguments.
The case was sent to the judge on 23 September 2019 and the Bank is awaiting a decision. BCP added legal opinions to
the records (Professors M\u00e1rio Aroso de Almeida and Manuel Fontaine de Campos).
14. Following the restructuring process agreed with the Directorate-General for Competition (DGComp) and the
Portuguese State, Group Banco Comercial Portugu\u00eas implemented in 2014 a salary adjustment process for employees,
with a temporary effect. Additionally, it was agreed between the Bank and the Unions that, in the years after the State
intervention and if there are distributable profits, the Board of Directors and the Executive Committee would submit
for approval of the Shareholders\u2019 General Meeting a proposal of distribution of profits to the employees, which allows
the distribution of an accumulated total global amount at least equal to the total amount that was not received over
the temporary term of the salary adjustment, as described in the clause no. 151-E of BCP\u2019s Collective Labour
Agreement, effective between 2014 and 2017.
At the General Meeting held on 24 May 2023, the proposal submitted by the Board of Directors, the application of
profits relating to the financial year of 2022 was approved, which included an extraordinary distribution to the
employees to Euros 9,972,000, with the concrete determination of the amount to be attributed to each employee to be
fixed by the Executive Committee to employees who, having not already been fully compensated with the results
distributed in 2019 and 2020 and 2022, remain in office on the date of payment of the remuneration of June 2023. This
extraordinary distribution of results, together with those of 2019, 2020 and 2022 allowed the distribution to the
employees in office in June 2023 of an accumulated amount equal to the total amount not received during the period
of temporary salary adjustment indicated in the previous paragraph.
15. The Bank was subject to tax inspections for the years up to 2019. As a result of the inspections in question,
corrections were made by the tax authorities, arising from the different interpretation of some tax rules. The main
impact of these corrections occurred regarding IRC, including in terms of the tax loss carry forwards and, in the case of
indirect tax, in the calculation of the Value-Added Tax (VAT) deduction pro rata used for the purpose of determining
the amount of deductible VAT and at the Stamp Duty level. Most of additional liquidations/corrections made by the tax
administration were the object of contestation by administrative and/or judicial means.
The Bank recorded provisions, current tax liabilities or deferred tax liabilities at the amount considered sufficient to
offset the tax or tax loss carry forwards, as well as the contingencies related to the fiscal years not yet reviewed by the
tax administration.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-681": { "value": "Other liabilities
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Interests and other amounts payable
169,842
163,843
Operations to be settled - foreign, transfers and deposits
249,509
212,208
Credit insurance received and to accrued
49,181
62,740
Holidays, subsidies and other remuneration payable
58,018
55,132
Transactions on securities to be settled
3,855
4,514
Public sector
51,675
43,628
Creditors
Rents to pay
215,714
185,163
Deposit account and other applications
157,102
89,386
Suppliers
57,652
35,649
From factoring operations
47,987
41,618
For futures and options transactions
11,121
73,394
Liabilities not covered by the Group Pension Fund - amounts payable by the Group
10,561
10,819
Associated companies
26
21
\u00a0 Other creditors
\u00a0 \u00a0 Residents
35,660
66,158
\u00a0 \u00a0 Non-residents
96,525
70,590
Deferred income
10,424
10,155
Other administrative costs payable
7,809
4,763
Other liabilities
458,891
262,192
1,691,552
1,391,973
The balance Liabilities not covered by the Group Pension Fund - amounts payable by the Group includes the amount of
Euros 6,620,000 (31\u00a0December 2022: Euros 6,777,000) related to the actual value of benefits attributed associated with
mortgage loans to employees, retirees and former employees.
The balance Amounts payable on trading activity includes amounts payable within 3 business days of stock exchange
operations.
The Group has several operating leases for properties, being registered in the item Rents to pay the amount of lease
liabilities recognised under IFRS 16, as described in the accounting policy 1 H. The analysis of this balance, by maturity,
is as follows:
(Thousands of euros)
2023
2022
(restated)
Until 1 year
20,728
20,402
1 to 5 years
84,482
137,949
Over 5 years
146,725
33,485
251,935
191,836
Accrued costs recognised in Net interest income
(36,221)
(6,673)
215,714
185,163
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-680": { "value": "Other liabilities
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Interests and other amounts payable
169,842
163,843
Operations to be settled - foreign, transfers and deposits
249,509
212,208
Credit insurance received and to accrued
49,181
62,740
Holidays, subsidies and other remuneration payable
58,018
55,132
Transactions on securities to be settled
3,855
4,514
Public sector
51,675
43,628
Creditors
Rents to pay
215,714
185,163
Deposit account and other applications
157,102
89,386
Suppliers
57,652
35,649
From factoring operations
47,987
41,618
For futures and options transactions
11,121
73,394
Liabilities not covered by the Group Pension Fund - amounts payable by the Group
10,561
10,819
Associated companies
26
21
\u00a0 Other creditors
\u00a0 \u00a0 Residents
35,660
66,158
\u00a0 \u00a0 Non-residents
96,525
70,590
Deferred income
10,424
10,155
Other administrative costs payable
7,809
4,763
Other liabilities
458,891
262,192
1,691,552
1,391,973
The balance Liabilities not covered by the Group Pension Fund - amounts payable by the Group includes the amount of
Euros 6,620,000 (31\u00a0December 2022: Euros 6,777,000) related to the actual value of benefits attributed associated with
mortgage loans to employees, retirees and former employees.
The balance Amounts payable on trading activity includes amounts payable within 3 business days of stock exchange
operations.
The Group has several operating leases for properties, being registered in the item Rents to pay the amount of lease
liabilities recognised under IFRS 16, as described in the accounting policy 1 H. The analysis of this balance, by maturity,
is as follows:
(Thousands of euros)
2023
2022
(restated)
Until 1 year
20,728
20,402
1 to 5 years
84,482
137,949
Over 5 years
146,725
33,485
251,935
191,836
Accrued costs recognised in Net interest income
(36,221)
(6,673)
215,714
185,163
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-679": { "value": "Other liabilities
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Interests and other amounts payable
169,842
163,843
Operations to be settled - foreign, transfers and deposits
249,509
212,208
Credit insurance received and to accrued
49,181
62,740
Holidays, subsidies and other remuneration payable
58,018
55,132
Transactions on securities to be settled
3,855
4,514
Public sector
51,675
43,628
Creditors
Rents to pay
215,714
185,163
Deposit account and other applications
157,102
89,386
Suppliers
57,652
35,649
From factoring operations
47,987
41,618
For futures and options transactions
11,121
73,394
Liabilities not covered by the Group Pension Fund - amounts payable by the Group
10,561
10,819
Associated companies
26
21
\u00a0 Other creditors
\u00a0 \u00a0 Residents
35,660
66,158
\u00a0 \u00a0 Non-residents
96,525
70,590
Deferred income
10,424
10,155
Other administrative costs payable
7,809
4,763
Other liabilities
458,891
262,192
1,691,552
1,391,973
The balance Liabilities not covered by the Group Pension Fund - amounts payable by the Group includes the amount of
Euros 6,620,000 (31\u00a0December 2022: Euros 6,777,000) related to the actual value of benefits attributed associated with
mortgage loans to employees, retirees and former employees.
The balance Amounts payable on trading activity includes amounts payable within 3 business days of stock exchange
operations.
The Group has several operating leases for properties, being registered in the item Rents to pay the amount of lease
liabilities recognised under IFRS 16, as described in the accounting policy 1 H. The analysis of this balance, by maturity,
is as follows:
(Thousands of euros)
2023
2022
(restated)
Until 1 year
20,728
20,402
1 to 5 years
84,482
137,949
Over 5 years
146,725
33,485
251,935
191,836
Accrued costs recognised in Net interest income
(36,221)
(6,673)
215,714
185,163
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-683": { "value": "Share capital, Share premium and Other equity instruments
As at 31\u00a0December 2023, the Bank's share capital amounts to Euros 3,000,000,000 and is represented by 15,113,989,952
nominative book-entry shares without nominal value, fully subscribed and paid up.
As at 31\u00a0December 2023, the Share premium amounts to Euros 16,470,667.11, corresponding to the difference between
the issue price (Euros 0.0834 per share) and the issue value (Euros 0.08 per share) determined under the scope of the
Exchange Offer occurred in June 2015.
As at 31\u00a0December 2023, the Other equity instruments in the amount of Euros 400,000,000 corresponds to 2,000
subordinated perpetual bonds (Additional Tier 1), issued on 31 January 2019, with a nominal value of Euros 200,000
each. This issue was classified as an equity instrument in accordance with the specific rules of IAS 32 and accounting
policy 1 E. This operation without fixed term has the option of early repayment by the Bank as from the end of the 5th
year, and an annual interest rate of 9.25% during the first 5 years. As an instrument classified as AT1, the corresponding
interest payment is decided by the Bank at its discretion and is still subject to compliance with a set of conditions,
including compliance with the combined requirement of capital reserve and the existence of Distributable Funds in
sufficient amount. The payment of interest may also be cancelled by imposition of the competent authorities.
As at 31\u00a0December 2023, the shareholders who hold, individually or jointly, 5% or more of the Bank's capital, are the
following:
Shareholder
number
of shares
% share
capital
% voting
rights
Chiado (Luxembourg) S.\u00e0.r.l. (Fosun Group)
3,927,436,381
25.99%
25.99%
Sonangol - Sociedade Nacional de Combust\u00edveis de Angola, EP
2,946,353,914
19.49%
19.49%
Total Qualified Shareholdings
6,873,790,295
45.48%
45.48%
Chiado (Luxembourg) S.\u00e0.r.l. announced on 23 January 2024, that it held on to that date, 3,027,936,381 BCP shares,
corresponding to 20.03% of the respective share capital and voting rights.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-682": { "value": "Share capital, Share premium and Other equity instruments
As at 31\u00a0December 2023, the Bank's share capital amounts to Euros 3,000,000,000 and is represented by 15,113,989,952
nominative book-entry shares without nominal value, fully subscribed and paid up.
As at 31\u00a0December 2023, the Share premium amounts to Euros 16,470,667.11, corresponding to the difference between
the issue price (Euros 0.0834 per share) and the issue value (Euros 0.08 per share) determined under the scope of the
Exchange Offer occurred in June 2015.
As at 31\u00a0December 2023, the Other equity instruments in the amount of Euros 400,000,000 corresponds to 2,000
subordinated perpetual bonds (Additional Tier 1), issued on 31 January 2019, with a nominal value of Euros 200,000
each. This issue was classified as an equity instrument in accordance with the specific rules of IAS 32 and accounting
policy 1 E. This operation without fixed term has the option of early repayment by the Bank as from the end of the 5th
year, and an annual interest rate of 9.25% during the first 5 years. As an instrument classified as AT1, the corresponding
interest payment is decided by the Bank at its discretion and is still subject to compliance with a set of conditions,
including compliance with the combined requirement of capital reserve and the existence of Distributable Funds in
sufficient amount. The payment of interest may also be cancelled by imposition of the competent authorities.
As at 31\u00a0December 2023, the shareholders who hold, individually or jointly, 5% or more of the Bank's capital, are the
following:
Shareholder
number
of shares
% share
capital
% voting
rights
Chiado (Luxembourg) S.\u00e0.r.l. (Fosun Group)
3,927,436,381
25.99%
25.99%
Sonangol - Sociedade Nacional de Combust\u00edveis de Angola, EP
2,946,353,914
19.49%
19.49%
Total Qualified Shareholdings
6,873,790,295
45.48%
45.48%
Chiado (Luxembourg) S.\u00e0.r.l. announced on 23 January 2024, that it held on to that date, 3,027,936,381 BCP shares,
corresponding to 20.03% of the respective share capital and voting rights.
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-684": { "value": "Legal and statutory reserves
Under the Portuguese legislation, the Bank is required to annually set-up a legal reserve equal to a minimum of 10% of
annual profits until the reserve equals the share capital, or until the sum of the free reserves constituted and the
retained earnings, if higher. In accordance with the proposal for the appropriation of net income for the 2022 financial
year approved at the General Shareholders' Meeting held on 24 May 2023, the Bank increased its legal reserves in the
amount of Euros 47,841,000, thus, as at 31\u00a0December 2023 the Legal Reserves amount to Euros 316,375,000
(31\u00a0December 2022: Euros 268,534,000).
In accordance with the current Portuguese legislation, the Group companies must set-up annually a reserve with a
minimum percentage between 5 and 20% of their net annual profits depending on the nature of their economic activity
and are recognised in Other reserves and retained earnings in the Bank's consolidated financial statements (note 43).
Reserves and retained earnings
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Fair value changes - Gross amount
Financial assets at fair value through other comprehensive income (note 24)
\u00a0 \u00a0 Debt instruments (*)
(75,326)
(228,425)
\u00a0 \u00a0 Equity instruments
(3,747)
(25,846)
Of associated companies and other changes
1,931
7,838
Cash-flow hedge
(1,274,684)
(1,744,727)
From financial liabilities designated at fair value through profit or loss
related to changes in own credit risk
(2,596)
182
(1,354,422)
(1,990,978)
Fair value changes - Tax
Financial assets at fair value through other comprehensive income
\u00a0 Debt instruments
20,266
58,780
\u00a0 Equity instruments
1,403
1,550
Cash-flow hedge
398,207
540,755
From financial liabilities designated at fair value through profit or loss
related to changes in own credit risk
814
(57)
420,690
601,028
(933,732)
(1,389,950)
Exchange differences arising on consolidation
\u00a0 Bank Millennium, S.A.
(35,347)
(92,629)
\u00a0 BIM - Banco Internacional de Mo\u00e7ambique, S.A.
(152,108)
(139,373)
\u00a0 Banco Millennium Atl\u00e2ntico, S.A.
(180,187)
(143,989)
\u00a0 Others
2,031
2,073
(365,611)
(373,918)
Application of IAS 29
\u00a0 Effect on equity of Banco Millennium Atl\u00e2ntico, S.A.
50,584
42,316
\u00a0 Others
(3,965)
(3,965)
46,619
38,351
Other reserves and retained earnings
2,975,899
2,997,779
1,723,175
1,272,262
(*) Includes the effects arising from the application of hedge accounting.
The fair value changes correspond to the accumulated changes of the Financial assets at fair value through other
comprehensive income and Cash flow hedge, in accordance with the accounting policy presented in note 1 C.
The variation in the fair value of cash flow hedges reflects the economic impact on these hedges of the pronounced
increase in market interest rates, an effect that is more than offset by the economic impact on the fair value of
liabilities that are more sensitive to such an increase and that are accounted for at amortized cost.
During 2023, the changes occurred in Fair value changes - Gross amount, excluding the effect of hedge accounting and
changes in own credit risk associated with financial liabilities at fair value through profit or loss, are analysed as
follows:
(Thousands of euros)
2023
Balance as
at 1 January
Fair value
changes
Fair value
hedge
adjustment
Impairment
in profit or
loss
Disposals
Balance as at
31 December
Financial assets at fair value through
other comprehensive income (note 24)
Debt instruments
Debt securities - Portuguese public
issuers
(89,985)
140,683
(104,087)
306
10,438
(42,645)
Others
(138,440)
154,972
(51,078)
1,016
849
(32,681)
(228,425)
295,655
(155,165)
1,322
11,287
(75,326)
Equity instruments
(25,846)
12,505
\u2014
\u2014
9,594
(3,747)
Associated companies and other
changes
Millenniumbcp Ageas
(3,725)
(1,533)
\u2014
\u2014
(1,350)
(6,608)
Other associates and other changes
11,563
2,699
\u2014
\u2014
(5,723)
8,539
7,838
1,166
\u2014
\u2014
(7,073)
1,931
(246,433)
309,326
(155,165)
1,322
13,808
(77,142)
During 2022 the changes occurred in Fair value changes - Gross amount, excluding the effect of hedge accounting and
changes in own credit risk associated with financial liabilities at fair value through profit or loss, are analysed as
follows:
(Thousands of euros)
2022 (restated)
Balance as
at 1 January
Fair value
changes
Fair value
hedge
adjustment
Impairment
in profit or
loss
Disposals
Balance as at
31 December
Financial assets at fair value through
other comprehensive income (note 24)
Debt instruments
Debt securities - Portuguese public
issuers
41,380
(293,433)
146,264
(2,406)
18,210
(89,985)
Others
(32,684)
(183,482)
85,052
(2,617)
(4,709)
(138,440)
8,696
(476,915)
231,316
(5,023)
13,501
(228,425)
Equity instruments
(30,242)
(3,183)
\u2014
\u2014
7,579
(25,846)
Associated companies and other
changes
Millenniumbcp Ageas
(24,485)
6,522
\u2014
\u2014
14,238
(3,725)
Other associates and other changes
9,640
1,923
\u2014
\u2014
\u2014
11,563
(14,845)
8,445
\u2014
\u2014
14,238
7,838
(36,391)
(471,653)
231,316
(5,023)
35,318
(246,433)
The item Disposals refers to the derecognition of debt securities and equity instruments at fair value through other
comprehensive income.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-685": { "value": "Non-controlling interests
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Fair value changes
Debt instruments
(27,718)
(98,139)
Equity instruments
2,924
2,380
Cash-flow hedge
(6,226)
(43,281)
Other
4
7
(31,016)
(139,033)
Deferred taxes
Debt instruments
5,362
18,531
Equity instruments
(600)
(467)
Cash-flow hedge
1,183
8,223
5,945
26,287
(25,071)
(112,746)
Exchange differences arising on consolidation
(136,624)
(187,306)
Actuarial losses (net of taxes)
897
1,742
Other reserves and retained earnings
1,148,225
1,080,424
987,427
782,114
The balance Non-controlling interests is analysed as follows:
(Thousands of euros)
Balance Sheet
Income Statement
2023
2022
(restated)
2023
2022
(restated)
Bank Millennium Group
792,061
585,618
63,284
(108,125)
BIM - Banco Internacional de Mo\u00e7ambique Group
178,500
174,041
33,865
35,323
Other subsidiaries
16,866
22,455
(5,590)
(5,020)
987,427
782,114
91,559
(77,822)
The following table presents a summary of financial information for the main subsidiaries included in this balance,
prepared in accordance with IFRS. The information is presented before inter-company eliminations:
(Thousands of euros)
Bank Millennium Group
BIM - Banco International de
Mo\u00e7ambique Group
2023
2022
(restated)
2023
2022
(restated)
Net income for the year
126,821
(216,683)
105,099
106,030
Correction of net income from previous years
\u2014
\u2014
(3,447)
\u2014
Adjusted net income
126,821
(216,683)
101,652
106,030
Net income for the year attributable to the shareholders
63,537
(108,558)
67,787
70,707
Net income for the year attributable to non-controlling interests
63,284
(108,125)
33,865
35,323
Other comprehensive income attributable to the shareholders
143,760
(34,929)
(11,355)
23,390
Other comprehensive income attributable to non-controlling interests
143,186
(34,790)
(5,673)
11,685
Total comprehensive income
413,767
(286,402)
84,624
141,105
Balance sheet
Financial assets
28,184,289
23,055,876
2,495,727
2,606,994
Non-financial assets
752,625
641,571
215,447
217,416
Financial liabilities
(26,121,981)
(21,684,366)
(2,096,244)
(2,235,210)
Non-financial liabilities
(1,227,601)
(839,464)
(80,310)
(68,008)
Equity
1,587,332
1,173,617
534,620
521,192
Equity attributed to the shareholders
795,271
587,999
356,514
347,559
Equity attributed to the non-controlling interests
792,061
585,618
178,106
173,633
Cash flows arising from:
operating activities
3,337,195
2,134,937
101,745
104,089
investing activities
(2,828,892)
260,370
(18,862)
(12,141)
financing activities
474,329
(75,834)
(71,516)
(191,515)
Increase / (decrease) in cash and equivalents
982,632
2,319,473
11,367
(99,567)
Dividends paid during the year:
attributed to the shareholders
\u2014
\u2014
47,478
119,244
attributed to the non-controlling interests
\u2014
\u2014
23,719
59,572
\u2014
\u2014
71,197
178,816
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-686": { "value": "Guarantees and other commitments
This balance is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Guarantees granted
Guarantees
3,893,124
4,144,220
Stand-by letter of credit
75,018
57,084
Open documentary credits
238,962
258,591
Bails and indemnities
135,256
135,718
4,342,360
4,595,613
Commitments to third parties
Irrevocable commitments
Term deposits contracts
2,051
1,621
Irrevocable credit lines
5,279,307
4,880,858
Securities subscription
22,145
41,285
Other irrevocable commitments
157,711
153,982
Revocable commitments
Revocable credit lines
6,013,393
5,834,056
Bank overdraft facilities
890,579
998,886
Other revocable commitments
181,380
128,025
12,546,566
12,038,713
Guarantees received
28,126,885
29,552,693
Commitments from third parties
12,352,650
13,453,876
Securities and other items held for safekeeping
85,357,406
75,348,414
Securities and other items held under custody by the Securities Depository Authority
87,167,519
82,314,713
Other off balance sheet accounts
146,614,201
131,084,605
The guarantees granted by the Group may be related to loans transactions, where the Group grants a guarantee in
connection with a loan granted to a client by a third entity. According to its specific characteristics it is expected that
some of these guarantees expire without being executed and therefore these transactions do not necessarily represent
a cash-outflow. The estimated liabilities are recorded under provisions (note 39).
Stand-by letters and open documentary credits aim to ensure the payment to third parties from commercial deals with
foreign entities and therefore financing the shipment of the goods. Therefore, the credit risk of these transactions is
limited since they are collateralised by the shipped goods and are generally short-term operations.
Irrevocable commitments are non-used parts of credit facilities granted to corporate or retail customers. Many of these
transactions have a fixed term and a variable interest rate and therefore the credit and interest rate risk are limited.
The balance Irrevocable commitments - Other irrevocable commitments includes the amount of Euros 30,638,000
(31\u00a0December 2022: Euros 25,506,000) relating to the collateral constituted in compliance with the assumption of
irrevocable payment commitments to Single Resolution Fund, as referred in note 6.
This balance also includes the amount of Euros 95.190.000 (31\u00a0December 2022: Euros 95.190.000) corresponding to
irrevocable commitments for cumulative payments assumed with the Deposit Guarantee Fund, as referred in note 6.
The financial instruments accounted as Guarantees and other commitments are subject to the same approval and
control procedures applied to the credit portfolio, namely regarding the analysis of objective evidence of impairment,
as described in the accounting policy in note 1.C. The maximum credit exposure is represented by the nominal value
that could be lost related to guarantees and commitments undertaken by the Group in the event of default by the
respective counterparties, without considering potential recoveries or collaterals.
The balance of Guarantees granted, Irrevocable credit lines and revocable commitments portfolio detailed by stage
according with IFRS 9, is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Stage 1
Gross amount
14,934,354
14,303,231
Impairment
(12,880)
(11,307)
14,921,474
14,291,924
Stage 2
Gross amount
1,433,605
1,768,595
Impairment
(14,686)
(14,893)
1,418,919
1,753,702
Stage 3
Gross amount
339,060
365,612
Impairment
(94,008)
(84,554)
245,052
281,058
16,585,445
16,326,684
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-687": { "value": "Fair value
Fair value is based on market prices, whenever these are available. If market prices are not available, as occurs
regarding many products sold to clients, fair value is estimated through internal models based on cash-flow discounting
techniques. Cash-flows for the different instruments sold are calculated according to its financial characteristics and
the discount rates used include both the market interest rate curve and the current conditions of the Group's pricing
policy.
Thus, the fair value obtained is influenced by the parameters used in the evaluation model that have some degree of
judgment and reflects exclusively the value attributed to different financial instruments. However, it does not consider
prospective factors, as the future business evolution. Therefore, the values presented cannot be understood as an
estimate of the economic value of the Group.
The main methods and assumptions used in estimating the fair value for the financial assets and financial liabilities are
presented as follows:
Cash and deposits at Central Banks and Loans and advances to credit institutions repayable on
demand
Considering the short term of these financial instruments, the amount in the balance sheet is a reasonable estimate of
its fair value.
Loans and advances to credit institutions, Deposits from credit institutions and Assets with
repurchase agreements
The fair value of these financial instruments is calculated discounting the expected principal and interest future cash
flows for these instruments, considering that the payments of the instalments occur in the contractually defined dates.
This update is made based on the prevailing market rate for the term of each cash flow plus the average spread of the
production of the most recent 3 months of the same. For the elements with signs of impairment, the net impairment of
these operations is considered as a reasonable estimate of their fair value, considering the economic valuation that is
realized in the determination of this impairment.
For resources from Central Banks, it was considered that the book value is a reasonable estimate of its fair value, given
the nature of operations and the associated short-term.
For the remaining loans and advances and deposits, the discount rate used reflects the current conditions applied by
the Group on identical instruments for each of the different residual maturities (rates from the monetary market or
from the interest rate swap market).
Loans and advances to customers without defined maturity date
Considering the short maturity of these financial instruments, the conditions of the portfolio are similar to conditions
used at the date of the report. Therefore, the amount in the balance sheet is a reasonable estimate of its fair value
(this class incorporates among other, factoring operations, current account credit, credit cards and overdrafts in
demand deposits).
Loans and advances to customers with defined maturity date
The fair value of these instruments is calculated by discounting the expected principal and interest future cash flows
for these instruments, considering that the payments of the instalments occur in the contractually defined dates. For
loans with signs of impairment (Stage 3 loans), the net impairment of these operations is considered as a reasonable
estimate of their fair value, considering the economic valuation that is realized in the determination of this
impairment.
The discount rate used is the one that reflects the current rates of the Group for each of the homogeneous classes of
this type of instruments and with similar residual maturity. The discount rate includes the market rates for the residual
maturity date (rates from the monetary market or from the interest rate swap market) and the spread used at the date
of the report, which was calculated from the average production of the three most recent months compared to the
reporting date.
Resources from customers and other loans
The fair value of these financial instruments is calculated by discounting the expected principal and interest future
cash flows for the referred instruments, considering that payments occur in the contractually defined dates. The
discount rate used reflects the current conditions applied by the Group in similar instruments with a similar maturity.
The discount rate includes the market rates of the residual maturity date (rates of monetary market or the interest
rate swap market, at the end of the period) and the actual spread of the Group. This was calculated from the average
production of the three most recent months compared to the reporting date.
As in the case of credits without defined maturity, also for the resources from customers without defined maturity
(demand deposits) it is considered that given the potential short term of the same, possibility of their liquidation at any
time, the book value of these liabilities is a reasonable estimate of their fair value.
The average discount rates for Loans and advances to credit institutions, Loans and advances to customers, Resources
from credit institutions and Resources from customers are analysed as follows:
Loans and advances to
credit institutions
Loans and advances to
customers
Resources from credit
institutions
Resources from customers
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
2023
2022
(restated)
EUR
4.31%
2.44%
4.76%
5.15%
4.28%
3.38%
4.32%
2.77%
AOA
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
AUD
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4.86%
3.76%
CAD
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
5.43%
5.11%
CHF
n.a.
n.a.
3.57%
4.48%
n.a.
n.a.
2.10%
1.58%
CNY
n.a.
n.a.
2.95%
n.a.
n.a.
n.a.
2.66%
1.64%
DKK
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3.93%
2.77%
GBP
n.a.
n.a.
n.a.
n.a.
5.69%
4.07%
5.50%
4.18%
HKD
n.a.
n.a.
4.24%
4.73%
n.a.
n.a.
5.30%
3.89%
JPY
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
MOP
n.a.
n.a.
3.66%
4.17%
n.a.
n.a.
5.11%
4.89%
MZN
19.51%
19.51%
23.62%
22.59%
n.a.
n.a.
16.41%
15.99%
NOK
n.a.
n.a.
n.a.
6.19%
n.a.
n.a.
5.09%
3.64%
PLN
5.27%
7.27%
8.28%
10.01%
5.28%
7.39%
5.48%
7.00%
SEK
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4.37%
3.53%
TRY
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
44.94%
n.a.
USD
5.78%
5.41%
6.34%
5.74%
5.85%
5.52%
5.03%
4.51%
ZAR
8.69%
8.61%
13.08%
13.05%
n.a.
n.a.
5.87%
5.45%
Financial assets and liabilities measured at fair value through profit or loss (except
derivatives), financial assets at fair value through other comprehensive income
These financial instruments are accounted for at fair value. Fair value is based on market prices (\"Bid-price\"), whenever
these are available. If market prices are not available, fair value is estimated through numerical models based on cash-
flow discounting techniques, using the market interest rate curve adjusted for factors associated, predominantly credit
risk and liquidity risk, determined in accordance with the market conditions and time frame. In this class of assets, the
fair value corresponds to their book value.
Market interest rates are determined based on information released by the suppliers of financial content - Reuters and
Bloomberg - more specifically because of prices of interest rate swaps. The values for the very short-term rates are
obtained from similar sources but regarding interbank money market. The interest rate curve obtained is calibrated
with the values of interest rate short-term futures. Interest rates for specific periods of the cash flows are determined
by appropriate interpolation methods. The same interest rate curves are used in the projection of the non-
deterministic cash flows such as indexes.
When optionality is involved, the standard templates (Black-Scholes, Black, Ho and others) are used considering the
volatility areas applicable. Whenever there are no references in the market of sufficient quality or that the available
models do not fully apply to meet the characteristics of the financial instrument, specific quotations supplied by an
external entity are applied, typically a counterparty of the business.
Financial assets measured at amortised cost - Debt securities
These financial instruments are accounted at amortised cost net of impairment, as referred in the accounting policy
described in note 1 C1.1.1. The fair value of this class of assets, is based on market prices, whenever these are
available. If market prices are not available, fair value is estimated through numerical models based on cash-flow
discounting techniques, using the market interest rate curve adjusted for factors associated, predominantly credit risk
and liquidity risk, determined in accordance with the market conditions and time frame.
Hedging and trading derivatives
All derivatives are recorded at fair value. In case of derivative contracts that are quoted in organised markets their
market prices are used. As for derivatives traded \"Over-the-counter\", it is applied methods based on numerical cash-
flow discounting techniques and models for assessment of options considering variables of the market, particularly the
interest rates on the instruments in question, and where necessary, their volatilities.
Market interest rates are determined based on information released by the suppliers of financial content - Reuters and
Bloomberg - more specifically because of prices of interest rate swaps. The values for the very short-term rates are
obtained from similar sources but regarding interbank money market. The interest rate curve obtained is calibrated
with the values of interest rate short-term futures. Interest rates for specific periods of the cash flows are determined
by appropriate interpolation methods. The same interest rate curves are used in the projection of the non-
deterministic cash flows such as indexes.
Debt securities non subordinated issued and subordinated debt
For these financial instruments the fair value was calculated for components for which fair value is not yet reflected in
the balance sheet. Fixed rate remunerated instruments for which the Group adopts \"hedge-accounting\", the fair value
related to the interest rate risk is already recognised. For the fair value calculation, other components of risk were
considered, in addition to the interest rate risk already recorded, when applicable. The fair value is based on market
prices, whenever these are available. If market prices are not available, fair value is estimated through numerical
models based on cash-flow discounting techniques, using the market interest rate curve adjusted by associated factors,
predominantly credit risk and trading margin, the latter only in the case of issues placed on non-institutional customers
of the Group.
As original reference, the Group applies the curves resulting from the market interest rate swaps for each specific
currency. The credit risk (credit spread) is represented by an excess from the curve of interest rate swaps established
specifically for each term and class of instruments based on the market prices on equivalent instruments.
For own issued debts placed among non-institutional customers of the Group, one more differential was added
(commercial spread), which represents the margin between the financing cost in the institutional market and the cost
obtained by distributing the respective instrument in the owned commercial network.
The average of the reference rates of the yield curve obtained from the market prices of the different currencies used
in the determination of the fair value of the\u00a0 issues is analysed as follows:
2023
2022 (restated)
EUR
PLN
EUR
PLN
Placed in the institutional market
Subordinated
4.98%
0.00%
9.33%
0.00%
Senior
0.04%
0.00%
0.19%
0.00%
Placed in retail
Senior and collateralised
2.36%
0.04%
3.37%
6.19%
For non subordinated debt securities issued, the fair value calculation focused on all the components of these
instruments, as a result the difference determined is a positive amount of Euros 118,547,000 (31\u00a0December 2022: a
positive amount of Euros 72,745,000) and includes a payable amount of Euros 95,357,000 (31\u00a0December 2022: a payable
amount of Euros 53,495,000) which reflects the fair value of embedded derivatives and are recorded in financial assets
and liabilities held for trading (note 24 and 37).
The following table presents the interest rates used in the definition of the interest rate curves of main currencies,
namely EUR, USD, GBP and PLN used to determine the fair value of the financial assets and liabilities of the Group:
2023
2022 (restated)
EUR
USD
GBP
PLN
EUR
USD
GBP
PLN
1 day
3.93%
5.28%
5.20%
5.74%
2.00%
4.45%
3.55%
6.76%
7 days
3.93%
5.29%
5.22%
5.74%
2.00%
4.47%
3.58%
6.76%
1 month
3.96%
5.37%
5.25%
5.70%
2.04%
4.57%
3.67%
6.83%
2 months
3.98%
5.41%
5.29%
5.74%
2.13%
4.66%
3.80%
6.87%
3 months
3.97%
5.44%
5.32%
5.78%
2.25%
4.77%
3.91%
6.92%
6 months
3.86%
5.37%
5.34%
5.72%
2.73%
5.07%
4.32%
7.04%
9 months
3.75%
5.33%
5.29%
5.71%
3.11%
5.28%
4.65%
7.09%
1 year
3.45%
5.05%
5.25%
5.50%
3.26%
5.11%
4.87%
7.35%
2 years
2.81%
4.37%
4.28%
4.94%
3.39%
4.69%
4.69%
6.97%
3 years
2.56%
4.04%
3.94%
4.62%
3.31%
4.33%
4.56%
6.53%
5 years
2.43%
3.81%
3.63%
4.41%
3.23%
4.02%
4.33%
6.20%
7 years
2.44%
3.75%
3.53%
4.41%
3.19%
3.89%
4.14%
6.13%
10 years
2.50%
3.74%
3.54%
4.49%
3.21%
3.82%
3.99%
6.20%
15 years
2.56%
3.76%
3.63%
4.66%
3.14%
3.79%
3.91%
6.45%
20 years
2.51%
3.74%
3.66%
4.75%
2.93%
3.72%
3.84%
6.49%
30 years
2.33%
3.57%
3.61%
4.75%
2.54%
3.48%
3.70%
6.49%
The following table shows the fair value of financial assets and liabilities of the Group, as at 31\u00a0December 2023:
(Thousands of euros)
2023
Fair value
through
profit or loss
Fair value
through other
comprehensive
income
Amortised
cost
Book value
Fair value
Assets
Cash and deposits at Central Banks
\u2014
\u2014
4,545,526
4,545,526
4,545,526
Loans and advances to credit institutions repayable
on demand
\u2014
\u2014
337,687
337,687
337,687
Financial assets at amortised cost
Loans and advances to credit institutions
\u2014
\u2014
908,477
908,477
904,728
Loans and advances to customers (i)
\u2014
\u2014
53,305,159
53,305,159
52,389,825
Debt securities
\u2014
\u2014
17,579,136
17,579,136
17,260,082
Financial assets at fair value through profit or loss
Financial assets held for trading
822,904
\u2014
\u2014
822,904
822,904
Financial assets not held for trading mandatorily
at fair value through profit or loss
467,254
\u2014
\u2014
467,254
467,254
Financial assets designated at fair value
through profit or loss
32,004
\u2014
\u2014
32,004
32,004
Financial assets at fair value through
other comprehensive income
\u2014
10,834,291
\u2014
10,834,291
10,834,291
Hedging derivatives (ii)
40,628
\u2014
\u2014
40,628
40,628
1,362,790
10,834,291
76,675,985
88,873,066
87,634,929
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
\u2014
\u2014
829,126
829,126
820,805
Resources from customers (i)
\u2014
\u2014
75,606,813
75,606,813
75,460,202
Non subordinated debt securities issued (i)
\u2014
\u2014
2,712,682
2,712,682
2,831,229
Subordinated debt (i)
\u2014
\u2014
1,397,425
1,397,425
1,456,002
Financial liabilities at fair value through profit or
loss
Financial liabilities held for trading
207,387
\u2014
\u2014
207,387
207,387
Financial liabilities designated
at fair value through profit or loss
3,608,487
\u2014
\u2014
3,608,487
3,608,487
Hedging derivatives (ii)
67,825
\u2014
\u2014
67,825
67,825
3,883,699
\u2014
80,546,046
84,429,745
84,451,937
(i) - The book value includes the effect of the adjustments resulting from the application of hedge accounting;
(ii) - Includes a portion that is recognised in reserves in the application of accounting cash flow hedge.
The Bank includes in the Book value column of the heading Financial assets at amortized cost - Debt securities the
variation in the fair value of the hedged element attributable to the hedged risk (risk of interest rate) for securities to
which the Bank is applying fair value hedge accounting.
Until 31 December 2022, the Fair value column of the heading Financial assets at cost amortized - Debt securities
corresponded to the fair value plus the variation in the fair value of the hedged element attributable to the hedged risk
(interest rate risk) for the securities in which the Bank was applying fair value hedge accounting. Since 31 December
2022, the difference between the two columns presented (Book value and Fair value) corresponded to potential gains
on debt securities recorded in accounting at amortized cost, not considering the effects of applying hedge accounting
(alternatively compared to the initial acquisition cost). As of 30 June 2023, for these instruments, the Bank began to
apply a strict definition of Fair value, no longer adding at fair value the change in the fair value of the hedged item
attributable to the hedged risk. This way, as of that date, the differential between the two columns referred to above
(Book value and Fair value) corresponds to potential gains on debt securities recorded in the accounting at amortized
cost after considering the effects of applying hedge accounting. In order to ensure the consistency and comparability of
the information disclosed, the information relating to 31 December 2022 was presented consistently with the applied
with reference to 31 December 2023.
The following table shows the fair value of financial assets and liabilities of the Group, as at 31\u00a0December 2022:
(Thousands of euros)
2022 (restated)
Fair value
through
profit or loss
Fair value
through other
comprehensive
income
Amortised
cost
Book value
Fair value
Assets
Cash and deposits at Central Banks
\u2014
\u2014
6,022,001
6,022,001
6,022,001
Loans and advances to credit institutions repayable
on demand
\u2014
\u2014
213,460
213,460
213,460
Financial assets at amortised cost
Loans and advances to credit institutions
\u2014
\u2014
963,434
963,434
953,643
Loans and advances to customers (i)
\u2014
\u2014
54,675,793
54,675,793
53,436,993
Debt securities
\u2014
\u2014
13,035,582
13,035,582
12,248,074
Financial assets at fair value through profit or loss
Financial assets held for trading
766,597
\u2014
\u2014
766,597
766,597
Financial assets not held for trading mandatorily
at fair value through profit or loss
552,679
\u2014
\u2014
552,679
552,679
Financial assets at fair value through
other comprehensive income
\u2014
7,461,553
\u2014
7,461,553
7,461,553
Hedging derivatives (ii)
59,703
\u2014
\u2014
59,703
59,703
1,378,979
7,461,553
74,910,270
83,750,802
81,714,703
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
\u2014
\u2014
1,468,360
1,468,360
1,453,270
Resources from customers (i)
\u2014
\u2014
75,430,143
75,430,143
75,129,795
Non subordinated debt securities issued (i)
\u2014
\u2014
1,482,086
1,482,086
1,554,561
Subordinated debt (i)
\u2014
\u2014
1,333,056
1,333,056
1,305,013
Financial liabilities at fair value through profit or
loss
Financial liabilities held for trading
241,506
\u2014
\u2014
241,506
241,506
Financial liabilities designated
at fair value through profit or loss
1,817,678
\u2014
\u2014
1,817,678
1,817,678
Hedging derivatives (ii)
178,000
\u2014
\u2014
178,000
178,000
2,237,184
\u2014
79,713,645
81,950,829
81,679,823
(i) - The book value includes the effect of the adjustments resulting from the application of hedge accounting;
(ii) - Includes a portion that is recognised in reserves in the application of accounting cash flow hedge.
The Group classified the financial instruments recorded in the balance sheet at fair value in accordance with the
hierarchy established in IFRS 13. The fair value of financial instruments is determined using quotations recorded in
active and liquid markets, considering that a market is active and liquid whenever its stakeholders conduct transactions
on a regular basis giving liquidity to the instruments traded. When it is verified that there are no transactions that
regularly provide liquidity to the traded instruments, valuation methods and techniques are used to determine the fair
value of the financial instruments.
Level 1 - With quotation in active market
In this category are included, in addition to financial instruments traded on a regulated market, bonds and units of
investment funds valued based on the prices disclosed through trading systems.
The classification of the fair value of level 1 is used when:
i. there is a firm daily enforceable quotation for the financial instruments concerned, or;
ii. there is a quotation available in market information systems that aggregate multiple prices of various stakeholders.
Level 2 - Valuation methods and techniques based on market data
Financial instruments, when there are no regular transactions in the active and liquid markets (level 1), are classified in
level 2, according to the following rules:
i. failure to comply with the rules defined for level 1, or;
ii. they are valued based on valuation methods and techniques that use mostly observable market data (interest rate or
exchange rate curves, credit curves, etc.).
Level 2 includes over-the-counter derivative financial instruments contracted with counterparties with which the Bank
maintains collateral agreements (ISDAs with Credit Support Annex (CSA)). In addition, derivative financial instruments
traded in the over-the-counter market, which, despite not having CSA agreements, the non-observable market data
component (i.e., internal ratings, default probabilities determined by internal models, etc.) incorporated in the
estimation of CVA/DVA is not significant in the overall value of the derivative. In order to assess the significance of this
component, the Bank defined a quantitative relevance criterion and performed a qualitative sensitivity analysis on the
valuation component that includes unobservable market data.
Level 3 - Valuation methods and techniques based on data not observable in the market
If the level 1 or level 2 criteria are not met, financial instruments should be classified in level 3, as well as in situations
where the fair value of financial instruments results from the use of information not observable in the market, such as:
- financial instruments which are not classified as level 1 and which are valued using evaluation methods and
techniques without being known or where there is consensus on the criteria to be used, namely:
i. - those measured using comparative price analysis of financial instruments with risk and return profile, typology,
seniority or other similar factors, observable in the active and liquid markets;
ii. - those measured based on performance of impairment tests, using performance indicators of the underlying
transactions (e.g. default probability rates of the underlying assets, delinquency rates, evolution of the ratings,
etc.);
iii. - those measured taking as reference the NAV (Net Asset Value) disclosed by the management entities of securities/
real estate/other investment funds not listed on a regulated market.
Level 3 includes over-the-counter derivative financial instruments that have been contracted with counterparties with
which the Bank does not maintain collateral exchange agreements, and whose unobservable market data component
incorporated in the estimation of the value adjustment.
The following table shows, by valuation levels, the fair value of financial assets and liabilities of the Group as at
31\u00a0December 2023:
(Thousands of euros)
2023
Level 1
Level 2
Level 3
Total
Assets
Cash and deposits at Central Banks
4,545,526
\u2014
\u2014
4,545,526
Loans and advances to credit institutions repayable on demand
337,687
\u2014
\u2014
337,687
Financial assets at amortised cost
Loans and advances to credit institutions
\u2014
\u2014
904,728
904,728
Loans and advances to customers
\u2014
\u2014
52,389,825
52,389,825
Debt securities
13,626,971
935,239
2,697,872
17,260,082
Financial assets at fair value through profit or loss
Financial assets held for trading
405,585
84,614
332,705
822,904
Financial assets not held for trading mandatorily
at fair value through profit or loss
\u2014
\u2014
467,254
467,254
Financial assets designated at fair value through profit or loss
32,004
\u2014
\u2014
32,004
Financial assets at fair value through other comprehensive income
8,301,377
2,431,483
101,431
10,834,291
Hedging derivatives
\u2014
40,628
\u2014
40,628
27,249,150
3,491,964
56,893,815
87,634,929
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
\u2014
\u2014
820,805
820,805
Resources from customers
\u2014
\u2014
75,460,202
75,460,202
Non subordinated debt securities issued
\u2014
\u2014
2,831,229
2,831,229
Subordinated debt
\u2014
\u2014
1,456,002
1,456,002
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading
\u2014
108,767
98,620
207,387
Financial liabilities designated at fair value through profit or loss
989,703
\u2014
2,618,784
3,608,487
Hedging derivatives
\u2014
67,825
\u2014
67,825
989,703
176,592
83,285,642
84,451,937
The following table shows, by valuation levels, the fair value of financial assets and liabilities of the Group as at
31\u00a0December 2022:
(Thousands of euros)
2022 (restated)
Level 1
Level 2
Level 3
Total
Assets
Cash and deposits at Central Banks
6,022,001
\u2014
\u2014
6,022,001
Loans and advances to credit institutions repayable on demand
213,460
\u2014
\u2014
213,460
Financial assets at amortised cost
Loans and advances to credit institutions
\u2014
\u2014
953,643
953,643
Loans and advances to customers
\u2014
\u2014
53,436,993
53,436,993
Debt securities
9,462,042
694,560
2,091,472
12,248,074
Financial assets at fair value through profit or loss
Financial assets held for trading
389,954
81,347
295,296
766,597
Financial assets not held for trading mandatorily
at fair value through profit or loss
\u2014
\u2014
552,679
552,679
Financial assets at fair value through other comprehensive income
6,489,282
862,566
109,705
7,461,553
Hedging derivatives
\u2014
59,703
\u2014
59,703
22,576,739
1,698,176
57,439,788
81,714,703
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
\u2014
\u2014
1,453,270
1,453,270
Resources from customers
\u2014
\u2014
75,129,795
75,129,795
Non subordinated debt securities issued
\u2014
\u2014
1,554,561
1,554,561
Subordinated debt
\u2014
\u2014
1,305,013
1,305,013
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading
\u2014
186,130
55,376
241,506
Financial liabilities designated at fair value through profit or loss
850,681
\u2014
966,997
1,817,678
Hedging derivatives
\u2014
178,000
\u2014
178,000
850,681
364,130
80,465,012
81,679,823
For financial assets classified at level 3 recorded in the balance sheet at fair value, the changes occurred during 2023 is
presented as follows:
(Thousands of euros)
2023
Financial assets
Held for
trading
Not held for trading
mandatorily at fair
value through profit
or loss
At fair value
through other
comprehensive
income
Financial
liabilities held
for trading (*)
Balance as at 1 January
295,296
552,679
109,705
54,354
Gains / (losses) recognised in profit or loss
Results on financial operations
11,032
(5,722)
\u2014
203
Net interest income
(31)
2,202
\u2014
\u2014
Purchases / (Sales, repayments or amortisations)
26,408
(86,915)
(14,487)
43,437
Gains / (losses) recognised in reserves
\u2014
\u2014
6,124
\u2014
Exchange differences
\u2014
5,010
(626)
\u2014
Accruals of interest
\u2014
\u2014
715
\u2014
Balance as at 31 December
332,705
467,254
101,431
97,994
(*) Do not include short sales in the amount of Euros 626,000 (note 37).
For financial assets classified at level 3 recorded in the balance sheet at fair value, the changes occurred during 2022 is
presented as follows:
(Thousands of euros)
2022 (restated)
Financial assets
Held for
trading
Not held for trading
mandatorily at fair
value through profit
or loss
At fair value
through other
comprehensive
income
Financial
liabilities held
for trading (*)
Balance as at 1 January
263,157
990,938
123,944
6,576
Gains / (losses) recognised in profit or loss
Results on financial operations
(10,027)
(90,286)
\u2014
47,221
Net interest income
\u2014
6,109
\u2014
\u2014
Transfers between levels
(1,860)
\u2014
\u2014
(145)
Purchases / (Sales, repayments or amortisations)
44,028
(351,744)
(11,130)
702
Gains / (losses) recognised in reserves
\u2014
\u2014
(4,138)
\u2014
Exchange differences
\u2014
(2,338)
1,061
\u2014
Accruals of interest
(2)
\u2014
(32)
\u2014
Balance as at 31 December
295,296
552,679
109,705
54,354
(*) Do not include short sales in the amount of Euros 1,022,000 (note 37).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-688": { "value": "
Fair value is based on market prices, whenever these are available. If market prices are not available, as occurs
regarding many products sold to clients, fair value is estimated through internal models based on cash-flow discounting
techniques. Cash-flows for the different instruments sold are calculated according to its financial characteristics and
the discount rates used include both the market interest rate curve and the current conditions of the Group's pricing
policy.
Thus, the fair value obtained is influenced by the parameters used in the evaluation model that have some degree of
judgment and reflects exclusively the value attributed to different financial instruments. However, it does not consider
prospective factors, as the future business evolution. Therefore, the values presented cannot be understood as an
estimate of the economic value of the Group.
The main methods and assumptions used in estimating the fair value for the financial assets and financial liabilities are
presented as follows:
Cash and deposits at Central Banks and Loans and advances to credit institutions repayable on
demand
Considering the short term of these financial instruments, the amount in the balance sheet is a reasonable estimate of
its fair value.
Loans and advances to credit institutions, Deposits from credit institutions and Assets with
repurchase agreements
The fair value of these financial instruments is calculated discounting the expected principal and interest future cash
flows for these instruments, considering that the payments of the instalments occur in the contractually defined dates.
This update is made based on the prevailing market rate for the term of each cash flow plus the average spread of the
production of the most recent 3 months of the same. For the elements with signs of impairment, the net impairment of
these operations is considered as a reasonable estimate of their fair value, considering the economic valuation that is
realized in the determination of this impairment.
For resources from Central Banks, it was considered that the book value is a reasonable estimate of its fair value, given
the nature of operations and the associated short-term.
For the remaining loans and advances and deposits, the discount rate used reflects the current conditions applied by
the Group on identical instruments for each of the different residual maturities (rates from the monetary market or
from the interest rate swap market).
Loans and advances to customers without defined maturity date
Considering the short maturity of these financial instruments, the conditions of the portfolio are similar to conditions
used at the date of the report. Therefore, the amount in the balance sheet is a reasonable estimate of its fair value
(this class incorporates among other, factoring operations, current account credit, credit cards and overdrafts in
demand deposits).
Loans and advances to customers with defined maturity date
The fair value of these instruments is calculated by discounting the expected principal and interest future cash flows
for these instruments, considering that the payments of the instalments occur in the contractually defined dates. For
loans with signs of impairment (Stage 3 loans), the net impairment of these operations is considered as a reasonable
estimate of their fair value, considering the economic valuation that is realized in the determination of this
impairment.
The discount rate used is the one that reflects the current rates of the Group for each of the homogeneous classes of
this type of instruments and with similar residual maturity. The discount rate includes the market rates for the residual
maturity date (rates from the monetary market or from the interest rate swap market) and the spread used at the date
of the report, which was calculated from the average production of the three most recent months compared to the
reporting date.
Resources from customers and other loans
The fair value of these financial instruments is calculated by discounting the expected principal and interest future
cash flows for the referred instruments, considering that payments occur in the contractually defined dates. The
discount rate used reflects the current conditions applied by the Group in similar instruments with a similar maturity.
The discount rate includes the market rates of the residual maturity date (rates of monetary market or the interest
rate swap market, at the end of the period) and the actual spread of the Group. This was calculated from the average
production of the three most recent months compared to the reporting date.
As in the case of credits without defined maturity, also for the resources from customers without defined maturity
(demand deposits) it is considered that given the potential short term of the same, possibility of their liquidation at any
time, the book value of these liabilities is a reasonable estimate of their fair value.
Financial assets and liabilities measured at fair value through profit or loss (except
derivatives), financial assets at fair value through other comprehensive income
These financial instruments are accounted for at fair value. Fair value is based on market prices (\"Bid-price\"), whenever
these are available. If market prices are not available, fair value is estimated through numerical models based on cash-
flow discounting techniques, using the market interest rate curve adjusted for factors associated, predominantly credit
risk and liquidity risk, determined in accordance with the market conditions and time frame. In this class of assets, the
fair value corresponds to their book value.
Market interest rates are determined based on information released by the suppliers of financial content - Reuters and
Bloomberg - more specifically because of prices of interest rate swaps. The values for the very short-term rates are
obtained from similar sources but regarding interbank money market. The interest rate curve obtained is calibrated
with the values of interest rate short-term futures. Interest rates for specific periods of the cash flows are determined
by appropriate interpolation methods. The same interest rate curves are used in the projection of the non-
deterministic cash flows such as indexes.
When optionality is involved, the standard templates (Black-Scholes, Black, Ho and others) are used considering the
volatility areas applicable. Whenever there are no references in the market of sufficient quality or that the available
models do not fully apply to meet the characteristics of the financial instrument, specific quotations supplied by an
external entity are applied, typically a counterparty of the business.
Financial assets measured at amortised cost - Debt securities
These financial instruments are accounted at amortised cost net of impairment, as referred in the accounting policy
described in note 1 C1.1.1. The fair value of this class of assets, is based on market prices, whenever these are
available. If market prices are not available, fair value is estimated through numerical models based on cash-flow
discounting techniques, using the market interest rate curve adjusted for factors associated, predominantly credit risk
and liquidity risk, determined in accordance with the market conditions and time frame.
Hedging and trading derivatives
All derivatives are recorded at fair value. In case of derivative contracts that are quoted in organised markets their
market prices are used. As for derivatives traded \"Over-the-counter\", it is applied methods based on numerical cash-
flow discounting techniques and models for assessment of options considering variables of the market, particularly the
interest rates on the instruments in question, and where necessary, their volatilities.
Market interest rates are determined based on information released by the suppliers of financial content - Reuters and
Bloomberg - more specifically because of prices of interest rate swaps. The values for the very short-term rates are
obtained from similar sources but regarding interbank money market. The interest rate curve obtained is calibrated
with the values of interest rate short-term futures. Interest rates for specific periods of the cash flows are determined
by appropriate interpolation methods. The same interest rate curves are used in the projection of the non-
deterministic cash flows such as indexes.
Debt securities non subordinated issued and subordinated debt
For these financial instruments the fair value was calculated for components for which fair value is not yet reflected in
the balance sheet. Fixed rate remunerated instruments for which the Group adopts \"hedge-accounting\", the fair value
related to the interest rate risk is already recognised. For the fair value calculation, other components of risk were
considered, in addition to the interest rate risk already recorded, when applicable. The fair value is based on market
prices, whenever these are available. If market prices are not available, fair value is estimated through numerical
models based on cash-flow discounting techniques, using the market interest rate curve adjusted by associated factors,
predominantly credit risk and trading margin, the latter only in the case of issues placed on non-institutional customers
of the Group.
As original reference, the Group applies the curves resulting from the market interest rate swaps for each specific
currency. The credit risk (credit spread) is represented by an excess from the curve of interest rate swaps established
specifically for each term and class of instruments based on the market prices on equivalent instruments.
For own issued debts placed among non-institutional customers of the Group, one more differential was added
(commercial spread), which represents the margin between the financing cost in the institutional market and the cost
obtained by distributing the respective instrument in the owned commercial network.
The Group classified the financial instruments recorded in the balance sheet at fair value in accordance with the
hierarchy established in IFRS 13. The fair value of financial instruments is determined using quotations recorded in
active and liquid markets, considering that a market is active and liquid whenever its stakeholders conduct transactions
on a regular basis giving liquidity to the instruments traded. When it is verified that there are no transactions that
regularly provide liquidity to the traded instruments, valuation methods and techniques are used to determine the fair
value of the financial instruments.
Level 1 - With quotation in active market
In this category are included, in addition to financial instruments traded on a regulated market, bonds and units of
investment funds valued based on the prices disclosed through trading systems.
The classification of the fair value of level 1 is used when:
i. there is a firm daily enforceable quotation for the financial instruments concerned, or;
ii. there is a quotation available in market information systems that aggregate multiple prices of various stakeholders.
Level 2 - Valuation methods and techniques based on market data
Financial instruments, when there are no regular transactions in the active and liquid markets (level 1), are classified in
level 2, according to the following rules:
i. failure to comply with the rules defined for level 1, or;
ii. they are valued based on valuation methods and techniques that use mostly observable market data (interest rate or
exchange rate curves, credit curves, etc.).
Level 2 includes over-the-counter derivative financial instruments contracted with counterparties with which the Bank
maintains collateral agreements (ISDAs with Credit Support Annex (CSA)). In addition, derivative financial instruments
traded in the over-the-counter market, which, despite not having CSA agreements, the non-observable market data
component (i.e., internal ratings, default probabilities determined by internal models, etc.) incorporated in the
estimation of CVA/DVA is not significant in the overall value of the derivative. In order to assess the significance of this
component, the Bank defined a quantitative relevance criterion and performed a qualitative sensitivity analysis on the
valuation component that includes unobservable market data.
Level 3 - Valuation methods and techniques based on data not observable in the market
If the level 1 or level 2 criteria are not met, financial instruments should be classified in level 3, as well as in situations
where the fair value of financial instruments results from the use of information not observable in the market, such as:
- financial instruments which are not classified as level 1 and which are valued using evaluation methods and
techniques without being known or where there is consensus on the criteria to be used, namely:
i. - those measured using comparative price analysis of financial instruments with risk and return profile, typology,
seniority or other similar factors, observable in the active and liquid markets;
ii. - those measured based on performance of impairment tests, using performance indicators of the underlying
transactions (e.g. default probability rates of the underlying assets, delinquency rates, evolution of the ratings,
etc.);
iii. - those measured taking as reference the NAV (Net Asset Value) disclosed by the management entities of securities/
real estate/other investment funds not listed on a regulated market.
Level 3 includes over-the-counter derivative financial instruments that have been contracted with counterparties with
which the Bank does not maintain collateral exchange agreements, and whose unobservable market data component
incorporated in the estimation of the value adjustment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-689": { "value": "Post-employment benefits and other long-term benefits
The Group assumed the liability to pay to their employees' pensions on retirement or disability and other obligations, in
accordance with the accounting policy described in note 1 R.
The number of participants in the Pension Fund of Banco Comercial Portugu\u00eas covered by this pension plan and other
benefits is analysed as follows:
Number of participants
2023
2022
(restated)
Pensioners
17,121
17,111
Former Attendees Acquired Rights
3,452
3,495
Employees
6,345
6,370
26,918
26,976
In accordance with the accounting policy described in note 1 R, the Group's retirement pension liabilities and other
benefits and the respective coverage, based on the Projected Unit Credit method are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Actual amount of the past services
Pensioners
2,318,761
2,126,809
Former attendees acquired rights
183,252
161,387
Employees
577,562
502,428
3,079,575
2,790,624
Pension fund value
(3,469,833)
(3,384,118)
Net (assets) / liabilities in balance sheet (note 32)
(390,258)
(593,494)
Accumulated actuarial deviations and changing assumptions
effect recognised in Other comprehensive income
3,375,415
3,152,535
In 2017, following the authorization of the Insurance and Pension Funds Supervisory Authority, the BCP group's pension
fund agreement was amended. The main purpose of this process was to incorporate into the pension fund the changes
made to the Group's Collective Labour Agreement (CLA) in terms of retirement benefits and to pass on to the pension
fund the responsibilities that were directly in charge by the companies (extra-fund liabilities). The pension fund has a
share exclusively related to the financing of these liabilities, which under the scope of the fund is called an Additional
Complement, which as at 31\u00a0December 2023 amounts to Euros 195,420,000 (31\u00a0December 2022: Euros 197,486,000).
The End of Career Premium also came to be borne by the pension fund under the basic pension plan.
In 2023, negotiations continued with all the unions subscribing to the Group's Collective Labour Agreements, for the
conclusion of the full review of the respective clauses, negotiations which are still ongoing.
At the same time, negotiations took place with all the unions that subscribed the Group's Collective Labour
Agreements, for the review of the Salary Tables and remaining pecuniary clauses relating to the year 2023, having been
agreed on 9 and 17 October with all the Unions subscribing to the Group's Collective Labour Agreements, the update of
the Salary Tables in 2023 with differentiated increases by contractual level between 4.00% and 7.80%. An increase of
4.50% was agreed for the Bank's Contributions to SAMS and other pecuniary clauses, such as study subsidies,
diuturnities, among others, and an increase of 21.43% was agreed for the lunch subsidy, whose daily value increased to
Euros 12.75. The agreed updates took effect on 1 January 2023, with the exception of remuneration related to
subsistence and travel allowances, which were updated after the agreed updates were operationalized.
Regarding the unions SNQTB \u2013 Sindicato Nacional dos Quadros e T\u00e9cnicos Banc\u00e1rios e SIB \u2013 Sindicato Independente da
Banca, an agreement was also reached regarding the revision of the Salary Tables and other pecuniary clauses relating
to the year 2022, as already agreed in 2022 with the remaining unions.
The change in the projected benefit obligations is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance as at 1 January
2,790,624
3,497,622
Service cost
(9,616)
(11,727)
Interest cost / (income)
111,658
67,059
Actuarial losses / (gains)
Not related to changes in actuarial assumptions
42,609
58,590
Related to changes in assumptions
279,783
(693,673)
Payments
(149,634)
(136,338)
Early retirement programmes and terminations by mutual agreement
7,043
2,223
Contributions of employees
7,108
6,868
Balance at the end of the year
3,079,575
2,790,624
The pensions paid by the Fund, including the Additional Complement, amounts to Euros 149,634,000 (31\u00a0December
2022: Euros 136,338,000).
The liabilities with health benefits are fully covered by the Pension Fund and correspond to Euros 258,840,000
(31\u00a0December 2022: Euros 241,345,000).
Additionally, regarding the coverage of some benefit obligations related to pensions, the Bank contracted with
Ocidental Vida the acquisition of perpetual annuities for which the total liability amounts to Euros 33,765,000
(31\u00a0December 2022: Euros 39,093,000), in order to pay:
i) pensions of former Group's Board Members in accordance with the Bank's Board Members Retirement Regulation;
ii) pensions and complementary pensions to pensioners in accordance with the Pension Fund of the BCP Group
employees established in 28 December 1987, as also to pensioners, in accordance with other Pension Funds, that were
incorporated after on the BCP Group Pension Fund and which were planed that the retirement benefits should be paid
through the acquisition of insurance policies, in accordance with the Decree - Law no. 12/2006.
Ocidental Vida is 100% owned by Ageas Group and Ageas Group is 49% owned by the BCP Group.
During 2023 and 2022, the changes occurred in the plan's assets value is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance as at 1 January
3,384,118
3,699,988
Employees' contributions
7,108
6,868
Actuarial gains / (losses)
99,512
(259,394)
Payments
(149,634)
(136,338)
Expected return on plan assets
128,720
72,988
Amount transferred to the Fund resulting from acquired rights unassigned
related to the Complementary Plan
9
6
Balance at the end of the year
3,469,833
3,384,118
The elements of the Pension Fund's assets are analysed as follows:
(Thousands of euros)
2023
2022 (restated)
Asset class
Assets with
market price in
active market
Remaining
Total
Portfolio
Assets with
market price in
active market
Remaining
Total
Portfolio
Shares
330,370
1,262
331,632
96,817
1,183
98,000
Bonds and other fixed income
securities
1,995,531
\u2014
1,995,531
1,120,132
\u2014
1,120,132
Participations units in
investment funds
\u2014
497,830
497,830
\u2014
969,232
969,232
Participation units in real
estate funds
\u2014
298,969
298,969
\u2014
308,404
308,404
Properties
\u2014
264,968
264,968
\u2014
275,493
275,493
Loans and advances to credit
institutions and others
\u2014
80,903
80,903
\u2014
612,857
612,857
2,325,901
1,143,932
3,469,833
1,216,949
2,167,169
3,384,118
The balance Properties includes buildings booked in the Fund's financial statements and used by the Group's companies
which amounts to Euros 227,346,000 (31\u00a0December 2022: Euros 238,202,000).
The securities issued by Group's companies accounted in the portfolio of the Fund are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Shares
\u2014
4,301
Bonds and other fixed income securities
1,812
2,805
Loans and advances to credit institutions and others
48,438
128,476
50,250
135,582
The evolution of net (assets) / liabilities in the balance sheet is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Balance as at 1 January
(593,494)
(202,366)
Recognised in the income statement:
Service cost
(9,616)
(11,727)
Interest cost / (income) net of the balance liabilities coverage
(17,062)
(5,929)
Cost with early retirement programs
7,043
2,223
Amount transferred to the Fund resulting from acquired rights
unassigned related to the Complementary Plan
(9)
(6)
(19,644)
(15,439)
Recognised in the statement of comprehensive income:
Actuarial (gains) / losses
Not related to changes in actuarial assumptions
Difference between the estimated and the actual income of the fund
(99,512)
259,394
Difference between expected and effective obligations
42,609
58,590
Arising from changes in actuarial assumptions
279,783
(693,673)
222,880
(375,689)
Balance at the end of the year
(390,258)
(593,494)
The estimate of contributions to be made in 2024, by the employees, for the Defined Benefit Plan amount to Euros
7,130,000.
In accordance with IAS 19, the Group accounted for (income)/costs with post-employment benefits, which is analysed
as follows:
(Thousands of euros)
2023
2022
(restated)
Current service cost
(9,616)
(11,727)
Net interest cost /(income) in the liability coverage balance
(17,062)
(5,929)
Cost with early retirement programs
7,043
2,223
Amount transferred to the Fund resulting from acquired rights unassigned related to the
Complementary Plan
(9)
(6)
(Income) / Cost of the year
(19,644)
(15,439)
Within the framework of the three-party agreement between the Government, the Banking and the Trade Unions, the
bank's employees in activity as at 31 December 2010 under the CAFEB / CLA regime were integrated into the General
Social Security System (RGSS) with effect from 1 January 2011. The integration led to an effective decrease in the
present value of the total benefits reported at the retirement age to be borne by the Pension Fund, and this effect is
recorded on a straight-line basis over the average period of active life until the normal retirement age is reached. The
calculation of the liability for pensions carried out periodically by the actuary considers this effect and is calculated
considering the actuarial assumptions in force, ensuring that the liabilities calculated with reference to 31 December
2010, not considering the effect of the integration of bank employees into the General Social Security Scheme are fully
covered and deducted from the amount of the effect recognised until the date. The component of this effect for the
year is recognised under the heading \"Current service costs\".
Board of Directors Plan
As the Board of Directors Retirement Regulation establish that the pensions are subjected to an annual update, and as
it is not common in the insurance market the acquisition of perpetual annuities including variable updates in pensions,
the Bank determined, the liability to be recognised on the financial statements related to that update, taking into
consideration current actuarial assumptions.
In accordance with the remuneration policy of the Board Members, the Group has the responsibility of supporting the
cost with: i) the retirement pensions of former Group's Executive Board Members; and ii) the Complementary Plan for
these members in accordance with the applicable rules funded through the Pension Fund, Extra-fund and perpetual
annuities.
In order to cover liabilities with pensions to former members of the Executive Board of Directors, under the Bank's
Board of Directors Retirement Regulation the Bank contracted with Ocidental Vida to purchase immediate life annuity
insurance policies.
Assumptions used in the liability's assessment
Considering the market indicators, particularly the inflation rate estimates and the long-term interest rate for Euro
Zone, as well as the demographic characteristics of its employees, the Group considered the following actuarial
assumptions for calculating the liabilities with pension obligations:
2023
2022 (restated)
Salary growth rate (c)
2,65% in 2024; 1,9% in 2025 and
1,15% in the following years
3,75% in 2023; 2,25% in 2024
and 1% in the following years
Pension's growth rate (c)
2,25% in 2024; 1,5% in 2025 and
0,75% in the following years
3,0% in 2023; 2,0% in 2024 and
0.75% in the following years
Discount rate / Projected Fund's rate of return
3.53%
4.17%
Mortality tables
Men
TV 88/90 less a year
TV 88/90 less a year
Women (a)
TV 99/01 less 2 years
TV 99/01 less 2 years
Disability rate
Non applicable
Non applicable
Turnover rate
Non applicable
Non applicable
Normal retirement age (b)
66 years and 4 months
66 years and 7 months
Total salary growth rate for Social Security purposes
1.75%
1.75%
Revaluation rate of wages / pensions of Social Security
1%
1%
a) The mortality table considered for women corresponds to TV 99/01 adjusted in less than 2 years (which implies an
increase in hope life expectancy compared to that which would be considered in relation to their effective age).
b) Retirement age is variable. The normal retirement age increases one month for each civil year and cannot be higher
than the normal retirement age in force in the General Social Security Regime (RGSS). The normal retirement age in
the RGSS is variable and depends on the evolution of the average life expectancy at 65 years of age.
In 2022 the retirement age was 66 years and 7 months. For 2023 and 2024, the normal retirement age in the RGSS is
66 years and 4 months. The reduction in the retirement age was due to the evolution of the average life expectancy
at 65 years in Portugal. For the projection of life expectancy\u2019s increment, it was considered an increase of one year
in every 10 years, with the maximum retirement age being set at 67 years and 2 months.
c) This rate refers to the growth for the years following the reporting year.
The assumptions used on the calculation of the actuarial value of the liabilities are in accordance with the
requirements of IAS 19, and are determined based on the references of the entities under common control. No
disability decreases are considered in the calculation of the liabilities.
The discount rate used to update the Bank's pension fund liabilities, regarding the defined benefit pension plans of its
employees and managers, was determined based on an analysis carried out on a set of available information, which
includes, among other elements, the market references for this indicator published by internationally recognized
specialized entities and which are based, as defined by IAS 19, on market yields of a universe of high quality bond
issues (low risk), different maturities, called in Euros and relating to a diverse and representative range of issuers (non-
sovereign). With reference to 31\u00a0December 2023, the Group used a discount rate of 3.53% (31\u00a0December 2022: 4.17%).
The Actuarial gains are related to the difference between the actuarial assumptions used for the estimation of the
liabilities and the values verified and the change in actuarial assumptions, are analysed as follows:
(Thousands of euros)
Actuarial (gains) / losses
2023
2022 (restated)
Values
effectively
verified in %
Amount
of deviations
Values
effectively
verified in %
Amount
of deviations
Deviation between expected and actual liabilities
42,609
58,590
Changes on the assumptions:
Discount rate
225,566
(1,108,506)
\u00a0 Salary and pensions growth rate
54,217
279,108
\u00a0 Mortality tables
\u2014
63,571
\u00a0 Other changes
\u2014
72,154
Deviation between expected income and income from funds
7.07%
(99,512)
(5.07)%
259,394
222,880
(375,689)
In accordance with IAS 19, the sensitivity analysis to changes in assumptions, is as follows:
(Thousands of euros)
Impact resulting from changes in financial assumptions
2023
2022 (restated)
-0.25%
0.25%
-0.25%
0.25%
Discount rate
99,220
(92,532)
87,938
(82,095)
Pension's increase rate
(104,068)
108,563
(98,276)
102,703
Salary growth rate
(25,075)
29,118
(20,620)
23,675
(Thousands of euros)
Impact resulting from changes in demographic assumptions
2023
2022 (restated)
- 1 year
+ 1 year
- 1 year
+ 1 year
Changes in mortality table (*)
100,138
(100,538)
83,017
(83,816)
(*) The impact of 1 year reduction in the mortality table implies an increase in the average life expectancy
Defined contribution plan
According to what is described in accounting policy 1 R3, in the scope of the Defined Contribution Plan provided for the
BCP Pension Fund of the BCP Group for employees who have been admitted until 1 July 2009, it was accounted for a
cost in 2023 of Euros 2,061,000 (2022: cost of 2,026,000) as an estimated contribution given that the Group estimates
that the following requirements will be met, cumulatively: (i) the previous year BCP's ROE equals or exceeds the rate of
government bonds of 10 years plus 5 percentage points, and (ii) distributable profits or reserves exist in the accounts of
Banco Comercial Portugu\u00eas.
For employees who have been admitted after 1 July 2009, are made monthly contributions equal to 1.5% of the monthly
remuneration received by employees in the current month, either by themselves or by the Group and employees. This
contribution has a mandatory character and is defined in the Collective Labour Agreement of the BCP Group and does
not have a performance criterion. The Group accounted for staff costs in 2023 the amount of Euros 384,000 (2022:
Euros 307,000) related to this contribution.
Transactions with the Pension Fund
The balances with the Pension Fund included in items of the consolidated balance sheet are as follows:
(Thousands of euros)
2023
2022
(restated)
Assets
Financial assets held for trading
\u2014
209
\u2014
209
Liabilities
Resources from customers
54,850
145,303
Non subordinated debt securities issued
9,075
13,199
Financial liabilities held for trading
\u2014
3,475
Other liabilities
231
\u2014
64,156
161,977
In 2023 and 2022, there were no transactions related to other financial instruments between the Group and the Pension
Fund.
Income and expenses with the Pension Fund included in the items of the consolidated income statement are as follows:
(Thousands of euros)
2023
2022
(restated)
Income
Commissions
1,073
2,167
Expenses
Interest expense and similar charges
102
\u2014
Other administrative costs
15,118
14,227
15,220
14,227
The balance Other administrative costs corresponds to rents incurred under the scope of the Pension Fund's properties
in which the tenant is the Group.
As at 31\u00a0December 2023 and 2022, the guarantees granted by the Group to the Pension Fund amount to Euros 5,000.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-690": { "value": "Related parties
As defined by IAS 24, are considered related parties of the Group, the companies detailed in note 60 - List of subsidiary
and associated companies of Banco Comercial Portugu\u00eas Group, the Pension Fund, the members of the Board of
Directors and key management members. The key management members are the first line Directors. Beyond the
members of the Board of Directors and key management members, are also considered related parties, people who are
close to them (family relationships) and entities controlled by them or in whose management they have significant
influence.
As the transactions with subsidiaries are eliminated in consolidation, these are not included in the notes to the Group's
consolidated financial statements.
According to Portuguese law, namely under Article no. 109 of the General Law for Credit Institutions and Financial
Companies and also in accordance with Article no. 33 of Notice 3/2020 of the Bank of Portugal, are considered related
parties as well, the qualified shareholders of Banco Comercial Portugu\u00eas, S.A. and the entities controlled by them or
with which they are in a group relationship. The list of the qualified shareholders is detailed in note 41.
A) Balances and transactions with qualified shareholders
The balances reflected in assets of consolidated balance sheet with qualified shareholders, are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Assets
Financial assets at amortised cost
Loans and advances to customers
110,527
97,744
Debt securities
52,548
79,787
163,075
177,531
Liabilities
Resources from customers
48,099
96,159
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading
2,138
4,287
50,237
100,446
The values of Financial assets at amortized cost are net of impairment in the amount of Euros 1,481,000 (31\u00a0December
2022: Euros 914,000) for Loans and advances to customers and for Debt securities the amount of Euros 237,000
(31\u00a0December 2022: Euros 257,000).
The transactions with qualified shareholders, reflected in the consolidated income statement items, are as follows:
(Thousands of euros)
2023
2022
(restated)
Income
Interest and similar income
13,280
5,989
Commissions
476
752
13,756
6,741
Costs
Interest and similar expenses
179
\u2014
Commissions
76
82
255
82
The balances with qualified shareholders, reflected in the guarantees granted and revocable and irrevocable credit
lines, are as follows:
(Thousands of euros)
2023
2022
(restated)
Guarantees granted
3,536
2,273
Revocable credit lines
5,622
18,171
9,158
20,444
The Group has accounted for provisions for guarantees granted the amount of Euros 8,000 (31\u00a0December 2022: Euros
3,000) and provisions for revocable credit lines the amount of Euros 141,000 (31\u00a0December 2022: Euros 229,000).
B) Balances and transactions with members of the Board of Directors and key management
members
The balances with related parties discriminated in the following table, included on the consolidated balance sheet, are
analysed as follows:
(Thousands of euros)
Loans and advances to
customers
Resources from customers
2023
2022
(restated)
2023
2022
(restated)
Board of Directors
Non-executive directors
8
10
8,900
8,180
Executive Committee (*)
27
46
2,918
2,716
Closely related people
19
14
2,651
2,629
Controlled entities
\u2014
\u2014
24
24
Key management members
Key management members
5,416
6,575
10,934
10,180
Closely related people
1,948
2,475
4,433
4,497
Controlled entities
705
928
3,276
2,613
8,123
10,048
33,136
30,839
(*) The item Loans to Customers corresponds to mortgage loans granted prior to the respective election and to the amount used from private
credit cards which must be settled on the maturity date.
In accordance with Article 85, no. 9 of RGICSF, no credits were granted during 2023 and 2022.
The transactions with related parties discriminated in the following table, included in income items of the consolidated
income statement, are as follows:
(Thousands of euros)
Interest and similar income
Commissions income
2023
2022
(restated)
2023
2022
(restated)
Board of Directors
Non-executive directors
\u2014
\u2014
27
29
Executive Committee
1
\u2014
23
10
Closely related people
\u2014
\u2014
9
9
Key management members
Key management members
174
41
62
62
Closely related people
88
22
39
43
Controlled entities
63
17
31
19
326
80
191
172
The transactions with related parties discriminated in the following table, included in cost items of the consolidated
income statement, are as follows:
(Thousands of euros)
Interest and similar expense
Commissions' expense
2023
2022
(restated)
2023
2022
(restated)
Board of Directors
Non-executive directors
128
19
\u2014
\u2014
Executive Committee (*)
26
\u2014
\u2014
1
Closely related people
33
9
\u2014
\u2014
Key management members
Key management members
101
6
1
4
Closely related people
20
2
1
2
Controlled entities
21
\u2014
2
2
329
36
4
9
The revocable credit lines granted by the Group to the following related parties are as follows:
Guarantees granted
Revocable credit lines
2023
2022
(restated)
2023
2022
(restated)
Board of Directors
Non-executive directors
\u2014
\u2014
143
113
Executive Committee (*)
\u2014
\u2014
160
140
Closely related people
\u2014
\u2014
63
43
Key management members
Key management members
5
5
844
825
Closely related people
\u2014
\u2014
180
164
Controlled entities
\u2014
\u2014
622
525
5
5
2,012
1,810
(*) Corresponds to the maximum authorized and unused limit of private credit cards and overdraft authorization in a salary account under the
same regime as all the Bank's other employees.
The shareholder and bondholder position of members of the Board of Directors, Key management members and people
closely related to the previous categories, as well as the movements occurred during 2023, are as follows:
Number of securities
Unit
price
Euros
Shareholders/Bondholders
Security
2023
2022
(restated)
Acquisitions
Disposals
Date
MEMBERS OF BOARD OF DIRECTORS
Altina de F\u00e1tima Sebasti\u00e1n Gonz\u00e1lez Villamarin
BCP Shares
0
0
Ana Paula Alcobia Gray
BCP Shares
0
0
Cid\u00e1lia Maria da Mota Lopes
BCP Shares
2,184
2,184
Fernando da Costa Lima
BCP Shares
18,986
18,986
Jo\u00e3o Nuno Oliveira Jorge Palma
BCP Shares
1,723,818
1,364,642
636,836
(a)
277,660
(b)
23/6/2023
0.2200
Jorge Manuel Baptista Magalh\u00e3es Correia
BCP Shares
388,500
388,298
202
20/1/2023
0.1900
Bonds (i)
1
1
Bonds (ii)
1
1
Bonds (iv)
1
0
1
25/9/2023
100,000
Jos\u00e9 Miguel Bensliman Schorcht da Silva
Pessanha
BCP Shares
1,504,495
1,177,152
582,460
(a)
255,117
(b)
23/6/2023
0.2200
Jos\u00e9 Pedro Rivera Ferreira Malaquias
BCP Shares
9,808
9,808
J\u00falia Gu (Xiao Xu Gu)
BCP Shares
0
0
Lingjiang Xu
BCP Shares
0
0
Lingzi Yuan (Smilla Yuan)
BCP Shares
0
0
Maria Jos\u00e9 Henriques Barreto de Matos de
Campos
BCP Shares
2,014,344
1,554,512
574,790
(a)
114,958
(b)
23/6/2023
0.2200
Miguel de Campos Pereira de Bragan\u00e7a
BCP Shares
2,111,178
1,725,908
674,727
(a)
289,457
(b)
23/6/2023
0.2200
Miguel Maya Dias Pinheiro
BCP Shares
2,501,557
2,018,854
839,483
(a)
356,780
(b)
23/6/2023
0.2200
Nuno Manuel da Silva Amado
BCP Shares
2,525,388
1,525,388
1,000,000
3/1/2023
0.1567
Bonds (i)
2
2
Bonds (ii)
2
2
Bonds (iii)
3
1
2
8/8/2023
100,000
Bonds (iv)
1
0
1
27/9/2023
100,000
Rui Manuel da Silva Teixeira
BCP Shares
1,207,858
571,501
(a)
250,317
(b)
23/6/2023
0.2200
1,152,359
376,663
1/8/2023
0.2500
Valter Rui Dias de Barros
BCP Shares
0
0
KEY MANAGEMENT MEMBERS
Albino Ant\u00f3nio Carneiro de Andrade
BCP Shares
133,881
128,684
5,197
(a)
23/6/2023
0.2200
Alexandre Manuel Casimiro de Almeida
BCP Shares
169,519
111,400
58,119
(a)
23/6/2023
0.2200
Am\u00e9rico Jo\u00e3o Pinto Carola
BCP Shares
140,747
104,945
63,588
(a)
27,786
(b)
23/6/2023
0.2200
Ana Maria Jord\u00e3o F. Torres Marques Tavares
BCP Shares
255,931
215,340
63,819
(a)
23,228
(b)
23/6/2023
0.2200
Ana Patr\u00edcia Moniz Macedo
BCP Shares
35,864
0
63,588
(a)
27,724
(b)
23/6/2023
0.2200
Ant\u00f3nio Augusto Amaral de Medeiros
BCP Shares
178,245
143,063
62,599
(a)
27,417
(b)
23/6/2023
0.2200
Ant\u00f3nio Ferreira Pinto J\u00fanior
BCP Shares
11,842
11,842
Ant\u00f3nio Jos\u00e9 Lindeiro Cordeiro
BCP Shares
93,898
64,134
49,854
(a)
20,090
(b)
23/6/2023
0.2200
Ant\u00f3nio Lu\u00eds Duarte Bandeira
BCP Shares
321,903
285,425
64,906
(a)
28,428
(b)
23/6/2023
0.2200
Ant\u00f3nio Ricardo Fery Salgueiro Antunes
BCP Shares
120,117
61,361
58,756
(a)
23/6/2023
0.2200
Ant\u00f3nio V\u00edtor Martins Monteiro
BCP Shares
3,872
3,872
(i) - Fixed Rate Reset Perpetual Temporary Write Down Additional Tier 1 Capital Notes
(ii) - BCP Tier 2 Subordinated Callable Notes
(iii) - BCP 1.75% EUR 500M 6.5NC5.5 Social Senior Preferred Notes
(iv) - BCP/2023 - BCP Senior Preferred Fiexed FLT OCT 2026
(a) - identifies the increment in shares during 2023 corresponding to the annual deferred variable compensation of previous years.
(b) - identifies the shares used in sell-cover in 2023 related to the increment of shares of variable compensation.
Number of securities
Unit
price
Euros
Shareholders/Bondholders
Security
2023
2022
(restated)
Acquisitions
Disposals
Date
Artur Frederico Silva Luna Pais
BCP Shares
517,197
459,405
57,792
(a)
23/6/2023
0.2200
Belmira Abreu Cabral
BCP Shares
129,190
96,604
57,978
(a)
25,392
(b)
23/6/2023
0.2200
Bernardo Roquette de Arag\u00e3o de Portugal
Colla\u00e7o
BCP Shares
89,825
54,362
62,103
(a)
26,640
(b)
23/6/2023
0.2200
Carlos Manuel da Silva Teixeira
BCP Shares
0
0
Chi Wai Leung (Timothy)
BCP Shares
43,768
26,582
17,186
(a)
23/6/2023
0.2200
Constantino Alves Mousinho
BCP Shares
108,170
72,352
35,818
(a)
23/6/2023
0.2200
Fernando Maria Cardoso Rodrigues Bicho
BCP Shares
237
237
Filipe Maria de Sousa Ferreira Abecasis
BCP Shares
174,218
135,398
68,947
(a)
30,127
(b)
23/6/2023
0.2200
Francisco Ant\u00f3nio Caspa Monteiro
BCP Shares
225,015
186,219
69,030
(a)
30,234
(b)
23/6/2023
0.2200
Gon\u00e7alo Nuno Belo de Almeida Pascoal
BCP Shares
153,373
119,771
58,846
(a)
25,244
(b)
23/6/2023
0.2200
Hugo Miguel Martins Resende
BCP Shares
178,524
139,589
69,030
(a)
30,095
(b)
23/6/2023
0.2200
Jo\u00e3o Adriano Azevedo Seixas Vale
BCP Shares
43,222
43,222
Jo\u00e3o Br\u00e1s Jorge
BCP Shares
91,709
91,709
Jo\u00e3o Manuel Taveira Pinto Santos Paiva
BCP Shares
259,116
190,677
68,439
(a)
23/6/2023
0.2200
Jorge Filipe Nogueira Freire Cortes Martins
BCP Shares
107,720
48,257
59,463
(a)
23/6/2023
0.2200
Jorge Manuel Machado de Sousa G\u00f3is
BCP Shares
190,352
134,204
56,148
(a)
23/6/2023
0.2200
Jorge Manuel Magalh\u00e3es Oliveira Pereira
BCP Shares
57,488
25,460
56,785
(a)
24,757
(b)
23/6/2023
0.2200
Jorge Manuel Nobre Carreteiro
BCP Shares
55,988
55,776
(a)
23/6/2023
0.2200
41,000
5/9/2023
0.2630
80,764
10,000
4/12/2023
0.3270
Jorge Oct\u00e1vio Neto dos Santos
BCP Shares
471,191
471,191
Jos\u00e9 Artur Gouveia Coelho Caetano
BCP Shares
0
0
Jos\u00e9 Carlos Benito Garcia de Oliveira
BCP Shares
37,941
37,941
Jos\u00e9 Gon\u00e7alo Prior Regalado
BCP Shares
147,115
79,184
67,931
(a)
23/6/2023
0.2200
Jos\u00e9 Guilherme Potier Raposo Pulido Valente
BCP Shares
315,008
280,081
62,144
(a)
27,217
(b)
23/6/2023
0.2200
Jos\u00e9 Maria Gon\u00e7alves Pereira Brand\u00e3o de
Brito
BCP Shares
87,138
55,225
52,660
(a)
20,747
(b)
23/6/2023
0.2200
Liliana Marisa Catoja Costa Lemos
BCP Shares
400
400
Luis Miguel Manso Correia dos Santos
BCP Shares
285,820
216,790
69,030
(a)
23/6/2023
0.2200
Maria Constan\u00e7a C. Brand\u00e3o Amado Fonseca
G. Santos
BCP Shares
800
800
Maria de F\u00e1tima Coelho Dias
BCP Shares
0
0
Maria de Los Angeles Sanchez Sanchez
BCP Shares
61,375
41,011
36,232
(a)
15,868
(b)
23/6/2023
0.2200
Maria Helena Soledade Nunes Henriques
BCP Shares
268,800
232,863
63,943
(a)
28,006
(b)
23/6/2023
0.2200
Maria Manuela de Ara\u00fajo Mesquita Reis
BCP Shares
228,036
190,663
62,599
(a)
25,226
(b)
23/6/2023
0.2200
M\u00e1rio Ant\u00f3nio Pinho Gaspar Neves
BCP Shares
142,301
108,172
60,616
(a)
26,487
(b)
23/6/2023
0.2200
M\u00e1rio Madeira Robalo Fernandes
BCP Shares
220,539
156,951
63,588
(a)
23/6/2023
0.2200
Nelson Lu\u00eds Vieira Teixeira
BCP Shares
108,936
7,200
16/2/2023
0.2100
22,200
24/2/2023
0.2250
118,570
68,356
(a)
29,322
(b)
23/6/2023
0.2200
Nuno Alexandre Ferreira Pereira Alves
BCP Shares
251,695
183,959
67,736
(a)
23/6/2023
0.2200
Nuno Miguel Nobre Botelho
BCP Shares
144,294
85,625
58,669
(a)
23/6/2023
0.2200
Pedro Jos\u00e9 Mora de Paiva Beija
BCP Shares
138,202
50,673
17/1/2023
0.1934
69,030
(a)
23/6/2023
0.2200
173,559
17,000
21/12/2023
0.2710
Pedro Manuel Francisco da Silva Dias
BCP Shares
152,178
111,149
68,493
(a)
27,464
(b)
23/6/2023
0.2200
Pedro Manuel Macedo Vilas Boas
BCP Shares
146,870
66,368
(a)
23/6/2023
0.2200
70,000
143,238
5/12/2023
0.3310
Pedro Manuel Rendas Duarte Turras
BCP Shares
146,367
105,371
68,439
(a)
27,443
(b)
23/6/2023
0.2200
(a) - identifies the increment in shares during 2023 corresponding to the annual deferred variable compensation of previous years.
(b) - identifies the shares used in sell-cover in 2023 related to the increment of shares of variable compensation.
Number of securities
Unit
price
Euros
Shareholders/Bondholders
Security
2023
2022
(restated)
Acquisitions
Disposals
Date
Ricardo Potes Valadares
BCP Shares
100,121
68,014
55,354
(a)
23,247
(b)
23/6/2023
0.2200
Rosa Maria Ferreira Vaz Santa B\u00e1rbara
BCP Shares
117,023
68,163
5/1/2023
0.1712
87,324
68,439
(a)
29,975
(b)
23/6/2023
0.2200
Bonds (i)
1
1
Rui Artur dos Santos Baptista
BCP Shares
2,500
2,500
8/8/2023
0.2500
Rui Emanuel Agapito Silva
BCP Shares
145,528
109,252
64,315
(a)
28,039
(b)
23/6/2023
0.2200
Rui Fernando da Silva Teixeira
BCP Shares
221,892
186,154
63,588
(a)
27,850
(b)
23/6/2023
0.2200
Rui Manuel Pereira Pedro
BCP Shares
408,353
339,819
68,534
(a)
23/6/2023
0.2200
Rui Miguel Alves Costa
BCP Shares
348,163
279,133
69,030
(a)
23/6/2023
0.2200
Rui Nelson Moreira de Carvalho Maximino
BCP Shares
146,835
110,273
64,823
(a)
28,261
(b)
23/6/2023
0.2200
Rui Pedro da Concei\u00e7\u00e3o Coimbra Fernandes
BCP Shares
143,793
102,700
21/6/2023
0.2200
79,629
63,588
(a)
25,052
(b)
23/6/2023
0.2200
Tiago Alexandre Machado Ferreira Mateus
BCP Shares
52,540
2,128
50,412
(a)
23/6/2023
0.2200
V\u00e2nia Alexandra Machado Marques Correia
BCP Shares
160,146
115,226
56,148
(a)
11,228
(b)
23/6/2023
0.2200
PEOPLE CLOSELY RELATED TO THE PREVIOUS
of: Cid\u00e1lia Maria da Mota Lopes
Alexandre Miguel Martins Ventura
BCP Shares
2,184
2,184
of: Jos\u00e9 Miguel Bensliman Schorcht da Silva
Pessanha
Heran\u00e7a de Anne Marie Bensliman Silva
Pessanha
BCP Shares
139
139
of: Maria Jos\u00e9 Henriques Barreto de Matos de
Campos
Ricardo Gil Monteiro Lopes de Campos
BCP Shares
(c)
(c)
of: Rui Manuel da Silva Teixeira
Maria Helena Espassandim Cat\u00e3o
BCP Shares
576
576
of: Am\u00e9rico Jo\u00e3o Pinto Carola
Ana Isabel Salgueiro Antunes
BCP Shares
29
29
of: Ana Maria Jord\u00e3o F. Torres Marques Tavares
\u00c1lvaro Manuel Coreia Marques Tavares
BCP Shares
25,118
25,118
Francisco Jord\u00e3o Torres Marques Tavares
BCP Shares
1,016
1,016
of: Ant\u00f3nio Lu\u00eds Duarte Bandeira
Ant\u00f3nio da Silva Bandeira
BCP Shares
0
20,000
20,000
20/2/2023
0.2110
Ana Margarida Rebelo A. M. Soares Bandeira
BCP Shares
2,976
2,976
of: Ant\u00f3nio Ferreira Pinto J\u00fanior
Paula Alexandre Cardoso de Miguel Pinto
BCP Shares
33,187
33,187
of: Ant\u00f3nio V\u00edtor Martins Monteiro
Isabel Maria Vaz Leite Pinto Martins Monteiro
BCP Shares
3,104
3,104
of: Francisco Ant\u00f3nio Caspa Monteiro
Ricardo Miranda Monteiro
BCP Shares
1,639
1,639
Rita Miranda Monteiro
BCP Shares
1,639
1,639
of: Maria Helena Soledade Nunes Henriques
Jo\u00e3o Paulo Rodrigues Taborda Gon\u00e7alves
BCP Shares
130
130
of: Maria Manuela de Ara\u00fajo Mesquita Reis
Lu\u00eds Filipe da Silva Reis
BCP Shares
280,000
280,000
of: Jos\u00e9 Pedro Rivera Ferreira Malaquias
Maria Joana de Oliveira Monteiro Ferreira
Malaquias
BCP Shares
(d)
(d)
(i) - Fixed Rate Reset Perpetual Temporary Write Down Additional Tier 1 Capital Notes
(a) - identifies the increment in shares during 2023 corresponding to the annual deferred variable compensation of previous years.
(b) - identifies the shares used in sell-cover in 2023 related to the increment of shares of variable compensation.
(c) - solidary ownership in both securities accounts, and Dr. Ricardo Campos is the first holder and Eng.\u00aa Maria Jos\u00e9 Campos is the 2nd holder of the
securities account.
(d) - solidary ownership in both securities accounts, and Dr. Jos\u00e9 Pedro Ferreira Malaquias is the first holder and Maria Joana Ferreira Malaquias is the 2nd
holder of the securities account.
C) Balances and transactions with associated companies
The balances with associated companies included in the consolidated balance sheet items, except for the item
investments in associated companies, are as follows:
(Thousands of euros)
2023
2022
(restated)
Assets
Loans and advances to credit institutions repayable on demand
12,220
8,834
Financial assets at amortised cost
Loans and advances to credit institutions
212,037
206,078
Loans and advances to customers
2,517
59,487
Financial assets at fair value through profit or loss
Financial assets held for trading
3,465
\u2014
Other assets
11,778
11,497
242,017
285,896
Liabilities
Financial liabilities at amortised cost
Resources from credit institutions
22,365
62,845
Resources from customers
198,627
211,193
Non subordinated debt securities issued
6,896
2,002
Financial liabilities held for trading
5,136
3,894
Other liabilities
356
8
233,380
279,942
The transactions with associated companies included in the consolidated income statement items are as follows:
(Thousands of euros)
2023
2022
(restated)
Income
Interest and similar income
10,343
4,198
Commissions
53,594
60,230
Gains on financial operations
2,513
1,020
Other operating income
2,786
1,957
69,236
67,405
Costs
Interest and similar expenses
4,785
1,104
Commissions
11
113
Other administrative costs
2,365
4,136
Losses on financial operations
2,796
\u2014
Other operating losses
1
51
9,958
5,404
The guarantees granted and revocable and irrevocable credit lines by the Group over associated companies are as
follows:
(Thousands of euros)
2023
2022
(restated)
Guarantees granted
4,824
7,539
Revocable credit lines
9,328
9,527
Other revocable commitments
16,284
\u2014
30,436
17,066
Under the scope of the Group's insurance mediation activities, the remuneration from services provided is analysed as
follows:\u00a0
(Thousands of euros)
2023
2022
(restated)
Life insurance
Saving products
24,166
27,966
Mortgage and consumer loans
20,424
20,699
Others
1
\u2014
44,591
48,665
Non-Life insurance
Accidents and health
24,007
21,612
Motor
4,066
3,956
Multi-Risk Housing
8,516
7,753
Others
1,843
1,660
38,432
34,981
83,023
83,646
Remuneration from insurance intermediation services was received through bank transfers and resulted from insurance
intermediation with Ocidental - Companhia Portuguesa de Seguros de Vida, S.A. and Ageas Portugal - Companhia de
Seguros, S.A. (Millenniumbcp Ageas Group). The Group does not collect insurance premiums on behalf of Insurance
Companies nor performs any movement of funds related to insurance contracts. Thus, there is no other asset, liability,
income or expense to be reported related to the activity of insurance mediation exercised by the Group, other than
those already disclosed.
The receivable balances from insurance intermediation activities, by nature, are analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Funds receivable for payment of life insurance commissions
10,546
11,467
Funds receivable for payment of non-life insurance commissions
9,713
8,835
20,259
20,302
The commissions received result from insurance mediation contracts and investment contracts, under the terms
established in the contracts in force. The mediation commissions are calculated according to the nature of the
contracts subject to mediation, as follows:
- insurance contracts \u2013 use of fixed rates on gross premiums issued;
- investment contracts \u2013 use of fixed rates on the responsibilities assumed by the insurance company under the
commercialisation of these products.
D) Transactions with the Pension Fund
The balances with the Pension Fund included in items of the consolidated balance sheet are as follows:
(Thousands of euros)
2023
2022
(restated)
Assets
Financial assets held for trading
\u2014
209
\u2014
209
Liabilities
Resources from customers
54,850
145,303
Non subordinated debt securities issued
9,075
13,199
Financial liabilities held for trading
\u2014
3,475
Other liabilities
231
\u2014
64,156
161,977
In 2023 and 2022, there were no transactions related to other financial instruments between the Group and the Pension
Fund.
Income and expenses with the Pension Fund included in the items of the consolidated income statement are as follows:
(Thousands of euros)
2023
2022
(restated)
Income
Commissions
1,073
2,167
Expenses
Interest expense and similar charges
102
\u2014
Other administrative costs
15,118
14,227
15,220
14,227
The balance Other administrative costs corresponds to rents incurred under the scope of the Pension Fund's properties
in which the tenant is the Group.
As at 31\u00a0December 2023 and 2022, the guarantees granted by the Group to the Pension Fund amount to Euros 5,000.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-691": { "value": "
As defined by IAS 24, are considered related parties of the Group, the companies detailed in note 60 - List of subsidiary
and associated companies of Banco Comercial Portugu\u00eas Group, the Pension Fund, the members of the Board of
Directors and key management members. The key management members are the first line Directors. Beyond the
members of the Board of Directors and key management members, are also considered related parties, people who are
close to them (family relationships) and entities controlled by them or in whose management they have significant
influence.
As the transactions with subsidiaries are eliminated in consolidation, these are not included in the notes to the Group's
consolidated financial statements.
According to Portuguese law, namely under Article no. 109 of the General Law for Credit Institutions and Financial
Companies and also in accordance with Article no. 33 of Notice 3/2020 of the Bank of Portugal, are considered related
parties as well, the qualified shareholders of Banco Comercial Portugu\u00eas, S.A. and the entities controlled by them or
with which they are in a group relationship. The list of the qualified shareholders is detailed in note 41.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithRelatedPartiesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-692": { "value": "Consolidated Balance sheet and Income statement by geographic and
operational segments
The segments presented are in accordance with IFRS 8. In accordance with the Group's management model, the
segments presented correspond to the segments used for management purposes by the Executive Committee. The
Group offers a wide range of banking activities and financial services in Portugal and abroad, with a special focus on
Commercial Banking, Companies Banking and Private Banking.
Segments description
A. Geographical Segments
The Group operates in the Portuguese market, and also in a few affinity markets with recognised growth potential.
Considering this, the geographical segments are structured in Portugal and Foreign Business (Poland, Mozambique and
Other). Portugal segment reflects, essentially, the activities carried out by Banco Comercial Portugu\u00eas in Portugal and
ActivoBank.
Portugal activity includes the following segments: i) Retail Banking; ii) Companies and Corporate; iii) Private Banking
and iv) Other.
Retail Banking includes the following business areas:
- Retail network, which ensures the monitoring of individual customers, entrepreneurs, merchants and small and
medium enterprises with a turnover less than Euros 2.5 million. The Retail network strategic approach is to target
\u201cMass Market\u201d customers, who appreciate a value proposal based on innovation and speed, as well as Prestige and
Small Business customers, whose specific characteristics, financial assets or income imply a value proposal based on
innovation and personalisation, requiring a dedicated Account Manager;
- Retail Recovery Division that accompanies and manages the responsibilities of customers or economic groups in
effective default, as well as customers with bankruptcy requirement or other similar mechanisms, looking through the
conclusion of agreements or payment restructuring processes that minimizes the economic loss to the Bank; and
- ActivoBank, a bank focused on clients who are young, intensive users of new communication technologies and who
prefer a banking relationship based on simplicity, offering modern products and services.
Companies and Corporate segment includes:
- Companies and Corporate network, which monitors clients included in the corporate segment, economic groups and
institutional entities, with a turnover higher than Euros 2.5 million, offering a wide range of traditional banking
products complemented by specialised financing;
- Large Corporate network that assures the relationship and the monitoring of a set of Groups / Clients, which in
addition to Portugal, develop their activity in several geographies (Poland, Angola, Mozambique and East), providing a
complete range of value-added products and services;
- Specialised Monitoring Division which carries out the monitorisation of business groups that have high and complex
credit exposures or that show relevant signs of impairment, in order to defend the value and managing credit risk, in
a sustainable medium and long term perspective;
\u2013 Specialised Recovery Division which ensures efficient tracking of customers with predictable or effective high risk of
credit, from Companies, Corporate, Large Corporate and retail networks (exposure exceeding Euros 1 million);
- Investment Banking unit, that ensures the offer of products and specific services, in particular financial advice,
including corporate finance services, capital market transactions and analysis and financing structuring in the medium
to long term;
- Interfundos with the activity of management of real estate investment funds;
- Specialized Credit and Real Estate Department, with the mission of managing the Group's foreclosed assets portfolio,
referred as non-performing assets, in order to place them back to the market.
- Treasury, Markets and International Department, which coordinates business with banks and financial institutions in
order to better serve the Bank's commercial networks and operations abroad. This unit has a dynamic emphasis that
promotes international business within commercial networks, aiming to be a partner for clients for internationalization.
It also provides securities custody services to resident and non-resident clients, and grants the Bank's intervention in
the financial markets, providing commercial services for treasury and markets products and managing the financial risks
inherent to the Bank's activity.
The Private Banking segment, for the purposes of geographical segments, comprises:
- Private Banking Division in Portugal, which ensures the monitoring of clients with high net worth, based on a
commitment to excellence and a personalized relationship with clients;
- Wealth Management Division, which provides advisory customer services and portfolio management for clients in the
Private Banking network and the affluent segment.
For the purposes of business segments, the Private Banking segment also includes Millennium bcp Bank & Trust in
Cayman Islands (entity liquidated in 2022) that is considered Foreign Business on geographical segmentation.
All other businesses not previously discriminated are allocated to the Other segment (Portugal) and include centralized
management of financial investments, corporate activities and operations not integrated in the remaining business
segments and other amounts not allocated to segments.
Foreign Business includes the following segments:
- Poland, where the Group is represented by Bank Millennium, a universal bank offering a wide range of financial
products and services to individuals and companies nationwide;
- Mozambique, where the Group is represented by BIM \u2013 Banco Internacional de Mo\u00e7ambique, a universal bank targeting
companies and individual customers; and
- Other, which includes the contribution of the associate in Angola and the contribution of the discontinued operation
in Cayman Islands.
B. Business Segments
For the purposes of business segments reporting, Foreign Business segment comprises the Group\u2019s operations developed
in other countries already mentioned excluding the activity of Millennium bcp Bank & Trust in the Cayman Islands
(entity liquidated) which, in this context, is considered in Private Banking segment.
Business segments activity
The figures reported for each segment resulted from aggregating the subsidiaries and business units integrated in each
segment. For the business units in Portugal, the aggregation process reflects the impact from capital allocation and
balancing process in the balance sheet and income statement, based on average figures. The balance sheet headings
for each business unit in Portugal were calculated considering the allocation process, based on the regulatory solvency
criteria.
Considering that the process of capital allocation complies with the regulatory criteria of solvency in force, as at 31
December 2023 and 31 December 2022 the risk weighted assets, and consequently the capital allocated to the business
segments, are determined in accordance with the Basel III framework, pursuant to the CRD IV/CRR. The capital
allocated to each segment resulted from the application of a target capital ratio to the risks managed by each segment,
reflecting the application of the Basel III methodology previously referred. Each operation is balanced through internal
transfers of funds, with impact on the net interest income and income taxes of each segment, hence with no impact on
consolidated accounts.
Commissions and other net income, as well as operating costs calculated for each business area, are based on the
amounts accounted for directly in the respective cost centres, on the one hand, and the amounts resulting from
internal processes for allocating revenues and costs, for another. In this case, the allocation is based on the application
of pre-defined criteria related to the level of activity of each business area.
The following information has been prepared based on the individual and consolidated financial statements of the
Group prepared in accordance with international financial reporting standards (IFRS), as adopted by the European
Union (EU), at the reference date and with the Organization of the Group's business areas in force on 31 December
2023. Information relating to prior periods is restated whenever changes in the internal organization of the entity are
likely to change the composition of the reportable segments (business and geographical) or relevant changes in the
dynamics of allocation of indirect revenues and costs, as described in the previous paragraph, ensuring the
comparability of the information provided in the reported periods.
The information in the financial statements of reportable segments is reconciled, at the level of the total revenue of
those same segments, with the revenue from the demonstration of the consolidated financial position of the reportable
entity for each date on which is lodged a statement of financial position.
As at 31 December 2023, the net contribution of the major business segments, for the income statement, is analysed as
follows:
(Thousands of euros)
2023
Commercial banking
Companies
and
Corporate in
Portugal
Retail in
Portugal
Foreign
business (1)
Total
Private
banking
Other
Consolidated
INCOME STATEMENT
Net interest income
881,859
1,359,093
2,240,952
206,539
34,834
343,399
2,825,724
Net fees and commissions income
435,629
211,395
647,024
141,435
32,370
(49,156)
771,673
Other net income
12,535
26,414
38,949
10,609
49
(88,213)
(38,606)
Net gains arising from trading
activity (2)
1,513
131,939
133,452
106
67
11,190
144,815
Dividends from equity instruments
\u2014
756
756
\u2014
\u2014
1,027
1,783
Share of profit of associates under
the equity method
\u2014
4,651
4,651
\u2014
\u2014
59,615
64,266
Net operating revenue
1,331,536
1,734,248
3,065,784
358,689
67,320
277,862
3,769,655
Operating expenses
356,321
545,894
902,215
61,930
14,960
183,446
1,162,551
Results on modification (3)
\u2014
(19,426)
(19,426)
\u2014
\u2014
\u2014
(19,426)
Impairment for credit and financial
assets (4)
(44,223)
(36,782)
(81,005)
(154,511)
(178)
(14,290)
(249,984)
Other impairments and provisions (5)
(98)
(694,696)
(694,794)
\u2014
\u2014
(155,068)
(849,862)
Net income before income tax
930,894
437,450
1,368,344
142,248
52,182
(74,942)
1,487,832
Income tax
(291,370)
(206,268)
(497,638)
(44,524)
(16,333)
21,124
(537,371)
Net income after income tax
from continuing operations
639,524
231,182
870,706
97,724
35,849
(53,818)
950,461
Income arising from discontinued
operations
\u2014
\u2014
\u2014
\u2014
(2,843)
(9)
(2,852)
Net income for the year
639,524
231,182
870,706
97,724
33,006
(53,827)
947,609
Non-controlling interests
\u2014
(97,148)
(97,148)
\u2014
\u2014
5,589
(91,559)
Net income for the year
attributable to Bank's Shareholders
639,524
134,034
773,558
97,724
33,006
(48,238)
856,050
(1) Includes the contribution associated with the\u00a0 investments held in Angola, in Banco Millennium Atl\u00e2ntico.
(2) Includes results from financial operations at fair value through profit or loss, results from foreign exchange, results from hedge accounting
operations and results arising from derecognition of financial assets and liabilities not measured at fair value through profit or loss.
(3) Includes the results of contractual amendments, namely, costs arising from negotiations with customers holding mortgage loans in foreign
currency.
(4) Includes impairment of financial assets at amortised cost, for loans to customers (net of recoveries - principal and accrual) and for debt
instruments related to credit operations. It also includes impairment of financial assets (at fair value through other comprehensive income and
at amortised cost not associated with credit operations).
(5) Includes impairment of non-current assets held for sale, investments in associated companies, goodwill, other assets and provisions,
highlighting the provisions for legal proceedings related to mortgage loans granted in Swiss francs, booked by the Polish subsidiary.
As at 31 December 2023, the net contribution of the major operational Segments, for the balance sheet, is analysed as
follows:
(Thousands of euros)
2023
Commercial banking
Companies
and
Corporate in
Portugal
Retail in
Portugal
Foreign
business
Total
Private
banking
Other
Consolidated
BALANCE SHEET
Cash and Loans and advances to
credit institutions
14,390,981
2,803,205
17,194,186
1,255,995
2,371,683
(15,030,174)
5,791,690
Loans and advances to customers (1)
26,002,815
17,581,929
43,584,744
11,097,187
333,393
202,643
55,217,967
Financial assets (2)
\u2014
10,269,402
10,269,402
\u2014
\u2014
17,594,007
27,863,409
Other assets
\u2014
1,000,590
1,000,590
\u2014
\u2014
4,506,122
5,506,712
Total Assets
40,393,796
31,655,126
72,048,922
12,353,182
2,705,076
7,272,598
94,379,778
Resources from\u00a0 credit institutions
(3)
259,026
151,175
410,201
1,618,782
\u2014
(1,199,857)
829,126
Resources from customers (4)
37,934,752
26,764,909
64,699,661
9,463,888
2,545,353
1,218,911
77,927,813
Debt securities issued (5)
1,144,133
763,831
1,907,964
1,408
133,442
1,957,355
4,000,169
Other financial liabilities (6)
\u2014
538,311
538,311
\u2014
\u2014
1,134,326
1,672,637
Other liabilities (7)
\u2014
1,268,020
1,268,020
\u2014
\u2014
1,382,515
2,650,535
Total Liabilities
39,337,911
29,486,246
68,824,157
11,084,078
2,678,795
4,493,250
87,080,280
Total Equity
1,055,885
2,168,880
3,224,765
1,269,104
26,281
2,779,348
7,299,498
Total Liabilities and Equity
40,393,796
31,655,126
72,048,922
12,353,182
2,705,076
7,272,598
94,379,778
Number of employees
3,599
9,446
13,045
440
106
2,097
15,688
(1) Includes loans to customers at amortised cost net of impairment, debt instruments at amortised cost associated to credit operations net of
impairment and balance sheet amount of loans to customers at fair value through profit or loss.
(2) Includes debt instruments at amortised cost not associated with credit operations (net of impairment), financial assets at fair value through
profit or loss (excluding the ones related to loans to customers), financial assets at fair value through other comprehensive income and hedging
derivatives.
(3) Includes resources and other financing from central banks and resources from other credit institutions.
(4) Corresponds to deposits and other resources from customers (including resources from customers at amortised cost and customer deposits at
fair value through profit or loss).
(5) Includes non-subordinated debt securities at amortized cost and financial liabilities at fair value through profit or loss (debt securities and
certificates).
(6) Includes financial liabilities held for trading, subordinated debt and hedging derivatives.
(7) Includes provisions, current and deferred tax liabilities and other liabilities.
As at 31 December 2022, the net contribution of the major business segments, for the income statement, is analysed as
follows:
(Thousands of euros)
2022 (restated)
Commercial banking
Companies
and
Corporate in
Portugal
Private
banking
Other
Consolidated
Retail in
Portugal
Foreign
business
(1)
Total
INCOME STATEMENT
Net interest income
621,413
1,197,822
1,819,235
202,754
21,116
106,667
2,149,772
Net fees and commissions income
421,398
211,325
632,723
149,029
32,368
(42,212)
771,908
Other net income
21,634
(106,637)
(85,003)
40,768
(10)
(138,700)
(182,945)
Net gains arising from trading activity
(2)
2,680
(19,299)
(16,619)
69
182
66,328
49,960
Dividends from equity instruments
\u2014
811
811
\u2014
\u2014
9,275
10,086
Share of profit of associates under the
equity method
\u2014
925
925
\u2014
\u2014
57,686
58,611
Net operating revenue
1,067,125
1,284,947
2,352,072
392,620
53,656
59,044
2,857,392
Operating expenses
328,887
470,347
799,234
57,615
15,299
200,870
1,073,018
Results on modification (3)
\u2014
(309,865)
(309,865)
\u2014
\u2014
\u2014
(309,865)
Impairment for credit and financial
assets (4)
(66,953)
(82,394)
(149,347)
(149,529)
591
2,156
(296,129)
Other impairments and provisions (5)
(394)
(550,085)
(550,479)
\u2014
\u2014
(209,554)
(760,033)
Net income before income tax
670,891
(127,744)
543,147
185,476
38,948
(349,224)
418,347
Income tax
(209,989)
(96,742)
(306,731)
(58,054)
(12,172)
72,637
(304,320)
Net income after income tax
from continuing operations
460,902
(224,486)
236,416
127,422
26,776
(276,587)
114,027
Income arising from discontinued
operations
\u2014
3,772
3,772
\u2014
1,765
\u2014
5,537
Net income for the year
460,902
(220,714)
240,188
127,422
28,541
(276,587)
119,564
Non-controlling interests
\u2014
72,802
72,802
\u2014
\u2014
5,020
77,822
Net income for the year attributable
to Bank's Shareholders
460,902
(147,912)
312,990
127,422
28,541
(271,567)
197,386
(1) Includes the contribution associated with the\u00a0 investments held in Angola, in Banco Millennium Atl\u00e2ntico.
(2) Includes results from financial operations at fair value through profit or loss, results from foreign exchange, results from hedge accounting
operations and results arising from derecognition of financial assets and liabilities not measured at fair value through profit or loss.
(3) Results mainly from the amount associated to potential costs arising from the moratorium program in Poland (credit holidays). It's also
included the results of contractual amendments, namely, costs arising from negotiations with customers holding mortgage loans in foreign
currency.
(4) Includes impairment of financial assets at amortised cost, for loans to customers (net of recoveries - principal and accrual) and for debt
instruments related to credit operations. It also includes impairment of financial assets (at fair value through other comprehensive income and
at amortised cost not associated with credit operations).
(5) Includes impairment of non-current assets held for sale, investments in associated companies, goodwill, other assets and provisions,
highlighting the provisions for legal proceedings related to mortgage loans granted in Swiss francs, booked by the Polish subsidiary.
As at 31 December 2022, the net contribution of the major operational Segments, for the balance sheet, is analysed as
follows:
(Thousands of euros)
2022 (restated)
Commercial banking
Companies
and
Corporate in
Portugal
Retail in
Portugal
Foreign
business
Total
Private
banking
Other
Consolidated
BALANCE SHEET
Cash and Loans and advances to
credit institutions
14,496,145
3,208,230
17,704,375
2,405,941
2,427,179
(15,338,600)
7,198,895
Loans and advances to customers (1)
26,360,608
16,983,242
43,343,850
11,751,456
345,264
757,114
56,197,684
Financial assets (2)
\u2014
5,458,513
5,458,513
\u2014
\u2014
14,895,710
20,354,223
Other assets
\u2014
942,640
942,640
\u2014
\u2014
5,183,301
6,125,941
Total Assets
40,856,753
26,592,625
67,449,378
14,157,397
2,772,443
5,497,525
89,876,743
Resources from\u00a0 credit institutions (3)
229,245
158,808
388,053
1,140,782
\u2014
(60,475)
1,468,360
Resources from customers (4)
38,537,857
23,173,054
61,710,911
11,539,455
2,605,487
50,961
75,906,814
Debt securities issued (5)
1,201,403
52,066
1,253,469
\u2014
141,613
1,428,011
2,823,093
Other financial liabilities (6)
\u2014
535,648
535,648
\u2014
\u2014
1,216,914
1,752,562
Other liabilities (7)
\u2014
907,471
907,471
\u2014
\u2014
1,081,676
1,989,147
Total Liabilities
39,968,505
24,827,047
64,795,552
12,680,237
2,747,100
3,717,087
83,939,976
Total Equity
888,248
1,765,578
2,653,826
1,477,160
25,343
1,780,438
5,936,767
Total Liabilities and Equity
40,856,753
26,592,625
67,449,378
14,157,397
2,772,443
5,497,525
89,876,743
Number of employees
3,519
9,491
13,010
444
140
2,149
15,743
(1) Includes loans to customers at amortised cost net of impairment, debt instruments at amortised cost associated to credit operations net of
impairment and balance sheet amount of loans to customers at fair value through profit or loss.
(2) Includes debt instruments at amortised cost not associated with credit operations (net of impairment), financial assets at fair value through
profit or loss (excluding the ones related to loans to customers), financial assets at fair value through other comprehensive income and hedging
derivatives.
(3) Includes resources and other financing from central banks and resources from other credit institutions.
(4) Corresponds to deposits and other resources from customers (including resources from customers at amortised cost and customer deposits at
fair value through profit or loss).
(5) Includes non-subordinated debt securities at amortized cost and financial liabilities at fair value through profit or loss (debt securities and
certificates).
(6) Includes financial liabilities held for trading, subordinated debt and hedging derivatives.
(7) Includes provisions, current and deferred tax liabilities and other liabilities.
As at 31 December 2023, the net contribution of the major geographic segments, for the income statement, is analysed
as follows:
(Thousands of euros)
2023
Portugal
Retail
banking
Companies
and
Corporate
Private
banking
Other
Total
Poland
Mozambique
Other (1)
Consolidated
INCOME STATEMENT
Net interest income
881,859
206,539
34,834
343,399
1,466,631
1,157,256
201,837
\u2014
2,825,724
Net fees and commissions
income
435,629
141,435
32,370
(49,156)
560,278
172,346
39,049
\u2014
771,673
Other net income
12,535
10,609
49
(88,213)
(65,020)
21,822
4,592
\u2014
(38,606)
Net gains arising from trading
activity (2)
1,513
106
67
11,190
12,876
115,625
16,314
\u2014
144,815
Dividends from equity
instruments
\u2014
\u2014
\u2014
1,027
1,027
756
\u2014
\u2014
1,783
Share of profit of associates
under the equity method
\u2014
\u2014
\u2014
59,615
59,615
\u2014
1,942
2,709
64,266
Net operating revenue
1,331,536
358,689
67,320
277,862
2,035,407
1,467,805
263,734
2,709
3,769,655
Operating expenses
356,321
61,930
14,960
183,446
616,657
420,211
125,683
\u2014
1,162,551
Results on modification (3)
\u2014
\u2014
\u2014
\u2014
\u2014
(19,426)
\u2014
\u2014
(19,426)
Impairment for credit and
financial assets (4)
(44,223)
(154,511)
(178)
(14,290)
(213,202)
(57,192)
20,410
\u2014
(249,984)
Other impairments and
provisions (5)
(98)
\u2014
\u2014
(155,068)
(155,166)
(681,857)
(12,839)
\u2014
(849,862)
Net income before income
tax
930,894
142,248
52,182
(74,942)
1,050,382
289,119
145,622
2,709
1,487,832
Income tax
(291,370)
(44,524)
(16,333)
21,124
(331,103)
(162,298)
(43,970)
\u2014
(537,371)
Net income after income tax
from continuing operations
639,524
97,724
35,849
(53,818)
719,279
126,821
101,652
2,709
950,461
Income arising from
discontinued operations
\u2014
\u2014
\u2014
(9)
(9)
\u2014
\u2014
(2,843)
(2,852)
Net income for the year
639,524
97,724
35,849
(53,827)
719,270
126,821
101,652
(134)
947,609
Non-controlling interests
\u2014
\u2014
\u2014
5,589
5,589
(63,283)
(33,865)
\u2014
(91,559)
Net income for the year
attributable to Bank's
Shareholders
639,524
97,724
35,849
(48,238)
724,859
63,538
67,787
(134)
856,050
(1) Includes the contribution associated with the\u00a0 investments held in Angola, in Banco Millennium Atl\u00e2ntico.
(2) Includes results from financial operations at fair value through profit or loss, results from foreign exchange, results from hedge accounting
operations and results arising from derecognition of financial assets and liabilities not measured at fair value through profit or loss.
(3) Includes the results of contractual amendments, namely, costs arising from negotiations with customers holding mortgage loans in foreign
currency.
(4) Includes impairment of financial assets at amortised cost for loans to customers (net of recoveries - principal and accrual) and for debt
instruments related to credit operations. It also includes impairment of financial assets at amortised cost not associated with credit operations.
(5) Includes impairment of non-current assets held for sale, investments in associated companies, goodwill, other assets and provisions,
highlighting the provisions for legal proceedings related to mortgage loans granted in Swiss francs, booked by the Polish subsidiary.
As at 31 December 2023, the net contribution of the major geographic segments, for the balance sheet is analysed as
follows:
(Thousands of euros)
2023
Portugal
Retail
banking
Companies
and
Corporate
Private
banking
Other
Total
Poland
Mozambique
Other (1)
Consolidated
BALANCE SHEET
Cash and Loans and
advances to credit
institutions
14,390,981
1,255,995
2,371,683
(15,030,174)
2,988,485
1,621,924
1,181,281
\u2014
5,791,690
Loans and advances to
customers (1)
26,002,815
11,097,187
333,393
202,643
37,636,038
16,955,492
626,437
\u2014
55,217,967
Financial assets (2)
\u2014
\u2014
\u2014
17,594,007
17,594,007
9,594,785
674,653
(36)
27,863,409
Other assets
\u2014
\u2014
\u2014
4,506,122
4,506,122
724,823
228,803
46,964
5,506,712
Total Assets
40,393,796
12,353,182
2,705,076
7,272,598
62,724,652
28,897,024
2,711,174
46,928
94,379,778
Resources from other
credit institutions (3)
259,026
1,618,782
\u2014
(1,199,857)
677,951
130,131
21,044
\u2014
829,126
Resources from
customers (4)
37,934,752
9,463,888
2,545,353
1,218,911
51,162,904
24,689,709
2,075,200
\u2014
77,927,813
Debt securities issued (5)
1,144,133
1,408
133,442
1,957,355
3,236,338
763,831
\u2014
\u2014
4,000,169
Other financial liabilities
(6)
\u2014
\u2014
\u2014
1,134,326
1,134,326
538,311
\u2014
\u2014
1,672,637
Other liabilities (7)
\u2014
\u2014
\u2014
1,382,515
1,382,515
1,187,710
80,310
\u2014
2,650,535
Total Liabilities
39,337,911
11,084,078
2,678,795
4,493,250
57,594,034
27,309,692
2,176,554
\u2014
87,080,280
Total Equity
1,055,885
1,269,104
26,281
2,779,348
5,130,618
1,587,332
534,620
46,928
7,299,498
Total Liabilities and
Equity
40,393,796
12,353,182
2,705,076
7,272,598
62,724,652
28,897,024
2,711,174
46,928
94,379,778
Number of employees
3,599
440
106
2,097
6,242
6,872
2,574
0
15,688
1) Includes loans to customers at amortised cost net of impairment, debt instruments at amortised cost associated to credit operations net of
impairment and balance sheet amount of loans to customers at fair value through profit or loss.
2) Includes debt instruments at amortised cost not associated with credit operations (net of impairment), financial assets at fair value through
profit or loss (excluding the ones related to loans to customers), financial assets at fair value through other comprehensive income and hedging
derivatives.
3) Includes resources and other financing from central banks and resources from other credit institutions.
4) Corresponds to deposits and other resources from customers (including resources from customers at amortised cost and customer deposits at
fair value through profit or loss).
5) Includes non-subordinated debt securities at amortized cost and financial liabilities at fair value through profit or loss (debt securities and
certificates).
6) Includes financial liabilities held for trading, subordinated debt and hedging derivatives.
7) Includes provisions, current and deferred tax liabilities and other liabilities.
As at 31 December 2022, the net contribution of the major geographic segments, for the\u00a0 income statement, is
analysed as follows:
(Thousands of euros)
2022 (restated)
Portugal
Retail
banking
Companies
and
Corporate
Private
banking
Other
Total
Poland
Mozambique
Other (1)
Consolidated
INCOME STATEMENT
Net interest income
621,413
202,754
20,144
106,667
950,978
995,565
202,257
972
2,149,772
Net fees and commissions
income
421,398
149,029
32,343
(42,212)
560,558
172,631
38,694
25
771,908
Other net income
21,634
40,768
24
(138,700)
(76,274)
(109,088)
2,451
(34)
(182,945)
Net gains arising from trading
activity (2)
2,680
69
162
66,328
69,239
(40,130)
20,830
21
49,960
Dividends from equity
instruments
\u2014
\u2014
\u2014
9,275
9,275
811
\u2014
\u2014
10,086
Share of profit of associates
under the equity method
\u2014
\u2014
\u2014
57,686
57,686
\u2014
1,841
(916)
58,611
Net operating revenue
1,067,125
392,620
52,673
59,044
1,571,462
1,019,789
266,073
68
2,857,392
Operating expenses
328,887
57,615
14,376
200,870
601,748
357,092
113,255
923
1,073,018
Results on modification (3)
\u2014
\u2014
\u2014
\u2014
\u2014
(309,865)
\u2014
\u2014
(309,865)
Impairment for credit and
financial assets (4)
(66,953)
(149,529)
591
2,156
(213,735)
(74,067)
(8,327)
\u2014
(296,129)
Other impairments and
provisions (5)
(394)
\u2014
\u2014
(209,554)
(209,948)
(537,143)
(6,506)
(6,436)
(760,033)
Net income before income
tax
670,891
185,476
38,888
(349,224)
546,031
(258,378)
137,985
(7,291)
418,347
Income tax
(209,989)
(58,054)
(12,172)
72,637
(207,578)
(60,614)
(36,128)
\u2014
(304,320)
Net income after income tax
from continuing operations
460,902
127,422
26,716
(276,587)
338,453
(318,992)
101,857
(7,291)
114,027
Income arising from
discontinued operations
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
3,772
1,765
5,537
Net income for the period
460,902
127,422
26,716
(276,587)
338,453
(318,992)
105,629
(5,526)
119,564
Non-controlling interests
\u2014
\u2014
\u2014
5,020
5,020
108,125
(35,323)
\u2014
77,822
Net income for the period
attributable to Bank's
Shareholders
460,902
127,422
26,716
(271,567)
343,473
(210,867)
70,306
(5,526)
197,386
(1) Includes the contribution associated with the\u00a0 investments held in Angola, in Banco Millennium Atl\u00e2ntico.
(2) Includes results from financial operations at fair value through profit or loss, results from foreign exchange, results from hedge accounting
operations and results arising from derecognition of financial assets and liabilities not measured at fair value through profit or loss.
(3) ) Results mainly from the amount associated to potential costs arising from the moratorium program in Poland (credit holidays). It's also
included the results of contractual amendments, namely, costs arising from negotiations with customers holding mortgage loans in foreign
currency.
(4) Includes impairment of financial assets at amortised cost for loans to customers (net of recoveries - principal and accrual) and for debt
instruments related to credit operations. It also includes impairment of financial assets at amortised cost not associated with credit operations.
(5) Includes impairment of non-current assets held for sale, investments in associated companies, goodwill, other assets and provisions,
highlighting the provisions for legal proceedings related to mortgage loans granted in Swiss francs, booked by the Polish subsidiary.
As at 31 December 2022, the net contribution of the major geographic segments, for the balance sheet is analysed as
follows:
(Thousands of euros)
2022 (restated)
Portugal
Retail
banking
Companies
and
Corporate
Private
banking
Other
Total
Poland
Mozambique
Other (1)
Consolidated
BALANCE SHEET
Cash and Loans and
advances to credit
institutions
14,496,145
2,405,941
2,427,179
(15,338,600)
3,990,665
2,193,520
1,014,710
\u2014
7,198,895
Loans and advances to
customers (1)
26,360,608
11,751,456
345,264
757,114
39,214,442
16,355,525
627,717
\u2014
56,197,684
Financial assets (2)
\u2014
\u2014
\u2014
14,895,710
14,895,710
4,506,830
951,716
(33)
20,354,223
Other assets
\u2014
\u2014
\u2014
5,183,301
5,183,301
641,572
230,266
70,802
6,125,941
Total Assets
40,856,753
14,157,397
2,772,443
5,497,525
63,284,118
23,697,447
2,824,409
70,769
89,876,743
Resources from other
credit institutions (3)
229,245
1,140,782
\u2014
(60,475)
1,309,552
155,411
3,397
\u2014
1,468,360
Resources from
customers (4)
38,537,857
11,539,455
2,605,487
50,961
52,733,760
20,941,241
2,231,813
\u2014
75,906,814
Debt securities issued (5)
1,201,403
\u2014
141,613
1,428,011
2,771,027
52,066
\u2014
\u2014
2,823,093
Other financial
liabilities (6)
\u2014
\u2014
\u2014
1,216,914
1,216,914
535,648
\u2014
\u2014
1,752,562
Other liabilities (7)
\u2014
\u2014
\u2014
1,081,676
1,081,676
839,464
68,007
\u2014
1,989,147
Total Liabilities
39,968,505
12,680,237
2,747,100
3,717,087
59,112,929
22,523,830
2,303,217
\u2014
83,939,976
Total Equity
888,248
1,477,160
25,343
1,780,438
4,171,189
1,173,617
521,192
70,769
5,936,767
Total Liabilities and
Equity
40,856,753
14,157,397
2,772,443
5,497,525
63,284,118
23,697,447
2,824,409
70,769
89,876,743
Number of employees
3,519
444
140
2,149
6,252
6,987
2,504
0
15,743
1) Includes loans to customers at amortised cost net of impairment, debt instruments at amortised cost associated to credit operations net of
impairment and balance sheet amount of loans to customers at fair value through profit or loss.
2) Includes debt instruments at amortised cost not associated with credit operations (net of impairment), financial assets at fair value through
profit or loss (excluding the ones related to loans to customers), financial assets at fair value through other comprehensive income and hedging
derivatives.
3) Includes resources and other financing from central banks and resources from other credit institutions.
4) Corresponds to deposits and other resources from customers (including resources from customers at amortised cost and customer deposits at
fair value through profit or loss).
5) Includes non-subordinated debt securities at amortized cost and financial liabilities at fair value through profit or loss (debt securities and
certificates).
6) Includes financial liabilities held for trading, subordinated debt and hedging derivatives.
7) Includes provisions, current and deferred tax liabilities and other liabilities.
Reconciliation of net income of reportable segments with the net income attributable to
shareholders
(Thousands of euros)
2023
2022
(restated)
Net contribution
Retail banking in Portugal
639,524
460,902
Companies and Corporate
97,724
127,422
Private Banking
35,849
26,716
Foreign business (continuing operations)
231,182
(224,426)
Non-controlling interests (1)
(97,148)
72,802
907,131
463,416
Income arising from discontinued or discontinuing operations
(2,843)
5,537
904,288
468,953
Amounts not allocated to segments
Net interest income - bonds portfolio
325,921
105,777
Net interest income - others (2)
17,478
890
Foreign exchange activity
17,005
39,603
Gains / (losses) arising from sales of subsidiaries and other assets
3,098
(26,440)
Equity accounted earnings
59,614
57,686
Impairment and other provisions (3)
(169,358)
(207,397)
Operational costs
(183,446)
(200,870)
Gains on sale of Portuguese public debt
(8,181)
(24,336)
Gains on sale of foreign public debt
31
15,404
Mandatory contributions
(72,583)
(88,528)
Loans sale
(5,242)
8,357
Income from other financial assets not held for trading mandatorily
at fair value through profit or loss (4)
(5,834)
3,473
Taxes (5)
21,124
72,637
Income from discontinued operations
(9)
\u2014
Non-controlling interests
5,589
5,020
Others (6)
(53,445)
(32,843)
Total not allocated to segments
(48,238)
(271,567)
Consolidated net income
856,050
197,386
(1) Corresponds mainly to the income attributable to third parties related to the subsidiaries in Poland and in Mozambique.
(2) Includes net interest income arising from internal transfer of liquidity, interest rate risk, cost of wholesale funding and others.
(3) Includes impairments for non-current assets held for sale, impairments for other assets, provisions for administrative infractions, various
contingencies and other impairments and/or provisions not allocated to business segments.
(4) Includes gains/(losses) from corporate restructuring funds.
(5) Includes deferred tax revenue, net of current non-segment tax expense, namely the tax effect associated with the impacts of the previous
items.
(6) It includes other operations not allocated previously namely funding for non-interest bearing assets and strategic financial investments.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-694": { "value": "Solvency
The Group\u2019s own funds are determined according to the established regulation, in particular, according to Directive
2013/36/EU and Regulation (EU) 575/2013, approved by the European Parliament and the Council (CRD IV/CRR).
Total capital includes tier 1 and tier 2. Tier 1 comprises common equity tier 1 (CET1) and additional tier 1.
Common equity tier 1 includes: (i) paid-up capital, share premium, reserves and retained earnings deducted
anticipated dividends and non-controlling interests; ii) and deductions related to own shares and loans to finance the
acquisition of shares of the Bank, the shortfall of value adjustments and provisions to expected losses concerning risk\u2010
weighted exposure amounts calculated according to the IRB approach, goodwill and other intangible assets and the
additional value adjustments necessary for the prudent valuation requirements applied to all assets at fair value,
adjustments related to minimum commitment with collective investments undertakings, insufficient coverage for non-
performing exposures and with the amount of securitisation positions, eligible for deduction as an alternative to a 1 250
% risk weight. Reserves and retained earnings are adjusted by the reversal of unrealised gains and losses on cash-flow
hedge transactions and on financial liabilities valued at fair value through profits and losses, to the extent related to
own credit risk. The non-controlling interests are only eligible up to the amount of the Group\u2019s capital requirements
attributable to the minorities. In addition, the deferred tax assets arising from unused tax losses carried forward are
deducted, as well as the deferred tax assets arising from temporary differences relying on the future profitability and
the interests held in financial institutions and insurers of at least 10%, in this case only in the amount that exceeds the
thresholds of 10% and 15% of the common equity tier 1, when analysed on an individual and aggregated basis,
respectively. The irrevocable payment commitments for the Single Resolution Fund, the fair value of the collateral for
irrevocable commitments from the Deposits Guarantee Fund and the additional coverage for non-performing exposures,
are also deducted, due to a SREP (Supervisory Review and Evaluation Process) recommendation.
Additional tier 1 comprises preference shares, hybrid instruments and perpetual bonds representing subordinated debt
that are compliant with the issue conditions established in the Regulation and non-controlling interests related to
minimum level 1 additional capital requirements of institutions that are not totally owned by the Group.
Tier 2 includes the subordinated debt that is compliant with the Regulation and the non-controlling interests related to
minimum total capital requirements of institutions that are not totally owned by the Group. Additionally, Tier 2
instruments held in financial institutions and insurers of at least 10% are deducted.
The legislation in force stipulates a transitional period between the own funds calculated under national law until 31
December 2013, and own funds estimated according to EU law, in order to exclude some elements previously
considered (phase-out) and include new elements (phase-in). The transitional period was extended to the end of 2017
for most of the elements, except for the deferred tax assets already recorded on the balance sheet of 1 January 2014,
according to the new regulation, which period ends in 2023.
With the IFRS9 introduction the Group has decided to gradually recognise the impacts, according to art\u00ba 473\u00ba-A of CRR.
CRD IV/CRR\u00a0 establishes Pilar 1 capital requirements for CET1, Tier 1 and Total Capital. However, under the scope of
SREP , European Central Bank notified BCP about the need to comply with phased-in capital ratios, including additional
Pilar 2 requirements,\u00a0 O-SII and capital conservation buffer, as following:
2023 Minimum Capital Requirements
BCP Consolidated
Phased-in
of which:
Fully
implemented
of which:
Pilar 1
Pilar 2
Buffers
Pilar 1
Pilar 2
Buffers
CET1
9.41%
4.50%
1.41%
3.50%
9.41%
4.50%
1.41%
3.50%
T1
11.38%
6.00%
1.88%
3.50%
11.38%
6.00%
1.88%
3.50%
Total
14.00%
8.00%
2.50%
3.50%
14.00%
8.00%
2.50%
3.50%
The Bank meets all the requirements and other recommendations issued by\u00a0 the supervisor on this matter.
The Group has adopted the methodologies based on internal rating models (IRB) for the calculation of capital
requirements for credit and counterparty risk, covering a substantial part of both its retail portfolio in Portugal and
Poland and its corporate portfolio in Portugal. The Group has adopted the advanced approach (internal model) for the
coverage of trading portfolio\u2019s general market risk and for exchange rate risks generated in exposures in the perimeter
centrally managed from Portugal, and the standard method was used for the purposes of operational risk coverage. The
capital requirements of the other portfolios/geographies were calculated using the standardised approach.
The own funds and the capital requirements determined according to the CRD IV/CRR (phased-in) methodologies
previously referred, are the following:
(Thousands of euros)
2023
2022
(restated)
Common equity tier 1 (CET1)
Share capital
3,000,000
3,000,000
Share Premium
16,471
16,471
Reserves and retained earnings
2,632,602
1,715,797
Non-controlling interests eligible to CET1
475,923
433,767
Regulatory adjustments to CET1
32,342
276,422
6,157,338
5,442,457
Tier 1
Capital Instruments
400,000
400,000
Non-controlling interests eligible to AT1
84,267
96,341
6,641,605
5,938,798
Tier 2
Subordinated debt
1,014,615
1,047,875
Non-controlling interests eligible to Tier 2
225,063
271,800
Other
24,303
20,240
1,263,981
1,339,915
Total own funds
7,905,586
7,278,713
RWA - Risk weighted assets
Credit risk
34,304,305
36,265,788
Market risk
547,022
2,611,404
Operational risk
4,854,039
4,178,551
CVA
45,646
47,016
39,751,012
43,102,759
Capital ratios
CET1
15.5%
12.6%
Tier 1
16.7%
13.8%
Tier 2
3.2%
3.1%
Total own funds
19.9%
16.9%
The presented amounts include the accumulated net income.
Liquidity risk
The evaluation of the Group\u2019s liquidity risk is carried out using indicators set by the supervisory authorities on a regular
basis and other internal metrics for which exposure limits are also fixed.
The monitoring of the liquidity position of the Group's operations in short-term time horizons (up to 3 months) is based
on two internally defined indicators (immediate liquidity and quarterly liquidity). These indicators are calculated on a
daily basis, taking into account the impact in the liquidity buffers available to discount with the respective central
banks at the reference date of future estimated cash flows for each of the respective time horizon (3 days or 3 months)
considering the set of transactions intermediated by the market areas, including in this context transactions with
clients of the Corporate and Private networks, which, due to their size, must be quoted by the Trading Room. The
remaining buffer in each time bucket is then compared to the amount of customer deposits, being the indicators
assessed against exposure limits defined in the Bank's regulations.
In parallel, the evolution of the Group\u2019s structural liquidity position is calculated on a regular basis identifying all the
factors that justify the variations that occur. This analysis is submitted to the Capital and Assets and Liabilities
Committee (CALCO) for appraisal, to enable the decision making that leads to the maintenance of financing conditions
adequate to the business sustainability.
The methodological aspects of the control of liquidity risk are a responsibility of the Risk Commission. This control
includes the regular execution of stress tests, to characterize the Bank's risk profile and to ensure that the Group and
each of its subsidiaries fulfil its obligations in the event of a liquidity crisis. These tests are also used to support the
liquidity contingency plan and management decisions.
Throughout 2023, the Group's three operations - BCP, Bank Millennium and Banco Internacional de Mo\u00e7ambique -
maintained robust liquidity positions, supported mainly by retail deposit bases with proven stability and which allowed
maintaining all liquidity indicators, regulatory and internal, comfortably above the minimum requirements.
At the end of the year and on a consolidated basis, the regulatory short term standard (LCR: Liquidity Coverage Ratio)
reached 276%, compared to 212% in December 2022, well above the minimum regulatory requirement of 100%. The
other short-term liquidity indicator included in the Group's Risk Appetite Statement (RAS), which represents the degree
of coverage of customer deposits by the liquidity buffers available for discounting at European central banks, also had a
favorable evolution, having evolved from 42% to 45%.
From a structural liquidity perspective, the Group continued to reinforce its stable financing base, characterized by the
high weight of customer deposits in the funding structure, complemented by medium and long-term instruments,
consisting mainly of MREL (Minimum Requirements for Own Funds and Eligible Liabilities). The regulatory stable funding
ratio (NSFR: Net Stable Funding Ratio; Article 428 of Regulation (EU) 2019/876) reached 167% in December 2023, vs.
154% a year earlier.
As at 31 December 2023, the Group maintains a structurally comfortable liquidity profile with a loan-to-deposit ratio of
71% (according to Bank of Portugal Instruction No. 16/2004), compared to 74% as at 31 December 2022, indicating a
slight improvement over this period.
In Portugal, following the significant migration of deposits to non-bank savings products that occurred mainly in the
first quarter of 2023, the volume of customer funds showed a stable behavior throughout the 2nd half of the year,
allowing the Bank to protect its market share.
In what concerns wholesale funding, BCP carried out in January 2023 the early repayment of the second and last
tranche of the Targeted Longer-Term Refinancing Operation III (TLTRO III, \"T LTRO III\" in the English abbreviation, in
the gross amount of Euros 600,000,000), with no significant impact on the liquidity risk indicators.
In September 2023, after regaining investment grade status by the four main rating agencies, BCP returned to the
market, placing an issue of senior preferred debt eligible for MREL (Minimum Requirements for Own Funds and Eligible
Liabilities) under its Euro Note Program. The issue, in the amount of Euros 500,000,000, has a term of 3 years, with an
option for early repayment by the Bank at the end of the second year, an issue price of 99.825% and a fixed interest
rate of 5.625%, per year, during the first 2 years (corresponding to a spread of 1.90% over the 2-year mid-swaps rate).
In the third year, the interest rate will result from the sum of the 3-month Euribor with a spread of 1.90%. The issue
was placed among a very diversified base of institutional investors, with demand exceeding the transaction amount by
more than 3 times. The high demand and profile of investors involved in the issue made it possible to narrow the spread
by 30 basis points during the execution phase, also reflecting an excellent market response to the Bank's recent rating
upgrades.
The liquidity buffer available for discounting at the ECB stood at Euros 27,859,364,000 at the end of 2023, Euros
1,351,735,000 higher than a year earlier, to which contributed the cash flow from operations, the reduction in
derivative margin accounts, the placement of the MTN issuance and the market price increase of assets integrated in
the portfolio of assets discountable with the ECB, which offset the impacts in the opposite direction of the evolution of
the commercial gap and the reversal of haircuts applicable to eligible assets at the values in force before the
extraordinary measures taken by the ECB following the COVID-19 pandemic. At the end of 2023, the liquidity buffer
comprised a long position of Euros 2,050,654,000 with the ECB, slightly lower than that observed a year earlier (Euros
2,574,146,000).
Throughout 2023, Bank Millennium showed a significant growth of 11% in its retail deposits base. The operation's
liquidity position was further reinforced by the market placement of a senior non-preferred issue of Euros 500,000,000.
Initially with an amount of Euros 400,000,000, it was subsequently increased by an additional amount of Euros
100,000,000. It has a maturity of four years and a remuneration of 9.875% and qualifies for MREL purposes, thus
meaning the fulfilment of another stage of the institution's recovery plan.
Banco Internacional de Mo\u00e7ambique continued to display a resilient liquidity position, supported by a very conservative
loan to deposits ratio and a robust buffer discountable at the respective central bank, despite the strong increase in
minimum mandatory reserve rates in national and foreign currency imposed by the respective central bank in the first
half of 2023.
The pool of eligible assets for funding operations in the European Central Bank and other central banks, after haircuts,
is detailed as follows:
(Thousands of euros)
2023
2022
(restated)
European Central Bank
14,677,769
13,677,518
Other Central Banks
7,346,514
5,213,823
22,024,283
18,891,341
As at 31\u00a0December 2023 the gross amount discounted with the European Central Bank is null (31\u00a0December 2022: Euros
600,000,000). The amount discounted with the Bank of Mozambique amounts to Euros 1,469,000 (31\u00a0December 2022:
Euros 2,165,000). There are no discounted amounts with other central banks.
The evolution of the ECB\u2019s Monetary Policy Pool, the net borrows at the ECB and liquidity buffer is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Collateral eligible for ECB, after haircuts:
The pool of ECB monetary policy (i)
14,677,769
13,677,518
Outside the pool of ECB monetary policy
11,130,941
10,269,081
25,808,710
23,946,599
Net borrowing at the ECB (ii)
(2,050,654)
(2,574,146)
Liquidity buffer (iii)
27,859,364
26,520,745
i) Corresponds to the amount reported in COLMS (Bank of Portugal application).
ii) Includes as at 31\u00a0December 2023 the amount of deposits with the Bank of Portugal and other liquidity with the Eurosystem (Euros
2,050,654,000) in excess over the minimum cash reserves (Euros 499,338,000).
iii) Eligible collateral available for discount with the ECB, after haircuts, deducted from the net funding at the ECB.
The Group's counterbalancing capacity is defined by the ability to generate additional liquidity in the short term to deal
with possible situations of financial stress. The measures for its reinforcement are described in the Recovery Plan
which, as at 31 December 2023, projected a total estimated value for Portugal of Euros 2,735,000,000, arising from the
sale of corporate bonds and commercial paper, securitization of a portfolio of consumer credit and issuance of retained
covered bonds to be mobilized for the ECB's monetary policy pool.
In consolidated terms, the refinancing risk of medium and long-term instruments will remain at very low levels over the
next years, with no material expression.
Encumbered and Unencumbered assets
Within the scope of the European Banking Authority's guidance on the disclosure of encumbered assets and
unencumbered assets, taking into account the recommendation made by the European Systemic Risk Committee, the
following information is presented in accordance with Commission Implementing Regulation (EU) 2021/637 of 15 March
2021 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to
regulatory technical standards for disclosure of encumbered and unencumbered assets.
(Thousands of euros)
2023 (1)
Carrying amount of
encumbered assets
Fair value of
encumbered assets
Carrying amount of
unencumbered assets
Fair value of
unencumbered assets
of which
notionally
eligible EHQLA
and HQLA (2)
of which
notionally
eligible EHQLA
and HQLA (2)
of which
EHQLA
and HQLA
(2)
of which
EHQLA
and HQLA
(2)
Assets of the disclosing
institution
2,209,334
1,732,985
88,478,010
23,355,398
Equity instruments
\u2014
\u2014
\u2014
\u2014
108,617
\u2014
108,617
\u2014
Debt securities
1,732,985
1,732,985
1,600,621
1,600,621
24,139,055
19,569,285
23,462,376
18,923,903
of which: covered bonds
\u2014
\u2014
\u2014
\u2014
49,735
\u2014
49,735
\u2014
of which: securitisations
\u2014
\u2014
\u2014
\u2014
7,329
3,348
7,329
3,348
of which: issued by
general governments
1,693,088
1,693,088
1,561,888
1,561,888
17,567,226
17,177,757
16,922,286
16,543,663
of which: issued by
financial corporations
\u2014
\u2014
\u2014
\u2014
1,704,878
259,885
1,713,561
259,586
of which: issued by non-
financial corporations
39,897
39,897
38,734
38,734
2,939,512
491,430
2,952,759
491,430
Other assets
459,458
\u2014
64,159,488
3,797,102
(1) Table's figures are calculated by the median of the values disclosed in the regulatory information for the previous 4 quarters.
(2) EHQLA (Set as Extremely High-Quality Liquid Assets) e HQLA (High-Quality Liquid Assets).
Collateral received and own debt securities issued
(Thousands of euros)
2023 (1)
Fair value of encumbered collateral
received or own debt securities issued
Unencumbered
Fair value of collateral received or
own debt securities issued
available for encumbrance
of which notionally
eligible EHQLA and
HQLA (2)
of which EHQLA
and HQLA (2)
Collateral received by the disclosing institution
\u2014
\u2014
253,362
139,971
Debt securities
\u2014
\u2014
139,971
139,971
of which: issued by general governments
\u2014
\u2014
139,971
139,971
Loans and advances other than loans on demand
\u2014
\u2014
111,455
\u2014
Own covered bonds and securitisations issued
and not yet pledged
9,114,834
\u2014
TOTAL COLLATERAL RECEIVED AND OWN DEBT
SECURITIES ISSUED
2,209,334
1,732,985
(1) Table's figures are calculated by the median of the values disclosed in the regulatory information for the previous 4 quarters.
(2) EHQLA (Set as Extremely High-Quality Liquid Assets) e HQLA (High-Quality Liquid Assets).
Sources of encumbrance
(Thousands of euros)
Sources of encumbrance
Matching liabilities, contingent
liabilities and securities lent
Assets, collateral received and own debt
securities issued other than covered
bonds and securitisations encumbered
Carrying amount of selected financial liabilities
1,163,408
1,687,935
The table's figures are calculated by the median of the values disclosed in the regulatory information for the previous 4 quarters.
At the end of 2023, and according to the EBA methodology, the total encumbered assets represents 2% of the Group's
total balance sheet assets. The encumbered Loans to customers represents 13% of the total encumbered assets, while
Debt securities represents 78%.
The main sources of asset encumbrance stem from financing operations in Portugal, notably transactions with the
European Investment Bank (EIB), collateralization of derivative operations and securitization programs.
Collateralization of securitization operations in Poland and derivatives, as well as financing operations with the
European Investment Bank and other commitments with the Deposit Guarantee Fund, are primarily supported by
eligible sovereign debt held with central banks. On the other hand, securitization programs in Portugal are
collateralised by certain Loans to Customers\u2019 portfolios.
As at 31 December 2023, the Other assets includes unencumbered assets in the amount of Euros 3,350,705,000 related
to Loans on demand, the amount of Euros 54,466,987,000 related to Loans and advances other than loans on demand
(of which encumbered assets in the amount of Euros 276,263,000) and the amount of Euros 6,872,185,000, mostly
unencumbered and related to the Group\u2019s activity, namely, to: investments in associated companies and subsidiaries,
tangible assets and investment properties, intangible assets, assets associated with derivatives and current and
deferred taxes.
As at 31 December 2023, BCP Group has a Euros 12.5 billion BCP Covered Bond Programme (\u201cBCP Programme\u201d) with
Euros 9.2 billion of covered bonds outstanding. The BCP Programme is backed by a Euros 10.9 billion portfolio of
residential mortgages, as well as by a liquidity buffer of Euros 50 million, providing an overcollateralization of 18.8%,
which is above the minimum of 14% currently required by rating agencies.
The new Portuguese covered bond legislation, under which the BCP Programme has been recently updated and
authorised for the issuance of \u201cCovered Bonds (Premium)\u201d (label now born by all its outstanding covered bonds),
affords covered bond holders a dual-recourse, firstly over the issuer, secondly over the cover pool that may also include
other eligible assets, over which they benefit from a special preferential claim. The Portuguese covered bond
legislation ensures total segregation of the covered pool from any future issuer\u2019s insolvent estate, for the benefit of
covered bond holders, who have precedence over claims of any other of the issuer\u2019s creditors in case of issuer
insolvency, thus and to this extent superseding the general insolvency and recovery legislation. Residential mortgages
in a cover pool are subject to certain eligibility criteria inscribed in the Portuguese covered bond legislation, among
them a maximum LTV of 80%, in the case of programmes issuing Covered Bonds (Premium), delinquency of no more
than 90 days, and them being first lien mortgages (or, if otherwise, all preceding liens being in the cover pool) over
properties located in the EU. The BCP\u2019s Programme documentation limits property location to Portugal only.
The analysis of the balance sheet items by maturity dates is as follows:
(Thousands of euros)
2023
Up to 3
months
3 months
to 1 year
1 year to
5 years
Over 5
years
Undetermined
maturity
At sight
Total
Assets
Cash and deposits at Central Banks
4,545,526
\u2014
\u2014
\u2014
\u2014
\u2014
4,545,526
Loans and advances to Credit
Institutions - Repayable on demand
337,687
\u2014
\u2014
\u2014
\u2014
\u2014
337,687
Other loans and advances (a)
\u2014
703,056
205,645
\u2014
\u2014
\u2014
908,701
Loans and advances to customers (a)
\u2014
\u2014
8,758,135
13,062,576
32,451,042
616,056
54,887,809
Other financial assets (b)
\u2014
2,573,933
2,463,873
5,409,172
1,004,966
704,509
12,156,453
4,883,213
3,276,989
11,427,653
18,471,748
33,456,008
1,320,565
72,836,176
Liabilities
Resources from Credit Institutions
\u2014
516,776
312,350
\u2014
\u2014
\u2014
829,126
Resources from costumers
45,049,544
15,685,920
14,117,747
693,602
60,000
\u2014
75,606,813
Debt securities issued
\u2014
\u2014
311
2,360,372
351,999
\u2014
2,712,682
Subordinated debt
\u2014
\u2014
\u2014
328,679
1,068,746
\u2014
1,397,425
45,049,544
16,202,696
14,430,408
3,382,653
1,480,745
\u2014
80,546,046
(a) Gross of impairment
(b) Financial assets at fair value through profit or loss and Financial assets at fair value through other comprehensive income.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-693": { "value": "Solvency
The Group\u2019s own funds are determined according to the established regulation, in particular, according to Directive
2013/36/EU and Regulation (EU) 575/2013, approved by the European Parliament and the Council (CRD IV/CRR).
Total capital includes tier 1 and tier 2. Tier 1 comprises common equity tier 1 (CET1) and additional tier 1.
Common equity tier 1 includes: (i) paid-up capital, share premium, reserves and retained earnings deducted
anticipated dividends and non-controlling interests; ii) and deductions related to own shares and loans to finance the
acquisition of shares of the Bank, the shortfall of value adjustments and provisions to expected losses concerning risk\u2010
weighted exposure amounts calculated according to the IRB approach, goodwill and other intangible assets and the
additional value adjustments necessary for the prudent valuation requirements applied to all assets at fair value,
adjustments related to minimum commitment with collective investments undertakings, insufficient coverage for non-
performing exposures and with the amount of securitisation positions, eligible for deduction as an alternative to a 1 250
% risk weight. Reserves and retained earnings are adjusted by the reversal of unrealised gains and losses on cash-flow
hedge transactions and on financial liabilities valued at fair value through profits and losses, to the extent related to
own credit risk. The non-controlling interests are only eligible up to the amount of the Group\u2019s capital requirements
attributable to the minorities. In addition, the deferred tax assets arising from unused tax losses carried forward are
deducted, as well as the deferred tax assets arising from temporary differences relying on the future profitability and
the interests held in financial institutions and insurers of at least 10%, in this case only in the amount that exceeds the
thresholds of 10% and 15% of the common equity tier 1, when analysed on an individual and aggregated basis,
respectively. The irrevocable payment commitments for the Single Resolution Fund, the fair value of the collateral for
irrevocable commitments from the Deposits Guarantee Fund and the additional coverage for non-performing exposures,
are also deducted, due to a SREP (Supervisory Review and Evaluation Process) recommendation.
Additional tier 1 comprises preference shares, hybrid instruments and perpetual bonds representing subordinated debt
that are compliant with the issue conditions established in the Regulation and non-controlling interests related to
minimum level 1 additional capital requirements of institutions that are not totally owned by the Group.
Tier 2 includes the subordinated debt that is compliant with the Regulation and the non-controlling interests related to
minimum total capital requirements of institutions that are not totally owned by the Group. Additionally, Tier 2
instruments held in financial institutions and insurers of at least 10% are deducted.
The legislation in force stipulates a transitional period between the own funds calculated under national law until 31
December 2013, and own funds estimated according to EU law, in order to exclude some elements previously
considered (phase-out) and include new elements (phase-in). The transitional period was extended to the end of 2017
for most of the elements, except for the deferred tax assets already recorded on the balance sheet of 1 January 2014,
according to the new regulation, which period ends in 2023.
With the IFRS9 introduction the Group has decided to gradually recognise the impacts, according to art\u00ba 473\u00ba-A of CRR.
CRD IV/CRR\u00a0 establishes Pilar 1 capital requirements for CET1, Tier 1 and Total Capital. However, under the scope of
SREP , European Central Bank notified BCP about the need to comply with phased-in capital ratios, including additional
Pilar 2 requirements,\u00a0 O-SII and capital conservation buffer, as following:
2023 Minimum Capital Requirements
BCP Consolidated
Phased-in
of which:
Fully
implemented
of which:
Pilar 1
Pilar 2
Buffers
Pilar 1
Pilar 2
Buffers
CET1
9.41%
4.50%
1.41%
3.50%
9.41%
4.50%
1.41%
3.50%
T1
11.38%
6.00%
1.88%
3.50%
11.38%
6.00%
1.88%
3.50%
Total
14.00%
8.00%
2.50%
3.50%
14.00%
8.00%
2.50%
3.50%
The Bank meets all the requirements and other recommendations issued by\u00a0 the supervisor on this matter.
The Group has adopted the methodologies based on internal rating models (IRB) for the calculation of capital
requirements for credit and counterparty risk, covering a substantial part of both its retail portfolio in Portugal and
Poland and its corporate portfolio in Portugal. The Group has adopted the advanced approach (internal model) for the
coverage of trading portfolio\u2019s general market risk and for exchange rate risks generated in exposures in the perimeter
centrally managed from Portugal, and the standard method was used for the purposes of operational risk coverage. The
capital requirements of the other portfolios/geographies were calculated using the standardised approach.
The own funds and the capital requirements determined according to the CRD IV/CRR (phased-in) methodologies
previously referred, are the following:
(Thousands of euros)
2023
2022
(restated)
Common equity tier 1 (CET1)
Share capital
3,000,000
3,000,000
Share Premium
16,471
16,471
Reserves and retained earnings
2,632,602
1,715,797
Non-controlling interests eligible to CET1
475,923
433,767
Regulatory adjustments to CET1
32,342
276,422
6,157,338
5,442,457
Tier 1
Capital Instruments
400,000
400,000
Non-controlling interests eligible to AT1
84,267
96,341
6,641,605
5,938,798
Tier 2
Subordinated debt
1,014,615
1,047,875
Non-controlling interests eligible to Tier 2
225,063
271,800
Other
24,303
20,240
1,263,981
1,339,915
Total own funds
7,905,586
7,278,713
RWA - Risk weighted assets
Credit risk
34,304,305
36,265,788
Market risk
547,022
2,611,404
Operational risk
4,854,039
4,178,551
CVA
45,646
47,016
39,751,012
43,102,759
Capital ratios
CET1
15.5%
12.6%
Tier 1
16.7%
13.8%
Tier 2
3.2%
3.1%
Total own funds
19.9%
16.9%
The presented amounts include the accumulated net income.
Liquidity risk
The evaluation of the Group\u2019s liquidity risk is carried out using indicators set by the supervisory authorities on a regular
basis and other internal metrics for which exposure limits are also fixed.
The monitoring of the liquidity position of the Group's operations in short-term time horizons (up to 3 months) is based
on two internally defined indicators (immediate liquidity and quarterly liquidity). These indicators are calculated on a
daily basis, taking into account the impact in the liquidity buffers available to discount with the respective central
banks at the reference date of future estimated cash flows for each of the respective time horizon (3 days or 3 months)
considering the set of transactions intermediated by the market areas, including in this context transactions with
clients of the Corporate and Private networks, which, due to their size, must be quoted by the Trading Room. The
remaining buffer in each time bucket is then compared to the amount of customer deposits, being the indicators
assessed against exposure limits defined in the Bank's regulations.
In parallel, the evolution of the Group\u2019s structural liquidity position is calculated on a regular basis identifying all the
factors that justify the variations that occur. This analysis is submitted to the Capital and Assets and Liabilities
Committee (CALCO) for appraisal, to enable the decision making that leads to the maintenance of financing conditions
adequate to the business sustainability.
The methodological aspects of the control of liquidity risk are a responsibility of the Risk Commission. This control
includes the regular execution of stress tests, to characterize the Bank's risk profile and to ensure that the Group and
each of its subsidiaries fulfil its obligations in the event of a liquidity crisis. These tests are also used to support the
liquidity contingency plan and management decisions.
Throughout 2023, the Group's three operations - BCP, Bank Millennium and Banco Internacional de Mo\u00e7ambique -
maintained robust liquidity positions, supported mainly by retail deposit bases with proven stability and which allowed
maintaining all liquidity indicators, regulatory and internal, comfortably above the minimum requirements.
At the end of the year and on a consolidated basis, the regulatory short term standard (LCR: Liquidity Coverage Ratio)
reached 276%, compared to 212% in December 2022, well above the minimum regulatory requirement of 100%. The
other short-term liquidity indicator included in the Group's Risk Appetite Statement (RAS), which represents the degree
of coverage of customer deposits by the liquidity buffers available for discounting at European central banks, also had a
favorable evolution, having evolved from 42% to 45%.
From a structural liquidity perspective, the Group continued to reinforce its stable financing base, characterized by the
high weight of customer deposits in the funding structure, complemented by medium and long-term instruments,
consisting mainly of MREL (Minimum Requirements for Own Funds and Eligible Liabilities). The regulatory stable funding
ratio (NSFR: Net Stable Funding Ratio; Article 428 of Regulation (EU) 2019/876) reached 167% in December 2023, vs.
154% a year earlier.
As at 31 December 2023, the Group maintains a structurally comfortable liquidity profile with a loan-to-deposit ratio of
71% (according to Bank of Portugal Instruction No. 16/2004), compared to 74% as at 31 December 2022, indicating a
slight improvement over this period.
In Portugal, following the significant migration of deposits to non-bank savings products that occurred mainly in the
first quarter of 2023, the volume of customer funds showed a stable behavior throughout the 2nd half of the year,
allowing the Bank to protect its market share.
In what concerns wholesale funding, BCP carried out in January 2023 the early repayment of the second and last
tranche of the Targeted Longer-Term Refinancing Operation III (TLTRO III, \"T LTRO III\" in the English abbreviation, in
the gross amount of Euros 600,000,000), with no significant impact on the liquidity risk indicators.
In September 2023, after regaining investment grade status by the four main rating agencies, BCP returned to the
market, placing an issue of senior preferred debt eligible for MREL (Minimum Requirements for Own Funds and Eligible
Liabilities) under its Euro Note Program. The issue, in the amount of Euros 500,000,000, has a term of 3 years, with an
option for early repayment by the Bank at the end of the second year, an issue price of 99.825% and a fixed interest
rate of 5.625%, per year, during the first 2 years (corresponding to a spread of 1.90% over the 2-year mid-swaps rate).
In the third year, the interest rate will result from the sum of the 3-month Euribor with a spread of 1.90%. The issue
was placed among a very diversified base of institutional investors, with demand exceeding the transaction amount by
more than 3 times. The high demand and profile of investors involved in the issue made it possible to narrow the spread
by 30 basis points during the execution phase, also reflecting an excellent market response to the Bank's recent rating
upgrades.
The liquidity buffer available for discounting at the ECB stood at Euros 27,859,364,000 at the end of 2023, Euros
1,351,735,000 higher than a year earlier, to which contributed the cash flow from operations, the reduction in
derivative margin accounts, the placement of the MTN issuance and the market price increase of assets integrated in
the portfolio of assets discountable with the ECB, which offset the impacts in the opposite direction of the evolution of
the commercial gap and the reversal of haircuts applicable to eligible assets at the values in force before the
extraordinary measures taken by the ECB following the COVID-19 pandemic. At the end of 2023, the liquidity buffer
comprised a long position of Euros 2,050,654,000 with the ECB, slightly lower than that observed a year earlier (Euros
2,574,146,000).
Throughout 2023, Bank Millennium showed a significant growth of 11% in its retail deposits base. The operation's
liquidity position was further reinforced by the market placement of a senior non-preferred issue of Euros 500,000,000.
Initially with an amount of Euros 400,000,000, it was subsequently increased by an additional amount of Euros
100,000,000. It has a maturity of four years and a remuneration of 9.875% and qualifies for MREL purposes, thus
meaning the fulfilment of another stage of the institution's recovery plan.
Banco Internacional de Mo\u00e7ambique continued to display a resilient liquidity position, supported by a very conservative
loan to deposits ratio and a robust buffer discountable at the respective central bank, despite the strong increase in
minimum mandatory reserve rates in national and foreign currency imposed by the respective central bank in the first
half of 2023.
The pool of eligible assets for funding operations in the European Central Bank and other central banks, after haircuts,
is detailed as follows:
(Thousands of euros)
2023
2022
(restated)
European Central Bank
14,677,769
13,677,518
Other Central Banks
7,346,514
5,213,823
22,024,283
18,891,341
As at 31\u00a0December 2023 the gross amount discounted with the European Central Bank is null (31\u00a0December 2022: Euros
600,000,000). The amount discounted with the Bank of Mozambique amounts to Euros 1,469,000 (31\u00a0December 2022:
Euros 2,165,000). There are no discounted amounts with other central banks.
The evolution of the ECB\u2019s Monetary Policy Pool, the net borrows at the ECB and liquidity buffer is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Collateral eligible for ECB, after haircuts:
The pool of ECB monetary policy (i)
14,677,769
13,677,518
Outside the pool of ECB monetary policy
11,130,941
10,269,081
25,808,710
23,946,599
Net borrowing at the ECB (ii)
(2,050,654)
(2,574,146)
Liquidity buffer (iii)
27,859,364
26,520,745
i) Corresponds to the amount reported in COLMS (Bank of Portugal application).
ii) Includes as at 31\u00a0December 2023 the amount of deposits with the Bank of Portugal and other liquidity with the Eurosystem (Euros
2,050,654,000) in excess over the minimum cash reserves (Euros 499,338,000).
iii) Eligible collateral available for discount with the ECB, after haircuts, deducted from the net funding at the ECB.
The Group's counterbalancing capacity is defined by the ability to generate additional liquidity in the short term to deal
with possible situations of financial stress. The measures for its reinforcement are described in the Recovery Plan
which, as at 31 December 2023, projected a total estimated value for Portugal of Euros 2,735,000,000, arising from the
sale of corporate bonds and commercial paper, securitization of a portfolio of consumer credit and issuance of retained
covered bonds to be mobilized for the ECB's monetary policy pool.
In consolidated terms, the refinancing risk of medium and long-term instruments will remain at very low levels over the
next years, with no material expression.
", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-695": { "value": "Risk Management
The Group is subject to several risks during the course of its business. The risks from different companies of the Group
are managed centrally, in coordination with the local departments and considering the specific risks of each business.
The Group's risk-management policy is designed to permanently ensure an adequate relationship between its own funds
and the business it develops, as well as the corresponding evaluation of the risk/return profile by business line. Under
this scope, the monitoring and control of the main types of financial risks (e.g., credit, market, operational) or non-
financial risks (e.g., legal and compliance, reputational) to which the Group\u2019s business is subject to, including the
impact of the ESG risk drivers (environmental, social and governance).
The Bank implemented a regular process for identifying and assessing the risks to which its activity is exposed, which
conclusions are presented to the management bodies and influence the update of the Group\u2019s risk appetite and risk
strategy.
Internal organisation
The Board of Directors of Banco Comercial Portugu\u00eas is responsible for the definition of the risk strategy and policies,
including the approval of the principles and rules of the highest level to be followed in risk management of the Group,
as well as the guidelines dictating the allocation of capital to the business lines.
The Board of Directors, through the Audit Committee and Committee for Risk Assessment, ensures the existence of
adequate risk control and of risk-management systems at Group level and for each entity. The Board of Directors also
approves the risk-tolerance level acceptable to the Group, proposed by its Executive Committee, hearing the Risk
Assessment Committee.
The Risk Committee is responsible for monitoring the overall levels of risk incurred, ensuring that these are compatible
with the goals and strategies approved for the business. Other commissions regularly monitor specific risks, namely the
Compliance and Operational Risks Commission, the Credit and Non-performing Assets Monitoring Commission, the
Pension Funds Risk Monitoring Commission, the Operational Resilience Commission (with a focus on information
technologies and cybernetics), the Sustainability Commission and the Corporate Risk Monitoring Commission.
The Chief Risk Officer is responsible for the control of risks in all Group entities, for the identification of all risks to
which the Group activity is exposed and for the proposal of measures to improve risks control. The Chief Risk Officer
also ensures that risks are monitored on an overall basis and that there is alignment of concepts, practices and goals in
risk management. The activity of every entity included within the Banco Comercial Portugu\u00eas consolidation perimeter is
governed by the principles and decisions established centrally by the Board of Directors and the main subsidiaries are
provided with Risk Office structures which are established in accordance with the risks inherent to their particular
business. A Risk Control Commission has been set up at each relevant subsidiary, responsible for the control of risks at
local level, in which the Chief Risk Officer takes part.
As Head of the Compliance Office, the Compliance Officer is responsible to ensure that regulatory requirements are
complied with, as well as the ethical values of the organization, fulfilling all the attributions that are legally conferred
to it, ensuring the existence of an internal control culture, thus contributing to the mitigation of the risk of attributing
sanctions or significant asset or reputational damages to the Group Entities, including the compliance with the
regulatory framework on the prevention and combating money laundering and terrorism financing.
Risk assessment
Credit Risk
Credit granting is based on a prior classification of the customers\u2019 risk and on a thorough assessment of the level of
protection provided by the underlying collateral. In order to do so, a single risk-notation system has been introduced,
the Rating Master Scale, based on the expected probability of default, allowing greater discrimination in the
assessment of the customers and better establishment of the hierarchies of the associated risk.
The Rating Master Scale also identifies those customers that show a worsening credit capacity and, in particular, those
classified as being in default. All rating and scoring models used by the Group have been duly calibrated for the Rating
Master Scale. The protection-level concept has been introduced as a crucial element of evaluation of the effectiveness
of the collateral in credit-risk mitigation, leading to a more active collateralization of loans and to a better adequacy
of pricing regarding the risk incurred.
The gross Group\u2019s exposure to credit risk (original exposure) is presented in the following table:
(Thousands of euros)
Risk items
2023
2022
(restated)
Central Governments or Central Banks
26,982,937
22,898,387
Regional Governments or Local Authorities
1,210,789
1,012,723
Administrative and non-profit Organisations
1,098,748
412,223
Multilateral Development Banks
227,711
114,633
Other Credit Institutions
3,283,571
3,279,977
Retail and Corporate customers
67,789,725
69,798,319
Other items (*)
11,597,622
10,153,154
112,191,103
107,669,416
Note: gross exposures of impairment and amortization, in accordance with the prudential consolidation perimeter. Includes securitization
positions.
(*) In addition to positions in equity, collective investment and securitization, the Other items contain other assets subject to credit risk in
accordance with Article 156 of the CRR.
The evaluation of the risk associated to the loan portfolio and quantification of the respective losses expected
considers the following methodological notes.
a) Collaterals and Guarantees
On the risk evaluation of an operation or of a group of operations, the mitigation elements of credit risk associated to
those operations are considered in accordance with the rules and internal procedures that fulfil the requirements
defined by the regulations in force, also reflecting the experience of the loan's recovery areas and the Legal
Department opinions with respect to the entailment of the various mitigation instruments.
The collaterals and the relevant guarantees can be aggregated in the following categories:
- financial collaterals, real estate collaterals or other collaterals;
- receivables;
- first demand guarantees, issued by banks or other entities with Risk Grade 7 or better on the Rating Master Scale;
- personal guarantees when the persons are classified with Risk Grade 7 or better;
- credit derivatives. \u00a0
The financial collaterals accepted are those that are traded in a recognised stock exchange, i.e., on an organized
secondary market, liquid and transparent, with public bid-ask prices, located in countries of the European Union,
United Kingdom, United States, Japan, Canada, Hong Kong or Switzerland.
In this context, it is important to refer that the Bank\u2019s shares are not accepted as financial collaterals of new credit
operations and are only accepted for the reinforcement of guarantees of existing credit operations, or in restructuring
process associated to credit recoveries.
Regarding guarantees and credit derivatives, it can be applied the substitution principle by replacing the Risk Grade of
the client by the Risk Grade of the guarantor, (if the Risk of Grade Degree of the guarantor is better than the client\u2019s),
when the protection is formalized through:
- State, Financial Institutions or Mutual Guarantee Societies guarantees exist;
- personal guarantees (or, in the case of Leasing, there is a recovery agreement of the provider);
- Credit derivatives;
- Formalization of the clause of the contracting party in leasing contracts in which it is an entity that is in a relationship
of dominion or group with the lessee.
An internal level of protection is attributed to all credit operations at the moment of the credit granting decision,
considering the credit amount as well as the value and type of the collaterals involved. The protection level
corresponds to the loss reduction in case of default that is linked to the various collateral types, considering their
market value and the amount of the associated exposure.
In the case of financial collaterals, adjustments are made to the protection value by the use of a set of haircuts, in
order to reflect the price volatility of the financial instruments.
In the case of real estate mortgages, the initial appraisal of the real estate value is done during the credit analysis and
before decision process.
Either the initial evaluations or the subsequent reviews carried out are performed by external expert valuers and the
ratification process is centralized in the Appraisals Unit, which is independent of the clients\u2019 areas.
In any case, they are the subject to a written report, in a standardized digital format, based on a group of predefined
methods that are aligned with the sector practices \u2013 income, replacement cost and/or market comparative -
mentioning the obtained value, for both the market value and for purposes of the mortgage guarantee, depending on
the type of the real estate. The evaluations have a declaration/certification of an expert valuer since 2008, as
requested by Regulation (EU) 575/2013 and Law 153/2015 of 14 September and are ratified by the Appraisals Unit.
Regarding residential real estate, after the initial valuation and in accordance with Notice n. 5/2006 of Bank of
Portugal and e CRR 575/2013, the Bank monitors the respective values through market indexes. If the index is lower
than 0.9, the Bank revaluates choosing one of the following two methods:
i) - depreciation of the property by direct application of the index, if the amount owed does not exceed Euros 300,000;
ii) - review of the property value by external valuators, depending on the value of the credit operation, and in
accordance with the established standards from ECB and Bank of Portugal.
For all non-residential real estate, the Bank also monitors its values through market indexes and to the regular
valuation reviews with the minimum periodicities in accordance with the Regulation (EU) 575/2013, in the case of
offices, commercial spaces, warehouses and industrial premises.
For all real estate (residential or non-residential) for which the monitoring result in significant devaluation of the real
estate value (more than 10%), a valuation review is subsequently carried out by an expert valuer, preserving the
referred i) above.
For the remaining real estate (land or countryside buildings for example) there are no market indexes available for the
monitoring of appraisal values, after the initial valuations. Therefore, for these cases and in accordance with the
minimum periodicity established for the monitoring and reviewing of this type of real estate, valuation reviews are
carried out by expert valuers.
The indexes currently used are supplied to the Bank by an external specialized entity that, for more than a decade, has
been collecting and processing the data upon which the indexes are built.
In the case of financial collaterals, their market value is daily and automatically updated, through the IT connection
between the collaterals management system and the relevant financial markets data.
b) Risk grades
Credit granting is based on the previous risk assessment of clients and also on a rigorous assessment of the protection
level provided by the underlying collaterals. For this purpose, a single risk grading system is used - the Rating Master
Scale - based on Probability of Default (PD), allowing for a greater discriminating power in clients' assessment and for a
better hierarchy of the associated risk. The Rating Master Scale also allows to identify clients that show signs of
degradation in their credit capacity and, in particular, those that are classified in a default situation. All rating systems
and models used by the Group were calibrated for the Rating Master Scale.
Aiming at an adequate assessment of credit risk, the Group defined a set of macro segments and segments which are
treated through different rating systems and models that relate the internal risk grades and the clients\u2019 PD, ensuring a
risk assessment that considers the clients\u2019 specific features in terms of their respectively risk profiles.
The assessment made by these rating systems and models result in the risk grades of the Master Scale, that has fifteen
grades, where the last three correspond to relevant downgrades of the clients\u2019 credit quality and are referred to by
\u201cprocedural risk grades\u201d: 13, 14 and 15, that correspond, in this order, to situations of increased severity in terms
default, as risk grade 15 is a Default situation.
The non-procedural risk grades are attributed by the rating systems through automatic decision models or by the Rating
Division \u2013 a unit which is independent from the credit analysis and decision areas and bodies- and are reviewed/updated
periodically or whenever this is justified by events.
The models within the various rating systems are regularly subject to validation, made by the Models Validation and
Monitoring Office, which is independent from the units that are responsible for the development and maintenance of
the rating models.
The conclusions of the validations by the Models Validation and Monitoring Office, as well the respective
recommendations and proposal for changes and/or improvements, are analysed and ratified by a specific Validation
Committee, composed in accordance to the type of model analysed. The proposals for models\u2019 changes originated by
the Validation Committee are submitted to the approval of the Risk Committee.
The following table lists the equivalence between the internal rating levels (Rating Master Scale) and the external
ratings of the international rating agencies:
Internal risk grade
External ratings
Fitch
S&P
Moody's
DBRS
1
AAA
AAA
Aaa
AAA
1
AA+
AA+
Aa1
AA (high)
2
AA
AA
Aa2
AA
2
AA-
AA-
Aa3
AA (low)
3
A+
A+
A1
A (high)
3
A
A
A2
A
4
A-
A-
A3
A (low)
4
BBB+
BBB+
Baa1
BBB (high)
5
BBB
BBB
Baa2
BBB
6
BBB-
BBB-
Baa3
BBB (low)
7
BB+
BB+
Ba1
BB (high)
8
BB
BB
Ba2
BB
9
BB-
BB-
Ba3
BB (low)
10
B+
B+
B1
B (high)
11
B
B
B2
B
12
\u2264 B-
\u2264 B-
\u2264 B3
\u2264 B-
c) Impairment and Write-offs
The credit impairment calculation as at 31\u00a0December 2023 and 2022 integrates the general principles defined in
International Financial Reporting Standards (IFRS 9) and the guidelines issued by the Bank of Portugal through Circular
Letter CC/2018/00000062, in order to align the calculation process used in the Group with the best international
practices in this area.
As at 31\u00a0December 2023, the financial instruments subject to impairment requirements under IFRS 9, (do not include
equity instruments as accounting policy 1.C1.1.2), analysed by stage, are detailed in the following tables:
(Thousands of euros)
Category
2023
Gross exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
908,701
\u2014
\u2014
\u2014
908,701
Loans and advances to customers (note 22)
45,651,670
7,290,622
1,914,768
30,749
54,887,809
Debt instruments (note 23)
17,536,547
62,872
5,105
\u2014
17,604,524
Debt instruments at fair value through other
comprehensive income (note 24) (*)
10,809,872
\u2014
1,150
\u2014
10,811,022
Guarantees and other commitments (note 45) (**)
14,934,354
1,433,594
336,497
2,574
16,707,019
Total
89,841,144
8,787,088
2,257,520
33,323
100,919,075
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments
(Thousands of euros)
Category
2023
Impairment losses
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
224
\u2014
\u2014
\u2014
224
Loans and advances to customers (note 22)
268,948
291,752
1,007,481
14,469
1,582,650
Debt instruments (note 23)
23,066
797
1,525
\u2014
25,388
Debt instruments at fair value through other
comprehensive income (note 24) (*)
\u2014
\u2014
1,150
\u2014
1,150
Guarantees and other commitments (note 39)
12,880
14,686
94,008
\u2014
121,574
Total
305,118
307,235
1,104,164
14,469
1,730,986
(Thousands of euros)
Category
2023
Net exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
908,477
\u2014
\u2014
\u2014
908,477
Loans and advances to customers (note 22)
45,382,722
6,998,870
907,287
16,280
53,305,159
Debt instruments (note 23)
17,513,481
62,075
3,580
\u2014
17,579,136
Debt instruments at fair value through other
comprehensive income (note 24) (*)
10,809,872
\u2014
\u2014
\u2014
10,809,872
Guarantees and other commitments (note 45) (**)
14,921,474
1,418,908
242,489
2,574
16,585,445
Total
89,536,026
8,479,853
1,153,356
18,854
99,188,089
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments.
As at 31\u00a0December 2022, the financial instruments subject to impairment requirements under IFRS 9 (do not include
equity instruments as accounting policy 1.C1.1.2), analysed by stage, are detailed in the following tables:
(Thousands of euros)
Category
2022 (restated)
Gross exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
964,296
\u2014
\u2014
\u2014
964,296
Loans and advances to customers (note 22)
46,395,996
7,564,235
2,170,979
46,956
56,178,166
Debt instruments (note 23)
12,990,232
55,787
3,802
\u2014
13,049,821
Debt instruments at fair value through other
comprehensive income (note 24) (*)
7,434,152
\u2014
1,067
\u2014
7,435,219
Guarantees and other commitments (note 45) (**)
14,303,231
1,768,595
364,691
921
16,437,438
Total
82,087,907
9,388,617
2,540,539
47,877
94,064,940
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1.C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments.
(Thousands of euros)
Category
2022 (restated)
Impairment losses
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
862
\u2014
\u2014
\u2014
862
Loans and advances to customers (note 22)
214,470
284,448
985,557
17,898
1,502,373
Debt instruments (note 23)
13,409
720
110
\u2014
14,239
Debt instruments at fair value through other
comprehensive income (note 24) (*)
\u2014
\u2014
1,067
\u2014
1,067
Guarantees and other commitments (note 39)
11,307
14,893
84,435
119
110,754
Total
240,048
300,061
1,071,169
18,017
1,629,295
(Thousands of euros)
Category
2022 (restated)
Net exposure
Stage 1
Stage 2
Stage 3
POCI
Total
Financial assets at amortised cost
Loans and advances to credit institutions (note 21)
963,434
\u2014
\u2014
\u2014
963,434
Loans and advances to customers (note 22)
46,181,526
7,279,787
1,185,422
29,058
54,675,793
Debt instruments (note 23)
12,976,823
55,067
3,692
\u2014
13,035,582
Debt instruments at fair value through other
comprehensive income (note 24) (*)
7,434,152
\u2014
\u2014
\u2014
7,434,152
Guarantees and other commitments (note 45) (**)
14,291,924
1,753,702
280,256
802
16,326,684
Total
81,847,859
9,088,556
1,469,370
29,860
92,435,645
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements
indicated in the accounting policy 1 C1.5.1.2.
(**) Includes the balances of guarantees granted, irrevocable credit lines and revocable commitments
The maximum exposure to credit risk of financial assets not subject to impairment requirements is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Financial assets held for trading (note 24)
Debt instruments
355,526
338,813
Derivatives
437,155
394,183
Financial assets designated at fair value through profit or loss - Debt instruments (note 24)
32,004
\u2014
Financial assets not held for trading mandatorily at fair value through profit or loss
Debt instruments (note 24)
280,558
311,404
Hedging derivatives (note 25)
40,628
59,703
Total
1,145,871
1,104,103
- In the case of financial assets, excluding derivatives, it is considered that its credit risk exposure is equal to its book value;
- In the case of derivatives, the maximum exposure to credit risk is its market value, plus its potential risk (\"add-on\").
During 2023, the changes occurred in Loans and advances to customers - gross amount are as follows:
(Thousands of euros)
2023
Financial assets at amortised cost - Loans and advances to customers -
Gross amount
Stage 1
Stage 2
Stage 3
POCI
Total
Gross amount as at 1 January
46,395,996
7,564,235
2,170,979
46,956
56,178,166
Changes in gross book value:
Transfers from stage 1 to stage 2
(2,100,816)
2,100,816
\u2014
\u2014
\u2014
Transfers from stage 1 to stage 3
(285,020)
\u2014
285,020
\u2014
\u2014
Transfers from stage 2 to stage 1
1,889,217
(1,889,217)
\u2014
\u2014
\u2014
Transfers from stage 2 to stage 3
\u2014
(415,277)
415,277
\u2014
\u2014
Transfers from stage 3 to stage 1
36,667
\u2014
(36,667)
\u2014
\u2014
Transfers from stage 3 to stage 2
\u2014
291,025
(291,025)
\u2014
\u2014
Write-offs
(811)
(2,261)
(186,529)
(2,872)
(192,473)
Net balance of new financial assets and derecognised\u00a0
financial assets and other variations
(283,563)
(358,699)
(442,287)
(13,335)
(1,097,884)
Gross amount at the end of the year
45,651,670
7,290,622
1,914,768
30,749
54,887,809
During 2023, the changes occurred in Loans and advances to customers - impairment are as follows:
(Thousands of euros)
2023
Financial assets at amortised cost - Loans and advances to customers
impairment
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment losses as at 1 January
214,470
284,448
985,557
17,898
1,502,373
Change in impairment losses:
Transfer to Stage 1
64,091
(55,424)
(8,587)
(80)
\u2014
Transfer to Stage 2
(12,326)
129,062
(116,736)
\u2014
\u2014
Transfer to Stage 3
(4,882)
(36,867)
42,105
(356)
\u2014
Changes occurred due to changes in credit risk
(26,368)
(45,099)
376,483
2,155
307,171
Write-offs
(811)
(2,261)
(186,529)
(2,872)
(192,473)
Changes due to new financial assets and derecognised
financial assets and other variations
34,774
17,893
(84,812)
(2,276)
(34,421)
Impairment losses at the end of the year
268,948
291,752
1,007,481
14,469
1,582,650
During 2022, the changes occurred in Loans and advances to customers - gross amount are as follows:
(Thousands of euros)
2022 (restated)
Financial assets at amortised cost - Loans and advances to customers - Gross
amount
Stage 1
Stage 2
Stage 3
POCI
Total
Gross amount as at 1 January
46,113,653
7,964,052
2,686,267
57,713
56,821,685
Changes in gross book value:
Transfers from stage 1 to stage 2
(2,111,726)
2,111,726
\u2014
\u2014
\u2014
Transfers from stage 1 to stage 3
(258,614)
\u2014
258,614
\u2014
\u2014
Transfers from stage 2 to stage 1
1,946,027
(1,946,027)
\u2014
\u2014
\u2014
Transfers from stage 2 to stage 3
\u2014
(631,859)
631,859
\u2014
\u2014
Transfers from stage 3 to stage 1
26,176
\u2014
(26,176)
\u2014
\u2014
Transfers from stage 3 to stage 2
\u2014
174,249
(174,249)
\u2014
\u2014
Write-offs
(922)
(2,996)
(440,667)
(13,820)
(458,405)
Net balance of new financial assets and
derecognised financial assets and other variations
681,402
(104,910)
(764,669)
3,063
(185,114)
Gross amount at the end of the year
46,395,996
7,564,235
2,170,979
46,956
56,178,166
During 2022, the changes occurred in Loans and advances to customers - impairment are as follows:
(Thousands of euros)
2022 (restated)
Financial assets at amortised cost - Loans and advances to customers
impairment
Stage 1
Stage 2
Stage 3
POCI
Total
Impairment losses as at 1 January
207,328
288,642
1,336,612
16,702
1,849,284
Change in impairment losses:
Transfer to Stage 1
50,530
(50,139)
(4,778)
4,387
\u2014
Transfer to Stage 2
(14,016)
47,552
(33,614)
78
\u2014
Transfer to Stage 3
(4,314)
(55,508)
58,004
1,818
\u2014
Changes occurred due to changes in credit risk
(51,425)
25,711
196,355
4,816
175,457
Write-offs
(922)
(2,996)
(440,667)
(13,820)
(458,405)
Changes due to new financial assets and derecognised
financial assets and other variations
27,289
31,186
(126,355)
3,917
(63,963)
Impairment losses at the end of the year
214,470
284,448
985,557
17,898
1,502,373
Financial assets modified during the period that have not resulted in derecognition (with impairment losses based on
expected lifetime losses) are analysed as follows:
(Thousands of euros)
Financial assets modified
2023
2022
(restated)
Amortised cost before changes
457,237
396,049
Impairment losses before changes
(61,984)
(47,337)
Net amortised cost before changes
395,253
348,712
Net gain/loss arising on changes
(9,926)
(32,993)
Net amortised cost after changes
385,327
315,719
The financial assets changed since the initial recognition at a time when the impairment loss was measured based on
the expected credit losses lifetime, are analysed as follows:
(Thousands of euros)
Financial assets changed
2023
2022
(restated)
Amortised cost of financial assets for which credit losses expected to go from \"lifetime\" to 12 months
106,778
65,942
As at 31\u00a0December 2023, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by segment and stage, are as follows:
(Thousands of euros)
2023
Stage 2
Stage 3
Segment
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <=
90 days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Individuals-Mortgage
24,913,323
2,317,570
217,742
106,027
2,641,339
269,211
149,473
418,684
11,247
27,984,593
Individuals-Other
8,455,374
996,879
138,926
50,292
1,186,097
256,328
320,458
576,786
14,263
10,232,520
Financial Companies
3,275,624
53,152
42
1
53,195
46,841
10
46,851
\u2014
3,375,670
Non-financial companies -
Corporate
10,825,177
716,737
13,734
1,961
732,432
198,010
29,407
227,417
2,209
11,787,235
Non-financial companies - SME-
Corporate
8,777,780
2,327,698
13,722
3,902
2,345,322
582,545
102,199
684,744
2,959
11,810,805
Non-financial companies -SME-
Retail
6,672,112
1,429,586
45,468
19,621
1,494,675
161,067
138,539
299,606
2,645
8,469,038
Non-financial companies -
Other
515,637
22,791
4
16
22,811
269
2,010
2,279
\u2014
540,727
Other loans
15,596,245
308,938
2,266
13
311,217
1
2
3
\u2014
15,907,465
Total
79,031,272
8,173,351
431,904
181,833
8,787,088
1,514,272
742,098
2,256,370
33,323
90,108,053
Impairment
Individuals-Mortgage
30,606
21,789
4,435
5,736
31,960
59,673
54,599
114,272
5,376
182,214
Individuals-Other
65,165
42,205
23,950
13,973
80,128
104,578
211,238
315,816
9,093
470,202
Financial Companies
23,475
1,381
3
\u2014
1,384
34,559
6
34,565
\u2014
59,424
Non-financial companies -
Corporate
36,533
25,712
247
312
26,271
91,151
20,578
111,729
\u2014
174,533
Non-financial companies - SME-
Corporate
49,075
78,177
1,490
760
80,427
313,575
59,279
372,854
\u2014
502,356
Non-financial companies -SME-
Retail
83,013
75,676
4,281
4,152
84,109
92,830
59,457
152,287
\u2014
319,409
Non-financial companies -
Other
370
74
\u2014
2
76
8
1,482
1,490
\u2014
1,936
Other loans
16,881
2,763
116
1
2,880
\u2014
1
1
\u2014
19,762
Total
305,118
247,777
34,522
24,936
307,235
696,374
406,640
1,103,014
14,469
1,729,836
Net exposure
Individuals-Mortgage
24,882,717
2,295,781
213,307
100,291
2,609,379
209,538
94,874
304,412
5,871
27,802,379
Individuals-Other
8,390,209
954,674
114,976
36,319
1,105,969
151,750
109,220
260,970
5,170
9,762,318
Financial Companies
3,252,149
51,771
39
1
51,811
12,282
4
12,286
\u2014
3,316,246
Non-financial companies -
Corporate
10,788,644
691,025
13,487
1,649
706,161
106,859
8,829
115,688
2,209
11,612,702
Non-financial companies - SME-
Corporate
8,728,705
2,249,521
12,232
3,142
2,264,895
268,970
42,920
311,890
2,959
11,308,449
Non-financial companies -SME-
Retail
6,589,099
1,353,910
41,187
15,469
1,410,566
68,237
79,082
147,319
2,645
8,149,629
Non-financial companies -
Other
515,267
22,717
4
14
22,735
261
528
789
\u2014
538,791
Other loans
15,579,364
306,175
2,150
12
308,337
1
1
2
\u2014
15,887,703
Total
78,726,154
7,925,574
397,382
156,897
8,479,853
817,898
335,458
1,153,356
18,854
88,378,217
% of impairment coverage
Individuals-Mortgage
0.12%
0.94%
2.04%
5.41%
1.21%
22.17%
36.53%
27.29%
47.80%
0.65%
Individuals-Other
0.77%
4.23%
17.24%
27.78%
6.76%
40.80%
65.92%
54.75%
63.75%
4.60%
Financial Companies
0.72%
2.60%
7.14%
0.00%
2.60%
73.78%
60.00%
73.78%
0.00%
1.76%
Non-financial companies -
Corporate
0.34%
3.59%
1.80%
15.91%
3.59%
46.03%
69.98%
49.13%
0.00%
1.48%
Non-financial companies - SME-
Corporate
0.56%
3.36%
10.86%
19.48%
3.43%
53.83%
58.00%
54.45%
0.00%
4.25%
Non-financial companies -SME-
Retail
1.24%
5.29%
9.42%
21.16%
5.63%
57.63%
42.92%
50.83%
0.00%
3.77%
Non-financial companies -
Other
0.07%
0.32%
0.00%
12.50%
0.33%
2.97%
73.73%
65.38%
0.00%
0.36%
Other loans
0.11%
0.89%
5.12%
7.69%
0.93%
0.00%
50.00%
33.33%
0.00%
0.12%
Total
0.39%
3.03%
7.99%
13.71%
3.50%
45.99%
54.80%
48.88%
43.42%
1.92%
As at 31\u00a0December 2022, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by segment and stage, are as follows:
(Thousands of euros)
2022 (restated)
Stage 2
Stage 3
Segment
Stage 1
No delays
Days past
due <=
30 days
Days past
due > 30
days
Total
Days past
due <=
90 days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Individuals-Mortgage
25,213,881
2,320,624
151,906
89,857
2,562,387
284,276
142,817
427,093
10,525
28,213,886
Individuals-Other
7,614,004
958,714
118,276
42,895
1,119,885
252,456
284,486
536,942
19,621
9,290,452
Financial Companies
3,569,566
80,945
61
\u2014
81,006
72,980
1,494
74,474
7,545
3,732,591
Non-financial companies -
Corporate
9,621,830
700,538
660
13
701,211
204,523
91,575
296,098
\u2014
10,619,139
Non-financial companies - SME-
Corporate
10,238,522
2,798,567
5,339
2,559
2,806,465
761,101
95,135
856,236
6,733
13,907,956
Non-financial companies -SME-
Retail
6,024,603
1,683,407
30,867
14,532
1,728,806
231,377
117,109
348,486
3,453
8,105,348
Non-financial companies -
Other
558,812
46,613
2
\u2014
46,615
113
\u2014
113
\u2014
605,540
Other loans
11,812,537
342,203
39
\u2014
342,242
\u2014
30
30
\u2014
12,154,809
Total
74,653,755
8,931,611
307,150
149,856
9,388,617
1,806,826
732,646
2,539,472
47,877
86,629,721
Impairment
Individuals-Mortgage
15,380
23,667
4,083
5,262
33,012
56,519
56,440
112,959
5,452
166,803
Individuals-Other
52,559
31,277
18,676
11,224
61,177
104,108
180,916
285,024
12,436
411,196
Financial Companies
8,491
1,701
4
\u2014
1,705
36,543
1,245
37,788
\u2014
47,984
Non-financial companies -
Corporate
27,484
18,218
22
\u2014
18,240
87,043
43,500
130,543
\u2014
176,267
Non-financial companies - SME-
Corporate
46,296
81,667
506
660
82,833
298,455
46,890
345,345
129
474,603
Non-financial companies -SME-
Retail
78,239
92,784
4,090
3,226
100,100
106,533
51,896
158,429
\u2014
336,768
Non-financial companies -
Other
512
129
\u2014
\u2014
129
5
\u2014
5
\u2014
646
Other loans
11,087
2,860
5
\u2014
2,865
\u2014
9
9
\u2014
13,961
Total
240,048
252,303
27,386
20,372
300,061
689,206
380,896
1,070,102
18,017
1,628,228
Net exposure
Individuals-Mortgage
25,198,501
2,296,957
147,823
84,595
2,529,375
227,757
86,377
314,134
5,073
28,047,083
Individuals-Other
7,561,445
927,437
99,600
31,671
1,058,708
148,348
103,570
251,918
7,185
8,879,256
Financial Companies
3,561,075
79,244
57
\u2014
79,301
36,437
249
36,686
7,545
3,684,607
Non-financial companies -
Corporate
9,594,346
682,320
638
13
682,971
117,480
48,075
165,555
\u2014
10,442,872
Non-financial companies - SME-
Corporate
10,192,226
2,716,900
4,833
1,899
2,723,632
462,646
48,245
510,891
6,604
13,433,353
Non-financial companies -SME-
Retail
5,946,364
1,590,623
26,777
11,306
1,628,706
124,844
65,213
190,057
3,453
7,768,580
Non-financial companies -
Other
558,300
46,484
2
\u2014
46,486
108
\u2014
108
\u2014
604,894
Other loans
11,801,450
339,343
34
\u2014
339,377
\u2014
21
21
\u2014
12,140,848
Total
74,413,707
8,679,308
279,764
129,484
9,088,556
1,117,620
351,750
1,469,370
29,860
85,001,493
% of impairment coverage
Individuals-Mortgage
0.06%
1.02%
2.69%
5.86%
1.29%
19.88%
39.52%
26.45%
51.80%
0.59%
Individuals-Other
0.69%
3.26%
15.79%
26.17%
5.46%
41.24%
63.59%
53.08%
63.38%
4.43%
Financial Companies
0.24%
2.10%
6.56%
0.00%
2.10%
50.07%
83.33%
50.74%
0.00%
1.29%
Non-financial companies -
Corporate
0.29%
2.60%
3.33%
0.00%
2.60%
42.56%
47.50%
44.09%
0.00%
1.66%
Non-financial companies - SME-
Corporate
0.45%
2.92%
9.48%
25.79%
2.95%
39.21%
49.29%
40.33%
1.92%
3.41%
Non-financial companies -SME-
Retail
1.30%
5.51%
13.25%
22.20%
5.79%
46.04%
44.31%
45.46%
0.00%
4.15%
Non-financial companies -
Other
0.09%
0.28%
0.00%
0.00%
0.28%
4.42%
0.00%
4.42%
0.00%
0.11%
Other loans
0.09%
0.84%
12.82%
0.00%
0.84%
0.00%
30.00%
30.00%
0.00%
0.11%
Total
0.32%
2.82%
8.92%
13.59%
3.20%
38.14%
51.99%
42.14%
37.63%
1.88%
As at 31\u00a0December 2023, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by sector of activity and stage, are as follows:
(Thousands of euros)
2023
Stage 2
Stage 3
Sector of activity
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <= 90
days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Loans to individuals
33,368,697
3,314,449
356,668
156,319
3,827,436
525,539
469,931
995,470
25,510
38,217,113
Non-financial companies -
Trade
5,299,609
735,392
16,114
3,998
755,504
91,961
44,149
136,110
604
6,191,827
Non-financial companies -
Construction
2,346,987
583,617
7,508
2,523
593,648
272,067
30,830
302,897
4,141
3,247,673
Non-financial companies -
Manufacturing industries
5,596,512
934,013
14,368
7,458
955,839
137,257
71,289
208,546
560
6,761,457
Non-financial companies -
Other activities
2,265,462
372,268
12,087
954
385,309
56,211
15,197
71,408
50
2,722,229
Non-financial companies -
Other services
11,282,136
1,871,522
22,851
10,567
1,904,940
384,395
110,690
495,085
2,458
13,684,619
Other Services /Other
activities
18,871,869
362,090
2,308
14
364,412
46,842
12
46,854
\u2014
19,283,135
Total
79,031,272
8,173,351
431,904
181,833
8,787,088
1,514,272
742,098
2,256,370
33,323
90,108,053
Impairment
Loans to individuals
95,771
63,994
28,385
19,709
112,088
164,251
265,837
430,088
14,469
652,416
Non-financial companies -
Trade
28,456
25,648
863
1,084
27,595
40,537
19,292
59,829
\u2014
115,880
Non-financial companies -
Construction
15,896
13,624
978
645
15,247
91,537
17,927
109,464
\u2014
140,607
Non-financial companies -
Manufacturing industries
54,770
57,777
1,909
1,842
61,528
53,536
35,826
89,362
\u2014
205,660
Non-financial companies -
Other activities
10,608
18,371
771
170
19,312
38,378
8,562
46,940
\u2014
76,860
Non-financial companies -
Other services
59,261
64,219
1,497
1,485
67,201
273,576
59,189
332,765
\u2014
459,227
Other Services /Other
activities
40,356
4,144
119
1
4,264
34,559
7
34,566
\u2014
79,186
Total
305,118
247,777
34,522
24,936
307,235
696,374
406,640
1,103,014
14,469
1,729,836
Net exposure
Loans to individuals
33,272,926
3,250,455
328,283
136,610
3,715,348
361,288
204,094
565,382
11,041
37,564,697
Non-financial companies -
Trade
5,271,153
709,744
15,251
2,914
727,909
51,424
24,857
76,281
604
6,075,947
Non-financial companies -
Construction
2,331,091
569,993
6,530
1,878
578,401
180,530
12,903
193,433
4,141
3,107,066
Non-financial companies -
Manufacturing industries
5,541,742
876,236
12,459
5,616
894,311
83,721
35,463
119,184
560
6,555,797
Non-financial companies -
Other activities
2,254,854
353,897
11,316
784
365,997
17,833
6,635
24,468
50
2,645,369
Non-financial companies -
Other services
11,222,875
1,807,303
21,354
9,082
1,837,739
110,819
51,501
162,320
2,458
13,225,392
Other Services /Other
activities
18,831,513
357,946
2,189
13
360,148
12,283
5
12,288
\u2014
19,203,949
Total
78,726,154
7,925,574
397,382
156,897
8,479,853
817,898
335,458
1,153,356
18,854
88,378,217
% of impairment coverage
Loans to individuals
0.29%
1.93%
7.96%
12.61%
2.93%
31.25%
56.57%
43.20%
56.72%
1.71%
Non-financial companies -
Trade
0.54%
3.49%
5.36%
27.11%
3.65%
44.08%
43.70%
43.96%
0.00%
1.87%
Non-financial companies -
Construction
0.68%
2.33%
13.03%
25.56%
2.57%
33.65%
58.15%
36.14%
0.00%
4.33%
Non-financial companies -
Manufacturing industries
0.98%
6.19%
13.29%
24.70%
6.44%
39.00%
50.25%
42.85%
0.00%
3.04%
Non-financial companies -
Other activities
0.47%
4.93%
6.38%
17.82%
5.01%
68.27%
56.34%
65.73%
0.00%
2.82%
Non-financial companies -
Other services
0.53%
3.43%
6.55%
14.05%
3.53%
71.17%
53.47%
67.21%
0.00%
3.36%
Other Services /Other
activities
0.21%
1.14%
5.16%
7.14%
1.17%
73.78%
58.33%
73.77%
0.00%
0.41%
Total
0.39%
3.03%
7.99%
13.71%
3.50%
45.99%
54.80%
48.88%
43.42%
1.92%
As at 31\u00a0December 2022, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by sector of activity and stage, are as follows:
(Thousands of euros)
2022 (restated)
Stage 2
Stage 3
Sector of activity
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <= 90
days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Loans to individuals
32,827,885
3,279,338
270,182
132,752
3,682,272
536,732
427,303
964,035
30,146
37,504,338
Non-financial companies -
Trade
5,312,463
827,990
9,921
4,283
842,194
91,204
45,688
136,892
4,715
6,296,264
Non-financial companies -
Construction
2,010,021
771,490
3,040
1,033
775,563
363,418
32,791
396,209
1,851
3,183,644
Non-financial companies -
Manufacturing industries
5,836,145
1,013,888
9,380
4,983
1,028,251
162,228
117,804
280,032
928
7,145,356
Non-financial companies -
Other activities
2,107,745
395,981
3,587
1,007
400,575
101,252
17,354
118,606
44
2,626,970
Non-financial companies -
Other services
11,177,393
2,219,776
10,940
5,798
2,236,514
479,012
90,182
569,194
2,648
13,985,749
Other Services /Other
activities
15,382,103
423,148
100
\u2014
423,248
72,980
1,524
74,504
7,545
15,887,400
Total
74,653,755
8,931,611
307,150
149,856
9,388,617
1,806,826
732,646
2,539,472
47,877
86,629,721
Impairment
Loans to individuals
67,939
54,944
22,759
16,486
94,189
160,627
237,356
397,983
17,888
577,999
Non-financial companies -
Trade
22,306
26,555
1,168
1,110
28,833
35,530
20,294
55,824
129
107,092
Non-financial companies -
Construction
11,517
16,055
551
288
16,894
154,391
18,769
173,160
\u2014
201,571
Non-financial companies -
Manufacturing industries
54,925
54,821
1,293
1,258
57,372
65,474
58,761
124,235
\u2014
236,532
Non-financial companies -
Other activities
7,701
15,667
529
154
16,350
44,356
8,459
52,815
\u2014
76,866
Non-financial companies -
Other services
56,082
79,700
1,077
1,076
81,853
192,285
36,003
228,288
\u2014
366,223
Other Services /Other
activities
19,578
4,561
9
\u2014
4,570
36,543
1,254
37,797
\u2014
61,945
Total
240,048
252,303
27,386
20,372
300,061
689,206
380,896
1,070,102
18,017
1,628,228
Net exposure
Loans to individuals
32,759,946
3,224,394
247,423
116,266
3,588,083
376,105
189,947
566,052
12,258
36,926,339
Non-financial companies -
Trade
5,290,157
801,435
8,753
3,173
813,361
55,674
25,394
81,068
4,586
6,189,172
Non-financial companies -
Construction
1,998,504
755,435
2,489
745
758,669
209,027
14,022
223,049
1,851
2,982,073
Non-financial companies -
Manufacturing industries
5,781,220
959,067
8,087
3,725
970,879
96,754
59,043
155,797
928
6,908,824
Non-financial companies -
Other activities
2,100,044
380,314
3,058
853
384,225
56,896
8,895
65,791
44
2,550,104
Non-financial companies -
Other services
11,121,311
2,140,076
9,863
4,722
2,154,661
286,727
54,179
340,906
2,648
13,619,526
Other Services /Other
activities
15,362,525
418,587
91
\u2014
418,678
36,437
270
36,707
7,545
15,825,455
Total
74,413,707
8,679,308
279,764
129,484
9,088,556
1,117,620
351,750
1,469,370
29,860
85,001,493
% of impairment coverage
Loans to individuals
0.21%
1.68%
8.42%
12.42%
2.56%
29.93%
55.55%
41.28%
59.34%
1.54%
Non-financial companies -
Trade
0.42%
3.21%
11.77%
25.92%
3.42%
38.96%
44.42%
40.78%
2.74%
1.70%
Non-financial companies -
Construction
0.57%
2.08%
18.13%
27.88%
2.18%
42.48%
57.24%
43.70%
0.00%
6.33%
Non-financial companies -
Manufacturing industries
0.94%
5.41%
13.78%
25.25%
5.58%
40.36%
49.88%
44.36%
0.00%
3.31%
Non-financial companies -
Other activities
0.37%
3.96%
14.75%
15.29%
4.08%
43.81%
48.74%
44.53%
0.00%
2.93%
Non-financial companies -
Other services
0.50%
3.59%
9.84%
18.56%
3.66%
40.14%
39.92%
40.11%
0.00%
2.62%
Other Services /Other
activities
0.13%
1.08%
9.00%
0.00%
1.08%
50.07%
82.28%
50.73%
0.00%
0.39%
Total
0.32%
2.82%
8.92%
13.59%
3.20%
38.14%
51.99%
42.14%
37.63%
1.88%
As at 31\u00a0December 2023, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by geography and stage, are as follows:
(Thousands of euros)
2023
Stage 2
Stage 3
Geography
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <= 90
days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Portugal
54,817,070
6,507,490
243,837
97,956
6,849,283
1,101,355
321,902
1,423,257
14,814
63,104,424
Poland
22,932,079
1,254,639
168,557
76,684
1,499,880
404,395
394,011
798,406
18,509
25,248,874
Mozambique
1,282,123
411,222
19,510
7,193
437,925
8,522
26,185
34,707
\u2014
1,754,755
Total
79,031,272
8,173,351
431,904
181,833
8,787,088
1,514,272
742,098
2,256,370
33,323
90,108,053
Impairment
Portugal
190,234
201,637
10,867
9,419
221,923
551,673
145,912
697,585
\u2014
1,109,742
Poland
103,505
40,435
22,551
14,419
77,405
143,301
245,864
389,165
14,469
584,544
Mozambique
11,379
5,705
1,104
1,098
7,907
1,400
14,864
16,264
\u2014
35,550
Total
305,118
247,777
34,522
24,936
307,235
696,374
406,640
1,103,014
14,469
1,729,836
Net exposure
Portugal
54,626,836
6,305,853
232,970
88,537
6,627,360
549,682
175,990
725,672
14,814
61,994,682
Poland
22,828,574
1,214,204
146,006
62,265
1,422,475
261,094
148,147
409,241
4,040
24,664,330
Mozambique
1,270,744
405,517
18,406
6,095
430,018
7,122
11,321
18,443
\u2014
1,719,205
Total
78,726,154
7,925,574
397,382
156,897
8,479,853
817,898
335,458
1,153,356
18,854
88,378,217
% of impairment
coverage
Portugal
0.35%
3.10%
4.46%
9.62%
3.24%
50.09%
45.33%
49.01%
0.00%
1.76%
Poland
0.45%
3.22%
13.38%
18.80%
5.16%
35.44%
62.40%
48.74%
78.17%
2.32%
Mozambique
0.89%
1.39%
5.66%
15.26%
1.81%
16.43%
56.77%
46.86%
0.00%
2.03%
Total
0.39%
3.03%
7.99%
13.71%
3.50%
45.99%
54.80%
48.88%
43.42%
1.92%
As at 31\u00a0December 2022, financial assets at amortised cost, guarantees granted, irrevocable credit lines and revocable
commitments, analysed by geography and stage, are as follows:
(Thousands of euros)
2022 (restated)
Stage 2
Stage 3
Geography
Stage 1
No delays
Days past
due <= 30
days
Days past
due > 30
days
Total
Days past
due <= 90
days
Days past
due > 90
days
Total
POCI
Total
Gross Exposure
Portugal
54,604,642
7,155,127
159,209
66,646
7,380,982
1,410,285
306,213
1,716,498
19,011
63,721,133
Poland
18,184,099
1,377,667
142,519
81,498
1,601,684
386,990
343,753
730,743
28,866
20,545,392
Mozambique
1,865,014
398,817
5,422
1,712
405,951
9,551
82,680
92,231
\u2014
2,363,196
Total
74,653,755
8,931,611
307,150
149,856
9,388,617
1,806,826
732,646
2,539,472
47,877
86,629,721
Impairment
Portugal
150,039
205,954
7,124
5,447
218,525
550,372
124,012
674,384
\u2014
1,042,948
Poland
83,818
42,151
19,641
14,566
76,358
136,847
210,573
347,420
18,017
525,613
Mozambique
6,191
4,198
621
359
5,178
1,987
46,311
48,298
\u2014
59,667
Total
240,048
252,303
27,386
20,372
300,061
689,206
380,896
1,070,102
18,017
1,628,228
Net exposure
Portugal
54,454,603
6,949,173
152,085
61,199
7,162,457
859,913
182,201
1,042,114
19,011
62,678,185
Poland
18,100,281
1,335,516
122,878
66,932
1,525,326
250,143
133,180
383,323
10,849
20,019,779
Mozambique
1,858,823
394,619
4,801
1,353
400,773
7,564
36,369
43,933
\u2014
2,303,529
Total
74,413,707
8,679,308
279,764
129,484
9,088,556
1,117,620
351,750
1,469,370
29,860
85,001,493
% of impairment
coverage
Portugal
0.27%
2.88%
4.47%
8.17%
2.96%
39.03%
40.50%
39.29%
0.00%
1.64%
Poland
0.46%
3.06%
13.78%
17.87%
4.77%
35.36%
61.26%
47.54%
62.42%
2.56%
Mozambique
0.33%
1.05%
11.45%
20.97%
1.28%
20.80%
56.01%
52.37%
0.00%
2.52%
Total
0.32%
2.82%
8.92%
13.59%
3.20%
38.14%
51.99%
42.14%
37.63%
1.88%
As at 31\u00a0December 2023, the gross exposure, by type of financial instrument, internal rating and stage, is analysed as
follows:
(Thousands of euros)
2023
Gross Exposure
Higher quality
(GR 1-6)
Average
quality
(GR 7-9)
Lower
quality
(GR 10-12)
Procedural
(GR 13/14/15)
Not classified
(without risk
grade)
Total
Impairment
losses
Net
exposure
Financial assets at
amortised cost
stage 1
48,884,930
9,891,705
4,050,015
800
1,269,469
64,096,919
292,238
63,804,681
stage 2
1,338,150
1,942,276
3,215,313
379,810
477,945
7,353,494
292,549
7,060,945
stage 3
\u2014
\u2014
\u2014
1,896,329
23,543
1,919,872
1,009,006
910,866
POCI
2,152
2,448
1,202
24,831
115
30,748
14,469
16,279
50,225,232
11,836,429
7,266,530
2,301,770
1,771,072
73,401,033
1,608,262
71,792,771
Debt instruments at fair
value through other
comprehensive income (*)
stage 1
10,490,205
153,637
11,687
50
154,294
10,809,873
\u2014
10,809,873
stage 3
\u2014
\u2014
\u2014
\u2014
1,150
1,150
1,150
\u2014
10,490,205
153,637
11,687
50
155,444
10,811,023
1,150
10,809,873
Guarantees and other
commitments (**)
stage 1
9,603,432
3,927,153
1,224,614
3,511
175,643
14,934,353
12,880
14,921,473
stage 2
169,847
400,684
670,786
13,250
179,027
1,433,594
14,686
1,418,908
stage 3
\u2014
\u2014
\u2014
336,351
147
336,498
94,008
242,490
POCI
6
5
1
2,563
\u2014
2,575
\u2014
2,575
9,773,285
4,327,842
1,895,401
355,675
354,817
16,707,020
121,574
16,585,446
Total
70,488,722
16,317,908
9,173,618
2,657,495
2,281,333
100,919,076
1,730,986
99,188,090
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements indicated in the
accounting policy 1 C1.5.1.2.
(**) The gross exposure includes the guarantees granted, irrevocable credit lines and revocable commitments (note 45).
As at 31\u00a0December 2022, the gross exposure, by type of financial instrument, internal rating and stage, is analysed as
follows:
(Thousands of euros)
2022 (restated)
Gross Exposure
Higher quality
(GR 1-6)
Average
quality
(GR 7-9)
Lower
quality
(GR 10-12)
Procedural
(GR 13/14/15)
Not classified
(without risk
grade)
Total
Impairment
losses
Net
exposure
Financial assets at
amortised cost
stage 1
44,625,339
10,468,892
3,984,622
2,862
1,268,808
60,350,523
228,741
60,121,782
stage 2
1,456,028
1,911,502
3,321,694
373,651
557,148
7,620,023
285,168
7,334,855
stage 3
\u2014
\u2014
\u2014
2,165,309
9,472
2,174,781
985,667
1,189,114
POCI
1,928
9,048
1,122
34,782
77
46,957
17,898
29,059
46,083,295
12,389,442
7,307,438
2,576,604
1,835,505
70,192,284
1,517,474
68,674,810
Debt instruments at fair
value through other
comprehensive income (*)
stage 1
6,600,955
169,240
34,790
\u2014
629,167
7,434,152
\u2014
7,434,152
stage 3
\u2014
\u2014
\u2014
\u2014
1,067
1,067
1,067
\u2014
6,600,955
169,240
34,790
\u2014
630,234
7,435,219
1,067
7,434,152
Guarantees and other
commitments (**)
stage 1
9,105,641
3,673,579
1,312,038
57
211,917
14,303,232
11,307
14,291,925
stage 2
219,327
390,858
832,431
34,840
291,138
1,768,594
14,893
1,753,701
stage 3
\u2014
\u2014
\u2014
364,627
64
364,691
84,435
280,256
POCI
\u2014
\u2014
\u2014
921
\u2014
921
119
802
9,324,968
4,064,437
2,144,469
400,445
503,119
16,437,438
110,754
16,326,684
Total
62,009,218
16,623,119
9,486,697
2,977,049
2,968,858
94,064,941
1,629,295
92,435,646
(*) For financial assets at fair value through other comprehensive income, impairment is recorded in accordance with the requirements indicated in the
accounting policy 1 C1.5.1.2.
(**) The gross exposure includes the guarantees granted, irrevocable credit lines and revocable commitments (note 45).
As at 31\u00a0December 2023, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by segment, are presented in the following table:
(Thousands of euros)
2023
Gross Exposure
Impairment losses
Segment
Individual
Collective
Total
Individual
Collective
Total
Individuals - Mortgage
27,960
27,956,633
27,984,593
9,347
172,867
182,214
Individuals - Other
8,531
10,223,989
10,232,520
4,709
465,493
470,202
Financial Companies
48,444
3,327,226
3,375,670
34,439
24,985
59,424
Non-financial companies-Corporate
204,869
11,582,366
11,787,235
105,559
68,974
174,533
Non-financial companies-SME-Corporate
517,062
11,293,743
11,810,805
326,269
176,087
502,356
Non-financial companies-SME-Retail
84,903
8,384,136
8,469,039
77,852
241,557
319,409
Non-financial companies-Other
702
540,025
540,727
567
1,369
1,936
Other loans
\u2014
15,907,464
15,907,464
\u2014
19,762
19,762
Total
892,471
89,215,582
90,108,053
558,742
1,171,094
1,729,836
As at 31\u00a0December 2022, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by segment, are presented in the following table:
(Thousands of euros)
2022 (restated)
Gross Exposure
Impairment losses
Segment
Individual
Collective
Total
Individual
Collective
Total
Individuals - Mortgage
30,700
28,183,186
28,213,886
9,386
157,417
166,803
Individuals - Other
26,953
9,263,499
9,290,452
18,543
392,653
411,196
Financial Companies
81,059
3,651,532
3,732,591
37,622
10,362
47,984
Non-financial companies-Corporate
276,046
10,343,093
10,619,139
126,378
49,889
176,267
Non-financial companies-SME-Corporate
654,073
13,253,883
13,907,956
301,952
172,651
474,603
Non-financial companies -SME - Retail
158,552
7,946,796
8,105,348
94,878
241,890
336,768
Non-financial companies-Other
\u2014
605,540
605,540
\u2014
646
646
Other loans
\u2014
12,154,809
12,154,809
\u2014
13,961
13,961
Total
1,227,383
85,402,338
86,629,721
588,759
1,039,469
1,628,228
As at 31\u00a0December 2023, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by sector of activity are presented in the following table:
(Thousands of euros)
2023
Gross Exposure
Impairment losses
Sector of activity
Individual
Collective
Total
Individual
Collective
Total
Loans to individuals
36,491
38,180,622
38,217,113
14,056
638,360
652,416
Non-financial companies-Trade
63,282
6,128,545
6,191,827
33,799
82,081
115,880
Non-financial companies-Construction
212,160
3,035,513
3,247,673
88,160
52,447
140,607
Non-financial companies-Manufacturing
industry
110,203
6,651,255
6,761,458
57,795
147,865
205,660
Non-financial companies-Other activities
48,448
2,673,781
2,722,229
37,216
39,644
76,860
Non-financial companies-Other services
373,443
13,311,176
13,684,619
293,277
165,950
459,227
Other Services/Other activities
48,444
19,234,690
19,283,134
34,439
44,747
79,186
Total
892,471
89,215,582
90,108,053
558,742
1,171,094
1,729,836
As at 31\u00a0December 2022, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by sector of activity are presented in the following table:
(Thousands of euros)
2022 (restated)
Gross Exposure
Impairment losses
Sector of activity
Individual
Collective
Total
Individual
Collective
Total
Loans to individuals
57,653
37,446,685
37,504,338
27,929
550,070
577,999
Non-financial companies-Trade
56,649
6,239,615
6,296,264
30,640
76,452
107,092
Non-financial companies-Construction
308,289
2,875,355
3,183,644
158,454
43,117
201,571
Non-financial companies-Manufacturing
industry
173,248
6,972,108
7,145,356
93,885
142,647
236,532
Non-financial companies-Other activities
95,832
2,531,138
2,626,970
44,541
32,325
76,866
Non-financial companies-Other services
454,653
13,531,096
13,985,749
195,688
170,535
366,223
Other Services/Other activities
81,059
15,806,341
15,887,400
37,622
24,323
61,945
Total
1,227,383
85,402,338
86,629,721
588,759
1,039,469
1,628,228
As at 31\u00a0December 2023, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by geography, are presented in the following table:
(Thousands of euros)
2023
Gross Exposure
Impairment losses
Geography
Individual
Collective
Total
Individual
Collective
Total
Portugal
758,022
62,346,402
63,104,424
516,336
593,406
1,109,742
Poland
121,548
25,127,326
25,248,874
36,255
548,289
584,544
Mozambique
12,901
1,741,854
1,754,755
6,151
29,399
35,550
Total
892,471
89,215,582
90,108,053
558,742
1,171,094
1,729,836
As at 31\u00a0December 2022, the financial assets at amortised cost, guarantees and other commitments subject to
individual and collective impairment, by geography, are presented in the following table:
(Thousands of euros)
2022 (restated)
Gross Exposure
Impairment losses
Geography
Individual
Collective
Total
Individual
Collective
Total
Portugal
1,053,955
62,667,178
63,721,133
511,657
531,291
1,042,948
Poland
98,717
20,446,675
20,545,392
37,219
488,394
525,613
Mozambique
74,711
2,288,485
2,363,196
39,883
19,784
59,667
Total
1,227,383
85,402,338
86,629,721
588,759
1,039,469
1,628,228
The columns Gross exposure and Collective impairment losses of the previous tables include loans subject to individual
analysis for which the Group has concluded that there is no objective evidence of impairment.
As at 31\u00a0December 2023, the following table includes the loans portfolio (including guarantees and commitments) by
segment and by year of production (date of the beginning of the operations, in the portfolio at the date of balance
sheet - it does not include restructured loans):
2023
Year of production
Construction
and Commercial
Real Estate
Companies -
Other Activities
Mortgage
loans
Individuals -
Other
Other loans
Total
2013 and previous
Number of operations
13,988
27,550
275,796
637,888
380
955,602
Value (Euros '000)
928,757
3,261,687
8,790,207
1,229,144
89,608
14,299,403
Impairment constituted (Euros '000)
73,508
58,659
113,180
22,494
812
268,653
2014
Number of operations
1,310
5,156
7,877
63,545
85
77,973
Value (Euros '000)
69,788
447,850
327,925
111,200
184,307
1,141,070
Impairment constituted (Euros '000)
7,137
5,895
5,441
4,563
873
23,909
2015
Number of operations
1,740
7,093
9,709
84,470
114
103,126
Value (Euros '000)
85,463
591,723
464,924
145,749
8,498
1,296,357
Impairment constituted (Euros '000)
1,952
22,286
4,621
7,655
577
37,091
2016
Number of operations
2,053
8,438
10,979
110,408
49
131,927
Value (Euros '000)
141,513
1,117,972
542,229
213,263
3,067
2,018,044
Impairment constituted (Euros '000)
2,314
12,494
5,106
13,662
179
33,755
2017
Number of operations
2,482
9,808
17,985
120,635
99
151,009
Value (Euros '000)
157,801
978,292
1,047,446
246,833
14,258
2,444,630
Impairment constituted (Euros '000)
10,391
17,786
6,592
17,477
774
53,020
2018
Number of operations
4,819
15,084
23,954
213,882
165
257,904
Value (Euros '000)
384,262
1,901,330
1,604,675
530,572
301,822
4,722,661
Impairment constituted (Euros '000)
5,771
33,804
8,220
37,433
1,227
86,455
2019
Number of operations
7,245
21,732
27,329
521,238
150
577,694
Value (Euros '000)
499,121
1,658,088
1,956,352
982,211
79,619
5,175,391
Impairment constituted (Euros '000)
7,673
43,210
7,137
67,067
1,144
126,231
2020
Number of operations
9,258
31,822
32,966
244,303
189
318,538
Value (Euros '000)
862,852
2,855,711
2,410,351
617,566
104,195
6,850,675
Impairment constituted (Euros '000)
14,538
76,473
8,944
38,516
1,913
140,384
2021
Number of operations
9,130
33,058
48,727
363,405
219
454,539
Value (Euros '000)
792,772
2,539,394
3,981,918
1,016,489
333,477
8,664,050
Impairment constituted (Euros '000)
11,334
42,963
10,857
67,703
3,131
135,988
2022
Number of operations
9,311
34,292
35,724
571,063
396
650,786
Value (Euros '000)
1,397,283
4,265,544
3,490,509
1,677,789
126,587
10,957,712
Impairment constituted (Euros '000)
15,286
51,293
6,233
79,493
1,704
154,009
2023
Number of operations
14,388
113,890
31,737
1,312,681
4,733
1,477,429
Value (Euros '000)
1,967,654
6,445,098
3,317,913
2,949,518
179,760
14,859,943
Impairment constituted (Euros '000)
16,782
217,800
6,768
70,824
2,232
314,406
Total
Number of operations
75,724
307,923
522,783
4,243,518
6,579
5,156,527
Value (Euros '000)
7,287,266
26,062,689
27,934,449
9,720,334
1,425,198
72,429,936
Impairment constituted (Euros '000)
166,686
582,663
183,099
426,887
14,566
1,373,901
In the year of the current production, are included operations that, by their nature, are contractually subject to
renewals. In these cases, the date of the last renewal is considered, namely for overdraft operations, secured current
account and factoring operations.
As at 31\u00a0December 2022, the following table includes the loans portfolio (including guarantees and commitments) by
segment and by year of production (date of the beginning of the operations, in the portfolio at the date of balance
sheet - it does not include restructured loans):
2022 (restated)
Year of production
Construction
and Commercial
Real Estate
Companies -
Other Activities
Mortgage
loans
Individuals -
Other
Other loans
Total
2012 and previous
Number of operations
15,703
25,791
293,344
677,001
384
1,012,223
Value (Euros '000)
970,246
3,194,423
10,117,624
1,228,014
81,780
15,592,087
Impairment constituted (Euros '000)
73,617
51,428
106,931
17,378
646
250,000
2013
Number of operations
1,121
3,600
10,115
65,523
17
80,376
Value (Euros '000)
64,192
510,025
376,049
106,759
2,537
1,059,562
Impairment constituted (Euros '000)
3,236
3,441
5,681
3,329
6
15,693
2014
Number of operations
1,234
4,859
8,737
82,035
86
96,951
Value (Euros '000)
76,217
509,250
356,743
126,516
183,780
1,252,506
Impairment constituted (Euros '000)
5,049
9,235
4,719
4,618
855
24,476
2015
Number of operations
1,691
6,284
10,836
112,676
124
131,611
Value (Euros '000)
106,007
908,354
515,361
185,482
44,947
1,760,151
Impairment constituted (Euros '000)
1,947
23,398
3,874
9,116
27,758
66,093
2016
Number of operations
1,911
8,196
12,280
134,403
55
156,845
Value (Euros '000)
154,183
1,209,277
616,181
256,858
4,248
2,240,747
Impairment constituted (Euros '000)
5,274
13,961
4,432
17,195
174
41,036
2017
Number of operations
2,568
11,100
20,277
142,014
96
176,055
Value (Euros '000)
219,318
1,228,140
1,202,742
305,913
13,230
2,969,343
Impairment constituted (Euros '000)
2,807
17,900
5,830
21,347
720
48,604
2018
Number of operations
5,312
19,488
26,701
286,638
203
338,342
Value (Euros '000)
498,338
2,227,925
1,833,809
655,719
309,885
5,525,676
Impairment constituted (Euros '000)
7,262
32,931
6,511
43,836
1,607
92,147
2019
Number of operations
8,703
27,962
30,166
595,430
185
662,446
Value (Euros '000)
632,970
2,098,246
2,198,981
1,221,662
144,135
6,295,994
Impairment constituted (Euros '000)
7,295
45,754
5,735
75,179
3,002
136,965
2020
Number of operations
9,891
37,416
36,088
313,758
255
397,408
Value (Euros '000)
1,148,968
4,324,442
2,656,294
809,745
165,228
9,104,677
Impairment constituted (Euros '000)
13,228
83,686
7,361
42,424
1,638
148,337
2021
Number of operations
10,744
37,545
53,486
524,347
340
626,462
Value (Euros '000)
1,146,704
3,355,457
4,464,436
1,376,201
388,696
10,731,494
Impairment constituted (Euros '000)
15,760
51,953
8,848
61,243
2,299
140,103
2022
Number of operations
14,046
117,544
38,354
1,108,878
4,678
1,283,500
Value (Euros '000)
2,097,778
7,566,584
3,822,846
2,514,949
364,556
16,366,713
Impairment constituted (Euros '000)
19,365
169,939
5,788
64,160
2,593
261,845
Total
Number of operations
72,924
299,785
540,384
4,042,703
6,423
4,962,219
Value (Euros '000)
7,114,921
27,132,123
28,161,066
8,787,818
1,703,022
72,898,950
Impairment constituted (Euros '000)
154,840
503,626
165,710
359,825
41,298
1,225,299
In the year of the current production, are included operations that, by their nature, are contractually subject to
renewals. In these cases, the date of the last renewal is considered, namely for overdraft operations, secured current
account and factoring operations.
As at 31\u00a0December 2023, the following table includes the fair value of the collaterals by segments (not limited by the
value of the collateral) associated to the loan's portfolio:
2023
Construction and Commercial
Real Estate
Companies - Other Activities
Mortgage loans
Fair Value
Real Estate
(*)
Other real
Collateral (**)
Real Estate
(*)
Other real
Collateral (**)
Real Estate
(*)
Other real
Collateral (**)
< 0.5 M\u20ac
Number
7,433
10,521
8,995
74,256
453,097
247
Value (Euros '000)
957,351
270,085
1,360,898
1,715,200
64,939,467
14,258
>= 0.5 M\u20ac and < 1 M\u20ac
Number
788
68
1,221
261
6,910
5
Value (Euros '000)
548,653
46,495
856,785
181,934
4,459,854
2,833
>= 1 M\u20ac and < 5 M\u20ac
Number
752
49
1,137
180
1,169
1
Value (Euros '000)
1,564,212
90,200
2,317,694
351,774
1,828,625
1,121
>= 5 M\u20ac and < 10 M\u20ac
Number
126
1
128
15
16
\u2014
Value (Euros '000)
883,759
5,424
892,174
111,364
102,113
\u2014
>= 10 M\u20ac and < 20 M\u20ac
Number
52
1
62
12
2
\u2014
Value (Euros '000)
705,360
10,415
882,748
176,111
21,129
\u2014
>= 20 M\u20ac and < 50 M\u20ac
Number
32
1
47
2
\u2014
\u2014
Value (Euros '000)
900,127
20,241
1,393,377
46,125
\u2014
\u2014
>= 50 M\u20ac
Number
4
\u2014
15
4
\u2014
\u2014
Value (Euros '000)
263,193
\u2014
1,124,438
855,609
\u2014
\u2014
Total Number
9,187
10,641
11,605
74,730
461,194
253
Total Value (Euros '000)
5,822,655
442,860
8,828,114
3,438,117
71,351,188
18,212
(*) The fair value of real estate collateral relates to the PVT included in valuations.
(**) Includes, namely, securities, deposits and fixed assets pledges.
As at 31\u00a0December 2022, the following table includes the fair value of the collaterals by segments (not limited by the
value of the collateral) associated to the loan's portfolio:
2022 (restated)
Construction and Commercial
Real Estate
Companies - Other Activities
Mortgage loans
Fair Value
Real Estate
(*)
Other real
Collateral (**)
Real Estate
(*)
Other real
Collateral (**)
Real Estate
(*)
Other real
Collateral (**)
< 0.5 M\u20ac
Number
6,822
9,575
9,030
71,315
468,372
303
Value (Euros '000)
882,242
223,661
1,369,613
1,489,242
62,924,078
17,038
>= 0.5 M\u20ac and < 1 M\u20ac
Number
741
70
1,189
236
6,321
4
Value (Euros '000)
520,105
47,186
832,819
162,741
4,080,818
2,230
>= 1 M\u20ac and < 5 M\u20ac
Number
634
47
1,110
205
1,062
1
Value (Euros '000)
1,307,513
84,190
2,223,387
395,940
1,636,182
1,267
>= 5 M\u20ac and < 10 M\u20ac
Number
108
2
118
15
14
\u2014
Value (Euros '000)
737,705
10,838
852,256
102,251
86,476
\u2014
>= 10 M\u20ac and < 20 M\u20ac
Number
50
2
57
13
1
\u2014
Value (Euros '000)
651,146
21,833
809,825
194,916
11,110
\u2014
>= 20 M\u20ac and < 50 M\u20ac
Number
22
\u2014
40
1
\u2014
\u2014
Value (Euros '000)
636,352
\u2014
1,208,432
20,452
\u2014
\u2014
>= 50 M\u20ac
Number
6
\u2014
14
2
\u2014
\u2014
Value (Euros '000)
455,600
\u2014
1,245,381
523,630
\u2014
\u2014
Total Number
8,383
9,696
11,558
71,787
475,770
308
Total Value (Euros '000)
5,190,663
387,708
8,541,713
2,889,172
68,738,664
20,535
(*) The fair value of real estate collateral relates to the PVT included in valuations.
(**) Includes, namely, securities, deposits and fixed assets pledges.
As at 31\u00a0December 2023, the following table includes the LTV (loan-to-value) ratio by segments Construction and
Commercial Real Estate (CRE), Companies - Other Activities and Mortgage loans:
(Thousands of euros)
2023
Segment/Ratio
Number
of properties
Stage 1
Stage 2
Stage 3
Impairment
Construction and CRE
Without associated collateral
n.a.
1,325,209
368,506
61,341
69,194
<60%
26,471
1,231,512
314,464
27,331
22,492
>=60% and <80%
4,107
405,123
124,352
25,326
17,357
>=80% and <100%
858
115,631
26,141
2,513
3,689
>=100%
915
83,185
56,059
49,530
30,584
Companies - Other Activities
Without associated collateral
n.a.
9,520,386
1,406,516
244,982
438,065
<60%
49,955
1,888,694
528,115
128,724
75,157
>=60% and <80%
15,150
965,433
277,671
80,993
42,715
>=80% and <100%
9,050
457,684
378,185
48,634
34,873
>=100%
2,328
492,635
159,776
258,397
208,054
Mortgage loans
Without associated collateral
n.a.
62,011
3,510
9,719
12,435
<60%
380,896
13,666,658
1,351,098
264,041
119,276
>=60% and <80%
119,725
8,368,284
896,151
117,924
39,255
>=80% and <100%
33,465
2,594,964
349,466
50,104
20,302
>=100%
4,814
168,138
53,712
19,770
10,447
As at 31\u00a0December 2022, the following table includes the LTV (loan-to-value) ratio by segments Construction and
Commercial Real Estate (CRE), Companies - Other Activities and Mortgage loans:
(Thousands of euros)
2022 (restated)
Segment/Ratio
Number
of properties
Stage 1
Stage 2
Stage 3
Impairment
Construction and CRE
Without associated collateral
n.a.
1,528,695
453,957
73,399
70,799
<60%
25,799
1,019,694
259,169
42,667
31,589
>=60% and <80%
2,771
376,094
81,106
21,337
9,536
>=80% and <100%
1,067
131,874
46,414
58,121
49,541
>=100%
979
74,888
73,472
61,705
40,249
Companies - Other Activities
Without associated collateral
n.a.
10,285,172
1,651,463
284,131
393,519
<60%
49,259
1,563,296
495,030
141,344
65,781
>=60% and <80%
16,491
991,449
329,502
128,863
48,995
>=80% and <100%
11,106
576,326
406,133
72,826
47,386
>=100%
2,741
654,901
202,769
280,711
146,244
Mortgage loans
Without associated collateral
n.a.
53,715
2,892
10,403
10,816
<60%
383,344
13,363,029
1,310,064
261,616
102,636
>=60% and <80%
129,126
8,530,613
844,549
112,000
32,431
>=80% and <100%
39,677
2,884,194
357,767
58,421
19,953
>=100%
6,013
235,017
60,244
30,008
15,674
As at 31\u00a0December 2023, the following table includes the fair value and the net book value of the properties classified
as Non-current assets held for sale (note 27) and as Other assets (note 32), by type of asset:
(Thousands of euros)
2023
Assets arising from recovered
loans results
Assets belong to investments
funds and
real estate companies
Total
Asset
Appraised
value
Book value
Appraised
value (1)
Book value
Appraised
value
Book value
Land
Urban
80,526
49,779
84,684
84,684
165,210
134,463
Rural
4,622
2,188
17,560
17,560
22,182
19,748
Buildings in development
Commercials
790
529
\u2014
\u2014
790
529
Mortgage loans
2,474
1,438
\u2014
\u2014
2,474
1,438
Constructed buildings
Commercials
29,968
15,391
\u2014
\u2014
29,968
15,391
Mortgage loans
52,120
35,758
\u2014
\u2014
52,120
35,758
Other
30,495
30,261
\u2014
\u2014
30,495
30,261
Other assets
5,400
5,400
\u2014
\u2014
5,400
5,400
206,395
140,744
102,244
102,244
308,639
242,988
(1) Value deducted from haircuts or other applicable impairments
As at 31\u00a0December 2022, the following table includes the fair value and the net book value of the properties classified
as Non-current assets held for sale (note 27), by type of asset:
(Thousands of euros)
2022 (restated)
Assets arising from recovered
loans
Assets belong to investments
funds and
real estate companies
Total
Asset
Appraised
value
Book value
Appraised
value (1)
Book value
Appraised
value
Book value
Land
Urban
126,593
84,970
199,094
199,094
325,687
284,064
Rural
5,318
2,996
20,768
20,768
26,086
23,764
Buildings in development
Commercials
869
517
\u2014
\u2014
869
517
Mortgage loans
2,550
1,491
\u2014
\u2014
2,550
1,491
Other
11
11
\u2014
\u2014
11
11
Constructed buildings
Commercials
62,390
43,304
\u2014
\u2014
62,390
43,304
Mortgage loans
82,549
64,015
185
185
82,734
64,200
Other
38,697
38,574
\u2014
\u2014
38,697
38,574
318,977
235,878
220,047
220,047
539,024
455,925
(1) Value deducted from haircuts or other applicable impairments
Credit portfolio monitoring process
The Bank has in place a credit portfolio management and monitoring processes, namely with regard to the assessment
of the risk profile of the exposure in different portfolios/segments. These procedures have the purpose of identifying
and closely monitoring the customers potentially more affected by the prevailing macroeconomic context, anticipating
possible difficulties in complying the responsibilities and defining credit and performance strategies adjusted to the
specificities of each customer/group of customers, with a view to both maintaining support to customers considered
viable and mitigating credit risk in cases where there are risks of loss in the exposure value.
The importance of this approach is reinforced by the uncertainty that has marked the activity in recent years, with
special emphasis on the pandemic context that emerged at the beginning of 2020 and the effects resulting from
multiple geopolitical conflicts, with impacts on various aspects such as a more modest level of economic growth,
budgetary pressures to cope with the impacts felt by economic agents, the need to allocate budgetary amounts to
areas such as Defence, limitations on the transportation of goods, pressure on energy costs, inflationary impacts, high
levels of interest rates and rising unemployment rates.
In the specific case of Portugal, the context described translated into lower demand for credit instruments from
customers, especially in the corporate segment.
The main guidelines of the credit portfolio monitoring approach can be characterized as presented below:
- Global and transversal: Analysis of the entire credit portfolio of the Bank, being excluded from the monitoring process
only customers with a better risk profile (in the case of retail) or with exposures of a lower size (in the case of retail
and corporate).
- Specialized: Monitoring by the \u201cComit\u00e9 de Acompanhamento de Risco de Empresas\u201d (CARE), and Credit Division in
coordination with the Rating Division for the corporate segment and by the Credit Division and Retail Recovery Division
for individuals and small businesses. The cases monitored by the CARE committee, are related to clients covered by a
set of criteria that combine exposure size and risk factors like the rating assigned, IFRS 9 staging and, for the corporate
segment, the level of leverage and whether the sector in which it operates is considered highly vulnerable.
- Segmented: Prioritization of approach/analysis recurrence based on risk signs, in order to gather additional
information and agree on appropriate and sustainable financial restructuring solutions in a timely manner.
- Prospective: Use of predictive models, in order to anticipate potential future defaults, avoiding a reactive approach.
- Standardized: Both in terms of risk models and monitoring, and in terms of credit solutions for which it is possible to
identify pre-defined alternatives (retail segments).
- Convenient and innovative: Making the restructuring journey simpler and more convenient both in terms of credit
solutions and channels, extending the restructuring offer to the App for consumer credit and mortgages.
Specifically in the corporate segment, the process of portfolio follow-up and monitoring can be generically
characterized as described below, having as a fundamental component the attribution of credit strategies, among pre-
defined options, with review periods differentiated according to the level of risk associated to the strategy attributed:
1. Client Assessment and presentation of Indicative Credit Strategy by the Rating Division (for customers with ratings
assigned by corporate rating models);
2. Approval, by the competent credit decision levels, of a credit strategy for each customer, taking into consideration
the Indicative Credit Strategy from the Rating Division, the information received from the area that follows the
client and the inputs received as a result of the customer interaction process;
3. Decision, negotiation and formalisation of the operations that will ensure that the approved strategy is pursued and
the approved credit limits are met (Credit Division, Areas that follow the client and Operations Division);
4. Monitoring the Credit Strategy and the evolution of the customer's activity (Credit Division, Areas that follow the
client and Specialised Committees - CARE);
5. Monitoring of the credit portfolio and effectiveness of the portfolio monitoring process and credit strategy
attribution (Risk Office), based on a set of KPIs, (e.g. percentage of the credit portfolio with valid risk strategy;
evolution of credit exposure to customers with a reduction strategy; adequacy of the credit strategy to the
customer's performance);
6. In the attribution of the customer's credit strategy, besides the intrinsic factors of the customer, more transversal
factors are taken into consideration, such as the evaluation of the sectorial risk and ESG impacts (periodically
reviewed with the support of the Economic, Sustainability and Criptoactives Studies Division) and taking into
consideration the attribution of a ESG rating regarding the clients with most relevant exposures;
7. The occurrence of effective and/or potential risk events (signs of default/delinquency; breach of contractual
covenants; severe alteration in sector risk; alteration in the corporate/shareholder structure), trigger an
extraordinary/anticipated revision of the strategy.
Within the scope of this monitoring process and with an impact on other complementary procedures adopted by the
Bank, namely for reporting purposes, the Bank defines a list of sectors considered as more vulnerable to the
macroeconomic environment, which is reviewed periodically (at least annually), also involving the preparation of report
presenting a detailed characterisation of its loan portfolio under a sectoral perspective.
Additional measures with impact on the Impairment level
i. Updating macroeconomic scenarios and the parameters of the collective impairment model
Taking into account the changes and uncertainty of the context and the economic outlook essentially marked by a
context conditioned by the maintenance of relatively high levels of inflation and interest rates, an update of the
macroeconomic scenarios used in the collective impairment analysis model in Portugal was carried out in December
2023, based on three scenarios (Central Scenario, Optimistic and Pessimistic) prepared by the Bank's Economic Studies
area.
The referred scenarios, which are used in the Bank for several purposes other than the impairment calculation, took
into consideration the existing projections of reputed entities.
The tables below systematise the projections for 2023 and 2024 considered for Portugal concerning the central
scenarios with regard to some of the critical variables used in the calculation of collective impairment.
Update of main macroeconomic scenario assumptions (Base Scenario) - Portugal
December 2022 Scenario
December 2023 Scenario
Difference
Variable
2023
2024
2023
2024
2023
2024
Unemployment rate
5.88%
5.92%
6.53%
7.15%
0.65%
1.23%
3 months Euribor Rate
3.17%
3.10%
3.43%
3.18%
0.26%
0.08%
Savings Rate
5.80%
6.00%
6.40%
8.40%
0.60%
2.40%
Inflation Rate
5.83%
3.25%
5.34%
2.93%
-0.49%
-0.33%
Regarding Poland, an update of the macroeconomic assumptions was also carried out in relation to those considered in
December 2022, which translates into the terms presented in the table below regarding the projections for 2023 and
2024 foreseen in the central scenario.
Update of main macroeconomic scenario assumptions (Base Scenario) - Poland
Variable
December 2022 Scenario
December 2023 Scenario
Difference
2023
2024
2023
2024
2023
2024
Unemployment rate
5.80%
6.00%
5.20%
5.30%
-0.60%
-0.70%
Nominal GDP annual evolution
13.80%
9.00%
11.70%
7.60%
-2.10%
-1.40%
Consumption annual evolution
0.70%
1.50%
-1.00%
3.50%
-1.70%
2.00%
Disposable Income
4.90%
4.80%
12.60%
8.10%
7.70%
3.30%
EUR/PLN exchange rate
4,64
4,52
4,48
4,42
-0.16
-0,10
CHF/PLN exchange rate
4,65
4,48
4,60
4,58
-0.05
0,10
The following tables describe the weightings assigned in Portugal and Poland to the different macroeconomic scenarios
considered at the end of 2022 and 2023, which can be considered as conservative:
Weightings of the macroeconomic scenarios considered
Scenario
Weightings
Portugal
Poland
Dec 2022
Dec 2023
Dec 2022
Dec 2023
Central
60%
60%
65%
70%
Upside
10%
10%
10%
10%
Downside
30%
30%
25%
20%
For Portugal, a simulation of an additional one percentage point worsening in the evolution of the key indicators for the
collective impairment estimate was carried out, which translates into the impacts shown in the table below, based on
the collective impairment of the portfolio in Portugal as at 31 December 2023, which amounted to Euros 488 million
(this figure does not include the impairment amounts calculated by the overlays methodology described in point ii. of
this section).
Sensitivity analysis on the calculation of collective impairment (December 2023)
Variable
Estimated impact (% variation)
100 bp Unemployment Rate aggravation
4,68%
100 bp 3 months Euribor aggravation
6,76%
100 bp Savings Rate aggravation
0,55%
100 bp Inflation Rate aggravation
4,62%
ii. Impairment overlays
In order to incorporate an additional level of conservatism in the impairment values, the Bank defined and
implemented a methodology of complementary of identification of significant increase in credit risk situations and
potential signs of impairment.
This approach adopts differentiated criteria in relation to the base methodologies in force, with distinct processes
having been adopted for the calculation of overlays for the corporate and individual customers segments.
The overlays currently in force seek in particular to address the context of uncertainty that continues to prevail,
associated with a context of multiple geopolitical crisis, the constraints that still exist with regard to economic growth,
inflationary pressures and the high level of interest rates, an environment that constitutes a disruption of the context
that prevailed until the end of 2021, characterized by low levels of interest rates and inflation.
This positioning is in line with the guidelines on this matter issued by the Supervisors in what regards the identification
and measurement of credit risk in contexts of uncertainty, so that the release of overlays initially constituted in the
context of the pandemic should be carried out with prudence and taking into account the possible need for new
overlays to respond to the current context.
The exercise carried out reflected, in terms of impairment value, in the calculation of the estimated impact arising
from potential migrations of customers with higher risk to Stage 2 and Stage 3, based on the various factors considered
in the analysis. It should be noted that the most significant impact occurred in the corporate segment. The
methodology developed by the Bank was considered for the calculation and recording of impairment at the reference
date of the accounts, without affecting the classification of credit exposures by stages in the Bank's loan portfolio.
In Poland, the Bank also adopted a policy of recording overlays. Taking into consideration the country's specific reality,
adjustments to the overlay's methodology had already been incorporated in 2022 to address the impacts of the
geopolitical crisis.
As a result of the implementation of this methodology, the Bank calculated an additional impairment to that resulting
from the collective analysis model, therefore with characteristics of overlays, whose amount on 31 December 2023 was
approximately Euros 99.0 million in Portugal (Euros 95.0 million in December 2022), Euros 48.3 million in Poland (Euros
33.9 million in December 2022) and Euros 2.8 million in Mozambique (in the end of 2022 there weren\u2019t overlay
allocations in this geography).
Government measures to mitigate the impacts on mortgage contracts
Decree-Law 80-A/2022
Specifically with regard to Decree-Law 80-A/2022, a Portuguese Government act of 25 November 2022 that established
measures to mitigate the effects of the increase in the reference indexing factors of credit contracts for the acquisition
or construction of permanent house ownership, it is worth highlighting the fact that it introduced the obligation for
Financial Institutions to approach individual customers with mortgage credit who potentially fit into the requirements
set out in that act.
In what concerns Millennium bcp, a contact was promoted with about 180 thousand customers, requesting information
in order to calculate the respective effort rate.
On 31 December 2023, date when the period to adhere to this measure expired, the number of clients that had shown
interest in evaluating the support mechanisms provided for under Decree Law 80-A/2022 amounted to around 15
thousand.
Decree-Law 20-B/2023
Decree-Law 20-B/2023, a Portuguese Government regulation of 22 March 2023, embodied the legislative package \"Mais
Habita\u00e7\u00e3o\", providing extraordinary support to families, namely through the creation of support for borrowers of credit
agreements for permanent own housing in the form of a temporary subsidy of the interest component, in situations
where the index rate exceeds a certain threshold.
On 13 February 2024, loans with subsidies already processed amounted to exposures of approximately Euros 520 million,
with an average monthly subsidy of Euros 49.
Decree-Law 91/2023
Also with regard to the promotion of support measures for borrowers of mortgage loan contracts, it is worth noting the
publication of Decree-Law 91/2023, a Portuguese government decree of 11 October 2023, which allows to fix the
installment over a period of 24 months, taking into account an interest rate benchmark defined in the decree-law, and
with an adherence period until 31 March 2024.
By 31 January 2024, at the request of customers, the Bank had implemented this measure in around 1,800 contracts.
Credit concentration risk
The Group\u2019s policy relating to the identification, measurement, and evaluation of the concentration risk in credit risk is
approved by the Bank\u2019s management body, applied to all Group entities, and is based on the following guidelines:
The monitoring of the concentration risk and the follow-up of major risks is made, at Group level, based on the concept
of \"Economic Groups\" and \u201cCustomer Groups\u201d - sets of connected Customers (individual persons or companies), which
represent a single entity from a credit risk perspective, such that if one of them is affected by financial problems, one
or all of the others, will probably face difficulties to fulfil their debtor obligations. The Customer connections that
originate a Customer group include the formal participation on the same economic group, the evidence that a direct or
indirect control relationship exists, including the control by an individual Customer (criteria of capacity of control) of a
company or the existence of a strong commercial interdependency or common sources of funding that cannot be
replaced on a short term (criteria of economic dependency).The identification of connected clients is an integral part
of the credit granting and monitoring processes of each entity, with the Risk Office monitoring the economic and
customers\u2019 groups maintenance.
For the control of credit concentration risk and limit the exposure to this risk, there are limits defined for:
1) Exposures to Sovereigns;
2) Exposures to Institutions (Banks/financial institutions);
3) Single-name exposures (Large Corporate exposures);
4) Geographic concentration (country risk);
5) Exposure to sectors of activity.
These limits apply to the \u2018Net exposures\u2019 (*), relating either to a counterparty or a group of counterparties \u2013 cases for
1), 2) and 3) \u2013 or to the set of exposures to an activity sector or to a country (the counterparty country of residence) \u2013
cases for 4) and 5). The metrics regarding the concentration of exposure to Sovereigns and geographic concentration
exclude the countries in which the Group has significant operations (Portugal, Poland and Mozambique) and the
respective Sovereigns.
Except for exposure to sectors of activity, the concentration limits are established by taking into consideration the
credit worthiness of the debtors at stake in what concerns their rating grades/probability of Default (PD) (internal or
external ratings; country rating in the case of geographic concentration).
The concentration limits for Corporate single-name exposures apply only to non-NPE positions, since the NPE (Non-
performing exposures) positions are considered \u201calways in excess\u201d and its framed by the actions covered by the NPE
reduction Plan defined and executed at Group BCP level.
The limits in force as at 31 December 2023, for the exposure to Single-name, in terms of the Net Exposure weight over
the Consolidated Own Funds, are the following:
Risk quality
Risk grade
Single-name
High quality
1 - 5
7.0%
Average/good quality
6 - 7
4.5%
Average low/quality
8 - 9
2.8%
Low quality
10 - 11
0.5%
Restricted credit
12 - 13
0.3%
(*) Net exposure = EAD x LGD, considering LGD=45% whenever own estimates for LGD are not available or applicable. EAD = Exposure at
default ; LGD = Loss given Default.
As at 31 December 2023:
- There were no exposure excesses to Sovereigns, Institutions or countries;
- There were 4 Economic Groups with net exposure above the established Single-name limits for their respective risk
grade. For each client with an exposure excess a specific plan is prepared, aiming at reducing the exposure and
bringing it within the established limits.
It should also be referred that the assessment of the Single-name concentration is also performed within the Group RAS
(Risk Appetite Statement) scope.
In what concerns the limit for exposure to sectors of activity, in force on 31 December 2023, this is defined as a
maximum of 40% per sector of activity, in terms of the weight of the Net Exposure for each sector of activity over the
Own Funds of each Group Entity. At this date, there was no excess over this limit.
The Bank's management body and the Risk Assessment Committee are regularly informed on the evolution of the credit
concentration risk metrics (against the mentioned limits) and on major risks.
The credit concentration risk is measured and monitored by the Risk Office supported on a database on credit
exposures (the Risk Office Datamart), monthly updated by the Group\u2019s systems, which feeds the risk management
system of the Group.
The Risk Office maintains a simulation tool for supporting the analysis of the impact on changes on the Customers
exposures in the consumption of the respective concentration limits, which is used by the Credit Division and by the
Commercial Networks within the scope of credit analysis for large clients with the purpose of ensuring exposures are
kept within the approved limits.
Real state risk
Real estate risk materializes through losses associated with changes in the value of assets held by the Bank or,
indirectly, through funds and/or real estate companies.
The Group detains a real estate portfolio, that comes from repossessed assets linked with recovery processes of non-
performing exposures, that is subject to fluctuations and risks in the real estate market and the obligations arising from
ownership of the properties.
As a credit institution operating in the financial market, the Bank does not operate directly in the real estate sector,
neither as a sales agent nor as an operator in the rental segment.
In this context, the management of this portfolio is based on the following objectives:
\u2022 Minimize the risks associated with the real estate portfolio;
\u2022 Minimize management costs, maintenance and sale of properties;
\u2022 Maximize the financial results from the sale of foreclosed assets;
\u2022 Mitigate the portfolio's impact on the Bank's cost of capital and liquidity.
Within this framework, the Bank should optimize the outflow of foreclosed assets from the real estate portfolio,
developing appropriate commercial strategies and exploring the distribution channels that are expected to be most
effective at any given time to sell the different types of properties held by the Bank.
By managing this portfolio, the following risks were identified and monitored by the Bank:
\u2022 Price risk \u2013 Risk associated with the devaluation of the property due to unfavourable developments in the real estate
market, whether due to a decrease in demand or strong pressure on property sales;
\u2022 Liquidity risk - Inherent to the nature of real estate assets and the impact on the Bank's liquidity position and
respective financial costs of holding the property;
\u2022 Operational risk - associated with the processes of acquiring, maintaining and selling properties, which can result in
costs or lost revenue (includes the risks of vandalization and deterioration of properties);
\u2022 Compliance risk - compliance with legal standards from the property acquisition process, to the requirements to be
observed in its sale, including the responsibility associated with your status as owner;
\u2022 Fiscal risk \u2013 associated with possible tax contingencies relating to properties owned by the Bank and monitoring the
administrative and judicial processes;
\u2022 Reputational risk - related to the risks mentioned above, but also with the image projected by the Bank in the way it
manages its operations in the real estate market.
The risks associated above are mitigated by the Bank through the existence of a team specialized in the management of
this type of assets; a set of internal policies and standards that regulate the asset management processes on the
balance sheet; and an insurance policy.
The portfolio of real estate assets has been progressively reduced by the Bank over the last few years.
Market risk
Market risks consist of the potential losses that may arise within a portfolio as a result of changes in interest or
exchange rates, and/or in the prices of the different financial instruments within the portfolio, considering not only the
correlations that exist between those instruments but also their volatilities.
For the purpose of profitability analysis and market risks quantification and control, the following management areas
are defined for each entity within the Group:
- Trading: Management of positions aimed at achieving short-term gains through sale or revaluation. These positions are
actively managed, tradable without restriction, and may be valued frequently and accurately. These positions include
securities and derivatives resulting from sales activities;
- Funding: Management of institutional funding (wholesale funding) and money market positions;
\u2013 Investment: Management of all positions in securities to be held to maturity or for an extended period, or positions
not tradable on liquid markets;
- Commercial: Management of positions arising from commercial activities with Customers;
- Structural: Management of balance sheet items or operations which, due to their nature, are not directly related to
any of the management areas referred to above; and
- ALM: Assets and Liabilities Management.
The definition of these areas allows for an effective management separation between trading and banking books, as
well as a proper allocation of each operation to the most suitable management area, according to the respective
context and strategy.
To ensure that risk levels incurred in the different portfolios of the Group align with predefined tolerance risk levels,
various market risks limits are established, typically on an annual basis, applying to all portfolios of the risk
management areas where the risks are incident. These limits are monitored daily (or intra-daily, in the case of financial
markets) by the Risk Office.
Stop loss limits are also set for portfolios in the financial markets' areas \u2013 Trading and Funding \u2013 based on multiples of
the risk limits defined for them, aiming to limit the maximum losses that may occur in these areas. If these limits are
breached, a mandatory review of the underlying business strategy and assumptions regarding the management of the
positions in question ensues.
Market risks of the prudential trading book (1)
For the daily measurement of generic market risk, which includes interest rate risk, exchange rate risk, equity risk and
credit default swap price risk (indexes) - a Value-at-Risk (VaR) model is used, considering a time horizon of 10 business
days and a 99% significance level.
Additionally, the Group uses an integrated market risk measure that monitors all relevant sub-types of risk. This
measure integrates assessment of generic, specific, non-linear and commodity risks. Each sub-type of risk is measured
individually using appropriate risk models, with the integrated measure calculated from individual measures for each,
without considering any type of diversification between the sub-types (worst-case scenario approach).
For non-linear risk, an internally developed methodology is applied, replicating the effect of main non-linear elements
of options on P&L results of the different portfolios in which these are included, similarly to what is considered in the
VaR methodology, using the same time horizon and significance level.
Specific and commodity risks are measured using standard methodologies defined in the applicable regulations, with an
appropriate change of the time horizon considered.
The table below presents the amounts at risk for the Trading Book, measured by the methodologies referred to above:
(Thousands of euros)
2023
Max of global risk
in the period
Min of global risk
in the period
2022
(restated)
Generic Risk ( VaR )
889
4,250
683
1,322
Interest Rate Risk
587
4,458
555
1,011
FX Risk
551
1,438
566
841
Equity Risk
499
218
80
585
Diversification effects
(748)
(1,864)
(518)
(1,114)
Specific Risk
624
428
16
13
Non-Linear Risk
\u2014
\u2014
\u2014
\u2014
Commodities Risk
\u2014
\u2014
\u2014
\u2014
Global Risk
1,513
4,678
699
1,335
Validation of the internal VaR model\u2019s appropriateness for the assessment of risks involved in the positions held, is
conducted over time, with different scopes and frequency, including back testing, diversification effects estimation,
and analysis of risk factor comprehensiveness.
In addition to VaR assessment, the Group continuously tests a broad range of stress scenarios analysing the respective
results to identify risk concentrations not captured by the VaR model.
(1) Trading Book - positions allocated to the Trading Management Area (and not specifically to the accounting trading book)
Interest rate risk
The evaluation of interest rate risk derived from Banking Book operations is assessed through a process of risk
sensitivity analysis, undertaken every month, covering all the operations included in the Group's consolidated Balance
Sheet and discriminated by exposure currency.
Variations of market interest rates influence the Group's net interest income, both in the short term and medium/long
term, affecting its economic value in a long-term perspective. The main risk factors arise from the repricing mismatch
of portfolio positions (repricing risk) and from the risk of variation in market interest rates (yield curve risk). Besides
this, although with less impact, there is the risk of unequal variations in different reference rates with the same
repricing period (basis risk).
In order to identify the exposure of the Group's banking book to these risks, the monitoring of the interest rate risk
takes into consideration the financial characteristics of each of the relevant contracts, with the respective expected
cash-flows (principal and interest, without the spread component but including costs for liquidity, capital, operational
and other) being projected according to the repricing dates, thus calculating the impact on economic value resulting
from alternative scenarios of change of market interest rate curves.
The interest rate sensitivity of the balance sheet, by currency, is calculated as the difference between the present
value of the interest rate mismatch discounted at market interest rates and the discounted value of the same cash
flows simulating parallel shifts of the market interest rates.
The following tables show the expected impact on the banking book economic value of parallel shifts of the yield curve
by +/- 100 and +/- 200 basis points, for each of the main currencies in which the Group holds material positions:
(Thousands of euros)
2023
Currency
-200 bp(*)
- 100 bp (*)
+ 100 bp
+ 200 bp
CHF
2,726
1,368
(1,378)
(2,763)
EUR
(52,312)
(24,650)
21,646
38,925
PLN
130,883
63,939
(61,469)
(120,974)
USD
(8,362)
(4,103)
3,954
7,764
72,935
36,554
(37,247)
(77,048)
(*) Decrease in rates scenario, limited to non-negative rates (which implies effective variations of lesser amplitude than 100 bp, especially in
shorter periods).
(Thousands of euros)
2022 (restated)
Currency
-200 bp(*)
- 100 bp (*)
+ 100 bp
+ 200 bp
CHF
1,422
741
(763)
(1,544)
EUR
(99,549)
(50,069)
50,011
99,465
PLN
(71,253)
(35,436)
34,996
69,502
USD
(32,091)
(15,661)
14,937
29,193
(201,471)
(100,425)
99,181
196,616
(*) Decrease in rates scenario, limited to non-negative rates (which implies effective variations of lesser amplitude than 100 bp, especially in
shorter periods).
As described in accounting policy 1.B, the financial statements of the Group's subsidiaries and associates placed abroad
are prepared in their functional currency and translated into Euros at the end of each financial period. The exchange
rates used for the conversion of balance sheet foreign currency amounts are the ECB reference rates at the end of each
period. In foreign currency conversion of results, are calculated average exchange rates according to the closing
exchange rates of each month of the year. The rates used by the Group are as follows:
Closing exchange rates
Average exchange rates
(Balance sheet)
(Income statement)
Currency
2023
2022
(restated)
2023
2022
(restated)
AOA
924.8560
543.2680
748.1139
487.7116
BRL
5.3614
5.6390
5.4066
5.4153
CHF
0.9297
0.9872
0.9729
1.0042
MOP
8.8865
8.5744
8.8865
8.5744
MZN
70.5700
68.1850
69.2471
67.5585
PLN
4.3437
4.6816
4.5396
4.6823
USD
1.1049
1.0667
1.0819
1.0537
Foreign exchange and equity risk of the banking book
The foreign exchange risk of the banking book is transferred internally to the Trading Area, in accordance with the
Group\u2019s risk specialization model for the management of balance sheet foreign exchange risk. Structural foreign
exchange exposures, including those resulting from financial holdings in subsidiaries, are not transferred and may be
covered by market operations, in line with the defined strategy for managing structural foreign exchange risk, aiming
at hedging against volatility in the CET1 ratio stemming from exchange rates changes.
As at 31 December 2023, the Group 's financial investments in foreign currency were not hedged.
On a consolidated basis these are identified as net investment hedges in accounting terms, according with IFRS
nomenclature. On an individual basis, they are designated as fair value hedges of equity investments.
Gains and losses on instruments used to hedge net investments in foreign institutions are recognized in foreign
exchange reserves and presented in the statement of comprehensive income.
The transfer of funds to Portugal, including dividends, owed by BCP's subsidiaries or associates in third countries,
particularly outside the European Union, may be subject to the restrictions and exchange controls that, at any given
time, are in force in the country where the subsidiaries are incorporated or associated.
Regarding equity risk, the Group maintains a set of small-scale, low-risk positions, primarily in the investment portfolio,
mainly resulting from execution/payment processes. Management of these positions is conducted by a specialized area
of the Group, with risk controlled through defined metrics and limits for market risk control.
Liquidity risk
The evaluation of the Group\u2019s liquidity risk is carried out using indicators set by the supervisory authorities on a regular
basis and other internal metrics for which exposure limits are also fixed.
The monitoring of the liquidity position of the Group's operations in short-term time horizons (up to 3 months) is based
on two internally defined indicators (immediate liquidity and quarterly liquidity). These indicators are calculated on a
daily basis, taking into account the impact in the liquidity buffers available to discount with the respective central
banks at the reference date of future estimated cash flows for each of the respective time horizon (3 days or 3 months)
considering the set of transactions intermediated by the market areas, including in this context transactions with
clients of the Corporate and Private networks, which, due to their size, must be quoted by the Trading Room. The
remaining buffer in each time bucket is then compared to the amount of customer deposits, being the indicators
assessed against exposure limits defined in the Bank's regulations.
In parallel, the evolution of the Group\u2019s structural liquidity position is calculated on a regular basis identifying all the
factors that justify the variations that occur. This analysis is submitted to the Capital and Assets and Liabilities
Committee (CALCO) for appraisal, to enable the decision making that leads to the maintenance of financing conditions
adequate to the business sustainability.
The methodological aspects of the control of liquidity risk are a responsibility of the Risk Commission. This control
includes the regular execution of stress tests, to characterize the Bank's risk profile and to ensure that the Group and
each of its subsidiaries fulfil its obligations in the event of a liquidity crisis. These tests are also used to support the
liquidity contingency plan and management decisions.
Throughout 2023, the Group's three operations - BCP, Bank Millennium and Banco Internacional de Mo\u00e7ambique -
maintained robust liquidity positions, supported mainly by retail deposit bases with proven stability and which allowed
maintaining all liquidity indicators, regulatory and internal, comfortably above the minimum requirements.
At the end of the year and on a consolidated basis, the regulatory short term standard (LCR: Liquidity Coverage Ratio)
reached 276%, compared to 212% in December 2022, well above the minimum regulatory requirement of 100%. The
other short-term liquidity indicator included in the Group's Risk Appetite Statement (RAS), which represents the degree
of coverage of customer deposits by the liquidity buffers available for discounting at European central banks, also had a
favorable evolution, having evolved from 42% to 45%.
From a structural liquidity perspective, the Group continued to reinforce its stable financing base, characterized by the
high weight of customer deposits in the funding structure, complemented by medium and long-term instruments,
consisting mainly of MREL (Minimum Requirements for Own Funds and Eligible Liabilities). The regulatory stable funding
ratio (NSFR: Net Stable Funding Ratio; Article 428 of Regulation (EU) 2019/876) reached 167% in December 2023, vs.
154% a year earlier.
As at 31 December 2023, the Group maintains a structurally comfortable liquidity profile with a loan-to-deposit ratio of
71% (according to Bank of Portugal Instruction No. 16/2004), compared to 74% as at 31 December 2022, indicating a
slight improvement over this period.
In Portugal, following the significant migration of deposits to non-bank savings products that occurred mainly in the
first quarter of 2023, the volume of customer funds showed a stable behavior throughout the 2nd half of the year,
allowing the Bank to protect its market share.
In what concerns wholesale funding, BCP carried out in January 2023 the early repayment of the second and last
tranche of the Targeted Longer-Term Refinancing Operation III (TLTRO III, \"T LTRO III\" in the English abbreviation, in
the gross amount of Euros 600,000,000), with no significant impact on the liquidity risk indicators.
In September 2023, after regaining investment grade status by the four main rating agencies, BCP returned to the
market, placing an issue of senior preferred debt eligible for MREL (Minimum Requirements for Own Funds and Eligible
Liabilities) under its Euro Note Program. The issue, in the amount of Euros 500,000,000, has a term of 3 years, with an
option for early repayment by the Bank at the end of the second year, an issue price of 99.825% and a fixed interest
rate of 5.625%, per year, during the first 2 years (corresponding to a spread of 1.90% over the 2-year mid-swaps rate).
In the third year, the interest rate will result from the sum of the 3-month Euribor with a spread of 1.90%. The issue
was placed among a very diversified base of institutional investors, with demand exceeding the transaction amount by
more than 3 times. The high demand and profile of investors involved in the issue made it possible to narrow the spread
by 30 basis points during the execution phase, also reflecting an excellent market response to the Bank's recent rating
upgrades.
The liquidity buffer available for discounting at the ECB stood at Euros 27,859,364,000 at the end of 2023, Euros
1,351,735,000 higher than a year earlier, to which contributed the cash flow from operations, the reduction in
derivative margin accounts, the placement of the MTN issuance and the market price increase of assets integrated in
the portfolio of assets discountable with the ECB, which offset the impacts in the opposite direction of the evolution of
the commercial gap and the reversal of haircuts applicable to eligible assets at the values in force before the
extraordinary measures taken by the ECB following the COVID-19 pandemic. At the end of 2023, the liquidity buffer
comprised a long position of Euros 2,050,654,000 with the ECB, slightly lower than that observed a year earlier (Euros
2,574,146,000).
Throughout 2023, Bank Millennium showed a significant growth of 11% in its retail deposits base. The operation's
liquidity position was further reinforced by the market placement of a senior non-preferred issue of Euros 500,000,000.
Initially with an amount of Euros 400,000,000, it was subsequently increased by an additional amount of Euros
100,000,000. It has a maturity of four years and a remuneration of 9.875% and qualifies for MREL purposes, thus
meaning the fulfilment of another stage of the institution's recovery plan.
Banco Internacional de Mo\u00e7ambique continued to display a resilient liquidity position, supported by a very conservative
loan to deposits ratio and a robust buffer discountable at the respective central bank, despite the strong increase in
minimum mandatory reserve rates in national and foreign currency imposed by the respective central bank in the first
half of 2023.
The pool of eligible assets for funding operations in the European Central Bank and other central banks, after haircuts,
is detailed as follows:
(Thousands of euros)
2023
2022
(restated)
European Central Bank
14,677,769
13,677,518
Other Central Banks
7,346,514
5,213,823
22,024,283
18,891,341
As at 31\u00a0December 2023 the gross amount discounted with the European Central Bank is null (31\u00a0December 2022: Euros
600,000,000). The amount discounted with the Bank of Mozambique amounts to Euros 1,469,000 (31\u00a0December 2022:
Euros 2,165,000). There are no discounted amounts with other central banks.
The evolution of the ECB\u2019s Monetary Policy Pool, the net borrows at the ECB and liquidity buffer is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Collateral eligible for ECB, after haircuts:
The pool of ECB monetary policy (i)
14,677,769
13,677,518
Outside the pool of ECB monetary policy
11,130,941
10,269,081
25,808,710
23,946,599
Net borrowing at the ECB (ii)
(2,050,654)
(2,574,146)
Liquidity buffer (iii)
27,859,364
26,520,745
i) Corresponds to the amount reported in COLMS (Bank of Portugal application).
ii) Includes as at 31\u00a0December 2023 the amount of deposits with the Bank of Portugal and other liquidity with the Eurosystem (Euros
2,050,654,000) in excess over the minimum cash reserves (Euros 499,338,000).
iii) Eligible collateral available for discount with the ECB, after haircuts, deducted from the net funding at the ECB.
The Group's counterbalancing capacity is defined by the ability to generate additional liquidity in the short term to deal
with possible situations of financial stress. The measures for its reinforcement are described in the Recovery Plan
which, as at 31 December 2023, projected a total estimated value for Portugal of Euros 2,735,000,000, arising from the
sale of corporate bonds and commercial paper, securitization of a portfolio of consumer credit and issuance of retained
covered bonds to be mobilized for the ECB's monetary policy pool.
In consolidated terms, the refinancing risk of medium and long-term instruments will remain at very low levels over the
next years, with no material expression.
Encumbered and Unencumbered assets
Within the scope of the European Banking Authority's guidance on the disclosure of encumbered assets and
unencumbered assets, taking into account the recommendation made by the European Systemic Risk Committee, the
following information is presented in accordance with Commission Implementing Regulation (EU) 2021/637 of 15 March
2021 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to
regulatory technical standards for disclosure of encumbered and unencumbered assets.
(Thousands of euros)
2023 (1)
Carrying amount of
encumbered assets
Fair value of
encumbered assets
Carrying amount of
unencumbered assets
Fair value of
unencumbered assets
of which
notionally
eligible EHQLA
and HQLA (2)
of which
notionally
eligible EHQLA
and HQLA (2)
of which
EHQLA
and HQLA
(2)
of which
EHQLA
and HQLA
(2)
Assets of the disclosing
institution
2,209,334
1,732,985
88,478,010
23,355,398
Equity instruments
\u2014
\u2014
\u2014
\u2014
108,617
\u2014
108,617
\u2014
Debt securities
1,732,985
1,732,985
1,600,621
1,600,621
24,139,055
19,569,285
23,462,376
18,923,903
of which: covered bonds
\u2014
\u2014
\u2014
\u2014
49,735
\u2014
49,735
\u2014
of which: securitisations
\u2014
\u2014
\u2014
\u2014
7,329
3,348
7,329
3,348
of which: issued by
general governments
1,693,088
1,693,088
1,561,888
1,561,888
17,567,226
17,177,757
16,922,286
16,543,663
of which: issued by
financial corporations
\u2014
\u2014
\u2014
\u2014
1,704,878
259,885
1,713,561
259,586
of which: issued by non-
financial corporations
39,897
39,897
38,734
38,734
2,939,512
491,430
2,952,759
491,430
Other assets
459,458
\u2014
64,159,488
3,797,102
(1) Table's figures are calculated by the median of the values disclosed in the regulatory information for the previous 4 quarters.
(2) EHQLA (Set as Extremely High-Quality Liquid Assets) e HQLA (High-Quality Liquid Assets).
Collateral received and own debt securities issued
(Thousands of euros)
2023 (1)
Fair value of encumbered collateral
received or own debt securities issued
Unencumbered
Fair value of collateral received or
own debt securities issued
available for encumbrance
of which notionally
eligible EHQLA and
HQLA (2)
of which EHQLA
and HQLA (2)
Collateral received by the disclosing institution
\u2014
\u2014
253,362
139,971
Debt securities
\u2014
\u2014
139,971
139,971
of which: issued by general governments
\u2014
\u2014
139,971
139,971
Loans and advances other than loans on demand
\u2014
\u2014
111,455
\u2014
Own covered bonds and securitisations issued
and not yet pledged
9,114,834
\u2014
TOTAL COLLATERAL RECEIVED AND OWN DEBT
SECURITIES ISSUED
2,209,334
1,732,985
(1) Table's figures are calculated by the median of the values disclosed in the regulatory information for the previous 4 quarters.
(2) EHQLA (Set as Extremely High-Quality Liquid Assets) e HQLA (High-Quality Liquid Assets).
Sources of encumbrance
(Thousands of euros)
Sources of encumbrance
Matching liabilities, contingent
liabilities and securities lent
Assets, collateral received and own debt
securities issued other than covered
bonds and securitisations encumbered
Carrying amount of selected financial liabilities
1,163,408
1,687,935
The table's figures are calculated by the median of the values disclosed in the regulatory information for the previous 4 quarters.
At the end of 2023, and according to the EBA methodology, the total encumbered assets represents 2% of the Group's
total balance sheet assets. The encumbered Loans to customers represents 13% of the total encumbered assets, while
Debt securities represents 78%.
The main sources of asset encumbrance stem from financing operations in Portugal, notably transactions with the
European Investment Bank (EIB), collateralization of derivative operations and securitization programs.
Collateralization of securitization operations in Poland and derivatives, as well as financing operations with the
European Investment Bank and other commitments with the Deposit Guarantee Fund, are primarily supported by
eligible sovereign debt held with central banks. On the other hand, securitization programs in Portugal are
collateralised by certain Loans to Customers\u2019 portfolios.
As at 31 December 2023, the Other assets includes unencumbered assets in the amount of Euros 3,350,705,000 related
to Loans on demand, the amount of Euros 54,466,987,000 related to Loans and advances other than loans on demand
(of which encumbered assets in the amount of Euros 276,263,000) and the amount of Euros 6,872,185,000, mostly
unencumbered and related to the Group\u2019s activity, namely, to: investments in associated companies and subsidiaries,
tangible assets and investment properties, intangible assets, assets associated with derivatives and current and
deferred taxes.
As at 31 December 2023, BCP Group has a Euros 12.5 billion BCP Covered Bond Programme (\u201cBCP Programme\u201d) with
Euros 9.2 billion of covered bonds outstanding. The BCP Programme is backed by a Euros 10.9 billion portfolio of
residential mortgages, as well as by a liquidity buffer of Euros 50 million, providing an overcollateralization of 18.8%,
which is above the minimum of 14% currently required by rating agencies.
The new Portuguese covered bond legislation, under which the BCP Programme has been recently updated and
authorised for the issuance of \u201cCovered Bonds (Premium)\u201d (label now born by all its outstanding covered bonds),
affords covered bond holders a dual-recourse, firstly over the issuer, secondly over the cover pool that may also include
other eligible assets, over which they benefit from a special preferential claim. The Portuguese covered bond
legislation ensures total segregation of the covered pool from any future issuer\u2019s insolvent estate, for the benefit of
covered bond holders, who have precedence over claims of any other of the issuer\u2019s creditors in case of issuer
insolvency, thus and to this extent superseding the general insolvency and recovery legislation. Residential mortgages
in a cover pool are subject to certain eligibility criteria inscribed in the Portuguese covered bond legislation, among
them a maximum LTV of 80%, in the case of programmes issuing Covered Bonds (Premium), delinquency of no more
than 90 days, and them being first lien mortgages (or, if otherwise, all preceding liens being in the cover pool) over
properties located in the EU. The BCP\u2019s Programme documentation limits property location to Portugal only.
The analysis of the balance sheet items by maturity dates is as follows:
(Thousands of euros)
2023
Up to 3
months
3 months
to 1 year
1 year to
5 years
Over 5
years
Undetermined
maturity
At sight
Total
Assets
Cash and deposits at Central Banks
4,545,526
\u2014
\u2014
\u2014
\u2014
\u2014
4,545,526
Loans and advances to Credit
Institutions - Repayable on demand
337,687
\u2014
\u2014
\u2014
\u2014
\u2014
337,687
Other loans and advances (a)
\u2014
703,056
205,645
\u2014
\u2014
\u2014
908,701
Loans and advances to customers (a)
\u2014
\u2014
8,758,135
13,062,576
32,451,042
616,056
54,887,809
Other financial assets (b)
\u2014
2,573,933
2,463,873
5,409,172
1,004,966
704,509
12,156,453
4,883,213
3,276,989
11,427,653
18,471,748
33,456,008
1,320,565
72,836,176
Liabilities
Resources from Credit Institutions
\u2014
516,776
312,350
\u2014
\u2014
\u2014
829,126
Resources from costumers
45,049,544
15,685,920
14,117,747
693,602
60,000
\u2014
75,606,813
Debt securities issued
\u2014
\u2014
311
2,360,372
351,999
\u2014
2,712,682
Subordinated debt
\u2014
\u2014
\u2014
328,679
1,068,746
\u2014
1,397,425
45,049,544
16,202,696
14,430,408
3,382,653
1,480,745
\u2014
80,546,046
(a) Gross of impairment
(b) Financial assets at fair value through profit or loss and Financial assets at fair value through other comprehensive income.
Operational Risk
The operational risk management system is framed by the \u201c3 Lines of Defence\u201d Corporate Governance model and is
based on an integrated structure of end-to-end processes, considering that a vision which is transversal to the
functional units of the organisational structure is the most suitable approach for the perception of risks and to estimate
the effects of the corrective measures introduced for their mitigation. Furthermore, these processes model also
underlies other strategic initiatives related to the management of this risk such as the actions to improve operating
efficiency and the management of business continuity. Hence, the most relevant Group subsidiaries have their own
process's structure, which is periodically adjusted according to business evolution, in order to ensure suitable coverage
of the business activities (or business support activities) developed, ensuring thus, the replication of the 3 Lines of
Defence model in the management of operational risk.
The responsibility for the day-to-day processes\u2019 management lies with the 1st Line of Defence: the process owners
(seconded by process managers), whose mission is to characterise the operational losses captured under their
processes, to monitor the respective Key Risk Indicators (KRI), to perform the Risks Self-Assessment (RSA) exercises, as
well as to identify and implement suitable actions to mitigate operational risk exposures, thus contributing to the
strengthening of control mechanisms and the improvement of the internal control environment. The periodic revision of
the main processes in each geography is ensured by local structure units.
The Risk Management function (materialised in the Risk Office) and the Compliance function (materialised in the
Compliance Office) represent the 2nd Line of Defence and are responsible for implementing the risk policy defined for
the Group, proposing and developing approaches for managing this risk, supervising their implementation and
challenging the 1st Line of Defence regarding the risk levels incurred. The Internal Audit function embodies the 3rd Line
of Defence and supervises the appropriate fulfilment of the functions and activities of the remaining two lines of
defence.
In 2023, the usual operational risk management activities continued to be executed by the various players involved in
the management of this risk, aiming at an efficient and systematic identification, evaluation, mitigation and control of
exposures, as well as at the appropriate reporting tasks, either to the Group\u2019s management bodies or within regulatory
duties. The results of the RSA exercises evidence a robust control environment, demonstrating the Group's commitment
to operational risk management through the continuous development of improvement actions that help mitigate
exposures to this risk. Regarding the operational losses registered, it should be highlighted that their pattern was not
different from what is usual and expected, with a higher frequency of losses of low amounts, without concentration in
significant amounts.
The monitoring of KRI has allowed to identify opportunities for improvement that, together with the RSA exercises and
the process of identification and registration of losses, provide for an effective management of this risk.
The Bank's mobilisation\u00a0to reinvent the banking experience, based on the digitization and use of new technologies,
entails relevant challenges in the management of operational risk, which include the reinforcement of the security of
digital banking channels, the reinforcement of mechanisms for the prevention and detection of potential fraud, proper
management of personal data and compliance with the information duties legally provided for in sales through digital
banking channels.
Covenants
The contractual terms of instruments of various wholesale funding instruments encompass obligations assumed by
entities belonging to the Group as borrowers or issuers, concerning general duties of corporate conduct, maintenance
of banking activity and the inexistence of special guarantees constituted for the benefit of other creditors (\u201cnegative
pledge\u201d). These terms essentially reflect the internationally adopted standards for each of the types of debt
instruments used by the Group.
The terms of the Group\u2019s intervention in rated securitization transactions involving its own assets are subject to
changes in case the Group triggers certain rating criteria. The criteria established in each transaction results mainly
from the analysis performed at the moment that the transaction was structured, being usually applied by each rating
agency in a standardised way to the securitization transactions involving the same type of assets.
Regarding the Covered Bond Programs of Banco Comercial Portugu\u00eas, there are no relevant covenants related to a
possible downgrade of BCP.
Hedge accounting
The detailed information of the strategies, hedge transactions, hedged items and hedging instruments applied by the
Group, is shown in a table below:
Strategy
Description of hedge transactions
Hedged items
Hedging
instruments
Cash flow volatility hedge of the
flows generated by the portfolio
of Euros floating rate mortgage
loans (a)
Group hedges the risk of the volatility of interest
payments from floating rate mortgages. The
volatility of cash flows results from interest rate
risk
Floating rate mortgage loans
(BCP S.A.)
IRS
transactions
Cash flow volatility hedge due to
future income and interest costs
denominated in foreign currencies
(a)
The Group hedges the risk of the volatility of cash
flows generated by income and interest costs
denominated in foreign currencies. The volatility
of cash flows results from the currency risk
Cash flows resulting from
income and interest costs
denominated in foreign
currencies (Bank Millennium
S.A.)
FX position
transactions
Cash flow volatility hedge for the
flows generated by FX mortgage
portfolio and its underlying PLN
liabilities (a)
The Group hedges the risk of the volatility of cash
flows generated by FX mortgages and by PLN
liabilities financially underlying such loans. The
volatility of cash flows results from the currency
risk and interest rate risk
Cash flows resulting from the
FX mortgage loan portfolio
and PLN deposits together
with issued debt PLN
securities funding them (Bank
Millennium S.A.)
CIRS
transactions
Hedge of volatility of the cash
flows generated by PLN
denominated financial assets (a)
The Group hedges the risk of the volatility of cash
flows generated by PLN denominated financial
assets. The volatility of cash flows results from
interest rate risk
Cash flows resulting from PLN
denominated financial assets
(Bank Millennium S.A.)
IRS
transactions
Fair value hedge of fixed rate
mortgage loans (a)
Group hedges changes in the fair value of cash
flows of fixed rate mortgage loans due to changes
in market interest rates
Fixed rate mortgage loans
(BCP S.A.)
IRS
transactions
Fair value hedge of fixed rate
debt instruments (a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate debt securities,
classified as Financial assets
at amortised cost (BCP S.A.)
IRS
transactions
Fair value hedge of fixed rate
debt instruments in Euros (a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate debt securities,
classified as Financial assets
at fair value through other
comprehensive income (BCP
S.A. and ActivoBank S.A.)
IRS
transactions
Fair value hedge of fixed rate
issued debt instruments in Euros
(a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate Issued debt (BCP
S.A.)
IRS
transactions
Fair value hedge of fixed rate
deposits in Euros (a)
Group hedges changes in the fair value of fixed
rate deposits due to changes in market interest
rates
Term deposits (BCP S.A.)
IRS
transactions
Fair value hedge of fixed rate
deposits in Euros (macro hedge)
(b)
Group hedges changes in the fair value of fixed
rate deposits due to changes in market interest
rates
Repayable demand deposits
without maturity (BCP S.A.
and ActivoBank S.A.)
IRS
transactions
Fair value hedge of fixed rate
debt instruments in USD (a)
Group hedges changes in the fair value of fixed
rate bonds due to changes in market interest rates
Fixed rate debt securities,
classified as Financial assets
at fair value through other
comprehensive income or
amortised cost (BCP S.A.)
CIRS
transactions
Fair value hedge of a fixed
interest rate debt instrument
(macro hedge) (a)
The Group hedges part of the interest rate risk
associated with the change in the fair value of a
fixed-rate debt instrument recorded in other
comprehensive income, resulting from fluctuations
in market interest rate
A portfolio of fixed coupon
debt securities classified as
financial assets measured at
fair value through other
comprehensive income
denominated in PLN (Bank
Millennium S.A.)
IRS
transactions
Hedging the fair value of cash
flows from issued fixed-rate
liabilities denominated in foreign
currencies (b)
The Group hedges part of the interest rate risk
related to changes in the fair value of cash flows
from issued fixed-rate liabilities denominated in
foreign currencies, resulting from the volatility of
market interest rates
Cash flows from issued fixed-
rate liabilities denominated in
foreign currencies (Bank
Millennium S.A.)
IRS
transactions
(a) - Strategy applied in 2023 and 2022.
(b) - Strategy applied in 2023.
As at 31\u00a0December 2023, the table below includes the detail of the hedging instruments used in the Group's hedging
strategies and accounted at the Balance sheet item - Hedging derivatives:
(Thousands of euros)
2023
Hedging instruments
Book value
Change in fair
value (A)
Type of hedging
Notional
Assets
Liabilities
Fair value hedge
Interest rate risk
Interest rate swaps
11,482,214
34,716
8,441
(43,031)
Foreign exchange risk
Currency and interest rate swap
348,464
2,279
6,272
856
11,830,678
36,995
14,713
(42,175)
Cash flows hedging
Interest rate risk
Interest rate swaps
10,258,928
164
14,965
1,310,159
Foreign exchange risk
Currency and interest rate swap
454,268
3,469
38,147
16,544
10,713,196
3,633
53,112
1,326,703
Total
22,543,874
40,628
67,825
1,284,528
(A) Changes in fair value used to calculate the ineffectiveness of the hedge
As at 31\u00a0December 2022, the table below includes the detail of the hedging instruments used in the Group's hedging
strategies and accounted at the Balance sheet item - Hedging derivatives:
(Thousands of euros)
2022 (restated)
Hedging instruments
Book value
Change in fair
value (A)
Type of hedging
Notional
Assets
Liabilities
Fair value hedge
Interest rate risk
Interest rate swaps
11,962,045
27,696
7,031
309,506
Foreign exchange risk
Currency and interest rate swap
431,257
2,999
18,432
(717)
12,393,302
30,695
25,463
308,789
Cash flows hedging
Interest rate risk
Interest rate swaps
14,559,138
\u2014
110,562
(1,513,397)
Foreign exchange risk
Currency and interest rate swap
1,273,663
29,008
41,975
(10,527)
15,832,801
29,008
152,537
(1,523,924)
Total
28,226,103
59,703
178,000
(1,215,135)
(A) Changes in fair value used to calculate the ineffectiveness of the hedge
As at 31\u00a0December 2023, the table below includes the detail of the hedged items:
(Thousands of euros)
2023
Hedged items
Type of hedging
Balance
sheet
item
Cumulative value of
the adjustments
Change in
fair value
(A)
Cash flow hedge reserve /
Currency translation reserve
Book value
Hedging
relationships
in effect
Hedging
relationships
discontinued
Assets
Liabilities
Assets
Liabilities
Fair value hedge
Interest rate risk
Interest rate swaps
(B)
288,106
\u2014
(24,592)
13,551
(33,462)
n/a
n/a
(H)
1,599,095
\u2014
(21,780)
\u2014
55,434
n/a
n/a
(C)
2,997,010
\u2014
(126,169)
\u2014
93,925
n/a
n/a
(D)
\u2014
10,000
\u2014
(221)
221
n/a
n/a
(E)
\u2014
2,387,825
\u2014
103,603
(16,516)
n/a
n/a
(F)
\u2014
1,329,345
\u2014
(34,224)
(32,636)
n/a
n/a
(G)
\u2014
1,037,079
\u2014
(41,831)
(30,208)
n/a
n/a
Foreign exchange risk
Currency and interest rate
swap
\u2014
348,464
\u2014
51
(173)
n/a
n/a
4,884,211
5,112,713
(172,541)
40,929
36,585
n/a
n/a
Cash flows hedging
Interest rate risk
Interest rate swaps
(B)
10,258,698
\u2014
\u2014
\u2014
(1,310,159)
(470,250)
(808,471)
Foreign exchange risk
Currency and interest rate
swap
(B)
454,268
\u2014
\u2014
\u2014
(16,027)
(2,138)
(51)
10,712,966
\u2014
\u2014
\u2014
(1,326,186)
(472,388)
(808,522)
Total
15,597,177
5,112,713
(172,541)
40,929
(1,289,601)
(472,388)
(808,522)
(A) Fair value changes used to calculate the ineffectiveness of the hedge
(B) Financial assets at amortised cost - Loans and advances to customers
(C) Financial assets at fair value through other comprehensive income
(D) Financial liabilities at amortised cost - Resources from credit institutions
(E) Financial liabilities at amortised cost - Resources from customers
(F) Financial liabilities at amortised cost - Non subordinated debt securities issued
(G) Financial liabilities at amortised cost - Subordinated debt
(H) Debt securities held not associated with credit operations
As at 31\u00a0December 2022, the table below includes the detail of the hedged items:
(Thousands of euros)
2022 (restated)
Hedged items
Type of hedging
Balance
sheet
item
Cumulative value of
the adjustments
Change in
fair value
(A)
Cash flow hedge reserve /
Currency translation reserve
Book value
Hedging
relationships
in effect
Hedging
relationships
discontinued
Assets
Liabilities
Assets
Liabilities
Fair value hedge
Interest rate risk
Interest rate swaps
(B)
814,689
\u2014
(71,691)
\u2014
(70,012)
n/a
n/a
(H)
1,524,001
\u2014
(510,086)
\u2014
(181,718)
n/a
n/a
(C)
3,437,415
\u2014
(285,374)
(3,278)
(210,181)
n/a
n/a
(D)
\u2014
10,000
\u2014
517
580
n/a
n/a
(E)
\u2014
12,350
\u2014
(1,232)
718
n/a
n/a
(F)
\u2014
1,295,542
\u2014
(66,860)
65,881
n/a
n/a
(G)
\u2014
998,066
\u2014
(72,040)
67,509
n/a
n/a
Foreign exchange risk
Currency and interest
rate swap
\u2014
431,257
\u2014
(1,131)
1,079
n/a
n/a
5,776,105
2,747,215
(867,151)
(144,024)
(326,144)
n/a
n/a
Cash flows hedging
Interest rate risk
Interest rate swaps
(B)
14,558,924
\u2014
\u2014
\u2014
1,513,397
(1,775,249)
7,644
Foreign exchange risk
Currency and interest rate
swap
(B)
1,273,663
\u2014
\u2014
\u2014
11,473
(20,123)
(280)
15,832,587
\u2014
\u2014
\u2014
1,524,870
(1,795,372)
7,364
Total
21,608,692
2,747,215
(867,151)
(144,024)
1,198,726
(1,795,372)
7,364
(A) Fair value changes used to calculate the ineffectiveness of the hedge
(B) Financial assets at amortised cost - Loans and advances to customers
(C) Financial assets at fair value through other comprehensive income
(D) Financial liabilities at amortised cost - Resources from credit institutions
(E) Financial liabilities at amortised cost - Resources from customers
(F) Financial liabilities at amortised cost - Non subordinated debt securities issued
(G) Financial liabilities at amortised cost - Subordinated debt
(H) Debt securities held not associated with credit operations
The reconciliation of each equity component and an analysis of other comprehensive income attributable to hedge
accounting, with reference to 31\u00a0December 2023 and 2022, is as follows:
(Thousands of euros)
Cash flow hedge reserve
Exchange differences
2023
2022
(restated)
2023
2022
(restated)
Balance as at 1 January
(1,788,008)
(141,642)
\u2014
55,326
Amounts recognised in other comprehensive income:
\u00a0 Hedging cash flows
\u00a0 \u00a0 Changes in fair value of currency and interest rate swaps
1,326,186
(1,523,207)
\u2014
\u2014
\u00a0 \u00a0 Foreign exchange changes
(6,747)
1,725
\u2014
\u2014
\u00a0 \u00a0 Hedge breakage
(816,115)
(123,938)
\u2014
\u2014
\u00a0 \u00a0 Ineffectiveness of coverage recognised in results
(517)
1,333
\u2014
\u2014
\u00a0 \u00a0 Others
4,291
(2,279)
\u2014
\u2014
\u00a0 Hedging of net investments - foreign exchange risk
\u00a0 \u00a0 Reclassified to the income statement
\u2014
\u2014
\u2014
3,685
Change in the fair value of settled transactions
\u2014
\u2014
\u2014
(59,011)
Balance at the end of the year
(1,280,910)
(1,788,008)
\u2014
\u2014
The table below includes information on the effectiveness of hedging relationships, as well as impacts on results and
other comprehensive income, with reference to 31\u00a0December 2023:
(Thousands of euros)
2023
Income
statement
item (A)
Gains/(losses)
recognised in
Other
comprehensive
income
Hedging
ineffectiveness
recognised in
Income
statement (A)
Amounts reclassified from reserves to results
for the following reasons:
Income
statement
item (B)
Cash flows
that were
being hedged
(C)
Hedged item
with an
impact on
results
Type of hedging
Fair value hedge
Interest rate risk
Interest rate swaps
(D)
\u2014
(6,273)
\u2014
\u2014
Foreign exchange risk
Currency and interest rate swap
(D)
\u2014
683
\u2014
\u2014
\u2014
(5,590)
\u2014
\u2014
Cash flows hedging
Interest rate risk
Interest rate swaps
(D)
61,205
\u2014
(E)
(45,947)
\u2014
Foreign exchange risk
Currency and interest rate swap
(D)
19,801
517
\u2014
\u2014
81,006
517
(45,947)
\u2014
Total
81,006
(5,073)
(45,947)
\u2014
(A) Income Statement item in which the ineffectiveness of the hedge was recognised
(B) Income Statement item in which the reclassified amount was recognised
(C) but which are no longer expected to occur
(D) Net gains/(losses) from hedge accounting operations
(E) Interest income
The table below includes information on the effectiveness of hedging relationships, as well as impacts on results and
other comprehensive income, with reference to 31\u00a0December 2022:
(Thousands of euros)
2022 (restated)
Income
statement
item (A)
Gains/(losses)
recognised in
Other
comprehensive
income
Hedging
ineffectiveness
recognised in
Income
statement (A)
Amounts reclassified from reserves to results
for the following reasons:
Income
statement
item (B)
Cash flows
that were
being hedged
(C)
Hedged item
with an
impact on
results
Type of hedging
Fair value hedge
Interest rate risk
Interest rate swaps
(D)
\u2014
(17,717)
\u2014
\u2014
Foreign exchange risk
Currency and interest rate swap
(D)
\u2014
362
\u2014
\u2014
\u2014
(17,355)
\u2014
\u2014
Cash flows hedging
Interest rate risk
Interest rate swaps
(D)
(66,333)
(238)
(E)
54,861
\u2014
Foreign exchange risk
Currency and interest rate swap
(D)
(15,838)
(1,333)
\u2014
\u2014
(82,171)
(1,571)
54,861
\u2014
Total
(82,171)
(18,926)
54,861
\u2014
(A) Income Statement item in which the ineffectiveness of the hedge was recognised
(B) Income Statement item in which the reclassified amount was recognised
(C) but which are no longer expected to occur
(D) Net gains/(losses) from hedge accounting operations
(E) Interest income
The table below shows the detail of hedging instruments, as at 31\u00a0December 2023, by maturity:
(Thousands of euros)
2023
Remaining period
Fair value
Type of hedging
Up to 3
months
3 months to
1 year
Over 1 year
Total
Assets
Liabilities
Fair value hedging derivatives related to
interest rate risk changes:
OTC Market:
Interest rate swaps
Notional
7,750
508,735
10,965,729
11,482,214
34,716
8,441
Fixed interest rate (average)
3.56%
6.17%
2.91%
3.07%
Fair value hedging derivatives related to
currency risk changes
OTC Market:
Currency and interest rate swap
140,291
208,173
\u2014
348,464
2,279
6,272
Cash flow hedging derivatives related to
interest rate risk changes:
OTC Market:
\u00a0 Interest rate swaps
499,574
1,600,000
8,159,354
10,258,928
164
14,965
Cash flow hedging derivatives related to
currency risk changes:
OTC Market:
\u00a0 Currency and interest rate swap
354,009
19,885
80,374
454,268
3,469
38,147
Total derivatives traded by
OTC Market:
1,001,624
2,336,793
19,205,457
22,543,874
40,628
67,825
The table below shows the detail of hedging instruments, as at 31\u00a0December 2022, by maturity:
(Thousands of euros)
2022 (restated)
Remaining period
Fair value
Type of hedging
Up to 3
months
3 months to
1 year
Over 1 year
Total
Assets
Liabilities
Fair value hedging derivatives related to
interest rate risk changes:
OTC Market:
Interest rate swaps
Notional
293,467
377,114
11,291,464
11,962,045
27,696
7,031
Fixed interest rate (average)
1.05%
1.44%
2.44%
2.38%
Fair value hedging derivatives
related to currency risk changes
OTC Market:
Currency and interest rate swap
98,439
332,818
\u2014
431,257
2,999
18,432
Cash flow hedging derivatives related to
interest rate risk changes:
OTC Market:
Interest rate swaps
240,409
278,751
14,039,978
14,559,138
\u2014
110,562
Cash flow hedging derivatives related to
currency risk changes:
OTC Market:
Currency and interest rate swap
153,720
685,365
434,578
1,273,663
29,008
41,975
Total derivatives traded by
OTC Market:
786,035
1,674,048
25,766,020
28,226,103
59,703
178,000
Climate risks - Integration of ESG Factors in Risk Management
In its risk classification, Millennium BCP recognises the ESG category which includes factors associated with the climate
and environmental components, and also with social and governance aspects.\u00a0
These factors are not considered separately; in fact, they are seen as elements likely to affect positively or negatively
the financial performance and solvency of the Bank's customer\u2019s and counterparties. This way, the materialisation of
their impacts occurs by means of the \u201ctraditional\u201d categories: credit risk, market risk, operational & reputation risk,
liquidity and financing risks.
Within this context, and with the purpose of promoting the integration of ESG factors in risk management, the Bank
implemented a set of processes and methodologies to identify, assess, manage and monitor the impact of the ESG
category in overall risk, in accordance with the framework and policies already established for the remaining financial
and non-financial risks.
Governance Model
The governance model for risks arising from ESG factors follows a structure based on three lines of defence which,
under the leadership of the Board of Directors (and respective delegations on the Executive Committee), ensure its
adequate assessment and management.
The first-line functions comprise all the departments and business areas that interact with the Bank\u2019s customers,
counterparties and suppliers, collect the information and data that support the assessment of their risk profiles (and of
their respective operations) and structure the commercial solutions with characteristics associated with the ESG or with
the promotion of control of their impacts on the Bank's risk profile.
The Sustainability Function fits in the first line of defence and its responsibilities include:
\u2022 the overall management of the sustainability strategy and plans of Millennium BCP and of its financial group;
\u2022 the development of policies, methodologies, analyses and reports that address ESG issues;
\u2022 the management of commitments and external communications by the Bank and the Group in this area; and
\u2022 the direct orientation and operational support to the first and second lines of defence in the performance of their
main responsibilities in this scope.
In the second line of defence, the responsibility for risk control, is assumed by the Risk Office and by the Compliance
Office. These functions ensure the procedures for the design, implementation of the policies/methodologies/ risk
management models, which are paramount in keeping the risk profile of the Group in appropriate levels.
Among other, these responsibilities, include:
\u2022 Integrate the ESG dimension in risk appetite (Risk Appetite Framework - RAF);
\u2022 Syndicating with the Sustainability Function the proposal of ESG metrics to be included in the Risk Appetite Statement
(RAS);
\u2022 Carry out stress tests focused on climate and environmental risk factors;
\u2022 Introduce the ESG dimension in capital and liquidity adequacy exercises.
Specifically in terms of compliance, we emphasise the following controls:
\u2022 Reporting, disclosure and prudential obligations;
\u2022 Design and approval of new products, especially in the cases of ESG product design and labelling;
\u2022 Incorporation of ESG-related conditions and requirements into the forms and contracts;
\u2022 Ensuring the timely application of the legal and regulatory dispositions related to ESG;
\u2022 Potential for conflicting interest or litigation in the provision of ESG-related services and products.
Within the scope of the Committees of the Board of Directors, the Committee for Corporate Governance, Ethics and
Sustainability is the body responsible for recommending the adoption by the Board of Directors of policies in line with
ethical principles and social responsibility and best practices in matters of corporate governance and sustainability, but
also for monitoring the evolution of the Sustainability Master Plan and the Corporate Social Responsibility Plan and
issuing an opinion on the annual corporate governance and sustainability reports. The Committee for Risk Assessment,
among its competences and attributions, is also responsible for monitoring ESG risks, including climate risks and advise
the Board of Directors in terms of the identification, management and control of ESG risk factors, while monitoring the
Group\u2019s risk appetite and underlying performance, as well as supervising the adequacy of the ESG internal control
system, with special focus on a) the effectiveness of the risk management system to deal with the ESG risk drivers; and
b) dealing with any instance of reputational risk related to ESG to which the Group may be associated to (directly or
indirectly).
The third line of defence assumes responsibility for the independent review of all ESG aspects through the annual work
plans of the Audit Division.
Identification of ESG risks
Climate changes and environmental degradation factors are elements that potentially affect economic activity, through
factors related with issues such as climate changes (mitigation, and adaptation), sustainable use and protection of
hybrid and marine resources, transition towards a circular economy, prevention and control of pollution, protection and
restoration of biodiversity (cf. EU Taxonomy).
The materialisation of these risks fundamentally stems from the exposure of Millennium BCP's banking portfolio to
customers, counterparties and invested assets whose performance may be affected or contribute to the negative
impacts of climate change and other environmental factors.
These factors may generate negative financial impacts which are identified and assessed by means of two main
dimensions:
\u2022 Physical risk factors: arising from the physical effects of climate change and environmental degradation. They should
be categorized as a) severe risks, if they arise from extreme weather events such as wildfires or floods; b) chronic
risks, if they arise from progressive changes in weather and climate patterns or from a gradual loss of natural
ecosystems.
\u2022 Transition risk factors: are the risks of any negative financial impact arising from the effort, in progress or to happen
in the future, of transition into a low-carbon and environmentally sustainable economy. These may result, for
example, from technological changes, the impact of public policies or behavioural changes in terms of demand for
goods or services (including banking services).
\u2022 The biodiversity or nature-related risks: The depreciation of natural capital, which in this context encapsulates the
environmental-driven risks, is another key component of a holistic approach to C&E concerns. Natural capital refers
to the world\u2019s stocks of natural assets which include geology, soil, air, water and all living things as well as the
organization and distribution of ecosystems. The depreciation of natural capital undermines the ability of nature to
provide ecosystem services (provisioning services, such as food, raw materials and fresh water; maintenance and
regulating services, such as climate, water and air quality regulation, pollination, and pest and disease control; and
cultural services, supporting recreation, mental and physical health, and spiritual and religious values) on which the
Human society, economies and other species rely. Natural capital degradation can have chronic as well as acute
economic effects.
The materialisation of social risks is also assessed, considering the issues related with rights, well-being and interests of
persons and communities and include factors such as (in)equality, health, diversity, inclusion, labour relations,
workplace health and safety, human capital and communities.
In addition, the governance risk factors are also identified by Millennium BCP, through issues relating to leadership,
executive remuneration, shareholder rights, corruption and bribery, management and prevention of conflicts of
interest, quality of internal control and independent reviews/auditing, transparency and good tax practices, for
example.
A methodology for assessing the materiality of ESG risks was developed in order to determine the potential impact of
those risks on the Bank\u2019s profile.
Management and monitoring principles
ESG risks management and respective strategy follows a different logic compared to 'traditional' risks, which are based
on short-term timeframes. In contrast, the materialization of ESG risks is expected to occur over extended timeframes,
which is why the establishment of strategy and risk appetite follows different timeframes. For example, if the
assessment of physical (severe) risks can determine an action strategy more focused on the short term (e.g.,
considering the establishment of additional mitigation measures, at the level of policies for granting credit and
insurance policy), the transition risks justify a more structural approach, based on collecting information, evaluating
customers and monitoring their performance over time.
From this perspective, Millennium BCP's management of ESG impacts follows the following principles:
\u2022 Establishment of a responsible corporate financing policy, which excludes or conditions the Group's operations in
sectors and/or activities with greater environmental and social impact.
\u2022 Integration of the strategy for managing risks arising from ESG factors into the Bank's global sustainability plan, which
steers the integration of the ESG dimension into business processes, establishing goals, timelines and a model for
controlling proper observance.
\u2022 Communication Transparency: The Bank publicly discloses its sustainability objectives and key practices, as well as its
management of ESG (Environmental, Social, and Governance) impact factors. This allows all stakeholders to assess
the robustness of its approach, including its exposure to risks arising from ESG factors.
\u2022 Regular Monitoring of Exposure to Risks Arising from ESG Factors: This is done through established management
information routines for each risk category.
\u2022 Internal Standardization of ESG References: This involves implementing a corporate taxonomy that enables the
identification and classification of exposures demonstrating characteristics that actively support the transition of the
Portuguese and European economies.
\u2022 Focus on Credit Risk Management: This is achieved through models that facilitate the integration of the ESG
dimension in the risk assessment of the bank's key companies/clients. This ensures that business decisions incorporate
an evaluation of the primary impacts of ESG factors.
\u2022 Collection and Structuring of Information: Utilizing public sources and information provided directly by clients, this
approach aims to enhance understanding of clients' environmental performance and potential financial impacts
associated with any limitations in that performance.
The operationalization of these principles is facilitated through an internal policy for managing risks arising from ESG
factors, which establishes the following key risk tools:
\u2022 Regular assessment of the materiality of risks arising from ESG factors to confirm alignment with risk appetite and the
need for implementing mitigation actions.
\u2022 Methodologies for assessing risks arising from ESG factors integrated into credit risk assessment models.
\u2022 Risk classification methodologies at the portfolio level, allowing the identification of sectors, companies, and
exposures most susceptible to transition and/or physical risks and/or nature-related.
\u2022 Models for quantifying financed greenhouse gas emissions, fostering strategic discussions regarding the management
of these emissions and their alignment (in the long term) with the goals of the Paris Agreement.
\u2022 Sensitivity analyses and stress tests focusing on climate risks.
Climate risk stress tests
The Bank uses sensitivity analysis methodologies and stress tests on the risks arising from ESG factors (with a focus on
the climate risk component).
Considering the horizons of materialization of ESG risks, this is an important risk management technique, which allows
the assessment of the impacts of climate change (and respective scenarios) on the financial variables that affect the
value of Millennium bcp's banking portfolio.
Based on their results, new exposures at risk may be identified that require the Bank to take additional management
measures to mitigate the impacts of climate risks.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-696": { "value": "
The collaterals and the relevant guarantees can be aggregated in the following categories:
- financial collaterals, real estate collaterals or other collaterals;
- receivables;
- first demand guarantees, issued by banks or other entities with Risk Grade 7 or better on the Rating Master Scale;
- personal guarantees when the persons are classified with Risk Grade 7 or better;
- credit derivatives. \u00a0
The financial collaterals accepted are those that are traded in a recognised stock exchange, i.e., on an organized
secondary market, liquid and transparent, with public bid-ask prices, located in countries of the European Union,
United Kingdom, United States, Japan, Canada, Hong Kong or Switzerland.
In this context, it is important to refer that the Bank\u2019s shares are not accepted as financial collaterals of new credit
operations and are only accepted for the reinforcement of guarantees of existing credit operations, or in restructuring
process associated to credit recoveries.
An internal level of protection is attributed to all credit operations at the moment of the credit granting decision,
considering the credit amount as well as the value and type of the collaterals involved. The protection level
corresponds to the loss reduction in case of default that is linked to the various collateral types, considering their
market value and the amount of the associated exposure.
In the case of financial collaterals, adjustments are made to the protection value by the use of a set of haircuts, in
order to reflect the price volatility of the financial instruments.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCollateralExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-697": { "value": "
The maximum exposure to credit risk of financial assets not subject to impairment requirements is analysed as follows:
(Thousands of euros)
2023
2022
(restated)
Financial assets held for trading (note 24)
Debt instruments
355,526
338,813
Derivatives
437,155
394,183
Financial assets designated at fair value through profit or loss - Debt instruments (note 24)
32,004
\u2014
Financial assets not held for trading mandatorily at fair value through profit or loss
Debt instruments (note 24)
280,558
311,404
Hedging derivatives (note 25)
40,628
59,703
Total
1,145,871
1,104,103
- In the case of financial assets, excluding derivatives, it is considered that its credit risk exposure is equal to its book value;
- In the case of derivatives, the maximum exposure to credit risk is its market value, plus its potential risk (\"add-on\").
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsHeldForTradingExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-698": { "value": "
Market risk
Market risks consist of the potential losses that may arise within a portfolio as a result of changes in interest or
exchange rates, and/or in the prices of the different financial instruments within the portfolio, considering not only the
correlations that exist between those instruments but also their volatilities.
For the purpose of profitability analysis and market risks quantification and control, the following management areas
are defined for each entity within the Group:
- Trading: Management of positions aimed at achieving short-term gains through sale or revaluation. These positions are
actively managed, tradable without restriction, and may be valued frequently and accurately. These positions include
securities and derivatives resulting from sales activities;
- Funding: Management of institutional funding (wholesale funding) and money market positions;
\u2013 Investment: Management of all positions in securities to be held to maturity or for an extended period, or positions
not tradable on liquid markets;
- Commercial: Management of positions arising from commercial activities with Customers;
- Structural: Management of balance sheet items or operations which, due to their nature, are not directly related to
any of the management areas referred to above; and
- ALM: Assets and Liabilities Management.
The definition of these areas allows for an effective management separation between trading and banking books, as
well as a proper allocation of each operation to the most suitable management area, according to the respective
context and strategy.
To ensure that risk levels incurred in the different portfolios of the Group align with predefined tolerance risk levels,
various market risks limits are established, typically on an annual basis, applying to all portfolios of the risk
management areas where the risks are incident. These limits are monitored daily (or intra-daily, in the case of financial
markets) by the Risk Office.
Stop loss limits are also set for portfolios in the financial markets' areas \u2013 Trading and Funding \u2013 based on multiples of
the risk limits defined for them, aiming to limit the maximum losses that may occur in these areas. If these limits are
breached, a mandatory review of the underlying business strategy and assumptions regarding the management of the
positions in question ensues.
Market risks of the prudential trading book (1)
For the daily measurement of generic market risk, which includes interest rate risk, exchange rate risk, equity risk and
credit default swap price risk (indexes) - a Value-at-Risk (VaR) model is used, considering a time horizon of 10 business
days and a 99% significance level.
Additionally, the Group uses an integrated market risk measure that monitors all relevant sub-types of risk. This
measure integrates assessment of generic, specific, non-linear and commodity risks. Each sub-type of risk is measured
individually using appropriate risk models, with the integrated measure calculated from individual measures for each,
without considering any type of diversification between the sub-types (worst-case scenario approach).
For non-linear risk, an internally developed methodology is applied, replicating the effect of main non-linear elements
of options on P&L results of the different portfolios in which these are included, similarly to what is considered in the
VaR methodology, using the same time horizon and significance level.
Specific and commodity risks are measured using standard methodologies defined in the applicable regulations, with an
appropriate change of the time horizon considered.
The table below presents the amounts at risk for the Trading Book, measured by the methodologies referred to above:
(Thousands of euros)
2023
Max of global risk
in the period
Min of global risk
in the period
2022
(restated)
Generic Risk ( VaR )
889
4,250
683
1,322
Interest Rate Risk
587
4,458
555
1,011
FX Risk
551
1,438
566
841
Equity Risk
499
218
80
585
Diversification effects
(748)
(1,864)
(518)
(1,114)
Specific Risk
624
428
16
13
Non-Linear Risk
\u2014
\u2014
\u2014
\u2014
Commodities Risk
\u2014
\u2014
\u2014
\u2014
Global Risk
1,513
4,678
699
1,335
Validation of the internal VaR model\u2019s appropriateness for the assessment of risks involved in the positions held, is
conducted over time, with different scopes and frequency, including back testing, diversification effects estimation,
and analysis of risk factor comprehensiveness.
In addition to VaR assessment, the Group continuously tests a broad range of stress scenarios analysing the respective
results to identify risk concentrations not captured by the VaR model.
(1) Trading Book - positions allocated to the Trading Management Area (and not specifically to the accounting trading book)
Interest rate risk
The evaluation of interest rate risk derived from Banking Book operations is assessed through a process of risk
sensitivity analysis, undertaken every month, covering all the operations included in the Group's consolidated Balance
Sheet and discriminated by exposure currency.
Variations of market interest rates influence the Group's net interest income, both in the short term and medium/long
term, affecting its economic value in a long-term perspective. The main risk factors arise from the repricing mismatch
of portfolio positions (repricing risk) and from the risk of variation in market interest rates (yield curve risk). Besides
this, although with less impact, there is the risk of unequal variations in different reference rates with the same
repricing period (basis risk).
In order to identify the exposure of the Group's banking book to these risks, the monitoring of the interest rate risk
takes into consideration the financial characteristics of each of the relevant contracts, with the respective expected
cash-flows (principal and interest, without the spread component but including costs for liquidity, capital, operational
and other) being projected according to the repricing dates, thus calculating the impact on economic value resulting
from alternative scenarios of change of market interest rate curves.
The interest rate sensitivity of the balance sheet, by currency, is calculated as the difference between the present
value of the interest rate mismatch discounted at market interest rates and the discounted value of the same cash
flows simulating parallel shifts of the market interest rates.
The following tables show the expected impact on the banking book economic value of parallel shifts of the yield curve
by +/- 100 and +/- 200 basis points, for each of the main currencies in which the Group holds material positions:
(Thousands of euros)
2023
Currency
-200 bp(*)
- 100 bp (*)
+ 100 bp
+ 200 bp
CHF
2,726
1,368
(1,378)
(2,763)
EUR
(52,312)
(24,650)
21,646
38,925
PLN
130,883
63,939
(61,469)
(120,974)
USD
(8,362)
(4,103)
3,954
7,764
72,935
36,554
(37,247)
(77,048)
(*) Decrease in rates scenario, limited to non-negative rates (which implies effective variations of lesser amplitude than 100 bp, especially in
shorter periods).
(Thousands of euros)
2022 (restated)
Currency
-200 bp(*)
- 100 bp (*)
+ 100 bp
+ 200 bp
CHF
1,422
741
(763)
(1,544)
EUR
(99,549)
(50,069)
50,011
99,465
PLN
(71,253)
(35,436)
34,996
69,502
USD
(32,091)
(15,661)
14,937
29,193
(201,471)
(100,425)
99,181
196,616
(*) Decrease in rates scenario, limited to non-negative rates (which implies effective variations of lesser amplitude than 100 bp, especially in
shorter periods).
As described in accounting policy 1.B, the financial statements of the Group's subsidiaries and associates placed abroad
are prepared in their functional currency and translated into Euros at the end of each financial period. The exchange
rates used for the conversion of balance sheet foreign currency amounts are the ECB reference rates at the end of each
period. In foreign currency conversion of results, are calculated average exchange rates according to the closing
exchange rates of each month of the year. The rates used by the Group are as follows:
Closing exchange rates
Average exchange rates
(Balance sheet)
(Income statement)
Currency
2023
2022
(restated)
2023
2022
(restated)
AOA
924.8560
543.2680
748.1139
487.7116
BRL
5.3614
5.6390
5.4066
5.4153
CHF
0.9297
0.9872
0.9729
1.0042
MOP
8.8865
8.5744
8.8865
8.5744
MZN
70.5700
68.1850
69.2471
67.5585
PLN
4.3437
4.6816
4.5396
4.6823
USD
1.1049
1.0667
1.0819
1.0537
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-699": { "value": "
Sources of encumbrance
(Thousands of euros)
Sources of encumbrance
Matching liabilities, contingent
liabilities and securities lent
Assets, collateral received and own debt
securities issued other than covered
bonds and securitisations encumbered
Carrying amount of selected financial liabilities
1,163,408
1,687,935
", "dimensions": { "concept": "ifrs-full:DisclosureOfCollateralExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-701": { "value": "Contingent liabilities and other commitments
In accordance with accounting policy 1.U3, the main contingent liabilities and other commitments under IAS 37 are the
following:
1. In 2012, the Portuguese Competition Authority (\"PCA\") initiated an administrative proceeding relating to competition
restrictive practices (no. PRC 2012/9). On 6 March 2013, unannounced inspections were conducted in the premises of
Banco Comercial Portugu\u00eas, S.A. (\"BCP\" or \"Bank\") and other credit institutions, where documentation was seized to
investigate allegations of a commercially sensitive information exchange between Portuguese banks.
The administrative proceeding was subject to judicial secrecy by the PCA, as the publicity of the process would not be
compatible with the interests of the investigation and with the rights of the investigated companies. On 2 June 2015,
the Bank was notified of the PCA\u2019s statement of objections (\u201cSO\u201d) in connection with the administrative offence no.
2012/9, by which the Bank is accused of participating in a commercially sensitive information exchange between other
fourteen banks related to retail credit products, namely housing, consumer and small and medium enterprises credit
products.
The proceedings, including the deadline to submit a response to the SO, were suspended for several months between
2015 and 2017, following the appeals lodged by some defendants (including the Bank) before the Portuguese
Competition, Regulation and Supervision Court (\u201cCompetition Court\u201d) on procedural grounds (namely, on the right to
have access to confidential documents which were not used as evidence by the Authority \u2013 for several months, the PCA
denied the Defendant\u2019 right to have access to confidential documents not used as evidence). In the end of June 2017,
the suspension on the deadline to reply to the SO was lifted.
On 27 September 2017, BCP submitted its reply to the statement of objections. A non-confidential version of the Bank\u2019s
defence was sent to the PCA, at the latter\u2019s request, on 30 October 2017. The witnesses indicated by the Bank were
interrogated by the PCA in December 2017 (although without the presence of BCP\u2019s legal representatives).
In May 2018, the PCA refused the BCP\u2019s application for confidential treatment of some of the information in the Bank\u2019s
reply to the SO, having also imposed that the Bank protects the confidential information of the co-defendants
(providing a summary of the information). On 1 June 2018, the Bank filed an appeal with the Competition Court, which,
upholding the appeal, concluded that the PCA infringed on the right to a prior hearing. Complying with the judgment,
in November 2018, the PCA notified the Bank of its intention to deny the application for confidential treatment of some
of the information included in the Bank\u2019s defence; subsequently, in January 2019, it requested BCP to provide
summaries for the co-defendants\u2019 confidential information. The Bank filed an appeal before the Competition Court,
which ruled in favour of BCP, as it considered that the elaboration by the Bank of summaries for its co-defendants\u2019
confidential information an illegitimate burden.
In April 2019, at the PCA\u2019s request, BCP declared to be in favour of the re-examination of its witnesses, requested in its
defence and previously held. The witnesses were re-inquired on 16-17 April 2019 with the presence of the Bank\u2019s legal
representatives.
The PCA denied the request of BCP to be allowed to conduct cross-examination of the witnesses appointed by its co-
defendants. The Bank appealed to the Competition Court, which denied the appeal, through a decision which was latter
upheld by the Lisbon Court of Appeal. BCP then lodged an appeal before the Portuguese Constitutional Court for breach
of the constitutional right of defence. The Constitutional Court dismissed the appeal on 29 April 2021, on the grounds
that the requested cross-examination was not required by the Portuguese Constitution, at that stage of the
proceedings. On 12 August 2020, the Bank lodged a complaint before the European Court of Human Rights on this
matter.
On 2 July 2019, the Bank submitted its observations to the PCA\u2019s report on complementary evidence measures.
On 3 June 2019, BCP was notified of the partial dismissal of the complementary evidence measures it had requested in
its reply to the SO, which it judicially contested. By judgment of September 2019, the Competition Court declared the
nullity of the PCA\u2019s decision, for breach of the right of the parties to be heard on the PCA\u2019s draft decision. The Bank
appealed to the Lisbon Court of Appeal in what concerned the limitation by the Competition Court of the effects of the
nullity declaration of the PCA\u2019s decision. Although this appeal was ultimately admitted by the panel of judges of the
Lisbon Court of Appeal, it ends up being denied.
In order to give compliance to BCP\u2019s right to be heard, the PCA notified the BCP of its intention to reject the above-
mentioned complementary evidence measures. Following BCP\u2019s observations in November 2019, the PCA adopted its
final decision rejecting the measures, which was judicially contested by the BCP in December 2019. In March 2020, the
Competition Court rejected the appeal. This judgment was upheld by the Lisbon Court of Appeal in October 2020.
On 9 September 2019, the PCA adopted its final decision in this proceeding, fining the Bank in a Euros 60 million fine
for its alleged participation in an information exchange system with its competitors in the housing, consumer and SME
credit segments. The BCP considers that the Decision contains serious factual and legal errors, having, on 21 October
2019, filed an appeal before the Competition Court requesting the annulation of the Decision and the suspensory effect
of the appeal. On 8 May 2020, BCP\u2019s appeal was admitted. On 8 June 2020, the BCP submitted a request before the
Court, claiming that the rule according to which appeals do not have, in principle, suspensory effect violates the
Portuguese Constitution, submitting elements aimed at demonstrating considerable harm in the advance provisional
payment of the fine, and offering a guarantee in lieu (indicating the respective percentage of the fine to be offered as
a guarantee). On 14 December 2020, a hearing was held before the Competition Court, and a consensual solution was
reached between the PCA and the defendant banks, including BCP, as to the dosimetry (i.e., 50% of the amount of the
fine) and the forms of the guarantee to be provided, in order for the appeal of the PCA\u2019s decision to have suspensory
effect. On 21 December 2020, BCP submitted a bank guarantee issued by the BCP, which was accepted by the
Competition Court. On 1 March 2021, the Competition Court notified BCP that the guarantee had been presented in a
timely manner and in the agreed form, and, as a result, attributed suspensory effect to the appeal. By order of 20
March 2021, the Competition Court lifted the judicial secrecy and informed the appellants that the trial would, in
principle, start in September 2021.
On 9 July 2020, the BCP requested the Court to declare the nullity of the fining decision of the PCA for failure to assess
the economic and legal context, as determined by the recent case-law of the Court of Justice of the European Union.
The Competition Court clarified that this and other prior questions would not be assessed before the hearing phase.
On 13 January 2021, BCP was notified of an application submitted by \"Associa\u00e7\u00e3o Ius Omnibus \u2013 Nova Associa\u00e7\u00e3o de
Consumidores\" to the Competition Court asking it to have access to a non-confidential version of the file, based on the
need to assert the \u201crights to indemnification of the consumers whose rights and interests it represents, and the possible
exercise and proof of those rights in the context of an action for damages\u201d. On the same date, BCP was notified by the
Competition Court of its decision authorizing the news agency \"Lusa\" to access the file of the administrative phase of
the case. BCP appeal of this decision to the Appeal Court of Lisbon, on 25 January 2021 and opposed to the request of
\"Ius Omnibus\" on 2 February 2021.
On 20 March 2021, the Competition Court determined: (i) the lifting of the judicial secrecy; (ii) the forwarding to the
Public Prosecutor of the appeal of BCP against the decision of the Competition Court relating to \"Lusa\", for reply; (iii)
the provisional start date of the judgement hearing on September 2021, having requested suggestions by the co-
appellants for venues.
By decision of 9 April 2021 of the Competition Court, a preparatory hearing took place on 30 April 2021 for discussion of
issues precedent to the begging of the judgment hearings, in which the procedures relating to the treatment of
confidential information of the co-appellants in the appeals was defined, as well as the conditions relating to access to
file. The Competition Court also set forth preliminary dates for the judgement hearing and scheduled a preparatory
hearing for 7 July 2021.
On 28 June 2021, BCP was notified by the Competition Court to reply to the requests submitted by some of the co-
appellants and confirm that all confidential information had been duly eliminated from non-confidential versions
submitted by each co-appellant. The Competition Court also determined that the hearing of 7 July 2021 was cancelled
and its object would be transferred to the next hearing date (6 September 2021).
On 8 July 2021, BCP presented its reply to the notification of 28 June 2021, having also requested confirmation in
relation to the scheduling of the judgement hearing, namely confirmation of whether it was actually scheduled for 6
September 2021 the preparatory hearing and the start of the judgement hearing sessions.
Several representatives of the banks raised the question of the possible unconstitutionality of the seizure proceedings
of e-mail messages used as evidence in the PCA\u2019s decision, which objection appeal will now take place. This issue was
raised bearing in mind the recent Decision of the Constitutional Court no. 687/2021 on the administrative offence case
no. 225/15.4YUSTR-W. A petition on this matter was filed with the Court on 10 October 2021, requesting the Court to
take a position on the matter before the beginning of the trial. The Court issued an order rejecting the banks' request
to rule on those nullities raised by them, having refused to prohibit the use during the judgment of electronic messages
seized, allowing witnesses to be confronted with their content. The requesting banks lodged an appeal against this
order, which was admitted by the Lisbon Court of Appeal.
On 28 April 2022, TCRS (\"Tribunal da Concorr\u00eancia, Regula\u00e7\u00e3o e Supervis\u00e3o\") handed down a decision under the scope
of Proc. 225/15.4YUSTR-W, regarding the appeal to challenge the decision of the Portuguese Competition Authority of
September 2019 (PRC/2012/09), which imposed fines on a number of banking institutions for alleged violation of
competition rules in virtue of participating in a process of exchanging information on mortgage loans, consumer credit
and credit to SMEs.
In this extensive decision, TCRS lists the facts given as proven, bearing in mind the testimonial evidence produced and
the documents attached to the case file, both in the administrative phase and in the trial, however, at this stage, the
TCRS does not yet conclude by the legal framework of the facts as proven, nor, consequently, by the imposition of
fines, having the TCRS instead chosen to make the reference for a preliminary ruling to the Court of Justice of the
European Union (CJEU) in order to answer two preliminary questions that it sets out, requesting that this reference
follows further terms in the form of an accelerated procedure, taking into account the risk of prescription. It should be
noted that it is not up to the CJEU to adjudicate on the case, but only to interpret the rules of community law by
answering in abstract to the questions submitted to it by the referring court.
CJEU rejected TCRS's request for an accelerated procedure and for priority to be given in the assessment of this case,
hence CJEU's assessment must be given within the normal deadline for these prejudicial proceedings, after which the
judgment of this Court will then be concluded.
The Bank has been notified by the CJEU to, if it wishes, submit its written observations, and must do so by 2 September
2022.
The Bank forwarded its observations to the CJEU on 1 September 2022.
The Oral Hearing took place on 22 June 2023 at the CJEU, and the parties' lawyers made their respective presentations
and answered the questions that the Judge and the Advocate General intended to raise. The reading of the Opinion by
the Advocate General was scheduled to take place on 5 October 2023.
If this judicial ruling so determines, the trial may be \"reopened\" for some additional evidence to be produced. This not
being the case, the CRSC will deliver the corresponding sentence, which can also be appealed to the Lisbon Court of
Appeal and the Constitutional Court.
After receiving an answer from the CJEU, it is expected that the CRSC will be able to issue a Judgment, where it may
cancel, confirm, reduce or increase the fine applied by the CA (Competition Authority) to the Bank.
On the appeal submitted, and at the trial hearing, arguments of fact and law were presented, which we believe to be
solid and sufficient to justify the acquittal of BCP from the conviction against it. However, given the complexity of the
case, its several legal and extra-legal implications, and the position that the CRSC has already taken on the facts, it is
not possible to anticipate the final decision of the case.
The Bank does not anticipate that this lawsuit may result in any responsibility that could have impact on the respective
financial statements.
The Advocate General's conclusions were made public on 5 October 2023:
1) Article 101 TFEU must be interpreted as meaning that it does not preclude the classification as a restriction of
competition by object of an exchange between competitors of information concerning the commercial conditions
applicable to transactions (in particular, current and future credit spreads and risk variables) and production figures for
home loan offers, corporate lending offers and consumer credit offers in the banking sector, where such a practice has
artificially increased transparency and reduced uncertainty as to the functioning of the market.
2) Article 101 TFEU does not preclude such classification where it has been impossible to identify or establish any gain
in efficiency or any uncertain or positive effect on competition resulting from that exchange of information.
The Advocate General's conclusions are not in the nature of a judgement by the CJEU, they are not binding on the
Court of Justice, and it is therefore necessary to await the subsequent delivery of the CJEU judgement which in that
case will set out the interpretation of Community law on the questions referred to it for a preliminary ruling by the
TCRS in case no. 225/15.4YUSTR-W.
On 11 March 2024, BCP, along with 8 banking institutions, was served in order to, once willing, contest a \u201cpopular
declaratory action of condemnation in the form of a common process aimed at protecting competition, the rights of
consumers, and diffuse and/or collective interests associated with the consumption of goods and services\u201d, an action
brought by the Ius Omnibus Association, under the terms n.\u00ba 2/24.1YQSRT at the TCRS, entirely based on the alleged
infringement of competition in mortgage and consumer credit transactions declared in the AdC Decision of 9 September
2019 (PRC/2012/09), a decision that was subject to judicial opposition by BCP, an opposition that has not yet been
definitively judged.
The Bank is analysing that class action in order to present its response in a timely manner.
2. On 7 June 2022, the Bank was notified by the Court to contest a lawsuit brought by Funda\u00e7\u00e3o Jos\u00e9 Berardo and Jos\u00e9
Manuel Rodrigues Berardo against Banco Comercial Portugu\u00eas, S.A., Caixa Geral de Dep\u00f3sitos, S.A., Novo Banco, S.A.
and Banco Esp\u00edrito Santo, S.A., in liquidation.
In this lawsuit, the Plaintiffs allege that they incurred in a mistake regarding the endogenous situation of the defendant
banks and the financial system, without which they would have sold the pledged shares and paid their loans. If this is
not the case, the plaintiffs request the defendant banks to be ordered to pay compensation to Funda\u00e7\u00e3o Jos\u00e9 Berardo
for damages caused by breach of contract, since the moment when they should have been sold in execution of the
pledge due to failure to verify coverage ratios until the moment\u00a0 when they were sold, that is, the difference between
the price at which the pledged shares would have been sold on the dates of coverage ratios default and the price at
which they were actually sold, plus interest and all other loan charges since those dates, in any case the global amount
of compensation not being less than Euros 800,000,000. In any case, the plaintiffs ask the defendant banks to be jointly
condemned to pay Jos\u00e9 Manuel Rodrigues Berardo compensation for moral damages, in the already calculated amount
of Euros 100,000,000 and also in the amount that is settled as soon as the full extent of the damages is known.
In the meantime, through Order No. 8765/2022 of Mr. Secretary of State for the Presidency of the Council of Ministers,
published in Republic Diary, Series 2, part C, of 19 July 2022, the Plaintiff of this lawsuit, Funda\u00e7\u00e3o Jos\u00e9 Berardo, was
declared extinct. This decision was legally contested by the Jos\u00e9 Berardo Foundation, and in April 2023, the
Administrative and Fiscal Court of Funchal cancel the decision that ordered its extinction. Dissatisfied, the Portuguese
State appealed against this latter and is awaiting the outcome.
The lawsuit was contested on 27 September 2022 and is awaiting subsequent terms.
Nothing relevant to the judgment on the merit of the case happened. The lawsuit is suspended until the motions
submitted by FJB in the execution filed by the Banks (8489/19.8T8LSB) have been definitively judged.
The Bank does not anticipate that this lawsuit may result in any responsibility that could have impact on the respective
financial statements.
3. On 3 January 2018, Bank Millennium received decision of the Chairman of the Office for Protection of Competition
and Consumers (OPCC Chairman), in which the OPCC Chairman found infringement by Bank Millennium of the rights of
consumers. In the opinion of the OPCC Chairman the essence of the violation is that Bank Millennium informed
consumers (it regards 78 agreements) in responses to their complaints, that the court verdict stating the abusiveness of
the provisions of the loan agreement regarding exchange rates does not apply to them. According to the position of the
OPCC Chairman the abusiveness of contract\u2019s clauses determined by the court\u00a0 in the course of abstract control is
constitutive and effective for every contract from the beginning. As a result of the decision, Bank Millennium was
obliged to:
1) send information on the UOKiK\u2019s decision to the said 78 clients;
2) place the information on\u00a0 decision and the decision itself on the website and on Twitter;
3) to pay a fine amounting to PLN 20.7 million (Euros 4.8 million).
Bank Millennium lodged an appeal within the statutory time limit.
On 7 January 2020, the first instance court dismissed Bank Millennium's appeal in its entirety. Bank Millennium appealed
against the judgment within the statutory deadline. The court presented the view that the judgment issued in the
course of the control of a contractual template (in the course of an abstract control), recognizing the provisions of the
template as abusive, determines the abusiveness of similar provisions in previously concluded contracts. Therefore, the
information provided to consumers was incorrect and misleading. As regards the penalty imposed by OPCC, the court
pointed out that the policy of imposing penalties by the Office had changed in the direction of tightening penalties and
that the court agrees with this direction.
In Bank Millennium's assessment, the Court should not assess Bank Millennium's behaviour in 2015 from the perspective
of today's case-law views on the importance of abstract control (it was not until January 2016 that the Supreme Court's
resolution supporting the view of the OPCC Chairman was published), the more penalties for these behaviours should
not be imposed using current policy. The above constitutes a significant argument against the validity of the judgment
and supports the appeal which Bank Millennium submitted to the Court of second instance.
The second instance court, in its judgment of 24 February 2022, completely revoked the decision of the OPCC
Chairman. On 31 August 2022, the OPCC Chairman lodged a cassation appeal to the Supreme Court. Bank Millennium
believes that the prognosis regarding the litigation chances of winning the case before the Supreme Court is positive.
Bank Millennium (along with other banks) is also a party to the dispute with OPCC, in which the OPCC Chairman
recognized the practice of participating banks, including Bank Millennium, in an agreement aimed at jointly setting
interchange fee rates charged on transactions made with Visa and Mastercard cards as restrictive of competition, and
by decision of 29 December 2006 imposed a fine on Bank Millennium in the amount of PLN 12.2 million (Euros 2.8
million). Bank Millennium, along with other banks, appealed the decision.
In connection with the judgment of the Supreme Court and the judgment of the Court of Appeal in Warsaw of 23
November 2020, the case is currently pending before the court of first instance - the Court of Competition and
Consumer Protection. Bank Millennium has created a provision in the amount equal to the imposed penalty.
4. On 22 September 2020, Bank Millennium received decision of the Chairman of the Office for Protection of
Competition and Consumers (OPCC Chairman) recognising clauses stipulating principles of currency exchange applied in
the so-called anti-spread annex as abusive and prohibited the use thereof.
Penalty was imposed upon Bank Millennium in the amount of PLN 10.5 million (Euros 2.4 million). Penalty amount takes
account of two mitigating circumstances: cooperation with the Office for Protection of Competition and Consumers and
discontinuation of the use of provisions in question.
Bank Millennium was also requested, after the decision becomes final and binding, to inform consumers, by registered
mail, to the effect that the said clauses were deemed to be abusive and therefore not binding upon them (without need
to obtain court\u2019s decision confirming this circumstance) and publish the decision of the case on Bank Millennium\u2019s
website.
In the decision justification delivered in writing the OPCC Chairman stated that FX rates determined by Bank Millennium
were determined at Bank Millennium\u2019s discretion (on the basis of a concept, not specified in any regulations, of average
inter-bank market rate). Moreover, client had no precise knowledge on where to look for said rates since provision
referred to Reuters, without precisely defining the relevant site.
Provisions relating to FX rates in Bank Millennium\u2019s tables were challenged since Bank Millennium failed to define when
and how many times a day these tables were prepared and published.
In justification of the decision, the OPCC Chairman also indicated that in the course of the proceeding, Bank Millennium
presented various proposed solutions, which the OPCC Chairman deemed to be insufficient.
Bank Millennium appealed against the said decision within statutory term.
On 31 March 2022, the first instance court revoked the entire decision of the Chairman of the OPCC. On 23 May 2022,
the Chairman of the OPCC filed an appeal. On 26 October 2022, the Court of Appeals changed the judgment of the
court of first instance and shared the position of the Chairman of the OPCC as to the abusiveness of the provisions
regarding the determination of exchange rates in the annexes concluded with foreign currency borrowers. On 21
November 2022, the Court of Appeal, at the request of Bank Millennium, suspended the execution of the judgment until
the end of the cassation proceedings. On 30 January 2023, Bank Millennium filled a cassation appeal to the Supreme
Court.
5. Bank Millennium is a defendant in court proceedings brought by PKN Orlen SA, in which the subject of the dispute is
the amount of the interchange fee and the plaintiff demands payment of PLN 635.7 million (Euros 146.3 million). The
plaintiff in this proceeding alleges that the banks acted under an agreement restricting competition on the acquiring
services market by jointly setting the level of the national interchange fee in the years 2006-2014. In this case, Bank
Millennium was sued jointly with another bank and card organizations. According to current estimates of the risk of
losing a dispute in these matters, Bank Millennium did not create a provision. In addition, we point out that Bank
Millennium participates as a side intervener in four other proceedings regarding the interchange fee. Other banks are
the defendant. Plaintiffs in these cases also accuse banks of acting as part of an agreement restricting competition on
the acquiring services market by jointly setting the level of the national interchange fee in the years 2008-2014.
- A lawsuit brought up by shareholder of PCZ S.A. in bankruptcy (PHM, then the European Foundation for Polish-Belgian
Cooperation - EFWP-B, currently called The European Foundation for Polish-Kenyan Cooperation) against Bank
Millennium S.A., worth of the dispute PLN 521.9 million (Euros 120.2 million) with statutory interest from 5 April 2016
until the day of payment. The plaintiff filed the suit dated 23 October 2015 to the Regional Court in Warsaw; the suit\u00a0
was served to Bank Millennium on 4 April 2016. According to the plaintiff, the basis for the claim is damage to their
assets, due to the actions taken by Bank Millennium and consisting in the wrong interpretation of the Agreement for
working capital loan concluded between Bank Millennium and PCZ S.A., which resulted in placing the loan on demand.
Bank Millennium is requesting complete dismissal of the suit, stating disagreement with the charges raised in the claim.
Supporting the position of Bank Millennium, Bank Millennium\u2019s attorney submitted a binding copy of final verdict of
Appeal Court in Wroc\u0142aw favourable to Bank Millennium, issued in the same legal state in the action brought by PCZ SA
against Bank Millennium. On 10 May 2023, the Court of first instance announced a judgment dismissing the claim in its
entirety. The verdict is not final, the plaintiff filed an appeal, the date of the appeal hearing has not yet been set.
As at 31 December 2023, the total value of the subjects of the other litigations in which the Bank Millennium Group\u2019s
companies appeared as defendant, stood at PLN 5,547.3 million (Euros 1,277.1 million) (excluding the class actions
described below and in note 57). In this group the most important category are cases related with FX loans mortgage
portfolio.
6. On 3 December 2015 a class action was served on Bank Millennium. A group of Bank Millennium's debtors (454
borrowers party to 275 loan agreements) is represented by the Municipal Consumer Ombudsman in Olsztyn. The
plaintiffs demanded payment of the amount of PLN 3.5 million (Euros 0.8 million), claiming that the clauses of the
agreements, pertaining to the low down payment insurance, are unfair and thus not binding. Plaintiff extended the
group in the court letter filed on 4 April 2018, therefore the claims increased from PLN 3.5 million (Euros 0.8 million) to
over PLN 5 million (Euros 1.2 million).
Actual status:
On 1 October 2018, the group's representative corrected the total amount of claims pursued in the proceedings and
submitted a revised list of all group members, covering the total of 697 borrowers \u2013 432 loan agreements. The value of
the subject of the dispute, as updated by the claimant, is PLN 7,371,107.94 (Euros 1,696,986).
By the resolution of 1 April 2020 the court established the composition of the group as per request of the plaintiff and
decided to take witness evidence in writing. The hearing date was set for 18 October 2024.
As at 31 December 2023, there were also 138 individual court cases regarding LTV (loans-to-value) insurance (cases in
which only a claim for the reimbursement of the commission or LTV insurance fee is presented).
7. On 13 August 2020, Bank Millennium received lawsuit from the Financial Ombudsman. The Financial Ombudsman, in
the lawsuit, demands that Bank Millennium and the Insurer (TU Europa) be ordered to discontinue performing unfair
market practices involving, as follows:
- presenting the offered loan repayment insurance as protecting interests of the insured in case when insurance
structure indicates that it protects Bank Millennium\u2019s interests;
- use of clauses linking the value of insurance benefit with the amount of borrower\u2019s debt;
- use of clauses determining the amount of insurance premium without prior risk assessment (underwriting);
- use of clauses excluding insurer\u2019s liability for insurance accidents resulting from earlier causes.
Furthermore, the Ombudsman requires Bank Millennium to be ordered to publish, on its website, information on use of
unfair market practices.
The lawsuit does not include any demand for payment, by Bank Millennium, of any specified amounts. Nonetheless, if
the practice is deemed to be abusive it may constitute grounds for future claims to be filed by individual clients.
The case is being examined by the court of first instance.
8. By 31 December 2023, Bank Millennium recorded the receipt of 63 lawsuits by borrowers of mortgage loans in PLN
for reimbursement of benefits provided under the loan agreement. One final judgment was issued dismissing the
borrowers' claim. The borrowers' allegations focus on the WIBOR ratio as an incomprehensible, unverifiable element
affecting the consumer's liability, as well as the issue of insufficient information on the effects of variable interest
rates provided to the consumer by the bank before the conclusion of the contract.
Based on publicly available information, it can be assumed that there will be an increase in the number of lawsuits
concerning mortgage loans in PLN. This phenomenon affects the entire sector of banking services. It is possible that a
\"new business model\" will be created in the area of law firms, which consists in questioning mortgage contracts
containing a variable interest rate clause based on the WIBOR reference index.
On 29 June 2023, the Polish Financial Supervision Authority (KNF) announced that it had assessed the ability of the
WIBOR interest rate reference index to measure the market and economic realities. The KNF stated that the WIBOR
interest rate reference index is capable of measuring the market and economic realities for which it was established.
According to the Commission's assessment, the WIBOR ratio responds appropriately to changes in liquidity conditions,
changes in central bank rates and economic realities.
On 26 July 2023, the Polish Financial Supervision Authority (KNF) presented its position on legal and economic issues
related to mortgage loan agreements in Polish currency in which the WIBOR interest rate\u00a0 reference\u00a0 index\u00a0 is\u00a0 used.
This position can be used in court proceedings and can then be treated as an 'amicus curiae' opinion. The Polish
Financial Supervision Authority stated that the WIBOR reference index meets all legal requirements. In the opinion of
the Polish Financial Supervision Authority, there are no grounds to question the credibility and legality of WIBOR, in
particular in the context of the use of this indicator in mortgage loan agreements in the Polish currency.
9. By 31 December 2023, Bank Millennium received 419 lawsuits in which the plaintiffs (both clients and companies
purchasing claims), alleging violation of the information obligations provided in Art. 30 of the Consumer Credit Act,
demand reimbursement of interest and other costs incurred in connection with taking out a loan (free loan sanction
within the meaning of Article 45). As of 31 December 2023, 16 cases have been legally concluded, and in all these cases
the Bank won the dispute. The Bank believes that the prognosis regarding the litigation chances of winning the
remaining disputes are positive and therefore it has not created provisions in this respect.
10. On 22 December 2023, the Polish Financial Supervision Authority (KNF) started administrative proceedings against
bank Millennium S.A. that might result in a penalty being imposed on the Bank under Article 176i(1)(4) of the Act on
trading in financial instruments. At this stage of the proceedings, the amount of the potential penalty cannot be
estimated.
11. On 1 October 2015, a set of entities connected to a group with debts in default to BCP amounting to Euros 170
million, resulting from a loan agreement signed in 2009 - debts already fully provisioned in the Bank's accounts -, filed
against BCP, after receiving the Bank's notice for mandatory payment, a lawsuit requesting that:
a) the court declares that two of the defendants are mere fiduciary owners of 340,265,616 BCP shares, since they acted
pursuant to a request made by the Bank for the making of the respective purchases, and also that the court orders the
cancellation of the registration of those shares in the name of those companies;
b) the court declares the nullity of the financing agreement established between the plaintiffs and the Bank, due to
relative simulation;
c) the court sentences the Bank, in accordance with the legal regime of the mandate without representation, to
become liable for the amounts due to the institution, abstaining from requesting those amounts to the plaintiffs and to
refund them the cost they incurred while complying with that mandate, namely, Euros 90,483,816.83 regarding Banco
Esp\u00edrito Santo, S.A. (BES) and Euros 52,021,558.11 regarding Caixa Geral de Dep\u00f3sitos, S.A. (CGD), plus default
interests;
d) the amount of the lawsuit determined by the plaintiffs is Euros 317,200,644.90;
e) the Bank opposed and presented a counter claim, wherein it requests the conviction, namely, of a plaintiff company
in the amount of Euros 185,169,149.23 for the loans granted, plus default interests and stamp tax.
The court issued a curative act and already ascertained the factual basis that are proven and that must be proven.
The expertise was carried out and the expert report was submitted. There is a deadline for completing and concluding
the expert report, in its final version, since the Bank presented a complaint about various aspects of the expert's
report, in its first version.
The expertise was carried out and the expert report submitted.
In November 2022 the Bank complained about the Experts' Report: (i) they considered documents that the Court had
ordered to be removed from the proceedings, which had not been done due to the Court's inertia, (ii) they considered
written notes on documents, that may have been written by Mr. Gois Ferreira, and (iii) they did not consider much
information that was contained in the statements, and (iv) they made errors in the calculation of interest and the
amount of financing granted. In view of the experts' new reply, BCP claimed all the expertise, in March 2023. For the
Court's final decision, BCP added, in June this year, thousands of documents supporting its position.
12. Resolution Fund
Resolution measure of Banco Esp\u00edrito Santo, S.A.
On 3 August 2014, with the purpose of safeguarding the stability of the financial system, Banco de Portugal applied a
resolution measure to Banco Esp\u00edrito Santo, S.A. (BES) in accordance with the Article 145-C (1.b) of the Decree-law no.
298/92, of 31 December 1992, as amended (the \u201cBanking Law\u201d), which entailed, inter alia, the partial transfer of
assets, liabilities, off-balance sheet items and assets under management into a transition bank, Novo Banco, S.A. (Novo
Banco), incorporated on that date by a decision issued by Banco de Portugal. Within the scope of this process, the
Resolution Fund made a capital contribution to Novo Banco amounting to Euros 4,900 million, becoming, on that date,
the sole shareholder. Further, in accordance with information published on the Resolution Fund\u2019s website, the
Resolution Fund borrowed Euros 4,600 million, of which Euros 3,900 million were granted by the Portuguese State and
Euros 700 million by a group of credit institutions, including the Bank.
As announced on 29 December 2015, Banco de Portugal transferred to the Resolution Fund the liabilities emerging from
the \u201ceventual negative effects of future decisions regarding the resolution process that may result in liabilities or
contingencies\u201d.
On 7 July 2016, the Resolution Fund declared that it would analyse and evaluate the diligences to be taken, following
the publication of the report on the result of the independent evaluation, made to estimate the level of credit recovery
for each category of creditors under a hypothetical scenario of a normal insolvency process of BES on 3 August 2014.
In accordance with the applicable law, when the BES liquidation process is over, if it is verified that the creditors,
whose credits were not transferred to Novo Banco, would take on a higher loss than the one they would hypothetically
take if BES had gone into liquidation right before the application of the resolution measure, such creditors shall be
entitled to receive the difference from the Resolution Fund.
On 31 May 2019, the Liquidation Committee of BES presented a list of all the acknowledged and a list of the non-
acknowledged creditors before the court and the subsequent terms of the proceedings. These lists detail that the total
acknowledged credits, including capital, remunerative and default interest amounts to Euros 5,056,814,588, of which
Euros 2,221,549,499 are common credits and Euros 2,835,265,089 are subordinated claims, and no guaranteed or
privileged claims exist. Both the total number of acknowledged creditors and the total value of the acknowledged
credits and their ranking will only be ultimately determined upon the definitive judicial judgment of the verification
and ranking of credits to be given in the liquidation proceedings.
According to the Resolution Fund's 2022 Annual Report, the Resolution Fund filed an appeal against the list of creditors
with the Judicial Court of the District of Lisbon, requesting the recognition of its claims. The appeal was upheld, and
the Liquidation Committee of BES filed an appeal. In 2023, the Lisbon Court of Appeal rejected the appeal filed by the
Liquidation Committee of BES and, in favour of the position defended by the Resolution Fund, confirmed the decision of
the Court of First Instance and the recognition, in the amount of Euros 1,242,568.9 thousand of the credits claimed by
the Resolution Fund as privileged credits. In February 2023, the Liquidation Committee of BES filed a review appeal
with the Supreme Court of Justice, which decision is expected during 2023.
On 11 August 2023, the BES Liquidation Committee announced that this amount had been recognized and qualified as
privileged by a judgment of the Supreme Court of 11 July 2023. On 10 August 2023, an order was issued in the BES
liquidation proceedings, which reads as follows: \"(...) On 11 July 2023, the Supreme Court of Justice dismissed the
appeal filed by the Banco Esp\u00edrito Santo, S.A. bankruptcy estate, recognizing that the Resolution Fund's claim is
privileged in these proceedings. This means that only the Resolution Fund, as a creditor, will have its claim satisfied
from the funds available to the Banco Esp\u00edrito Santo, S.A. bankruptcy estate (...)\".
Following the resolution measure of BES, a significant number of lawsuits against the Resolution Fund was filed and is
underway. According to note 20 of the Resolution Fund\u2019s annual report of 2022, \u201cLegal actions related to the
application of resolution measures have no definitive legal precedents, which makes it impossible to use case law in
its evaluation, as well as to obtain a reliable estimate of the associated contingent financial impact. (\u2026) The
Resolution Fund, supported by legal advice of the attorneys for these actions, and in light of the legal and procedural
information available so far, considers that there is no evidence to cast doubt on their belief that the probability of
success is higher than the probability of failure\u201d.
According to note 22 of the Resolution Fund\u2019s annual report of 2022, \"In addition to the Portuguese courts, it is
important to take into account the litigation of Novo Banco, S.A., in other jurisdictions, being noteworthy, for its
materiality and respective procedural stage, the litigation in the Spanish jurisdiction. Regarding litigation in the
Spanish jurisdiction, during the years 2018 to 2022, twelve (decisions) have become final and unappealable
condemning Novo Banco, Spanish branch, as well as four sentences in relation to which due compensation has been
requested from the Resolution Fund\u201d.
On 31 March 2017, Banco de Portugal communicated the sale of Novo Banco, where it states the following: \"Banco de
Portugal today selected Lone Star to complete the sale of Novo Banco. The Resolution Fund has consequently signed
the contractual documents of the transaction. Under the terms of the agreement, Lone Star will inject a total of Euros
1,000 million in Novo Banco, of which Euros 750 million at completion and Euros 250 million within a period of up to 3
years. Through the capital injection, Lone Star will hold 75% of the share capital of Novo Banco and the Resolution
Fund will maintain 25% of the share capital\u201d.
The terms agreed also included a Contingent Capital Agreement (CCA), under which the Resolution Fund, as a
shareholder, undertakes to make capital injections if certain cumulative conditions are met related to the performance
of a specific portfolio of assets and to the capital ratios of Novo Banco going forward.
If these conditions are met, the Resolution Fund may be called upon to make a payment to Novo Banco for the lesser of
the accumulated losses in the covered assets and the amount necessary to restore the capital ratios at the agreed
levels. Any capital injections to be carried out pursuant to this contingent mechanism are limited to an absolute cap.
The terms agreed also provide for mechanisms to safeguard the interests of the Resolution Fund, to align incentives as
well as monitoring mechanisms, notwithstanding the limitations arising from State Aid rules.
On 18 October 2017, following the resolution of the Council of Ministers no. 151-A/2017 of 2 October 2017, Banco de
Portugal communicated the conclusion of the sale of Novo Banco to Lone Star, with an injection by the new shareholder
of Euros 750 million, followed by a further capital increase of Euros 250 million by the end of 2017. Upon completion of
the transaction, the status of Novo Banco as a bridge institution ceased, fully complying with the purposes of the
resolution of BES.
On 26 February 2018, the European Commission published the non-confidential version of its decision regarding the
approval of State aid underlying Novo Banco\u2019s sale process. This statement identifies the three support measures by the
Resolution Fund and the Portuguese State that are part of the sale agreement associated with a total gross book value
of around Euros [10-20] billion(1) that revealed significant uncertainties regarding adequacy in provisioning(2):
(i) Contingent Capital Agreement (CCA) which allows Lone Star to reclaim, from the Resolution Fund, funding costs,
realised losses and provisions related to an ex-ante agreed portfolio of existing loan stock, up to a maximum of
Euros 3.89 billion, subject to a capital ratio trigger (CET1 below 8%-13%) as well as to some additional
conditions(1)(2)(3);
(ii) underwriting by the Resolution Fund of a Tier 2 instrument to be issued by Novo Banco up to the amount necessary
(but no more than Euros 400 million). The amount that can be reclaimed by the Resolution Fund under the CCA is
subject to the cap of Euros 3.89 billion(2);
(iii) in case the Supervisory Review and Evaluation Process (\u201cSREP\u201d) total capital ratio of Novo Banco falls below the
SREP total capital requirement, the Portuguese State will provide additional capital in certain conditions and
through different instruments(2). According to the audit report on the management of Novo Banco conducted by the
Court of Auditors and released on 12 July 2022, \"the risk of triggering the additional capital mechanism (capital
backstop), up to Euros 1.6 billion, provided for in the commitments made by the Portuguese State to ensure the
viability of NB, exists\u201d.
According to an Investor Presentation dated January 2024, from Novo Banco\u2019s, Novo Banco still has Euros 485 million
under the MCC in addition to the Euros 209 million included in the capital call for 2021. The mechanism is in place until
December 2025, date that can be extended, under certain conditions, by one additional year.
(1) Exact value not disclosed by the European Commission for confidentiality reasons
(2) As referred to in the respective European Commission Decision
(3) According to 2018 Novo Banco\u2019s earnings institutional presentation, the \u201cminimum capital condition\u201d is (i) CET1 or Tier 1 < CET1 or
Tier 1 SREP requirement plus a buffer for the first three years (2017-2019); (ii) CET1 < 12%
According to a statement issued by the Resolution Fund on 13 February 2023, \"the Ministry of Finance has disclosed that
the European Commission intends to consider the restructuring process of Novo Banco as completed. The information
disclosed today confirms the successful restructuring of Novo Banco, resulting from the combined execution of the
restructuring plan agreed in 2017, under the sale transaction conducted by Banco de Portugal, and the sale
agreements, namely the CCA, under which the Resolution Fund transferred to Novo Banco Euros 485 million, less than
the maximum amount set in the contract (Euros 3,890 million). The completion of the restructuring of Novo Banco, is
also another indicator that Novo Banco should not need to request any further payment to the Resolution Fund under
the CCA, without prejudice to the ongoing litigation or that still may occur regarding the amounts already requested by
Novo Banco in relation to past years and that the Resolution Fund considers that are not due. On the same day, Banco
de Portugal issued the following statement \"The conclusion of the Novo Banco restructuring process also results in the
end of the backstop mechanism, which provided for the possibility, which was always considered remote, of the
Portuguese State providing extraordinary support to Novo Banco in extreme scenarios. This mechanism protected Novo
Banco and the national financial system from more adverse scenarios, which did not materialize. With the end of the
backstop, the financial risk for the Portuguese State is eliminated\".
According to the 2018 Resolution Fund\u2019s annual report, the Resolution Fund and Novo Banco have agreed that a
Verification Agent - an independent entity which is essentially responsible for clarifying any differences that may exist
between Novo Banco and the Resolution Fund regarding the set of calculations inherent to the CCA or regarding the
practical application of the principles stipulated in the contract - is in charge of confirming that the perimeter of the
mechanism is correct and that the balance sheet values of Novo Banco are being correctly reflected in the mechanism,
as well as verifying the underlying set of calculations, namely by confirming the correct calculation of losses and the
reference value of the assets. According to the 2022 Resolution Fund\u2019s annual report, the Resolution Fund follows the
work carried out by the Verification Agent, while specific analyses are being requested.
The Resolution Fund disclosed on 17 June 2019 a set of clarifications related to the payment due in 2019 under the CCA
with Novo Banco, namely:
- For payments from the Resolution Fund to be made (limited to a maximum of Euros 3,890 million over the lifetime of
the mechanism), losses on the assets under the contingent mechanism should be incurred and the capital ratios of Novo
Banco should stand below the agreed reference thresholds;
- The payment to be made by the Resolution Fund corresponds to the lower of the accumulated losses on the assets
covered and the amount necessary to restore the capital ratios above the minimum reference threshold;
- The reference capital ratios are, in 2017, 2018 and 2019, linked to the regulatory requirements applicable to Novo
Banco (CET1 ratio of 11.25% and Tier 1 ratio of 12.75%), but, as from 2020, the reference ratio will correspond to a
CET1 ratio of 12%;
- The initial reference value of the portfolio comprising the CCA was, as of 30 June 2016, Euros 7,838 million (book
value of the associated assets, net of impairments);
In a statement dated 2 February 2024, the Resolution Fund clarifies that it has been informed of the Supreme Court's
ruling on the appeal filed by Novo Banco, following the decision of the Lisbon Court of Appeal, which rejected the
petition for annulment of the decision of the Court of Arbitration, issued in October 2021, relating to the first
arbitration between the Resolution Fund and Novo Banco, which began in 2020.
This ruling definitively confirms the validity and correctness of the position taken by the Resolution Fund in 2019, when
it opposed being charged, through the CCM, for the impact of Novo Banco's intention to waive the transitional regime
related to the implementation of IFRS 9. The Resolution Fund's action in this process resulted in a saving of its
resources of Euros 169 million.
Regarding the intervention of the Resolution Fund concerning the transitional regime of the implementation of the
dynamic component of IFRS 9, Novo Banco estimates a positive impact on its own funds in the amount of Euros 171
million (which implies a reduction in the capital requirements that Novo Banco intended to pass on to the CCM in the
amount of Euros 161.6 million). Accordingly, the Resolution Fund has an arbitration proceeding underway, also under
the aegis of the International Chamber of Commerce, with a view to settling the difference between the parties. This
process is in progress, and it is estimated that an award will be rendered in the first half of 2024.
According to a statement by the Resolution Fund on 3 September 2020, following the payment made in May 2019 by the
Resolution Fund to Novo Banco in compliance with the CCA, a special audit determined by the Government was carried
out. The information was presented by the independent entity that carried out the special audit, showed that Novo
Banco has been operating with a strong influence of the vast legacy of non-productive assets, originated in BES, which
resulted in impairment charges and provisions, but have also contributed to rendering Novo Banco\u2019s internal procedures
more robust. Regarding the exercise of the powers of the Resolution Fund under the CCA, the audit results reflect the
adequacy of the principles and the adopted criteria.
According to Resolution Fund\u2019s annual report of 2022, Novo Banco submitted to the International Chamber of
Commerce a request for arbitration to have recognized the right to receive an aggregate amount of Euros 165,441.9
thousand (divestment of Novo Banco's activity in Spain in the amount of Euros 147,441.9 thousand and valuation
differences regarding a set of assets held by Novo Banco in the amount of Euros 18,000 thousand) which the Resolution
Fund considered, and considers, not to merit the coverage of the CCM.
On 3 May 2021, following the request of the Portuguese parliament in October 2020 to review the operations and
management of Novo Banco that led to the need to transfer funds from the Resolution Fund to Novo Banco, the
Resolution Fund announced that the audit report conducted by Tribunal de Contas (\u201cCourt of Auditors\u201d) was released.
The Court of Auditors concluded that the public financing of Novo Banco through the CCA contributed to the stability of
the financial system, particularly as it avoided the bank\u2019s liquidation and reduced systemic risk. According to the
Resolution Fund, the audit does not identify any impediment to the fulfilment of commitments and contracts arising
from BES\u2019s resolution process, initiated in August 2014.
On 9 September 2020, BCP informed that it has decided not to continue with the legal proceeding before the General
Court of the European Union with a view to partially annul the European Commission\u2019s decision regarding its approval
of the CCA of Novo Banco.
According to Novo Banco\u2019s 2023 annual report (note 28), Novo Banco adhered to the Special Regime applicable to
Deferred Tax Assets under Law No. 61/2014, of 26 August (REAID), according to which, the deferred tax assets recorded
until 31 December 2015 can be converted into tax credits when the taxable entity reports an annual net loss, in
accordance to the proportion of the amount of the said net loss to total equity at the individual company level, A
special reserve was established with an amount identical to the tax credit approved, increased by 10%. The conversion
rights are securities that entitle the State to require Novo Banco to increase its share capital by incorporating the
amount of the special reserve and consequently issuing and delivering free of charge ordinary shares. The shareholders
have the right to acquire the conversion rights attributed to the Portuguese State.
According to the Resolution Fund\u2019s 2022 annual report, under the terms of the sale of Novo Banco, the 75% of the share
capital of Novo Banco held by Nani Holdings is not affected by the dilution associated with the REAID.
On 17 December 2021, Novo Banco, carried out a capital increase in the amount of Euros 154,907.3 thousand, through
the conversion of the rights that had been attributed to the State due to the conversion of the deferred tax assets of
Novo Banco, into tax credits, with reference to the 2015 tax period, under the REAID. As of that date, the State
became a shareholder of Novo Banco, having been attributed a participation corresponding to 1.56% of the share
capital. Later, on 4 November 2022, Novo Banco made a further capital increase of Euros 249,753 thousand conferred
the State an additional stake of 4.13% in Novo Banco.
In April 2023, a capital increase of Euros 263,183 thousand was carried out through a rights conversion related to 2018
and 2019, which gave the State an additional stake of 6.27% in Novo Banco. With reference to the 2020 financial year,
conversion rights representing 3.64% of the capital were issued which will only dilute, in accordance with the sale
contract, the Resolution Fund's participation if the shareholders do not exercise their potestative right to acquire the
conversion rights.
According to Novo Banco's 2023 annual report, Lone Star owns 75% of Novo Banco, the Resolution Fund 13%, and the
Portuguese State 12%.
Resolution measure of Banif \u2013 Banco Internacional do Funchal, S.A.
On 19 December 2015, the Board of Directors of Banco de Portugal announced that Banif \u201cwas failing or likely to fail\u201d
and started an urgent resolution process of the institution through the partial or total sale of its activity, which was
completed on 20 December 2015 through the sale to Banco Santander Totta S.A. (BST) of the rights and obligations of
Banif, formed by the assets, liabilities, off-balance sheet items and assets under management. The largest portion of
the assets that were not sold, were transferred to an asset management vehicle denominated Oitante, S.A. (Oitante)
specifically created for that purpose, having the Resolution Fund as the sole shareholder. For that matter, Oitante
issued bonds representing debt in the amount of Euros 746 million. The Resolution Fund provided a guarantee and the
Portuguese State a counter-guarantee. The operation also involved State aid, of which Euros 489 million were provided
by the Resolution Fund, which was funded by a loan granted by the State.
On 4 July 2022, Oitante - 100% owned by the Resolution Fund - completed the process of repayment of the bonds issued
in connection with the resolution of BANIF. Oitante's debt, which initially amounted to Euros 746 million, was thus fully
repaid. With the repayment of the debt, the Resolution Fund's responsibility as guarantor also ceases, as well as the
Portuguese State's responsibility as provider of a counter-guarantee.
According to the Resolution Fund (press release dated 29 December 2023), Oitante has already paid a total of Euros
78.8 million to the Resolution Fund, of which Euros 63.8 million will be paid in 2023. The amounts received and to be
received by the Resolution Fund, given its 100% participation in Oitante's capital, will contribute to reducing the losses
of Euro 489 million incurred by this Fund in the resolution of BANIF and will be used to repay the debts of the
Resolution Fund, namely to the State.
On 16 January 2023, the Liquidation Committee of Banif announced a list of all the acknowledged and a list of the non-
acknowledged creditors. According to the Resolution Fund\u2019s 2022 annual report, the Resolution Fund holds a claim on
Banif of Euros 489 million, which has a higher claim ranking provided for in article 166-A of the RGICSF. Under the
judicial liquidation process of Banif, which was initiated following the resolution, the independent evaluator estimates
that the level of recovery of the financial support made available by the Resolution Fund, as having a higher ranking at
the end of the liquidation, is expected to be 7.6%.
On 12 January 2021, Banco de Portugal was informed that the Administrative and Fiscal Court of Funchal dismissed a
lawsuit involving several disputes associated to Banif\u2019s resolution measures applied by Banco de Portugal. In its
decision, the Court determined the legality and maintenance of Banco de Portugal\u2019s measures.
Liabilities and financing of the Resolution Fund
Pursuant to the resolution measures applied to BES and Banif, the Resolution Fund incurred on loans and assumed other
responsibilities and contingent liabilities resulting from:
- The State loans, on 31 December 2021, included the amounts made available (i) in 2014 for the financing of the
resolution measure applied to BES (Euros 3,900 million); (ii) to finance the absorption of Banif's losses (Euros 353
million); (iii) under the framework agreement concluded with the State in October 2017 for the financing of the
measures under the CCA (Euros 430 million plus Euros 850 million of additional funding requested in 2019 and Euros 850
million made available in 2020);
- Other funding granted:
\u2022 in 2014 by the institutions participating in the Resolution Fund in the amount of Euros 700 million, in which the
Bank participates, within the scope of BES resolution measure;
\u2022 in 2021 by seven domestic credit institutions, including BCP, to finance payments due under the CCA up to a
maximum of Euros 429 million;
- The underwriting by the Resolution Fund of a Tier 2 instrument to be issued by Novo Banco up to the amount of Euros
400 million did not take place as the instruments were placed with third party investors as disclosed by Novo Banco on
29 July 2018;
- Effects of the application of the principle that no creditor of the credit institution under resolution may assume a loss
greater than the one it would take if that institution did not go into liquidation;
- Negative effects resulting from the resolution process that result in additional liabilities or contingencies for Novo
Banco, which must be neutralized by the Resolution Fund;
- Legal proceedings filed against the Resolution Fund;
- Guarantee granted to secure the bonds issued by Oitante, totally reimbursed, as described above.
- CCA allows Lone Star to claim, from the Resolution Fund, funding costs, realised losses and provisions related to the
aforementioned ex-ante portfolio of existing loan stock agreed upon the sale process to Lone Star up to Euros 3.89
billion under the aforementioned conditions, among which a reduction of Novo Banco\u2019s CET1 below 8%-13%;
- In case the Supervisory Review and Evaluation Process (SREP) total capital ratio of Novo Banco falls below the SREP
total capital requirement, the State will provide additional capital in certain conditions and through different
instruments as referred to in the respective European Commission Decision.
According to Resolution Fund\u2019s annual report of 2022, contingent liabilities from the CCA are limited to a maximum
aggregate amount of Euros 3,890 million and that the aggregate amount of this contingent liability, which corresponds
to the difference between that maximum amount and the amounts already paid by the Resolution Fund, amounts to
Euros 485 million.
The expectation of the Resolution Fund is that, except for what may eventually result from the pending arbitration
disputes with Novo Banco, no further payments will occur under the CCA. On the other hand, the value of payments
already made may be compensated, under the terms of the contracts, by the eventual recovery of credits that may
occur, to which the value of the shareholding of the Resolution Fund in Novo Banco must be added.
According to note 22 of the Resolution Fund\u2019s 2022 annual report, the Resolution Fund considers that, to date, there
are no elements that allow a reliable estimate of the potential financial effect of these potential liabilities.
By a public statement on 28 September 2016, the Resolution Fund and the Ministry of Finance communicated the
agreement based on a review of the terms of the Euros 3,900 million loan originally granted by the State to the
Resolution Fund in August 2014 to finance the resolution measure applied to BES. According to the Resolution Fund, the
extension of the maturity of the loan was intended to ensure the ability of the Resolution Fund to meet its obligations
through its regular revenues, regardless of the contingencies to which the Resolution Fund is exposed. On the same day,
the Office of the Minister of Finance also announced that increases in the liabilities arising from the materialization of
future contingencies will determine the maturity adjustment of State and bank loans to the Resolution Fund, required
from to maintain the contributory effort required from the banking sector at prevailing levels at that time.
According to the statement of the Resolution Fund of 21 March 2017:
- \u201cThe conditions of the loans obtained from the Fund to finance the resolution measures applied to Banco Esp\u00edrito
Santo, S.A. and to Banif \u2013 Banco Internacional do Funchal, S.A. were changed. These loans amount to Euros 4,953
million, of which Euros 4,253 million were granted by the Portuguese State and Euros 700 million were granted by a
group of banks\";
- \u201cThose loans are now due in December 2046, without prejudice to the possibility of early repayment based on the
use of the Resolution Fund's revenues. The revision of the loan\u2019s terms aimed to ensure the sustainability and financial
balance of the Resolution Fund. The terms allow the Resolution Fund to fully meet its liabilities based on regular
revenues and without the need for special contributions or any other type of extraordinary contributions\".
According to the audit report on the management of Novo Banco conducted by the Court of Auditors and released on 12
July 2022, \"the repayment of the Euros 2,130 million loans granted by the Portuguese State to the Resolution Fund will
not end in 2046, as expected, rather in 2056 (without payments under the CCA after 2021) or in 2059 (with the use of
the CCA cap). (...) In other, more pessimistic scenarios, these loans will still be being repaid in 2062\u201d.
On 2 October 2017, by Resolution no. 151-A/2017, of the Council of Ministers of the Portuguese State, as the ultimate
guarantor of financial stability, was authorised to enter into a framework agreement with the Resolution Fund, to make
available the necessary financial resources to the Resolution Fund, if and when the State deemed necessary, to satisfy
any contractual obligations that may arise from the sale of the 75% stake in Novo Banco. The above-mentioned
resolution further set out that the framework agreement should be subject to a time period that is consistent with the
undertakings of the Resolution Fund and should preserve the Resolution Fund\u2019s capacity to satisfy said obligations in
due time.
On 31 December 2022, the Resolution Fund's own resources had a negative equity of Euros 6,974.7 million, as opposed
to Euros 7,207.6 million at the end of 2021, according to the latest 2022 annual report of the Resolution Fund.
To repay the loans obtained and to meet other liabilities that it may take on, the Resolution Fund receives proceeds
from the initial and regular contributions from the participating institutions (including the Bank) and from the
contribution over the banking sector (created under Law no. 55-A/2010). It is also provided for the possibility of the
member of the Government responsible for the area of Finance to determine, by ordinance that the participating
institutions make special contributions, in the situations provided for in the applicable legislation, particularly if the
Resolution Fund does not have resources to satisfy its obligations.
Pursuant to Decree-Law no. 24/2013 of 19 February, which establishes the method for determining the initial, periodic
and special contributions to the Resolution Fund, provided for in the Banking Law, the Bank has been paying, since
2013, its mandatory contributions set out in the aforementioned decree-law.
On 3 November 2015, the Banco de Portugal issued Circular Letter no. 085/2015/DES, under which it is clarified that
the periodic contribution to the Resolution Fund should be recognised as an expense at the time of the occurrence of
the event which creates the obligation to pay the contribution, i.e. on the last day of April of each year, as stipulated
in Article 9 of the referred Decree-Law no. 24/2013, of 19 February, thus the Bank is recognising as an expense the
contribution to the Resolution Fund in the year in which it becomes due.
Decree-Law no. 24/2013 of 19 February further sets out that Banco de Portugal has the authority to determine, by way
of instruction (\u201cinstru\u00e7\u00e3o\u201d), the applicable yearly rate based on objective incidence of periodic contributions. The
instruction of Banco de Portugal no. 28/2023, published on 15 December 2023, set the base rate for 2024 for the
determination of periodic contributions to the Resolution Fund at 0.032% (0.029% in 2023).
The Resolution Fund issued, on 15 November 2015, a public statement declaring: \"...it is further clarified that it is not
expected that the Resolution Fund will propose the setting up of a special contribution to finance the resolution
measure applied to BES. Therefore, the potential collection of a special contribution appears to be unlikely\".
In 2015, following the establishment of the Single Resolution Fund (SRF), the Group made an initial contribution in the
amount of Euros 31,364 thousand. In accordance with the Intergovernmental Agreement on the Transfer and
Mutualisation of Contributions to the SRF, this amount was not transferred to the SRF but was used instead to partially
cover for the disbursements made by the RF in respect of resolution measures prior to the date of application of this
Agreement. This amount will have to be reinstated over a period of 8 years (started in 2016) through the periodic
contributions to the SRF. The Single Resolution Fund does not cover undergoing situations with the National Resolution
Fund as at 31 December 2015. The total amount of the contribution attributable to the Group of 2023 was Euros 22,861
thousand, of which the Group delivered Euros 17,729 thousand and the remaining was constituted as irrevocable
payment commitment.
In 2023, the Group made regular contributions to the Portuguese Resolution Fund in the amount of Euros 9,491
thousand. The amount related to the contribution on the banking sector in Portugal, registered in this period was Euros
44,807 thousand. These contributions were recognized as a cost in 2023, in accordance with IFRIC no. 21 \u2013 Levies.
It is not possible, on this date, to assess the effects on the Resolution Fund due to: (i) the sale of the shareholding in
Novo Banco in accordance with the communication of Banco de Portugal dated 18 October 2017 and the information
provided by the European Commission on this subject under the terms described above, including the effects of the
application of the Contingent Capital Agreement and the Special Regime applicable to Deferred Tax Assets; (ii) the
application of the principle that no creditor of the credit institution under resolution may take on a loss greater than
the one it would take if that institution did not go into liquidation; (iii) additional liabilities or contingencies for Novo
Banco which need to be neutralized by the Resolution Fund; and, (iv) legal proceedings against the Resolution Fund.
According to Article 5 (e) of the Regulation of the Resolution Fund, approved by the Ministerial Order no. 420/2012, of
21 December, the Resolution Fund may submit to the member of the Government responsible for finance a proposal
with respect to the determination of amounts, time limits, payment methods, and any other terms related to the
special contributions to be made by the institutions participating in the Resolution Fund. According to public
communications from both the Resolution Fund and from the Government, there is no indication that any such special
contributions are foreseen.
According to the Resolution Fund\u2019s 2022 annual report, under note 8, \"the Resolution Fund is not obliged to present
positive equity. In case of insufficient resources, the Resolution Fund may receive special contributions, as determined
by the member of the Government responsible for finance, in accordance with article 153-I of the Banking Act,
although no such contributions are expected. The Resolution Fund may also, exceptionally, obtain financial support
from the State, namely through loans or guarantees, as set out in article 153-J of the same regime\".
To meet a payment from the Resolution Fund to Novo Banco, as per to Resolution no. 63-A/2021 of 27 May 2021 of the
Council of Ministers and Order from the Minister of State and Finance, of 31 May 2021 - intended to provide the
Resolution Fund with the financial resources necessary to meet any obligations arising from the Contingent
Capitalization Agreement in the years 2021 and 2022 \u2013 rendering a new loan from the State to the Resolution Fund, a
number of national financial institutions offered to finance the Resolution Fund, increasing up to Euros 475 million the
direct financing of banks to the Resolution Fund and waiving a Portuguese State loan to the Resolution Fund.
According to the Resolution Fund\u2019s 2022 annual report from the maximum amount of Euros 475 million. The Resolution
Fund used Euros 429 million, which corresponds to the payment made to Novo Banco in 2021. The loan matures in 2046
and bears interest at a rate corresponding to the sovereign cost of funding for the period between the contract date (31
May 2021) and 31 December 2026, plus a margin of 15 b.p. The interest rate will be reviewed on 31 December 2026
and, after that, every five-years. The payment obligations arising from this loan benefit from a pari passu treatment
with the payment obligations of the loans entered into with the Portuguese State on 7 August 2014 and 31 December
2015 and with the Portuguese credit institutions on 28 August 2014. The funding costs of the Resolution Fund (from the
State and from banks) will continue to be exclusively borne by periodic revenues, corresponding to the contributions
paid by the banking sector.
13. Banco Comercial Portugu\u00eas, S.A., Banco ActivoBank S.A. and Banco de Investimento Imobili\u00e1rio, S.A. (company
merged into Banco Comercial Portugu\u00eas, S.A.) initiated an administrative proceeding to contest the resolution adopted
by Bank of Portugal on 31 March 2017 to sell Novo Banco (NB), and also, as a precaution, the deliberation adopted by
the Resolution Fund on the same date, as they foresee the sale of NB by resorting to a contingent capitalization
agreement under which the Resolution Fund commits to inject capital in Novo Banco up to Euros 3,9 billion, under
determined circumstances. In the proceedings, the claimants request the declaration of nullity or annulment of those
acts.
The proceedings were filed based on the information contained in the Communication from Bank of Portugal dated 31
March 2017, of which the claimants were not notified. The proceedings were filed in court on 4 September 2017. Bank
of Portugal and the Resolution Fund presented their arguments and, only very recently, Nani Holdings SGPS, S.A. did
the same since, by delay of the court, this company was only very recently notified to act as a party in the proceedings.
In addition to opposing to it, the defendants invoke three objections (i) the illegitimacy of the claimants, (ii) the
argument that the act performed by Bank of Portugal cannot be challenged and (iii) the material incompetence of the
court. The opponent party invoked the issue of passive illegitimacy since Novo Banco was not notified as an opponent
party.
The claimants replied to the arguments presented by the defendants and to the arguments presented by the opponent
party. After the presentation of the arguments, Bank of Portugal attached to the proceedings what it called an
evidence process (allegedly in compliance with the law) but most of the documents delivered were truncated in such a
way that neither the court nor the claimants are able to obtain adequate knowledge thereof. That issue was already
raised in the proceedings (requesting the court to order Bank of Portugal to deliver a true evidence process) but no
decision thereon has been made yet.
Currently, the proceedings are prepared for confirmation of the decision accepting the formalities of the right of action
(with the making of a decision on the specific objections invoked). In case the judge considers that Novo Banco is an
opponent party, the judge must start by issuing a pre-confirmation in order to request the claimants to identify it.
Afterwards, that Bank will be notified to present its opposition arguments.
The case was sent to the judge on 23 September 2019 and the Bank is awaiting a decision. BCP added legal opinions to
the records (Professors M\u00e1rio Aroso de Almeida and Manuel Fontaine de Campos).
14. Following the restructuring process agreed with the Directorate-General for Competition (DGComp) and the
Portuguese State, Group Banco Comercial Portugu\u00eas implemented in 2014 a salary adjustment process for employees,
with a temporary effect. Additionally, it was agreed between the Bank and the Unions that, in the years after the State
intervention and if there are distributable profits, the Board of Directors and the Executive Committee would submit
for approval of the Shareholders\u2019 General Meeting a proposal of distribution of profits to the employees, which allows
the distribution of an accumulated total global amount at least equal to the total amount that was not received over
the temporary term of the salary adjustment, as described in the clause no. 151-E of BCP\u2019s Collective Labour
Agreement, effective between 2014 and 2017.
At the General Meeting held on 24 May 2023, the proposal submitted by the Board of Directors, the application of
profits relating to the financial year of 2022 was approved, which included an extraordinary distribution to the
employees to Euros 9,972,000, with the concrete determination of the amount to be attributed to each employee to be
fixed by the Executive Committee to employees who, having not already been fully compensated with the results
distributed in 2019 and 2020 and 2022, remain in office on the date of payment of the remuneration of June 2023. This
extraordinary distribution of results, together with those of 2019, 2020 and 2022 allowed the distribution to the
employees in office in June 2023 of an accumulated amount equal to the total amount not received during the period
of temporary salary adjustment indicated in the previous paragraph.
15. The Bank was subject to tax inspections for the years up to 2019. As a result of the inspections in question,
corrections were made by the tax authorities, arising from the different interpretation of some tax rules. The main
impact of these corrections occurred regarding IRC, including in terms of the tax loss carry forwards and, in the case of
indirect tax, in the calculation of the Value-Added Tax (VAT) deduction pro rata used for the purpose of determining
the amount of deductible VAT and at the Stamp Duty level. Most of additional liquidations/corrections made by the tax
administration were the object of contestation by administrative and/or judicial means.
The Bank recorded provisions, current tax liabilities or deferred tax liabilities at the amount considered sufficient to
offset the tax or tax loss carry forwards, as well as the contingencies related to the fiscal years not yet reviewed by the
tax administration.
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-700": { "value": "Contingent liabilities and other commitments
In accordance with accounting policy 1.U3, the main contingent liabilities and other commitments under IAS 37 are the
following:
1. In 2012, the Portuguese Competition Authority (\"PCA\") initiated an administrative proceeding relating to competition
restrictive practices (no. PRC 2012/9). On 6 March 2013, unannounced inspections were conducted in the premises of
Banco Comercial Portugu\u00eas, S.A. (\"BCP\" or \"Bank\") and other credit institutions, where documentation was seized to
investigate allegations of a commercially sensitive information exchange between Portuguese banks.
The administrative proceeding was subject to judicial secrecy by the PCA, as the publicity of the process would not be
compatible with the interests of the investigation and with the rights of the investigated companies. On 2 June 2015,
the Bank was notified of the PCA\u2019s statement of objections (\u201cSO\u201d) in connection with the administrative offence no.
2012/9, by which the Bank is accused of participating in a commercially sensitive information exchange between other
fourteen banks related to retail credit products, namely housing, consumer and small and medium enterprises credit
products.
The proceedings, including the deadline to submit a response to the SO, were suspended for several months between
2015 and 2017, following the appeals lodged by some defendants (including the Bank) before the Portuguese
Competition, Regulation and Supervision Court (\u201cCompetition Court\u201d) on procedural grounds (namely, on the right to
have access to confidential documents which were not used as evidence by the Authority \u2013 for several months, the PCA
denied the Defendant\u2019 right to have access to confidential documents not used as evidence). In the end of June 2017,
the suspension on the deadline to reply to the SO was lifted.
On 27 September 2017, BCP submitted its reply to the statement of objections. A non-confidential version of the Bank\u2019s
defence was sent to the PCA, at the latter\u2019s request, on 30 October 2017. The witnesses indicated by the Bank were
interrogated by the PCA in December 2017 (although without the presence of BCP\u2019s legal representatives).
In May 2018, the PCA refused the BCP\u2019s application for confidential treatment of some of the information in the Bank\u2019s
reply to the SO, having also imposed that the Bank protects the confidential information of the co-defendants
(providing a summary of the information). On 1 June 2018, the Bank filed an appeal with the Competition Court, which,
upholding the appeal, concluded that the PCA infringed on the right to a prior hearing. Complying with the judgment,
in November 2018, the PCA notified the Bank of its intention to deny the application for confidential treatment of some
of the information included in the Bank\u2019s defence; subsequently, in January 2019, it requested BCP to provide
summaries for the co-defendants\u2019 confidential information. The Bank filed an appeal before the Competition Court,
which ruled in favour of BCP, as it considered that the elaboration by the Bank of summaries for its co-defendants\u2019
confidential information an illegitimate burden.
In April 2019, at the PCA\u2019s request, BCP declared to be in favour of the re-examination of its witnesses, requested in its
defence and previously held. The witnesses were re-inquired on 16-17 April 2019 with the presence of the Bank\u2019s legal
representatives.
The PCA denied the request of BCP to be allowed to conduct cross-examination of the witnesses appointed by its co-
defendants. The Bank appealed to the Competition Court, which denied the appeal, through a decision which was latter
upheld by the Lisbon Court of Appeal. BCP then lodged an appeal before the Portuguese Constitutional Court for breach
of the constitutional right of defence. The Constitutional Court dismissed the appeal on 29 April 2021, on the grounds
that the requested cross-examination was not required by the Portuguese Constitution, at that stage of the
proceedings. On 12 August 2020, the Bank lodged a complaint before the European Court of Human Rights on this
matter.
On 2 July 2019, the Bank submitted its observations to the PCA\u2019s report on complementary evidence measures.
On 3 June 2019, BCP was notified of the partial dismissal of the complementary evidence measures it had requested in
its reply to the SO, which it judicially contested. By judgment of September 2019, the Competition Court declared the
nullity of the PCA\u2019s decision, for breach of the right of the parties to be heard on the PCA\u2019s draft decision. The Bank
appealed to the Lisbon Court of Appeal in what concerned the limitation by the Competition Court of the effects of the
nullity declaration of the PCA\u2019s decision. Although this appeal was ultimately admitted by the panel of judges of the
Lisbon Court of Appeal, it ends up being denied.
In order to give compliance to BCP\u2019s right to be heard, the PCA notified the BCP of its intention to reject the above-
mentioned complementary evidence measures. Following BCP\u2019s observations in November 2019, the PCA adopted its
final decision rejecting the measures, which was judicially contested by the BCP in December 2019. In March 2020, the
Competition Court rejected the appeal. This judgment was upheld by the Lisbon Court of Appeal in October 2020.
On 9 September 2019, the PCA adopted its final decision in this proceeding, fining the Bank in a Euros 60 million fine
for its alleged participation in an information exchange system with its competitors in the housing, consumer and SME
credit segments. The BCP considers that the Decision contains serious factual and legal errors, having, on 21 October
2019, filed an appeal before the Competition Court requesting the annulation of the Decision and the suspensory effect
of the appeal. On 8 May 2020, BCP\u2019s appeal was admitted. On 8 June 2020, the BCP submitted a request before the
Court, claiming that the rule according to which appeals do not have, in principle, suspensory effect violates the
Portuguese Constitution, submitting elements aimed at demonstrating considerable harm in the advance provisional
payment of the fine, and offering a guarantee in lieu (indicating the respective percentage of the fine to be offered as
a guarantee). On 14 December 2020, a hearing was held before the Competition Court, and a consensual solution was
reached between the PCA and the defendant banks, including BCP, as to the dosimetry (i.e., 50% of the amount of the
fine) and the forms of the guarantee to be provided, in order for the appeal of the PCA\u2019s decision to have suspensory
effect. On 21 December 2020, BCP submitted a bank guarantee issued by the BCP, which was accepted by the
Competition Court. On 1 March 2021, the Competition Court notified BCP that the guarantee had been presented in a
timely manner and in the agreed form, and, as a result, attributed suspensory effect to the appeal. By order of 20
March 2021, the Competition Court lifted the judicial secrecy and informed the appellants that the trial would, in
principle, start in September 2021.
On 9 July 2020, the BCP requested the Court to declare the nullity of the fining decision of the PCA for failure to assess
the economic and legal context, as determined by the recent case-law of the Court of Justice of the European Union.
The Competition Court clarified that this and other prior questions would not be assessed before the hearing phase.
On 13 January 2021, BCP was notified of an application submitted by \"Associa\u00e7\u00e3o Ius Omnibus \u2013 Nova Associa\u00e7\u00e3o de
Consumidores\" to the Competition Court asking it to have access to a non-confidential version of the file, based on the
need to assert the \u201crights to indemnification of the consumers whose rights and interests it represents, and the possible
exercise and proof of those rights in the context of an action for damages\u201d. On the same date, BCP was notified by the
Competition Court of its decision authorizing the news agency \"Lusa\" to access the file of the administrative phase of
the case. BCP appeal of this decision to the Appeal Court of Lisbon, on 25 January 2021 and opposed to the request of
\"Ius Omnibus\" on 2 February 2021.
On 20 March 2021, the Competition Court determined: (i) the lifting of the judicial secrecy; (ii) the forwarding to the
Public Prosecutor of the appeal of BCP against the decision of the Competition Court relating to \"Lusa\", for reply; (iii)
the provisional start date of the judgement hearing on September 2021, having requested suggestions by the co-
appellants for venues.
By decision of 9 April 2021 of the Competition Court, a preparatory hearing took place on 30 April 2021 for discussion of
issues precedent to the begging of the judgment hearings, in which the procedures relating to the treatment of
confidential information of the co-appellants in the appeals was defined, as well as the conditions relating to access to
file. The Competition Court also set forth preliminary dates for the judgement hearing and scheduled a preparatory
hearing for 7 July 2021.
On 28 June 2021, BCP was notified by the Competition Court to reply to the requests submitted by some of the co-
appellants and confirm that all confidential information had been duly eliminated from non-confidential versions
submitted by each co-appellant. The Competition Court also determined that the hearing of 7 July 2021 was cancelled
and its object would be transferred to the next hearing date (6 September 2021).
On 8 July 2021, BCP presented its reply to the notification of 28 June 2021, having also requested confirmation in
relation to the scheduling of the judgement hearing, namely confirmation of whether it was actually scheduled for 6
September 2021 the preparatory hearing and the start of the judgement hearing sessions.
Several representatives of the banks raised the question of the possible unconstitutionality of the seizure proceedings
of e-mail messages used as evidence in the PCA\u2019s decision, which objection appeal will now take place. This issue was
raised bearing in mind the recent Decision of the Constitutional Court no. 687/2021 on the administrative offence case
no. 225/15.4YUSTR-W. A petition on this matter was filed with the Court on 10 October 2021, requesting the Court to
take a position on the matter before the beginning of the trial. The Court issued an order rejecting the banks' request
to rule on those nullities raised by them, having refused to prohibit the use during the judgment of electronic messages
seized, allowing witnesses to be confronted with their content. The requesting banks lodged an appeal against this
order, which was admitted by the Lisbon Court of Appeal.
On 28 April 2022, TCRS (\"Tribunal da Concorr\u00eancia, Regula\u00e7\u00e3o e Supervis\u00e3o\") handed down a decision under the scope
of Proc. 225/15.4YUSTR-W, regarding the appeal to challenge the decision of the Portuguese Competition Authority of
September 2019 (PRC/2012/09), which imposed fines on a number of banking institutions for alleged violation of
competition rules in virtue of participating in a process of exchanging information on mortgage loans, consumer credit
and credit to SMEs.
In this extensive decision, TCRS lists the facts given as proven, bearing in mind the testimonial evidence produced and
the documents attached to the case file, both in the administrative phase and in the trial, however, at this stage, the
TCRS does not yet conclude by the legal framework of the facts as proven, nor, consequently, by the imposition of
fines, having the TCRS instead chosen to make the reference for a preliminary ruling to the Court of Justice of the
European Union (CJEU) in order to answer two preliminary questions that it sets out, requesting that this reference
follows further terms in the form of an accelerated procedure, taking into account the risk of prescription. It should be
noted that it is not up to the CJEU to adjudicate on the case, but only to interpret the rules of community law by
answering in abstract to the questions submitted to it by the referring court.
CJEU rejected TCRS's request for an accelerated procedure and for priority to be given in the assessment of this case,
hence CJEU's assessment must be given within the normal deadline for these prejudicial proceedings, after which the
judgment of this Court will then be concluded.
The Bank has been notified by the CJEU to, if it wishes, submit its written observations, and must do so by 2 September
2022.
The Bank forwarded its observations to the CJEU on 1 September 2022.
The Oral Hearing took place on 22 June 2023 at the CJEU, and the parties' lawyers made their respective presentations
and answered the questions that the Judge and the Advocate General intended to raise. The reading of the Opinion by
the Advocate General was scheduled to take place on 5 October 2023.
If this judicial ruling so determines, the trial may be \"reopened\" for some additional evidence to be produced. This not
being the case, the CRSC will deliver the corresponding sentence, which can also be appealed to the Lisbon Court of
Appeal and the Constitutional Court.
After receiving an answer from the CJEU, it is expected that the CRSC will be able to issue a Judgment, where it may
cancel, confirm, reduce or increase the fine applied by the CA (Competition Authority) to the Bank.
On the appeal submitted, and at the trial hearing, arguments of fact and law were presented, which we believe to be
solid and sufficient to justify the acquittal of BCP from the conviction against it. However, given the complexity of the
case, its several legal and extra-legal implications, and the position that the CRSC has already taken on the facts, it is
not possible to anticipate the final decision of the case.
The Bank does not anticipate that this lawsuit may result in any responsibility that could have impact on the respective
financial statements.
The Advocate General's conclusions were made public on 5 October 2023:
1) Article 101 TFEU must be interpreted as meaning that it does not preclude the classification as a restriction of
competition by object of an exchange between competitors of information concerning the commercial conditions
applicable to transactions (in particular, current and future credit spreads and risk variables) and production figures for
home loan offers, corporate lending offers and consumer credit offers in the banking sector, where such a practice has
artificially increased transparency and reduced uncertainty as to the functioning of the market.
2) Article 101 TFEU does not preclude such classification where it has been impossible to identify or establish any gain
in efficiency or any uncertain or positive effect on competition resulting from that exchange of information.
The Advocate General's conclusions are not in the nature of a judgement by the CJEU, they are not binding on the
Court of Justice, and it is therefore necessary to await the subsequent delivery of the CJEU judgement which in that
case will set out the interpretation of Community law on the questions referred to it for a preliminary ruling by the
TCRS in case no. 225/15.4YUSTR-W.
On 11 March 2024, BCP, along with 8 banking institutions, was served in order to, once willing, contest a \u201cpopular
declaratory action of condemnation in the form of a common process aimed at protecting competition, the rights of
consumers, and diffuse and/or collective interests associated with the consumption of goods and services\u201d, an action
brought by the Ius Omnibus Association, under the terms n.\u00ba 2/24.1YQSRT at the TCRS, entirely based on the alleged
infringement of competition in mortgage and consumer credit transactions declared in the AdC Decision of 9 September
2019 (PRC/2012/09), a decision that was subject to judicial opposition by BCP, an opposition that has not yet been
definitively judged.
The Bank is analysing that class action in order to present its response in a timely manner.
2. On 7 June 2022, the Bank was notified by the Court to contest a lawsuit brought by Funda\u00e7\u00e3o Jos\u00e9 Berardo and Jos\u00e9
Manuel Rodrigues Berardo against Banco Comercial Portugu\u00eas, S.A., Caixa Geral de Dep\u00f3sitos, S.A., Novo Banco, S.A.
and Banco Esp\u00edrito Santo, S.A., in liquidation.
In this lawsuit, the Plaintiffs allege that they incurred in a mistake regarding the endogenous situation of the defendant
banks and the financial system, without which they would have sold the pledged shares and paid their loans. If this is
not the case, the plaintiffs request the defendant banks to be ordered to pay compensation to Funda\u00e7\u00e3o Jos\u00e9 Berardo
for damages caused by breach of contract, since the moment when they should have been sold in execution of the
pledge due to failure to verify coverage ratios until the moment\u00a0 when they were sold, that is, the difference between
the price at which the pledged shares would have been sold on the dates of coverage ratios default and the price at
which they were actually sold, plus interest and all other loan charges since those dates, in any case the global amount
of compensation not being less than Euros 800,000,000. In any case, the plaintiffs ask the defendant banks to be jointly
condemned to pay Jos\u00e9 Manuel Rodrigues Berardo compensation for moral damages, in the already calculated amount
of Euros 100,000,000 and also in the amount that is settled as soon as the full extent of the damages is known.
In the meantime, through Order No. 8765/2022 of Mr. Secretary of State for the Presidency of the Council of Ministers,
published in Republic Diary, Series 2, part C, of 19 July 2022, the Plaintiff of this lawsuit, Funda\u00e7\u00e3o Jos\u00e9 Berardo, was
declared extinct. This decision was legally contested by the Jos\u00e9 Berardo Foundation, and in April 2023, the
Administrative and Fiscal Court of Funchal cancel the decision that ordered its extinction. Dissatisfied, the Portuguese
State appealed against this latter and is awaiting the outcome.
The lawsuit was contested on 27 September 2022 and is awaiting subsequent terms.
Nothing relevant to the judgment on the merit of the case happened. The lawsuit is suspended until the motions
submitted by FJB in the execution filed by the Banks (8489/19.8T8LSB) have been definitively judged.
The Bank does not anticipate that this lawsuit may result in any responsibility that could have impact on the respective
financial statements.
3. On 3 January 2018, Bank Millennium received decision of the Chairman of the Office for Protection of Competition
and Consumers (OPCC Chairman), in which the OPCC Chairman found infringement by Bank Millennium of the rights of
consumers. In the opinion of the OPCC Chairman the essence of the violation is that Bank Millennium informed
consumers (it regards 78 agreements) in responses to their complaints, that the court verdict stating the abusiveness of
the provisions of the loan agreement regarding exchange rates does not apply to them. According to the position of the
OPCC Chairman the abusiveness of contract\u2019s clauses determined by the court\u00a0 in the course of abstract control is
constitutive and effective for every contract from the beginning. As a result of the decision, Bank Millennium was
obliged to:
1) send information on the UOKiK\u2019s decision to the said 78 clients;
2) place the information on\u00a0 decision and the decision itself on the website and on Twitter;
3) to pay a fine amounting to PLN 20.7 million (Euros 4.8 million).
Bank Millennium lodged an appeal within the statutory time limit.
On 7 January 2020, the first instance court dismissed Bank Millennium's appeal in its entirety. Bank Millennium appealed
against the judgment within the statutory deadline. The court presented the view that the judgment issued in the
course of the control of a contractual template (in the course of an abstract control), recognizing the provisions of the
template as abusive, determines the abusiveness of similar provisions in previously concluded contracts. Therefore, the
information provided to consumers was incorrect and misleading. As regards the penalty imposed by OPCC, the court
pointed out that the policy of imposing penalties by the Office had changed in the direction of tightening penalties and
that the court agrees with this direction.
In Bank Millennium's assessment, the Court should not assess Bank Millennium's behaviour in 2015 from the perspective
of today's case-law views on the importance of abstract control (it was not until January 2016 that the Supreme Court's
resolution supporting the view of the OPCC Chairman was published), the more penalties for these behaviours should
not be imposed using current policy. The above constitutes a significant argument against the validity of the judgment
and supports the appeal which Bank Millennium submitted to the Court of second instance.
The second instance court, in its judgment of 24 February 2022, completely revoked the decision of the OPCC
Chairman. On 31 August 2022, the OPCC Chairman lodged a cassation appeal to the Supreme Court. Bank Millennium
believes that the prognosis regarding the litigation chances of winning the case before the Supreme Court is positive.
Bank Millennium (along with other banks) is also a party to the dispute with OPCC, in which the OPCC Chairman
recognized the practice of participating banks, including Bank Millennium, in an agreement aimed at jointly setting
interchange fee rates charged on transactions made with Visa and Mastercard cards as restrictive of competition, and
by decision of 29 December 2006 imposed a fine on Bank Millennium in the amount of PLN 12.2 million (Euros 2.8
million). Bank Millennium, along with other banks, appealed the decision.
In connection with the judgment of the Supreme Court and the judgment of the Court of Appeal in Warsaw of 23
November 2020, the case is currently pending before the court of first instance - the Court of Competition and
Consumer Protection. Bank Millennium has created a provision in the amount equal to the imposed penalty.
4. On 22 September 2020, Bank Millennium received decision of the Chairman of the Office for Protection of
Competition and Consumers (OPCC Chairman) recognising clauses stipulating principles of currency exchange applied in
the so-called anti-spread annex as abusive and prohibited the use thereof.
Penalty was imposed upon Bank Millennium in the amount of PLN 10.5 million (Euros 2.4 million). Penalty amount takes
account of two mitigating circumstances: cooperation with the Office for Protection of Competition and Consumers and
discontinuation of the use of provisions in question.
Bank Millennium was also requested, after the decision becomes final and binding, to inform consumers, by registered
mail, to the effect that the said clauses were deemed to be abusive and therefore not binding upon them (without need
to obtain court\u2019s decision confirming this circumstance) and publish the decision of the case on Bank Millennium\u2019s
website.
In the decision justification delivered in writing the OPCC Chairman stated that FX rates determined by Bank Millennium
were determined at Bank Millennium\u2019s discretion (on the basis of a concept, not specified in any regulations, of average
inter-bank market rate). Moreover, client had no precise knowledge on where to look for said rates since provision
referred to Reuters, without precisely defining the relevant site.
Provisions relating to FX rates in Bank Millennium\u2019s tables were challenged since Bank Millennium failed to define when
and how many times a day these tables were prepared and published.
In justification of the decision, the OPCC Chairman also indicated that in the course of the proceeding, Bank Millennium
presented various proposed solutions, which the OPCC Chairman deemed to be insufficient.
Bank Millennium appealed against the said decision within statutory term.
On 31 March 2022, the first instance court revoked the entire decision of the Chairman of the OPCC. On 23 May 2022,
the Chairman of the OPCC filed an appeal. On 26 October 2022, the Court of Appeals changed the judgment of the
court of first instance and shared the position of the Chairman of the OPCC as to the abusiveness of the provisions
regarding the determination of exchange rates in the annexes concluded with foreign currency borrowers. On 21
November 2022, the Court of Appeal, at the request of Bank Millennium, suspended the execution of the judgment until
the end of the cassation proceedings. On 30 January 2023, Bank Millennium filled a cassation appeal to the Supreme
Court.
5. Bank Millennium is a defendant in court proceedings brought by PKN Orlen SA, in which the subject of the dispute is
the amount of the interchange fee and the plaintiff demands payment of PLN 635.7 million (Euros 146.3 million). The
plaintiff in this proceeding alleges that the banks acted under an agreement restricting competition on the acquiring
services market by jointly setting the level of the national interchange fee in the years 2006-2014. In this case, Bank
Millennium was sued jointly with another bank and card organizations. According to current estimates of the risk of
losing a dispute in these matters, Bank Millennium did not create a provision. In addition, we point out that Bank
Millennium participates as a side intervener in four other proceedings regarding the interchange fee. Other banks are
the defendant. Plaintiffs in these cases also accuse banks of acting as part of an agreement restricting competition on
the acquiring services market by jointly setting the level of the national interchange fee in the years 2008-2014.
- A lawsuit brought up by shareholder of PCZ S.A. in bankruptcy (PHM, then the European Foundation for Polish-Belgian
Cooperation - EFWP-B, currently called The European Foundation for Polish-Kenyan Cooperation) against Bank
Millennium S.A., worth of the dispute PLN 521.9 million (Euros 120.2 million) with statutory interest from 5 April 2016
until the day of payment. The plaintiff filed the suit dated 23 October 2015 to the Regional Court in Warsaw; the suit\u00a0
was served to Bank Millennium on 4 April 2016. According to the plaintiff, the basis for the claim is damage to their
assets, due to the actions taken by Bank Millennium and consisting in the wrong interpretation of the Agreement for
working capital loan concluded between Bank Millennium and PCZ S.A., which resulted in placing the loan on demand.
Bank Millennium is requesting complete dismissal of the suit, stating disagreement with the charges raised in the claim.
Supporting the position of Bank Millennium, Bank Millennium\u2019s attorney submitted a binding copy of final verdict of
Appeal Court in Wroc\u0142aw favourable to Bank Millennium, issued in the same legal state in the action brought by PCZ SA
against Bank Millennium. On 10 May 2023, the Court of first instance announced a judgment dismissing the claim in its
entirety. The verdict is not final, the plaintiff filed an appeal, the date of the appeal hearing has not yet been set.
As at 31 December 2023, the total value of the subjects of the other litigations in which the Bank Millennium Group\u2019s
companies appeared as defendant, stood at PLN 5,547.3 million (Euros 1,277.1 million) (excluding the class actions
described below and in note 57). In this group the most important category are cases related with FX loans mortgage
portfolio.
6. On 3 December 2015 a class action was served on Bank Millennium. A group of Bank Millennium's debtors (454
borrowers party to 275 loan agreements) is represented by the Municipal Consumer Ombudsman in Olsztyn. The
plaintiffs demanded payment of the amount of PLN 3.5 million (Euros 0.8 million), claiming that the clauses of the
agreements, pertaining to the low down payment insurance, are unfair and thus not binding. Plaintiff extended the
group in the court letter filed on 4 April 2018, therefore the claims increased from PLN 3.5 million (Euros 0.8 million) to
over PLN 5 million (Euros 1.2 million).
Actual status:
On 1 October 2018, the group's representative corrected the total amount of claims pursued in the proceedings and
submitted a revised list of all group members, covering the total of 697 borrowers \u2013 432 loan agreements. The value of
the subject of the dispute, as updated by the claimant, is PLN 7,371,107.94 (Euros 1,696,986).
By the resolution of 1 April 2020 the court established the composition of the group as per request of the plaintiff and
decided to take witness evidence in writing. The hearing date was set for 18 October 2024.
As at 31 December 2023, there were also 138 individual court cases regarding LTV (loans-to-value) insurance (cases in
which only a claim for the reimbursement of the commission or LTV insurance fee is presented).
7. On 13 August 2020, Bank Millennium received lawsuit from the Financial Ombudsman. The Financial Ombudsman, in
the lawsuit, demands that Bank Millennium and the Insurer (TU Europa) be ordered to discontinue performing unfair
market practices involving, as follows:
- presenting the offered loan repayment insurance as protecting interests of the insured in case when insurance
structure indicates that it protects Bank Millennium\u2019s interests;
- use of clauses linking the value of insurance benefit with the amount of borrower\u2019s debt;
- use of clauses determining the amount of insurance premium without prior risk assessment (underwriting);
- use of clauses excluding insurer\u2019s liability for insurance accidents resulting from earlier causes.
Furthermore, the Ombudsman requires Bank Millennium to be ordered to publish, on its website, information on use of
unfair market practices.
The lawsuit does not include any demand for payment, by Bank Millennium, of any specified amounts. Nonetheless, if
the practice is deemed to be abusive it may constitute grounds for future claims to be filed by individual clients.
The case is being examined by the court of first instance.
8. By 31 December 2023, Bank Millennium recorded the receipt of 63 lawsuits by borrowers of mortgage loans in PLN
for reimbursement of benefits provided under the loan agreement. One final judgment was issued dismissing the
borrowers' claim. The borrowers' allegations focus on the WIBOR ratio as an incomprehensible, unverifiable element
affecting the consumer's liability, as well as the issue of insufficient information on the effects of variable interest
rates provided to the consumer by the bank before the conclusion of the contract.
Based on publicly available information, it can be assumed that there will be an increase in the number of lawsuits
concerning mortgage loans in PLN. This phenomenon affects the entire sector of banking services. It is possible that a
\"new business model\" will be created in the area of law firms, which consists in questioning mortgage contracts
containing a variable interest rate clause based on the WIBOR reference index.
On 29 June 2023, the Polish Financial Supervision Authority (KNF) announced that it had assessed the ability of the
WIBOR interest rate reference index to measure the market and economic realities. The KNF stated that the WIBOR
interest rate reference index is capable of measuring the market and economic realities for which it was established.
According to the Commission's assessment, the WIBOR ratio responds appropriately to changes in liquidity conditions,
changes in central bank rates and economic realities.
On 26 July 2023, the Polish Financial Supervision Authority (KNF) presented its position on legal and economic issues
related to mortgage loan agreements in Polish currency in which the WIBOR interest rate\u00a0 reference\u00a0 index\u00a0 is\u00a0 used.
This position can be used in court proceedings and can then be treated as an 'amicus curiae' opinion. The Polish
Financial Supervision Authority stated that the WIBOR reference index meets all legal requirements. In the opinion of
the Polish Financial Supervision Authority, there are no grounds to question the credibility and legality of WIBOR, in
particular in the context of the use of this indicator in mortgage loan agreements in the Polish currency.
9. By 31 December 2023, Bank Millennium received 419 lawsuits in which the plaintiffs (both clients and companies
purchasing claims), alleging violation of the information obligations provided in Art. 30 of the Consumer Credit Act,
demand reimbursement of interest and other costs incurred in connection with taking out a loan (free loan sanction
within the meaning of Article 45). As of 31 December 2023, 16 cases have been legally concluded, and in all these cases
the Bank won the dispute. The Bank believes that the prognosis regarding the litigation chances of winning the
remaining disputes are positive and therefore it has not created provisions in this respect.
10. On 22 December 2023, the Polish Financial Supervision Authority (KNF) started administrative proceedings against
bank Millennium S.A. that might result in a penalty being imposed on the Bank under Article 176i(1)(4) of the Act on
trading in financial instruments. At this stage of the proceedings, the amount of the potential penalty cannot be
estimated.
11. On 1 October 2015, a set of entities connected to a group with debts in default to BCP amounting to Euros 170
million, resulting from a loan agreement signed in 2009 - debts already fully provisioned in the Bank's accounts -, filed
against BCP, after receiving the Bank's notice for mandatory payment, a lawsuit requesting that:
a) the court declares that two of the defendants are mere fiduciary owners of 340,265,616 BCP shares, since they acted
pursuant to a request made by the Bank for the making of the respective purchases, and also that the court orders the
cancellation of the registration of those shares in the name of those companies;
b) the court declares the nullity of the financing agreement established between the plaintiffs and the Bank, due to
relative simulation;
c) the court sentences the Bank, in accordance with the legal regime of the mandate without representation, to
become liable for the amounts due to the institution, abstaining from requesting those amounts to the plaintiffs and to
refund them the cost they incurred while complying with that mandate, namely, Euros 90,483,816.83 regarding Banco
Esp\u00edrito Santo, S.A. (BES) and Euros 52,021,558.11 regarding Caixa Geral de Dep\u00f3sitos, S.A. (CGD), plus default
interests;
d) the amount of the lawsuit determined by the plaintiffs is Euros 317,200,644.90;
e) the Bank opposed and presented a counter claim, wherein it requests the conviction, namely, of a plaintiff company
in the amount of Euros 185,169,149.23 for the loans granted, plus default interests and stamp tax.
The court issued a curative act and already ascertained the factual basis that are proven and that must be proven.
The expertise was carried out and the expert report was submitted. There is a deadline for completing and concluding
the expert report, in its final version, since the Bank presented a complaint about various aspects of the expert's
report, in its first version.
The expertise was carried out and the expert report submitted.
In November 2022 the Bank complained about the Experts' Report: (i) they considered documents that the Court had
ordered to be removed from the proceedings, which had not been done due to the Court's inertia, (ii) they considered
written notes on documents, that may have been written by Mr. Gois Ferreira, and (iii) they did not consider much
information that was contained in the statements, and (iv) they made errors in the calculation of interest and the
amount of financing granted. In view of the experts' new reply, BCP claimed all the expertise, in March 2023. For the
Court's final decision, BCP added, in June this year, thousands of documents supporting its position.
12. Resolution Fund
Resolution measure of Banco Esp\u00edrito Santo, S.A.
On 3 August 2014, with the purpose of safeguarding the stability of the financial system, Banco de Portugal applied a
resolution measure to Banco Esp\u00edrito Santo, S.A. (BES) in accordance with the Article 145-C (1.b) of the Decree-law no.
298/92, of 31 December 1992, as amended (the \u201cBanking Law\u201d), which entailed, inter alia, the partial transfer of
assets, liabilities, off-balance sheet items and assets under management into a transition bank, Novo Banco, S.A. (Novo
Banco), incorporated on that date by a decision issued by Banco de Portugal. Within the scope of this process, the
Resolution Fund made a capital contribution to Novo Banco amounting to Euros 4,900 million, becoming, on that date,
the sole shareholder. Further, in accordance with information published on the Resolution Fund\u2019s website, the
Resolution Fund borrowed Euros 4,600 million, of which Euros 3,900 million were granted by the Portuguese State and
Euros 700 million by a group of credit institutions, including the Bank.
As announced on 29 December 2015, Banco de Portugal transferred to the Resolution Fund the liabilities emerging from
the \u201ceventual negative effects of future decisions regarding the resolution process that may result in liabilities or
contingencies\u201d.
On 7 July 2016, the Resolution Fund declared that it would analyse and evaluate the diligences to be taken, following
the publication of the report on the result of the independent evaluation, made to estimate the level of credit recovery
for each category of creditors under a hypothetical scenario of a normal insolvency process of BES on 3 August 2014.
In accordance with the applicable law, when the BES liquidation process is over, if it is verified that the creditors,
whose credits were not transferred to Novo Banco, would take on a higher loss than the one they would hypothetically
take if BES had gone into liquidation right before the application of the resolution measure, such creditors shall be
entitled to receive the difference from the Resolution Fund.
On 31 May 2019, the Liquidation Committee of BES presented a list of all the acknowledged and a list of the non-
acknowledged creditors before the court and the subsequent terms of the proceedings. These lists detail that the total
acknowledged credits, including capital, remunerative and default interest amounts to Euros 5,056,814,588, of which
Euros 2,221,549,499 are common credits and Euros 2,835,265,089 are subordinated claims, and no guaranteed or
privileged claims exist. Both the total number of acknowledged creditors and the total value of the acknowledged
credits and their ranking will only be ultimately determined upon the definitive judicial judgment of the verification
and ranking of credits to be given in the liquidation proceedings.
According to the Resolution Fund's 2022 Annual Report, the Resolution Fund filed an appeal against the list of creditors
with the Judicial Court of the District of Lisbon, requesting the recognition of its claims. The appeal was upheld, and
the Liquidation Committee of BES filed an appeal. In 2023, the Lisbon Court of Appeal rejected the appeal filed by the
Liquidation Committee of BES and, in favour of the position defended by the Resolution Fund, confirmed the decision of
the Court of First Instance and the recognition, in the amount of Euros 1,242,568.9 thousand of the credits claimed by
the Resolution Fund as privileged credits. In February 2023, the Liquidation Committee of BES filed a review appeal
with the Supreme Court of Justice, which decision is expected during 2023.
On 11 August 2023, the BES Liquidation Committee announced that this amount had been recognized and qualified as
privileged by a judgment of the Supreme Court of 11 July 2023. On 10 August 2023, an order was issued in the BES
liquidation proceedings, which reads as follows: \"(...) On 11 July 2023, the Supreme Court of Justice dismissed the
appeal filed by the Banco Esp\u00edrito Santo, S.A. bankruptcy estate, recognizing that the Resolution Fund's claim is
privileged in these proceedings. This means that only the Resolution Fund, as a creditor, will have its claim satisfied
from the funds available to the Banco Esp\u00edrito Santo, S.A. bankruptcy estate (...)\".
Following the resolution measure of BES, a significant number of lawsuits against the Resolution Fund was filed and is
underway. According to note 20 of the Resolution Fund\u2019s annual report of 2022, \u201cLegal actions related to the
application of resolution measures have no definitive legal precedents, which makes it impossible to use case law in
its evaluation, as well as to obtain a reliable estimate of the associated contingent financial impact. (\u2026) The
Resolution Fund, supported by legal advice of the attorneys for these actions, and in light of the legal and procedural
information available so far, considers that there is no evidence to cast doubt on their belief that the probability of
success is higher than the probability of failure\u201d.
According to note 22 of the Resolution Fund\u2019s annual report of 2022, \"In addition to the Portuguese courts, it is
important to take into account the litigation of Novo Banco, S.A., in other jurisdictions, being noteworthy, for its
materiality and respective procedural stage, the litigation in the Spanish jurisdiction. Regarding litigation in the
Spanish jurisdiction, during the years 2018 to 2022, twelve (decisions) have become final and unappealable
condemning Novo Banco, Spanish branch, as well as four sentences in relation to which due compensation has been
requested from the Resolution Fund\u201d.
On 31 March 2017, Banco de Portugal communicated the sale of Novo Banco, where it states the following: \"Banco de
Portugal today selected Lone Star to complete the sale of Novo Banco. The Resolution Fund has consequently signed
the contractual documents of the transaction. Under the terms of the agreement, Lone Star will inject a total of Euros
1,000 million in Novo Banco, of which Euros 750 million at completion and Euros 250 million within a period of up to 3
years. Through the capital injection, Lone Star will hold 75% of the share capital of Novo Banco and the Resolution
Fund will maintain 25% of the share capital\u201d.
The terms agreed also included a Contingent Capital Agreement (CCA), under which the Resolution Fund, as a
shareholder, undertakes to make capital injections if certain cumulative conditions are met related to the performance
of a specific portfolio of assets and to the capital ratios of Novo Banco going forward.
If these conditions are met, the Resolution Fund may be called upon to make a payment to Novo Banco for the lesser of
the accumulated losses in the covered assets and the amount necessary to restore the capital ratios at the agreed
levels. Any capital injections to be carried out pursuant to this contingent mechanism are limited to an absolute cap.
The terms agreed also provide for mechanisms to safeguard the interests of the Resolution Fund, to align incentives as
well as monitoring mechanisms, notwithstanding the limitations arising from State Aid rules.
On 18 October 2017, following the resolution of the Council of Ministers no. 151-A/2017 of 2 October 2017, Banco de
Portugal communicated the conclusion of the sale of Novo Banco to Lone Star, with an injection by the new shareholder
of Euros 750 million, followed by a further capital increase of Euros 250 million by the end of 2017. Upon completion of
the transaction, the status of Novo Banco as a bridge institution ceased, fully complying with the purposes of the
resolution of BES.
On 26 February 2018, the European Commission published the non-confidential version of its decision regarding the
approval of State aid underlying Novo Banco\u2019s sale process. This statement identifies the three support measures by the
Resolution Fund and the Portuguese State that are part of the sale agreement associated with a total gross book value
of around Euros [10-20] billion(1) that revealed significant uncertainties regarding adequacy in provisioning(2):
(i) Contingent Capital Agreement (CCA) which allows Lone Star to reclaim, from the Resolution Fund, funding costs,
realised losses and provisions related to an ex-ante agreed portfolio of existing loan stock, up to a maximum of
Euros 3.89 billion, subject to a capital ratio trigger (CET1 below 8%-13%) as well as to some additional
conditions(1)(2)(3);
(ii) underwriting by the Resolution Fund of a Tier 2 instrument to be issued by Novo Banco up to the amount necessary
(but no more than Euros 400 million). The amount that can be reclaimed by the Resolution Fund under the CCA is
subject to the cap of Euros 3.89 billion(2);
(iii) in case the Supervisory Review and Evaluation Process (\u201cSREP\u201d) total capital ratio of Novo Banco falls below the
SREP total capital requirement, the Portuguese State will provide additional capital in certain conditions and
through different instruments(2). According to the audit report on the management of Novo Banco conducted by the
Court of Auditors and released on 12 July 2022, \"the risk of triggering the additional capital mechanism (capital
backstop), up to Euros 1.6 billion, provided for in the commitments made by the Portuguese State to ensure the
viability of NB, exists\u201d.
According to an Investor Presentation dated January 2024, from Novo Banco\u2019s, Novo Banco still has Euros 485 million
under the MCC in addition to the Euros 209 million included in the capital call for 2021. The mechanism is in place until
December 2025, date that can be extended, under certain conditions, by one additional year.
(1) Exact value not disclosed by the European Commission for confidentiality reasons
(2) As referred to in the respective European Commission Decision
(3) According to 2018 Novo Banco\u2019s earnings institutional presentation, the \u201cminimum capital condition\u201d is (i) CET1 or Tier 1 < CET1 or
Tier 1 SREP requirement plus a buffer for the first three years (2017-2019); (ii) CET1 < 12%
According to a statement issued by the Resolution Fund on 13 February 2023, \"the Ministry of Finance has disclosed that
the European Commission intends to consider the restructuring process of Novo Banco as completed. The information
disclosed today confirms the successful restructuring of Novo Banco, resulting from the combined execution of the
restructuring plan agreed in 2017, under the sale transaction conducted by Banco de Portugal, and the sale
agreements, namely the CCA, under which the Resolution Fund transferred to Novo Banco Euros 485 million, less than
the maximum amount set in the contract (Euros 3,890 million). The completion of the restructuring of Novo Banco, is
also another indicator that Novo Banco should not need to request any further payment to the Resolution Fund under
the CCA, without prejudice to the ongoing litigation or that still may occur regarding the amounts already requested by
Novo Banco in relation to past years and that the Resolution Fund considers that are not due. On the same day, Banco
de Portugal issued the following statement \"The conclusion of the Novo Banco restructuring process also results in the
end of the backstop mechanism, which provided for the possibility, which was always considered remote, of the
Portuguese State providing extraordinary support to Novo Banco in extreme scenarios. This mechanism protected Novo
Banco and the national financial system from more adverse scenarios, which did not materialize. With the end of the
backstop, the financial risk for the Portuguese State is eliminated\".
According to the 2018 Resolution Fund\u2019s annual report, the Resolution Fund and Novo Banco have agreed that a
Verification Agent - an independent entity which is essentially responsible for clarifying any differences that may exist
between Novo Banco and the Resolution Fund regarding the set of calculations inherent to the CCA or regarding the
practical application of the principles stipulated in the contract - is in charge of confirming that the perimeter of the
mechanism is correct and that the balance sheet values of Novo Banco are being correctly reflected in the mechanism,
as well as verifying the underlying set of calculations, namely by confirming the correct calculation of losses and the
reference value of the assets. According to the 2022 Resolution Fund\u2019s annual report, the Resolution Fund follows the
work carried out by the Verification Agent, while specific analyses are being requested.
The Resolution Fund disclosed on 17 June 2019 a set of clarifications related to the payment due in 2019 under the CCA
with Novo Banco, namely:
- For payments from the Resolution Fund to be made (limited to a maximum of Euros 3,890 million over the lifetime of
the mechanism), losses on the assets under the contingent mechanism should be incurred and the capital ratios of Novo
Banco should stand below the agreed reference thresholds;
- The payment to be made by the Resolution Fund corresponds to the lower of the accumulated losses on the assets
covered and the amount necessary to restore the capital ratios above the minimum reference threshold;
- The reference capital ratios are, in 2017, 2018 and 2019, linked to the regulatory requirements applicable to Novo
Banco (CET1 ratio of 11.25% and Tier 1 ratio of 12.75%), but, as from 2020, the reference ratio will correspond to a
CET1 ratio of 12%;
- The initial reference value of the portfolio comprising the CCA was, as of 30 June 2016, Euros 7,838 million (book
value of the associated assets, net of impairments);
In a statement dated 2 February 2024, the Resolution Fund clarifies that it has been informed of the Supreme Court's
ruling on the appeal filed by Novo Banco, following the decision of the Lisbon Court of Appeal, which rejected the
petition for annulment of the decision of the Court of Arbitration, issued in October 2021, relating to the first
arbitration between the Resolution Fund and Novo Banco, which began in 2020.
This ruling definitively confirms the validity and correctness of the position taken by the Resolution Fund in 2019, when
it opposed being charged, through the CCM, for the impact of Novo Banco's intention to waive the transitional regime
related to the implementation of IFRS 9. The Resolution Fund's action in this process resulted in a saving of its
resources of Euros 169 million.
Regarding the intervention of the Resolution Fund concerning the transitional regime of the implementation of the
dynamic component of IFRS 9, Novo Banco estimates a positive impact on its own funds in the amount of Euros 171
million (which implies a reduction in the capital requirements that Novo Banco intended to pass on to the CCM in the
amount of Euros 161.6 million). Accordingly, the Resolution Fund has an arbitration proceeding underway, also under
the aegis of the International Chamber of Commerce, with a view to settling the difference between the parties. This
process is in progress, and it is estimated that an award will be rendered in the first half of 2024.
According to a statement by the Resolution Fund on 3 September 2020, following the payment made in May 2019 by the
Resolution Fund to Novo Banco in compliance with the CCA, a special audit determined by the Government was carried
out. The information was presented by the independent entity that carried out the special audit, showed that Novo
Banco has been operating with a strong influence of the vast legacy of non-productive assets, originated in BES, which
resulted in impairment charges and provisions, but have also contributed to rendering Novo Banco\u2019s internal procedures
more robust. Regarding the exercise of the powers of the Resolution Fund under the CCA, the audit results reflect the
adequacy of the principles and the adopted criteria.
According to Resolution Fund\u2019s annual report of 2022, Novo Banco submitted to the International Chamber of
Commerce a request for arbitration to have recognized the right to receive an aggregate amount of Euros 165,441.9
thousand (divestment of Novo Banco's activity in Spain in the amount of Euros 147,441.9 thousand and valuation
differences regarding a set of assets held by Novo Banco in the amount of Euros 18,000 thousand) which the Resolution
Fund considered, and considers, not to merit the coverage of the CCM.
On 3 May 2021, following the request of the Portuguese parliament in October 2020 to review the operations and
management of Novo Banco that led to the need to transfer funds from the Resolution Fund to Novo Banco, the
Resolution Fund announced that the audit report conducted by Tribunal de Contas (\u201cCourt of Auditors\u201d) was released.
The Court of Auditors concluded that the public financing of Novo Banco through the CCA contributed to the stability of
the financial system, particularly as it avoided the bank\u2019s liquidation and reduced systemic risk. According to the
Resolution Fund, the audit does not identify any impediment to the fulfilment of commitments and contracts arising
from BES\u2019s resolution process, initiated in August 2014.
On 9 September 2020, BCP informed that it has decided not to continue with the legal proceeding before the General
Court of the European Union with a view to partially annul the European Commission\u2019s decision regarding its approval
of the CCA of Novo Banco.
According to Novo Banco\u2019s 2023 annual report (note 28), Novo Banco adhered to the Special Regime applicable to
Deferred Tax Assets under Law No. 61/2014, of 26 August (REAID), according to which, the deferred tax assets recorded
until 31 December 2015 can be converted into tax credits when the taxable entity reports an annual net loss, in
accordance to the proportion of the amount of the said net loss to total equity at the individual company level, A
special reserve was established with an amount identical to the tax credit approved, increased by 10%. The conversion
rights are securities that entitle the State to require Novo Banco to increase its share capital by incorporating the
amount of the special reserve and consequently issuing and delivering free of charge ordinary shares. The shareholders
have the right to acquire the conversion rights attributed to the Portuguese State.
According to the Resolution Fund\u2019s 2022 annual report, under the terms of the sale of Novo Banco, the 75% of the share
capital of Novo Banco held by Nani Holdings is not affected by the dilution associated with the REAID.
On 17 December 2021, Novo Banco, carried out a capital increase in the amount of Euros 154,907.3 thousand, through
the conversion of the rights that had been attributed to the State due to the conversion of the deferred tax assets of
Novo Banco, into tax credits, with reference to the 2015 tax period, under the REAID. As of that date, the State
became a shareholder of Novo Banco, having been attributed a participation corresponding to 1.56% of the share
capital. Later, on 4 November 2022, Novo Banco made a further capital increase of Euros 249,753 thousand conferred
the State an additional stake of 4.13% in Novo Banco.
In April 2023, a capital increase of Euros 263,183 thousand was carried out through a rights conversion related to 2018
and 2019, which gave the State an additional stake of 6.27% in Novo Banco. With reference to the 2020 financial year,
conversion rights representing 3.64% of the capital were issued which will only dilute, in accordance with the sale
contract, the Resolution Fund's participation if the shareholders do not exercise their potestative right to acquire the
conversion rights.
According to Novo Banco's 2023 annual report, Lone Star owns 75% of Novo Banco, the Resolution Fund 13%, and the
Portuguese State 12%.
Resolution measure of Banif \u2013 Banco Internacional do Funchal, S.A.
On 19 December 2015, the Board of Directors of Banco de Portugal announced that Banif \u201cwas failing or likely to fail\u201d
and started an urgent resolution process of the institution through the partial or total sale of its activity, which was
completed on 20 December 2015 through the sale to Banco Santander Totta S.A. (BST) of the rights and obligations of
Banif, formed by the assets, liabilities, off-balance sheet items and assets under management. The largest portion of
the assets that were not sold, were transferred to an asset management vehicle denominated Oitante, S.A. (Oitante)
specifically created for that purpose, having the Resolution Fund as the sole shareholder. For that matter, Oitante
issued bonds representing debt in the amount of Euros 746 million. The Resolution Fund provided a guarantee and the
Portuguese State a counter-guarantee. The operation also involved State aid, of which Euros 489 million were provided
by the Resolution Fund, which was funded by a loan granted by the State.
On 4 July 2022, Oitante - 100% owned by the Resolution Fund - completed the process of repayment of the bonds issued
in connection with the resolution of BANIF. Oitante's debt, which initially amounted to Euros 746 million, was thus fully
repaid. With the repayment of the debt, the Resolution Fund's responsibility as guarantor also ceases, as well as the
Portuguese State's responsibility as provider of a counter-guarantee.
According to the Resolution Fund (press release dated 29 December 2023), Oitante has already paid a total of Euros
78.8 million to the Resolution Fund, of which Euros 63.8 million will be paid in 2023. The amounts received and to be
received by the Resolution Fund, given its 100% participation in Oitante's capital, will contribute to reducing the losses
of Euro 489 million incurred by this Fund in the resolution of BANIF and will be used to repay the debts of the
Resolution Fund, namely to the State.
On 16 January 2023, the Liquidation Committee of Banif announced a list of all the acknowledged and a list of the non-
acknowledged creditors. According to the Resolution Fund\u2019s 2022 annual report, the Resolution Fund holds a claim on
Banif of Euros 489 million, which has a higher claim ranking provided for in article 166-A of the RGICSF. Under the
judicial liquidation process of Banif, which was initiated following the resolution, the independent evaluator estimates
that the level of recovery of the financial support made available by the Resolution Fund, as having a higher ranking at
the end of the liquidation, is expected to be 7.6%.
On 12 January 2021, Banco de Portugal was informed that the Administrative and Fiscal Court of Funchal dismissed a
lawsuit involving several disputes associated to Banif\u2019s resolution measures applied by Banco de Portugal. In its
decision, the Court determined the legality and maintenance of Banco de Portugal\u2019s measures.
Liabilities and financing of the Resolution Fund
Pursuant to the resolution measures applied to BES and Banif, the Resolution Fund incurred on loans and assumed other
responsibilities and contingent liabilities resulting from:
- The State loans, on 31 December 2021, included the amounts made available (i) in 2014 for the financing of the
resolution measure applied to BES (Euros 3,900 million); (ii) to finance the absorption of Banif's losses (Euros 353
million); (iii) under the framework agreement concluded with the State in October 2017 for the financing of the
measures under the CCA (Euros 430 million plus Euros 850 million of additional funding requested in 2019 and Euros 850
million made available in 2020);
- Other funding granted:
\u2022 in 2014 by the institutions participating in the Resolution Fund in the amount of Euros 700 million, in which the
Bank participates, within the scope of BES resolution measure;
\u2022 in 2021 by seven domestic credit institutions, including BCP, to finance payments due under the CCA up to a
maximum of Euros 429 million;
- The underwriting by the Resolution Fund of a Tier 2 instrument to be issued by Novo Banco up to the amount of Euros
400 million did not take place as the instruments were placed with third party investors as disclosed by Novo Banco on
29 July 2018;
- Effects of the application of the principle that no creditor of the credit institution under resolution may assume a loss
greater than the one it would take if that institution did not go into liquidation;
- Negative effects resulting from the resolution process that result in additional liabilities or contingencies for Novo
Banco, which must be neutralized by the Resolution Fund;
- Legal proceedings filed against the Resolution Fund;
- Guarantee granted to secure the bonds issued by Oitante, totally reimbursed, as described above.
- CCA allows Lone Star to claim, from the Resolution Fund, funding costs, realised losses and provisions related to the
aforementioned ex-ante portfolio of existing loan stock agreed upon the sale process to Lone Star up to Euros 3.89
billion under the aforementioned conditions, among which a reduction of Novo Banco\u2019s CET1 below 8%-13%;
- In case the Supervisory Review and Evaluation Process (SREP) total capital ratio of Novo Banco falls below the SREP
total capital requirement, the State will provide additional capital in certain conditions and through different
instruments as referred to in the respective European Commission Decision.
According to Resolution Fund\u2019s annual report of 2022, contingent liabilities from the CCA are limited to a maximum
aggregate amount of Euros 3,890 million and that the aggregate amount of this contingent liability, which corresponds
to the difference between that maximum amount and the amounts already paid by the Resolution Fund, amounts to
Euros 485 million.
The expectation of the Resolution Fund is that, except for what may eventually result from the pending arbitration
disputes with Novo Banco, no further payments will occur under the CCA. On the other hand, the value of payments
already made may be compensated, under the terms of the contracts, by the eventual recovery of credits that may
occur, to which the value of the shareholding of the Resolution Fund in Novo Banco must be added.
According to note 22 of the Resolution Fund\u2019s 2022 annual report, the Resolution Fund considers that, to date, there
are no elements that allow a reliable estimate of the potential financial effect of these potential liabilities.
By a public statement on 28 September 2016, the Resolution Fund and the Ministry of Finance communicated the
agreement based on a review of the terms of the Euros 3,900 million loan originally granted by the State to the
Resolution Fund in August 2014 to finance the resolution measure applied to BES. According to the Resolution Fund, the
extension of the maturity of the loan was intended to ensure the ability of the Resolution Fund to meet its obligations
through its regular revenues, regardless of the contingencies to which the Resolution Fund is exposed. On the same day,
the Office of the Minister of Finance also announced that increases in the liabilities arising from the materialization of
future contingencies will determine the maturity adjustment of State and bank loans to the Resolution Fund, required
from to maintain the contributory effort required from the banking sector at prevailing levels at that time.
According to the statement of the Resolution Fund of 21 March 2017:
- \u201cThe conditions of the loans obtained from the Fund to finance the resolution measures applied to Banco Esp\u00edrito
Santo, S.A. and to Banif \u2013 Banco Internacional do Funchal, S.A. were changed. These loans amount to Euros 4,953
million, of which Euros 4,253 million were granted by the Portuguese State and Euros 700 million were granted by a
group of banks\";
- \u201cThose loans are now due in December 2046, without prejudice to the possibility of early repayment based on the
use of the Resolution Fund's revenues. The revision of the loan\u2019s terms aimed to ensure the sustainability and financial
balance of the Resolution Fund. The terms allow the Resolution Fund to fully meet its liabilities based on regular
revenues and without the need for special contributions or any other type of extraordinary contributions\".
According to the audit report on the management of Novo Banco conducted by the Court of Auditors and released on 12
July 2022, \"the repayment of the Euros 2,130 million loans granted by the Portuguese State to the Resolution Fund will
not end in 2046, as expected, rather in 2056 (without payments under the CCA after 2021) or in 2059 (with the use of
the CCA cap). (...) In other, more pessimistic scenarios, these loans will still be being repaid in 2062\u201d.
On 2 October 2017, by Resolution no. 151-A/2017, of the Council of Ministers of the Portuguese State, as the ultimate
guarantor of financial stability, was authorised to enter into a framework agreement with the Resolution Fund, to make
available the necessary financial resources to the Resolution Fund, if and when the State deemed necessary, to satisfy
any contractual obligations that may arise from the sale of the 75% stake in Novo Banco. The above-mentioned
resolution further set out that the framework agreement should be subject to a time period that is consistent with the
undertakings of the Resolution Fund and should preserve the Resolution Fund\u2019s capacity to satisfy said obligations in
due time.
On 31 December 2022, the Resolution Fund's own resources had a negative equity of Euros 6,974.7 million, as opposed
to Euros 7,207.6 million at the end of 2021, according to the latest 2022 annual report of the Resolution Fund.
To repay the loans obtained and to meet other liabilities that it may take on, the Resolution Fund receives proceeds
from the initial and regular contributions from the participating institutions (including the Bank) and from the
contribution over the banking sector (created under Law no. 55-A/2010). It is also provided for the possibility of the
member of the Government responsible for the area of Finance to determine, by ordinance that the participating
institutions make special contributions, in the situations provided for in the applicable legislation, particularly if the
Resolution Fund does not have resources to satisfy its obligations.
Pursuant to Decree-Law no. 24/2013 of 19 February, which establishes the method for determining the initial, periodic
and special contributions to the Resolution Fund, provided for in the Banking Law, the Bank has been paying, since
2013, its mandatory contributions set out in the aforementioned decree-law.
On 3 November 2015, the Banco de Portugal issued Circular Letter no. 085/2015/DES, under which it is clarified that
the periodic contribution to the Resolution Fund should be recognised as an expense at the time of the occurrence of
the event which creates the obligation to pay the contribution, i.e. on the last day of April of each year, as stipulated
in Article 9 of the referred Decree-Law no. 24/2013, of 19 February, thus the Bank is recognising as an expense the
contribution to the Resolution Fund in the year in which it becomes due.
Decree-Law no. 24/2013 of 19 February further sets out that Banco de Portugal has the authority to determine, by way
of instruction (\u201cinstru\u00e7\u00e3o\u201d), the applicable yearly rate based on objective incidence of periodic contributions. The
instruction of Banco de Portugal no. 28/2023, published on 15 December 2023, set the base rate for 2024 for the
determination of periodic contributions to the Resolution Fund at 0.032% (0.029% in 2023).
The Resolution Fund issued, on 15 November 2015, a public statement declaring: \"...it is further clarified that it is not
expected that the Resolution Fund will propose the setting up of a special contribution to finance the resolution
measure applied to BES. Therefore, the potential collection of a special contribution appears to be unlikely\".
In 2015, following the establishment of the Single Resolution Fund (SRF), the Group made an initial contribution in the
amount of Euros 31,364 thousand. In accordance with the Intergovernmental Agreement on the Transfer and
Mutualisation of Contributions to the SRF, this amount was not transferred to the SRF but was used instead to partially
cover for the disbursements made by the RF in respect of resolution measures prior to the date of application of this
Agreement. This amount will have to be reinstated over a period of 8 years (started in 2016) through the periodic
contributions to the SRF. The Single Resolution Fund does not cover undergoing situations with the National Resolution
Fund as at 31 December 2015. The total amount of the contribution attributable to the Group of 2023 was Euros 22,861
thousand, of which the Group delivered Euros 17,729 thousand and the remaining was constituted as irrevocable
payment commitment.
In 2023, the Group made regular contributions to the Portuguese Resolution Fund in the amount of Euros 9,491
thousand. The amount related to the contribution on the banking sector in Portugal, registered in this period was Euros
44,807 thousand. These contributions were recognized as a cost in 2023, in accordance with IFRIC no. 21 \u2013 Levies.
It is not possible, on this date, to assess the effects on the Resolution Fund due to: (i) the sale of the shareholding in
Novo Banco in accordance with the communication of Banco de Portugal dated 18 October 2017 and the information
provided by the European Commission on this subject under the terms described above, including the effects of the
application of the Contingent Capital Agreement and the Special Regime applicable to Deferred Tax Assets; (ii) the
application of the principle that no creditor of the credit institution under resolution may take on a loss greater than
the one it would take if that institution did not go into liquidation; (iii) additional liabilities or contingencies for Novo
Banco which need to be neutralized by the Resolution Fund; and, (iv) legal proceedings against the Resolution Fund.
According to Article 5 (e) of the Regulation of the Resolution Fund, approved by the Ministerial Order no. 420/2012, of
21 December, the Resolution Fund may submit to the member of the Government responsible for finance a proposal
with respect to the determination of amounts, time limits, payment methods, and any other terms related to the
special contributions to be made by the institutions participating in the Resolution Fund. According to public
communications from both the Resolution Fund and from the Government, there is no indication that any such special
contributions are foreseen.
According to the Resolution Fund\u2019s 2022 annual report, under note 8, \"the Resolution Fund is not obliged to present
positive equity. In case of insufficient resources, the Resolution Fund may receive special contributions, as determined
by the member of the Government responsible for finance, in accordance with article 153-I of the Banking Act,
although no such contributions are expected. The Resolution Fund may also, exceptionally, obtain financial support
from the State, namely through loans or guarantees, as set out in article 153-J of the same regime\".
To meet a payment from the Resolution Fund to Novo Banco, as per to Resolution no. 63-A/2021 of 27 May 2021 of the
Council of Ministers and Order from the Minister of State and Finance, of 31 May 2021 - intended to provide the
Resolution Fund with the financial resources necessary to meet any obligations arising from the Contingent
Capitalization Agreement in the years 2021 and 2022 \u2013 rendering a new loan from the State to the Resolution Fund, a
number of national financial institutions offered to finance the Resolution Fund, increasing up to Euros 475 million the
direct financing of banks to the Resolution Fund and waiving a Portuguese State loan to the Resolution Fund.
According to the Resolution Fund\u2019s 2022 annual report from the maximum amount of Euros 475 million. The Resolution
Fund used Euros 429 million, which corresponds to the payment made to Novo Banco in 2021. The loan matures in 2046
and bears interest at a rate corresponding to the sovereign cost of funding for the period between the contract date (31
May 2021) and 31 December 2026, plus a margin of 15 b.p. The interest rate will be reviewed on 31 December 2026
and, after that, every five-years. The payment obligations arising from this loan benefit from a pari passu treatment
with the payment obligations of the loans entered into with the Portuguese State on 7 August 2014 and 31 December
2015 and with the Portuguese credit institutions on 28 August 2014. The funding costs of the Resolution Fund (from the
State and from banks) will continue to be exclusively borne by periodic revenues, corresponding to the contributions
paid by the banking sector.
13. Banco Comercial Portugu\u00eas, S.A., Banco ActivoBank S.A. and Banco de Investimento Imobili\u00e1rio, S.A. (company
merged into Banco Comercial Portugu\u00eas, S.A.) initiated an administrative proceeding to contest the resolution adopted
by Bank of Portugal on 31 March 2017 to sell Novo Banco (NB), and also, as a precaution, the deliberation adopted by
the Resolution Fund on the same date, as they foresee the sale of NB by resorting to a contingent capitalization
agreement under which the Resolution Fund commits to inject capital in Novo Banco up to Euros 3,9 billion, under
determined circumstances. In the proceedings, the claimants request the declaration of nullity or annulment of those
acts.
The proceedings were filed based on the information contained in the Communication from Bank of Portugal dated 31
March 2017, of which the claimants were not notified. The proceedings were filed in court on 4 September 2017. Bank
of Portugal and the Resolution Fund presented their arguments and, only very recently, Nani Holdings SGPS, S.A. did
the same since, by delay of the court, this company was only very recently notified to act as a party in the proceedings.
In addition to opposing to it, the defendants invoke three objections (i) the illegitimacy of the claimants, (ii) the
argument that the act performed by Bank of Portugal cannot be challenged and (iii) the material incompetence of the
court. The opponent party invoked the issue of passive illegitimacy since Novo Banco was not notified as an opponent
party.
The claimants replied to the arguments presented by the defendants and to the arguments presented by the opponent
party. After the presentation of the arguments, Bank of Portugal attached to the proceedings what it called an
evidence process (allegedly in compliance with the law) but most of the documents delivered were truncated in such a
way that neither the court nor the claimants are able to obtain adequate knowledge thereof. That issue was already
raised in the proceedings (requesting the court to order Bank of Portugal to deliver a true evidence process) but no
decision thereon has been made yet.
Currently, the proceedings are prepared for confirmation of the decision accepting the formalities of the right of action
(with the making of a decision on the specific objections invoked). In case the judge considers that Novo Banco is an
opponent party, the judge must start by issuing a pre-confirmation in order to request the claimants to identify it.
Afterwards, that Bank will be notified to present its opposition arguments.
The case was sent to the judge on 23 September 2019 and the Bank is awaiting a decision. BCP added legal opinions to
the records (Professors M\u00e1rio Aroso de Almeida and Manuel Fontaine de Campos).
14. Following the restructuring process agreed with the Directorate-General for Competition (DGComp) and the
Portuguese State, Group Banco Comercial Portugu\u00eas implemented in 2014 a salary adjustment process for employees,
with a temporary effect. Additionally, it was agreed between the Bank and the Unions that, in the years after the State
intervention and if there are distributable profits, the Board of Directors and the Executive Committee would submit
for approval of the Shareholders\u2019 General Meeting a proposal of distribution of profits to the employees, which allows
the distribution of an accumulated total global amount at least equal to the total amount that was not received over
the temporary term of the salary adjustment, as described in the clause no. 151-E of BCP\u2019s Collective Labour
Agreement, effective between 2014 and 2017.
At the General Meeting held on 24 May 2023, the proposal submitted by the Board of Directors, the application of
profits relating to the financial year of 2022 was approved, which included an extraordinary distribution to the
employees to Euros 9,972,000, with the concrete determination of the amount to be attributed to each employee to be
fixed by the Executive Committee to employees who, having not already been fully compensated with the results
distributed in 2019 and 2020 and 2022, remain in office on the date of payment of the remuneration of June 2023. This
extraordinary distribution of results, together with those of 2019, 2020 and 2022 allowed the distribution to the
employees in office in June 2023 of an accumulated amount equal to the total amount not received during the period
of temporary salary adjustment indicated in the previous paragraph.
15. The Bank was subject to tax inspections for the years up to 2019. As a result of the inspections in question,
corrections were made by the tax authorities, arising from the different interpretation of some tax rules. The main
impact of these corrections occurred regarding IRC, including in terms of the tax loss carry forwards and, in the case of
indirect tax, in the calculation of the Value-Added Tax (VAT) deduction pro rata used for the purpose of determining
the amount of deductible VAT and at the Stamp Duty level. Most of additional liquidations/corrections made by the tax
administration were the object of contestation by administrative and/or judicial means.
The Bank recorded provisions, current tax liabilities or deferred tax liabilities at the amount considered sufficient to
offset the tax or tax loss carry forwards, as well as the contingencies related to the fiscal years not yet reviewed by the
tax administration.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-702": { "value": "Provisions for legal risk related to foreign currency-indexed mortgage loans in Bank Millennium (Poland) 1. Court claims and current provisions for legal riskOn 31 December 2023, Bank Millennium had 20,914 loan agreements and additionally 1,780 loan agreements from former Euro Bank under individual ongoing litigations (excluding claims submitted by Bank Millennium against clients i.e. debt collection cases) concerning indexation clauses of FX mortgage loans submitted to the courts (64% loans agreements before the courts of first instance and 36% loans agreements before the courts of second instance) with the total value of claims filed by the plaintiffs amounting to PLN 4,130.6 million (Euros 950.9 million) and CHF 281.5 million (Euros 302.8 million) [(Bank Millennium portfolio: PLN 3,780.2 million (Euros 870.3 million) and CHF 272.6 million (Euros 293.2 million) and former Euro Bank portfolio: PLN 350.4 million (Euros 80.7 million) and CHF 8.8 million (Euros 9.5 million)]. Out of 20,914 Bank Millennium's loan agreements in ongoing individual cases 240 are also part of class action. From the total number of individual litigations against the Bank approximately 2,260 or 11% were submitted by borrowers that had already naturally or early fully repaid the loan or were converted to polish zloty at the moment of submission and had not a settlement agreement and approximately another 730 cases correspond to loans that were fully repaid since then (as court proceedings are lengthy).The claims formulated by the clients in individual proceedings primarily concern the declaration of invalidity of the contract and payment for reimbursement of paid principal and interest instalments as undue performance, due to the abusive nature of indexation clauses, or maintenance of the agreement in PLN with interest rate indexed to CHF Libor.In addition, Bank Millennium is a party to the group proceedings (class action) subject matter of which is to determine Bank Millennium's liability towards the group members based on unjust enrichment (undue benefit) ground in connection with the foreign currency mortgage loans concluded. It is not a payment dispute. The judgment in these proceedings will not directly grant any amounts to the group members. The number of credit agreements covered by these proceedings is 3,273. Out of 3,273 loan agreements in class action 240 are also part of ongoing individual cases, 858 concluded settlements and 7 received final verdicts (invalidation of loan agreement). On 24 May 2022 the court issued a judgment on the merits, dismissing the claim in full. On 13 December 2022 the claimant filed an appeal against the judgment of 24 May 2022. On 20 November 2023 the claimant requested granting interim measures to secure the claims against the Bank. In a decision of 27 December 2023, the request for granting interim measures was dismissed.The pushy advertising campaign observed in the public domain affects the number of court disputes. Until the end of 2019, 1,985 individual claims were filed against Bank Millennium (in addition, 236 against former Euro Bank), in 2020 the number increased by 3,005 (265), in 2021 the number increased by 6,159 (423), in 2022 the number increased by 5,755 (408), while in 2023 the number increased by 6,871 (647).Based on ZBP (the Polish Banking Association) data gathered from all banks having FX mortgage loans, vast majority of disputes were finally resolved against the banks. As far as Bank Millennium (including the former Euro Bank portfolio) is concerned, from 2015 until the end of 2023, 3,341 cases were finally resolved (3,263 in claims submitted by clients against Bank Millennium and 78 in claims submitted by Bank Millennium against clients i.e. debt collection cases) out of which 925 were settlements, 56 were remissions, 64 rulings were favourable for Bank Millennium and 2,296 were unfavourable including both invalidation of loan agreements as well as conversions into PLN+LIBOR. Bank Millennium files appeals against negative judgements of the courts of 1st instance declaring invalidation of loan agreements. Simultaneously Bank Millennium undertakes proper legal actions in order to secure repayment of initially disbursed capital of the loan.The outstanding gross balance of the loan agreements under individual court cases and class action against Bank Millennium (including the former Euro Bank portfolio) on 31 December 2023 was PLN 6,264 million (Euros 1,442.1 million) [of which the outstanding amount of the loan agreements under the class action proceeding was PLN 763 million (Euros 175.7 million)]. If all Bank Millennium\u2019s originated loan agreements currently under individual and class action court proceedings would be declared invalid without any compensation for the use of capital, the pre-tax cost could reach PLN 6,955 million (Euros 1,601.2 million), excluding potential amounts connected with interest. Overall losses would be higher or lower depending on the final court jurisprudence in this regard. In the 12 months of 2023, Bank Millennium created PLN 2,828.1 million (Euros 623 million) provisions for Bank Millennium originated portfolio and PLN 237.3 million (Euros 52.2 million) for former Euro Bank originated portfolio. The balance sheet value of provisions for Bank Millennium's portfolio at the end of December 2023 was at the level of PLN 7,268.8 million (Euros 1,673.4 million), and PLN 603 million (Euros 138.8 million) for former Euro Bank originated portfolio.The methodology developed by Bank Millennium of calculating provisions for legal risk involved with indexed loans is based on the following main parameters: (1) the number of ongoing cases (including class action agreements) and potential future lawsuits that will arise within the specified (three-year) time horizon. As regards the number of future court cases, Bank Millennium monitors customer behaviours, follows market trends and expert comments, which resulted in the adjustment of previous assumptions. As a result, in the methodology of calculating provisions for legal risk in the case of active loans (loans with an outstanding balance as at the date of filing the lawsuit), Bank Millennium increased the estimated percentage of customers covered by methodology in this group of clients to 83% of the total number of currently active loans compared to 77% at the end of 3rd quarter of 2023. Regarding loans already fully repaid or converted to polish zloty, Bank Millennium attributes a much lower probability of becoming the subject of a court case based on statistical analysis. In particular: a) Bank Millennium assesses the risk connected with the settlements reached with the clients in the past as negligible\u00a0 b) from the group of loans that have been repaid (naturally or early or converted into polish zloty loan) and were not subject of a settlement agreement, Bank Millennium assumes that circa 16% sued or will decide to sue the Bank in the future;(2) the currently estimated amount of Bank Millennium's potential loss in the event of a specific court judgment;(3) the probability of obtaining a specific court judgment calculated on the basis of statistics of judgments in cases where Bank Millennium is a party and legal opinions obtained;(4) Bank Millennium does not include in the methodology of calculating an element related to the potential claim for remuneration for the client in connection with the repayments made by him or her;(5) estimates involved with amicable settlements with clients, concluded in court or out of court:a. Bank Millennium assumes 12% probability of success of reaching a settlement within negotiations made with clients during court proceedings;b. negotiations in court or out of court are conducted on a case-by-case basis and can be stopped at any time by Bank Millennium;c. due to significant negotiation efforts already made in the past, the probability of success in these negotiations in the future is decreasing, and at the same time most customers have already been contacted by or contacted the Bank regarding the possible conversion of loans into PLN, so at the moment the Bank adopts a conservative approach when taking into account the potential impact of this factor.Bank Millennium is open to negotiate case by case favourable conditions for early repayment or conversion of loans to PLN. As a result of these negotiations, the number of active FX mortgage loans originated by Bank Millennium decreased by 21,428: 1,363 in 2020; 8,450 in 2021; 7,943 in 2022 and 3,672 in 2023. As of the end of 2023, the Bank had 32,425 active FX mortgage loans. Cost incurred in conjunctions with these negotiations totalled PLN 1,340.1 million (Euros 295.2 million): PLN 44.5 million (Euros 9.8 million) in 2020; PLN 364.6 million (Euros 80.3 million) in 2021; PLN 515.2 million (Euros 113.5 million) in 2022 and PLN 415.8 million (Euros 91.6 million) in 2023 and is presented mainly in \u2018Result on exchange differences\u2019 and also in \u2018Result on modification\u2019 in the profit and loss statement.Legal risk from former Euro Bank portfolio is fully covered by Indemnity Agreement with Soci\u00e9t\u00e9 G\u00e9n\u00e9rale.Bank Millennium analysed the sensitivity of the methodology for calculating provisions, for which a change in the parameters would affect the value of the estimated loss to the legal risk of litigation:Parameter Scenario Impact on the loss Change in the assumed number of court cases In addition to above assumed numbers, 1,000 new customers file a lawsuit against the BankPLN 167 million (Euros 36.8 million) Change of estimated losses for each variant of judgmentChange of losses for each judgment variant by 1 p.p PLN 75 million (Euros 16.5 million) Change in probability of success in negotiations with court clientChange of probability by 1 p.p PLN 18 million (Euros 4 million) On 8 December 2020, Mr. Jacek Jastrz\u0119bski, the Chairman of the Polish Financial Supervision Authority (\u2018PFSA\u2019) proposed a \u2018sector\u2019 solution to address the sector risks related to FX mortgages. The solution would consist in offering banks\u2019 clients a voluntary possibility of concluding arrangements based on which a client would settle a CHF Mortgage Loan as if it was a PLN loan bearing interest at an appropriate WIBOR rate increased by the margin historically employed for such loans. The decision to generally implement this solution could imply the need of creating upfront provisions for the losses resulting from the conversion of CHF Mortgage Loans. Bank Millennium in practice has been using elements of the proposal of above system solution on many individual negotiations with FX mortgage borrowers, including in the course of court proceedings.Due to the circumstances stemming from the CJEU which excludes demanding by the Bank amounts exceeding the return of disbursed capital, the possibility of successful implementation of a general offer of KNF solution is low.Finally, it should also be mentioned that Bank Millennium, as at 31 December 2023, had to maintain additional own funds for the coverage of additional capital requirements related to FX mortgage portfolio risks (Pillar II FX buffer) in the amount of 1.47 p.p. (1.46 p.p. at the Group level), part of which is allocated to operational/legal risk.Taking into consideration the recent negative evolution in the court verdicts regarding FX mortgage loans, the Bank will have to regularly review and may need to continue to increase the balance of provisions allocated to court litigations.It can reasonably be assumed that the legal issues relating to foreign currency mortgage loans will be further examined by the polish courts within the framework of disputes considered which would possibly result in the emergence of further interpretations, which are relevant for the assessment of the risks associated with subject matter proceedings. This circumstance indicates the need for constant analysis of these matters.The Court of Justice of the European Union and the Polish Supreme Court rulings relevant to risk assessmentJurisprudence of the Court of Justice of the European UnionOn 3 October 2019, the Court of Justice of the European Union (the CJEU) issued the judgment in Case C-260/18 in connection with the preliminary questions formulated by the District Court of Warsaw in the case against Raiffeisen Bank International AG. The judgment of the CJEU, as regards the interpretation of European Union law made therein, is binding on domestic courts. The judgment in question interpreted Article 6 of Directive 93/13. In the light of the subject matter judgment the said provision must be interpreted in such a way that:(i) the national court may invalidate a credit agreement if the removal of unfair terms detected in this agreement would alter the nature of the main subject-matter of the contract;(ii) the effects for the consumer\u2019s situation resulting from the cancellation of the contract must be assessed in the light of the circumstances existing or foreseeable at the time when the dispute arose and the will of the consumer is decisive as to whether he wishes to maintain the contract;(iii) Article 6 of the Directive precludes the filling-in of gaps in the contract caused by the removal of unfair terms from the contract solely on the basis of national legislation of a general nature or established customs;(iv) Article 6 of the Directive precludes the maintenance of unfair terms in the contract if the consumer has not consented to the maintenance of such terms. It can be noticed the CJEU found doubtful the possibility of a credit agreement being performed further in PLN while keeping interest calculated according to LIBOR.The CJEU judgment concerns only the situation where the national court has previously found the contract term to be abusive. It is the exclusive competence of the national courts to assess, in the course of judicial proceedings, whether a particular contract term can be regarded as abusive in the circumstances of the case.On 29 April 2021, the CJEU issued the judgement in the case C-19/20 in connection with the preliminary questions formulated by the District Court in Gda\u0144sk in the case against of ex-BPH S.A., the CJEU said that:(i) it is for the national court to find that a term in a contract is unfair, even if it has been contractually amended by those parties. Such a finding leads to the restoration of the situation that the consumer would have been in in the absence of the term found to be unfair, except where the consumer, by means of amendment of the unfair term, has waived such restoration by free and informed consent. However, it does not follow from Council Directive 93/13 that a finding that the original term is unfair would, in principle, lead to annulment of the contract, since the amendment of that term made it possible to restore the balance between the obligations and rights of those parties arising under the contract and to remove the defect which vitiated it;(ii) the national court may remove only the unfair element of a term in a contract concluded between a seller or supplier and a consumer where the deterrent objective pursued by Council Directive 93/13 is ensured by national legislative provisions governing the use of that term, provided that that element consists of a separate contractual obligation, capable of being subject to an individual examination of its unfair nature. At the same time, provisions of the Directive preclude the referring court from removing only the unfair element of a term in a contract concluded between a seller or supplier and a consumer where such removal would amount to revising the content of that term by altering its substance;(iii) the consequences of a judicial finding that a term if a contract concluded between a seller or supplier and a consumer is unfair are covered by national law and the question of continuity of the contract should be assessed by the national court of its own motion in accordance with an objective approach on the basis of those provisions;(iv) the national court, finding that a term in a contract concluded between a seller or supplier and a consumer is unfair, shall inform the consumer, in the context of the national procedural rules after both parties have been heard, of the legal consequences entailed by annulment of the contract, irrespective of whether the consumer is represented by a professional representative.On 18 November 2021, the Court of Justice of the European Union (CJEU) issued a judgment in case C-212/20 in connection with questions submitted by the District Court for Warsaw Wola in Warsaw in the case against Raiffeisen Bank International AG. The CJEU stated that:(i) the content of the clause of the loan agreement concluded between the entrepreneur and the consumer fixing the purchase and sale price of the foreign currency to which the loan is indexed should, on the basis of clear and comprehensible criteria, enable the consumer who is reasonably well informed and sufficiently observant and rational to understand how the exchange rate of the foreign currency used to calculate the amount of the loan instalments is determined, so that the consumer is able to determine himself at any time the exchange rate used by the entrepreneur;(ii) a national court which has found that a term of the agreement concluded between an entrepreneur and a consumer is unfair cannot interpret that term in order to mitigate its unfairness, even if such an interpretation would correspond to the common will of the parties.On 10 June 2021, the Court of Justice of the European Union (CJEU) issued an order in case C-198/20 in connection with questions submitted by the District Court for Warsaw Wola in Warsaw in the case against Santander Bank Polska SA. The CJEU stated that the protection provided for in Council Directive 93/13/EEC is granted to all consumers, not just those who can be considered to be 'duly informed and reasonably observant and circumspect average consumer'.On 8 September 2022, the Court of Justice of the European Union (CJEU) issued a judgment in joined cases C-80/21, C-81/21, C-82/21 in connection with questions submitted by the District Court for Warsaw \u015ar\u00f3dmie\u015bcie in Warsaw in cases against Deutsche Bank SA and mBank SA. The CJEU stated that:(i) a national court may find that the parts of a contractual term of the agreement concluded between a consumer and an entrepreneur which render it unfair are unfair, if such a deletion would not amount to a change in the content of that term that affects its substance, which is for the referring court to verify; (ii) a national court cannot, after annulling an unfair term contained in an agreement concluded between a consumer and an entrepreneur which does not render the agreement invalid in its entirety, replace that term with a supplementary provision of the national law;(iii) a national court may not, after having declared invalid an unfair term contained in an agreement concluded between a consumer and an entrepreneur which entails the invalidity of that agreement in its entirety, replace the contractual term which has been declared invalid either by interpretation of the parties' declaration of intent in order to avoid the cancellation of that agreement or by a provision of national law of a supplementary nature, even if the consumer has been informed of the effects of the invalidity of that agreement, and\u00a0 accepted them;(iv) the ten-year limitation period for a consumer's claim seeking reimbursement of sums unduly paid to the entrepreneur in performance of an unfair term of a loan agreement does not start to run on the date of each performance made by the consumer if the consumer was not able on that date to assess on his own the unfairness of the contractual term or if he had not become aware of the unfair nature of that term and without taking into account the circumstances that the agreement provided for a repayment period \u2013 in this case thirty years \u2013 well in excess of the ten-year statutory limitation period.On 16 March 2023, the Court of Justice of the European Union issued a judgment in a case registered under case number C-6/22, following preliminary questions submitted by the District Court for Warsaw-Wola in a case against the former Getin Noble Bank S.A.. In the judgment, the CJEU ruled that:(i) in the event that a contract concluded between a consumer and a seller or supplier is declared invalid because one of its terms is unfair, it is for the Member States, by means of their national law, to make provision for the effects of that invalidation, in compliance with the protection granted to the consumer by that directive, in particular, by ensuring the restoration of the legal and factual situation that he or she would have been in if that unfair term had not existed.(ii) a national court is not allowed:a. to examine of its own motion, without any prerogative conferred on it by national law in that regard, the financial situation of a consumer who has sought the invalidation of the contract between him or her and a seller or supplier on account of the presence of an unfair term without which the contract cannot legally continue to exist, even if that invalidation is liable to expose the consumer to particularly unfavourable consequences and,b. to refuse to declare that invalidation where the consumer has expressly sought it, after being objectively and exhaustively informed of the legal consequences and the particularly unfavourable financial consequences which it may have for him or her.(iii) a national court is not allowed, after it has found that a term in a contract concluded between a seller or supplier and a consumer is unfair, to fill gaps resulting from the removal of the unfair term contained therein by the application of a provision of national law which cannot be characterised as a supplementary provision. However, it is for the national court, taking account of its domestic law as a whole, to take all the measures necessary to protect the consumer from the particularly unfavourable consequences which annulment of the contract might entail for him or her.On 8 June 2023, the Court of Justice of the European Union issued a judgment in a case registered under case number C-570/21, following preliminary questions submitted by the District Court in Warsaw in a case against the former Getin Noble Bank S.A. In the judgment, the CJEU ruled that:(i) provisions of Council Directive 93/13 must be interpreted as meaning that the concept of \u2018consumer\u2019, within the meaning of that provision, covers a person who has concluded a loan contract intended for a purpose in part within and in part outside his or her trade, business or profession, together with a joint-borrower who did not act within his or her trade, business or profession, where the trade, business or professional purpose is so limited as not to be predominant in the overall context of that contract.(ii) provisions of Directive 93/13 must be interpreted as meaning that in order to determine whether a person falls within the concept of \u2018consumer\u2019, within the meaning of that provision, and, specifically, whether the trade, business or professional purpose of a loan contract concluded by that person is so limited as not to be predominant in the overall context of that contract, the referring court is required to take into consideration all the relevant circumstances surrounding that contract, both quantitative and qualitative, such as, in particular, the distribution of the borrowed capital between, on the one hand, a trade, business or profession and, on the other hand, a non-professional activity and, where there are several borrowers, the fact that only one of them is pursuing a professional purpose or that the lender made the grant of credit intended for consumer purposes conditional on a partial allocation of the amount borrowed to the repayment of debts connected with a trade, business or profession.On 15 June 2023, the Court of Justice of the European Union issued a judgment in a case registered under case number C-287/22, following preliminary questions submitted by the District Court in Warsaw in a case against the former Getin Noble Bank S.A. In the judgment, the CJEU ruled that provisions of the Directive 93/13 must be interpreted as precluding national case-law according to which a national court may dismiss an application for the grant of interim measures lodged by a consumer seeking the suspension, pending a final decision on the invalidity of the loan agreement concluded by that consumer on the ground that that loan agreement contains unfair terms, of the payment of the monthly instalments due under that loan agreement, where the grant of those interim measures is necessary to ensure the full effectiveness of that decision.On 15 June 2023, the CJEU issued a judgment in a case registered under case number C-520/21, following preliminary questions submitted by the District Court in Warsaw in a case against Bank Millennium, in which indicated that Directive 93/13 does not expressly regulate the consequences of invalidity of a contract concluded between a credit institution and a consumer after the removal of unfair terms contained therein. The CJEU stated that:(i) the provisions of the Directive do not preclude a judicial interpretation of national law, according to which the consumer has the right to demand compensation from the credit institution beyond the reimbursement of monthly instalments and costs paid for the performance of this contract and the payment of statutory default interest from the date of the request for payment provided that the objectives of Directive 93/13 and the principle of proportionality are respected. (ii) the provisions of Directive 93/13 preclude the judicial interpretation of national law, according to which a credit institution has the right to demand compensation from the consumer that goes beyond the return of the capital paid for the performance of this contract and beyond the payment of statutory default interest from the date of the request for payment.On 21 September 2023, the CJEU issued a judgement in a case registered under case number C-139/22, following preliminary questions submitted by the District Court in Warsaw in a case against mBank. The CJEU stated that:(i) provisions of the Directive 93/13 must be interpreted as not precluding a contractual term which has not been individually negotiated from being regarded as unfair by the national authorities concerned merely by virtue of the fact that its content is equivalent to that of a standard contract term entered in the national register of standard business terms held to be unlawful;(ii) the contractual term which, because of the circumstances for the performance of certain obligations of the consumer concerned provided for in that term, must be regarded as unfair, may not cease to be considered unfair on account of another term of that contract which provides for the possibility for that consumer to perform those obligations under different circumstances;(iii) a seller or supplier is obliged to inform the consumer concerned of the essential characteristics of the contract concluded with that seller or supplier and the risks associated with that contract, even though that consumer is its employee and has relevant knowledge in the field of the contract.On 7 December 2023, the CJEU issued the judgement in the case C-140/22 in connection with the preliminary questions formulated by the District Court in Warsaw in the case against of mBank S.A. The Court stated that provisions of the Directive 93/13 must be interpreted as meaning that, in the context of the cancellation, in its entirety, of a mortgage loan agreement concluded with a consumer by a banking institution on the ground that that agreement contains an unfair term without which it cannot continue in existence:(i) they preclude the judicial interpretation of national law according to which the exercise of the rights which that consumer draws from that directive is conditional on the lodging, by that consumer, before a court, of a declaration by which he or she states, first, not to consent to that unfair term remaining effective, secondly, to be aware of the fact that the nullity of that term entails the cancellation of that agreement and, moreover, of the consequences of that cancellation and, thirdly, to consent to the cancellation of that agreement;(ii) they preclude the compensation sought by the consumer concerned in respect of the restitution of the sums paid by him or her in the performance of the agreement at issue being reduced by the equivalent of the interest which that banking institution would have received if that agreement had remained in force.The Court of Justice of European Union by an order of 11 December 2023, closed the case registered under case number C-756/22 initiated by the District Court in Warsaw in the case brought by Bank Millennium and ruled that the provisions of Directive 93/13 must be interpreted as meaning that, in the context of declaring a mortgage loan agreement concluded with a consumer by a banking institution to be invalid in its entirety on the grounds that, that the contract contains unfair terms without which it cannot be continued, they preclude a judicial interpretation of the law of a Member State according to which that institution is entitled to recover from that consumer amounts other than the capital paid in performance of that contract and statutory interest for delay from the time of the demand for payment.On 14 December 2023, the CJEU issued the judgement in the case C-28/22 in connection with the preliminary questions referred by the District Court in Warsaw in the case of ex-Getin Noble Bank S.A. The Court stated that:(i) provisions of Directive 93/13 read in the light of the principle of effectiveness must be interpreted as precluding a judicial interpretation of national law according to which, following the cancellation of a mortgage loan agreement concluded with a consumer by a seller or supplier, on account of unfair terms contained in that agreement, the limitation period for the claims of that seller or supplier stemming from the nullity of that agreement starts to run only as from the date on which the agreement becomes definitively unenforceable, whereas the limitation period for the claims of that consumer stemming from the nullity of that agreement begins to run as from the day on which the consumer became aware, or should reasonably have become aware, of the unfair nature of the term entailing such nullity; (ii) provisions of the Directive 93/13 must be interpreted as not precluding a judicial interpretation of national law according to which it is not for a seller or supplier who has concluded a mortgage loan agreement with a consumer to ascertain whether the consumer is aware of the consequences of the removal of the unfair terms contained in that agreement or of that agreement being no longer capable of continuing in existence if those terms were removed;(iii) provisions of the Directive 93/13, read in the light of the principle of effectiveness, must be interpreted as precluding a judicial interpretation of national law according to which, where a mortgage loan agreement concluded with a consumer by a seller or supplier is no longer capable of continuing in existence after the unfair terms in that agreement have been removed, that seller or supplier may rely on a right of retention which allows him or her to make the restitution of the sums which it has received from that consumer conditional on that consumer making an offer to repay the sums which he or she has himself or herself received from that seller or supplier or to provide a security for the repayment of those sums, where the exercise by that seller or supplier of that right of retention entails the loss, for that consumer, of the right to obtain default interest as from the expiry of the time limit set for performance by the seller or supplier concerned, following receipt by that seller or supplier of a request to repay the sums he or she had been paid in performance of that agreement.The Court of Justice of the European Union by an order of January 15, 2024, closed the case registered under case number C-488/23 following a question from the District Court of Warsaw, indicating that the right of a financial institution to demand the valorization of the disbursed capital after a loan agreement has been declared invalid was excluded in the judgment of June 15, 2023 issued in case C-520/21.On January 18, 2024, the CJEU issued the judgement in the case C-531/22 in connection with the preliminary questions referred by the District Court in Warsaw in the case of ex-Getin Noble Bank S.A. The Court stated that:(i) the provisions of Directive 93/13 preclude national legislation which provides that a national court may not examine of its own motion the potentially unfair nature of the terms contained in a contract and draw the consequences thereof, where it is supervising enforcement proceedings carried out on the basis of a final decision to issue an order for payment which is subject to res judicata:a. if the regulations do not provide for such an examination at the stage of issuing a payment order, orb. if such examination is provided for only at the stage of opposition to the order for payment in question, provided that there is a significant risk that the consumer in question will not file the required opposition either because the time limit specified for this purpose is very short, or because of the cost of the proceedings before the court in relation to the amount of the disputed debt, or because the national legislation does not provide for the obligation to provide that consumer with all the information necessary for him to establish the extent of his rights;(ii) the provisions of Directive 93/13 do not preclude national case law according to which the entry of a term of a contract in a national register of prohibited clauses has the effect of declaring that term unfair in any proceedings involving a consumer, including against a trader other than the one against whom proceedings for the entry of the said term in that national register were pending, and where that term does not have the same wording as the term entered in the said register, but has the same meaning and has the same effect with respect to the consumer in question.Jurisprudence of the Polish Supreme CourtOn 7 May 2021, the Supreme Court composed of 7 judges of the Supreme Court, issued a resolution for which the meaning of legal principle has been granted, stating that: 1. An abusive contractual clause (art. 385(1) \u00a7 1 of the Polish Civil Code), by force of the law itself, is ineffective to the benefit of the consumer who may consequently give conscious and free consent to this clause and thus restore its effectiveness retroactively.2. If without the ineffective clause the loan agreement cannot bind, the consumer and the lender shall be eligible for separate claims for return of monetary performances made in exercising this agreement (art. 410 \u00a7 1 in relation to art. 405 of the Polish Civil Code). The lender may demand return of the performance from the moment the loan agreement becomes permanently ineffective.On 28 April 2022 the Supreme Court issued a resolution (III CZP 40/22) in which it indicated that in disputes with consumers, the provision of Article 358(1) of the Polish Civil Code is a special provision to Article 353(1) of the Polish Civil Code, which means that if the prerequisites for the application of both provisions exist, the court should apply the special provision and declare the contractual provision permanently ineffective, rather than invalid. This decision of the Supreme Court should be perceived as significantly limiting the risk of Bank Millennium's claims for return of capital being time-barred.The effect of the Supreme Court's resolution of 7 May 2021 is that Bank Millennium is entitled to a refund of the cash benefit provided by Bank Millennium in performance of a permanently ineffective contract. Taking into account the uncertainty as to the starting point of the limitation period for the bank's claims, Bank Millennium, in order to protect its interests, files lawsuits for payment against borrowers in a court dispute with the bank. Bank Millennium's demand consists of a claim for return of the capital made available to the borrower under the contract. By 31 December 2023 the Bank filed\u00a0 about 8.1 thousand lawsuits against the borrowers. Due to the CJEU jurisprudence interpreting the causes and effects of invalidity of foreign currency mortgage loan agreements, the area of interpretation of regulations by Polish courts in this respect appears to be limited. However, further jurisprudential practice of the Polish courts will play an important role in fulfilling the content of the CJEU's guidance and, moreover, this practice will be of significant importance as regards issues that, given the scope of the CJEU's competence, are subject to national jurisprudence.2. Events that may impact foreign currency-indexed mortgage loans legal risk and related provisionThe issues related to the statute of limitations for the Bank's and the customer's restitutionary claims following the invalidation of a loan agreement remain an area that may be subject to further analysis in the jurisprudence of Polish courts. Legal interpretations in this subject may be particularly significant for the Bank's claims as to the commencement of the running of the limitation period of its claims, by eliminating or confirming the risk of its claims being deemed time-barred in a given case.\u00a0 In addition, the extent of the consumer's and the bank's entitlement to statutory interest for delay on restitution claims may be an important legal issue.The issue that remains unresolved in the jurisprudence of common courts and the Supreme Court is also the issue of the admissibility of borrowers\u2019 claims in the event of the invalidity of a loan agreement for payment of amounts beyond the reimbursement of monthly instalments and costs paid for the execution of that agreement and beyond the payment of statutory default interest from the date of the demand for payment, which, in light of the CJEU's judgment of 15 June 2023 in case C-520/21, remains not excluded. Due to the uncertainty of the direction of case law in this area, as of the date of publication of the Bank Millennium's report, it is difficult to reliably assess the impact of potential rulings.", "dimensions": { "concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-703": { "value": "Recently issued accounting standards and interpretations that came into force in the
current financial year
At the date of approval of these financial statements, the following accounting standards, interpretations, amendments
and revisions were endorsed by the European Union (EU) with mandatory application for the financial year of the Group
started on 1 January 2023:
IFRS 17 \u2014 Insurance contracts
This standard establishes, for insurance contracts within its scope, the principles for their recognition, measurement,
presentation and disclosure. This standard replaced IFRS 4 \u2013 Insurance contracts.
The impacts resulting from the adoption of this standard are disclosed in note 59 - Adoption of IFRS 17 - Insurance
Contracts and IFRS 9 \u2013 Financial instruments by Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A..
Amendment to IAS 8: Definition of accounting estimates
This amendment emphasizes how companies should distinguish changes in accounting policies from changes in
accounting estimates, which is relevant since changes in accounting estimates are applied prospectively, only to future
transactions and other events, while changes in accounting policies are generally applied retrospectively to past
transactions and other events. The definition of a change in accounting estimates is replaced with a definition of
accounting estimates. Under the new definition, accounting estimates are \u201cmonetary amounts in financial statements
that are subject to measurement uncertainty\u201d, used to achieve the objective(s) of an accounting policy.
There were no material impacts on the application of this amendment in the Group's financial statements.
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of accounting policies
Amendments to IAS 1 require companies to disclose their material accounting policy information rather than their
significant accounting policies, further explaining how an entity can identify a material accounting policy. On the other
hand, Amendments to IFRS Practice Statement 2 provide guidance on how to apply the concept of materiality to
accounting policy disclosures.
There were no material impacts on the application of this amendment in the Group's financial statements.
Amendment to IAS 12: Deferred tax related to assets and liabilities arising from a single transaction
This amendment requires companies to recognise deferred tax on particular transactions that, on initial recognition,
give rise to equal amounts of taxable and deductible temporary differences. The proposed amendment will mostly
apply to transactions such as leases and decommissioning obligations.
There were no material impacts on the application of this amendment in the Group's financial statements.
Amendment to IFRS 17: Initial application of IFRS 17 and IFRS 9 \u2014 Comparative information
This amendment is aimed at helping entities to avoid temporary accounting mismatches between financial assets and
insurance contract liabilities by providing insurers with an option for the presentation of comparative information about
financial assets, thus improving the usefulness of comparative information for users of financial statements.
There were no material impacts on the application of this amendment in the Group's financial statements.
Amendments to IAS 12 Income taxes: International Tax Reform \u2013 Pilar Two Model Rules
The amendments introduce a temporary exception to the recognition of disclosures of information on deferred tax
assets and liabilities related to the application of the OECD Pillar 2 model rules and new additional disclosure
requirements for affected entities (entities belonging to multinational groups with consolidated revenues of Euros 750
million in at least two of the last four years).
The amendments are mandatory for annual reporting periods beginning on or after 1 January 2023.
There were no material impacts on the application of this amendment in the Group\u2019s financial statements.
2 - Adoption of IFRS 17 - Insurance Contracts and IFRS 9 - Financial Instruments by
Millenniumbcp Ageas Grupo Segurador , S.G.P.S., S.A.
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. dedicates to the management of life insurance and pension funds.
On 1 January 2023 Millenniumbcp Ageas made the simultaneous adoption of IFRS 9 - Financial Instruments and IFRS 17 -
Insurance Contracts. It opted for the possibility given to Insurance Companies to defer the application of IFRS9, since
the combined implementation with IFRS 17 would minimize the distortion of results.
IFRS 17 replaces IFRS 4 - \"Insurance Contracts\" and is applicable to all entities that issue insurance contracts,
reinsurance contracts and investment contracts with discretionary participation features if they are also issuers of
insurance contracts.
In accordance with IFRS 17, at initial recognition, Millenniumbcp Ageas Grupo Segurador has identified the contracts
that are subject to similar risks and that are managed together, being aggregated in portfolios. For measurement
purposes, further divides portfolios of insurance contracts into groups of insurance contracts. A group of insurance
contracts is determined by first dividing the portfolio of insurance contracts into annual cohorts. Each annual cohort is
then further divided in the following groups: i) group of contracts that are onerous at initial recognition; ii) group of
contracts that at initial recognition have no significant possibility of becoming onerous subsequently; and iii) a group of
the remaining contracts in the portfolio.
Insurance contracts are now measured using estimates and updated assumptions that reflect the timing of cash flows
discounted and any uncertainty related to insurance contracts. Income is now recognized as it provides insurance
services (rather than when it receives premiums) provide information on the insurance contract earnings that it expects
to recognize in the future.
In the measurement of insurance contracts, Millenniumbcp Ageas Grupo Segurador has opted for two measurement
methods: i) Premium allocation approach (\"PAA\") for contracts with duration equal to or less than one year and ii)
General measurement model measurement model (\"GMM\") for the remaining contracts.
Initial application of IFRS 17 and IFRS 9 requires comparative information. Therefore, Millenniumbcp Ageas Grupo
Segurador made the transition exercise on 1 January 2022. The estimated impacts of the Transition to IFRS 9 / 17 on
that date on the Equity of Millenniumbcp Ageas Grupo Segurador represent a reduction of approximately Euros 206.6
million, changing from Euros 827.3 million in IFRS 4/IAS 39, for Euros 620.7 million. Euros 206.6 million incorporate the
negative value of Euros 250.6 million of impact from the adoption of IFRS 17, offset by a positive value of Euros 44
million resulting from the adoption of IFRS 9.
IFRS 17 is retrospective with exemptions provided for the transition date. These exemptions are related to the
impracticability and complexity involved e.g. in calculating the liability, the current service margin (\"CSM\"), loss
component, or other comprehensive income (\"OCI option\") at transition date. When impracticable, the standard
provides for the use of the Modified Retrospective Approach or the Fair Value Approach. Millenniumbcp Ageas Grupo
Segurador, for contracts prior to 2018 adopted the fair value and for contracts after 2018 the full retrospective
approach.
Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., ('Millenniumbcp Ageas' or 'Group'), is owned by Ageas Insurance
International, N.V. (51%), through Ageas Portugal Holdings S.G.P.S., S.A. (51%), and by Banco Comercial Portugu\u00eas, S.A.
(49%).
In terms of accounting policies that present the greatest changes compared to the past, they are those relating to
Insurance Contracts (IFRS 17) and Financial Investments (IFRS 9) and also the issue of costs, which are now divided into
those attributable to the insurance contract and those not attributable.
IFRS 17 \u2013 Insurance Contracts
Ocidental adopted IFRS 17 \u2013 Insurance Contracts from 1 January 2023. This change resulted in significant changes in the
accounting of insurance and reinsurance contracts.
Transition
At the time of transition, the regulations require the Company to apply the retrospective approach to recognize and
measure both insurance and reinsurance contracts ceded. In light of this approach, IFRS 17 would have to be applied as
if it had always been in force.
However, if this is impracticable, the regulations provide for two possible alternatives: the modified retrospective
approach and the fair value approach.
The Company can only apply the retrospective approach if there is complete necessary historical data for all accounting
movements in question. Given some limitations in some available historical data, the Company decided to apply, in
addition to the total retrospective approach, the two alternative approaches according to the availability of
information and data.
On the transition date, Ocidental Vida identified, evaluated and recognized each group of insurance contracts,
reinsurance contracts and investment contracts with discretionary participation features retrospectively, as if the
requirements of IFRS 17 applied to these groups of contracts from the date of its initial recognition (i.e. the
'Retrospective Approach') unless it is impracticable. This included the identification, measurement and recognition of
any insurance acquisition cash flows (assets). On the transition date, an assessment of the recoverability of cash flows
from the acquisition of insurance (assets) was carried out. No recoverability assessment was performed prior to this
date.
In some situations, Ocidental was unable to measure a group of contracts retrospectively on the transition date. This is
what happened when:
\u2022 The information in Ocidental's existing reporting systems about historical cash flows was based on assumptions
that were developed based on retrospective;
\u2022 Some reasonable and sustainable information about historical cash flows was not available in Occidental's
existing reporting systems, or was only available at levels of aggregation higher than or different from the
contract grouping requirements under IFRS 17;
\u2022 The information in Ocidental's existing reporting systems did not allow to adequately estimate the movement
of CSM before the transition date.
In these cases, Ocidental measured these groups of contracts at the transition date applying the \u201cModified
Retrospective Approach\u201d or applying the \u201cFair Value Approach\u201d (see below). The aim of these alternative measurement
approaches in the transition was to achieve the closest possible result to the retrospective approach, using reasonable
and sustainable information that was available without undue cost or effort at the transition date.
The approaches used by Ocidental Vida can be summarized as:
Liabilities for future services /
Liabilities for incurred claims
IFRS 17 measurement models
Year
Transition Approach
Liabilities for future services
General Measurement Model
2018-2021
Retrospective approach
Before 2018
Fair Value Approach
Premium Allocation Approach
All
Retrospective approach
Liabilities for claims incurred
General Measurement Model
2016-2021
Retrospective approach
Before 2016
Modified retrospective
approach
Modified retrospective approach
The objective of the modified retrospective approach is to achieve the closest outcome to retrospective application
possible using reasonable and supportable information available without undue cost or effort. However, this approach
introduces some simplifications to the retrospective approach, namely with regard to:
\u2022 the assessments of insurance contracts or groups of insurance contracts that would have been made at the
date of inception or initial recognition;;
\u2022 the amounts related to the contractual service margin or the loss component for insurance contracts without
direct participation features;
\u2022 the amounts related to the contractual service margin or the loss component for insurance contracts with
direct participation features;
\u2022 the insurance finance income or expenses.
Fair value approach
The application of the fair value approach only requires the measurement of contracts at the transition date, so it is
not necessary to use historical information about them.
Considering this approach, the contractual service margin or the loss component of the remaining coverage liability, at
transition, corresponds to the difference between the fair value of a group of insurance contracts at that date and the
fulfilment cash flows measured at that date.
To determine the previously mentioned fair value, the Company applied, when necessary, IFRS 13 \u2013 Fair value
measurement.
Financial Instruments (IFRS 9)
The classification of financial assets depends on the business model followed by the Company in managing financial
assets (receipt of cash flows or appropriation of changes in fair value) and the contractual terms of the cash flows
receivable. Changes to the classification of financial assets can only be made when the business model is changed,
except for financial assets at fair value through other comprehensive income, which constitute equity instruments,
which can never be reclassified to another category.
Financial assets can be classified into the following measurement categories::
\u2013 Financial assets at amortized cost
\u2013 Financial assets at fair value through other comprehensive income\u00a0 (FVOCI)
\u2013 Financial assets at fair value through profit or loss (FVPL)
Impacts on the consolidated financial statements of Millenniumbcp Ageas Grupo Segurador,
S.G.P.S., S.A. as at 1 January 2022
IAS39/IFRS9 transition
With the adoption of IFRS 9, investments that were at amortized cost are now recorded at fair value through
comprehensive income, with a positive impact of Euros 51.6 million on financial investments and Euros 10.8 million on
loans.
In gross terms, the impact on retained earnings was Euros 118.4 million gross: a positive amount of Euros 24.4 million
from the reclassification of ETFs from Financial assets available for sale (AFS) to Financial assets at fair value through
profit or loss (FVPL), a positive impact of Euros 50.6 million from the reclassification of investment funds from AFS to
FVPL, a positive impact of impairment of shares of Euros 44.2 million and a negative impact of Euros 0.8 million related
to expected credit losses (ECL). The net tax value was a positive impact of Euros 83.5 million.
At the level of the remaining equity items of Millenniumbcp Ageas, the gross impact was negative at Euros 55.9 million:
a positive impact on the measurement of securities at amortized cost for Financial assets at fair value through other
comprehensive income (FVOCI) of Euros 51.6 million, a positive impact on the fair value of loans of Euros 10.8 million, a
negative impact of Euros 24.4 million from reclassification of ETFs from AFS to FVPL, a negative impact of Euros 50.6
million from reclassification of investment funds from AFS to FVPL, a negative impact on impairment of shares of Euros
44.2 million and positive impact of Euros 0.8 million on ECL. The net tax value was a negative impact of Euros 39.4
million.
Thus, the net tax value was a positive impact of Euros 44.075 million related to the adoption of IFRS 9, considering the
financial statements of Millenniumbcp Ageas that were part of the consolidation.
IFRS 4/IFRS 17 transition
With regard to the liabilities for remaining coverage, the contractual service margin for insurance contracts issued
before 2018 and measured according to the General Measurement Model was determined by applying the fair value
approach (according to IFRS 13). To determine the OCI, a retrospective \"replicating portfolio\" technique was used. For
insurance contracts issued during and after 2018, the Full Retrospective Approach was used.
Liabilities with Insurance Contracts registered an increase of Euros 322.7 thousand compared to the previous
regulations (excluding Euros 1.2 million related to reclassified debtors and creditors). It should be noted that, in
addition to the recalculation of provisions according to the new standard, the liabilities for remaining coverage include
the contractual service margin (CSM) of Euros 112 thousand (of which, Euros 96.5 thousand relate to the CSM of
contracts for which the fair value approach was used in the Transition, according to IFRS 13).
A negative impact was also recorded resulting from the cancellation of the VOBA of Euros 32.840 million relating to the
Value of Business Acquired (\u201cVOBA\u201d) which was recorded as intangible assets under IFRS 4, this impact had no effect
BCP Group's consolidated accounts.
Considering others effects related to the adoption of IFRS 17, the net tax value was a negative impact of Euros 250.611
million, considering the financial statements of Millenniumbcp Ageas that were part of the consolidation.
Impacts on the BCP Group\u00b4s consolidated financial statements
The Group owns 49% of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A., being accounted for under the equity
method, as Investments in associated companies.
The impacts of the adoption of IFRS 17 and IFRS 9 by Millenniumbcp Ageas Group Segurador, SGPS, SA on the
consolidated balance sheet with reference to 1 January 2022 (transition date), are detailed as follows:
(Thousands of euros)
31 December
2021
(reported)
Transition
adjustments
1 January 2022
ASSETS
Cash and deposits at Central Banks
7,796,299
\u2014
7,796,299
Loans and advances to credit institutions repayable on demand
361,786
\u2014
361,786
Financial assets at amortised cost
Loans and advances to credit institutions
453,213
\u2014
453,213
Loans and advances to customers
54,972,401
\u2014
54,972,401
Debt securities
8,205,196
\u2014
8,205,196
Financial assets at fair value through profit or loss
Financial assets held for trading
931,485
\u2014
931,485
Financial assets not held for trading mandatorily at fair value through
profit or loss
990,938
\u2014
990,938
Financial assets at fair value through other comprehensive income
12,890,988
\u2014
12,890,988
Hedging derivatives
109,059
\u2014
109,059
Investments in associated companies
462,338
(89,858)
372,480
Non-current assets held for sale
780,514
\u2014
780,514
Investment property
2,870
\u2014
2,870
Other tangible assets
600,721
\u2014
600,721
Goodwill and intangible assets
256,213
\u2014
256,213
Current tax assets
17,283
\u2014
17,283
Deferred tax assets
2,688,216
\u2014
2,688,216
Other assets
1,385,292
\u2014
1,385,292
TOTAL ASSETS
92,904,812
(89,858)
92,814,954
LIABILITIES
Financial liabilities at amortised cost
Resources from credit institutions
8,896,074
\u2014
8,896,074
Resources from customers
69,560,227
\u2014
69,560,227
Non subordinated debt securities issued
2,188,363
\u2014
2,188,363
Subordinated debt
1,394,780
\u2014
1,394,780
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading
231,241
\u2014
231,241
Financial liabilities at fair value through profit or loss
1,581,778
\u2014
1,581,778
Hedging derivatives
377,206
\u2014
377,206
Provisions
458,744
\u2014
458,744
Current tax liabilities
20,427
\u2014
20,427
Deferred tax liabilities
16,932
\u2014
16,932
Other liabilities
1,116,983
\u2014
1,116,983
TOTAL LIABILITIES
85,842,755
\u2014
85,842,755
EQUITY
Share capital
4,725,000
\u2014
4,725,000
Share premium
16,471
\u2014
16,471
Other equity instruments
400,000
\u2014
400,000
Legal and statutory reserves
259,528
\u2014
259,528
Reserves and retained earnings
580,304
(89,858)
490,446
Net income for the year attributable to Bank's Shareholders
138,082
\u2014
138,082
Non-controlling interests
942,672
\u2014
942,672
TOTAL EQUITY
7,062,057
(89,858)
6,972,199
TOTAL LIABILITIES AND EQUITY
92,904,812
(89,858)
92,814,954
The impacts of adopting IFRS 17 and IFRS 9 on equity of Millenniumbcp Ageas Grupo Segurador, S.G.P.S, S.A. and of BCP
Group, on the transition date, 1 January 2022, are as follows:
(Thousands of euros)
IFRS 9 transition
44,075
IFRS 17 transition
(250,611)
Impact of transition on equity (Ageas)
(206,536)
VOBA\u00a0 (Value of business acquired)*
23,152
Impact of transition on equity (Ageas - BCP Gaap) *
(183,384)
Impact of the transition on the equity of the BCP Group (49%) *
(89,858)
(*) The VOBA corresponds to the estimated current value of the future cash flows of the contracts in force at the date of acquisition under IFRS
4. On 31 December 2021, the gross value of VOBA was reflected in the caption Other intangible assets of Millenniumbcp Ageas in accordance
with IFRS 4, and with the implementation of IFRS 17 this concept was cancelled in the consolidated accounts of Millenniumbcp Ageas.
Considering that the VOBA recorded in the accounts of Millenniumbcp Ageas was not included in the value of this investment in the accounts of
the BCP Group (note 26), the derecognition of the VOBA in the accounts of Millenniumbcp Ageas had no impact on the BCP Group's consolidated
accounts (note 26).
The impacts of the adoption of IFRS 17 and IFRS 9 on the balance Investments in associates (note 26) of Group, are as
follows:
(Thousands of euros)
1 January 2022
(restated)
31 December 2022
(restated)
Investment held in Millennium Ageas ( IAS 39 and IFRS 4)
261,446
59,766
Transition to IFRS 9 and IFRS 17
(89,858)
(89,858)
Other comprehensive income
\u2014
116,152
Other reserves
\u2014
19
Net income
\u2014
(10,111)
Investment held in Millennium Ageas (IFRS 9 and IFRS 17)
171,588
75,968
The consolidated balance sheet with reference to 31 December 2022 was restated as a result of the adoption of IFRS 17
and IFRS 9 by Millenniumbcp Ageas Group Segurador, SGPS, SA, with the impacts detailed as follows:
(Thousands of euros)
31 December
2022
(reported)
Impact of the
adoption of IFRS
17 and IFRS 9
31 December
2022
(restated)
ASSETS
Cash and deposits at Central Banks
6,022,001
\u2014
6,022,001
Loans and advances to credit institutions repayable on demand
213,460
\u2014
213,460
Financial assets at amortised cost
Loans and advances to credit institutions
963,434
\u2014
963,434
Loans and advances to customers
54,675,793
\u2014
54,675,793
Debt securities
13,035,582
\u2014
13,035,582
Financial assets at fair value through profit or loss
Financial assets held for trading
766,597
\u2014
766,597
Financial assets not held for trading mandatorily at fair value through
profit or loss
552,679
\u2014
552,679
Financial assets at fair value through other comprehensive income
7,461,553
\u2014
7,461,553
Hedging derivatives
59,703
\u2014
59,703
Investments in associated companies
298,717
16,202
314,919
Non-current assets held for sale
499,035
\u2014
499,035
Investment property
15,217
\u2014
15,217
Other tangible assets
574,697
\u2014
574,697
Goodwill and intangible assets
182,687
\u2014
182,687
Current tax assets
17,945
\u2014
17,945
Deferred tax assets
2,938,986
\u2014
2,938,986
Other assets
1,582,455
\u2014
1,582,455
TOTAL ASSETS
89,860,541
16,202
89,876,743
LIABILITIES
Financial liabilities at amortised cost
Resources from credit institutions
1,468,360
\u2014
1,468,360
Resources from customers
75,430,143
\u2014
75,430,143
Non subordinated debt securities issued
1,482,086
\u2014
1,482,086
Subordinated debt
1,333,056
\u2014
1,333,056
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading
241,506
\u2014
241,506
Financial liabilities at fair value through profit or loss
1,817,678
\u2014
1,817,678
Hedging derivatives
178,000
\u2014
178,000
Provisions
561,786
\u2014
561,786
Current tax liabilities
23,680
\u2014
23,680
Deferred tax liabilities
11,708
\u2014
11,708
Other liabilities
1,391,973
\u2014
1,391,973
TOTAL LIABILITIES
83,939,976
\u2014
83,939,976
EQUITY
Share capital
3,000,000
\u2014
3,000,000
Share premium
16,471
\u2014
16,471
Other equity instruments
400,000
\u2014
400,000
Legal and statutory reserves
268,534
\u2014
268,534
Reserves and retained earnings
1,245,949
26,313
1,272,262
Net income for the year attributable to Bank's Shareholders
207,497
(10,111)
197,386
Non-controlling interests
782,114
\u2014
782,114
TOTAL EQUITY
5,920,565
16,202
5,936,767
TOTAL LIABILITIES AND EQUITY
89,860,541
16,202
89,876,743
The Consolidated Income Statement with reference to 31 December 2022 was restated resulting from the adoption of
IFRS 17 and IFRS 9 by Millenniumbcp Ageas Group Segurador, SGPS, SA, which impacts are detailed as follows:
(Thousands of euros)
31 December 2022
(reported)
Impact of the
adoption of IFRS 17
and IFRS 9
31 December 2022
(restated)
Interest and similar income
2,737,235
\u2014
2,737,235
Interest expense and similar charges
(587,463)
\u2014
(587,463)
NET INTEREST INCOME
2,149,772
\u2014
2,149,772
Dividends from equity instruments
10,086
\u2014
10,086
Net fees and commissions income
771,908
\u2014
771,908
Gains/(losses) on financial operations at fair value through profit or
loss
27,306
\u2014
27,306
Foreign exchange gains/(losses)
19,390
\u2014
19,390
Gains/(losses) on hedge accounting
(2,233)
\u2014
(2,233)
Gains/(losses) arising from derecognition of financial assets and
liabilities not measured at fair value through profit or loss
5,497
\u2014
5,497
Other operating income/(losses)
(193,112)
\u2014
(193,112)
TOTAL OPERATING INCOME
2,788,614
\u2014
2,788,614
Staff costs
580,807
\u2014
580,807
Other administrative costs
352,961
\u2014
352,961
Amortisations and depreciations
139,250
\u2014
139,250
TOTAL OPERATING EXPENSES
1,073,018
\u2014
1,073,018
NET OPERATING INCOME BEFORE PROVISIONS AND IMPAIRMENTS
1,715,596
\u2014
1,715,596
Impairment of financial assets at amortised cost
(300,829)
\u2014
(300,829)
Impairment of financial assets at fair value through other
comprehensive income
5,023
\u2014
5,023
Impairment of other assets
(192,059)
\u2014
(192,059)
Other provisions
(568,297)
\u2014
(568,297)
NET OPERATING INCOME
349,569
\u2014
349,569
Share of profit of associates accounted for using the equity method
68,722
(10,111)
58,611
Gains/(losses) on disposal of subsidiaries and other assets
10,167
\u2014
10,167
NET INCOME BEFORE INCOME TAXES
428,458
(10,111)
418,347
Income taxes
Current
(109,632)
\u2014
(109,632)
Deferred
(194,688)
\u2014
(194,688)
NET INCOME AFTER INCOME TAXES FROM CONTINUING
OPERATIONS
124,138
(10,111)
114,027
Net income from discontinued or discontinuing operations
5,537
\u2014
5,537
NET INCOME AFTER INCOME TAXES
129,675
(10,111)
119,564
Net income for the year attributable to:
Bank's Shareholders
207,497
(10,111)
197,386
Non-controlling interests
(77,822)
\u2014
(77,822)
NET INCOME FOR THE YEAR
129,675
(10,111)
119,564
", "dimensions": { "concept": "ifrs-full:DisclosureOfFirstTimeAdoptionExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-704": { "value": "Subsequent events
In addition to the aspects disclosed in the other notes and according to the accounting policy 1 Z, the events that
occurred after the date of the financial statements and until the date of its approval, were as follows:
S&P Global Ratings upgraded BCP's Outlook
On 12 March 2024, S&P Global Ratings upgraded BCP's Outlook from Stable to Positive.
Bank Millennium Poland - Credit holidays
The Bank Millennium is aware of risks connected with a potential extension of the so-called credit holidays for 2024. A
legislative proposal was made public and approved by the Government on 5 March 2024 and submitted to the Polish
Parliament for appreciation. At the time of publication of these financial statements, the proposal has not yet been
approved by Parliament. If such risk would materialize, it could imply upfront provision for such cost that would
decrease the net interest income and the net result of the Bank/Group.
EIB signed an agreement with Millennium bcp
As at 11 January 2024, the EIB signed an agreement with Millennium bcp to provide 400 million euros in new loans to
Portuguese companies.
Banco Comercial Portugu\u00eas, S.A. informed about the issuance of perpetual subordinated
notes (Additional Tier 1)
As at 11 January 2024, Banco Comercial Portugu\u00eas, S.A. (\u201cMillennium bcp\u201d) informed it has set the conditions for a new
issue of Additional Tier 1, in the amount of Euros 400 million, with the option of early repayment by Millennium bcp
from the end of 5th year onwards with a coupon of 8.125% per year for the first 5.5 years, which will be refixed from
that date every 5 years, with reference to the then prevailing 5-year mid-swap rate plus a spread of 5.78%.
Banco Comercial Portugu\u00eas, S.A. informed about the resignation of a member of the Board of
Directors
As at 5 January 2024, Banco Comercial Portugu\u00eas, S.A. (\u201cBank\u201d) informed, under the terms and for the purposes of
article 6 of CMVM Regulation No. 1/2023, that the Non-Executive Director Xiaoxu Gu (also known as Julia Gu) presented
today its resignation to the position of non-executive member of the Board of Directors, effective from February 29,
2024.
The Bank informs that it will begin the process of identifying and selecting a new non-executive member to join its
Board of Directors in accordance with the applicable Bank's regulations. The conclusion of this process will be
announced in due course and will not affect the regular functioning of the Board of Directors.
Banco Comercial Portugu\u00eas S.A. informed about decision to call the currently outstanding
Additional Tier 1 instrument (\u201cAT1\u201d) in the amount of Euros 400 million
As at 1 January 2024, Banco Comercial Portugu\u00eas, S.A. informed that it has decided to exercise its option to early
redeem all of its Additional Tier 1 notes \u201cFixed Rate Reset Perpetual Temporary Write Down Additional Tier 1 Capital
Notes\u201d (ISIN: PTBCPFOM0043), issued on 31 January 2019 (the \u201cNotes\u201d), in accordance with Condition 9.2 of the terms
and conditions of the Notes. The early redemption of the Notes took place on their first call date according with its
terms and conditions, 31 January 2024, at their outstanding principal amount together with accrued interest.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:JU1U6S0DG9YLT7N8ZV32", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } } } }