Accounts and Notes to the Accounts

Banco Comercial Português, S.A. Sociedade Aberta (the ‘Bank’) 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 ‘Group’) and the Group’s interest in associates, for the years ended 31 December 2019 and 2018.

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’s consolidated financial statements are required to be prepared, since 2005 (in the case of the individual financial statements, since the year 2016), 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 and individual financial statements and the accompanying notes were approved on 26 March 2020 by the Bank’s Board of Directors.

Group’s Consolidated Financial Statements

Bank’s Individual Financial Statements

CONSOLIDATED INCOME STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019 AND 2018
Thousand euros
Notes20192018
Interest and similar income21,991,4451,889,739
Interest expense and similar charges2(442,917)(466,108)
NET INTEREST INCOME1,548,5281,423,631
Dividends from equity instruments3798636
Net fees and commissions income4703,497684,019
Net gains / (losses) from financial operations at fair value through profit or loss54,8371,400
Net gains / (losses) from foreign exchange569,39175,355
Net gains / (losses) from hedge accounting operations5(5,682)2,552
Net gains / (losses) from derecognition of financial assets and liabilities at amortised cost5(24,909)(50,194)
Net gains / (losses) from derecognition of financial assets at fair value through other comprehensive income599,67649,435
Net gains / (losses) from insurance activity11,7528,477
Other operating income / (losses)6(144,400)(135,878)
TOTAL OPERATING INCOME2,263,4882,059,433
Staff costs7668,232592,792
Other administrative costs8376,455376,676
Amortizations and depreciations9124,78557,745
TOTAL OPERATING EXPENSES1,169,4721,027,213
OPERATING NET INCOME BEFORE PROVISIONS AND IMPAIRMENTS1,094,0161,032,220
Impairment for financial assets at amortised cost10(390,308)(465,468)
Impairment for financial assets at fair value through other comprehensive income112,1801,092
Impairment for other assets12(96,034)(79,037)
Other provisions13(57,484)(57,689)
NET OPERATING INCOME552,370431,118
Share of profit of associates under the equity method1442,98989,175
Gains / (losses) arising from sales of subsidiaries and other assets1531,90737,916
NET INCOME BEFORE INCOME TAXES627,266558,209
Income taxes
Current30(100,908)(105,559)
Deferred30(138,370)(32,458)
NET INCOME AFTER INCOME TAXES FROM CONTINUING OPERATIONS387,988420,192
Income arising from discontinued or discontinuing operations1613,412(1,318)
NET INCOME AFTER INCOME TAXES401,400418,874
Net income for the year attributable to:
Bank's Shareholders302,003301,065
Non-controlling interests4499,397117,809
NET INCOME FOR THE YEAR401,400418,874
Earnings per share (in Euros)
Basic170.0180.020
Diluted170.0180.020

See accompanying notes to the consolidated financial statements.
Chief AccountantThe Executive Committee
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED 31 DECEMBER 2019 AND 2018
Thousand euros
2019
Continuing operationsDiscontinued operationsTotalAttributable to
Bank's ShareholdersNon-controlling interests
NET INCOME FOR THE YEAR387,98813,412401,400302,00399,397
ITEMS THAT MAY BE RECLASSIFIED TO THE INCOME STATEMENT (NOTE 43)
Debt instruments at fair value through other comprehensive income
Gains / (losses) for the year183,516-183,516184,115(599)
Reclassification of (gains) / losses to profit or loss(99,676)-(99,676)(94,923)(4,753)
Cash flows hedging
Gains / (losses) for the year52,303-52,30347,6254,678
Other comprehensive income from investments in associates and others3,539-3,5393,5309
Exchange differences arising on consolidation(24,449)-(24,449)(35,952)11,503
IAS 29 application
Effect on equity of Banco Millennium Atlântico, S.A.(4,529)-(4,529)(4,529)-
Fiscal impact(44,906)-(44,906)(45,042)136
65,798-65,79854,82410,974
ITEMS THAT WILL NOT BE RECLASSIFIED TO THE INCOME STATEMENT
Equity instruments at fair value through other comprehensive income
Gains / (losses) for the year (note 43)(10,109)-(10,109)(10,508)399
Changes in credit risk of financial liabilities at fair value through profit or loss (note 43)(4,019)-(4,019)(4,019)-
Actuarial gains / (losses) for the year
BCP Group Pensions Fund (note 50)(285,335)-(285,335)(285,335)-
Pension Fund - other associated companies(3,455)-(3,455)(3,369)(86)
Fiscal impact(44,679)-(44,679)(44,619)(60)
(347,597)-(347,597)(347,850)253
Other comprehensive income / (loss) for the year(281,799)-(281,799)(293,026)11,227
TOTAL COMPREHENSIVE INCOME FOR THE YEAR106,18913,412119,6018,977110,624

See accompanying notes to the consolidated financial statements.
Chief AccountantThe Executive Committee
Thousand euros
2018
Continuing operationsDiscontinued operationsTotalAttributable to
Bank's ShareholdersNon-controlling interests
NET INCOME FOR THE YEAR420,192(1,318)418,874301,065117,809
ITEMS THAT MAY BE RECLASSIFIED TO THE INCOME STATEMENT (NOTE 43)
Debt instruments at fair value through other comprehensive income
Gains / (losses) for the year17,720-17,7207,13110,589
Reclassification of (gains) / losses to profit or loss(49,435)-(49,435)(47,222)(2,213)
Cash flows hedging
Gains / (losses) for the year97,955-97,95592,7205,235
Other comprehensive income from investments in associates and others(2,737)-(2,737)(2,681)(56)
Exchange differences arising on consolidation(131,345)-(131,345)(104,937)(26,408)
IAS 29 application
Effect on equity of Banco Millennium Atlântico, S.A (note 43)14,914-14,91414,914-
Fiscal impact(21,410)-(21,410)(18,824)(2,586)
(74,338)-(74,338)(58,899)(15,439)
ITEMS THAT WILL NOT BE RECLASSIFIED TO THE INCOME STATEMENT
Equity instruments at fair value through other comprehensive income
Gains / (losses) for the year (note 43)99-99176(77)
Changes in credit risk of financial liabilities at fair value through profit or loss (note 43)2,193-2,1932,193-
Actuarial gains / (losses) for the year--
BCP Group Pensions Fund (note 50)(97,922)-(97,922)(97,922)-
Pension Fund - other associated companies536-536545(9)
Fiscal impact(15,338)-(15,338)(15,354)16
(110,432)-(110,432)(110,362)(70)
Other comprehensive income / (loss) for the year(184,770)-(184,770)(169,261)(15,509)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR235,422(1,318)234,104131,804102,300
See accompanying notes to the consolidated financial statements.
Chief AccountantThe Executive Committee
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2019 AND 2018
Thousand euros
Notes20192018
ASSETS
Cash and deposits at Central Banks185,166,5512,753,839
Loans and advances to credit institutions repayable on demand19320,857326,707
Financial assets at amortised cost
Loans and advances to credit institutions20892,995890,033
Loans and advances to customers2149,847,82945,560,926
Debt securities223,185,8763,375,014
Financial assets at fair value through profit or loss
Financial assets held for trading23878,334870,454
Financial assets not held for trading mandatorily at fair value through profit or loss231,405,5131,404,684
Financial assets designated at fair value through profit or loss2331,49633,034
Financial assets at fair value through other comprehensive income2313,216,70113,845,625
Assets with repurchase agreement-58,252
Hedging derivatives2445,141123,054
Investments in associated companies25400,391405,082
Non-current assets held for sale261,279,8411,868,458
Investment property2713,29111,058
Other tangible assets28729,442461,276
Goodwill and intangible assets29242,630174,395
Current tax assets26,73832,712
Deferred tax assets302,720,6482,916,630
Other assets311,239,134811,816
TOTAL ASSETS81,643,40875,923,049
LIABILITIES
Financial liabilities at amortised cost
Resources from credit institutions326,366,9587,752,796
Resources from customers3359,127,00552,664,687
Non subordinated debt securities issued341,594,7241,686,087
Subordinated debt351,577,7061,072,105
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading36343,933327,008
Financial liabilities at fair value through profit or loss373,201,3093,603,647
Hedging derivatives24229,923177,900
Provisions38345,312350,832
Current tax liabilities21,99018,547
Deferred tax liabilities3011,0695,460
Other liabilities391,442,2251,300,074
TOTAL LIABILITIES74,262,15468,959,143
EQUITY
Share capital404,725,0004,725,000
Share premium4016,47116,471
Other equity instruments40400,0002,922
Legal and statutory reserves41240,535264,608
Treasury shares42(102)(74)
Reserves and retained earnings43435,823470,481
Net income for the year attributable to Bank's Shareholders302,003301,065
TOTAL EQUITY ATTRIBUTABLE TO BANK'S SHAREHOLDERS6,119,7305,780,473
Non-controlling interests441,261,5241,183,433
TOTAL EQUITY7,381,2546,963,906
TOTAL LIABILITIES AND EQUITY81,643,40875,923,049

See accompanying notes to the consolidated financial statements.
Chief AccountantThe Executive Committee
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED 31 DECEMBER 2019 AND 2018
Thousand euros
20192018
CASH FLOWS ARISING FROM OPERATING ACTIVITIES
Interests received1,743,2341,652,260
Commissions received899,938880,287
Fees received from services rendered100,31548,866
Interests paid(426,571)(461,280)
Commissions paid(171,815)(140,956)
Recoveries on loans previously written off24,26913,210
Net earned insurance premiums17,41817,698
Claims incurred of insurance activity(6,591)(5,393)
Payments (cash) to suppliers and employees (*)(1,248,720)(1,158,346)
Income taxes (paid) / received(61,027)(67,569)
870,450778,777
Decrease / (increase) in operating assets:
Receivables from / (Loans and advances to) credit institutions(2,626)121,768
Deposits held with purpose of monetary control-50,114
Loans and advances to customers receivable / (granted)(1,901,159)(1,254,603)
Short term trading account securities165,922(93,688)
Increase / (decrease) in operating liabilities:
Loans and advances to credit institutions repayable on demand(108,587)111,842
Deposits from credit institutions with agreed maturity date(2,154,270)175,304
Loans and advances to customers repayable on demand5,444,1075,144,519
Deposits from customers with agreed maturity date(1,784,092)(1,051,734)
529,7453,982,299
CASH FLOWS ARISING FROM INVESTING ACTIVITIES
Sale of shares in associated companies1398,000
Acquisition of investments in subsidiaries (**)(348,997)-
Dividends received11,00367,213
Interest income from financial assets at fair value through other comprehensive income and at amortised cost291,339311,001
Sale of financial assets at fair value through other comprehensive income and at amortised cost19,886,0885,725,095
Acquisition of financial assets at fair value through other comprehensive income and at amortised cost(50,627,555)(56,020,038)
Maturity of financial assets at fair value through other comprehensive income and at amortised cost32,096,53346,049,277
Acquisition of tangible and intangible assets(105,715)(88,560)
Sale of tangible and intangible assets14,47539,507
Decrease / (increase) in other sundry assets(231,448)703,905
985,736(3,114,600)
CASH FLOWS ARISING FROM FINANCING ACTIVITIES
Sale of shares in subsidiaries companies which does not results loss control-(1,400)
Issuance of subordinated debt647,216192
Reimbursement of subordinated debt(129,536)(96,181)
Issuance of debt securities545,825447,007
Reimbursement of debt securities(310,448)(640,376)
Issuance of commercial paper and other securities238,83923,204
Reimbursement of commercial paper and other securities(171,641)(108,930)
Issue of Perpetual Subordinated Bonds (Additional Tier 1) (note 48)396,325-
Reimbursed of perpetual subordinated debt securities(2,922)-
Dividends paid to shareholders of the Bank (note 47)(30,228)-
Dividends paid of perpetual subordinated debt securities(148)(149)
Dividends paid to non-controlling interests(15,502)(9,088)
Interest paid of the issue of Perpetual Subordinated Bonds (Additional Tier 1)(27,750)-
Increase / (decrease) in other sundry liabilities and non-controlling interests (***)(224,200)266,447
915,830(119,274)
Exchange differences effect on cash and equivalents(24,449)(131,345)
Net changes in cash and equivalents2,406,862617,080
Cash (note 18)566,202540,608
Deposits at Central Banks (note 18)2,187,6371,627,326
Loans and advances to credit institutions repayable on demand (note 19)326,707295,532
CASH AND EQUIVALENTS AT THE BEGINNING OF THE YEAR3,080,5462,463,466
Cash (note 18)636,048566,202
Deposits at Central Banks (note 18)4,530,5032,187,637
Loans and advances to credit institutions repayable on demand (note 19)320,857326,707
CASH AND EQUIVALENTS AT THE END OF THE YEAR5,487,4083,080,546
(*) In 2019, this balance includes the amount of Euros 4.551,000 related to short-term lease contracts and the amount of Euros 2,118,000 related to lease contracts of low value assets.
(**) In 2019, this balance includes the investment in Euro Bank, S.A. (Euros 424,370,000) , net of Cash and equivalents at the time of the acquisition (Euros 75,373,000).
(***) In 2019, this balance includes the amount of Euros 56.552.000 corresponding to payments of lease liabilities’ shares of capital.

See accompanying notes to the consolidated financial statements.
Chief AccountantThe Executive Committee
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 DECEMBER 2019 AND 2018
Thousand euros
Share capitalShare premiumPreference sharesOther equity instrumentsLegal and statutory reservesTreasury sharesReserves and retained earningsNet income for the year attributable to Bank's ShareholdersEquity attributable to Bank's ShareholdersNon-controlling interests (note 44)Total equity
BALANCE AS AT 31 DECEMBER 2017 (*)5,600,73816,47159,9102,922252,806(293)(38,130)186,3916,080,8151,098,9217,179,736
Transition adjustments IFRS 9
Gross value------(218,184)-(218,184)(36,999)(255,183)
Taxes------(155,472)-(155,472)6,888(148,584)
------(373,656)-(373,656)(30,111)(403,767)
BALANCES AS AT 1 JANUARY 20185,600,73816,47159,9102,922252,806(293)(411,786)186,3915,707,1591,068,8106,775,969
Net income for the year-------301,065301,065117,809418,874
Other comprehensive income------(169,261)-(169,261)(15,509)(184,770)
TOTAL COMPREHENSIVE INCOME------(169,261)301,065131,804102,300234,104
Results application:
Legal reserve----11,802--(11,802)---
Transfers for reserves and retained earnings------174,589(174,589)---
Share capital decrease (note 40)(875,738)-----875,738----
Reimbursement of preference shares (note 40)--(59,910)---373-(59,537)-(59,537)
Costs related to the share capital decrease------(41)-(41)-(41)
Constitution and acquisition of subsidiaries---------21,35921,359
Dividends from preference shares------(722)-(722)-(722)
Dividends from other equity instruments------(149)-(149)-(149)
Dividends (a)---------(9,088)(9,088)
Treasury shares-----219--219-219
Gains arising on sale of 10% of Setelote------252-252-252
Other reserves------1,488-1,488521,540
BALANCE AS AT 31 DECEMBER 20184,725,00016,471-2,922264,608(74)470,481301,0655,780,4731,183,4336,963,906
Net income for the year-------302,003302,00399,397401,400
Other comprehensive income------(293,026)-(293,026)11,227(281,799)
TOTAL COMPREHENSIVE INCOME------(293,026)302,0038,977110,624119,601
Results application (note 48):
Statutory reserve (note 41)----(30,000)-30,000----
Legal reserve (note 41)----5,927-(5,927)----
Transfers for reserves and retained earnings------301,065(301,065)---
Dividends payed (note 48)(30,228)-(30,228)-(30,228)
Issue of perpetual subordinated bonds (Additional Tier 1) (note 40)---400,000----400,000-400,000
Interests of the perpetual subordinated bonds (Additional Tier 1) (note 40)-----(27,750)-(27,750)-(27,750)
Costs with the issue of the perpetual subordinated bonds (Additional Tier 1)------(3,675)-(3,675)-(3,675)
Taxes with interests of the perpetual subordinated bonds (Additional Tier 1)------19-19-19
Reimbursed of perpetual subordinated debt securities---(2,922)----(2,922)-(2,922)
Reversal of deferred tax assets related with expenses with the capital increase------(3,652)-(3,652)-(3,652)
Taxes on costs with the issue of the perpetual subordinated bonds (Additional Tier 1)------2-2-2
Sale of subsidiaries---------(16,699)(16,699)
Dividends from other equity instruments------(148)-(148)-(148)
Dividends (a)---------(15,502)(15,502)
Treasury shares (note 42)-----(28)--(28)-(28)
Other reserves (note 43)------(1,338)-(1,338)(332)(1,670)
BALANCE AS AT 31 DECEMBER 20194,725,00016,471-400,000240,535(102)435,823302,0036,119,7301,261,5247,381,254
(*) The balances for the year ended 31 December 2017 consider the alignment with the new presentation requirements established by IFRS 9. These balances are presented exclusively for comparative purposes and have not been restated following the adoption of IFRS 9, with reference to 1 January 2018, as allowed by IFRS 9 (note 59).
(a) Dividends of BIM - Banco Internacional de Moçambique, S.A. and SIM - Seguradora Internacional de Moçambique, S.A.R.L.

See accompanying notes to the consolidated financial statements.
Chief AccountantThe Executive Committee

Notes to the Financial Statements

Notes to the Financial Statements
1. Accounting policiesX
Notes to the Financial Statements
2. Net interest incomeX
Notes to the Financial Statements
3. Dividends from equity instrumentsX
Notes to the Financial Statements
4. Net fees and commissions incomeX
Notes to the Financial Statements
5. Net gains / (losses) on financial operationsX
Notes to the Financial Statements
6. Other operating income / (losses)X
Notes to the Financial Statements
7. Staff costsX
Notes to the Financial Statements
8. Other administrative costsX
Notes to the Financial Statements
9. Amortisations and depreciationsX
Notes to the Financial Statements
10. Impairment for financial assets at amortised costX
Notes to the Financial Statements
11. Impairment for financial assets at fair value through other comprehensive incomeX
Notes to the Financial Statements
12. Impairment for other assetsX
Notes to the Financial Statements
13. Other provisionsX
Notes to the Financial Statements
14. Share of profit / (loss) of associates under the equity methodX
Notes to the Financial Statements
15. Gains / (losses) arising from sales of subsidiaries and other assetsX
Notes to the Financial Statements
16. Income / (loss) arising from discontinued or discontinuing operationsX
Notes to the Financial Statements
17. Earnings per shareX
Notes to the Financial Statements
18. Cash and deposits at Central BanksX
Notes to the Financial Statements
19. Loans and advances to credit institutions repayable on demandX
Notes to the Financial Statements
20. Loans and advances to credit institutionsX
Notes to the Financial Statements
21. Loans and advances to customersX
Notes to the Financial Statements
22. Debt securitiesX
Notes to the Financial Statements
23. Financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive incomeX
Notes to the Financial Statements
24. Hedging derivativesX
Notes to the Financial Statements
25. Investments in associated companiesX
Notes to the Financial Statements
26. Non-current assets held for saleX
Notes to the Financial Statements
27. Investment propertyX
Notes to the Financial Statements
28. Other tangible assetsX
Notes to the Financial Statements
29. Goodwill and intangible assetsX
Notes to the Financial Statements
30. Income taxX
Notes to the Financial Statements
31. Other assetsX
Notes to the Financial Statements
32. Resources from credit institutionsX
Notes to the Financial Statements
33. Resources from customers and other loansX
Notes to the Financial Statements
34. Non subordinated debt securities issuedX
Notes to the Financial Statements
35. Subordinated debtX
Notes to the Financial Statements
36. Financial liabilities held for tradingX
Notes to the Financial Statements
37. Financial liabilities designated at fair value through profit or lossX
Notes to the Financial Statements
38. ProvisionsX
Notes to the Financial Statements
39. Other liabilitiesX
Notes to the Financial Statements
40. Share capital, preference shares and other equity instrumentsX
Notes to the Financial Statements
41. Legal and statutory reservesX
Notes to the Financial Statements
42. Treasury sharesX
Notes to the Financial Statements
43. Reserves and retained earningsX
Notes to the Financial Statements
44. Non-controlling interestsX
Notes to the Financial Statements
45. Guarantees and other commitmentsX
Notes to the Financial Statements
46. Assets under management and custodyX
Notes to the Financial Statements
47. Transfers of assetsX
Notes to the Financial Statements
48. Relevant events occurred during 2019X
Notes to the Financial Statements
49. Fair valueX
Notes to the Financial Statements
50. Post-employment benefits and other long term benefitsX
Notes to the Financial Statements
51. Related partiesX
Notes to the Financial Statements
52. Consolidate balance sheet and income statement by geographic and operational segmentsX
Notes to the Financial Statements
53. SolvencyX
Notes to the Financial Statements
54. Risk managementX
Notes to the Financial Statements
55. Mozambique's sovereign debtX
Notes to the Financial Statements
56. Contingent liabilities and other commitmentsX
Notes to the Financial Statements
57. Recently issued accounting standardsX
Notes to the Financial Statements
58. Application of IFRS 9 – Financial instrumentsX
Notes to the Financial Statements
59. Application of IFRS 16 – LeasesX
Notes to the Financial Statements
60. Acquisition/Merger of Euro Bank, S.A.X
Notes to the Financial Statements
61. List of subsidiary and associated companies of Banco Comercial Português GroupX
Notes to the Financial Statements
62. Subsequent eventsX
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