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1. Company Snapshot

1.a. Company Description

Banco Comercial Português, S.A., together with its subsidiaries, provides various banking and financial products and services under the Millennium bcp brand.It operates through Retail Banking; Companies, Corporate & Investment Banking; Private Banking; Foreign Business; and Other segments.The company offers a range of financial products and services, including current accounts, payment systems, savings and investment products, private banking, asset management, and investment banking services, such as mortgage loans, personal loans, commercial banking, leasing, factoring and insurance, and others.


It also provides venture capital, real-estate management, e-commerce, brokerage, real estate investment fund, consulting, investment fund management, trade finance, and trust, as well as internet, telephone, and mobile banking services.As of December 31, 2021, the company operated through 1,288 branches, including 434 branches in Portugal and 854 branches internationally.Banco Comercial Português, S.A. was incorporated in 1985 and is based in Porto, Portugal.

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1.b. Last Insights on BCP

Banco Comercial Português, S.A.'s recent performance was driven by a 5.9% increase in consolidated net income, as reported in its Q4 2024 earnings release. The bank successfully navigated economic challenges in Mozambique and Poland, showcasing its resilience. Additionally, the company's ability to maintain profitability despite economic headwinds is a testament to its strong management. Further, the bank's focus on cost optimization and efficiency measures is a positive development, which may lead to potential share buybacks, as hinted by the company's efforts to allocate excess capital, thereby benefiting shareholders.

1.c. Company Highlights

2. BCP Beats Estimates with 3.5% Year-on-Year Growth in Net Income

BCP's first half 2025 earnings report revealed a strong operational performance, with a 3.5% year-on-year increase in consolidated net income to EUR 502 million, supported by a robust ROE of 14.3%. All core markets contributed positively to the results, with Portugal standing out with a net income of EUR 424 million, up 3.2% year-on-year. The increase in net income in Portugal was driven by higher operational revenues, controlled cost of risk, and expansion of business volumes. As Miguel Maya Dias Pinheiro stated, "We're on track to deliver on our plan, with business volumes growing positively and a high ROE."

Publication Date: Aug -11

📋 Highlights
  • Consolidated Net Income Growth:: EUR 502 million, a 3.5% year-on-year increase, driven by operational performance and ROE of 14.3%.
  • Portugal's Strong Performance:: Net income of EUR 424 million, up 3.2% YoY, reflecting controlled cost of risk and higher operational revenues.
  • International Operations Expansion:: 11.8% YoY growth led by Bank Millennium (EUR 121 million net profit), despite Mozambique's 48% net profit decline due to sovereign risks.
  • Capital Strength:: CET1 ratio at 16.2% and total capital at 20.2%, with nonproductive assets reduced by EUR 425 million, including EUR 336 million in NPEs.
  • Operational Efficiency:: Cost-to-income ratio at 37%, cost of risk at ~30 bps, and customer funds up 5.5% YoY, supported by retail banking resilience.

Financial Performance

Net interest margin grew 3.3%, and net interest income in international operations grew mainly due to the lower NII generated by credit holidays last year in Poland. Fees and commissions in Portugal grew almost 7%, showing the growth of the customer base and the effort to generate profitability. Operating costs had a cost-to-income ratio of 37%, and cost of risk was around 30 basis points. The continued decrease in NPEs is a positive trend, with the NPE loan ratio, including unlikely to pay, already below 2% in Portugal.

Valuation

With a P/E Ratio of 12.67 and a Dividend Yield of 3.91%, BCP's stock appears to be reasonably priced. The bank's strong capital position, reflected in capital ratios comfortably above regulatory requirements, with CET1 at 16.2% and total capital at 20.2%, provides a solid foundation for future growth. Additionally, the bank's ROE of 13.05% and ROIC of 3.88% indicate a strong ability to generate profits from its assets.

Guidance and Outlook

BCP expects stability in Portugal and Poland despite decreasing interest rates, with low-to-mid single-digit growth in NII next year. The bank also anticipates continued resilience in NII in Poland, driven by 5% business volume growth and marginal margin contraction. Corporate lending in Portugal is expected to grow mid-single-digit, driven by pipeline projects and secondary effects of European funds.

Capital and Liquidity

BCP maintained a stable capital ratio, with a leverage ratio that compares well with the leverage ratios in main European economies. The bank's liquidity position is robust, with a deposit cost of slightly below 50%. The proposed law in parliament, which hasn't been approved yet, may reduce the tax rate by 3% over three years, which would positively impact profits and valuation.

3. NewsRoom

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Are Finance Stocks Lagging Apollo Commercial Real Estate Finance (ARI) This Year?

Nov -27

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Evaluating Millennium bcp After Its 84% Surge and Strong Quarterly Earnings in 2025

Sep -15

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Poland Plans to Raise Tax Rate Paid by Banks

Aug -22

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Are Finance Stocks Lagging First BanCorp. (FBP) This Year?

Jul -16

Source: zacks.com

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French Lender Groupe BPCE to Buy Portugal’s Novo Banco for $7.4 Billion

Jun -13

Source:

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Take the Zacks Approach to Beat the Markets: StoneCo, Axon, Intuit in Focus

Jun -02

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Banco Comercial Portugues SA (BPCGY) Q1 2025 Earnings Call Highlights: Strong Growth in Poland ...

May -23

Source:

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Are Finance Stocks Lagging Banco Comercial Portugues (BPCGY) This Year?

May -16

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.55%)

6. Segments

Commercial Banking

Expected Growth: 6.47%

Strong loan growth driven by a robust Portuguese economy, increasing demand for credit from SMEs and corporates, and market share gains. Additionally, the bank's digital transformation efforts and cost-cutting initiatives have improved operational efficiency, contributing to the 6.47% growth in commercial banking.

Companies and Corporate in Portugal

Expected Growth: 5.83%

Banco Comercial Português, S.A. in Portugal, with a growth rate of 5.83%, is driven by a strong economy, increasing consumer confidence, and a growing demand for digital banking services. Additionally, the bank's strategic expansion into new markets, cost-cutting initiatives, and investments in technology have contributed to its growth.

Other

Expected Growth: 8.37%

Strong diversification strategy, expansion into high-growth markets, and increased focus on digital banking have driven Other segment growth for Banco Comercial Português, S.A. Additionally, strategic partnerships, cost optimization, and improved operational efficiency have contributed to the 8.37% growth.

Private Banking

Expected Growth: 6.47%

The 6.47% growth in Private Banking from Banco Comercial Português, S.A. is driven by increasing high net worth individuals, robust wealth management services, strategic partnerships, and a strong brand reputation. Additionally, the bank's digital transformation and tailored investment solutions have attracted new clients, contributing to the segment's growth.

7. Detailed Products

Personal Banking

Banco Comercial Português, S.A. offers a range of personal banking services, including current and savings accounts, credit cards, personal loans, and mortgages.

Corporate Banking

The bank provides corporate banking services, including cash management, trade finance, and lending solutions, to large corporations and SMEs.

Investment Banking

Banco Comercial Português, S.A. offers investment banking services, including M&A advisory, equity and debt capital markets, and leveraged finance.

Private Banking

The bank provides private banking services, including wealth management, investment advice, and portfolio management, to high net worth individuals.

Digital Banking

Banco Comercial Português, S.A. offers digital banking services, including online banking, mobile banking, and digital payments.

Insurance

The bank offers insurance products, including life insurance, non-life insurance, and pension plans.

Asset Management

Banco Comercial Português, S.A. provides asset management services, including investment funds, pension funds, and discretionary portfolio management.

8. Banco Comercial Português, S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Banco Comercial Português, S.A. is medium due to the presence of alternative banking services and financial institutions in Portugal.

Bargaining Power Of Customers

The bargaining power of customers for Banco Comercial Português, S.A. is low due to the lack of negotiating power of individual customers and the presence of switching costs.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Banco Comercial Português, S.A. is medium due to the presence of multiple suppliers of technology and services, but the bank's dependence on these suppliers.

Threat Of New Entrants

The threat of new entrants for Banco Comercial Português, S.A. is low due to the high barriers to entry in the banking industry, including regulatory requirements and capital requirements.

Intensity Of Rivalry

The intensity of rivalry for Banco Comercial Português, S.A. is high due to the presence of multiple competitors in the Portuguese banking industry, including Caixa Geral de Depósitos and Banco Santander Totta.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 45.45%
Debt Cost 12.08%
Equity Weight 54.55%
Equity Cost 12.08%
WACC 12.08%
Leverage 83.30%

11. Quality Control: Banco Comercial Português, S.A. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.01$

Current Price

0.01$

Potential

-0.00%

Expected Cash-Flows