PORTUGAL - Finance
Chairman, Millennium bcp
Nuno Amado was born in Torres Vedras in 1957. He studied Business Administration at ISCTE Business School and completed an Advanced Management Programme at INSEAD in Fontainebleau. In 1985, he joined the Audit and Consulting Department at KPMG and five years later he began a banking career that continues today, working at Citibank Portugal, Banco Fonsecas & Burnay, and Deutsche Bank Portugal. In 1997, he joined Banco Santander Totta, and became the Group CEO for Portugal in August 2006. In 2012 he became CEO of Millennium bcp, and in 2018 was named Chairman of the bank’s Board of Directors.
Millennium bcp is the only private-sector bank listed on the Portuguese Stock Exchange. This clearly marks us apart from other Portuguese banks. We came from a difficult position, like many other financial institutions at the beginning of the financial crisis. At the time, we had a relatively low capital base and loan portfolio issues. Today, we have a well-balanced balance sheet in terms of funding and lending; we went from having a loan-to-deposit ratio of 164% to having more deposits than loans today. Second, we currently have a much stronger capital base of 12% up from 4%, and we want to continue to grow this capital ratio to obtain a larger capital base. Our non-performing loan (NPL) figure was previously close to EUR13 billion; it has since reduced to around EUR6 billion and is falling at a rate of EUR1-1.5 billion every year. Moreover, we have increasing volumes of new loans and business. There were several years when we did not grow our customer base in Portugal, although we managed to increase it in Poland and Africa. In 2018, for the first time in a long time, we have a net gain in customers and new opportunities. Our main challenge is to continue to grow our customer and business acquisition on a sustainable basis. We also want to work on the profitability of Millennium bcp, because we have an excellent cost-to-income ratio. It is clearly one of the best in Europe at 46-47%. However, we have to maintain and improve it in the future to ensure our capacity to generate capital, reduce NPLs, acquire more business and customers, and invest more rapidly in the digitization processes. We need greater digitization both for our processes and to change the way we connect with our customers.
Our approach is to focus on our key, core markets, which are basically Portugal, Mozambique, and Poland, as well as Angola through a partnership. Our objective is to maintain a solid capital position in all these core markets, along with a quality balance sheet, while growing our customer base. This is a common strategy for all the key markets we are present in, though some adjustments are necessary in each market because not every country is in the same position in their financial cycle. In the Portuguese market, we have a critical mass as the largest private sector bank in the country in terms of business volumes. In Poland, we have around 5%—and growing—market share in what is considered a large market. In Mozambique, we are the key foreign bank in the sector, and in Angola, we are one of the top three private-sector banks with our partner there. We did a merger two years ago and are now better prepared for the future than before. We are extremely comfortable in the markets we are in.
We are perceived as number one or two in SME banking and corporate relations. The market sees us as number one in terms of innovation, proximity, and service quality. We are the main bank for companies that work in Portugal. On the personal banking side, we are also perceived as number one or two in terms of our service quality, products, and deep understanding of customer needs.
The measurement we use is cost-to-income, which refers to our operating profit for our business size and cost base. A cost-to-income ratio of about 46-47% means one has an excellent operating profit ratio. In the past, a high level of impairments affected this figure, and we still have a high level in 2018; however, the level is lower than before and our profits have increased. The main tools to maintain and develop our profitability are an excellent cost-to-income ratio and a solid operating profit base, coupled with normalizing our impairment level over the coming years. We are doing this very consistently, with decreases in our NPL book. We have also seen our business and customer volumes increasing since 2017. This year we will gain in net terms more than 300k customers, more than 100k in Portugal. On the other side, we also expect to see normalization of interest rates. Together, these factors give a reasonably good perspective for 2018 and 2019.
We want to remain close to our customers and better understand their needs and respond to those on a proactive basis, which has resulted in Millennium bcp having the least number of customer complaints. Improvement is also a continuous process for us, along with ongoing improvements to our processes from what is already a great starting point.
It is difficult to do business in Portugal if one only focuses on the local market because it is a relatively small market in terms of size. The country has a great environment for business, with the exception of some tax rates that are higher than in other countries and the time to complete judicial processes; however, one can negotiate a special tax agreement if they are involved in foreign investment. Portugal offers excellent work and language skills and infrastructure in terms of communications, higher education, and road transport. It also offers a greater quality of life.
In 2019, we want to maintain our excellent position with a strong operating profit and a further reduction of our non-performing assets and loans. We want to continue to reduce our impairment levels and improve our results. We want to make excellent inroads in our investment in digital technology and evolution, for which Millennium bcp is well positioned.