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2023
REPORT & ACCOUNTS
Pursuant to CMVM Regulation 1/2023, please find herein the transcription
of the
2023 Annual Report
BANCO COMERCIAL PORTUGUÊS, S.A.
Public limited company
Registered Office: Praça D. João I, 28, 4000-295 Porto - Share Capital Euros 3,000,000,000.00
Registered at Porto Commercial Registry, under the single registration and tax identification
number 501 525 882
The 2023 Annual Report is a translation of the “Relatório e Contas de 2023” document delivered by Banco
Comercial Português, S.A. to the Portuguese Securities and Market Commission (CMVM), in accordance with
Portuguese law.
The sole purpose of the English version is to facilitate consultation of the document by English-speaking
Shareholders, Investors and other Stakeholders, and, in case of any doubt or contradiction between the
documents, the Portuguese version of the “Relatório e Contas de 2023” prevails.
All references in this document to the application of any regulations and rules refer to the respective
version currently in force.

JOINT MESSAGE OF THE CHAIRMAN OF THE BOARD OF DIRECTORS AND OF THE CEO | 5
INFORMATION ON BCP GROUP | 9
MAIN HIGHLIGHTS OF RESULTS IN 20 23 | 9
MAIN HIGHLIGHTS | 10
INFORMATION ON BCP GROUP | 12
GOVERNANCE | 14
MAIN EVENTS IN 20 23 | 17
BCP SHARE | 22
QUALIFIED HOLDINGS | 31
BUSINESS MODEL | 32
REGULATORY, ECONOMIC AND FINANCIAL SYSTEM ENVIRONMENT | 32
BUSINESS MODEL | 38
MILLENNIUM NETWORK | 42
FINANCIAL INFORMATION | 43
RESULTS AND BALANCE SHEET | 44
BUSINESS AREAS | 94
STRATEGY | 110
STRATEGIC PLAN 2021-2024 | 110
RISK AND OUTLOOK | 114
INTERNAL CONTROL SYSTEM | 115
MAIN RISKS AND UNCERTAINTIES | 121
RISK MANAGEMENT | 124
RATINGS ASSIGNED TO BCP | 166
CAPITAL | 168
PENSION FUND | 169
INFORMATION ON TRENDS | 172
NON-FINANCIAL INFORMATION | 173
REGULATORY INFORMATION | 177
CONSOLIDATED FINANCIAL STATEMENTS | 177
ALTERNATIVE PERFORMANCE MEASURES | 179
APPLICATION OF RESULTS | 182
GLOSSARY | 184
ACCOUNTS AND NOTES TO THE CONSOLIDATED ACCOUNTS | 187
ACCOUNTS AND NOTES TO THE INDIVIDUAL ACCOUNTS | 465
DECLARATION OF COMPLIANCE | 689
ANNUAL REPORT OF THE AUDIT COMMITTEE | 691
OPINION OF THE AUDIT COMMITTEE | 702
SUMMARY OF THE SELF-ASSESSEMENT REPORT | 705
EXTERNAL AUDITORS' REPORT | 710
CORPORATE GOVERNANCE REPORT | 735

2023 REPORT & ACCOUNTS |

| 3

| 2023 REPORT & ACCOUNTS

| 4
Joint Message of the Chairman of the
Board of Directors and of the CEO

In 2023, global economic activity evolved favourably, though highly conditioned by geopolitical instability, while
benefiting from the easing of inflation in the main economic blocs after the strong rise observed in 2022.
In Portugal, the 2.3% expansion of activity reflected the remarkable resilience of the national economy in the face
of the strong slowdown in the euro area and the rise in interest rates. This performance was underpinned by
dynamic tourist activity in the first half of the year and a significant acceleration in private consumption in the
final quarter of the year. In 2024, a greater moderation in the growth rate of the Portuguese economy is
expected, in a context of less dynamic external demand.
In Poland, the economy stagnated in 2023, after the strong growth recorded in 2022. However, the improvement
in domestic demand that has been observed, as a result of the decrease in inflation and the reduction in interest
rates, should translate into a trajectory of accelerating activity in 2024.
The Mozambican economy has seen remarkable levels of growth, supported by the expansion of the extractive
industry, in particular the production of natural gas. In 2024, the economy is expected to maintain robust growth
levels, in a context of falling inflation and less restrictive monetary policy. It should be noted, however, that in
the north of the country concerns remain about the activity of destabilizing radical groups.
The Angolan economy, in 2023, slowed from 3.0% to 1.3%, penalized by contraction in oil sector activity, with the
kwanza depreciating significantly, particularly at the beginning of the third quarter. For 2024, the IMF projects an
acceleration in Angolan economic activity to 3.3%.
In Macau, the end of the zero-covid policy decreed in December 2022 led to a very significant increase in the
number of tourists during 2023. The recovery in economic activity allowed GDP to grow 77.7%, in the first nine
months of the year, with robust growth also expected in 2024.
In a complex context, in which uncertainties at a macroeconomic and geopolitical level increased, Millennium
bcp's activity in 2023 was also influenced by favourable factors, particularly those resulting from the normalization
of monetary policy. Millennium bcp ended the year with a consolidated net profit of 856 million euros, a
substantial increase compared to the 197.4 million euros achieved in 2022.
Special emphasis is given to the significant reinforcement achieved organically in the capital position in 2023,
reflecting the quality of Millennium bcp's business model, the discipline in capital management and the return to
positive annual results in Poland. In December 2023, the CET1 capital ratio reached 15.4% and the total capital
ratio 19.9%, both comfortably above regulatory requirements.
It is worth remembering, however, that these results came in a context of extraordinary adverse effects in
Poland, not directly related to loans in Swiss francs, which in 2022 affected that year's result. These were
significant, including the contribution of 59 million euros for the Institutional Protection Fund (IPS), the charges of
282.8 million euros for moratoriums on housing loans, and the recording of impairment of 102.3 million euros
related to Bank Millennium's goodwill.
In 2023, consolidated results continued to be influenced by significant additional effects related to Bank
Millennium in Poland. There were charges in the amount of 779.7 million euros relating to the portfolio of
mortgage loans in Swiss francs, of which provisions amounting to 623 million euros reflect the application of more
conservative adjustments to the provisioning model resulting from the decision of the Court of European Union
Justice, and other costs, particularly settlements with customers. Conversely, the results benefited from 139.1
million euros recorded in the first quarter, related to the sale of an 80% stake in Millennium Financial Services
within the scope of the strategic partnership in the bancassurance area.
The increase in Millennium bcp’s consolidated net income, in the different geographies, was largely based on the
bank's intense commercial activity, reflected in the 31.7% growth in core operating income, which amounted to

2022 REPORT & ACCOUNTS |

| 5
2.44 billion euros, driven by the 23.1% increase in core revenue and efficient management of operating costs,
which grew 8.3% in a context still marked by inflation.
Both in the activity in Portugal, where growth was more significant, and in the international activity, core income
showed relevant growth, mainly resulting from the increase in net interest margin, which rose 31.4% in the Group
and 54.2% in Portugal. Net commissions, in turn, remained practically stable compared to the previous year,
conditioned by the fact that, in the context of a loss of consumer purchasing power as a result of inflation, a
decision was made to made to limit alterations to banking fees as well as the fact that governments have
promoted legislative measures restricting these fees.
In the current context of higher interest rates, which encourages customers to use part of their savings to pay
down loans, and with intense competition in the sector to attract deposits, the bank presented a positive variation
of 2.5% in on-balance sheet customer funds, which reached 79.2 billion euros, a performance that reflects the
bank’s ability to gain the preference and trust of customers.
The restrictive monetary policy aimed at reducing inflation also translates into a lower demand for loans, with the
gross customer credit portfolio recording a slight retraction, standing at 56.8 billion euros in December 2023.
The net profit of the activity in Portugal was 724.9 million euros in 2023, an increase of 111% compared to the net
profit of 343.5 million euros in the previous year, a performance that confirms Millennium bcp's leadership in
multiple business fronts in the Portuguese market.
In international activity, net profit amounted to 131.2 million euros in 2023, showing a significant improvement
when compared to the negative 146.1 million euros recorded in 2022.
In Poland, Bank Millennium, which recorded profits for the fifth consecutive quarter, contributed significantly with
a net profit of 126.8 million euros in 2023, which compares with a loss of 223.5 million euros in 2022. This
trajectory confirms the quality of Bank Millennium's business model and its ability to simultaneously manage the
significant impacts arising from legal risks associated with loans in Swiss francs, successfully implementing the
planned measures to strengthen capital and increase business volumes in a market with high potential.
In Mozambique, the quality of the commercial franchise, operational efficiency, and prudent risk management,
allowed Millennium bim to continue to make a relevant contribution to consolidated results, presenting
sustainable levels of profitability, resilient to different contexts, translating into a net profit of 105.1 million
euros in 2023, in line with previous years.
Improving the quality of the balance sheet continued to be a priority for the bank, continuing the consistent
trajectory of recent years, based on the skills developed, with a reduction of 394 million euros in non-productive
assets in 2023, including a decrease of 266 million euros in NPE, which placed the NPE ratio at 3.4% at Group level
and 2.9% in Portugal.
Most credit quality indicators evolved favourably and were accompanied by an increase in NPE coverage due to
credit impairments, which reached 81.8% in 2023, a level that positions Millennium bcp well in a comparative
analysis of the European banking sector, maintaining a robust total coverage of 122.5% considering the remaining
collateral.
Despite the challenging context and the considerable level of uncertainty in the markets in which it operates, the
bank maintained prudent risk management, allowing it to contain the cost of risk at around 50 bp, in line with the
strategic plan presented to the market.
Commercial intensity was also reflected in the ability to attract customers, an indicator of the vitality of
Millennium bcp and its growth potential, reflected in the expansion of the customer base, with emphasis on the
10% increase in mobile customers, which represented 68% of total active customers in December 2023.
The symbiotic relationship between people and technology, combined with a commercial network comprised of
high-quality professionals and advanced technological solutions that provide superior user experiences, continues
to constitute the central and differentiating element of Millennium bcp's business model. The priority given to
investment and innovation in mobile platforms has made a decisive contribution on this front, reflected in
significant increases in transactions and sales made through these platforms.
Millennium bcp's annual results confirm the success of the strategy being implemented, signalling the year 2023 as
the end of the bank's transition period. More than a year in advance, the targets for year-end 2024 were exceeded
in the main metrics defined in the strategic plan.

| 2022 REPORT & ACCOUNTS

6 |
The preparation and rigorous work in pursuit of the defined objectives are clearly evident in the robustness of the
business model that allowed the bank to achieve the results presented and progress to a new phase in the bank's
life, returning to the normalization of its activity, with appropriate levels of return on own capital, which in 2023
stood at 16% (ROE), a trajectory also decisive for the attribution, by the four main rating agencies, of the
Investment Grade rating, after successive upward revisions.
Millennium bcp begins 2024 as a reference in terms of quality customer service, both in person and through digital
channels, with reinforced innovation capacity, standing apart from most peers in terms of operational efficiency.
The bank has a healthy balance sheet, demonstrates high skills in risk management and has achieved very robust
capital and liquidity ratios.
In short, with the indispensable support of Customers, Shareholders, Employees and other Stakeholders,
Millennium bcp is today a bank prepared for the future.

Miguel Maya | Nuno Amado
Chairman of the Executive Committee | Chairman of the Board of Directors
Vice-Chairman of the Board of Directors |

2022 REPORT & ACCOUNTS |

| 7

| 2022 REPORT & ACCOUNTS

8 |
Main highlights of the Results in 2023

Profitability Robust Business Model | A Bank prepared for the future • Net income of 856.0 million euros in 2023. • Group’s core operating profit increase of 31.7% to 2,434.8 million euros, supported by the increase of 23.1% on core income and by the strict management of operating costs, which grew 8.3% compared with 2022. • Effects1 related with Bank Millennium: 779.72 million euros of costs related with CHF mortgage loan portfolio, out of which 623.03 million euros related with provisions, resulting from the application of more conservative assumptions to the provisioning model after the Court of Justice of the European Union ruling; results benefited, this year, of 139.1 million euros related with the sale of Millennium Financial Services stake (80%) as a result of the strategic partnership in the bancassurance business. • Net income of 724.9 million euros in the activity in Portugal in 2023, corresponding to an increase of 381.4 million euros compared with 2022. • Substantial strengthening of capital ratios. CET14 ratio stood at 15.4% and total capital ratio4 at 19.9% (an increase of 293 bp and 310 bp, respectively, compared with last year), reflecting the strong capacity to generate organic capital. • Liquidity indicators5, well above regulatory requirements: LCR at 276%, NSFR at 167% and LtD at 71%. • On-Balance sheet customer funds grew 2.5% year on year to 79.2 billion euros. • Significant decrease of non-performing assets compared with December 2022: 266 million euros in NPE, 83 million euros in foreclosed assets and 45 million euros in restructuring funds, a combined reduction of 14.0% from December 2022. • Growth of the customer base, highlighting the increase in mobile Customers (10% from December 2022), which represent 68% of total Customers. • Investment grade by the 4 rating agencies, after successive upward revisions.

2022 REPORT & ACCOUNTS |

| 9
Main highlights (1)

Million euros
| 2023 | 2022 (restated) | 2021 | 2020 | 2019 | Chg. % 23/22
BALANCE SHEET |  |  |  |  |  |
Total assets | 94,380 | 89,877 | 92,905 | 85,715 | 81,643 | 5.0%
Equity | 7,299 | 5,937 | 7,062 | 7,386 | 7,381 | 23.0%
Loans and advances to customers (net) | 55,218 | 56,198 | 56,360 | 53,975 | 52,275 | (1.7%)
Total customer funds | 95,295 | 92,808 | 90,097 | 84,492 | 81,675 | 2.7%
Balance sheet customer funds | 79,215 | 77,250 | 71,175 | 64,764 | 62,607 | 2.5%
Deposits and other resources from customers | 77,928 | 75,907 | 69,560 | 63,259 | 60,847 | 2.7%
Loans to customers (net)/Deposits and other resources from customers (2) | 71% | 74% | 81% | 85% | 86% |
RESULTS |  |  |  |  |  |
Net interest income | 2,826 | 2,150 | 1,589 | 1,532 | 1,549 | 31.4%
Net operating revenues | 3,770 | 2,857 | 2,334 | 2,257 | 2,335 | 31.9%
Operating costs | 1,163 | 1,073 | 1,116 | 1,090 | 1,166 | 8.3%
Operating costs excluding specific items (3) | 1,147 | 1,057 | 1,025 | 1,044 | 1,100 | 8.6%
Results on modification | (19) | (310) | — | — | — | 93.7%
Impairment and Provisions | 1,100 | 1,056 | 1,061 | 841 | 542 | 4.1%
Income tax | 537 | 304 | 204 | 132 | 239 | 76.6%
Net income attributable to shareholders of the Bank | 856 | 197 | 138 | 183 | 302 | >200%
PROFITABILITY AND EFFICIENCY |  |  |  |  |  |
Net operating revenues/Average net assets (2) | 4.1% | 3.0% | 2.6% | 2.7% | 2.9% |
Return on average total assets (ROA) | 1.0% | 0.1% | 0.0% | 0.2% | 0.5% |
Income before tax and non-controlling interests/Average net assets (2) | 1.6% | 0.4% | 0.3% | 0.4% | 0.8% |
Return on average shareholders' equity (ROE) | 16.0% | 3.9% | 2.4% | 3.1% | 5.1% |
Income before tax and non-controlling interests/Average equity (2) | 23.8% | 7.2% | 3.3% | 4.8% | 8.9% |
Net interest margin | 3.36% | 2.46% | 1.93% | 2.00% | 2.18% |
Cost to core income (3) | 31.9% | 36.2% | 44.2% | 47.3% | 48.8% |
Cost to income (2) | 30.8% | 37.6% | 47.8% | 48.3% | 49.9% |
Cost to income (2)(3) | 31.6% | 37.0% | 43.9% | 46.3% | 47.1% |
Cost to income - activity in Portugal (2)(3) | 29.5% | 37.2% | 42.6% | 46.2% | 47.4% |
Staff costs/Net operating revenues (2)(3) | 17.0% | 19.7% | 24.1% | 25.9% | 26.9% |
CREDIT QUALITY |  |  |  |  |  |
Non-performing exposures | 1,952 | 2,218 | 2,752 | 3,295 | 4,206 |
Non-performing exposures (loans to customers)/Loans to customers | 3.4% | 3.8% | 4.7% | 5.9% | 7.7% |
Total impairment (balance sheet)/NPE (loans to customers) | 81.8% | 68.3% | 68.0% | 62.9% | 58.2% |
Restructured loans | 1,729 | 1,866 | 2,564 | 2,661 | 3,097 |
Restructured loans/Loans to customers | 3.0% | 3.2% | 4.4% | 4.7% | 5.7% |
Cost of risk (net of recoveries) | 42 b.p. | 52 b.p. | 60 b.p. | 92 b.p. | 72 b.p. |
LIQUIDITY |  |  |  |  |  |
Liquidity Coverage Ratio (LCR) | 276% | 212% | 269% | 230% | 216% |
Net Stable Funding Ratio (NSFR) | 167% | 154% | 150% | 140% | 135% |
CAPITAL(4) |  |  |  |  |  |
Own funds fully-implemented | 7,903 | 7,241 | 7,247 | 7,213 | 7,028 |
Risk Weighted Assets fully-implemented | 39,725 | 43,106 | 45,863 | 46,322 | 44,972 |
Common equity tier I fully-implemented ratio | 15.4% | 12.5% | 11.7% | 12.2% | 12.2% |
Total ratio fully implemented | 19.9% | 16.8% | 15.8% | 15.6% | 15.6% |
Common equity tier I phased-in ratio | 15.5% | 12.6% | 11.7% | 12.2% | 12.2% |
BCP SHARE |  |  |  |  |  |
Market capitalisation (ordinary shares) | 4,147 | 2,213 | 2,130 | 1,862 | 3,065 | #REF!
Adjusted basic and diluted earnings per share (euros) | 0.054 | 0.010 | 0.007 | 0.010 | 0.018 |
Market values per share (euros) |  |  |  |  |  |
High | 0.3309 | 0.1982 | 0.1709 | 0.2108 | 0.2889 |
Low | 0.1529 | 0.1218 | 0.1126 | 0.0697 | 0.1771 |
Close | 0.2744 | 0.1464 | 0.1409 | 0.1232 | 0.2028 |

| 2023 REPORT & ACCOUNTS

10 |
(1) Some indicators are presented according to management criteria of the Group, which concepts are described and
detailed at the glossary and at alternative performance measures chapter, being reconciled with the accounting values in
the respective chapters. From 31 May 2019, financial statements of the Group reflect the consolidation of Euro Bank S.A.,
the entity acquired by Bank Millennium S.A. Following the sale, in 2021, of the entire share capital of Banque Privée BCP
(Suisse) S.A. to Union Bancaire Privée, UBP S.A. and the sale of 70% of the investment held in Seguradora Internacional de
Moçambique, S.A. (“SIM”), now designated Fidelidade Moçambique - Companhia de Seguros, S.A., through its subsidiary
BIM - Banco Internacional de Moçambique, S.A., the contribution of these subsidiaries to the consolidated results of the
Group, till the date of disposal, is reflected as income from discontinued operations in the international activity and the
historical information has been restated since January 2020, in order to ensure its comparability, as defined in the IFRS 5.
The accounting of assets and liabilities of Banque Privée BCP (Suisse) S.A. and of SIM was not changed compared to the
criteria considered in the financial statements published in previous periods. In this context and taking into account the
immateriality of the balance sheet balances of these operations in the Group, the calculation of the indicators relating the
performance of the profit and loss account to the balance sheet items was not adjusted, with the exception of net interest
margin, that reflects the fact that the assets of those subsidiaries were no longer considered interest earning assets in
historical information regarding 2021 and 2020.
(2) According to Instruction no. 16/2004 from the Bank of Portugal, as the existing version as of 31 December 2023.
(3) Excludes the impact of specific items. In 2023, the impact was positive in the amount of 124 million euros, including
income of 139 million euros recognised in the international activity, related to the sale of 80% of the shares in Millennium
Financial Services sp. z o.o. (128 million euros recognised as net trading income and 11 million euros recognised as other
net operating income) and costs of 15 million euros recognised as staff costs in the activity in Portugal [(i) costs related to
the compensation for the temporary reduction in employees remunerations during 2014-2017, as distribution of part of the
Bank's results obtained in 2022; (ii) costs with employees terminations, namely early retirements; (iii) costs with mortgage
financing to former employees; and (iv) income recognised after an agreement related to liabilities with former directors
of the Bank]. In 2022, the impact was negative of 16 million euros, recognised in staff costs in the activity in Portugal,
including: (i) distribution of part of the Bank's results obtained in 2021 by the employees of the Bank; (ii) costs with
mortgage financing to former employees; (iii) discretionary remuneration paid to employees as a measure to offset the
impacts of inflation; and iv) the recognition of a provision for other structure adaptation measures. In 2021, the impact
was also negative, in the amount of 91 million euros, mainly related to the adjustment of headcount carried out by the
Bank in that year, including a provision in the amount of 84 million euros. In 2020, the impact was also negative, in the
amount of 46 million euros, of which 32 million euros related to headcount adjustment costs, compensation cost for
temporary remuneration cuts of employees under the participation in the results and income arising from the agreement
with a former director of the Bank, and 15 million euros related to acquisition, merger and integration of Euro Bank S.A. In
2019, the impact was also negative in the amount of 66 million euros, of which 40 million euros related to headcount
adjustment costs and costs with compensation for temporary remuneration cuts, and 26 million euros related to
acquisition, merger and integration of Euro Bank S.A. The profitability and efficiency indicators does not consider the
specific items recognized in net operating revenues (1 million euros in 2019 and an immaterial amount in 2020), related to
costs with the acquisition, merger and integration of Euro Bank S.A.
(4) Presented figures include the cumulate net results of the respective periods.

2023 REPORT & ACCOUNTS |

|11
Information on BCP Group
Brief description
Banco Comercial Português, S.A. (BCP, Millennium
bcp or Bank) is the largest Portuguese private
sector bank. The Bank, with its decision centre in
Portugal, operates and acts with respect for people
and institutions, focusing on the Customer, pursuing
a mission of excellence, trust, ethics and
responsibility, and is a distinguished leader in
various financial business areas in the Portuguese
market and a reference institution on an
international level. The Bank also holds a prominent
position in Africa through its banking operation in
Mozambique (in Angola, Banco Millennium Angola -
BMA merged with Banco Privado Atlântico-BPA and
currently the Bank holds a equity accounted
shareholding) and in Europe through its banking
operation in Poland. Since 2010, the Bank operates
in Macau through a full branch.
Bank History
BCP was incorporated on 17 June 1985 as a limited
liability company ("sociedade anónima") organised
under the Portuguese laws, following the
deregulation of the Portuguese banking industry.
BCP was founded by a group of over 200
shareholders and a team of experienced banking
professionals who sought to capitalise on the
opportunity to form an independent financial
institution that would serve the then
underdeveloped Portuguese financial market more
effectively than state-owned banks.
While the Bank's development was initially
characterised by organic growth, a series of
strategic acquisitions helped solidify its position in
the Portuguese market and increase its offering of
financial products and services. In March 1995, BCP
acquired control of Banco Português do Atlântico,
S.A. ("Atlântico"), which was then the largest
private sector bank in Portugal. This was followed
by a joint takeover bid for the whole share capital
of Atlântico. In June 2000, Atlântico was merged
into BCP. In 2000, BCP also acquired Império, along
with Banco Mello and Banco Pinto & Sotto Mayor.
In 2004, with a view to strengthening its focus on
the core business of distribution of financial
products and optimising capital consumption, BCP
sold insurers Império Bonança, Seguro Directo,
Impergesto and Servicomercial to the Caixa Geral
de Depósitos group. BCP also entered into
agreements with Fortis (now named Ageas) for the
sale of a controlling stake and management control
of insurers Ocidental - Companhia Portuguesa de
Seguros, S.A., Ocidental - Companhia Portuguesa de
Seguros de Vida, S.A. and Médis - Companhia
Portuguesa de Seguros de Saúde, S.A., as well as
the pension fund manager PensõesGere - Sociedade
Gestora de Fundos de Pensões, S.A.
In 2004, the Bank sold its non-life insurance
businesses and divested a portion of its life
insurance business by entering into a joint venture
with Ageas (formerly Fortis), named Millenniumbcp
Ageas, of which 51% is held by Ageas and 49% by the
Bank.
After the consolidation of its position in the
Portuguese banking market, the Bank focused on
the development of its retail business in new
regions, with the goal of attaining significant
positions in emerging markets in Europe and in
Africa. The Bank concentrated on businesses with
strong growth prospects in foreign markets with a
close historical connection to Portugal or that have
large communities of Portuguese origin (such as
Angola, Mozambique, the United States, Canada,
France, Luxembourg and Macao), as well as in
markets where the Bank's successful Portuguese
business model could be effectively exported to and
tailored to suit such local markets (such as Poland,
Greece and Romania).
The Bank has pursued a consistent strategy of
market segmentation. Until 2003, these segments
were served through autonomous distribution
networks operating under a variety of brand names.
In October 2003, BCP began the process of
replacing these brands in Portugal with a single
brand name: Millennium bcp. The rebranding in
other markets was completed in 2006. All banking
operations controlled by BCP are now carried out
under the "Millennium" brand. In Portugal, the Bank
also operates under the "ActivoBank" brand.
In recent years, the Bank has refocused on
operations that it considers core to its business. As
part of this refocus, the Bank divested several of its
international operations (in France, Luxembourg,
United States, Canada, Greece, Turkey and
Romania), while retaining commercial protocols to
facilitate remittances from Portuguese emigrants in
some markets. In 2010, the Bank transformed its
Macao off-shore branch into an on-shore branch.
In February 2012, the Bank adopted a management
restructuring through the introduction of a one-tier
management and supervisory model, in which the
Board of Directors includes an Executive Committee
and an Audit Committee (the latter comprising non-
executive members, and with a majority of
independent members, in accordance with the
applicable law).
In December 2012, the Bank prepared and
presented to the Portuguese government a
Restructuring Plan, required by national law and by
the applicable European rules on matters of State
aid. The Restructuring Plan was formally submitted
by the Portuguese government to the EC and, In
July 2013, the Bank agreed on the plan with the EC,
entailing an improvement of the profitability of the

| 2023 REPORT & ACCOUNTS

12 |
Bank in Portugal through continued cost reduction,
among other drivers. On September 2013, the DG
Comp announced its formal decision in connection
with its agreement with the Portuguese authorities
concerning the Bank's Restructuring Plan. Pursuant
to the decision, the Bank's Restructuring Plan was
found in compliance with the European Union's
rules relating to State aid, demonstrating the Bank's
viability without continued State support. The
implemented Restructuring Plan aimed at
strengthening the Bank's strategy by focusing on its
core activities.
In May 2014, as part of a process to refocus on core
activities defined as a priority in its Strategic Plan,
the Bank announced that it agreed with the
international insurance group Ageas a partial recast
of the strategic partnership agreements entered
into in 2004, which included the sale of its 49%
interest in the (currently jointly owned) insurance
companies that operate exclusively in the non-life
insurance business, i.e. Ocidental – Companhia
Portuguesa de Seguros, S.A. and Médis – Companhia
Portuguesa de Seguros de Saúde, S.A..
In April 2016, the Bank announced the conclusion of
the merger between Banco Millennium Angola, S.A.
with Banco Privado Atlântico, S.A., resulting in the
second-largest private sector bank in Angola in
terms of loans to the economy, with a market share
of approximately 10% in business volume. The
entity resulting from this merger ceased to be
controlled by BCP.
In January 2017, BCP announced a Euros 1.3bn
rights issue with transferable pre-emptive
subscription rights. The aim of this transaction was
to bring forward the full repayment of remaining
Government Subscribed Securities and the removal
of key State-aid related restrictions, including the
dividend ban, the risk of potential sale of core
businesses and the tail risk of conversion. This
transaction was designed to strengthening the
balance sheet through the improvement of the
CET1 FL ratio and Texas ratio, bringing them in line
with new industry benchmarks and above regulatory
requirements.
On December 27, 2019, the merger deed of Banco
de Investimento Imobiliário, S.A., a wholly-owned
subsidiary of Banco Comercial Português, S.A., by
incorporation into the latter, was signed, thus
completing the incorporation process of Banco de
Investimento Imobiliário, S.A. into Banco Comercial
Português, S.A..
On 27 August 2019, the Extraordinary General
Meeting of Bank Millennium S.A., in which 216
shareholders representing 78.53% of its share
capital, participated, approved the merger of Bank
Millennium S.A. with Euro Bank S.A.. The
completion of the integration of Eurobank S.A. into
Bank Millennium S.A. took place in November, with
the Bank resulting from the merger now operating
under a single brand, a single operating system and
a single legal entity.
On June 29, 2021 BCP entered into an agreement
with Union Bancaire Privée, UBP SA regarding the
sale of the entire share capital of Banque Privée
BCP (Suisse) SA (“Banque Privée”). The sale of the
entire share capital of Banque Privée BCP (Suisse)
SA (“Banque Privée”) to Union Bancaire Privée, UBP
SA was completed on November 2, 2021. The sale of
Banque Privée allows BCP Group to pursue its
strategy of focusing resources and management on
core geographies, enhancing their development and
thus creating value for stakeholders.
On 29 December 2021, BIM – Banco Internacional de
Moçambique, SA (a bank incorporated under
Mozambican law in which BCP indirectly holds a
stake of 66.69%) formalized the entry into force of
a long-term agreement with Fidelidade – Companhia
de Seguros, SA, with a view to strengthening
capabilities and expanding the offer of insurance
through the banking channel (bancassurance) in
Mozambique. Under this partnership, the possibility
of which was provided for in the memorandum of
understanding signed between BCP and the Fosun
Group in November 2016, BIM and Fidelidade also
formalized the sale by BIM to Fidelidade of shares
representing 70% of the share capital and voting
rights of Seguradora Internacional de Moçambique,
SA, with BIM maintaining approximately 22% of its
share capital. BIM and Fidelidade also agreed call
and put options with a view to enabling Fidelidade
to acquire additional shares, and BIM's
shareholding, as a result of these options, may be
reduced to 9.9% of SIM's capital. Under the long-
term exclusive distribution agreement, BIM will
promote the distribution of SIM insurance through
the banking channel, continuing to provide its
customers with a wide range of competitive
insurance products, which is reinforced by the
partnership with Fidelidade, an Insurance Group of
reference.
In the 1st half of 2023, Bank Millennium concluded
the sale of 80% of Millennium Financial Services, as
part of the strategic partnership in the
bancassurance area.

2023 REPORT & ACCOUNTS |

|13
Governance

Banco Comercial Português, S.A. has a one-tier
management and supervision model, composed of a
Board of Directors (BD), which includes an
Executive Committee (EC) and an Audit Committee
composed of only non-executive directors. The
Company also has a Remuneration and Welfare
Board (RWB) and a Strategic Board.
In addition, the Group uses a Statutory Auditor and
an external auditing firm to audit the individual and
consolidated accounts of the Bank, elected at the
General Meeting.
The General Meeting is the highest governing body
of the company, representing all shareholders, and
its resolutions are binding for all when adopted
under the terms of law and the articles of
association. The General Meeting is responsible for:
• Electing and dismissing the Board, as well as the
members of the management and supervisory
bodies, and the RWB;
• Approving amendments to the articles of
association;
• Resolving on the annual management report and
accounts for the year and proposed appropriation of
profits;
• Resolving on matters submitted upon request of the
management and supervisory bodies;
• Resolving on all issues especially entrusted to it by
the law or articles of association, or on those not
included in the duties of other corporate bodies.
The BD is the governing body of the Bank with the
amplest powers of management and representation,
pursuant to the law and the articles of association.
Under the terms of the Bank's By-Laws, the Board is
made up of a minimum of 15 and a maximum of 19
members with and without executive functions,
elected by the General Meeting of Shareholders for
a period of four years, with re-election permitted.
As of December 31, 2023, the Board of Directors
was made up of 17 members, of which 15 were
elected at the General Meeting of Shareholders
held on May 4, 2022 and 2 were co-opted by the
Board of Directors on October 11, 2022, having the
co-option was ratified at the General Assembly held
on December 20, 2022, after authorization for the
exercise of functions by the ECB (on December 7).
Of the 17 members that make up the BD, 6 are
executive and 11 are non-executive, with 5
qualified as independent.
The BD began its functions on September 5, 2022
and appointed an EC, composed of six of its
members, with the Chief Executive Officer being
appointed by the General Meeting, with the two co-
opted members starting their duties on February 4,
2023. The BD has delegated to the EC the day-to-
day management of the Bank, which is assisted by
several committees and subcommittees in the
exercise of this management function, to which it
monitors certain relevant matters.
On January 5, 2024, non-independent non-
executive Director Xiao Xu Gu (Julia Gu) submitted
a letter of resignation from her position, taking
effect on February 29. Banco Comercial Português,
S.A. is in the process of identifying and selecting a
new non-executive member to join the Board of
Directors.
The supervision of the company is ensured by an
Audit Committee (AudC), elected by the General
Meeting of Shareholders, and composed of a
minimum of 3 and a maximum of 5 members,
elected together with the other administrators, and
the lists proposed for the BD must detail the
members who are intended to form part of the
Audit Committee and indicate the respective
President. AudC is made up of 3 non-executive
directors, the majority of whom are independent
members as well as its president and also includes
an alternate member.
The RWB and the Strategic Council have the
functions described in the By-Laws, with the latter
Council being a non-permanent body.
The Company Secretary and the Alternate Secretary
are appointed by the Bank's BD, and their term-of-
office matches that of the BD that appointed them.

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14 |
Corporate Governance Model

2023 REPORT & ACCOUNTS |

|15
Identification and composition of the Corporate Bodies and Committees from
the Board of Directors
The Board of Directors and its Committees currently have the following composition:

| Board of Directors (BD) | Executive Committee (EC) | Audit Committee (AudC) | Remuneration and Welfare Board (RWB) | Committee for Corporate Governance, Ethics and Sustainability (CCGES) | Committee for Nominations and Remunerations (CNR) | Committee for Risk Assessment (CRA)
Nuno Manuel da Silva Amado (Chairman of BD and of CGSES) |  |  |  |  |  |  |
Jorge Manuel Baptista Magalhães Correia (Vice- Chairman of BD and Member of RWB) |  |  |  |  |  |  |
Valter Rui Dias de Barros (Vice-Chairman of BD) |  |  |  |  |  |  |
Miguel Maya Dias Pinheiro (Vice- Chairman of BD) |  |  |  |  |  |  |
Ana Paula Alcobia Gray |  |  |  |  |  |  |
Cidália Maria da Mota Lopes (Chairman of AudC) |  |  |  |  |  |  |
Fernando da Costa Lima (Chairman of (CRA) |  |  |  |  |  |  |
João Nuno de Oliveira Jorge Palma |  |  |  |  |  |  |
Lingzi Yuan (Smilla Yuan) (Chairman of CNR) |  |  |  |  |  |  |
José Miguel Bensliman Schorcht da Silva Pessanha |  |  |  |  |  |  |
Lingjiang Xu |  |  |  |  |  |  |
Maria José Henriques Barreto de Matos de Campos |  |  |  |  |  |  |
Miguel de Campos Pereira de Bragança |  |  |  |  |  |  |
Rui Manuel da Silva Teixeira |  |  |  |  |  |  |
Xiao Xu Gu (Julia Gu)* |  |  |  |  |  |  |
Altina de Fátima Sebastian Gonzalez ** |  |  |  |  |  |  |
José Pedro Rivera Ferreira Malaquias |  |  |  |  |  |  |

* Director resigned from her position on January 5, 2024, taking effect on February 29. ** Substitute member of the Audit Committee.
The Remuneration and Welfare Board is chaired by José António Figueiredo Almaça and composed of the two
vice-presidents mentioned above.
The Strategic Council, as a consultative and non-permanent body, has a variable composition, with the
President and Vice-Presidents of the Board of Directors being inherent members.
The Board of the General Assembly has the following composition:
President: Pedro Rebelo de Sousa
Vice President: Octávio Castelo Paulo
Secretary of the Board: Company Secretary (Ana Moniz Macedo)

| 2023 REPORT & ACCOUNTS

16 |
Main events in 2023
During 2023 and under a challenging macroeconomic environment, the Bank kept its focus on supporting
households and companies.
BCP informed on December 18, 2023 that DBRS Morningstar rating agency 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 reflected 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’s adequate funding structure coupled with solid liquidity buffers.
Banco Comercial Português, S.A. announced on December 5, 2023, 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 (“Legal Regime of Covered Bonds”), 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
€12,500,000,000 (the “Programme”), was approved on the present date by the Portuguese Securities Commission
(Comissão do Mercado de Valores Mobiliários) (“CMVM”). Fitch Ratings has upgraded on January 17, 2023, BCP
Portuguese mortgage covered bonds to 'AA+' from 'A'.
BCP informed, on 4 December 2023, that it received the decision from the European Central Bank (ECB) 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 January 1, 2024. The minimum prudential requirements to be in force from January 2024 remained
unchanged compared to the requirements in force in 2023.
BCP, in that announcement, also informed the decision from Banco de Portugal on its capital buffer requirement
as “other systemically important institution” (O-SII).
Buffers include the conservation buffer (2.5%), the countercyclical buffer (0%) and the buffer for other
systemically important institutions (O-SII: 1.0%).
BCP informed that Moody’s 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’s reflected 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’s, 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’s 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.
BCP informed on November 17, 2023, 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.

2023 REPORT & ACCOUNTS |

|17
Banco Comercial Português, S.A. informs 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 informed that on November 13, 2023, 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 (“AT1”)
instrument, considering that following the said reduction, BCP´s 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.
On 25 September 2023, BCP 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 500 million euros, has 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.
Fitch Ratings upgraded on 21 September BCP's long-term senior unsecured debt ratings to Investment Grade. This
upgrade reflects the Fitch Ratings’ view that BCP’ 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
litigation 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.
S&P Global Ratings upgraded on 12 September BCP's senior unsecured debt ratings to Investment Grade. 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’s Polish operations and its impact on earnings in 2023 and 2024. The Outlook is Stable. S&P Global Ratings
also raised the ratings on BCP's Additional Tier 1 and Tier 2 instruments by two notches.
Banco Comercial Português, S.A. was subject on 28 July 2023 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). Banco Comercial Português, S.A. notes the announcements
made on July 28 by the EBA on the EU-wide stress test and fully acknowledges the outcomes of this exercise,
comprising 70 banks that together represent around 75% of total banking assets in the European Union. The 2023
EU-wide stress test does not contain a pass-fail threshold and instead is designed to be used as an important
source of information for the purposes of the Supervisory Review and Evaluation Process (SREP). The results will
assist competent authorities in assessing Banco Comercial Português, S.A. ability to meet applicable prudential
requirements under stressed scenarios. 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 Português, S.A. profits. When analysing the results, it
should be taken into account that the projections made under the adverse scenario incorporated a significant
increase in provisions associated with the legal risk related to credits indexed to Swiss Francs at Bank Millennium
in Poland. Considering the results of Banco Comercial Português, S.A, in the stress test, it should be highlighted
the following:
• 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.
• 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.
Millennium bcp and the European Investment Fund (EIF) signed a guarantee agreement worth 405 million euros
within the scope of InvestEU to support investment in the EU's main priorities. The new credit lines will facilitate
financing for Portuguese SMEs.
Millennium bcp was distinguished as climate leader in Europe by the Financial Times and Statista. For the third
consecutive year, the Bank is part of the “Europe’s Climate Leaders 2023” ranking prepared by the two
institutions.

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18 |
BCP was notified on 12 July 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 Moçambique and their respective
subsidiaries), from 1 January 2024 is of:
• 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
• 6.71% of the leverage ratio exposure measure ("LRE").
The Resolution Group centred in Portugal 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.
Banco Comercial Português, S.A. concluded on May 24, 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 being highlighted:
• Approval of the individual and consolidated Annual Report, the balance sheet and financial statements of 2022,
and the Corporate Governance Report, which includes a chapter on the remuneration of the management and
supervisory bodies, and the Sustainability Report, and the proposal for the appropriation of profit concerning the
2022 financial year.
• Approval of the updating of the policy for the remuneration of Members of the Management and Supervisory
Bodies and revoking the retirement regulation of the Executive Directors.
• Approval of the update of the policy for selection and appointment of the Statutory Auditor or Audit Firm and
the hiring of not prohibited non-audit services under the terms of the legislation in force.
S&P Global Ratings, DBRS and Moody's revised the Outlook from Stable to Positive on April 17th, May 24th and May
26th, respectively.
Fitch Ratings on March 17 upgraded BCP’s long-term deposits rating to ‘BBB-’ and the long-term Issuer Default
Rating to ‘BB+’, with a stable Outlook. BCP's ratings upgrade primarily reflect the bank’s improved asset quality,
the improvement in capitalisation and resilient pre-impairment profitability, due to a leading franchise in Portugal
and sound cost efficiency.
Bank Millennium S.A. on February 13 executed the agreement for the sale of 80% of the shares in Millennium
Financial Services sp. z o.o. and concluded also certain agreements concerning an exclusive insurance distribution
model, including a cooperation agreement and distribution and agency agreements. On 29 March 2023, Bank
Millennium S.A. informed the completion of the transaction resulting in the recognition of the correspondent
extraordinary positive financial result, in the first quarter of 2023, of 597 million Zlotys before taxes (127 million
euros).
AWARDS AND DISTINCTIONS
• Millennium bcp and ActivoBank were elected “Consumer Choice” in 2024. Millennium was distinguished in the
“Large Banks” and “Banking Apps” categories, respectively, and Activo Bank in the “Digital Banking” category.
Millennium bcp was distinguished for the fourth consecutive year while ActivoBank has been in leadership for six
years.
• Millennium bcp distinguished in the 2024 “Cinco Estrelas” (Five Stars) Awards in the category of Large Banks.
• Best Service in the treasury management category in Portugal by Euromoney magazine, within the scope of the
2023 Euromoney Cash Management Non-Financial Institutions Survey, which chooses the institutions that present
the best services to their Customers.
• Millennium bcp distinguished in the 2nd edition of the AERI-Iberian Equity Awards in the “Best IR Professional”
category.
• Millennium bcp was once again included in the Stoxx Europe 600 index, which is a reference for institutional
investors in the capital markets.
• Best Bank for Sustainable Finance in Portugal awarded by Global Finance magazine.

2023 REPORT & ACCOUNTS |

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• Leadership in the Inovadora COTEC Program for the third consecutive year with 54% market share.
• Millennium bcp was included for the fourth year in the Bloomberg Gender-Equality Index, remaining in the elite
group of companies, that worldwide, stand out for their implementation of policies and practices of gender
equality, diversity, and inclusion.
• Millennium bcp was distinguished as Local Market Member in Equity in the Euronext Lisbon Awards.
• Millennium bcp was named “Best Investment Bank” in Portugal by Global Finance.
• Millennium bcp was once again distinguished as the Best Bank in Marketing and Services on Social Networks (Best
Consumer Social Media Marketing and Services) in Portugal in 2023, by Global Finance magazine.
• Millennium bcp was once again distinguished as the Best Bank in Information Security and Fraud Management in
Portugal in 2023 - (The Best Consumer Information Security and Fraud Management in Portugal for 2023), by
Global Finance magazine.
• Millennium bcp distinguished as "The Best Consumer Lending in Portugal in 2023” by Global Finance magazine.
• Millennium bcp distinguished as the Best Bank in Portugal in the “Sustainable Finance Awards 2023” by Global
Finance magazine.
• Millennium bcp was named “Best Consumer Digital Bank” in Portugal, and the Millennium App also being
considered “Best Consumer Mobile Banking App” by Global Finance.
• Millennium App was distinguished with the “Product of the Year” and “Prémio Cinco Estrelas” awards, in the
“Banking Apps” category, a distinction awarded by Five Star Consulting Portugal and Consumer Choice.
• Millennium bcp is Europe’s “Best Private Bank for Self-Directed Investments” according to Professional Wealth
Management, a publication of the Financial Times Group, in the PWM Wealth Tech Awards 2023.
• Millennium bcp has won the APCC Contact Centers 2023 award in the category of Best Banking Contact Center in
Portugal.
• Millennium bcp has won award Marketeer in the category Banking and Finance.
• IziBizi software, the first invoicing and management software with Bank Account that merges the Cloudware
Business billing and management software with Millennium bcp's financial services and Open Banking API, was
distinguished at the “Fosun Group 2023 Semi Annual Awarding” with the “Most Innovative Product Award”. IziBizi
also won in the “Top Tech of the Future by a Bank” category of the PayTech Awards 2023.
• ActivoBank was named for the second consecutive time as “Powerful Brand” in the “Online Banking” category.
• Bank Millennium among the most trustworthy companies in the world in 2023.
• Bank Millennium is the Best Bank in Poland according to Newsweek's Friendly Bank ranking.
• Bank Millennium distinguished as “Best Bank in Poland” in 2023 by Global Finance.
• Bank Millennium was distinguished as the “Best Digital Bank” in Poland in 2023, by Global Finance magazine.
• Bank Millennium distinguished as the “Best Digital Bank” in Poland for SMEs ("The Best Bank for SMEs in Poland
for 2023”) by Global Finance magazine.
• Bank Millennium distinguished with the “Best Consumer Mobile App” in Poland 2023, by Global Finance
magazine.
• Bank Millennium's Contact Center was highlighted at the Polish Contact Center Awards 2023, having reached the
podium six times, in what is the biggest event in the sector, which recognises the best contact centers and best
customer service in Poland.
• Bank Millennium was in the Top 10 in the 17th edition of the Ranking of Responsible Companies. Bank Millennium
was once again among the best, occupying sixth position, in the prestigious list of the largest companies in
Poland evaluated for the quality of responsible management in accordance with ESG guidelines.
• Bank Millennium came in second place on the ranking list of best employers in the “Banking and Financial
Services” category in the 3rd edition of the Best Employers Poland 2023 ranking prepared by Forbes Poland and
Statista.
• Bank Millennium has been awarded the Golden Bank 2023 title for the best multi-channel service quality in the
Golden Banker 2023 ranking. This ranking, the largest in the banking sector in Poland, aims to identify the
banking institutions that offer the highest standards of service quality, provide the best products and carry out
activities that stand out from the competition.

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20 |
• Bank Millennium wins the CSR Golden Leaf from Polityka Weekly for its consistent activities for sustainability and
its measurable successes in limiting the consumption of resources.
• Bank Millennium has joined the United Nations Global Compact (UNGC) as a direct participant. UNGC is the
world's largest UN initiative for sustainable business. Accession to the UNGC means a commitment to comply
with and implement the Ten Principles of the Compact, covering four areas: human rights, work standards,
environmental protection and counteracting corruption.
• Millennium bim distinguished as “Best Bank in Mozambique” in 2023 by Global Finance.
• Millennium bim distinguished as “Best Private Bank” in Mozambique for the fourth year in a row.
• Millennium bim distinguished as "The Best Consumer Digital Bank for Innovation and Transformation in Africa for
2023" by Global Finance magazine.
• Millennium bim distinguished as “Best Consumer Digital Bank” in Mozambique in 2023 by Global Finance
magazine.
• Millennium bcp distinguished with “Best Consumer Mobile App” in Mozambique 2023 by Global Finance
magazine.
• Millennium bim distinguished as the “Best Digital Bank” in Mozambique in 2023 by Global Finance magazine.
SUBSEQUENT EVENTS
On March 12, 2024, S&P Global Ratings upgraded BCP's Outlook from Stable to Positive.
BCP (“Millennium bcp”) informed that on January 11, 2024 it has set the conditions for a new issue of Additional
Tier 1, in the amount of 400 million euros, 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%. The operation,
which generated strong market interest, followed a series of meetings held yesterday involving more than 60
investors. Demand, in the final terms of the issue, reached an amount exceeding 3 billion euros (more than 7
times the amount issued), with orders from more than 250 institutional investors.
On January 11, 2024, the EIB signs an agreement with Millennium bcp to provide 400 million euros in new loans to
Portuguese companies.
BCP informed, on January 5, 2024 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 on that day its resignation
to the position of non-executive member of the Board of Directors, effective from February 29, 2024. The Bank
informed 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.
BCP informed that it has decided to exercise its option to early redeem all of its Additional Tier 1 notes “Fixed
Rate Reset Perpetual Temporary Write Down Additional Tier 1 Capital Notes” (ISIN: PTBCPFOM0043), issued on 31
January 2019, in accordance with Condition 9.2 of the terms and conditions of the Notes. The early redemption of
the Notes shall take place on their first call date according with its terms and conditions, 31 January 2024, at
their outstanding principal amount together with accrued interest.

2023 REPORT & ACCOUNTS |

|21
BCP Share

In 2023, the return of global equity markets,
measured by the MSCI World index, was +23.1%
(+20.0% in euros).
During 2023, central banks continued to apply
more restrictive monetary policies. The Fed raised
interest rates by 100bp in 2023, totalling 525bp
since the start of the rate hike in March 2022 (from
0.25% to 5.25-5.5%). The ECB increased policy
rates by 200bps in 2023, for a total of 450bps in
the interest rate rise cycle (deposit rate went from
-0.5% in July 2022 to 4.0% in December 2023).
Global economic growth exceeded recession
expectations, with US economic expansion
exceeding estimates. In Europe, a recession was
avoided, but GDP growth fell short of
expectations, particularly in Germany. China
recovered less than expected in the context of
post-pandemic reopening and macroeconomic and
financial stimuli.
The global disinflation process gained traction in
2023, with inflation significantly slowing down in
the USA and Europe.
The year 2023 was also marked by the crisis of
regional banks in the USA (with the bankruptcy of
SVB and First Republic), with the Fed's intervention
being crucial, which allowed the instability
generated to be significantly reduced.
Credit Suisse's resolution, with the purchase of the
bank by UBS, for 3 billion USD, with investors in
AT1 bearing a large part of the investment losses
(17 billion USD), on March 19, 2023, was also a
relevant factor in 2023.
It should be highlighted the prolongation of the
war in Ukraine and the emergence of instability in
the Middle East with the outbreak of conflict
between Hamas and Israel.

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22 |
BCP SHARES INDICATORS

| Units | 2023 | 2022
ADJUSTED PRICES |  |  |
Maximum price | (€) | 0.3309 | 0.1982
Average price | (€) | 0.2379 | 0.1549
Minimum price | (€) | 0.1529 | 0.1218
Closing price | (€) | 0.2744 | 0.1464
SHARES AND EQUITY |  |  |
Number of ordinary shares (outstanding) | (M) | 15,114 | 15,114
Shareholder's Equity attributable to the group (1) | (M€) | 6,312 | 5,155
VALUE PER SHARE |  |  |
Adjusted net income (EPS) (2) | (€) | 0.054 | 0.010
Book value (3) | (€) | 0.418 | 0.341
MARKET INDICATORS |  |  |
Closing price to book value | (PBV) | 0.66 | 0.43
Market capitalisation (closing price) | (M€) | 4,147 | 2,213
LIQUIDITY |  |  |
Turnover | (M€) | 5,049 | 3,728
Average daily turnover | (M€) | 19.8 | 14.5
Volume | (M) | 21,351 | 23,717
Average daily volume | (M) | 83.7 | 92.3
Capital rotation (4) | (%) | 141.3% | 156.9%

(1) Includes Other Equity Instruments (400 million euros of AT1 in 2023 and 2022).
(2) Considering the average number of shares outstanding
(3) Considering the average number of shares minus the number of treasury shares in portfolio
(4) Total number of shares traded divided by the average number of shares issued in the period
Despite the geopolitical context, the economic slowdown and uncertainty about the path of inflation and
restrictive monetary policy measures, the performance of BCP's shares in 2023 reflected the improvement in
profitability, operational efficiency, and the continued reduction of NPE and the strong organic capital generation
capacity (CET1 at 15.4% at the end of December 2023).
In December, BCP reinstated the Stoxx Europe 600 index, after being excluded in the third quarter of 2019, thus
allowing gains in visibility, daily liquidity and market capitalization.
The positive evolution of BCP led analysts who regularly follow BCP to revise upwards their estimates regarding
the results generated by the Bank, which resulted in several upward revisions of target prices throughout the year.

2023 REPORT & ACCOUNTS |

|23
PERFORMANCE

Index | Change 2023
BCP share | 87.4%
Eurostoxx 600 Banks | 20.3%
PSI20 | 11.7%
IBEX 35 | 22.8%
CAC 40 | 16.5%
DAX XETRA | 20.3%
FTSE 100 | 3.8%
MIB FTSE | 28.0%
Dow Jones Indu Average | 13.7%
Nasdaq | 53.8%
S&P500 | 24.2%
Source: Euronext, Reuters, Bloomberg |

Liquidity
During 2023, 5,049 million euros in BCP shares were traded, which represented an average daily turnover of 19.8
million euros. In 2023, 21,351 million shares were traded, corresponding to an average daily volume of 83.7 million
shares. The capital turnover ratio stood at 141.3% of the average annual number of shares issued.
Follow-up with Investors
During 2023, the Bank participated in several events, having been present at 5 conferences (all in person) and 8
roadshows, 4 of which were held in person, through which it held more than two hundred meetings with investors, the
which reveals the interest in the Bank.
Indexes listing BCP shares
The BCP share is included in more than 50 national and international stock indices, including the Stoxx 600 Europe
Banks, Euronext 150, the PSI and the PSI All-Share Index GR.
Additionally, at the end of 2023, Millennium bcp was included in Standard Ethics' "European Banks Index" and, among
the 26 “STOXX Indices” of which it is part, the “EURO STOXX Banks ESG-X”, the “STOXX Europe 600 Banks ESG-X”, the
“EURO STOXX Total Market ESG-X” and the “STOXX Developed Markets Total Market ESG-X”.
Bank Millennium in Poland is also part of the “WIG-ESG” of the Warsaw Stock Exchange. In 2023, the BCP Group was
once again included, for the 4th consecutive year, in the Bloomberg Gender-Equality Index and the "Europe's Climate
Leaders 2023" ranking of the Financial Times and Statista, in Portugal and Poland, as one of the European companies
with the greatest progress in reducing GHG emissions.

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24 |
Material information announced to the market and impact on the share price
The following table summarizes the relevant facts directly related to Banco Comercial Português that occurred
during the year 2023, as well as the changes in the share price, both on the following day and in the 5 subsequent
days, and the relative evolution vis-à-vis the main national reference indices and European banking sector in the
periods mentioned.

Nr. | Date | Material Events | Chg. +1D | Chg. vs. PSI20 (1D) | Chg. vs. STOXX® Europe 600 Banks (1D) | Chg. +5D | Chg. vs PSI20 (5D) | Chg. vs STOXX® Europe 600 Banks (5D)
1 | 4/Jan | Banco Comercial Português, S.A. informs about calendar of events in 2023 | 5.2% | 5.0% | 4.2% | 8.7% | 7.0% | 7.2%
2 | 4/Jan | Banco Comercial Português, S.A. informs about significant items impacting 4th quarter 2022 financial results of Bank Millennium, S.A. | 5.2% | 5.0% | 4.2% | 8.7% | 7.0% | 7.2%
3 | 5/Jan | Banco Comercial Português, S.A. informs about notice of acquisition of securities | 1.2% | 0.7% | 0.4% | 8.5% | 5.8% | 6.9%
4 | 9/Jan | Banco Comercial Português, S.A. releases additional information about Restructuring Funds | 2.9% | 2.4% | 3.1% | 9.2% | 7.7% | 7.4%
5 | 31/Jan | Banco Comercial Português, S.A. informs about Bank Millennium (Poland) results in 2022 | 1.9% | 1.6% | 1.2% | 4.4% | 3.7% | 3.7%
6 | 13/Feb | Banco Comercial Português, S.A. informs about signing of conditional agreement concerning the sale of Millennium Financial Services sp. z.o.o. and strategic insurance cooperation | 3.5% | 3.6% | 3.1% | 4.4% | 2.2% | 3.2%
7 | 27/Feb | Millennium bcp Earnings release as at 31 December 2022 | 1.9% | 1.3% | 0.5% | 1.8% | 1.5% | 1.0%
8 | 17/Mar | Banco Comercial Português, S.A. informs about upgrade of deposits rating to Investment Grade and Long-Term Issuer Default Rating to 'BB+' by Fitch Ratings | 2.6% | 1.8% | 1.3% | 1.4% | 1.2% | 3.0%
9 | 21/Mar | Banco Comercial Português, S.A. informs about notice of acquisition of securities | -0.8% | -0.2% | -0.7% | -3.2% | -2.5% | 1.3%
10 | 5/Apr | Banco Comercial Português, S.A. informs about additional provisions for FX- denominated mortgage loans booked by Bank Millennium, S.A. | 2.4% | 1.8% | 0.7% | 5.7% | 4.6% | 3.2%
11 | 28/Apr | Banco Comercial Português, S.A. informs about Bank Millennium (Poland) results in Q1 2023 | -3.9% | -2.5% | -2.5% | -4.7% | -3.1% | -4.2%
12 | 15/May | Millennium bcp Earnings release as at 31 March 2023 | 3.7% | 3.4% | 4.3% | 2.4% | 4.0% | 1.4%

(Continues)

2023 REPORT & ACCOUNTS |

|25
(Continuation)

Nr. | Date | Material Events | Chg. +1D | Chg. vs. PSI20 (1D) | Chg. vs. STOXX® Europe 600 Banks (1D) | Chg. +5D | Chg. vs PSI20 (5D) | Chg. vs STOXX® Europe 600 Banks (5D)
13 | 24/May | Banco Comercial Português, S.A. informs about resolutions of the Annual General Meeting | -0.6% | 0.6% | -0.8% | -3.5% | 0.3% | -0.9%
14 | 16/Jun | Banco Comercial Português, S.A. informs about preliminary estimation of provisions against legal risk related to FX mortgage loans portfolio of Bank Millennium in 2Q 2023 | 1.0% | 1.6% | 1.0% | -5.3% | -1.8% | -1.9%
15 | 27/Jun | Banco Comercial Português, S.A. informs about the attribution of shares within the scope of the variable remuneration policy for Persons with Managing Responsibilities and Employees | 1.5% | 1.1% | 1.0% | 3.8% | 2.9% | 0.3%
16 | 29/Jun | Banco Comercial Português, S.A. informs about notice of acquisition of securities by Fidelidade | 0.4% | 0.0% | -0.8% | -0.9% | -0.4% | 0.2%
17 | 12/Jul | Banco Comercial Português, S.A. informs on notification by Banco de Portugal of its MREL requirements | 0.4% | -0.2% | -0.4% | 10.1% | 7.9% | 8.3%
18 | 26/Jul | Banco Comercial Português, S.A. informs about Bank Millennium (Poland) results in H1 2023 | 0.0% | 1.3% | -0.4% | -6.6% | -1.9% | -4.5%
19 | 27/Jul | Millennium bcp Earnings release as at 30 June 2023 | 1.1% | 1.5% | 0.8% | -4.8% | -1.6% | -3.1%
20 | 28/Jul | Banco Comercial Português, S.A. informs about 2023 EU-Wide Stress Test Results | -4.2% | -3.8% | -4.4% | -4.8% | -2.5% | -3.4%
21 | 1/Aug | Banco Comercial Português, S.A. informs about notice of sale of securities | -3.2% | -1.5% | -1.2% | -2.1% | -1.3% | 0.7%
22 | 4/Sep | Banco Comercial Português, S.A. informs about notice of acquisition of securities | -0.5% | 0.0% | -0.1% | -5.3% | -4.9% | -3.9%
23 | 12/Sep | Banco Comercial Português, S.A. informs about the upgrade to Investment Grade of senior debt ratings by S&P Global | -0.7% | -0.3% | -1.2% | -0.8% | -0.8% | -2.6%

(Continues)

| 2023 REPORT & ACCOUNTS

26 |
(Continuation)

Nr. | Date | Material Events | Chg. +1D | Chg. vs. PSI20 (1D) | Chg. vs. STOXX® Europe 600 Banks (1D) | Chg. +5D | Chg. vs PSI20 (5D) | Chg. vs STOXX® Europe 600 Banks (5D)
24 | 21/Sep | Banco Comercial Português, S.A. informs about the upgrade to Investment Grade of senior debt ratings by Fitch Ratings | 1.7% | 1.6% | 2.3% | 1.5% | 3.3% | 1.5%
25 | 25/Sep | Banco Comercial Português, S.A. informs about issue of senior preferred debt securities eligible for MREL | -2.7% | -2.4% | -2.5% | -0.9% | 0.0% | -1.0%
26 | 28/Sep | Banco Comercial Português, S.A. informs about notice of acquisition of securities | -0.7% | -1.3% | -0.9% | -0.6% | 2.5% | 1.3%
27 | 4/Oct | Banco Comercial Português, S.A. informs about estimated provisions against legal risk related to FX mortgage loans portfolio booked by Bank Millennium, S.A. in 3Q 2023 | 0.6% | -0.1% | 0.1% | 9.0% | 3.5% | 5.4%
28 | 10/Oct | Banco Comercial Português, S.A. informs about notice of acquisition of securities | 1.7% | 0.3% | 1.2% | 2.9% | 1.4% | 3.3%
29 | 27/Oct | Banco Comercial Português, S.A. informs about Bank Millennium (Poland) results in the first 9M 2023 | 1.3% | 1.2% | 1.2% | 2.7% | -0.3% | -0.4%
30 | 30/Oct | Millennium bcp Earnings release as at 30 September 2023 | 0.1% | -0.6% | -0.3% | -0.2% | -3.0% | -3.3%
31 | 13/Nov | Banco Comercial Português, S.A. informs about notice of sale of securities by Fidelidade | -0.7% | -1.3% | -1.7% | 1.6% | 1.2% | -0.9%
32 | 13/Nov | BCP S.A. informs about the ECB's authorization to exercise the early redemption option of the currently outstanding Additional Tier 1 ("AT1") instrument with an outstanding amount of 400 million euros | -0.7% | -1.3% | -1.7% | 1.6% | 1.2% | -0.9%
33 | 17/Nov | Banco Comercial Português, S.A. informs about notification from Banco de Portugal on the implementation of a reserve in own funds for sectoral systemic risk | 1.9% | 1.2% | 1.9% | 4.9% | 4.0% | 4.6%
34 | 22/Nov | Banco Comercial Português, S.A. informs about the upgrade of deposits and senior unsecured debt ratings by Moody’s | 2.2% | 1.7% | 1.5% | 5.7% | 3.2% | 4.6%
35 | 4/Dec | Banco Comercial Português, S.A. informs about minimum prudential requirements | -1.0% | -1.1% | -1.4% | -6.0% | -5.1% | -7.7%

(Continues)

2023 REPORT & ACCOUNTS |

|27
(Continuation)

Nr. | Date | Material Events | Chg. +1D | Chg. vs. PSI20 (1D) | Chg. vs. STOXX® Europe 600 Banks (1D) | Chg. +5D | Chg. vs PSI20 (5D) | Chg. vs STOXX® Europe 600 Banks (5D)
36 | 5/Dec | Banco Comercial Português, S.A. informs about conversion of its existing covered bonds programme into a covered bonds programme compliant with the Legal Regime of Covered Bonds | -0.5% | -1.0% | -1.4% | -7.6% | -5.3% | -8.3%
37 | 18/Dec | Banco Comercial Português, S.A. informs about the upgrade of senior unsecured debt and deposits ratings by DBRS Morningstar | -1.7% | -1.4% | -1.8% | -1.6% | -2.2% | -2.9%
38 | 28/Dec | Banco Comercial Português, S.A. informs about calendar of events in 2024 | 0.5% | 0.6% | 0.2% | 4.5% | 3.2% | 2.5%

The following chart depicts BCP's share price performance in 2023:
Dividend policy
The BCP Group's dividend policy takes into account in particular: (i) the promotion of conditions for sustainable
compliance with the capital ratios applicable to the Bank at any given time, as well as other applicable legal
provisions, including the limitations applicable at any given time that result from the calculation of the maximum
distributable amount; (ii) retention of own funds to promote consistency with the Risk Appetite Statement (RAS) and
with the results of the internal capital adequacy self-assessment process (ICAAP); and (iii) safeguarding an
appropriate safety margin over the values established by the regulator within the scope of its analysis and assessment
regarding the adequacy of strategies, processes, capital and liquidity, to the risks to which the Bank is exposed
(SREP). In the current context, it will naturally still be worth considering the guidance issued by the ECB mentioned
above.

| 2023 REPORT & ACCOUNTS

28 |
The decision on the application of profits for the year is the responsibility of the General Meeting, based on a
proposal from the Board of Directors.
Bearing in mind the permanent consideration of the Bank's capital needs to meet its strategic objectives, it is the
intention of the Board of Directors, in a context of macroeconomic stability, to re-establish a distribution of net
profits, determined in the individual accounts for each year, that goes to meeting the legitimate expectations of its
shareholders and that, in the medium term, it is in line with the best practices of the reference banking sector.
The Board of Directors will define the implications of these criteria in the maximum limit of prospective dividend
payout resulting from the dividend policy, as well as the respective application period, which must be evidenced in
the Bank's annual budgets.
Shareholder structure
According to information from Interbolsa, on December 31, 2023, the number of Shareholders of Banco Comercial
Português amounted to 129,765.
At the end of December 2023, there were two Shareholders with qualifying holdings holding more than 5% of the
Bank's share capital.

Shareholder structure | Number of Shareholders | % of share capital
INDIVIDUAL SHAREHOLDERS |  |
Group Employees | 1,824 | 0.30%
Other | 123,764 | 21.43%
COMPANIES* |  |
Institutional | 308 | 24.49%
Qualified Shareholders | 2 | 45.48%
Other companies | 3,867 | 8.30%
TOTAL | 129,765 | 100%

*Chiado (Luxembourg) S.à r.l. reported on January 23, 2024 that it held, on that date, 3,027,936,381 BCP shares, corresponding to 20.03% of the respective share capital
and voting rights. On December 31, 2023, Chiado (Luxembourg) S.à r.l. held 3,927. 436,381 BCP shares, corresponding to 25.99% of the share capital and voting rights.
Shareholders with more than 5 million shares represented 76.95% of the share capital.

Number of shares per Shareholder | Number of Shareholders | % of share capital
> 5,000,000 | 143 | 76.95%
500,000 a 4,999,999 | 1,166 | 8.91%
50,000 a 499,999 | 11,150 | 9.83%
5,000 a 49,999 | 32,985 | 3.82%
< 5,000 | 84,321 | 0.49%
TOTAL | 129,765 | 100%

2023 REPORT & ACCOUNTS |

|29
The Bank’s shareholding structure remained stable in terms of geographical distribution in 2023. Domestic
shareholders held 26.20% of the total shares of the Bank as of December 31, 2023.

| Nr. of Shares (%)
Portugal | 26.2%
China* | 26.0%
Africa | 19.7%
UK / EUA | 16.9%
Other | 11.2%
Total | 100%

*Chiado (Luxembourg) S.à r.l. reported on January 23, 2024 that it held, on that date, 3,027,936,381 BCP shares, corresponding to 20.03% of the respective share capital
and voting rights. On December 31, 2023, Chiado (Luxembourg) S.à r.l. held 3,927. 436,381 BCP shares, corresponding to 25.99% of the share capital and voting rights.

| 2023 REPORT & ACCOUNTS

30 |
Qualified Holdings

The following Shareholders held more than 5% of the share capital of Banco Comercial Português, S.A. as of
December 31, 2023:

31 December 2023
Shareholder |  | Nr. of shares | % of share capital | % of voting rights
Chiado (Luxembourg) S.à.r.l. (Fosun Group) |  | 3,927,436,381 | 25.99% | 25.99%
TOTAL FOR FOSUN GROUP |  | 3,927,436,381 | 25.99% | 25.99%
Sonangol - Sociedade Nacional de Combustíveis de Angola, EP |  | 2,946,353,914 | 19.49% | 19.49%
TOTAL FOR SONANGOL GROUP |  | 2,946,353,914 | 19.49% | 19.49%
Total of Qualified Shareholdings |  | 6,873,790,295 | 45.48% | 45.48%

Chiado (Luxembourg) S.à r.l. announced on January 23, 2024, that it held on that date, 3,027,936,381 BCP shares,
corresponding to 20.03% of the respective share capital and voting rights. On December 31, 2023, Chiado
(Luxembourg) S.à r.l. held 3,927. 436,381 BCP shares, corresponding to 25.99% of the share capital and voting
rights.

2023 REPORT & ACCOUNTS |

|31
i
Regulatory, economic and
financial system environment

Regulatory environment
The banking system proved overall resilient to the
turbulences faced in 2023, including the
tightening of financial conditions, the geo-
political tensions, the escalation of armed
conflicts and localized bank failures that lead to
frequent shifts in market confidence and added to
an already uncertain outlook. Regulatory policies
and supervisory actions focused on financial
stability, notwithstanding sounder solvency levels
and ample liquidity buffers held by banks, while
working on the regulatory frameworks
underpinning the Basel reform, ESG sustainability,
digital finance, and consumer protection, to name
a few. ECB’s supervisory priorities for 2023-25
were adjusted to cover the sectors most affected
by the consequences of the war in Ukraine and by
the macroeconomic environment, while also
addressing digitalisation and climate change.
Within this context, at the EU level in the domain
of prudential and crisis management, highlight to
the following initiatives:(i) the final agreement on
the revision of the Capital Requirements
Regulation and the Capital Requirements
Directive (final approval expected by Q2.24 to
enter into force Jan.25); (ii) the EBA’s EU-wide
bank stress test exercise which showed that
European banks remain resilient under an adverse
scenario and the thematic stress tests in 2024 on
climate and cyber resilience; (iii) several
regulatory pieces and proposals under the
European Commission’s Green Deal, including
disclosures requirements and ESG ratings (iv)
ongoing review of the bank crisis management
and deposit insurance framework, overall
recovery capacity and operationalization of
resolution plans.
On the AML front, the EU Council and Parliament
reached a political agreement on the new Anti-
Money Laundering Authority that, in an initial
phase, will supervise ca. 40 groups and entities in
the EU, and the provisional agreement on the AML
Directive (AMLD 6) and Regulation, commonly
referred as the EU 'single rulebook' on AML/CFT,
laying requirements on supervised entities, on
transparency of information and use of
anonymised financial instruments. In Portugal,
the Banco de Portugal's Notice No. 1/2023, which
sets out the ML/TF prevention obligations, has
entered into force within the scope of entities
that carry out activities with virtual assets.
On 24 May 2023, the European Commission
adopted the Retail Investment Strategy as part of
its capital markets union action plan. It revises
the existing rules set out in the Markets in
Financial Instruments Directive (MiFID II) – already
adopted by the European Parliament - the
Insurance Distribution Directive (IDD), the
Undertaking for Collective Investment in
Transferable Securities (UCITS) Directive, the
Alternative Investment Fund Managers Directive
(AIFMD), and the taking-up and pursuit of the
business of Insurance and Reinsurance Directive
(Solvency II), as well as amendments to the
Packaged Retail and Insurance-based Investment
Products (PRIIPs) Regulation.
The EU member states have until November 2025
to transpose the Consumer Credit Directive 2 to
protect consumers from credit card debt,
overdrafts and unsuitable loans, with extended
scope application and addressing new digital
finance services. Regulation (EU) 2023/1114 of
the European Parliament and the Council, of 31
May 2023, on markets in crypto-assets
(“Regulation MiCA”) aims at protecting consumers
against abuse and market manipulation on these
type of assets. The Directive concerning financial
services contracts concluded at a distance has
been adopted, establishing a level playing field
for financial services remotely provided, including
rules on information disclosure, pre-contractual
information obligations and rights of consumers.
On 28 June 2023, the European Commission
proposed revised rules on payments services in
the EU. The EC proposes to introduce a new
regulation and a new directive developing on
features such as strong Customer authentication,
verification procedures and Open Banking.
Relating to digital and operational resiliency, the
Regulation (EU) 2022/2554 of the European
Parliament and of the Council of 14 December
2022 ("DORA Regulation"), applicable from 17
January 2025, came into force in January 2023,
establishing requirements for the security of
network and information systems supporting the
operational processes of financial institutions.
The European Commission adopted a legislative
proposal that lays the groundwork for the legal
framework underpinning the digital euro and later
in the year the ECB’s Governing Council endorsed
the preparation phase of the digital euro project.

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32 |
In Portugal, the potential impact of rising interest
rates on households' financial capacity has
motivated specific consumer protection
regulations, such as Law No. 24/2023 of 29 May,
Law No. 19/2022 of 21 October and Decree-Law
no 91/2023, bringing new obligations for credit
institutions in the marketing of mortgage loans,
extending the services included in the minimum
banking services account, introducing new
restrictions on commissions, establishing
exceptional measures to temporarily fix the
instalment of mortgages, as well extending the
extraordinary interest subsidy. At the Macro
prudential level, further to the adjustment on
borrower based measures given the higher level of
interest rates, the countercyclical capital buffer
applicable to credit exposures to the domestic
non-financial private sector remained at 0% of the
total amount of exposures, whereas Banco de
Portugal decided for a 4% sectoral systemic risk
buffer applicable to domestic RRE exposures for
institutions using the internal ratings-based (IRB)
approach. This measure will apply from 1 October
2024 and will be reviewed at least every two
years.
The Poland’s banking system remains under
intense legislative pressure. The CHF
denominated mortgage loans legal risk remains a
key risk factor for the Polish banking sector,
heavily weighing on provisioning. The European
Court of Justice, regarding the event of the
annulment of a mortgage loan agreement,
decided that the EU law does not preclude, in the
event of the annulment of a mortgage loan
agreement vitiated by unfair terms, the
consumers from seeking compensation from the
bank but precludes banks from raising such
claims. On relief measures for households, the
credit holidays have now been extended into
2024, allowing borrowers to defer up to 4
instalments per year at no charge. The prudential
financial sector authority is assessing the
development of a long term financing
requirement for mortgages to mitigate the risk of
maturity mismatches. The countercyclical capital
buffer remains at 0%.
In May 2022, the Polish government announced
that WIBOR would be replaced by a different
(lower) rate from 1 January 2023. In June 2022, a
Working Group was established, including market
participants and competent authorities, with the
objective to introduce a new interest rate
benchmark. The WIRON index has been selected
and originally a planned cessation of WIBOR for
December 2024 was envisaged. However, in
October 2023, a decision was made to delay such
cessation event until the end of 2027, providing
additional time for market participants to prepare
for the transition.
In Mozambique, the Banco de Moçambique (BM),
early 2023, sharply raised the reserve
requirement ratios for domestic and foreign
currency liabilities to support the absorption of
excess liquidity but at the beginning 2024 it has
cut rates and mentioned entering into a sustained
cycle of less restrictive monetary policy. On the
Macro prudential front, it maintained the
classification of Millennium bim as a Domestic
Systemically Important Institution and kept the
conservation buffers for systemically important
and quasi-systemically important domestic banks
unchanged at 2.0% and 1.0%, respectively.
Meanwhile, BM is updating the banking system’s
“rule book” and supervisory practices, including
the BM’s organic law. Such review comprises
initiatives on payments systems, bank accounts,
crisis management (recovery plans, resolution
planning, deposit guarantees), central credit
registers, potential transition to Basel III, foreign
exchange transactions, cybersecurity risks and
plans to address AML/CFT issues. On the climate
risk front, authorities have been keen on
strengthening the institutional frameworks for
managing natural resources and prevent and
recover from natural disasters.

2023 REPORT & ACCOUNTS |

|33
Economic environment
Global Economic Environment
According to the International Monetary Fund
(IMF), in 2023, the world economy is expected to
have slowed down from 3.5% to 3.1%. This
evolution reflects divergent performances among
the main economies, with the acceleration of the
United States (US) economy (from 1.9% to 2.5%)
contrasting with the sharp slowdown of the euro
area (from 3.4% to 0.5%) and a moderate
expansion of the Chinese economy.
In 2024, the effects associated with the
restrictiveness of monetary policy and the
reduction of fiscal stimulus measures that were in
place in 2023 are expected to contribute to the
maintenance of a global GDP growth rate of 3.1%,
which corresponds to a historically low level. The
risks to this projection are tilted to the downside
and relate mainly to the possibility of worsening
geopolitical tensions.
Global Financial Markets
In financial markets, 2023 was characterised by
an environment of higher optimism, supported by
the resilience of the US economy, alongside a
decrease in global inflation, which was
particularly noticeable in the second half of the
year. In this context, the main central banks
announced the end of the interest rate hike cycle
initiated in 2022, with the reference interest
rates stabilising at 5.50% in the US and at 4.50% in
the euro area, from July and September 2023
onwards, respectively.
The main global equity indices recorded
significant valuations, with the S&P 500 index in
the US rising by more than 20%. In turn, the
Germany and US government bond yields rose,
particularly in the third quarter of the year. The
more favourable environment was reflected in the
performance of emerging market asset classes,
albeit to a less magnitude, and in a reduction of
the risk premia of corporate debt, as well as of
euro area periphery sovereign debt, namely in
Portugal and Italy. On the foreign-exchange front,
there was a slight appreciation of the Euro against
the US dollar.
Concerning the Euribor interest rates, the
expectations of a less restrictive monetary policy
during 2024 contributed to the six and twelve
months Euribor interest rates starting a downward
trajectory in the last quarter of 2023, while the
three-month interest rates remained relatively
stable.
The Portuguese equity index benefited from the
positive evolution of international financial
markets and recorded a valuation of around 12%
in 2023.
Outlook for the Portuguese Economy
In 2023, GDP grew by 2.3%, slightly above the
forecasts of the main domestic and international
institutions. The positive performance of the
Portuguese economy resulted from a strong
contribution of exports in the first half of the
year, driven by the dynamism of the tourism
sector. In the last quarter of the year, a
significant acceleration of private consumption
added to GDP growth, supported by the increase
in real household disposable income, in a context
of a lower inflation rate and expectations of
decreasing financing costs.
In 2024, Banco de Portugal expects Portuguese
GDP to record a more moderate growth (1.2%),
hindered by a slowdown in exports, after the
strong growth observed in the previous year.
Regarding inflation rate, it is expected to
continue a downward trend, decreasing from 5.3%
in 2023 to 2.9% in 2024.
The favourable performance of economic activity
contributed to a decrease in the ratio of public
debt as a percentage of GDP, from 112.4% in 2022
to 99% in 2023, which corresponds to the lowest

| 2023 REPORT & ACCOUNTS

34 |
value since 2010. Regarding external
indebtedness, it is worth noting that the current
account registered a historical maximum,
ascending to 1.3% of GDP. Against this
background, the main rating agencies improved
the rating of the Portuguese Republic to a grade
of "A".
International Operations
In Poland, economic activity slowed down in 2023,
from 4.9% to 0.2%, penalised by the weakness of
domestic demand in the first half of the year, in a
context of high inflationary pressures and
increased restrictiveness of monetary policy. In
the second semester, the decline in the inflation
rate, from a peak of 18.4% in February to 6.2% in
December 2023, led to a decrease in the central
bank's reference interest rate, from 6.75% in
August to 5.75% in October 2023. Over the year,
the Zloty appreciated, mainly in the fourth
quarter.
The rise in real household disposable income,
which contributed to a recovery of domestic
demand in the second half of the year, should
continue to support economic activity in the short
run. In this context, the IMF forecasts a GDP
growth rate of 2.8% in 2024.
In Mozambique, GDP growth accelerated in 2023,
supported by the positive evolution of the
extractive industry, particularly of natural gas
production. In 2024, the economy is expected to
maintain robust growth levels (5.0%). Despite the
decrease in the inflation rate during 2023, the
central bank kept its reference interest rate
unchanged at 17.25%. In the foreign exchange
market, it is worth noting the stability of the
Metical throughout the year.
In 2023, the Angolan economy is expected to have
registered a slowdown, from 3.0% to 1.3%, driven
by the contraction of the oil sector's activity,
which hindered the evolution of the Kwanza. In
2024, the IMF projects an acceleration of GDP to
3.3%.

GROSS DOMESTIC PRODUCT |  |  |  |  |
Annual growth rate (in %) |  |  |  |  |  |
|  |  | 2021 | 2022 | 2023 | 2024 | 2025
EUROPEAN UNION |  | 5.9 | 3.6 | 0.5 | 1.2 | 1.9
Portugal |  |  | 5.5 | 6.7 | 2.3 | 1.5 | 2.2
Poland |  |  | 6.9 | 5.3 | 0.2 | 2.8 | 3.2
SUB-SAHARAN AFRICA |  | 4.7 | 4.0 | 3.3 | 3.8 | 4.1
Angola |  |  | 1.2 | 3.0 | 1.3 | 3.3 | 3.4
Mozambique |  |  | 2.4 | 4.4 | 6.0 | 5.0 | 5.0
Source: National Statistics Institutes. IMF, January 2024 for the EU, Poland and Sub-Saharan Africa. IMF, October 2023 for Portugal and Angola. IMF, January 2024 for Mozambique (Country Report no. 24/8).
| Estimates |  |  |  |  |  |

2023 REPORT & ACCOUNTS |

|35
Financial system
Inflation and Central Banks were the main
protagonists of 2023. The year was also marked by
the intensification of geopolitical risks due to the
continuing conflict in Ukraine and the new Israel-
Hamas conflict, with growing fears of it spreading
to the whole Middle East region and with
unpredictable political, social, economic, and
financial consequences. Fossil fuel production and
exports have not been directly affected, but they
did trigger a rise in energy prices and once again
undermined the confidence of households and
companies, thereby affecting the economic
recovery. Still, economic growth in the Euro-Zone
was positive in 2023. The ECB continued the
normalisation of monetary policy as a priority to
ensure that inflation returns to the 2% target in the
medium-term. Though decelerating, inflation levels
remained high in 2023. In the last quarter of the
year, the ECB signalled the end of the interest rate
hiking cycle started in 2022, but deemed it
premature to discuss interest rate cuts. Within the
scope of the PEPP (‘Pandemic Emergency Purchase
Programme’), the ECB announced that it intended
to reduce the portfolio over the second half of 2024
and discontinue reinvestments at the end of 2024,
noting that the current monetary policy instruments
will continue to provide liquidity support to the
Euro-Zone financial system and to preserve the
regular transmission of monetary policy.
The financial sector in 2023 was particularly
affected by the turmoil experienced in the US
during the first half of the year due to the collapse
of several regional banks (e.g. SVB, Signature Bank,
First Republic Bank, Silvergate) and the ratings
downgrade of several banks due to the increase of
liquidity risk. The situation experienced at Credit
Suisse, where material weaknesses in the financial
reporting control systems culminated in its merger
with UBS, one of the measures implemented in that
process being the write-off of its outstanding AT1
instruments, generated additional concerns in the
sector. The regulatory framework in the financial
sector remains very demanding, with ad-hoc
reporting intensifying, along with legislative
initiatives in each country (e.g. legal restrictions on
retail commissions or sector-specific levies).
Despite the current context, the results of the ‘EU-
wide stress test’ carried out by the EBA in 2023
have raised confidence levels in the European
financial sector by revealing that banks remain
resilient in adverse economic and financial
scenarios.
In a still very uncertain economic context, the
Portuguese banking system posted healthy levels of
profitability, albeit based on comparatively high
interest rate levels (which may not prevail in the
short/medium term, given the prospect of a less
restrictive monetary stance), as well as adequate
management of operating costs and of asset risk.
The evolution and performance of the banking
system continued to be affected by demanding and
costly supervision and regulation (e.g. contributions
to the European and National Resolution Funds and
contributions to the Banking Sector, in the latter
two cases at a clear disadvantage compared to
European peers). The Portuguese banking system
continues to show strength both in terms of capital
and liquidity, and improved asset quality indicators,
reflecting the efforts made in recent years to
reduce NPE and to raise loan loss coverage levels.
This performance is also reflected in the
generalised improvement in the ratings by the main
agencies of Portuguese banks. After successive
upgrades, reflecting the Bank’s normalisation, BCP
is again ‘investment grade’ in the four main rating
agencies (DBRS, Fitch, Moody's and S&P).
The performance and evolution of the Portuguese
banking system will continue to be influenced,
among other factors, by the level of
implementation of the Recovery and Resilience Plan
(‘PRR’), created to mitigate the negative economic
impacts of the Covid-19 pandemic and now also
those resulting from the geopolitical context (e.g.
invasion of Ukraine by Russia, the Israel-Hamas
conflict, US-China tensions, the Middle East,
globalisation), and also by the evolution of
disposable income and of consumption behaviour
and savings profile of households, on the back of
rising inflation and interest rates, even when
mitigated by income support from social security
and from employers and by resilient employment
levels.
After Banks have adjusted their business and
customer relationship models, making them more
digital, proximate, simple, safe and sustainable,
improving the overall quality of service provided to
increasingly demanding customers, investment in
new ways of operating will continue to be intense,
particularly in Artificial Intelligence and the way it
is already changing (and will continue to change)
the way the financial sector operates at a global
level. The persisting absence of a single regulatory
framework applying to all entities that can operate
in specific business segments, which would ensure a
level playing field, will continue to force the
banking system to maintain its focus on optimised
efficiency levels in order to mitigate the impact of
the loss of business and revenues to unregulated
non-bank players and to continue adapting their
business models to the new environment.
Compliance risk (associated, for example, with
money laundering and the financing of illicit
activities, e.g. terrorism) and cybersecurity risk
have required enhanced investment in appropriate
operating and technological risk assessment and
control policies, as well as in IT, and particularly
data security systems and in risk control
frameworks, together with the integration of ESG
requirements (Environmental, Social & Governance)
in daily management, so as to attain a more

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36 |
resilient response of the financial system to the
current and future economic context.

2023 REPORT & ACCOUNTS |

|37
Business Model

Nature of operations and main
activities
The Group provides a wide variety of banking
services and financial activities in Portugal and
abroad, where it is present in the following
markets: Poland, Mozambique, Angola (through its
associate BMA) and China (Macao). All its banking
operations develop their activity under the
Millennium brand. The Group also ensures its
international presence through representation
offices and/or commercial protocols.
The Bank offers a vast range of financial products
and services: current accounts, payment systems,
savings and investment products, private banking,
asset management and investment banking,
including mortgage loans, personal loans,
commercial banking, leasing, factoring and
insurance, among others. The back-office
operations for the distribution network are
integrated to benefit from economies of scale.
In Portugal, Millennium bcp is focused on the
retail and companies markets, providing services
to its Customers in a segmented manner. The
Bank makes products available to Customers
through its network of branches, offering a wide
range of products and services.
Distinctive factors of the business
model
Largest private sector banking
institution
BCP is the largest private banking institution in
terms of business volume in Portugal, assuming a
leading and prominent position in various
financial products and services as well as
different market segments, with its activity based
on a modern branch network with wide coverage
at a national level. In addition, the Bank has
remote banking channels (banking service by
telephone, Mobile Banking and Internet), which
act as distribution points for its financial products
and services.
The activity in the domestic market focuses on
Retail Banking and Companies, which is
segmented in order to best serve Customer needs,
through a value proposition based on innovation
and speed, targeting Mass-market Customers, and
through the innovation and customized
management of service for Prestige, Business,
Companies, Corporate and Large Corporate
Customers. Retail Banking is also developed
through ActivoBank, a bank aimed specifically at
Customers who are young in spirit, intensive users
of new technologies and prefer a banking
relationship based on simplicity and offering
innovative products and services.
At the end of December 2023, Millennium bcp
continued to be the largest Portuguese privately-
owned bank on business volumes and with a
relevant position in the countries where it
operates.
On 31 December 2023, operations in Portugal
accounted for 66% of total assets, 68% of total
loans to Customers (gross) and 70% of total
customer funds. The Bank had over 2.7 million
active Customers and market shares of 16.8% of
loans to Customers and 19.0% of customer
deposits.
International presence as a platform
for growth
At the end of December 2023, Millennium bcp had
an international presence throughout the world
through its banking operations, representative
offices and/or commercial protocols, serving over
6.7 million active Customers.
In Poland, Bank Millennium has a well distributed
network of branches, supported by a modern
multi-channel infrastructure, a service quality and
with high brand recognition.
In December 2023, Bank Millennium had a market
share of 5.7% in loans to Customers and of 5.6% in
deposits.
Concerning the operations in Africa, Millennium
bcp operates through Millennium bim, a universal
bank that has been operating since 1995 in
Mozambique, where it has about 1.2 million
Active Customers and is the reference bank in this
country, with market shares of 15.1% in loans and
advances to Customers and of 23.2% in deposits,
in the end of 2023. Millennium bim is a highly
reputed brand in the Mozambican market,
associated with innovation, strong penetration in
terms of electronic banking and exceptional
capacity to attract new Customers, as well as
being a reference in terms of profitability.
On 22 April 2016, the deed of the merger of
Banco Millennium Angola, S.A. with Banco Privado
Atlântico, S.A. was signed. The bank resulting
from the merger is an associate of Banco
Comercial Português.

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38 |
The Group also operates in the Far East since
1993. The activity of the existing branch in Macau
was expanded in 2010, through the attribution of
a full license (onshore) aimed at establishing an
international platform for business operations
between Europe, China and Portuguese-speaking
African countries.
The Bank also has 6 representation offices (1 in
the United Kingdom, 2 in Switzerland, 2 in Brazil
and 1 in China, in Guangzhou) and 1 commercial
protocol (France).
Growth based on digital/mobile
banking
Since its incorporation, the Bank has been
recognized by the innovation. The Bank was the
first in Portugal to introduce specific innovative
concepts and products, including direct marketing
methods, branch formats based on Customer
profiles, salary accounts, simplified branches
("NovaRede"), telephone banking services,
through Banco 7, which later became the first
online banking services platform, health insurance
(Médis) and direct insurance, and a website
dedicated to individual Customers and corporate
banking. The Bank was also a pioneer in the
launching of a new Internet Banking concept,
based on the ActivoBank platform, which provides
a simplified service to the Customer, including
the opening of a current account using Mobile
Banking solutions.
In 2023, sales made through digital channels
represented 82% of the Bank's total sales, an
increase of 4p.p. compared to 2022. The Bank
continued the development plan for a digital
experience focused on mobile, with the
application of an increasingly personalized and
targeted communication strategy with Customers,
highlighting the greater convenience of the
products and services available on the Millennium
App and seeking always simplifying the Customer's
day-to-day life.
Throughout the year, new features were launched
in the personal credit journey on the App, with a
strong impact on the user experience and the
procedural level, highlighting the development of
automatic reading of proof of income, thus
making the journey even faster and more
automated.
The placement of Credit Cards on the App
represented 87% of digital card sales in 2023. A
new journey for ordering and issuing credit, debit
and prepaid cards was also launched, with the
digital version available for immediate use.
In Savings constitutions and reinforcements, there
was significant growth compared to December
2022 in the number of transactions, with the App
representing more than 90% of the total.
In terms of investments, the significant weight of
digital continued to be maintained in most
products sold on these channels: 62% of
Investment Fund subscriptions, 93% of Millennium
bcp Stock Exchange Certificate subscriptions and
97% of Stock Exchange Orders were placed on
digital in 2023.
A new Automated Investment solution was also
launched in 2023, which allows the Customer to
define their investment profile, with their
investment management being ensured by the
solution itself.
In the online trading business, the weight of the
MTrader platform stands out, with 79% of orders
placed, with around 9,600 new additions recorded
in 2023.
In Risk Insurance, the Bank ended the year with
digital sales representing 54% (+11 percentage
points compared to December 2022). Following
the trend of growing Customer demand for
products related to their protection, the Bank
made Móbis car insurance available on the App,
which allows Customers to simulate and subscribe
online, and protection insurance for pet dogs and
cats -Pétis- with simulation and subscription also
online.
Customer-oriented relationship model
Continuing with a strategy of proximity and the
provision of products and solutions with an impact
on Customers' lives, the Bank developed a
permanent communication trough Campaigns such
as Housing Credit - with the "offer" of Spread 0;
Payroll Domiciliation – with 10% cashback on
utilities and also offering “Getaways in Portugal”.
Also noteworthy is the launch of “Let's GO” – an
integrated solution which agregates several
products for young people aged 0 to 17; the “M
Vantagem+” add-on, assistance insurance for
Customers between 55 and 90 years old, who have
an integrated solution; along with strengthening
communication with University students, with the
redefinition of the UNNI offer; and with the
dynamization of Digital within the Diaspora
universe.
In the Business segment, Millennium was
recognized as the “Bank of Companies”. In 2023,
the Factoring & Confirming Campaigns; Portugal
2030; COTEC Innovative Status; "PME Líder" and
online opening of corporate accounts provide
relationships, trust and presence with the Bank's
corporate customers.
The holding of Millennium Talks in several
national districts made it possible to attract and
promote the discussion of strategic themes
fundamental to Portuguese business development.

2023 REPORT & ACCOUNTS |

|39
The organization of another edition of the
Millennium Estoril Open allowed the Bank to
undertake brand activation actions with
Customers and non-Customers. Still in the area of
sport, 2023 was marked by the renewal of
sponsorship of the WSL Surfing competitions and
the support for professional athletes who are the
maximum expression of talent, dedication and
excellence in their activities – João Sousa in
Tennis, Teresa Bonvalot in Surfing and Marta Paço
in adapted Surf – which motivated the Bank to
launch the “Ambassadors” institutional campaign.
The Bank kept its support to Millennium Festival
in Largo, which this year edition allowed the Bank
to strengthen its role as patron of the “Território"
program (a platform for young dancers to begin
their careers), demonstrating the message of
commitment of BCP with art and with a focus on
talent, making this project an example of its
values and principles.
Millennium bcp's continuous communication
efforts had a direct impact on public recognition.
In 2023, the Bank won the “Consumer Choice”
and “Five Star” awards in the “Large Banks” and
“Banking Apps” categories; the Millennium bcp
brand won the Marketeer award in the “Banking
and Finance” category; the “Payroll
Domiciliation” campaign won the Bronze Efficacy
Award in the “Financial Services and Insurance”
category, making clear the Bank’s value,
preponderance and relevance in a market that is
constantly changing, dynamism and demanding.
Also according to BASEF's 2023 annual report,
Millennium bcp is a leader in Service Satisfaction.
Business Model Sustainability
Millennium bcp, with the aim of strengthening its
proposal and performance in matters of
Sustainability and responsible finance, in 2023
continued to lead an accelerated transformative
dynamic of adapting to new ESG (Environmental,
Social and Governance) requirements that
allowed it to respond to the needs of its
Customers, to the expectations of supervisors
and, in general, to the ambitions of Stakeholders
in these areas of activity.
The Bank has, in this context and within the
framework of its governance and decision-making
model, a Committee of the Board of Directors for
the topics of Corporate Governance, Ethics and
Sustainability, a Sustainability Committee
dependent on the Executive Committee and led
by the CEO and a Sustainability Master Plan, a
management instrument that coherently brings
together the multidisciplinary actions to be
developed within the scope of ESG dimensions
across the operations integrated into the BCP
Group.
Millennium bcp's intervention is thus divided into
three fundamental axes: (i) Environmental,
aiming to implement measures that promote a
fair and inclusive transition to decarbonized
economic development models, including the
incorporation of the climate dimension into the
Bank's risk models and in the commercial offering
of solutions, products and services; (ii) Social,
which ensures and promotes, in conjunction with
the Millennium bcp Foundation, involvement with
the external and internal communities in the
establishment of lasting relationships of proximity
and cooperation and in the creation of shared
value; and (iii) Corporate governance, promoting
the integration of Sustainability principles in the
Bank's decision-making and management
processes and in the definition of its value
proposition.
This alignment is central to Sustainability at
Millennium bcp, and organizations in general,
remaining a privileged means of determining the
social and environmental impact of the activity
carried out and the expected corporate
performance in these dimensions. The Bank is
aware of the competitive, reputational and
business advantage of incorporating
environmental, social and governance factors,
opportunities and risks into decision-making
processes and reflecting them in the offering of
solutions, products and services, a conviction that
clearly results from the inclusion of Sustainability
as one of the structuring vectors of the Strategic
Plan "Overcoming 24", a document that
summarizes Millennium bcp's vision, objectives
and value proposition for the three-year period
2021-2024.

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40 |
The deepening of a Responsible Business culture
that promotes the creation of wealth and its fair
distribution, and positively influences the
organization's long-term value proposition, in
balance with the well-being of people, the
company and the communities in which is inserted
and with respect for the preservation of natural
resources, the climate and the environment,
constitute the essence of the Sustainability
strategy, policies and practices defined and
implemented by the BCP Group in all its
geographies.

2023 REPORT & ACCOUNTS |

|41
Millennium network

| 2023 REPORT & ACCOUNTS

42 |
Financial information

2023 REPORT & ACCOUNTS |

|43
Results and Balance Sheet

The consolidated Financial Statements were prepared under the terms of Regulation (EC) 1606/2002, of 19
July (in the version in force), and in accordance with the reporting model determined by the Bank of
Portugal (Bank of Portugal Notice 5/2005, in the version in force), following the transposition into Portuguese
law of Directive 2003/51/EC, of 18 June, of the European Parliament and Council in the version currently in
force.
To provide a better reading of the evolution of the Group’s financial situation and to ensure comparability
with the information from previous periods, a set of concepts are described in this analysis that reflect the
management criteria adopted by the Group in the preparation of the financial information, whose accounting
correspondence is presented in the glossary and throughout the document, whenever applicable.
Taking into the account that the Group owns 49% of Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A.
(Mbcp Ageas), being accounted for under the equity method, as Investments in associated companies and
that on 1 January 2023 Mbcp Ageas adopted simultaneously IFRS9 - Financial Instruments and IFRS17 -
Insurance Contracts, whose initial adoption requires comparative information, the consolidated accounts
were restated. In fact, IFRS 17 replaces IFRS 4 - "Insurance Contracts" being 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 this sense, Mbcp Ageas made the transition
exercise on 1 January 2022. The estimated impacts of the transition to IFRS 17 represent a reduction in the
Equity of Mbcp Ageas, partially offset by the positive impact resulting from the adoption of IFRS9. The
impacts resulting from the implementation of IFRS 17 by Mbcp Ageas led to the restatement of the accounts
of the Group referring to 2022, as detailed in note 59. Adoption of IFRS 17 - Insurance Contracts and IFRS9 -
Financial instruments by Millenniumbcp Ageas Group Segurador, SGPS, S.A.
During 2023, some accounting reclassifications were carried out, in order to improve the quality of the
information reported, namely regarding net commissions and operating costs. The historical amounts of such
items are presented considering these reclassifications with the purpose of ensuring their comparability. The
total amount of each heading disclosed in previous periods remains unchanged compared to those published
in previous periods.
In 2023, with the exception of the situations previously mentioned, no other changes were introduced in the
way information regarding previous financial years was presented.
On 13 February 2023, Bank Millennium signed an agreement for the sale of 80% of the shares in Millennium
Financial Services sp. z o.o. to Towarzystwo Ubezpieczeń na Życie Europa S.A. which acquires 72% of that
company shares and Towarzystwo Ubezpieczeń Europa S.A. which acquires 8%. Bank Millennium concluded
also with the buyers and with Millennium Financial Services sp. z o.o. certain agreements concerning
exclusive insurance distribution model, including a cooperation agreement, distribution agreements and
agency agreements. The strategic cooperation provides for long term (10 years) bancassurance partnership in
relation to specified insurance products linked to loans offered by Bank Millennium. On 29 March 2023, the
transaction was concluded with the transfer of 80% of the shares of Millennium Financial Services sp. z o.o.,
as well as with the payment of the price for the shares to Bank Millennium S.A., resulting in the recognition
of the corresponding positive financial result and triggering the commencement of the Strategic Insurance
Cooperation between the Bank and the buyers, as described above.
The macroeconomic context observed in 2023 had several repercussions on the financial statements of the
Group, including the impacts resulting from the persistence of high levels of inflation and the evolution of
interest rates.
In fact, the generalised increase in prices had an impact on both an increase in other administrative costs
and an increase in staff costs, resulting from salary updates, in the three geographies in which the Bank
operates.
Although relatively low unemployment rates have mitigated the extent of the impact of inflation on
household disposable income and simultaneously on credit defaults, rising prices have caused a change in
consumption and savings patterns.

| 2023 REPORT & ACCOUNTS

44 |
Additionally, the evolution of interest rates led to an allocation of disposable income or use of savings, either
to respond to the increase in credit instalments or loans early repayments. In this context, there is a
temporary suspension of early repayment commissions, introduced by Decree-Law 80-A/2022, of 25
November, extended until the end of 2024, by Decree-Law 91/2023, of 11 October, within the framework of
legislative measures aimed at mitigating the impact of rising interest rates. On the other hand, as a
consequence of the increase in interest rates, there was also a decrease in the demand for new credit, both
by individuals and companies, particularly for loans for investment.
The evolution of inflation and interest rates is likely to affect the financial position of families and
companies more exposed to those variables. The Bank has in place credit monitoring processes, with the aim
of identifying and closely monitoring Customers potentially more affected by the prevailing macroeconomic
context, anticipating possible difficulties in fulfilling their commitments and defining strategies adjusted to
the specificities of each Customer or group of Customers. Despite these effects, in 2023 there was a
reduction in the cost of risk and non-performing exposures and an increase in the coverage of these
exposures by impairments.
In addition to the impact of the evolution of interest rates on the reduction in the volumes of deposits and
loans, it is important to mention the increase in the net interest income, resulting from the higher income
generated by the credit and securities portfolios, which more than offset the higher costs incurred with
customer deposits.
The impacts mentioned above are mentioned/described in this chapter under the respective headings,
namely in the analysis of net interest income, operating costs, credit and securities portfolios and customer
funds. The credit monitoring procedures are referred to in the Risk Management chapter, as well as in the
notes to the consolidated accounts, more specifically in note 54. Risk Management. The aforementioned
chapter details the interest rate risk monitoring procedures.
The consolidated net income of Millennium bcp amounted to 856 million euros in 2023, showing a very
significant growth compared to the 197 million euros recorded in the previous year, driving return on equity
(ROE) of the Group to increase from 3.9% to 16.0% in the last year.
The 23.1% increase recorded in core income, from 2,922 million euros in 2022 to 3,597 million euros in 2023,
contributed to a large extent to this performance, resulting from the 31.4% growth recorded in net interest
income.
The extraordinary gain of 139 million euros associated with the sale, by Bank Millennium, of 80% of the
shares of Millennium Financial Services sp. z o.o., within the scope of the strategic partnership in the
bancassurance business, also had a positive impact on the performance of the consolidated net income
compared to the previous year.
The evolution of net income of the Group was also influenced by extraordinary effects associated with the
Polish subsidiary that had a negative impact in the previous year, such as the upfront recognition of the costs
arising from the moratorium program (credit holidays) enacted in 2022, which had penalised the result
associated with this subsidiary in 283 million euros. Also the recognition of total impairment of the goodwill
associated with the acquisition by BCP Group of the percentage of control over Bank Millennium S.A. in the
amount of 102 million euros on 30 June 2022, contributed to the favourable evolution of net income of the
Group in 2023, compared to the previous exercise.
The reduction in the cost of mandatory contributions, particularly relevant in the Polish subsidiary, also had
a significant impact on the evolution of the results of the Group last year, as well as the evolution of the
credit portfolio's risk profile, which resulted in a reduction of loans impairment charges (net of recoveries).
On the other hand, the results of the Group continued to be strongly influenced by the increase in costs
associated with the foreign exchange mortgage portfolio in the Polish subsidiary, that globally increased from
526 million euros in 2022, to 780 million euros at the end of 2023 (both before income taxes and non-
controlling interests), mainly due to the additional provisions booked to face the legal risk implicit in this
portfolio.
On the other hand, despite the disciplined management of operating costs by the Group, the impact of
inflation was felt in the three geographies in which the Bank operates (particularly in Poland and
Mozambique), influencing the evolution of operating costs which, in consolidated terms, increased by 8.3%,
from 1,073 million euros to 1,163 million euros.
Millennium bcp’s consolidated balance sheet total assets amounted to 94,380 million euros as of 31
December 2023, showing an increase of 5.0% in comparison with the 89,877 million euros recorded by the

2023 REPORT & ACCOUNTS |

|45
end of 2022, with the increase in assets in the international activity, partially mitigated by the slight
reduction in assets seen in the activity in Portugal. This increase was driven by the significant reinforcement
of the securities portfolio, despite the reductions observed in deposits at central banks, in loans to customers
portfolio (net of impairment), in non-current assets held for sale and in deferred tax assets.
Total liabilities of the Group stood at 87,080 million euros at the end of 2023, a value higher than the 83,940
million euros recorded at the end of 2022, with this evolution being driven by increases in deposits and other
resources from customers and in non-subordinated debt securities issued, despite the decrease in resources
from central banks and from credit institutions.
Millennium bcp's consolidated customer loan portfolio (gross loans, that is, before impairment and fair value
adjustments) amounted to 56,814 million euros as of 31 December 2023, standing below the 57,713 million
euros figure achieved at the end of the previous year. This evolution reflects the reduction in the activity in
Portugal, although the increase in the international activity partially offset this reduction.
On 31 December 2023, the consolidated total customer funds amounted to 95,295 million euros, showing a
favourable evolution, increasing by 2,487 million euros compared to the 92,808 million euros obtained on the
same date of the previous year, benefiting from the increase in the international activity, partially mitigated
by the reduction in the activity in Portugal. Consolidated balance sheet customer funds amounted to 79,215
million euros on 31 December 2023, showing an increase of 1,965 million euros compared to the end of the
previous year, with this evolution being explained mainly by the increase in deposits and other resources
from customers of the Group. Consolidated off-balance sheet customer funds stood at 16,080 million euros as
of 31 December 2023, showing an increase of 521 million euros compared to the figure posted in the same
date in the prior year, with this evolution being explained by the increases recorded in assets placed with
customers and assets under management and the decrease seen in insurance products (savings and
investment).

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46 |
PROFITABILITY ANALYSIS
NET INCOME
The consolidated net income of Millennium bcp
amounted to 856 million euros in 2023, standing
significantly above the 197 million euros achieved
in the previous year.
This evolution reflects the favourable performance
of both the activity in Portugal and the
international activity, driving return on equity
(ROE) of the Group to increase from 3.9% to 16.0%
in the last year.
The 23.1% increase recorded in core income, from
2,922 million euros in 2022 to 3,597 million euros
in 2023, contributed to a large extent to this
performance. Both in the activity in Portugal,
where the growth was more pronounced, and in
the international activity, core income showed
significant increases, resulting, in both cases, from
the growth in net interest income. In fact,
consolidated net interest income of the Group was
31.4% above the 2,150 million euros recorded in
the previous year, rising to 2,826 million euros at
the end of 2023, benefiting from the evolution of
interest rates during last year. Net commissions, in
turn, totalled 772 million euros in 2023, remaining
in line with the amount achieved in the previous
year.
The extraordinary gain of 139 million euros
resulting from the sale, by Bank Millennium, of 80%
of the shares of Millennium Financial Services sp. z
o.o., within the scope of the strategic partnership
in the bancassurance business, also had a positive
impact on the performance of consolidated net
income compared to the previous year. This
amount includes the gain determined in the first
quarter of the current year (127 million euros), as
well as an additional gain of 12 million euros
recognised in the fourth quarter.
The evolution of net income of the Group was also
influenced by extraordinary effects associated with
the Polish subsidiary that had a negative impact in
the previous year. In this context, it should be
noted, the upfront recognition of the costs arising
from the moratoriums program (credit holidays)
enacted by the President of the Republic of Poland
in July 2022, which had penalised the result
associated with this subsidiary in the previous
year. T he total estimated cost of credit
moratoriums amounted to 283 million euros at the
end of 2022, recognised under the heading results
on modification.
On the other hand, the favourable evolution of net
income of the Group in 2023, compared to the
previous year, was also influenced by the fact that
the result associated with the Polish subsidiary in
2022 had been penalised by the recognition of
total impairment of the goodwill associated with
the acquisition by the BCP Group of the
percentage of control over Bank Millennium S.A. in
the amount of 102 million euros as at 30 June
2022.
Also in the Polish subsidiary, the contribution to
the Polish institutional protection fund (IPS -
Institutional Protection Scheme), created in 2022
and non-existent in 2023, together with temporary
exemptions in the current year for other
contributions, resulted in a reduction of 108
million euros in the overall amount of
contributions borne by the subsidiary, also
contributing to the favourable evolution of
consolidated net income.
The risk profile evolution of the credit portfolio, in
turn, allowed a reduction in loans impairment
charges (net of recoveries), both in the activity in
Portugal and in the international activity,
determining the favourable performance of this
item, which in consolidated terms, totalled 240
million euros, standing 61 million euros (20.2%)
below the amount recorded in 2022.
Conversely, the results of the Group continued to
be strongly influenced by the increase in the costs
associated with foreign exchange mortgage
portfolio in the Polish subsidiary, that globally
went from 526 million euros, in 2022, to 780
million euros, at the end of 2023 (both before
taxes and non-controlling interests). The overall
increase in these costs was mainly due to the
additional provisions booked to face the legal risk
implicit in this portfolio, following the
unfavourable decision of the Court of Justice of
the European Union, regarding remuneration for
the use of capital on foreign exchange mortgage
loans. In fact, in 2023 the Polish subsidiary
recognised provisions in the amount of 623 million
euros that compares to 394 million euros in the
previous year (net of the amount related to loans
originated by Euro Bank S.A., to be reimbursed by
a third party).
On the other hand, despite the disciplined
management of operating costs by the Group, the
impact of inflation was felt in the three
geographies in which the Bank operates
(particularly in Poland and Mozambique),
influencing the evolution of operating costs that,
in consolidated terms, increased 8.3%, from 1,073
million euros to 1,163 million euros. Both staff
costs and other administrative costs were higher
than a year earlier, both in the activity in Portugal
and mainly in the international activity.
Depreciations, in turn, decreased compared to the
amount recorded in the previous year, although

2023 REPORT & ACCOUNTS |

|47
this impact was not significant within the evolution
of operating costs.
Finally, despite the insignificant impact on the net
income of the Group, it is worth mentioning the
evolution of net income from discontinued
operations, from 6 million euros in 2022, to a
negative amount of 3 million euros in 2023. Thus,
in 2023, net income from discontinued operations
is mainly due from the final adjustment of the sale
price of Banque Privée BCP (Suisse) S.A. ("Banque
Privée"), under previously agreed conditions. In
fact, in the context of the sale of the entire share
capital of Banque Privée, in the fourth quarter of
2021, the purchase price received was subject to
adjustments, according to typical provisions in this
kind of transactions, including the variation of the
equity in the completion date, and the ones that
may result from the variation of stocks and/or
flows of assets under management, in pre-
determined dates and specified portfolios. In 2022,
in addition to the adjustment of the sale price of
Banque Privée, in accordance with the conditions
referred to above, the result of discontinued
operations also incorporates the correction of the
gain, at the end of 2021, from the sale of 70% of
the investment held in Seguradora Internacional de
Moçambique, S.A. (“SIM”) (currently known as
Fidelidade Moçambique - Companhia de Seguros
S.A.).
NET INCOME
Million euros
Note: Following the adoption, on 1 January 2023, of IFRS9 - Financial
Instruments and IFRS17 - Insurance Contracts, by Millenniumbcp Ageas Grupo
Segurador, S.G.P.S., S.A. (Mbcp Ageas), an entity 49% owned by the Group,
and complying with comparative information requirements, the accounts of
the Group referring to 2022 were restated accordingly, corresponding to a
negative impact of 10 million euros in 2022 results.
In 2023, core operating profit of the Group
amounted to 2,435 million euros, showing a
significant growth of 31.7% from the 1,849 million
euros achieved in the previous year, driven by the
increase in core income, namely in net interest
income.
CORE OPERATING PROFIT
Million euros
The previous analysis does not exclude the specific
items considered in these years. In 2023, specific
items had a positive impact of 124 million euros
(before taxes and non controlling interests),
including income of 139 million euros recognised in
the international activity, related to the sale of
80% of the shares in Millennium Financial Services
sp. z o.o. (128 million euros recognised as net
trading income and 11 million euros recognised as
other net operating income) and costs of 15 million
euros recognised as staff costs in the activity in
Portugal: [(i) costs related to the compensation for
the temporary reduction in employee
remunerations during 2014-2017, as distribution of
part of the Bank's results obtained in 2022; (ii)
costs with employees leavings, namely early
retirements; (iii) costs with mortgage financing to
former employees and (iv) income recognised after
an agreement related to liabilities with former
directors of the Bank]. On the other hand, in 2022,
the impact of specific items was negative in the
amount of 16 million euros (before taxes),
recognised in staff costs in the activity in Portugal,
including: (i) distribution of part of the Bank's
results obtained in 2021 by the employees of the
Bank; (ii) costs with mortgage financing to former
employees; (iii) discretionary remuneration paid to
employees as a measure to offset the impacts of
inflation; and (iv) the recognition of a provision for
other structure adaptation measures. In 2021, the
impact was also negative, in the amount of 91
million euros, mainly related to the adjustment of
headcount carried out by the Bank in that year,
including a provision in the amount of 84 million
euros.
Excluding specific items in both years, core
operating profit of the Group amounted to 2,450
million euros, increasing 31.4% from the 1,865
million euros accounted for in the previous year.

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48 |
QUARTERLY INCOME ANALYSIS

Million euros
| 2023 |  |
| 1st quarter | 2nd quarter | 3rd quarter | 4th quarter | Total | 2022 (restated) | 2021
NET INTEREST INCOME | 665 | 710 | 743 | 708 | 2,826 | 2,150 | 1,589
OTHER NET INCOME |  |  |  |  |  |  |
Dividends from equity instruments | 0 | 1 | 0 | 1 | 2 | 10 | 1
Net commissions | 195 | 192 | 191 | 193 | 772 | 772 | 728
Net trading income | 132 | (7) | (20) | 40 | 145 | 50 | 87
Other net operating income | (6) | (66) | 16 | 18 | (39) | (183) | (126)
Equity accounted earnings | 15 | 14 | 18 | 17 | 64 | 59 | 57
TOTAL OTHER NET INCOME | 336 | 134 | 205 | 269 | 944 | 708 | 746
NET OPERATING REVENUES | 1,000 | 844 | 948 | 977 | 3,770 | 2,857 | 2,334
OPERATING COSTS |  |  |  |  |  |  |
Staff costs | 144 | 164 | 160 | 164 | 632 | 581 | 654
Other administrative costs | 90 | 95 | 98 | 110 | 393 | 353 | 324
Depreciation | 34 | 35 | 35 | 34 | 137 | 139 | 137
TOTAL OPERATING COSTS | 269 | 293 | 293 | 308 | 1,163 | 1,073 | 1,116
RESULTS BEFORE PROVISIONS AND IMPAIRMENTS | 732 | 551 | 655 | 669 | 2,607 | 1,784 | 1,219
Results on modification | (6) | (6) | (3) | (5) | (19) | (310) | 0
Impairment for loans (net of recoveries) | 80 | 65 | 66 | 29 | 240 | 301 | 349
Other impairment and provisions | 238 | 165 | 200 | 257 | 860 | 756 | 712
INCOME BEFORE INCOME TAX | 408 | 315 | 387 | 378 | 1,488 | 418 | 158
INCOME TAX |  |  |  |  |  |  |
Current | 76 | 50 | 46 | 7 | 180 | 110 | 81
Deferred | 80 | 40 | 95 | 143 | 358 | 195 | 122
NET (LOSS) / INCOME AFTER INCOME TAX FROM CONTINUING OPERATIONS | 251 | 225 | 245 | 228 | 950 | 114 | (46)
Income from discontinued operations | 0 | 0 | 0 | (3) | (3) | 6 | 71
NET INCOME AFTER INCOME TAX | 251 | 225 | 245 | 226 | 948 | 120 | 25
Non-controlling interests | 35 | 18 | 18 | 20 | 92 | (78) | (113)
NET INCOME ATTRIBUTABLE TO SHAREHOLDERS OF THE BANK | 216 | 207 | 227 | 205 | 856 | 197 | 138

2023 REPORT & ACCOUNTS |

|49
MAIN GEOGRAPHIES

Million euros
|  |  |  | International activity *
| Portugal | Total Int Op | Bank Millennium | BIM
| Dec23 | Dec22 restated | Dec21 | Dec23 | Dec22 | Dec21 | Dec23 | Dec22 | Dec21 | Dec23 | Dec22 | Dec21
NET INTEREST INCOME | 1,467 | 951 | 831 | 1,359 | 1,199 | 757 | 1,157 | 996 | 595 | 202 | 202 | 159
OTHER NET INCOME |  |  |  |  |  |  |  |  |  |  |  |
Dividends from equity instruments | 1 | 9 | 0 | 1 | 1 | 1 | 1 | 1 | 1 | 0 | 0 | 0
Net commissions | 560 | 561 | 514 | 211 | 211 | 213 | 172 | 173 | 182 | 39 | 39 | 31
Net trading income | 13 | 69 | 76 | 132 | (19) | 11 | 116 | (40) | (6) | 16 | 21 | 17
Other net operating income | (65) | (76) | (66) | 26 | (107) | (60) | 22 | (109) | (62) | 5 | 2 | 3
Equity accounted earnings | 60 | 58 | 58 | 5 | 1 | (1) | 0 | 0 | 0 | 2 | 2 | 0
TOTAL OTHER NET INCOME | 569 | 620 | 582 | 375 | 87 | 164 | 311 | 24 | 115 | 62 | 64 | 51
NET OPERATING REVENUES | 2,035 | 1,571 | 1,414 | 1,734 | 1,286 | 921 | 1,468 | 1,020 | 710 | 264 | 266 | 210
OPERATING COSTS |  |  |  |  |  |  |  |  |  |  |  |
Staff costs | 355 | 339 | 436 | 277 | 242 | 218 | 227 | 194 | 179 | 50 | 47 | 39
Other administrative costs | 189 | 184 | 176 | 205 | 169 | 148 | 147 | 118 | 107 | 58 | 51 | 40
Depreciation | 73 | 79 | 80 | 64 | 60 | 57 | 47 | 45 | 44 | 18 | 16 | 13
TOTAL OPERATING COSTS | 617 | 602 | 693 | 546 | 471 | 423 | 420 | 357 | 330 | 126 | 113 | 92
RESULTS BEFORE PROVISIONS AND IMPAIRMENTS | 1,419 | 970 | 721 | 1,188 | 815 | 498 | 1,048 | 663 | 380 | 138 | 153 | 119
Results on modification | 0 | 0 | 0 | (19) | (310) | 0 | (19) | (310) | 0 | 0 | 0 | 0
Impairment for loans (net of recoveries) | 208 | 218 | 273 | 32 | 82 | 76 | 57 | 74 | 71 | (25) | 8 | 4
Other impairment and provisions | 161 | 205 | 165 | 699 | 550 | 547 | 682 | 435 | 528 | 14 | 7 | 10
INCOME BEFORE INCOME TAX | 1,050 | 546 | 282 | 437 | (128) | (124) | 289 | (156) | (219) | 149 | 138 | 105
INCOME TAX |  |  |  |  |  |  |  |  |  |  |  |
Current | 13 | 17 | 11 | 167 | 92 | 70 | 135 | 56 | 44 | 32 | 36 | 27
Deferred | 318 | 190 | 98 | 40 | 4 | 24 | 27 | 4 | 29 | 12 | 0 | (5)
NET (LOSS) / INCOME AFTER INCOME TAX FROM CONTINUING OPERATIONS | 719 | 338 | 173 | 231 | (224) | (219) | 127 | (217) | (292) | 105 | 102 | 83
Income from discontinued operations | 0 | 0 | 0 | (3) | 6 | 71 | 0 | 0 | 0 | 0 | 4 | 13
NET INCOME AFTER INCOME TAX | 719 | 338 | 173 | 228 | (219) | (148) | 127 | (217) | (292) | 105 | 106 | 96
Non-controlling interests ** | (6) | (5) | 0 | 97 | (73) | (113) | 0 | 0 | 0 | 0 | 0 | 1
NET INCOME ** | 725 | 343 | 173 | 131 | (146) | (35) | 127 | (217) | (292) | 105 | 106 | 96

* The international operations, in addition to the activity of Bank Millennium in Poland and Millennium Bim in Mozambique (BIM), also
include the contribution of Banco Millennium Atlântico in Angola and until 2022, the activity of Millennium BCP Bank & Trust in the Cayman
Islands. The presentation of the operations above is in accordance with the Consolidated Accounts of the Group, and there may be
differences in relation to the accounts disclosed locally. The aggregate of international operations includes some amounts recorded in the
consolidated accounts, with the recognition of impairment of the goodwill related to the Polish subsidiary, beeing the most significative. At
the same time, this aggregate also includes, under the heading results of discontinued operations: the results of the Swiss subsidiary, till the
date of the sale, as well as the impacts of the sale of the operation in each year, as well as the impacts arising from the sale of the SIM
stake not included in the results of the subsidiary.
** The net result shown in the columns relating to Bank Millennium and BIM corresponds to the consolidated result calculated by each of
those entities. Thus, the non-controlling interests presented in those same columns relate to subsidiaries of those entities, where
applicable.

| 2023 REPORT & ACCOUNTS

50 |
In the activity in Portugal, net income amounted
to 725 million euros in 2023, well above the 343
million euros achieved in the previous year.
NET INCOME
Activity in Portugal
Million euros
For the performance of net income in the activity
in Portugal, contributed above all the increase of
54.2% (516 million euros) in net interest income,
which stood at 1,467 million euros at the end of
2023, compared to 951 million euros in 2022. This
solid growth of net interest income mainly reflects
the favourable evolution of the commercial
business, benefiting from the increase of interest
rates that started in 2022. On the other hand, the
impact of the interest rates evolution in securities
portfolio, namely in the greater contribution of the
income generated by the sovereign debt portfolio,
also had a positive impact on net interest income
performance compared to the previous year.
The evolution of net income in the activity in
Portugal also benefited, albeit to a lesser extent,
from the reduction in impairments and provisions
during last year. In fact, mainly reflecting the
lower provisioning needs associated with non-
current assets held for sale, namely the foreclosed
assets portfolio, other impairments and provisions
showed a reduction of 21.7% (44 million euros)
compared to the amount posted in the previous
year, standing at 161 million euros at the end of
2023, while loans impairment, due to the
improvement in the portfolio's risk profile, stood
5.0% (11 million euros) below the amount
recognised in 2022, totalling 208 million euros, in
2023.
Other net operating income, largely influenced by
the reduction in mandatory contributions, and
equity accounted earnings also contributed to the
favourable evolution of net income in the activity
in Portugal, growing 14.8% (11 million euros) and
3.3% (2 million euros), respectively.
Conversely, net income in the activity in Portugal
in 2023 was penalised by the strong reduction in
net trading income which stood at 13 million
euros, compared to 69 million euros posted in
2022.
The performance of net income in the activity in
Portugal was also influenced, albeit to a lesser
extent, by the increase of 2.5% (15 million euros)
recorded in operating costs. This evolution was
mainly due to the increase in staff costs, although
there was also an increase in other administrative
costs, with these impacts being partially offset by
the reduction in depreciations.
It is also worth mentioning the reduction of 8
million euros, compared to the previous year,
recorded in dividends from equity instruments. Net
commissions, in turn, had no impact on the
evolution of net income in the activity in Portugal,
remaining stable compared to 2022, totalling 560
million euros at the end of the current year.
Despite the fact that commissions remained in line
with the amount recorded in 2022, the increase
recorded in the net interest income was reflected
in a significant growth in core income, which
largely offset the higher operating costs, leading
core operating profit in the activity in Portugal to
grow 55.0%, from 910 million euros in 2022, to
1,410 million euros in 2023.
Excluding the specific items mentioned above
(negative impact of 15 million euros in 2023 and 16
million euros in 2022, both recognised in staff
costs), core operating profit in the activity in
Portugal increased by 53.9% from 926 million euros
to 1,426 million euros.
CORE OPERATING PROFIT
Activity in Portugal
Million euros
In the international activity, net income stood at
131 million euros in 2023, improving significantly
compared to the negative amount of 146 million
euros recorded in the previous year.

2023 REPORT & ACCOUNTS |

|51
NET INCOME
International activity
Million euros
The significant increase in net income of the
international activity was due to the contribution
associated with the Polish subsidiary, that
presented, in the last quarter of the year, the fifth
quarter in a row with positive results. On the other
hand, the results of the international activity in
2022 were impacted by the recognition of the total
impairment of the goodwill associated with the
Group's stake in Bank Millennium SA in Poland in
the amount of 102 million euros on 30 June 2022.
Net income of Bank Millennium in Poland reached
127 million euros in 2023, showing a strong growth
from the negative amount of 217 million euros
recorded in the previous year.
Net income of 2022 was significantly influenced by
the upfront recognition of costs arising from the
aforementioned moratorium program (credit
holidays) enacted by the President of the Republic
of Poland in July 2022, which amounted to 283
million euros at the end of 2022.
The evolution of net income of the Polish
subsidiary was also strongly influenced by the
growth of 162 million euros (16.2%) recorded in net
interest income, mainly reflecting the impact of
the successive increases in the reference interest
rates of the central bank of Poland observed
between the last quarter of 2021 and the third
quarter of 2022.
The aforementioned extraordinary gain of 139
million euros, resulting from the sale, by Bank
Millennium, of 80% of the shares of Millennium
Financial Services sp. z o.o. as part of the strategic
partnership in bancassurance business, also
contributed largely to the favourable performance
of net income of the Polish subsidiary.
In addition, the reduction of 108 million euros in
the overall amount of mandatory contributions
borne by the Polish subsidiary, from 121 million
euros to 13 million euros, also contributed largely
to the growth of net income. This reduction
reflects, on one hand, the impact of the
contribution to the Institutional Protection Scheme
(IPS), established in 2022 and with no additional
contributions in 2023, and on the other the
temporary exemptions in the current year for
other mandatory contributions. The net income of
the Polish subsidiary also benefited, albeit to a
lesser extent, from the reduction in loans
impairment, with net commissions remaining
stable compared to the amount recorded a year
earlier.
On the other hand, the result of this subsidiary was
penalised by the increase in costs associated with
the portfolio of foreign exchange mortgage loans,
that overall increased from 526 million euros to
780 million euros (before taxes), continuing to
strongly influence the result of the subsidiary. The
additional provisions booked to face the legal risk
implicit in this portfolio, following the
unfavourable decision of the Court of Justice of
the European Union regarding remuneration for the
use of capital on these loans, represent the most
significant portion of these costs, increasing 229
million euros in the last year, from 394 million
euros to 623 million euros (net of the amount
originated by the operations of Euro Bank S.A., to
be reimbursed by a third party).
Although on a smaller scale, it is also worth
mentioning the impact of the increase in operating
costs, mainly in staff costs and in other
administrative costs on the performance of the net
income of the Polish subsidiary, mainly reflecting
high inflation rates and, regarding staff cots, also
the characteristics of the Polish labour market. It
should be noted however that the efforts to
continue with measures that allow the
improvement of the efficiency of the Polish
subsidiary, allowed to offset these impacts. In this
sense, reference should be made to the
optimisation of the physical distribution network,
associated with the Bank's progress in the area of
digitalisation of the commercial business, resulting
in a reduction in the number of branches, from 635
to 612. The number of employees of the Polish
subsidiary, also showed a reduction of 115
employees last year, to 6,872 employees at the
end of 2023.
It should be noted that the increase recorded in
operating costs was more than offset by the
increase in core income, namely in net interest
income, leading the core operating profit of the
Polish subsidiary to grow 12.1%, rising from 811
million euros in 2022, to 909 million euros in 2023.
Millennium bim in Mozambique, in turn, showed a
net income of 105 million euros, in line with the
amount recorded in the previous year (-0.9%). It
should be noted however that 2022 result
incorporates, under the item results from
discontinued operations, the positive impact of the
correction of the gain resulted from the sale of
70% of the stake that the Group held in “SIM”, as

| 2023 REPORT & ACCOUNTS

52 |
mentioned above. Income from continuing
operations increased 3.2%.
In the performance of the Mozambican subsidiary,
it is important to highlight the favourable
evolution of loans impairment, mainly reflecting
the impact of the partial recovery of a credit in
litigation, following an out-of-court settlement.
It should also be noted that despite the rise in the
reference interest rates, net interest income of
the subsidiary remained in line with the amount
recorded in 2022, due to the negative impact of
the increase in the local requirement for non-
remunerated cash reserves to be maintained with
the central bank. Other net operating income, in
turn, increased compared to the amount recorded
in the previous year, while operating costs, other
impairment and provisions and net trading income
performed less favourably than a year earlier. In
the particular case of operating costs, this
performance was largely due to the levels of
inflation in the country.
Reflecting the increase in operating costs, core
operating profit of the Mozambican subsidiary was
9.8% below the 128 million euros recorded in 2022,
totalling 115 million euros at the end of 2023.
Millennium bim ended the year with 2,574
employees, 70 more than in the previous year and
with 195 branches, two less than in 2022.
Despite its smaller relative weight within the scope
of this analysis, the contribution of the Angolan
operation evolved from a negative amount of 7
million euros in 2022, to a positive amount of 3
million euros in the current year. This performance
was due, on the one hand, to the appropriation of
the results of Banco Millennium Atlântico
recognised in equity accounted earnings, and on
the other, to the fact that the previous year's
contribution was affected by impairments charges,
including goodwill impairment, which did not exist
this year.
Net income of the international activity was also
influenced, although not significantly, by the
impact of the adjustment of the sale price of
Banque Privée, reflected in the heading income
from discontinued operations, in accordance with
conditions previously established and already
detailed above.
Benefiting from the increase in core income and
despite the impact of inflation levels on operating
costs, core operating profit of international
activity grew by 9.1%, from 939 million euros in
2022, to 1,025 million euros in 2023.
CORE OPERATING PROFIT
International activity
Million euros

2023 REPORT & ACCOUNTS |

|53
NET INCOME OF INTERNATIONAL ACTIVITY

Million euros
| 2023 | 2022 | 2021 | Chg. 23/22
Bank Millennium in Poland (1) | 127 | (217) | (292) | 158.5%
Costs associated with foreign exchange mortgage loans | 735 | 505 | 534 | 45.7%
Bank Millennium in Poland (exc. costs associated with foreign exchange mortgage loans) | 862 | 288 | 242 | 199.3%
Millennium bim in Mozambique (1)(2) | 105 | 102 | 83 | 3.2%
Banco Millennium Atlântico (BMA) (3) | 3 | (7) | (11) | 136,9%
Other (4) | (3) | (102) | 1 | 96,6%
Income from discontinued operations (5) | (3) | 6 | 71 | -151,3%
Banque Privée BCP (Suisse) S.A. | (3) | 2 | 52 | <-200%
Fidelidade Moçambique - Companhia de Seguros S.A. | — | 4 | 19 | -100.0%
Non-controlling interests | 97 | (73) | (113) | >200%
NET INCOME OF INTERNATIONAL ACTIVITY | 131 | (146) | (35) | 189.8%

(1) The amounts showed are not deducted from non-controlling interests.
(2) Corresponds to net income after income taxes from continuing operations. Net income does not include the net income generated by
SIM, now designated Fidelidade Moçambique - Companhia de Seguros S.A. up to the date of disposal of 70% of the stake that the Group held
in the insurance company, nor the gain recognised with the aforementioned disposal in 2021. The correction of the gain, accounted for in
2022, is also not included in the reported results. Income arising from discontinued operations is presented in the line "Income from
discontinued operations". The non-controlling interests related to the insurance company, meanwhile disposed, are reflected in the line
"Non-controlling interests".
(3) Corresponds to the proportion of the results of Banco Millennium Atlântico appropriated by the Group, considering the equity method.
In 2022 and 2021,the amounts presented also include provisions associated with the investment in this associate, also including in 2022
impairment of goodwill.
(4) In 2023, includes provisions associated with BIM, recognised in the consolidated accounts. In 2022, includes the total impairment of the
goodwill associated with the acquisition by the BCP Group of the percentage of control over Bank Millennium SA. and the net income of the
operation in Cayman Islands, fully attributable to the Bank. In 2021, includes the net income of the operation in Cayman Islands, fully
attributable to the Bank.
(5) Income arising from discontinued operations includes the net income of Banque Privée up to the date of its disposal (1 million euros in
2021); the gain, in the amount of 51 million euros, generated with the sale of the participation in 2021 and the adjustment of that gain (2
million euros in 2022 and a negative amount of 3 million euros in 2023). Additionally, income from discontinued operations also includes the
net income generated by SIM, now designated Fidelidade Moçambique - Companhia de Seguros S.A. up to the date of the sale of 70% of the
stake that the Group held in the insurance company (7 million euros in 2021), as well as the gain generated with the sale, in that year, in
the amount of 12 million euros net of taxes (of which 6 million euros reflected in the Millennium bim accounts). In 2022 is reflected in this
heading, the correction made to that value (4 million euros).

| 2023 REPORT & ACCOUNTS

54 |
NET INTEREST INCOME
In 2023, net interest income of the Group reached
2,826 million euros, showing a growth of 31.4%
compared to the 2,150 million euros posted in the
previous year. The favourable evolution of net
interest income was observed both in the activity
in Portugal, where there was a growth of more
than 50%, and in the international activity.
NET INTEREST INCOME
Million euros
In fact, net interest income, in the activity in
Portugal, showed a growth of 54.2% from the 951
million euros recorded in 2022, rising to 1,467
million euros, at the end of 2023.
The performance of net interest income in the
activity in Portugal, in the last year, reflects above
all, the favourable evolution of the commercial
business, but also incorporating, on the one hand,
the positive impact resulting from the
management of the securities portfolio, and on the
other, the increase in costs incurred with issued
debt and subordinated debt.
Thus, despite the decrease of the average balance
of the customers credit portfolio, in relation to the
previous year, in the activity in Portugal, there
was an increase in the income generated by this
portfolio, resulting from the increases recorded in
interest rates. On the other hand, this impact was
partially offset by the increase in the
remuneration of the deposit portfolio, reflecting
not only the evolution of interest rates, but also
the increase in the average balance of interest-
bearing deposits compared to the previous year.
Regarding securities portfolio, although the other
securities also generated higher income compared
to 2022, the increased contribution of the income
generated by the sovereign debt portfolio stands
out, benefiting on the one hand, from the
evolution of interest rates and on the other, from
the portfolio turnover. Although on a smaller
scale, reference should also be made to the
positive impact on the domestic net interest
income of income generated by other assets and
liabilities in 2023, compared to the previous year.
The evolution of net interest income in the activity
in Portugal was negatively impacted by an
increase, compared to 2022, of the costs incurred
with issued debt and subordinated debt, arising
not only from the increase in interest rates, but
also from the impact of two issues of senior
preferred debt securities, in the amount of 350
million euros and 500 million euros, launched in
October 2022 and September 2023, respectively.
These issues, under the Bank's Euro Note
Programme, increase the capacity to meet the
requirements known as “MREL” (Minimum
Requirements for Own Funds and Eligible
Liabilities).
Following the full early repayment of Targeted
Longer-Term Refinancing Operations (TLTRO) in
December 2022 and a residual portion in January
2023, these refinancing operations no longer had a
material impact in 2023, contrasting to the
previous year, when net interest income reflected
the income resulting from the negative interest
rate applied. In contrast, reference should be
made to the increase in net interest income
resulting from liquidity deposited at the Bank of
Portugal. Finally, it is worth mentioning the impact
of the increase in the cost of resources from other
credit institutions, net of interest income earned
on liquidity surpluses placed with these
institutions, reflecting the evolution of interest
rates in the last year.

2023 REPORT & ACCOUNTS |

|55
NET INTEREST INCOME
Activity in Portugal
Million euros
In the international activity, net interest income
amounted to 1,359 million euros at the end of
2023, showing a growth of 13.4% from the 1,199
million euros accounted in 2022.
This evolution was mainly due to the performance
of the Polish subsidiary, driven by successive
increases in the reference interest rates that have
taken place between the last quarter of 2021 and
the third quarter of 2022. In the subsidiary in
Mozambique, despite being influenced by the
significant increase in the local requirement for
non-remunerated cash reserves to be maintained
with the central bank, net interest income
remained stable compared to the amount recorded
in the previous year.
NET INTEREST INCOME
International activity
Million euros
In consolidated terms, net interest margin
increased significantly, from 2.46% in 2022 to
3.36% in 2023, mainly reflecting the performance
of the activity in Portugal.
In fact, in the activity in Portugal, net interest
margin evolved from 1.53% in 2022, to 2.59% in
2023, mainly influenced by the increase in interest
rates underlying the credit and sovereign debt
portfolios.
Net interest margin in the international activity, in
turn, recorded a more modest increase, from
4.77% in 2022, to 4.93% in 2023, limited by the
impact of the reversal of the monetary policy of
the central bank of Poland, which after a period of
successive increases between the last quarter of
2021 and the third quarter of 2022, made the first
interest rate cuts in September and October 2023.

| 2023 REPORT & ACCOUNTS

56 |
AVERAGE BALANCES

Million euros
| 2023 | 2022 (restated) | 2021
| Average Balance | Yield | Average Balance | Yield | Average Balance | Yield
INTEREST EARNING ASSETS |  |  |  |  |  |
Deposits in credit institutions | 4,379 | 4.0 % | 9,575 | 1.3 % | 6,116 | 0.3 %
Financial assets | 22,979 | 3.3 % | 19,742 | 1.8 % | 20,116 | 0.8 %
Loans and advances to customers | 55,672 | 5.4 % | 56,731 | 3.8 % | 55,045 | 2.7 %
TOTAL INTEREST EARNING ASSETS | 83,031 | 4.8 % | 86,048 | 3.0 % | 81,277 | 2.0 %
Discontinued operations (1) | — |  | — |  | 726 |
Non-interest earning assets | 8,009 |  | 9,837 |  | 8,481 |
TOTAL ASSETS | 91,040 |  | 95,884 |  | 90,484 |
INTEREST BEARING LIABILITIES |  |  |  |  |  |
Amounts owed to credit institutions | 1,295 | 3.9 % | 8,805 | (0.2 %) | 9,110 | (0.8 %)
Deposits and other resources from customers | 75,906 | 1.2 % | 72,995 | 0.6 % | 66,705 | 0.1 %
Debt issued and financial liabilities | 3,468 | 3.8 % | 3,263 | 1.0 % | 3,523 | 0.8 %
Subordinated debt | 1,388 | 7.8 % | 1,377 | 5.1 % | 1,248 | 4.5 %
TOTAL INTEREST BEARING LIABILITIES | 82,057 | 1.4 % | 86,439 | 0.6 % | 80,586 | 0.1 %
Discontinued operations (1) | — |  | — |  | 761 |
Non-interest bearing liabilities | 2,345 |  | 3,127 |  | 1,890 |
Shareholders' equity and Non-controlling interests | 6,637 |  | 6,318 |  | 7,247 |
TOTAL LIABILITIES, SHAREHOLDERS' EQUITY AND NON-CONTROLLING INTERESTS | 91,040 |  | 95,884 |  | 90,484 |
NET INTEREST MARGIN (2) |  | 3.4 % |  | 2.5 % |  | 1.9 %

(1) Includes, in 2021, the activity of the Swiss subsidiary (adjusted from the inter group' movements) and from Seguradora Internacional de
Moçambique, S.A. ("SIM"), until the date of the respective disposals.
(2)Net interest income as a percentage of average interest earning assets.
Note: Average balance calculated based on monthly average of end of month balances, accumulated in the period. Interest related to hedge
derivatives were allocated, each year, to the respective balance item.
The Group's interest earning assets totalled 83,031 million euros in 2023, standing below the 86,048 million
euros recorded in 2022. This evolution was mainly due to the decrease of deposits in credit institutions, from
9,575 million euros in 2022, to 4,379 million euros in 2023. Loans to customers also decreased from 56,731
million euros to 55,672 million euros in the same period. Financial assets, in turn, grew from 19,742 million
euros in 2022, to 22,979 million euros in 2023. It should be noted, however, that, in terms of profitability,
the reduction in the average amount of interest-earning assets was more than offset by the increase in the
implicit rate, reflecting the context of reference rates prevailing in Portugal, Poland and Mozambique.
Regarding non-interest earning assets there was also a decrease compared to the 9,837 million euros
recorded in 2022, totalling 8,009 million euros in 2023.
In terms of average balance sheet structure, interest earning assets represented 91.2% of average net assets
that compares to 89.7% in the previous year. Although showing an average balance lower than a year earlier,
loans to customers increased its relative weight in the balance sheet structure from 59.2% to 61.2%,
remaining the main aggregate in the interest-earning assets portfolio and increasing its relative weight in this
heading from 65.9% to 67.1% in the last year.
Financial assets portfolio, in turn, also reinforced its weight in the balance sheet structure, increasing from
20.6% in 2022, to 25.2% in 2023, while deposits in credit institutions, by contrast, decreased from 10.0% in
2022 to 4.8% in 2023.

2023 REPORT & ACCOUNTS |

|57
Interest bearing liabilities decreased from 86,439 million euros in 2022, to 82,057 million euros in 2023,
mainly reflecting the reduction of amounts owed to credit institutions, resulting from the early repayment of
the bulk of the financing that had been contracted with the European Central Bank within the scope of
targeted longer-term refinancing operations (TLTRO III). As a result, there was a significant reduction in the
relative weight of amounts owed to credit institutions in the average balance of interest-bearing liabilities,
from 10.2% in 2022 to 1.6% in 2023.
On the other hand, the average balance of customer deposits increased from 72,995 million euros in 2022 to
75,906 million euros in 2023, reinforcing its relative weight in the average balance of interest-bearing
liabilities, from 84.4% to 92.5%, and thus remaining the main financing and activity support instrument.
The remaining items that contribute to average interest-bearing liabilities did not show materially relevant
changes, so that the structure of average interest-bearing liabilities also did not show significant changes
compared to the previous year. As such, the relative weight of the aggregate of debt issued and financial
liabilities in average interest-bearing liabilities increased from 3.8% para 4.2% in the last year, while
subordinated debt represented 1.7% of the same aggregate (1.6% in 2022).
OTHER NET INCOME
Other net income, that aggregates dividends from equity instruments, net commissions, net trading income,
other net operating income and equity accounted earnings, totalled 944 million euros in 2023, corresponding
to a significant growth of 33.4% compared to the 708 million euros recorded in the previous year.
The contribution of the Polish subsidiary was decisive for this performance, although its impact was offset by
the lower results obtained in the activity in Portugal. In this sense, it is worth highlighting, on the one hand,
the recognition, in 2023, of the gains obtained with the sale of 80% of the shares of Millennium Financial
Services sp. z o.o., as part of the strategic partnership in bancassurance business, in the amount of 139
million euros, and on the other, the reduction by 108 million euros in mandatory contributions to which the
Polish operation was subject. On the other hand, the evolution of other net income was penalised mainly by
the reduction of 56 million euros in net trading income in the activity in Portugal.
In 2023, in the activity in Portugal, other net income amounted to 569 million euros, that compares to 620
million euros posted in 2022. In addition to the aforementioned reduction in net trading income, this
evolution also reflects, albeit to a lesser extent, on the one hand, the drop of 8 million euros recorded in
dividends from equity instruments, and on the other, the increases of 11 million euros and 2 million euros
recorded in other net operating income and equity accounted earnings, respectively. Net commissions, in
turn, remained in line with the amount recorded in the previous year.
In the international activity, other net income amounted to 375 million euros in 2023, showing a significant
growth, from 87 million euros posted in the previous year, resulting from the contribution of the Polish
subsidiary, as mentioned above.
From the gains obtained with the sale of 80% of the shares of Millennium Financial Services sp. z o.o.,
considered specific items, 128 million euros referring to the gain, were recognised in net trading income,
contributing decisively to the growth of 151 million euros recorded under this heading, in international
activity. The remaining 11 million euros, associated with the revaluation of the 20% minority stake held by
Bank Millennium after the completion of the operation, were recognised in other net operating income, an
item that increased 133 million euros mainly from the reduction in cost of mandatory contributions to which
the Polish operation was subject last year. Additionally, the evolution of other net income, in the
international activity, also benefited, albeit to a lesser extent, from the increase of 4 million euros recorded
in equity accounted earnings. Net commissions and dividends from equity instruments, in turn, remained in
line with the amount recorded in the previous year.

| 2023 REPORT & ACCOUNTS

58 |
OTHER NET INCOME

Million euros
| 2023 | 2022 (restated) | 2021 | Chg. % 23/22
Dividends from equity instruments | 2 | 10 | 1 | (82.3 %)
Net commissions | 772 | 772 | 728 | 0.0 %
Net trading income | 145 | 50 | 87 | 189.9 %
Other net operating income | (39) | (183) | (126) | 78.9 %
Equity accounted earnings | 64 | 59 | 57 | 9.6 %
TOTAL | 944 | 708 | 746 | 33.4 %
of which: |  |  |  |
Activity in Portugal | 569 | 620 | 582 | (8.3 %)
International activity | 375 | 87 | 164 | >200%

DIVIDENDS FROM EQUITY INSTRUMENTS
Dividends from equity instruments, which incorporates dividends and income from equity shares received
from investments classified as financial assets at fair value through other comprehensive income and as
financial assets held for trading, evolved from 10 million euros in 2022, to 2 million euros in 2023.
This evolution mainly reflects the reduction of income associated with investments that are part of the
shares portfolio of the activity in Portugal, which totalled 1 million euros in 2023, compared to the 9 million
euros observed in the previous year. In the international activity, dividends from equity instruments arising
exclusively from the activity of the Polish subsidiary remained in line with the amount recorded in 2022,
totalling 1 million euros at the end of the current year.
NET COMMISSIONS
Net commissions include commissions related to
the banking business and commissions more
directly related to financial markets.
In 2023, net commissions, as a whole, totalled 772
million euros, remaining in line with the amount
recorded in the previous year, reflecting the
performance of both the activity in Portugal and
the international activity.
In consolidated terms, both banking commissions
and commissions related to financial markets
remained at a similar level to that seen in 2022,
with the slight changes recorded in each of the
aggregates offsetting each other.
In fact, banking commissions amounted to 663
million euros at the end of the current year,
standing 1 million euros (0.2%) below the amount
recorded in 2022, while commissions related to
financial markets totalled 108 million euros, 1
million euros (1.1%) above the amount recorded a
year earlier.
Although the overall amount of the banking
commissions of the Group remained stable
compared to the amount recorded in the previous
year, there were changes in the several types of
commissions that make up this aggregate. In this
sense, it is important to highlight the growth of 20
million euros (8.6%) recorded in commissions
related to cards and transfers which, reflecting the
performance of both activity in Portugal and
international activity, increased from 228 million
euros to 248 million euros. On the other hand,
commissions related to credit and guarantees
showed a reduction of 12 million euros (8.5%),
standing at 129 million euros at the end of 2023,
mainly reflecting the evolution of this type of
commissions in the activity in Portugal, influenced,
among other effects, by legislative restrictions, as
in the international activity a growth was recorded
compared to the previous year. Commissions
related to management and maintenance of
accounts, in turn, totalled 159 million euros, 6
million euros (3.9%) lower than the amount
observed in 2022, with the increase in the activity
in Portugal being more than offset by the drop in
the international activity. Other bank commissions
decreased from 11 million euros to 9 million euros
(-17.7%) last year, mainly reflecting the
performance of the international activity. Finally,
it should be noted that bancassurance
commissions, which incorporate commissions
obtained from placing insurance products through
the Bank's distribution networks operating in
Portugal and Poland, were 1 million euros lower
compared to the amount recorded in the previous

2023 REPORT & ACCOUNTS |

|59
year, due to the performance of the Polish
subsidiary, totalling, in consolidated terms, 119
million euros, at the end of 2023.
Commissions related to financial markets totalled
108 million euros, standing 1.1% above the amount
recorded in 2022, with this evolution resulting, on
the one hand, from the increase of 4 million euros
(6.2%) in commissions associated with asset
management and distribution, and on the other,
the reduction of 3 million euros (-7.7%) recorded in
commissions associated with securities. Each one
of these commission headings totalled,
respectively, 72 million euros and 36 million euros,
at the end of 2023. In both cases, the evolution
was determined by the performance of the activity
in Portugal, since in the international activity
changes in the last year were not materially
relevant within the scope of this analysis.
NET COMMISSIONS
Million euros
In the activity in Portugal, net commissions, in
2023, amounted to 560 million euros, remaining in
line with the amount recorded a year earlier.
Both banking commissions, which amounted to 471
million euros, and commissions related to markets,
which totalled 89 million euros, were at a similar
level to that achieved in 2022, only changing
-0.3% e 1.4%, respectively.
This evolution resulted, however, from different
dynamics with regard to the several types of
commissions that make up these two aggregates.
Thus, regarding banking commissions, in the
activity in Portugal, the growth of 11 million euros
(7.2%) in commissions related to cards and
transfers stands out, totalling 158 million euros, at
the end of the current year. These commissions
include amounts charged for transactions carried
out with cards and the respective payment
networks, for bank transfers and for the use of
points of sale (POS), thus demonstrating the
increase in transaction levels in the last year.
Despite with smaller impact, the performance of
commissions related to the banking business in the
activity in Portugal also benefited from the growth
in management and maintenance of account
commissions, which increased by 2 million euros
(1.4%), from 140 million euros in 2022, to 142
million euros in 2023, reflecting, on the one hand,
the dynamics of new customers acquisition and, on
the other, greater commercial dynamism and
adequate management of value offers, with
customers subscribing integrated solutions and
service packages.
Conversely, the performance of banking
commissions, in the activity in Portugal, was
influenced by the reduction in commissions
associated with credit and guarantees, which
together stood 14 million euros below the 96
million euros reached in 2022, standing at 81
million euros at the end of 2023. This evolution
reflects the lower credit production in the current
context and the legal restrictions imposed in the
meantime.
Commissions from the bancassurance activity, with
regard to the activity in Portugal, remained in line
with the amounts achieved in the previous year,
totalling 84 million euros at the end of 2023, while
other banking commissions amounted to 5 million
euros, an increase of 2.8% from the amount
recorded last year, not material within the scope
of this analysis.
NET COMMISSIONS
Activity in Portugal
Million euros

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60 |
As previously mentioned, net commissions, in the
international activity, remained in line with the
amount recorded in 2022, standing at 211 million
euros. Neither the Polish subsidiary nor the
subsidiary in Mozambique showed significant
changes in the overall amount of net commissions.
Likewise, both commissions related to banking
business and commissions related to markets in the
international activity remained at identical levels
to the previous year, totalling 192 million euros
and 20 million euros, respectively at the end of
2023.
NET COMMISSIONS
International activity
Million euros
NET COMMISSIONS(1)

Million euros
| 2023 | 2022 | 2021 | Chg. % 23/22
BANKING COMMISSIONS |  |  |  |
Cards and transfers | 248 | 228 | 186 | 8.6 %
Credit and guarantees | 129 | 141 | 152 | (8.5 %)
Bancassurance | 119 | 119 | 116 | (0.6 %)
Management and maintenance of accounts | 159 | 165 | 149 | (3.9 %)
Other commissions | 9 | 11 | 12 | (17.7 %)
TOTAL BANKING COMMISSIONS | 663 | 665 | 615 | (0.2 %)
MARKET RELATED COMMISSIONS |  |  |  |
Securities | 36 | 39 | 37 | (7.7 %)
Asset management and distribution | 72 | 68 | 76 | 6.2 %
TOTAL MARKET RELATED COMMISSIONS | 108 | 107 | 113 | 1.1 %
TOTAL NET COMMISSIONS | 772 | 772 | 728 | 0.0 %
of which: |  |  |  |
Activity in Portugal | 560 | 561 | 514 | 0.0 %
International activity | 211 | 211 | 213 | 0.0 %

(1) In 2023, some commissions were reclassified, in order to improve the quality of the information reported. The historical amounts related to 2022 and 2021 of
such items are presented considering these reclassifications with the purpose of ensuring their comparability. The overall amount of net commissions disclosed in
previous periods remains unchanged compared to that published in previous periods.

2023 REPORT & ACCOUNTS |

|61
NET TRADING INCOME
Net trading income 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 financial
liabilities not measured at fair value through profit
or loss.
In 2023, net trading income amounted to 145
million euros, showing a very significant growth
compared to the 50 million euros achieved in the
previous year. This performance was determined
by the recognition, in 2023, of the gains obtained
by the Polish subsidiary with the sale of 80% of the
shares of Millennium Financial Services sp. z o.o.,
in the scope of the strategic partnership in the
bancassurance business, which, as previously
mentioned, totalled 128 million euros under this
heading. In consolidated terms, this impact was
partially offset by the reduction in net trading
income in the activity in Portugal, compared to the
amount recorded in 2022.
NET TRADING INCOME
Million euros
In the activity in Portugal, net trading income
stood well below the 69 million euros posted in
2022, amounting to 13 million euros at the end of
2023.
In this performance, reference should be made to
the contribution associated with the securities
portfolio, reflecting on the one hand the gains
recognised in the previous year with the sale of
foreign sovereign debt securities, which did not
occur in the current year, and on the other the
favourable evolution of net trading income
associated with Portuguese sovereign debt
securities, as the losses recorded were significantly
lower than those recorded a year earlier.
The evolution of net trading income in the activity
in Portugal was also influenced by the costs
recognised in 2023 with the sale of credits, in
contrast to the gains recorded in the previous
year.
In the international activity, net trading income
showed a significant increase, from a negative
amount of 19 million euros in 2022 to an income of
132 million euros at the end of the current year.
This performance was determined by the already
mentioned gains obtained with the sale of 80% of
the shares of Millennium Financial Services sp. z
o.o., that under this heading totalled 128 million
euros in 2023, considered as specific items. It is
important to note that this amount includes an
additional gain of 10 million euros compared to the
118 million euros considered in the first quarter of
the year, the recognition of which was subject to
certain conditions.
In addition, the reduction in costs incurred by the
Polish subsidiary in converting mortgage loans
granted in Swiss francs, following the agreements
with customers holding these loans, that in 2023
penalised net trading income in 60 million euros
compared to 82 million euros recognised in 2022,
also contributed to the favourable evolution of this
item.
In the operation in Mozambique, net trading
income was at a lower level than that achieved in
2022, despite having an immaterial impact within
the scope of this analysis.

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62 |
NET TRADING INCOME

Million euros
| 2023 | 2022 | 2021 | Chg. % 23/22
Net gains/(losses) from financial operations at fair value through profit or loss | (7) | 27 | 0 | (124.0 %)
Net gains/(losses) from foreign exchange | 17 | 19 | 17 | (9.9 %)
Net gains/(losses) from hedge accounting operations | 22 | (2) | 4 | >200%
Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value through profit or loss | 112 | 5 | n.a. | >200%
Net gains/(losses) from derecognition of financial assets and liabilities measured at amortised cost (only until 2021) | n.a | n.a. | (4) | n.a.
Net gains/(losses) from derecognition of financial assets measured at fair value through other comprehensive income (only until 2021) | n.a | n.a. | 69 | n.a.
TOTAL | 145 | 50 | 87 | 189.9 %
of which: |  |  |  |
Activity in Portugal | 13 | 69 | 76 | (81.4 %)
International activity | 132 | (19) | 11 | >200%

OTHER NET OPERATING INCOME
Other net operating income includes other operating income, net of other operating costs, which includes,
among others, the costs associated with the resolution and the deposit guarantee funds as well as with the
other mandatory contributions, both in the activity in Portugal and in the international activity. In addition,
other net operating income also includes the results from the sale of subsidiaries and other assets.
In 2023, other net operating income totalled a negative amount of 39 million euros, showing a significant
improvement compared to the also negative amount of 183 million euros recorded in the previous year. This
evolution was mainly driven by the international activity, namely by the reduction of mandatory
contributions to which the Polish subsidiary was subject.
In the activity in Portugal, other net operating income went from a negative amount of 76 million euros in
2022, to an also negative amount of 65 million euros at the end of 2023. Similar to what happened in the
international activity, it was also the reduction in costs with mandatory contributions that contributed
mainly to this evolution, although this impact was offset by the lower gains recognised with the sale of non-
current assets held for sale compared to the amount recognised in the previous year.
In fact, last year, the overall amount of mandatory contributions, including the supervisory fee charged by
the ECB, decreased from 91 million euros to 75 million euros. This evolution corresponds to a reduction of
17.2%, mainly reflecting the reduction in contributions for the National Resolution Fund (NRF) and the Single
Resolution Fund (SRF). The contribution to the NRF decreased by around 50%, from 19 million euros in 2022,
to 9 million euros in 2023, mainly due to the reduction in the contribution rate, from 0.057% to 0.029%. The
cost of the contribution to the SRF, in turn, went from 26 million euros in 2022, to 18 million euros in the
current year, reflecting on the one hand the lower reinforcement needs of the fund determined by the Single
Resolution Board (SRB) and on the other the increase, from 15.0% to 22.5%, of the share of this contribution
that can be delivered as irrevocable payment commitments, thus reducing the impact on the profit and loss
account of the institutions. Conversely, the cost incurred with the contribution on the banking sector
increased from 37 million euros to 38 million euros in the same period, influenced by the growth of the
Bank's balance sheet with the corresponding increase on average liabilities comprised in the calculation of
the amount of this contribution. It should be noted that the balance sheet reduction at the end of 2022 will
only have an higher impact on contributions for 2024, since the calculation of the amount payable considers
the average values of the balance sheet of the previous year to which the contribution relates, taking into
account the month-end observations. The additional solidarity contribution on the banking sector, aiming to
finance the costs with the public measures to address the crisis caused by the COVID-19 pandemic, amounted

2023 REPORT & ACCOUNTS |

|63
to 7 million euros in 2023, in line with the amount calculated in the previous year. The supervision fee
charged by the ECB amounted to 3 million euros, increasing from the 2 million euros recorded in 2022, while
the contribution to the deposit guarantee fund did not change significantly compared to the amount
recorded in 2022, standing at 1 million euros in 2023.
It should be noted that, in the activity in Portugal, of the total amount of costs recognised with mandatory
contributions in the current year, 54 million euros refer to contributions for national entities (62 million
euros in 2022).
In the international activity, other net operating income improved considerably from a negative amount of
107 million euros recognised in 2022, to an income of 26 million euros at the end of 2023. This performance
of other net operating income resulted from the reduction of about 90% of the costs with mandatory
contributions that the Polish subsidiary was subject, from 121 million euros in 2022, to 13 million euros in
2023.
Although the costs of all mandatory contributions borne by the Polish subsidiary were lower than those
recognised in 2022, the evolution of the overall amount of these contributions in the last year was mainly
due to the contribution, supported in 2022, associated with the then created Polish institutional protection
fund (IPS - Institutional Protection Scheme), which amounted to 59 million euros, non-existent in 2023. This
fund was set up with the aim of ensuring the stability of the local financial system by ensuring the liquidity
and solvency of the member banks, while serving to support situations of forced restructuring carried out by
the Bank Guarantee Fund in banks that are public companies. Thus, the Bank, together with the other
participating financial institutions, created a company that, in turn, constituted a "aid fund" to which each
bank contributed the equivalent of 0.4% of its deposits covered by the local Deposit Guarantee Fund. On the
other hand following the contribution to the IPS, the contribution of Bank Millennium to the deposit
guarantee fund has been suspended since the first quarter of 2022. As such, Bank Millennium only recorded
costs of the deposit guarantee fund for the first quarter of 2022, which amounted to 8 million euros also
contributing to the favourable evolution of the global amount of mandatory contributions compared to 2022.
The evolution of mandatory contributions in the Polish subsidiary also benefited from the suspension of the
payment of the special tax on the Polish banking sector, following the activation, at the beginning of the
second half of 2022, of the Bank Millennium Recovery Plan. In 2022 this tax amounted to 36 million euros.
Charges for the resolution fund recognised in 2023, in turn, totalled 13 million euros, below the 18 million
euros recognised last year.
In addition to the reduction of mandatory contributions in the Polish subsidiary, the evolution of other net
operating income in the international activity also benefited, albeit to a lesser extent, from a gain of 11
million euros, considered a specific item, associated with the revaluation of the minority stake (20%) which
Bank Millennium in Poland held following the sale of 80% of the shares of Millennium Financial Services sp. z
o.o. The mentioned amount includes an additional gain amounting to 2 million euros, compared to the 9
million euros determined in the first quarter of the year.
Conversely, other net operating income was negatively influenced by the impacts related to foreign
exchange mortgage loan portfolio that under this item went from an income of 22 million euros in 2022 to an
income of 16 million euros in 2023. This performance reflects both the increase arising from court costs
related to the counterclaims filed by Bank Millennium and the costs arising from negotiation with customers.
On the other hand, the income to be reimbursed from a third party, as compensation for costs incurred with
the booking of provisions to address the legal risk implicit in foreign exchange mortgage loans, following the
indemnity clauses and contractual guarantees provided for in the acquisition contract of Euro Bank S.A.,
evolved from 37 million euros in the last year, to 52 million euros this year.
Finally, it should be noted that although other net operating income in the subsidiary in Mozambique almost
doubled compared to the amount recognised in the previous year, its impact was not very significant on the
evolution of this item.
EQUITY ACCOUNTED EARNINGS
Equity accounted earnings from associates include the results appropriated by the Group related to the
entities where, despite exercising some influence, it does not have control over their financial and operating
policies.
In 2023, equity accounted earnings of the Group totalled 64 million euros, standing 9.6% above the 59 million
euros posted in the previous year.

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64 |
It should be noted that the amount for 2022 has been restated, thus diverging from the amount previously
disclosed. In fact, following the simultaneous adoption of IFRS9 - Financial Instruments and IFRS17 -
Insurance Contracts on 1 January 2023 by Millenniumbcp Ageas Grupo Segurador, S.G.P.S., S.A. (Mbcp
Ageas), an entity 49% owned by the Group, and taking into account that the initial application of IFRS 17 and
IFRS 9 requires comparative information, Mbcp Ageas made the transition exercise on 1 January 2022. The
restatement of 2022 Group's accounts resulted in an adjustment of 10 million euros, from 40 million euros to
30 million euros in the equity accounted earnings results from Mbcp Ageas in 2022, 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.
In the activity in Portugal, equity accounted earnings evolved from 58 million euros in 2022, to 60 million
euros at the end of the current year. This evolution was mainly due to the increase in results from Mbcp
Ageas, including the impact of the restatement of the amounts posted in 2022, as previously mentioned. On
the other hand, the lower income generated by the participation in SIBS and mainly in Unicre, compared to
the amounts recorded in 2022, offset the growth in equity accounted earnings in the activity in Portugal.
In the international activity, equity accounted earnings evolved from 1 million euros in 2022, to 5 million
euros at the end of the current year. Decisive for this evolution was the appropriation of the results
generated by Banco Millennium Atlântico in Angola, that went from a negative amount of 1 million euros in
2022 to a positive amount of 3 million euros in 2023. The appropriation of the results generated by
Seguradora Internacional de Moçambique, S.A. (“SIM”), currently known as Fidelidade Moçambique -
Companhia de Seguros S.A., in turn, did not change materially compared to the previous year.
EQUITY ACCOUNTED EARNINGS

| Million euros
| 2023 | 2022 (restated) | 2021 | Chg. % 23/22
Millenniumbcp Ageas Grupo Segurador, SGPS, S.A. | 40 | 30 | 38 | 36.1 %
UNICRE - Instituição Financeira de Crédito, S.A. | 7 | 12 | 5 | (44.3 %)
Banco Millennium Atlântico, S.A. | 3 | (1) | (1) | >200%
Banque BCP, S.A.S. | 3 | 5 | 4 | (39.3 %)
SIBS, SGPS, S.A. | 10 | 12 | 11 | (15.7 %)
Other (1) | 2 | 2 | — | 9.3 %
TOTAL | 64 | 59 | 57 | 9.6 %

(1) The appropriation of the results generated by Fidelidade Moçambique - Companhia de Seguros S.A. justifies the entire amount of this
heading in 2023 and almost its entirety in 2022.
OPERATING COSTS
Operating costs include staff costs, other
administrative costs and depreciation.
In 2023, operating costs continued to be strongly
influenced by the inflation rates in the three
geographies in which the Bank operates. In fact,
despite the disciplined management of costs
followed by the Group, operating costs as a whole
increased by 8.3% compared to the 1,073 million
euros recorded in 2022, totalling 1,163 million
euros, at the end of the current year.
The amounts presented do not exclude the specific
items considered in each period in staff costs in
the activity in Portugal. In 2023, specific items had
a negative impact of 15 million euros, including
costs related to the compensation for the
temporary reduction in employees remunerations
during 2014-2017, as distribution of part of the
Bank's results obtained in 2022 by the Bank's
employees, costs with employment terminations,
namely with early retirements, costs with
mortgage financing to former employees and an
income recognised after an agreement related to

2023 REPORT & ACCOUNTS |

|65
liabilities with former directors of the Bank. In
2022 the impact was also negative in the amount
of 16 million euros, including distribution of part of
the 2021 results by the Bank's employees, costs
with mortgage financing to former employees,
discretionary remuneration paid to employees as a
measure to offset the impacts of inflation and the
recognition of a provision for other structure
adaptation measures.
Excluding specific items, operating costs of the
Group amounted to 1,147 million euros, standing
8.6% above the 1,057 million euros accounted in
the previous year. This performance was
determined by the increase in both staff costs
(9.3%, 52 million euros) and other administrative
costs (11.4%, 40 million euros), in both cases more
significant in the international activity, although
activity in Portugal also showed an increase
compared to the amount recorded in the previous
year. Depreciations, in turn, were slightly below
(1.3%, 2 million euros) the amount recorded in
2022, as the reduction recorded in the activity in
Portugal was almost entirely offset by the increase
in the international activity.
Although operating costs were higher than in 2022,
the increase shown in both net operating revenues
and core income allowed a significant
improvement in cost to income and cost to core
income ratios. In fact, excluding the specific items
mentioned above and also excluding the positive
impact of 139 million euros, recognised in 2023, in
the international activity, associated with the sale
of 80% of the shares in Millennium Financial
Services sp. z o.o. also considered specific items,
cost to income evolved from 37.0% to 31.6% and
cost to core income from 36.2% to 31.9% in the last
year.
Cost to income and cost to core income stated
ratios evolved, respectively, from 37.6% to 30.8%
and from 36.7% to 32.3%.
OPERATING COSTS
(excluding specific items)
Million euros
In the activity in Portugal, operating costs totalled
617 million euros in 2023, standing 2.5% above the
602 million euros posted in 2022. Excluding the
specific items mentioned above, operating costs
increased 2.8%, from 585 million euros to 601
million euros.
This evolution of operating costs in the activity in
Portugal, not considering the effect of specific
items, reflects the increases of 5.4% (17 million
euros) and 2.6% (5 million euros) recorded in staff
costs and other administrative costs, respectively.
Depreciations, in turn, contributed favourably to
the evolution of operating costs in the activity in
Portugal, standing 7.6% (6 million euros) below the
amount recorded in 2022.
Despite the increase in operating costs, cost to
income and cost to core income ratios showed a
favourable evolution last year, reflecting the
increase recorded in net operating revenues and in
core income, respectively.
In fact, excluding the impact of specific items,
cost to income ratio in the activity in Portugal
stood at 29.5%, comparing favourably with the
37.2% recorded in 2022, while cost to core income
ratio improved from 38.7% to 29.7%. Cost to
income and cost to core income stated ratios stood
at 30.3% and 30.4% in 2023, levels that compare
respectively with 38.3% and 39.8% in the previous
year.

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66 |
OPERATING COSTS
(excluding specific items)
Activity in Portugal
Million euros
In the international activity, operating costs
totalled 546 million euros at the end of 2023,
standing 15.8% above the 471 million euros
accounted in the previous year. This evolution was
mainly due to the performance of the Polish
subsidiary, although in the subsidiary in
Mozambique operating costs were also higher than
those recorded in 2022. In both cases, the inflation
recorded in these geographies was decisive to this
evolution.
OPERATING COSTS
International activity
Million euros
In the Polish subsidiary, the increase in operating
costs resulted, above all, from the evolution of
staff costs and other administrative costs, with
depreciations showing a less significant increase.
In addition to the inflation levels, it is also
important to mention the impact that the
characteristics of the labour market in Poland,
with very low unemployment rates, had in
operating costs, namely the increase in staff costs,
as a way of retaining employees.
In turn, in the operation in Mozambique, operating
costs were also higher compared to the amount
recorded in 2022, mainly reflecting the increase in
other administrative costs, but also, although to a
lesser extent, staff costs and depreciations.
The evolution of operating costs in the
international activity was thus due to the increases
of 14.4% (35 million euros) in staff costs, of 21.0%
(36 million euros) in other administrative costs and
of 7.0% (4 million euros) in depreciations.
Despite higher operating costs, the evolution of
net operating revenues also allowed an
improvement in the cost to income ratio of the
international activity, from 36.6% para 31.5%.
Excluding the positive impact, in the amount of
139 million euros recognised in 2023, associated to
the sale of 80% of the shares of Millennium
Financial Services sp. z o.o., considered as specific
items, cost to income ratio of the international
activity was 34.2%. Cost to core income ratio in
the international activity, in turn, evolved from
33.4% to 34.8%.

2023 REPORT & ACCOUNTS |

|67
OPERATING COSTS

Million euros
| 2023 | 2022 | 2021 | Chg. % 23/22
ACTIVITY IN PORTUGAL (1) |  |  |  |
Staff costs | 340 | 322 | 346 | 5.4 %
Other administrative costs | 189 | 184 | 176 | 2.6 %
Depreciation | 73 | 79 | 80 | (7.6 %)
| 601 | 585 | 602 | 2.8 %
INTERNATIONAL ACTIVITY |  |  |  |
Staff costs | 277 | 242 | 218 | 14.4 %
Other administrative costs | 205 | 169 | 148 | 21.0 %
Depreciation | 64 | 60 | 57 | 7.0 %
| 546 | 471 | 423 | 15.8 %
CONSOLIDATED (1) |  |  |  |
Staff costs | 617 | 564 | 564 | 9.3 %
Other administrative costs | 393 | 353 | 324 | 11.4 %
Depreciation | 137 | 139 | 137 | (1.3 %)
| 1,147 | 1,057 | 1,025 | 8.6 %
SPECIFIC ITEMS | 15 | 16 | 91 | (7.4 %)
TOTAL | 1,163 | 1,073 | 1,116 | 8.3 %

(1) Excludes the impact of specific items previously mentioned.

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68 |
STAFF COSTS
In 2023, staff costs totalled 632 million euros,
standing 8.8% above the 581 million euros
accounted in the previous year.
These amounts include the specific items
recognised in each period in the activity in
Portugal. In 2023, specific items, related to staff
costs, had a negative impact of 15 million euros,
including the compensation for temporary
reduction in employees remunerations in
2014-2017 as distribution of part of the Bank's
results obtained in 2022 by the employees, costs
with employees terminations, namely early
retirements, costs with mortgage financing to
former employees and an income recognised after
an agreement related to liabilities with former
directors of the Bank. In 2022, the impact was also
negative in the amount of 16 million euros,
including distribution of part of the 2021 results by
the Bank's employees, costs with mortgage
financing to former employees, discretionary
remuneration paid to employees as a measure to
offset the impacts of inflation and the recognition
of a provision for other structure adaptation
measures.
Excluding specific items, staff costs of the Group
amounted to 617 million euros, increasing 9.3%
from the 564 million euros accounted for in the
previous year, mainly influenced by the
international activity.
In the activity in Portugal, staff costs amounted to
355 million euros at the end of 2023, standing 4.8%
above the 339 million euros recorded in the
previous year. Not considering the impact of the
specific items, staff costs in the activity in
Portugal totalled 340 million euros in 2023,
corresponding to an increase of 5.4% compared to
the 322 million euros recorded a year before.
After the implementation of the headcount
adjustment plan that the Bank carried out in 2021,
the number of employees in the activity in
Portugal remained stable, standing at 6,242
employees at the end of 2023, ten less than on 31
December 2022. It should be noted, however, that
the Bank continued to acquire the required
capabilities to meet current needs namely by
hiring new employees with specific skills, namely
on digital, new technologies and internal control
areas.
In the international activity, staff costs amounted
to 277 million euros at the end of 2023, standing
14.4% above the 242 million euros recorded in
2022. The Polish subsidiary was mainly responsible
for this evolution, although the subsidiary in
Mozambique also contributed to the increase in
staff costs compared to the previous year, albeit
to a lesser extent.
In the Polish subsidiary, the evolution of staff costs
continued to be determined by the strong pressure
on basic wages, resulting both from levels of
inflation and from the characteristics of the Polish
labour market, in particular from the very low
unemployment rates in the country, that reinforce
the need to retain employees. Conversely it is
worth mentioning the positive impact on the
evolution of staff costs of the reduction in the
total number of employees, which in the last year
went from 6,987 employees (6,860 FTE - full-time
equivalent) at the end of 2022, to 6,872 employees
(6,747 FTE - full-time equivalent) on 31 December,
2023.
The operation in Mozambique, in turn, increased
its headcount, from 2,504 employees on 31
December 2022 to 2,574 employees at the end of
2023, which together with the salary update and
the increase in bonuses paid, contributed to the
growth in staff costs in the last year.
As of 31 December 2023, the headcount of the
international activity consisted of 9,446
employees, which compares to 9,491 employees at
the end of 2022.
EMPLOYEES

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|69
STAFF COSTS

Million euros
| 2023 | 2022 | 2021 | Chg. % 23/22
Salaries and remunerations | 508 | 462 | 455 | 10.0 %
Social security charges and other staff costs | 109 | 103 | 108 | 6.1 %
TOTAL EXCLUDING SPECIFIC ITEMS | 617 | 564 | 564 | 9.3 %
of which: |  |  |  |
Activity in Portugal | 340 | 322 | 346 | 5.4 %
International activity | 277 | 242 | 218 | 14.4 %
SPECIFIC ITEMS | 15 | 16 | 91 | (7.4 %)
TOTAL | 632 | 581 | 654 | 8.8 %

OTHER ADMINISTRATIVE COSTS
In 2023, the evolution of other administrative costs
continued to be strongly influenced by inflation in
the three geographies in which the Bank operates,
especially in operations abroad. Thus,
notwithstanding the disciplined management of
costs followed by the Group, other administrative
costs, in consolidated terms, were 11.4% above the
353 million euros recorded in the previous year,
totalling 393 million euros at the end of the
current year.
In the activity in Portugal, other administrative
costs amounted to 189 million euros, standing 2.6%
above the 184 million euros recorded in 2022.
To a large extent, the increase in costs associated
with outsourcing, related to banking operations,
contributed to this performance. Influenced by the
effect of inflation, others supplies and services and
rents and leases were also higher compared to the
amount recorded in the previous year. On the
other hand, the investment in technology and
cybersecurity inevitably led to an increase in the
respective costs, particularly maintenance of
hardware and software, with an impact on
headings information technology services and
maintenance and related services. On the other
hand, the increasingly digital servicing model, with
the increasing transfer of transactions to
machines, resulted in the growth of the number of
deposit machines installed in branches, which,
along with the inclusion of a greater number of
branches in the deposit centralisation service was
reflected in the increase in costs associated with
the transport of values (reflected under
transportation item), despite the fact that the cost
per transaction has decreased. Costs associated
with advertising, travel, hotel and representations,
legal expenses and training were also higher than
the amounts observed in 2022, but had a smaller
impact on the evolution of other administrative
costs in the activity in Portugal.
On the other hand, significant savings were
obtained in water, electricity and fuel, resulting
from the reduction in energy prices and from an
efficient management of these consumptions.
Costs associated with advisory services and other
specialised services were also lower compared to
the amounts recorded in the previous year, as well
as, although with a smaller impact, costs
associated to insurance, consumables, credit cards
and mortgage and communications.
On the other hand, the resizing of the branch
network which, in the activity in Portugal, evolved
from 408 branches, to 399 branches, although not
very significant, had a positive impact on the
evolution of most of the items of other
administrative costs. Likewise, the pursuit of
disciplined cost management and the consequent
implementation of a series of recurrent measures
has allowed the optimisation of the cost structure
of the Bank.
In the international activity, other administrative
costs amounted to 205 million euros in 2023,
representing a 21.0% increase from the 169 million
euros posted in the previous year, largely
reflecting the aforementioned general price
increases with repercussions in both the Polish
subsidiary and the subsidiary in Mozambique.
The increase in costs was more noticeable in the
Polish subsidiary, which, in addition to the impact
of inflation, also reflects the increase in legal
advice costs associated with foreign exchange
mortgage loan portfolio. On the other hand, it
should be noted that the evolution of other
administrative costs, in the international activity,
continues to benefit from the optimisation of the
branch network in the Polish subsidiary, with the
number of branches decreasing from 635 at the
end of 2022, to 612 on 31 December 2023. The
subsidiary in Mozambique, in turn, ended the year
of 2023 with 195 branches, only two less than a
year before.

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70 |
BRANCHES
OTHER ADMINISTRATIVE COSTS

Million euros
| 2023 | 2022 | 2021 | Chg. % 23/22
Water, electricity and fuel | 15 | 18 | 13 | (17.0 %)
Consumables | 8 | 8 | 6 | 0.6 %
Rents and Leases | 27 | 24 | 24 | 10.5 %
Communications | 25 | 24 | 21 | 5.3 %
Travel, hotel and representation costs | 7 | 5 | 3 | 36.9 %
Advertising | 28 | 25 | 24 | 11.5 %
Maintenance and related services | 18 | 17 | 14 | 10.5 %
Credit cards and mortgage | 9 | 9 | 8 | 0.2 %
Advisory services | 44 | 32 | 27 | 38.0 %
Information technology services | 26 | 28 | 25 | (7.1 %)
Outsourcing and independent labour | 112 | 93 | 93 | 19.4 %
Other specialised services | 29 | 29 | 28 | (0.3 %)
Training costs | 1 | 1 | 1 | 3.5 %
Insurance | 5 | 5 | 5 | 2.0 %
Legal expenses | 5 | 4 | 5 | 14.7 %
Transportation | 11 | 10 | 8 | 9.9 %
Other supplies and services | 24 | 21 | 19 | 13.5 %
TOTAL | 393 | 353 | 324 | 11.4 %
of which: |  |  |  |
Activity in Portugal | 189 | 184 | 176 | 2.6 %
International activity | 205 | 169 | 148 | 21.0 %

(1) In 2023, some reclassifications were made, in order to improve the quality of the information reported. The historical amounts related to
2022 and 2021 of such items are presented considering these reclassifications with the purpose of ensuring their comparability, therefore
diverging from the accounting values disclosed. The overall amount of other administrative costs disclosed in previous periods remains
unchanged compared to that published in previous periods.
DEPRECIATIONS
Depreciations amounted to 137 million euros at the end of 2023, standing 1.3% below the amount recorded in
2022. This evolution mainly reflects the performance of the activity in Portugal, although its impact was
largely absorbed by the increase recorded in the international activity.

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|71
In the activity in Portugal, depreciations showed a reduction of 7.6%, evolving from 79 million euros in 2022
to 73 million euros in the current year. It is important, however, to note that this evolution was possible,
despite the increased investment made in software and IT equipment, given the Bank's commitment to the
digital transformation process.
In the international activity, depreciations amounted to 64 million euros in 2023, standing 7.0% above the 60
million euros recorded in 2022, reflecting the performance of both the Polish subsidiary and the Mozambican
subsidiary.
RESULTS ON MODIFICATION
In the fourth quarter of 2022, the Bank reviewed and reclassified the amount associated with costs arising
from the moratorium program (credit holidays) in Poland, enacted in July of that year, which had been
accounted for in other impairments and provisions, starting to recognise these costs as results on
modification. Since then, this heading also started to include contractual modifications, namely those
negotiated with customers with foreign exchange mortgage loans, in accordance with IFRS9.
In 2023, results on modification totalled a negative amount of 19 million euros, which compares with an also
negative amount of 310 million euros recorded in the previous year, with the amount recognised in 2022
resulting mainly from the recognition of costs arising from the aforementioned moratorium program (credit
holidays).
In this context, it should be noted that, following the signing by the President of the Republic of Poland of
the Act of 7 July 2022 on crowdfunding for business ventures and assistance to borrowers, introducing,
among others, access to credit holidays up to eight months in 2022-2023 for borrowers of mortgage loans
denominated in Zlotys, the Bank estimated the maximum impact of implementing this Act if all eligible
borrowers were to use this instrument, having recognised an upfront cost of 80% of the respective costs in
the results of the third quarter of 2022, corresponding to 305 million euros. In the fourth quarter of 2022, a
review of the effective cost and use of credit moratoriums by eligible borrowers in the second half of 2022
was carried out and ongoing requests to suspend mortgage loan instalments in Zlotys in the year 2023 were
analysed. As a result of this review, taking into account the analysis of Customers behaviour, Bank
Millennium's Group adjusted the estimates of the participation percentage to 68%. The total estimated cost
of credit moratoria was consequently reduced to 283 million euros at the end of 2022.
On the other hand, costs associated with contractual modifications negotiated with customers with foreign
exchange mortgage loans, also in the Polish subsidiary, were lower compared to the amount recognised in
2022.

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72 |
LOANS IMPAIRMENT
Impairment of loans to customers includes impairment of financial assets at amortised cost for loans granted
to customers and for debt securities associated with credit operations, net of reversals and recoveries of
credit and interest.
The reconciliation of the impairment of financial assets at amortised cost presented in the consolidated
profit and loss account with the impairment of loans to customers considered for the purposes of this analysis
is presented as follows:
Loans impairment (P&L)

Million euros
| 2023 | 2022 | 2021
Impairment of financial assets at amortised cost (accounting P&L) (1) | 248 | 301 | 353
Impairment of Loans and advances to credit institutions (at amortised cost) (2) | (1) | 0 | 1
Impairment of financial assets at amortised cost not associated with credit operations (3) | 9 | 1 | 3
Loans impairment considering management criteria (4)=(1)-(2)-(3) | 240 | 301 | 349
| 148 | 151 | 182

In 2023, impairment for loan losses (net of recoveries) totalled 240 million euros, showing a reduction of
20.2% compared to the 301 million euros accounted for in the previous year, reflecting the favourable
evolution recorded both in the activity in Portugal and mainly in the international activity.
LOANS IMPAIRMENT (NET)
Million euros
In the activity in Portugal, loans impairment
charges (net of recoveries), amounted to 208
million euros in 2023, standing 5.0% below the 218
million euros recognised in 2022. The lower level
of provisioning, compared to the previous year,
reflects, on the one hand, the improvement in the
risk profile of the credit portfolio and, on the
other, the recovery of relevant non-performing
exposures.
LOANS IMPAIRMENT (NET)
Activity in Portugal
Million euros
In the international activity, impairment charges
(net of recoveries) stood significantly below the 82
million euros recognised in 2022, standing at 32
million euros at the end of 2023, as a result of the
performance of both the subsidiary in Poland and
mainly from the Mozambican subsidiary.

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|73
In the Polish subsidiary, the update of the
impairment computation parameters for exposures
guaranteed by the State, as well as the change in
default definition, together with the impact of the
sale of non-performing loans contributed to the
improvement observed the last year.
In the subsidiary in Mozambique, in turn, the
evolution of loans impairment benefited from the
partial recovery of a credit in litigation, following
an out-of-court settlement. Additionally, the
reversal of impairments booked in previous periods
also contributed, albeit in a less significant way, to
the favourable evolution of loans impairment in
this subsidiary.
LOANS IMPAIRMENT (NET)
International activity
Million euros
The evolution of impairment charges (net of
recoveries), in consolidated terms, allowed the
cost of risk of the Group, net of recoveries, to
record a significant improvement in relation to the
52 basis points observed in 2022, standing at 42
basis points in 2023. Excluding the impact of the
recovery associated with the out-of-court
settlement, previously mentioned, the cost of risk
in 2023 stood at 48 basis points.
In the activity in Portugal, the cost of risk (net of
recoveries) remained stable compared to the
previous year, standing at 54 basis points in 2023.
In the international activity, the cost of risk net of
recoveries improved significantly, evolving from 47
basis points to 18 basis points in the last year,
benefiting from the impact of the recovery
associated with the aforementioned out-of-court
settlement. Excluding this impact, the cost of risk
in 2023 stood at 37 basis points.
LOANS IMPAIRMENT (NET OF RECOVERIES)

Million euros
| 2023 | 2022 | 2021 | Chg. 23/22
Loan impairment charges (net of reversions) | 298 | 321 | 372 | (7.4 %)
Credit recoveries | 58 | 21 | 23 | 177.1 %
TOTAL | 240 | 301 | 349 | (20.2 %)
of which: |  |  |  |
Activity in Portugal | 208 | 218 | 273 | (5.0 %)
International activity | 32 | 82 | 76 | (60.5 %)
COST OF RISK: |  |  |  |
Cost of risk (net of recoveries) | 42 b.p. | 52 b.p. | 60 b.p. | (10) b.p.

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74 |
OTHER IMPAIRMENT AND PROVISIONS
Other impairment and provisions include (i) impairment, net of reversals, for loans and advances of credit
institutions classified at amortised cost; (ii) impairment for financial assets (classified at fair value through
other comprehensive income and at amortised cost not associated with credit operations); (iii) impairment for
other assets, namely assets received as payment in kind, investments in associated companies and goodwill of
subsidiaries; and (iv) other provisions.
In 2023, other impairment and provisions totalled 860 million euros, 13.8% above the 756 million euros
recorded in the previous year. This evolution was, to a large extent, influenced by the reinforcement of the
additional provision booked by the Polish subsidiary to face the legal risk of foreign exchange mortgage
loans, which amounted to 675 million euros in the current year vs 431 million euros recognised in the
previous year. It should be noted, however, that the evolution of other impairments and provisions was also
considerably influenced by the recognition, in June 2022, of impairment of the goodwill of the Polish
subsidiary, in the amount of 102 million euros.
Other impairments and provisions, in the activity in Portugal, contributed favourably to the performance of
this heading, as there was a significant reduction of 21.7% over the last year, from 205 million euros, to 161
million euros.
This evolution mainly reflects the reduction in the impairment to non-current assets held for sale, namely
t he foreclosed assets portfolio, with provisions for other risks also showing a considerable reduction
compared to the amount recognised in the previous year. Conversely, the impairment of other assets and
other financial assets, as well as provisions for guarantees and other commitments were higher compared to
the amount posted in 2022.
In the international activity, other impairment and provisions amounted to 699 million euros at the end of
2023, standing 27.0% above the 550 million euros recorded a year earlier.
As previously mentioned, this evolution essentially reflects the increase of 244 million euros in the provision
booked by the Polish subsidiary to face the legal risk associated with foreign exchange mortgage loans, the
impact of which on the evolution of this heading was largely offset by the impairment in the amount of 102
million euros, booked in June of the previous year, relating to the total goodwill associated with the
participation that the Group holds in Bank Millennium.
In fact, the unfavourable decision of the Court of Justice of the European Union with regard to remuneration
for the use of capital on foreign exchange mortgage loans in the Polish subsidiary and the inclusion of
adjustments in the calculation methodology, in order to anticipate potential negative trends associated to
this portfolio led to the mentioned reinforcement of provisions. It should be noted that the impact of the
reinforcement of these provisions was, however, offset by the recognition of income, reflected in the
heading of other net operating income, corresponding to the amount receivable from a third party, following
the indemnity clauses and contractual guarantees provided for in the acquisition contract of Euro Bank S.A.
(52 million euros in 2023 and 37 million euros in 2022).
Although other impairments and provisions, in the subsidiary in Mozambique, more than doubled compared to
the amount recognised in 2022, their impact was not very significant on the evolution of this item in the
international activity. The increases were essentially recorded in impairments associated with other financial
assets and other assets, although there was a significant reduction in the impairment of non-current assets
held for sale.
Conversely, the impairments that had been recognised in 2022 to cover the investment in the participation in
Banco Millennium Atlântico (including impairment for goodwill) were non-existent in 2023, favourably
influencing the performance of other impairments and provisions in the international activity.
INCOME TAX
Income tax (current and deferred) amounted to 537 million euros in 2023, which compares to 304 million
euros posted in the previous year.
The recognised taxes include, in 2023, current tax of 180 million euros (110 million euros in 2022) and
deferred tax of 358 million euros (195 million euros in 2022).

2023 REPORT & ACCOUNTS |

|75
Current tax expenses in 2023 were strongly influenced by provisions for legal risks related to the portfolio of
foreign currency mortgage loans and by mandatory contributions to the banking sector, both of them non-
deductible for tax purposes in the Polish subsidiary.
Expenses with the reduction of deferred tax assets in 2023 mainly result from the income of the period of the
activity in Portugal and are influenced by mandatory contributions levied on the banking sector and provisions
for other risks, not deductible for tax purposes.
It should be noted that, in 2022, the Group’ s income before tax included the expense of 102 million euros
related to the impairment of the goodwill of the Polish subsidiary, which had no impact on current and
deferred taxes.
NON-CONTROLLING INTERESTS
Non-controlling interests are the part attributable to third parties of the net income of the subsidiary
companies consolidated under the full method in which the Group Banco Comercial Português does not hold,
directly or indirectly, the entirety of their share capital.
Non-controlling interests record mainly the income for the year attributable to third parties related to the
shareholdings in Bank Millennium in Poland (49.9%) and in Millennium bim in Mozambique (33.3%).
In 2023, non-controlling interests totalled 92 million euros, contrasting with the negative amount of 78
million euros recorded in the previous year. This evolution was mainly a result of the income for the year
attributable to third parties via the consolidation of the Polish subsidiary, which went from a negative
amount of 108 million euros to 63 million euros, following the better results obtained by Bank Millennium in
2023, compared to 2022.
Income for the year attributable to third parties via the consolidation of the subsidiary in Mozambique, in
turn, amounted to 34 million euros in 2023, which compares with 35 million euros in 2022.

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76 |
REVIEW OF THE BALANCE SHEET
Following the entry into force of the IFRS 9 – Financial Instruments on January 1, 2018 and the consequent
impacts on the structure of the financial statements of Millennium bcp versus previous periods, some
indicators were defined based on concepts that translate the management criteria adopted by the Group
within the scope of preparation of financial information. The correspondence between the management
approaches and the accounting information is described in the glossary and throughout the document, when
applicable, especially the concepts related with loans to customers, balance sheet customer funds and the
securities portfolio.
BALANCE SHEET

Million euros
| 31 Dec. 23 | 31 Dec. 22 restated | 31 Dec. 21 | Chg. 23/22
ASSETS |  |  |  |
Cash and deposits at central banks and loans and advances to credit institutions (1) | 4,883 | 6,235 | 8,158 | (21.7 %)
Financial assets measured at amortised cost |  |  |  |
Loans and advances to credit institutions | 908 | 963 | 453 | (5.7 %)
Loans and advances to customers | 53,305 | 54,676 | 54,972 | (2.5 %)
Debt instruments | 17,579 | 13,036 | 8,205 | 34.9 %
Financial assets measured at fair value through profit or loss |  |  |  |
Financial assets held for trading | 823 | 767 | 931 | 7.3 %
Financial assets not held for trading mandatorily at fair value through profit or loss | 467 | 553 | 991 | (15.5 %)
Financial assets designated at fair value through profit or loss | 32 | 0 | 0 |
Financial assets measured at fair value through other comprehensive income | 10,834 | 7,462 | 12,891 | 45.2 %
Investments in associated companies | 356 | 315 | 462 | 13.1 %
Non-current assets held for sale | 80 | 499 | 781 | (84.0 %)
Other tangible assets, goodwill and intangible assets | 830 | 757 | 857 | 9.5 %
Current and deferred tax assets | 2,575 | 2,957 | 2,705 | (12.9 %)
Other (2) | 1,706 | 1,657 | 1,497 | 3.0 %
TOTAL ASSETS | 94,380 | 89,877 | 92,905 | 5.0 %
LIABILITIES |  |  |  |
Financial liabilities measured at amortised cost |  |  |  |
Resources from credit institutions | 829 | 1,468 | 8,896 | (43.5 %)
Resources from customers | 75,607 | 75,430 | 69,560 | 0.2 %
Non subordinated debt securities issued | 2,713 | 1,482 | 2,188 | 83.0 %
Subordinated debt | 1,397 | 1,333 | 1,395 | 4.8 %
Financial liabilities at fair value through profit or loss |  |  |  |
Financial liabilities held for trading | 207 | 242 | 231 | (14.1 %)
Financial liabilities measured at fair value through profit or loss | 3,608 | 1,818 | 1,582 | 98.5 %
Other (3) | 2,718 | 2,167 | 1,990 | 25.4 %
TOTAL LIABILITIES | 87,080 | 83,940 | 85,843 | 3.7 %
EQUITY |  |  |  |
Share capital | 3,000 | 3,000 | 4,725 |
Share premium | 16 | 16 | 16 |
Other equity instruments | 400 | 400 | 400 |
Reserves and retained earnings (4) | 2,040 | 1,541 | 840 | 32.4 %
Net income for the period attributable to Bank's Shareholders | 856 | 197 | 138 | >200 %
Non-controlling interests | 987 | 782 | 943 | 26.3 %
TOTAL EQUITY | 7,299 | 5,937 | 7,062 | 23.0 %
TOTAL LIABILITIES AND EQUITY | 94,380 | 89,877 | 92,905 | 5.0 %

(1) Includes Cash and deposits at central banks and Loans and advances to credit institutions.
(2) Includes Hedging derivatives, Investment property and Other assets.
(3) Includes Hedging derivatives, Provisions, Current and deferred income tax liabilities and Other liabilities.
(4) Includes Legal and statutory reserves and Reserves and retained earnings.

2023 REPORT & ACCOUNTS |

|77
The reconciliation between the management criteria defined and the accounting values published in the
consolidated financial statements are presented below.
Loans to customers (gross) includes loans to customers at amortised cost before impairment, the debt
securities at amortised cost associated with credit operations before impairment and loans to customers at
fair value through profit or loss before fair value adjustments. The amount of balance sheet impairment
considered for the purpose of calculating loans to customers (net) and the coverage ratio of the loan
portfolio includes the balance sheet impairment associated with loans to customers at amortised cost, the
balance sheet impairment related with debt securities at amortised cost associated with credit operations
and the fair value adjustments associated with loans to customers at fair value through profit or loss.
Loans to customers

Million euros
| 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 21
Loans to customers at amortised cost (accounting Balance Sheet) | 53,305 | 54,676 | 54,972
Debt instruments at amortised cost associated to credit operations | 1,908 | 1,501 | 1,308
Balance sheet amount of loans to customers at fair value through profit or loss | 4 | 21 | 79
Loans to customers (net) considering management criteria | 55,218 | 56,198 | 56,360
Balance sheet impairment related to loans to customers at amortised cost | 1,583 | 1,502 | 1,849
Balance sheet impairment associated with debt instruments at amortised cost related to credit operations | 9 | 5 | 7
Fair value adjustments related to loans to customers at fair value through profit or loss | 5 | 8 | 14
Loans to customers (gross) considering management criteria | 56,814 | 57,713 | 58,231

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78 |
Regarding deposits and other resources from customers, the Bank continued to use the approach previously
used for the item “Resources from customers and other loans”, aggregating resources from customers at
amortised cost and customer deposits at fair value through profit and loss (non-existent on 31 December
2021). Balance sheet customer funds include, apart from deposits and other resources from customers, debt
securities placed with customers either classified at amortised cost or designated at fair value through profit
or loss.
Balance sheet customer funds

Million euros
| 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 21
Financial liabilities at fair value through profit or loss (accounting Balance sheet) (1) | 3,608 | 1,818 | 1,582
Debt securities at fair value through profit or loss and certificates (2) | 1,287 | 1,341 | 1,582
Customer deposits at fair value through profit or loss considering management criteria (3)=(1)-(2) | 2,321 | 477 | 0
Resources from customers at amortised cost (accounting Balance sheet) (4) | 75,607 | 75,430 | 69,560
Deposits and other resources from customers considering management criteria (5)=(3)+(4) | 77,928 | 75,907 | 69,560
Non subordinated debt securities issued at amortised cost (accounting Balance sheet) (6) | 2,713 | 1,482 | 2,188
Debt securities at fair value through profit or loss and certificates (7) | 1,287 | 1,341 | 1,582
Non subordinated debt securities placed with institutional customers (8) | 2,713 | 1,480 | 2,155
Debt securities placed with customers considering management criteria (9)=(6)+(7)-(8) | 1,287 | 1,343 | 1,615
Balance sheet customer funds considering management criteria (10)=(5)+(9) | 79,215 | 77,250 | 71,175

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|79
The securities portfolio includes debt securities at amortised cost not associated with credit operations (net
of impairment), financial assets at fair value through profit or loss (excluding amounts related to credit
operations and trading derivatives), and financial assets at fair value through other comprehensive income.
Securities portfolio

|  | Million euros
| 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 21
Debt instruments at amortised cost (accounting Balance sheet) (1) | 17,579 | 13,036 | 8,205
Debt instruments at amortised cost associated to credit operations net of impairment (2) | 1,908 | 1,501 | 1,308
Debt instruments at amortised cost considering management criteria (3)=(1)-(2) | 15,671 | 11,535 | 6,897
Financial assets not held for trading mandatorily at fair value through profit or loss (accounting Balance sheet) (4) | 467 | 553 | 991
Balance sheet amount of loans to customers at fair value through profit or loss (5) | 4 | 21 | 79
Financial assets not held for trading mandatorily at fair value through profit or loss considering management criteria (6)=(4)-(5) | 463 | 532 | 912
Financial assets held for trading at fair value through profit or loss (accounting Balance sheet) (7) | 823 | 767 | 931
of which: trading derivatives (8) | 414 | 376 | 431
Financial assets designated at fair value through profit or loss (accounting Balance sheet) (9) | 32 | 0 | 0
Financial assets at fair value through other comprehensive income (accounting Balance sheet) (10) | 10,834 | 7,462 | 12,891
Securities portfolio considering management criteria (11)=(3)+(6)+(7)- (8)+(9)+(10) | 27,409 | 19,918 | 21,201

The year 2023 was characterised by an increase in
Millennium bcp's consolidated balance sheet, with
an increase, on the assets side, driven by the
significant reinforcement of the securities
portfolio, despite the reductions observed in
deposits at central banks, in loans to customers
portfolio (net of impairment), in non-current
assets held for sale and in deferred tax assets.
Additionally, there was also an increase in
liabilities, mainly due to the increase observed in
deposits and other resources from customers and
in non-subordinated debt securities issued and
also, in equity, mainly due to integration of the
net result for the year.
TOTAL ASSETS
Million euros
Note: Following the adoption, on 1 January 2023, of IFRS9 - Financial
Instruments and IFRS17 - Insurance Contracts, by Millenniumbcp Ageas Grupo
Segurador, S.G.P.S., S.A. (Mbcp Ageas), an entity 49% owned by the Group,
and complying with comparative information requirements, the accounts of
the Group referring to 2022 were restated accordingly, corresponding to a
positive impact of 16 million euros in the 2022 consolidated balance sheet
total assets.

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80 |
The effect of the increase in deposits and other
resources from customers on a consolidated basis
combined with the decrease in loans to customers
portfolio (net of impairment) led to a surplus
increase of the commercial gap and, consequently,
to the reduction of the loans-to-deposits ratio
(measured by the ratio between net loans and
deposits and other resources from customers),
which evolved from 74.0% at the end of 2022 to
70.9% on 31 December 2023.
Millennium bcp’s consolidated balance sheet total
assets amounted to 94,380 million euros as of 31
December 2023, showing an increase of 5.0% in
comparison with the 89,877 million euros recorded
at the end of 2022, with the increase in assets in
the international activity, partially mitigated by
the slight reduction in assets seen in the activity in
Portugal.
MAIN GEOGRAPHIES

Million euros
|  |  |  | International activity *
| Portugal | Total Int Op | Bank Millennium | BIM
| Dec. 23 | Dec.22 restated | Dec. 21 | Dec. 23 | Dec. 22 | Dec. 21 | Dec. 23 | Dec. 22 | Dec. 21 | Dec. 23 | Dec. 22 | Dec. 21
TOTAL ASSETS | 62,725 | 63,284 | 67,216 | 31,655 | 26,593 | 25,689 | 28,897 | 23,697 | 22,669 | 2,711 | 2,824 | 2,527
LOANS TO CUSTOMERS (GROSS) | 38,625 | 40,149 | 39,866 | 18,190 | 17,564 | 18,365 | 17,535 | 16,881 | 17,739 | 654 | 683 | 626
Mortgage loans | 18,763 | 19,014 | 18,394 | 9,218 | 9,110 | 9,678 | 9,207 | 9,099 | 9,668 | 10 | 11 | 11
Personal loans | 2,324 | 2,180 | 2,111 | 4,509 | 3,862 | 3,888 | 4,308 | 3,700 | 3,752 | 201 | 161 | 135
Companies | 17,538 | 18,955 | 19,361 | 4,463 | 4,593 | 4,799 | 4,020 | 4,082 | 4,319 | 443 | 511 | 480
CUSTOMER FUNDS | 66,672 | 68,262 | 66,290 | 28,623 | 24,546 | 23,806 | 26,547 | 22,315 | 21,912 | 2,075 | 2,232 | 1,894
BALANCE SHEET CUSTOMER FUNDS | 52,450 | 54,077 | 49,319 | 26,765 | 23,173 | 21,856 | 24,690 | 20,941 | 19,962 | 2,075 | 2,232 | 1,894
Deposits and other resources from customers | 51,163 | 52,734 | 47,712 | 26,765 | 23,173 | 21,848 | 24,690 | 20,941 | 19,954 | 2,075 | 2,232 | 1,894
Debt securities placed with customers | 1,287 | 1,343 | 1,606 | 0 | 0 | 9 | 0 | 0 | 9 | 0 | 0 | 0
OFF BALANCE SHEET CUSTOMER FUNDS | 14,222 | 14,185 | 16,972 | 1,858 | 1,373 | 1,950 | 1,858 | 1,373 | 1,950 | 0 | 0 | 0
Assets under management | 4,351 | 4,307 | 4,629 | 1,210 | 806 | 1,143 | 1,210 | 806 | 1,143 | 0 | 0 | 0
Assets placed with customers | 5,516 | 4,803 | 6,076 | 399 | 299 | 410 | 399 | 299 | 410 | 0 | 0 | 0
Insurance products (savings and investment) | 4,355 | 5,075 | 6,267 | 248 | 268 | 397 | 248 | 268 | 397 | 0 | 0 | 0

*The international operations, in addition to the activity of Bank Millennium in Poland and Millennium Bim in Mozambique, also include the
activity of Banco Millennium Atlântico in Angola and until 2022 the activity of Millennium BCP Bank & Trust in the Cayman Islands. The
presentation of the international activity operations is in accordance with the Consolidated Accounts of the Group, and there may be
differences in relation to the accounts disclosed locally. In 2022, the aggregate of international operations includes the impairment of the
goodwill related to the Polish subsidiary, recorded in the consolidated accounts.
** In Poland, loans to customers (gross) include: buy-sell back transactions (i.e. reverse repos) (31 December 2023: 3 million euros, 31
December 2022: 1 million euros; 31 December 2021: 59 million euros) and customer funds include sell-buy back transactions (i.e. repos) (31
December 2021: 4 million euros).

2023 REPORT & ACCOUNTS |

|81
The activity in Portugal recorded a slight decrease
of 0.9% of total assets, compared to the 63,284
million euros posted as of 31 December 2022,
standing at 62,725 million euros at the end of
2023. Regarding the evolution of the balance sheet
items, there were reductions in loans to customers
portfolio (net of impairment), in deposits at
central banks, in non-current assets held for sale,
particularly in the portfolio of real estate
properties received as payment and in deferred
tax assets. Conversely, there was an increase in
the securities portfolio, mainly explained by the
investment in public debt of euro zone countries.
In the international activity, total assets amounted
to 31,655 million euros as of 31 December 2023,
showing an increase of 19.0% compared to the
26,593 million euros posted at the end of the
previous year. This evolution is mainly due to the
increases recorded in the securities portfolio and
in loans to customers portfolio (net of
impairments), despite the reduction observed in
deposits at central banks.
Total liabilities of the Group stood at 87,080
million euros at the end of 2023, a value higher
than the 83,940 million euros recorded at the end
of 2022, with this evolution being driven by
increases in deposits and other resources from
customers resources and in non-subordinated debt
securities issued, despite the decrease in resources
from central banks and from credit institutions.
Deposits and other resources from customers stood
at 77,928 million euros on 31 December 2023,
2,021 million euros above the figure recorded at
the end of 2022, with this evolution being driven
by the positive contribution of the international
activity, partly offset by the decrease in deposits
in the activity in Portugal. The non subordinated
debt securities issued also contributed to the
aforementioned evolution of liabilities, increasing
from 1,482 million euros at the end of 2022 to
2,713 million euros at the end of 2023, mainly due
to the issue of two preferred senior debts, one
within the scope of the activity in Portugal (issued
by Banco Comercial Português) and another in the
international activity (issued by Bank Millennium),
to reinforce the capacity to comply with MREL
(Minimum Requirements for Own Funds and
Eligible Liabilities). These aforementioned issues
amounted in both cases to 500 million euros and
were carried out in September.
Equity showed an increase from 5,937 million euros
figure recorded at the end of the previous year to
7,299 million euros at the end of 2023, with the
positives impacts of the integration of net income
for the year and the favourable evolution of the
fair value reserve, influenced by the positive
impact of cash flow hedging, being partially offset
by the negative evolution of actuarial deviations
associated with the pension fund.

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82 |
LOANS TO CUSTOMERS
Millennium bcp's consolidated customer loan
portfolio (gross loans, that is, before impairment
and fair value adjustments) amounted to 56,814
million euros as of 31 December 2023, standing
below the 57,713 million euros figure achieved at
the end of the previous year. This evolution
reflects the reduction in the activity in Portugal,
although the increase recorded in the international
activity partially offset this reduction.
The evolution of the loans to customers portfolio,
compared to 31 December 2022, was mainly due to
the reduction recorded in the loans to companies
segment, mainly seen in the activity in Portugal,
but also in the international activity, although in
the latter case the reduction was less significant.
In the opposite direction, there was a greater
contribution from loans to individuals segment,
due to the increase in personal loans, partly offset
by the slight reduction seen in mortgage loans. It
should also be noted that the good performance of
individuals segment was driven by the increase
observed in the international activity, as the
activity in Portugal recorded a slight reduction.
In the activity in Portugal, loans to customers
(before impairment) amounted to 38,625 million
euros as of 31 December 2023, standing below the
40,149 million euros recorded at the end of 2022.
The decrease in loans to customers portfolio
results, on the one hand, from a lower level of
performing credit (minus 633 million euros
compared to the amount recorded on the same
date of the previous year) and, on the other hand,
from a reduction in non-performing exposures
(NPE) (minus 266 million euros compared to the
same date of the last year).
LOANS AND ADVANCES TO CUSTOMERS (*)
Million euros
(*) Before impairment and fair value adjustments
In the international activity, loans to customers
(gross) amounted to 18,190 million euros as of 31
December 2023, standing above the 17,564 million
euros posted at the end of 2022. By geographies
and comparing to the end of the previous year,
there was a greater contribution from the Polish
subsidiary (despite a reduction in local currency,
loans to customers increased due to the favourable
evolution of the Zloty) and a smaller contribution
from the Mozambican subsidiary.
LOANS AND ADVANCES TO CUSTOMERS GROSS

Million Euros
| 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 21 | Chg. 23/22
INDIVIDUALS |  |  |  |
Mortgage loans | 27,981 | 28,124 | 28,072 | (0.5 %)
Personal loans | 6,833 | 6,042 | 5,999 | 13.1 %
| 34,813 | 34,165 | 34,071 | 1.9 %
COMPANIES |  |  |  |
Services | 7,528 | 8,037 | 8,297 | (6.3 %)
Commerce | 3,834 | 4,055 | 4,231 | (5.4 %)
Construction | 1,500 | 1,532 | 1,766 | (2.1 %)
Other | 9,139 | 9,923 | 9,866 | (7.9 %)
| 22,001 | 23,548 | 24,160 | (6.6 %)
TOTAL | 56,814 | 57,713 | 58,231 | (1.6 %)

2023 REPORT & ACCOUNTS |

|83
The structure of the consolidated (gross) loans to
customers portfolio maintained balanced patterns
of diversification, with an increase in loans to
individuals (higher weight of personal loans and
lower weight of mortgage loans) and a decrease in
loans to companies recorded compared to last
year. In terms of relative weights of credit in the
total amount of the portfolio, loans to individuals
stood at 61.3% as of 31 December 2023, 2.1 pp
above the 59.2% recorded at the end of 2022 and
loans to companies stood at 38.7% at the end of
2023, 2.1 pp below the 40.8% recorded as of 31
December 2022. Still regarding loans to
individuals, at the end of the year 2023, mortgage
loans represented 80.4% of loans to individuals, 1.9
pp below the 82.3% recorded at the end of the
previous year and personal loans represented
19.6%, 1.9 pp above the 17.7% recorded in 2022.
Consolidated loans to individuals, at 31 December
2023 amounted to 34,813 million euros, showing an
increase of 1.9% compared to the 34,165 million
euros recorded at the end of the previous year,
mainly due to the evolution of the international
activity, which showed an expansion, rising from
12,971 million euros on 31 December 2022 to
13,727 million euros at the end of 2023.
Conversely, there was a small contraction in the
activity in Portugal, with loans to individuals going
from 21,194 million euros on 31 December 2022 to
21,087 million euros on the same date in 2023.
Consolidated mortgage loan portfolio stood at
27,981 million euros on 31 December 2023,
showing a slight reduction compared to the value
recorded on the same date last year (28,124
million euros on 31 December 2022). In the activity
in Portugal, a reduction of 1.3% was recorded
compared to the same date of the last year, in a
context of a lower demand for new credits due to
high interest rates and higher loan repayments.
Conversely, in the international activity, mortgage
loans showed an increase of 1.2% compared to the
same date of the last year, with an increase in
mortgage loans being recorded in the Polish
subsidiary and a reduction in the Mozambican
subsidiary.
Still with regard to the international activity, the
reinforcement of provisioning and the agreements
signed with customers were reflected in the
continued reduction of the mortgage loan portfolio
in foreign currency at the Polish subsidiary, which
evolved from 1,504 million euros on 31 December
2022 to 721 million euros as of 31 December 2023,
representing 8.9% and 4.1% of the total amount of
credit recorded on the balance sheet of Bank
Millennium and 2.6% and 1.3% of the total
consolidated loan portfolio, at the end of 2022 and
2023, respectively. Excluding the portion relating
to Euro Bank S.A. (the risk of which is fully covered
by a third party, within the scope of the
clauses set out in the acquisition contract of that
entity) from that portfolio, the amount of the
mortgage loan portfolio in foreign currency
decreased from 1,373 million euros as of 31
December 2022 to 640 million euros on 31
December 2023, representing 8.1% and 3.6% of the
total amount of credit recorded on the balance
sheet of Bank Millennium and 2.4% and 1.1% of the
total consolidated loan portfolio on the aforesaid
dates, respectively.
On the other hand, consolidated personal loans
increased by 791 million euros compared to the
end of the previous year, reaching 6,833 million
euros at the end of 2023. In this context, it is
important to highlight the contribution of the
international activity, where personal loans
increased by 647 million euros compared to the
level recorded in the previous year (driven by the
growth recorded in the Polish and Mozambican
subsidiaries, with the most significant increase
being recorded in the Polish subsidiary). In the
activity in Portugal, personal loans registered an
increase of 144 million euros compared to the
figure recorded on the same date of 2022.
LOANS AND ADVANCES TO CUSTOMERS (*)
Million euros
(*) Before impairment and fair value adjustments
Loans to companies, in consolidated terms,
totalled 22,001 million euros on 31 December
2023, remaining below the 23,548 million euros
recorded at the end of 2022, with the evolution
being influenced both by the reductions observed
in the activity in Portugal (minus 1,417 million
euros than on the same date of the last year) and
in the international activity (minus 130 million
euros than on the same date of the last year).

| 2023 REPORT & ACCOUNTS

84 |
Loans to companies in the activity in Portugal fell
by 7.5% compared to 2022, reaching 17,538 million
euros at the end of 2023, in a context of lower
demand for credit due to higher interest rates,
postponements and delays in investment projects
and also, reduction of NPE stock in this segment.
The repayment of Covid lines also influenced this
evolution, with increased impact at the Bank as it
had assumed a leading role in granting this
financing during the pandemic.
Loans to companies in the international activity
recorded a reduction of 2.8% compared to the
4,593 million euros recorded on 31 December
2022, reaching 4,463 million euros at the end of
2023. By geographies, there were similar
reductions of loans to companies in the Polish
subsidiary (explained in part by the optimisation
plan to reduce risk weighted assets) and in the
subsidiary in Mozambique.
LOANS AND ADVANCES TO CUSTOMERS GROSS

Million euros
| 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 21 | Chg. 23/22
MORTGAGE LOANS |  |  |  |
Activity in Portugal | 18,763 | 19,014 | 18,394 | (1.3 %)
International Activity | 9,218 | 9,110 | 9,678 | 1.2 %
| 27,981 | 28,124 | 28,072 | (0.5 %)
PERSONAL LOANS |  |  |  |
Activity in Portugal | 2,324 | 2,180 | 2,111 | 6.6 %
International Activity | 4,509 | 3,862 | 3,888 | 16.8 %
| 6,833 | 6,042 | 5,999 | 13.1 %
COMPANIES |  |  |  |
Activity in Portugal | 17,538 | 18,955 | 19,361 | (7.5 %)
International Activity | 4,463 | 4,593 | 4,799 | (2.8 %)
| 22,001 | 23,548 | 24,160 | (6.6 %)
LOANS AND ADVANCES TO CUSTOMERS |  |  |  |
Activity in Portugal | 38,625 | 40,149 | 39,866 | (3.8 %)
International Activity | 18,190 | 17,564 | 18,365 | 3.6 %
TOTAL | 56,814 | 57,713 | 58,231 | (1.6 %)

The quality of the credit portfolio continues to
benefit from the focus on selectivity and
monitoring of the credit risk control processes, as
well as from the initiatives carried out by the
commercial and credit recovery areas, in order to
recover non-performing loans over the recent
years.
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 macroeconomic and/or
geopolitical context, anticipating possible
difficulties in meeting their commitments and
defining credit and performance strategies
adjusted to the specific 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.
In this complex context, credit overdue for more
than 90 days, on a consolidated basis, showed an
increase compared to the 496 million euros
recorded at the end of 2022, amounting to 512
million euros on 31 December 2023. The total
volume of overdue credit, on a consolidated basis,
also recorded an increase in relation to the 590
million euros recorded at the end of 2022, standing
at 623 million euros on 31 December 2023, mainly
due to the evolution seen in the activity in
Portugal, where there was an increase from 201

2023 REPORT & ACCOUNTS |

|85
million euros recorded at the end of 2022 to 230
million euros at the end of 2023.
The NPE stock, in consolidated terms, decreased
to 1,952 million euros on 31 December 2023,
showing a reduction of 266 million euros compared
to the end of 2022. In the activity in Portugal, the
NPE stock totalled 1,107 million euros at the end
of 2023, with a significant reduction of 255 million
euros being recorded in the same period.
Regarding credit quality indicators, there was a
stabilisation compared to the same date of the
previous year in terms of the credit overdue for
more than 90 days as a function of total credit, on
a consolidated basis, and NPL ratio for more than
90 days, on a consolidated basis, that stood at
0.9% and 1.3%, respectively in both years. In turn,
NPE ratio in percentage of the total credit
portfolio, on a consolidated basis, decreased from
3.8% to 3.4% in that period. In the activity in
Portugal, the NPE ratio as a percentage of the
total credit portfolio evolved from 3.4% to 2.9% in
the last year.
Regarding coverage ratios by impairments, the NPL
by more than 90 days coverage, in consolidated
terms, evolved from 208.9% at the end of 2022 to
213.0% on 31 December 2023. The coverage ratio
for credit overdue for more than 90 days by
impairments, on a consolidated basis, was 312.1%
on 31 December 2023, which compares with a ratio
of 305.8% on the same date of 2022 and in the
activity in Portugal the coverage level evolved
from 519.5% at the end of year 2022 to 471.7% at
the end of year 2023. The coverage of NPE by
impairments, in consolidated terms, stood at 81.8%
at the end of 2023, above the 68.3% recorded on
31 December 2022. In the activity in Portugal, the
coverage of NPE by impairments stood at 89.3% on
31 December 2023, also at a level above the figure
recorded in the previous year (68.6% on 31
December 2022).
CREDIT QUALITY
Million euros

| 2023 REPORT & ACCOUNTS

86 |
CREDIT QUALITY INDICATORS

| Group |  | Activity in Portugal
Dec. 23 | Dec. 22 | Dec. 21 | Chg. 23/22 |  | Dec. 23 | Dec. 22 | Dec. 21 | Chg. 23/22
STOCK (M€) |  |  |  |  |  |  |  |  |
Loans to customers (gross) | 56,814 | 57,713 | 58,231 | (1.6 %) |  | 38,625 | 40,149 | 39,866 | (3.8 %)
Overdue loans > 90 days | 512 | 496 | 949 | 3.2 % |  | 210 | 180 | 586 | 16.5 %
Overdue loans | 623 | 590 | 1,080 | 5.5 % |  | 230 | 201 | 605 | 14.6 %
Restructured loans | 1,729 | 1,866 | 2,564 | (7.3 %) |  | 1,186 | 1,341 | 2,069 | (11.5 %)
NPL > 90 days | 750 | 725 | 1,237 | 3.4 % |  | 360 | 333 | 776 | 8.0 %
NPE | 1,952 | 2,218 | 2,752 | (12.0 %) |  | 1,107 | 1,361 | 1,878 | (18.7 %)
Loans impairment (Balance sheet) | 1,596 | 1,515 | 1,871 | 5.3 % |  | 989 | 935 | 1,286 | 5.8 %
NPE impairment (Balance sheet) | 1,028 | 1,011 | 1,369 | 1.7 % |  | 606 | 592 | 917 | 2.4 %
CREDIT QUALITY |  |  |  |  |  |  |  |  |
Overdue loans > 90 days / Loans to customers (gross) | 0.9% | 0.9% | 1.6% |  |  | 0.5% | 0.4% | 1.5% |
Overdue loans / Loans to customers (gross) | 1.1% | 1.0% | 1.9% |  |  | 0.6% | 0.5% | 1.5% |
Restructured loans / Loans to customers (gross) | 3.0% | 3.2% | 4.4% |  |  | 3.1% | 3.3% | 5.2% |
NPL > 90 days / Loans to customers (gross) | 1.3% | 1.3% | 2.1% |  |  | 0.9% | 0.8% | 1.9% |
NPE / Loans to customers (gross) | 3.4% | 3.8% | 4.7% |  |  | 2.9% | 3.4% | 4.7% |
NPE ratio - EBA (includes debt securities and off-balance exposures) | 2.2% | 2.6% | 3.2% |  |  | 2.0% | 2.4% | 3.2% |
COVERAGE BY IMPAIRMENTS |  |  |  |  |  |  |  |  |
Coverage of overdue loans > 90 days | 312.1% | 305.8% | 197.0% |  |  | 471.7% | 519.5% | 219.5% |
Coverage of overdue loans | 256.4% | 256.7% | 173.3% |  |  | 429.9% | 465.6% | 212.6% |
Coverage of NPL > 90 dias | 213.0% | 208.9% | 151.2% |  |  | 274.8% | 280.4% | 165.8% |
Coverage of NPE | 81.8% | 68.3% | 68.0% |  |  | 89.3% | 68.6% | 68.5% |
Specific coverage of NPE | 52.7% | 45.6% | 49.7% |  |  | 54.7% | 43.5% | 48.8% |

Note: NPE include loans to customers only, as defined in the glossary.

2023 REPORT & ACCOUNTS |

|87
CUSTOMER FUNDS
On 31 December 2023, the consolidated total
customer funds amounted to 95,295 million euros,
showing a favourable evolution, increasing by
2,487 million euros compared to the 92,808
million euros obtained on the same date of the
previous year, benefiting from the increase in the
international activity (4,076 million euros more
than on the same date of the last year), partially
mitigated by the reduction in the activity in
Portugal (1,590 million euros less compared to the
same date of the previous year). The evolution of
total customer funds reflects the good
performance of most items, with emphasis on the
rise in deposits and other resources from
customers, which increased by 2,021 million euros
compared to 31 December 2022.
TOTAL CUSTOMER FUNDS
Million euros
TOTAL CUSTOMER FUNDS

Million euros
| 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 21 | Chg. 23/22
BALANCE SHEET CUSTOMER FUNDS |  |  |  |
Deposits and other resources from customers | 77,928 | 75,907 | 69,560 | 2.7%
Debt securities placed with customers | 1,287 | 1,343 | 1,615 | (4.1%)
| 79,215 | 77,250 | 71,175 | 2.5%
OFF BALANCE SHEET CUSTOMER FUNDS |  |  |  |
Assets under management | 5,561 | 5,114 | 5,773 | 8.8%
Assets placed with customers | 5,915 | 5,102 | 6,486 | 15.9%
Insurance products (savings and investment) | 4,603 | 5,343 | 6,663 | (13.8%)
| 16,080 | 15,558 | 18,922 | 3.3%
TOTAL | 95,295 | 92,808 | 90,097 | 2.7%

| 2023 REPORT & ACCOUNTS

88 |
In the activity in Portugal, total customer funds
reached 66,672 million euros on 31 December
2023, which compares with the 68,262 million
euros recorded on the same date in the previous
year, with this evolution being justified almost
entirely by the evolution of the balance sheet
customer funds, more specifically by the reduction
in deposits and other resources from customers
(minus 1,571 million euros than on the same date
of the last year).
In the international activity, total customer funds
increased by 4,076 million euros compared to the
24,546 million euros recorded on 31 December
2022, standing at 28,623 million euros at the end
of 2023, mainly reflecting the positive contribution
of the Polish subsidiary, slightly offset by the
decrease recorded in the subsidiary in
Mozambique. The aforementioned increase was
mainly driven by the good performance of the
balance sheet customer funds due to the rise of
deposits and other resources from customers and
also by the favourable evolution of the off balance
sheet customer funds, although to a lesser extent
in the latter case.
Consolidated balance sheet customer funds, which
comprise deposits and other resources from
customers and debt securities placed with
customers, amounted to 79,215 million euros on 31
December 2023, showing an increase of 1,965
million euros compared to the 77,250 million euros
reached at the end of the previous year. This
evolution results from the combined effect of the
increase of 3,592 million euros recorded in the
international activity and the reduction of 1,626
million euros recorded in the activity in Portugal.
On 31 December 2023, balance sheet customer
funds, on a consolidated basis, represented 83.1%
of total customer funds (83.2% at the end of 2022),
with deposits and other resources from customers,
on a consolidated basis, representing 81.8% of
total customer funds (percentage remained
unchanged comparing to the one recorded at the
end of 2022).
Deposits and other resources from customers of
the Group, totalled 77,928 million euros at the end
of 2023, which compares with the 75,907 million
euros obtained on 31 December 2022. In the
international activity, at the end of 2023, the
amount of deposits and other resources from
customers increased by 3,592 million euros,
benefiting from the increasing volumes of deposits
in the Polish subsidiary, slightly mitigated by the
decrease recorded in the Mozambican subsidiary.
In turn, in the activity in Portugal, a reduction of
1,571 million euros was recorded, in a context of
savings being drawn for the early repayment of
credits and for other purposes.
Debt securities placed with customers, which
corresponds to the Group's issues of debt securities
subscribed by clients (in 2023 and in 2022 existing
only in the activity in Portugal) recorded a
decrease of 56 million euros compared to the end
of 2022, standing at 1,287 million euros at end of
31 December 2023.
BALANCE SHEET CUSTOMER FUNDS
Million euros
As of 31 December 2023, consolidated off-balance
sheet customer funds stood at 16,080 million
euros, showing an increase of 521 million euros
compared to the figure posted on the same date in
the prior year. The increases recorded in assets
placed with customers and assets under
management, were partially offset by the decrease
seen in insurance products (savings and
investment). Off balance sheet customer funds
recorded a significant rise in the international
activity and a slight increase in the activity in
Portugal.
Assets under management, which result from the
provision of the service of managing portfolios of
clients under existing agreements for their
placement and administration, amounted to 5,561
million euros on 31 December 2023, having shown
an increase compared to the figure of 5,114
million euros recorded at the end of 2022,
benefiting above all from the dynamism of the
international activity. In the activity in Portugal, a
slight increase was recorded.

2023 REPORT & ACCOUNTS |

|89
OFF BALANCE SHEET CUSTOMER FUNDS
Million euros
Assets placed with customers, which in turn
correspond to the amounts held by customers
within the scope of placing third-party products
that contribute to the recognition of commissions,
also recorded an increase compared to the 5,102
million euros recorded as of 31 December 2022,
amounting to 5,915 million euros on 31 December
2023, having benefited from the dynamism of the
activity in Portugal and to a lesser extent also of
the international activity.
Insurance products (savings and investment)
amounted to 4,603 million euros on 31 December
2023, recording a decrease compared to the 5,343
million euros posted on the same date of the
previous year, with this evolution being explained
by the reductions recorded in the activity in
Portugal and in the international activity, although
in the latter case was of a smaller magnitude.
TOTAL CUSTOMER FUNDS

Million euros
| 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 21 | Chg. 23/22
BALANCE SHEET CUSTOMER FUNDS |  |  |  |
Activity in Portugal | 52,450 | 54,077 | 49,319 | (3.0%)
International Activity | 26,765 | 23,173 | 21,856 | 15.5%
| 79,215 | 77,250 | 71,175 | 2.5%
OFF BALANCE SHEET CUSTOMER FUNDS |  |  |  |
Activity in Portugal | 14,222 | 14,185 | 16,972 | 0.3%
International Activity | 1,858 | 1,373 | 1,950 | 35.3%
| 16,080 | 15,558 | 18,922 | 3.3%
TOTAL CUSTOMER FUNDS |  |  |  |
Activity in Portugal | 66,672 | 68,262 | 66,290 | (2.3%)
International Activity | 28,623 | 24,546 | 23,806 | 16.6%
TOTAL | 95,295 | 92,808 | 90,097 | 2.7%

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NON-CURRENT ASSETS HELD FOR SALE
Non-current assets held for sale registered a decrease of 84.0% on 31 December 2023 compared to the same
date of the last year, amounting to 80 million euros at the end of the current year (499 million euros at the
end of 2022).
Other assets (which mainly include equipment and financial assets) continue to have a small weight in the
overall calculation of this item, with a decrease of 44.8% being recorded compared to 31 December 2022.
NON-CURRENT ASSETS HELD FOR SALE

Million euros
| 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 21 | Chg. 23/22
REAL ESTATE |  |  |  |
Arising from recovered loans | 48 | 236 | 503 | (79.7%)
From investment funds and real estate companies | 14 | 220 | 229 | (93.6%)
For own use | 2 | 14 | 17 | (85.7%)
| 64 | 470 | 748 | (86.4%)
OTHER ASSETS |  |  |  |
Equipment | 4 | 16 | 17 | (75.0%)
Other assets | 12 | 13 | 15 | (7.7%)
| 16 | 29 | 32 | (44.8%)
TOTAL | 80 | 499 | 781 | (84.0%)

The Group's properties received under customer credits recovery (foreclosed assets), held directly and held
by investment funds and real estate companies, are classified under non-current assets held for sale and also
under the heading of other assets. The aggregate value of these properties net of impairment recorded
evolved from 385 million euros at the end of 2022 to 188 million euros at the end of 2023, as a result of the
divestment strategy in this type of non-productive assets.

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SECURITIES PORTFOLIO
The securities portfolio, as defined above, stood at 27,409 million euros as of 31 December 2023, showing an
increase of 37.6% compared to the 19,918 million euros recorded on the same date of the previous year,
representing 29.0% of total assets at the end of 2023 (22.2% at the end of 2022).
For the mentioned evolution, the increase of 5,562 million euros in the public debt securities portfolio held
by the Group was determinant. This portfolio increased from 16,531 million euros at the end of 2022 to
22,093 million euros at 31 December 2023, representing 80.6% of the total portfolio amount at the end of
2023, below the 83.0% recorded at the end of 2022.
The portfolio allocated to the activity in Portugal increased from 14,561 million euros at the end of 2022 to
17,271 million euros existing on 31 December 2023, with this increase being associated with an increased
diversification with public debt in the euro zone, namely Spanish, German, French and Belgian public debt,
compensating for lower investment in Portuguese public debt.
The securities portfolio allocated to the international activity showed a significant increase, rising from
5,357 million euros at the end of the previous year to 10,138 million euros on 31 December 2023 following
the reinforcement of investment from Polish and Mozambican subsidiaries in local public debt and also in
sovereign debt from other euro zone countries.
Taking into account the type of portfolio, there was a more significant increase in the portfolio of financial
assets at amortised cost and, also, an increase in the portfolio of financial assets measured at fair value
through other comprehensive income, reflecting the objective of holding securities for a longer period of
time. On the other hand, there was a slight reduction in the portfolio of financial assets at fair value through
profit or loss.
SECURITIES PORTFOLIO

Million euros
| 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 21 | Chg. 23/22
Financial assets measured at amortised cost (1) | 15,671 | 11,535 | 6,897 | 35.9 %
Financial assets measured at fair value through profit or loss (2) | 904 | 922 | 1,413 | (2.0 %)
Financial assets measured at fair value through other comprehensive income | 10,834 | 7,462 | 12,891 | 45.2 %
TOTAL | 27,409 | 19,918 | 21,201 | 37.6 %
of which: |  |  |  |
Activity in Portugal | 17,271 | 14,561 | 16,128 | 18.6 %
International activity | 10,138 | 5,357 | 5,072 | 89.2 %

(1) Corresponds to debt instruments not associated to credit operations, including treasury bills
(2) Excluding the amounts related to loans to customers and trading derivatives.

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92 |
CASH, DEPOSITS AND LOANS TO ADVANCES TO CENTRAL BANKS AND CREDIT INSTITUTIONS
Cash and deposits at central banks and credit institutions and loans and advances to credit institutions (2023:
5,792 million euros; 2022: 7,199 million euros) net of resources from credit institutions, including central
banks (2023: 829 million euros; 2022: 1,468 million euros) totalled a positive value of 4,963 million euros at
the end of 2023, which compares with a positive value of 5,731 million euros at the end of 2022.
OTHER ASSET ITEMS
Other assets items, which includes hedging and trading derivatives, investments in associates, investment
properties, other tangible assets, goodwill and intangible assets, current and deferred taxes assets and other
assets, stood at 5,881 million euros on 31 December 2023, representing 6.2% of total consolidated assets. At
the end of 2022, other asset items represented 6.7% of total consolidated assets, totalling 6,063 million
euros.
EQUITY
On 31 December 2023, total equity amounted to 7,299 million euros, 1,363 million euros above the equity of
5,937 million euros existing at the end of the previous year. Non-controlling interests increased from 782
million euros at the end of the previous year to 987 million euros in 2023, in this case motivated mainly by
the increase in the equity of the subsidiary in Poland, justified by the positive results generated in the year.
The increase in equity resulted mainly from the integration of the net profit for the year which totalled 856
million euros, the positive impact of the fair value reserve net of income taxes, which increased by 456
million euros and the positive exchange rate consolidation differences, totalling 8 million euros. Conversely,
equity was affected by the negative actuarial deviations associated with the pension fund in the net amount
of 124 million euros and the interest from coupons of the Additional Tier 1 instruments, which amounted to
37 million euros.

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|93
Business Areas

Activity per Segments
Millennium bcp conducts a wide range of banking activities and financial services in Portugal and abroad, with
special focus on Retail Banking, Companies Banking and Private Banking business.

BUSINESS SEGMENT | PERIMETER
Retail Banking | Retail Network of Millennium bcp (Portugal) Retail Recovery Division Banco ActivoBank
Companies and Corporate | Companies and Corporate Network of Millennium bcp (Portugal) Specialised Recovery Division Large Corporate Network of Millennium bcp (Portugal) Specialised Monitoring Division Investment Banking (*) Interfundos (*) Specialized Credit and Real Estate Division (*) Treasury and Markets International Division (*)
Private Banking | Private Banking Network of Millennium bcp (Portugal) Millennium bcp Bank & Trust (Cayman Islands) (**)
Foreign Business | Bank Millennium (Poland) BIM - Banco Internacional de Moçambique Banco Millennium Atlântico (***) Millennium bcp Bank & Trust (Cayman Islands) (**)
Other | Comprises the activity carried out by Banco Comercial Português, S.A. not included in the commercial business in Portugal which corresponds to the segments identified above, including the activity carried out by Macao branch. Also includes all other business and unallocated values in particular centralized management of financial investments, corporate activities and insurance activity.

(*) Units all together that serve mainly customers in the Companies & Corporate segment, but also customers in other segments, in which the corresponding income is
recognized. The operating costs of those units are attributed to the Other segment.
(**) For the purposes of business segments, Millennium bcp Bank & Trust (Cayman Islands) is included in the Private Banking segment. In terms of geographic segments, this
operation is considered Foreign Business. It should be noted, however, the liquidation of this operation during the year 2022.
(***) Consolidated by the equity method.
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 was re-
calculated, considering the replacement of the
equity book values by the amounts assigned through
the allocation process, based on the regulatory
solvency criteria.
Thus, as the process of capital allocation complies
with the regulatory criteria of solvency in force, 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.
Each segment’s income includes the non-controlling
interests, when applicable. Therefore, the values of
net income presented incorporate the individual
net income of the business units, regardless of the
percentage stake held by the Group, and the
impacts of the transfers of funds described above.
The information presented below for the
individually more relevant business areas in
Portugal and aggregately for the international
activity was based on the financial statements
prepared in accordance with IFRS and on the
organization of the Group's business areas as at 31
December 2023.

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94 |
RETAIL
Mass Market
During 2023, the Mass Market segment focused its
commercial activity on developing First Bank
relationships, both with the current Customer
base and with new Customers attracted.
Through various marketing actions and the high
proximity and quality of service to the Customer,
it was possible to increase the number of paid
orders, as well as the day-to-day transactional
relationship and cross-selling.
Taking into account the economic context of high
inflation, a campaign was launched that remained
active throughout the year and allowed Customers
who paid their salary or pension to benefit from
the refund of a percentage of the value of direct
debits associated with their household expenses.
In the youth segment, the focus on positioning in
the University segment stands out, with the
promotion of the “Unni” Value Proposition, which
integrates an Integrated GO! University, non-
financial offer aimed at the segment, preferential
conditions on personal training credit, discounts
on specialization courses at partner Universities
and insurance with coverage for protection needs
during exchange programs (Erasmus).
The strategy of increasing Customers' digital
engagement was also reinforced, through actions
to encourage account opening on the App with
Chave Móvel Digital; activating and encouraging
the use and development of new functionalities
and services.
Prestige
In 2023, the Prestige segment continued to
increase its Customer base, leveraging targeted
actions to attract customers, build loyalty and
upgrades. Of particular note is the increase in the
average involvement of the segment's Customers
with the Bank.
In the Investment component, the Bank sought to
constantly adjust the offer of different
investment instruments, adapting it to different
profiles and objectives.
The continuous improvement of the Prestige
Customer experience continued to be a priority,
highlighting the offer of local or remote
personalized management service (monitoring by
a Customer Manager), the “service password on
the App” functionality with priority customer
service Prestige and the features in the
Millennium App that facilitate interaction with
the Manager.
In Remote Customer Management, several
initiatives were implemented to optimize the
“Prestige Direto” service model, a service aimed
at Digital Prestige Customers, which allows
dedicated remote management during extended
hours.
Portuguese Diaspora & Foreigners
In 2023, the Portuguese Diaspora & Foreigners
segment continued its strategy of increasing
proximity and relationships, as well as growing
and rejuvenating the Customer base.
Given the particularities of the segment, we
sought to develop the relationship with these
Customers through a differentiated offer, which
seeks to satisfy the specific needs of those who
live or interact with the Bank abroad, as well as
the promotion of the Bank's Digital channels,
which allow greater proximity regardless of the
geographic area where the Customer is located.
In order to guarantee greater support to
Customers abroad, Millennium bcp maintains a
physical presence through the local Network of
Representative Offices in Brazil (Rio de Janeiro
and São Paulo), the United Kingdom (London) and
Switzerland (Geneva and Zurich).
Businesses
Millennium bcp maintained a strong commercial
dynamic throughout 2023, despite the challenging
economic context, characterized by rising interest
rates and international conflicts. Attracting new
customers continued to be one of Millennium
bcp's main priorities.

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Products
Loans to individuals
In 2023, the Bank sought to simplify and adjust
the credit "offer" to Customers' needs.
In Personal Credit, we highlight the continued
focus on boosting digital channels (App and
website) with diversified promotional actions
adjusted to the profile and needs of Customers,
as well as the simplification of the "offer".
Recognizing a pressing need for energy
conversion, the offer for investments aimed at
improving the energy efficiency of residential
buildings was reinforced.
The Bank maintained support for training, through
University Credit with Mutual Guarantee and
Personal Training Credit.
In Real Estate Credit, during the second half of
the year, and in a context of higher interest
rates, the “zero spread” campaign was launched,
allowing the Customer to benefit from a lower
instalment at an early stage of their loan.
Fixed rate solutions were also made available, as
well as the possibility of choosing the Euribor
index at 3, 6 or 12 months.
It is also worth highlighting the continuation of a
strong investment in innovation, increasingly
incorporating the Digital channel into the hiring
journey in order to make the entire process
simpler, more agile and faster.
Bearing in mind the relevance of the
Sustainability policy, the "offer" was maintained
with advantageous conditions for the acquisition
of properties with better energy efficiency.
Throughout the year, the Bank also made
available the possibility for the Customer to
adhere to the different Government Support
Measures aimed at Customers with Credit for their
own and permanent Housing. In order to simplify
and guarantee more comprehensive access, 100%
Digital membership journeys were developed.
Investment solutions
In 2023, in the investment component, the Bank
sought to adjust its offer of investment products
to the new interest rate context.
The commitment to digital continues to be clear
with the launch of an automated investment
service (Easy Invest) which is sold exclusively on
the App and also the provision of a savings
assistance service using the definition of
objectives called Apparte Account.
Insurance
During 2023, the insurance sales partnership
maintained a high dynamic, with new offerings,
process improvements and considerable
investment in digital channels, namely the App.
“Insurance is at Millennium” and that is why,
throughout 2023, we sought to increase the offer
of protection available to the Bank's Customers.
Also in Insurance, Digital has gained a very
important role, with an increase in its weight in
total interactions and sales, with the launch of
subscription to various insurance policies through
the App.
The dynamics and improvements implemented
resulted in a reinforcement of the bancassurance
market share, which in Non-Life increased from
34.6% in 2022 to 35.5% in 2023 and in Life Risk
from 18.8% to 21.1%.
Integrated Solutions
In 2023, the strategy of valuing the "offer"
associated with having an integrated solution was
reinforced with the launch of a savings product
with exclusive remuneration for holders of these
solutions.
Positioning itself as the reference Bank for young
people, Millennium bcp extended its university
offer to €0 also for Customers with a degree,
master's degree or doctorate under the age of 30
and who domicile their salary and sign up to the
digital statement.
At the end of the year, Millennium bcp made
available a new banking solution aimed
exclusively at Customers 55+ who have integrated
solutions for banking products and services.
Millenniumbcp thus continues its strategy of
launching integrated solutions by segment, now
allowing customization.
Current Accounts
Millenniumbcp has made new features available
on the App, with a Digital Mobile Key that allows
account opening without the need for video
conferencing and uploading documents, as well as
updating data without the need to send or upload
documents.
Microcredit
Millennium bcp continued to be a reference bank
in supporting Microcredit projects, having lines

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96 |
available with European guarantees, namely from
the European Investment Fund, for these
operations.
ActivoBank
In 2023, ActivoBank reinforced its focus on the
young digital segment, through the development
of digital products and functionalities in order to
respond to the financial needs of this segment.
The bank attracted approximately 68 thousand
new Customers, which allowed it to reach a base
of 517 thousand Customers, with a very high
degree of digitalization.
These results are the result of a consistent
strategy for developing brand awareness.
Additionally, from a procedural point of view, the
new account opening process with Digital Mobile
Key was implemented and account opening
methodologies were also reinforced, such as
scheduling account opening at any Ponto Activo.
The most significant notoriety actions were based
on an influencer marketing strategy that ensured
high levels of reach and specialization of
audiences in digital media.
During 2023, ActivoBank maintained an increasing
focus on digital marketing actions that were
present in the majority of the offer and that
supported the business capture regime
consistently.
Regarding products, digital cards were made
available on the App, which made it possible to
make transactions immediately after opening a
digital account.
In the scope of savings and investment products,
the strategy was focused on the deposit portfolio
with the recreation of the entire offer taking into
account the new objectives and market context
of increasing rates. This strategy allowed
significant growth in the term deposit portfolio
and the availability of new products that allowed
greater diversification of the term deposit
portfolio.
In terms of investments, we highlight the launch
of a new product, "EasyInvest", a unit-linked
insurance where, given the desired profile and
strategy, the Customer can invest automatically
in the ActivoBank App, and the reinforcement of
the offer of funds investment distributed by
ActivoBank.
With regard to credit, new products were
launched with new purposes, such as Health
Credit and Automobile Credit and Advance Credit
ordered with contracting via App.
Still during 2023, ActivoBank continued its
positioning in the area of Sustainability.
In the context of financial literacy, the podcast
No fim de contas was launched, where financial
management suggestions were presented in each
episode.
During 2023, ActivoBank developed 12 social
solidarity actions through its monthly item Dar
Créditos, associating a Project or Social Cause
that was supported with an amount of up to 2,000
euros.
As part of the reinforcement of the digital
experience, new contracting journeys were made
available that allow for the continued growth of
the digital business, including insurance
subscription through the App, updating of
Customer data, issuance of the letter of approval
for mortgage credit digital form and EcoActivo
Credit.
ActivoBank's net profit in 2023 was 39.4 million
euros, which represents an increase of 105.8%
compared to the previous year.

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|97

Million euros
RETAIL BANKING in Portugal | Dec 31, 2023 | Dec 31, 2022 | Chg. % 23/22
PROFIT AND LOSS ACCOUNT |  |  |
Net interest income | 882 | 621 | 41.9%
Other net income | 450 | 446 | 0.9%
| 1332 | 1067 | 24.8%
Operating costs | 356 | 329 | 8.3%
Impairment and provision | 45 | 67 | -34.2%
Income before tax | 931 | 671 | 38.8%
Income taxes | 291 | 210 | 38.8%
Income after tax | 640 | 461 | 38.8%
SUMMARY OF INDICATORS |  |  |
Allocated capital | 1,001 | 891 | 12.4%
Return on allocated capital | 63.9% | 51.7% |
Risk weighted assets | 7,251 | 7,127 | 1.7%
Cost to income ratio | 26.8% | 30.8% |
Loans to Customers (net of impairment charges) | 26,003 | 26,361 | -1.4%
Balance sheet Customer funds | 39,079 | 39,739 | -1.7%

Notes:
Allocated capital, Loans to customers (net of recoveries) and Balance sheet Customer funds figures based on average balance.
Financial performance
As at 31 December 2023, income after tax from
Retail Banking segment of Millennium bcp in
Portugal totalled 640 million euros, showing a 38.8%
increase compared to 461 million euros in 2022,
reflecting higher net interest income. Regarding the
evolution of the main income statement headings,
the following aspects should be highlighted:
• Net interest income reached 882 million euros
as at 31 December 2023, increasing 41.9%
compared to the previous year (621 million
euros), reflecting the effect of the
normalization of interest rates, mainly
benefiting from the net interest income arising
from the deposit portfolio, which was penalized
in the previous context of near zero or negative
interest rates.
• Other net income reached 450 million euros as
at 31 December 2023, showing an increase of
0.9% compared to the amount attained in the
previous year. This evolution reflects the
positive performance of commissions, mainly
from management and maintenance of
accounts, cards and transfer fees, although
partially mitigated by lower commissions on
credit operations, as a result of the legal
restrictions imposed. On the other hand, during
the year 2023, the level of the gains recognized
with the sale of non-current assets held for sale
was lower compared to those observed during
the year 2022.
• Operating costs were 8.3% higher than the
amounts recognized in 2022. Notwithstanding
the disciplined management of costs and the
commitment on improving efficiency, this
evolution was strongly influenced by the
inflation observed.
• Impairment charges amounted to 45 million
euros at the end of December 2023, remaining
at a low level relative to the loan portfolio size
of this segment, presenting a decrease of 34.2%
compared to the amount of 67 million euros
recorded in the same period of the previous
year.
• In December 2023, loans to customers (net)
totalled 26,003 million euros, decreasing 1.4%
from December 2022 (26,361 million euros),
while balance sheet customer funds decreased
by 1.7% in the same period, amounting to
39,079 million euros in December 2023 (39,379
million euros in December of the previous year),
mainly explained by the decrease in customer
deposits.

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98 |
COMPANIES AND CORPORATE
Millennium bcp reaffirmed its position in
supporting Portuguese Companies and
Entrepreneurs.
New support lines were made available, with
financial guarantee provided by Banco Português
de Fomento.
Also noteworthy is the leadership in placing
guarantees from the European Investment Fund,
with the execution of the largest national
contract under the European InvestEU Program,
around 400 million euros. A new guarantee was
also signed with the European Investment Bank to
grant credit worth 400 million euros to Medium
and Large Companies and the Public Sector.
Continuing the work implemented during the
Portugal 2020 community framework, in 2023, the
Bank maintained its focus on supporting Business
Investment that benefits from European
Incentives. Millennium bcp actively contributed to
the successful closing of the Community Portugal
2020 framework, exceeding 6 thousand project
support operations.
In the Recovery and Resilience Plan, the Bank
maintains a very important role in supporting
entities that are responsible for executing the
contracted investments by the end of 2026.
At the start of the Portugal 2030 Community
framework, the accumulated experience and the
level of internal specialization make Millennium
bcp fully prepared to support the economy and
Companies that are awaiting the first approvals or
preparing and submitting applications.
Highlights include the Millennium Talks events,
which brought issues such as Innovation,
corporate financing, but also the way in which
they can grow on sustainable foundations to the
center of discussion.~
In 2023, Millennium bcp maintained close
proximity to the primary sector. It has a
specialized team with the capacity to monitor and
respond to the specific financial needs of
Entrepreneurs in the sector, it has dedicated
financial solutions, such as credit lines registered
with IFAP, it maintains a newsletter and regular
presence at the main events national agricultural
and livestock sectors, in which it gives up its
space to give visibility to its Customers.
Millennium bcp maintains leadership in Leasing,
with 597 million euros of new production in 2023.
As a privileged solution to support investment for
SMEs, the Bank has carried out several operational
optimization initiatives with an impact on the
Customer experience. The Leasing offer is today
an integral part of the Guarantee Lines of the
European Investment Bank and the European
Investment Fund provided by Millennium bcp,
reinforcing the Bank's capacity to respond to the
investment needs of Companies.
In 2023, Millennium bcp once again surpassed 10
billion euros in turnover and led in this segment.
In the Trade Finance business, Millennium bcp
continued to reinforce its positioning as a partner
bank for Exporting and Importing Companies:
• Best Trade Finance Bank with "Best Service"
and "Market Leader", according to Euromoney.
• Maintaining leadership in credit for exporting
companies;
• Significant and sustained growth in credit
insurance sales in partnership with COSEC,
with emphasis on the contracting of new
policies.
During 2023, Millennium bcp reinforced the
Sustainable Business Credit aspects, having an
offer within the scope of Green Mobility, Credit
for Green Real Estate Promotion and Credit for
Investment Projects. Of particular note is the
financing of affordable housing projects, within
the Controlled Cost Housing regime and housing
projects with a sustainable approach, which
mainly resides in the energy efficiency of the
installed systems.
During 2023, Millennium bcp provided sustainable
financing with European guarantees, namely from
the European Investment Fund, and credit support
from national entities such as Banco Português de
Fomento and Turismo de Portugal should also be
mentioned.
Investment banking
The Bank participated in several projects in
Portugal and in international markets.
• In Corporate Finance, the Bank providing
financial advisory to its Customers and to the
Bank itself in various projects, involving
researching, developing and completing M&A
operations, valuation of companies, corporate
restructuring and reorganization processes, as
well as research and economic-financial
analysis of projects. In the mergers and
acquisitions segment, special mention should
be made of providing exclusive financial
advice to the Saint-Gobain Group on the sale
of 100% of Saint-Gobain's flat glass
transformation operations in Portugal,
operated by Covipor – Companhia Vidreira do
Porto, Lda.
• With regard to the Project Finance area, we
highlight the participation in the financing of
the construction of a portfolio of small solar
production units with 157 MW of installed
capacity and the refinancing of two solar

2023 REPORT & ACCOUNTS |

|99
photovoltaic parks with a total installed
capacity of 4.4 MW.
• In the Structured Finance area, we
participated in the analysis, structuring,
negotiation and setting up of new financing
operations in Portugal, of which emphasis is
given to financing the Electricity Company of
Madeira and financing to the RNM group for
the acquisition of two companies that allowed
the expansion and diversification of its
portfolio of products and services.
• Regarding Capital Markets activity, the joint
leadership of the “green” debt issue by EDP,
worth 750 million euros, and an issue by the
Autonomous Region of Madeira with the
endorsement of the Republic, worth a total of
275 million euros, stands out. millions of
euros. Several new Commercial Paper
Programs were also contracted with a number
of relevant national companies, including two
NOS Sustainability Linked Commercial Paper
Programs worth 75 and 80 million euros,
respectively, stands out.

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100 |
Real estate business
Main areas of activity during 2023:
Management of real estate assets available for
sale - The Bank developed and deepened its
property sales strategy, managing to exceed the
objectives of reducing assets on the Balance Sheet,
selling properties with a long history in the
portfolio, and with strict control of financial
impacts. The external environment required the
Bank's teams to constantly anticipate trends, as
well as adapt to new opportunities and needs,
through the development of commercial
approaches, based on the experience and
commercial relationships accumulated over recent
years, and supported by the trust essential to
decision making by Customers and other Agents in
the Market. In this line, the Bank positions itself as
a partner that presents investment solutions, not
limited to the simple sale of a real estate asset.
Management of real estate assets not available
for sale – The main objective continues to be to put
properties up for sale in the shortest possible time,
to this end the Bank continues to be demanding,
rigorous and competent in its physical, legal and
administrative regularization, in the thorough
analysis of better alternatives to their appreciation,
in the control and management of taxes related to
properties, promoting their sale and disposal before
the expiry of tax exemptions that some properties
enjoy.
These procedures have successfully contributed to
the reduction of these assets in the portfolio.
The Bank continued to manage the stakes
controlled by the Bank in entities that manage real
estate risk, Funds and Companies in a divestment
strategy with value preservation.
Interfundos
As of December 31, 2023, Interfundos had under
management 19 Alternative Real Estate Investment
Organizations (Funds and Collective Investment
Companies), corresponding to 881 million euros of
net assets under management, which compares
with 1,051 million euros recorded in the same
period of 2022, showing a 16% decrease in the
volume of assets managed compared to the same
period last year. These assets guarantee to
Interfundos a market share of 6.2% in all Real
Estate Investment Organizations (OII).
Interfundos continued its strategy of creating
liquidity conditions for Participants and
Shareholders of Alternative Real Estate Investment
Organizations, a situation evidenced by the
completion of six capital reduction operations.
Following a deliberation by the respective
Participant, Interfundos extended the duration of
the Imosotto - Accumulation - Closed Real Estate
Investment Fund.
Interfundos also transferred the management of
Multi24 - Sociedade Especial de Investimento
Imobiliário de Capital Fixo, SICAFI, S.A. and
liquidated Fundo Imopromoção – Portuguese Real
Estate Development Fund, Oceânico II – Fundo de
Investimento Imobiliário Fechado and Funsita –
Fundo of Closed Real Estate Investment.
On May 28, 2023, the Asset Management Regime
(RGA) came into force, published as an Annex to
Law Decree 27/2023, of April 28, which became the
common regulatory framework for all Collective
Investment Organizations. The RGA required the
implementation of a set of changes to be
implemented by the end of the adaptation period
set at 180 days, counting from the date of its entry
into force, with Interfundos having made the
changes, capable of being carried out, within the
deadline 180 days granted.
In 2023, global sales amounted to 180 million euros,
corresponding to a total of 259 properties.
Interfundos' net profit in 2023 amounted to 1,724
thousand euros, which corresponds to a decrease of
17% compared to the value recorded in the same
period last year (2,084 thousand euros). This
performance is mainly attributable to the
unfavourable evolution of net commissions of 15%,
resulting from the 170 million euros reduction in
assets under management. Operating costs
recorded a decrease of 15%, essentially resulting
from the reduction in Other Administrative
Expenses resulting from the Value Added Tax
recovery exercise and the adjustment of costs to
the activity, despite the increase in the General
Price Index. This cost containment allowed a
favourable evolution of the efficiency ratio from
47.6% to 47.3%.
Financial Institutions Group (FIG) - integrated into
Treasury, Markets & Institutional Department
The year 2023 was characterized by the persistence
of events with an impact on international trade,
resulting from conflicts and geopolitical tensions,
along with regulatory and market changes. This
framework, insofar as it tends to potentiate
different types of risks - namely legal, reputational,
operational and compliance - implied a continuous
investment in improving business processes and in
due diligence activities with counterparties,
reinforcing the quality of business relationships.
correspondence that the Bank maintains with the
main financial entities in the countries with which
it maintains economic relations.
In the different lines of business, the following
stand out:
• In international payments and transfers,
particularly those associated with international
trade, progress continues towards greater
efficiency, speed and transparency.

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• The Bank continues to deepen agreements and
partnerships with leading international banks
with a view to optimizing and maximizing
efficiency in payments involving foreign
exchange operations.
• In the custody activity, the publication of
Decree-Law no. 27/2023, of April 28, is
highlighted, which approves the Asset
Management Regime, which resulted in the
opportunity to revisit processes and update
contracts and procedures in line with the new
regulatory requirements and simultaneously
reinforce the value proposition in this specific
business segment, in which the role of
depository was reinforced.
• In the multilateral segment, the Bank
maintained close and fruitful collaboration with
the EIB/FEI group, to the benefit of the national
business community. Highlight is the signing of
two guarantee agreements, one with the EIF
under the InvestEU Program in the amount of
405 million euros and the other with the EIB in
the amount of 400 million euros, to grant
financing to Portuguese companies under
preferential conditions. The agreement signed
with the EIF aims to support the investment of
micro, small and medium-sized companies in
projects related to sustainability, innovation
and digitalization, social entrepreneurship,
microfinance, the cultural and creative sectors,
skills and education, and competitiveness. On
the other hand, the agreement signed with the
EIB aims to support Midcap companies and
Public Sector entities.

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Million euros
COMPANIES AND CORPORATE in Portugal | Dec 31, 2023 | Dec 31, 2022 | Chg. % 23/22
PROFIT AND LOSS ACCOUNT |  |  |
Net interest income | 207 | 203 | 1.9%
Other net income | 152 | 190 | -19.9%
| 359 | 393 | -8.6%
Operating costs | 62 | 58 | 7.5%
Impairment and provision | 155 | 150 | 3.3%
Income before tax | 142 | 185 | -23.3%
Income taxes | 44 | 58 | -23.3%
Income after tax | 98 | 127 | -23.3%
SUMMARY OF INDICATORS |  |  |
Allocated capital | 1,276 | 1,494 | -14.6%
Return on allocated capital | 7.7% | 8.5% |
Risk weighted assets | 11,662 | 11,950 | -2.4%
Cost to income ratio | 17.3% | 14.7% |
Loans to Customers (net of impairment charges) | 11,097 | 11,751 | -5.6%
Balance sheet Customer funds | 9,465 | 11,539 | -18.0%

Notes:
Allocated capital, Loans to customers (net of recoveries) and Balance sheet Customer funds figures based on average balance.
Financial performance
Companies and Corporate segment in Portugal
income after tax of 98 million euros in December
2023, compared unfavourably to an amount of 127
million euros presented in December 2022. This
evolution results mostly from a lower other net
income. As at December 2023 the performance of
this segment is explained by the following changes:
• Net interest income stood at 207 million euros
as at 31 December 2023, 1.9% above the amount
attained as at 31 December 2022 (203 million
euros), as the lower net interest income arising
from the loan portfolio was more than offset
the improvement in the margin on deposits,
enabled by the normalization of interest rates.
• Other net income reached 152 million euros in
December 2023, being 19.9% lower compared to
the amount achieved in December 2022, which
is mainly explained to the gains recognized with
the sale of non-current assets held for sale
recorded throughout 2022, substantially higher
than those recorded in 2023.
• Operating costs totalled 62 million euros by the
end of December 2023, 7.5% above the overall
amount of costs recorded in the same period of
the previous year.
• Impairments charges recorded 155 million euros
in December 2023, increasing from 150 million
euros in December 2022, an evolution explained
by the higher level of recoveries recorded in
2022, with a higher incidence in the 4th
quarter.
• In December 2023, loans to customers (net)
totalled 11,097 million euros, decreasing 5.6%
from December 2022 (11,751 million euros),
influenced by the environment of lower demand
for credit due to higher interest rates and
delays in investment projects and, also, by the
reduction of stock of NPE. Balance sheet
customer funds reached 9,465 million euros,
18.0% below the amount recorded in December
2022, particularly through the shrinkage of the
client’s deposits base, mostly from institutional
customers.

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PRIVATE BANKING
In 2023, the Bank adjusted its investment
“offer”, with the launch of new term deposit
solutions, new structured deposits and an
increase in the “offer” of funds, thus providing
solutions for different objectives and risk
profiles, allowing the diversification of
Customers' assets, and increasing return
opportunities.
Throughout the year, permanent monitoring of
Customer assets and knowledge sharing were
ensured, keeping Customers informed about
market developments.
The positioning as the main Bank was
reinforced, as a partner for Customers, not
only in the management of their financial
investments, but also in the management of
their day-to-day activities, promoting the
cross-selling of payment methods, risk
insurance and savings and digital services.
The focus on Digital resulted in the intensive
use of remote channels and digital tools, a key
component of business success, through the
simultaneous use of digital and human
channels.
It continued to invest in the dissemination of
digital channels among Customers, in
increasing the use of these channels, and in
the continuous improvement of the quality of
service through the improvement of the online
experience of Customers in their relationship
with the Bank, either on a day-to-day basis
either in the savings and investments
component, with a special focus on the
remote investment hubs of the Millennium
App.
In 2023, there was significant growth in the
number of Customers with the Millennium
App, which reached 60% and in the number of
users of the Millennium website, which
reached 90.5%. The number of execution
customers using the Mtrader App reached 64%.
94.6% of Private Customers adhere to the
digital statement.
It is also worth highlighting the importance
given to attracting Customers, as well as the
onboarding of new Customers, providing
Customers, from the outset, with products and
services suited to their needs.
Millennium bcp was elected, within the scope
of the PWM Wealth Tech Awards 2023, “Best
Private Bank For Self-Directed Investments” in
Europe by Professional Wealth Management
magazine, a publication of the Financial Times
Group.

Million euros
PRIVATE BANKING in Portugal | Dec 31, 2023 | Dec 31, 2022 | Chg. % 23/22
PROFIT AND LOSS ACCOUNT |  |  |
Net interest income | 35 | 20 | 72.9%
Other net income | 32 | 33 | -0.1%
| 67 | 53 | 27.8%
Operating costs | 15 | 14 | 4.1%
Impairment and provision | 0 | 0 |
Income before tax | 52 | 39 | 34.2%
Income taxes | 16 | 12 | 34.2%
Income after tax | 36 | 27 | 34.2%
SUMMARY OF INDICATORS |  |  |
Allocated capital | 24 | 25 | -6.5%
Return on allocated capital | >100% | >100% |
Risk weighted assets | 207 | 203 | 1.9%
Cost to income ratio | 22.2% | 27.3% |
Loans to Customers (net of impairment charges) | 333 | 345 | -3.4%
Balance sheet Customer funds | 2,679 | 2,747 | -2.5%

Notes: Allocated capital, Loans to customers (net of recoveries) and Balance sheet Customer funds figures based on average balance.

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Financial performance
Income after tax from Private Banking business in
Portugal, computed according to the geographic
segmentation perspective, totalled 36 million
euros in December 2023, showing an increase of
34.2% compared to the net profit reached in
December 2022 (27 million euros). Considering the
performance of the main items of the income
statement, the relevant situations are highlighted
as follows:
• Net operating revenues stood at 67 million
euros in December 2023, 27.8% up from the
amount recorded in the previous year (53
million euros), driven by the growth shown in
net interest income. Net interest income
totalled 35 million euros in December 2023,
comparing favourably to 20 million euros
reached in December 2022, benefiting from
the increase in interest rates and the
corresponding improvement in the margin on
deposits. Other net income amounted to 32
million euros in December 2023, reflecting a
slightly decrease of 0.1% compared to the
amount shown in the previous year, with lower
commissions from asset management activity
and from exchange and brokerage transactions
offset by commissions from cards and transfer
fees.
• Operating costs amounted to 15 million euros
in December 2023, being 4.1% above the
operating costs recorded in December 2022.
• The impairment and provision charges had no
material impact in the income statement on
both periods.
• Loans to customers (net) amounted to 333
million euros in December 2023, showing a
decrease of 3.4% compared to the figures
accounted in December of the previous year,
while balance sheet customer funds
corresponded to 2,679 million euros in
December 2023, 2.5% below the level achieved
in December 2022.

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FOREIGN BUSINESS AND OTHERS
Poland
• In 2023, net income amounted to 126.8 million
euros which compares to -223.5 million euros in
2022, excluding Foreign Exchange effect.
• Bank Millennium, in Q4 2023 reported positive
results of 26.2 million euros, thus presenting
positive results for the last five consecutive
quarters, after two years of negative results. Bank
Millennium results in 2023 continued to be
constrained by costs related to the mortgage loan
portfolio denominated in Swiss francs that
amounted to 735.3 million euros.
• Net profit in 2023 without extraordinary items
(mostly related to costs related to the mortgage
loan portfolio denominated in Swiss francs and the
gain associated to the sale of 80% of Millennium
Financial Services stake as a result of the strategic
partnership in the bancassurance business)
increased from 493.2 million euros, excluding
Foreign Exchange effect to 659.3 million euros,
corresponding to a 34% change.
• Net interest income (NII) increased by 12.9% y-o-y,
excluding credit holidays impact.
• Net fees and commissions decreased slightly by 3%
y-o-y.
• Operating costs decreased 4.8% y-o-y (costs
excluding BFG/IPS, increased 14% y-o-y).
• Operating income, excluding credit moratoria,
increased by 14% y-o-y.
• Impaired loans (stage 3) ratio stood at 4.58% which
compares to 4.45% in the previous year.
• Cost of Risk stood at 39 b.p. in 2023 which
compares to 44 b.p. in 2022.
• Loans to deposits ratio stood at 68.7% at the end of
2023.
• Significant increase of Group’s capital ratios that
stood at 18.06% for Total Capital Ratio (TCR) and at
14.73%% for T1 ratio, compared to 14.42% and
11.28%, respectively in 2022, above P2R
requirements (12.21% and 9.85%, respectively).
Mozambique
• Net income stood at 105.1 million in 2023, an
increase of 1.6% compared to the same period
last year, on a comparable basis.
• Net interest income increased by 2.3% and
commissions by 3.2%, excluding Foreign
Exchange effect.
• Operating costs increased by 13.7%, excluding
Foreign Exchange effect, in 2023.
• Stated cost/income ratio increased from 42.6%
in 2022 to 47.7% in 2023.
• Loans to customers decreased by 0.9% to 654
million euros, while customer funds decreased
by 3.8% to 2.1 billion euros.
• Ratio of NPL more than 90 days overdue stood
at 3.2% in December 2023, with coverage of
133% on the same date.
• Cost of risk of -371 b.p. in 2023 (118 b.p. in
the same period of 2022) resulting from the
partial recovery of a credit in litigation.
Without this effect, the cost of risk would be
161 b.p.
• Capital ratio of 36.9%.
Macao 1
• Net income reached euros 9.1 million in 2023,
aligned with Macao Branch’s target, down 35%, on a
comparable basis, versus 2022. This
underperformance was mainly due to the increase
in impairments for credit risk that more than offset
the increases in net interest income, net trading
income and commissions. Loans to customers
originated by the Macao Branch increased by 12.8%
compared to 2022.
• The Branch acted as a support platform for
companies doing business in Macao an in Mainland
China.
• Financing of local and Internacional corporate
customers.
• Trade finance operations to support companies with
exports to and/or imports from China.
• Attracting companies with international trade
operations with China.
• Attracting Chinese clients wishing to invest in
Portugal, both individually and at the business.
• Promoting contacts between the Investment
Banking area of Millennium bcp and Chinese
companies seeking investment opportunities in the
Portuguese-speaking countries.

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106 |
1 For the purpose of the computation of the net income generated by business segments, Macao activity is included in the "Other" segment, since it is
carried out through a branch.

Milhões de euros
Poland | Dec 31, 2023 | Dec 31, 2022 | Chg. % 23/22
PROFIT AND LOSS ACCOUNT |  |  |
Net interest income | 1,157 | 996 | 16.2%
Other net income | 311 | 24 |
| 1,468 | 1,020 | 43.9%
Operating costs | 420 | 357 | 17.7%
Result on modification | -19 | -310 | -93.7%
Impairment and provision | 740 | 509 | 45.2%
Income before tax | 289 | -156 |
Income taxes | 162 | 61 | 167.8%
Income after income tax | 127 | -217 |
BALANCE SHEET |  |  |
Loans to Customers (net of impairment charges) | 16,955 | 16,356 | 3.7%
Balance sheet Customer funds | 24,690 | 20,941 | 17.9%
Note: The accounts presented are in accordance with the Consolidated Accounts of the Group, and may differ from the accounts disclosed locally.

Milhões de euros
Mozambique | Dec 31, 2023 | Dec 31, 2022 | Chg. % 23/22
PROFIT AND LOSS ACCOUNT |  |  |
Net interest income | 202 | 202 | -0.2%
Other net income | 62 | 64 | -3.0%
| 264 | 266 | -0.9%
Operating costs | 126 | 113 | 11.0%
Impairment and provision | -11 | 15 | -174.3%
Income before tax | 149 | 138 | 8.0%
Income taxes | 44 | 36 | 21.7%
Income after tax from continuing operations | 105 | 102 | 3.2%
Income from discontinued operations | — | 4 | -100.0%
Income after income tax | 105 | 106 | -0.9%
BALANCE SHEET |  |  |
Loans to Customers (net of impairment charges) | 626 | 628 | -0.2%
Balance sheet Customer funds | 2,075 | 2,232 | -7.0%
Note: The accounts presented are in accordance with the Consolidated Accounts of the Group, and may differ from the accounts disclosed locally.

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|107

Million euros
FOREIGN BUSINESS | Dec 31, 2023 | Dec 31, 2022 | Chg. % 23/22
PROFIT AND LOSS ACCOUNT |  |  |
Net interest income | 1,359 | 1,199 | 13.4%
Other net income (*) | 375 | 87 | >200%
| 1,734 | 1,286 | 34.9%
Operating costs | 546 | 471 | 15.8%
Result on modification | -19 | -310 | -93.7%
Impairment and provision | 732 | 632 | 15.7%
Income before tax | 437 | -127 |
Income taxes | 206 | 97 | 113.2%
Income after tax from continuing operations | 231 | -224 |
Income from discontinued operations | -3 | 6 | -151.3%
Income after income tax | 228 | -218 |
SUMMARY OF INDICATORS |  |  |
Allocated capital (**) | 1,942 | 2,036 | -4.6%
Return on allocated capital | 11.8% | -10.8% |
Risk weighted assets | 14,325 | 16,821 | -14.8%
Cost to income ratio | 31.5% | 36.6% |
Loans to Customers (net of impairment charges) | 17,582 | 16,983 | 3.5%
Balance sheet Customer funds | 26,765 | 23,173 | 15.5%

(*) Includes equity accounted earnings related to the investment in Banco Millennium Atlântico.
(**) Allocated capital figures based on average balance.
Financial performance
Income after tax from Foreign Business, computed
in accordance with the geographic perspective, was
228 million euros in December 2023, comparing
favourably with a negative amount of 218 million
euros achieved by the end of December 2022. This
favourable evolution is mostly explained by the
higher level of the net operating income and the
lower loss recorded in results on modification,
partially offset by a higher level of impairment.
Considering the different items of the income
statement, the performance of Foreign Business can
be analysed as follows:
• Net interest income stood at 1,359 million euros
in December 2023, which compares to 1,199
million euros achieved in December 2022.
Excluding the impact arising from foreign
exchange effects, it would have increased
11.0%, reflecting mainly the performance of the
Polish subsidiary, driven by increases in the
reference interest rates that have been taking
place between the last quarter of 2021 and the
third quarter of 2022, while net interest income
at the subsidiary in Mozambique also increased,
albeit to a lesser extent, constrained by an
increase in the minimum level of non-
remunerated cash reserves maintained with the
central bank.
• Other net income attained 375 million euros in
December 2023, increasing significantly when
compared to the 87 million euros recorded in
the previous year. Excluding foreign exchange
effects, other net income would have increased
with the same significance level, determined by
the recognition of the gain obtained with the
sale of 80% of the shares of Millennium Financial
Services sp. z o.o. by Bank Millennium in Poland
and by the reduction of the mandatory
contributions of this subsidiary.
• Operating costs amounted to 546 million euros
as at 31 December 2023, 15.8% up from
December 2022. Excluding foreign exchange
effects, operating costs would have increased
14.0%, reflecting similar evolutions in the
subsidiaries in Poland and Mozambique. Wages
increase in Poland impacted staff costs of the
local subsidiary, although the subsidiary in
Mozambique also recorded an increase in this
item, albeit with a smaller magnitude. In other
administrative expenses, the general price
increase affected both the Polish subsidiary and

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108 |
the subsidiary in Mozambique, despite the
optimization of the branch network verified in
the Polish subsidiary.
• Results on modification totalled a negative
amount of 19 million euros at the end of
December of 2023, which compares with an also
negative amount of 310 million euros recorded
in the previous year. The amount recognised
during 2022 results mainly from the potential
costs arising from the moratorium program
(credit holidays). In both periods, this item also
includes the amount associated with contractual
modifications, namely those negotiated with
customers with foreign exchange mortgage
loans.
• Impairment and provision charges at the end of
December of 2023 presented a 15.7% growth
compared to the figures reported in 2022, which
had been penalized by the recognition in June
2022 by the impairment for the goodwill of the
Polish subsidiary. This growth corresponds
essentially to the additional provisions booked
by the Polish subsidiary to address the foreign
exchange mortgage legal risk.
• Results from discontinued operations, in 2022,
reflects adjustments to the gain arising from the
sale of Banque Privée BCP (Suisse) SA, and to
the investment held in Seguradora Internacional
de Moçambique, S.A.. In 2023, the adjustments
correspond exclusively to the discontinued
operation in Switzerland.
• Loans to customers (net) stood at 17,582 million
euros in December 2023, 3,5% up from the
amount attained in December 2022 (16,983
million euros). Excluding foreign exchange
effects, the loan portfolio decreased 3.6%,
influenced by the evolution of the Polish
subsidiary. The Foreign business’ balance sheet
customer funds increased 15.5% from 23,173
million euros reported in December 2022 to
26,765 million euros in December 2023.
Excluding the foreign exchange effects, balance
sheet customer funds increased 8,2%, mainly
driven by the performance of the subsidiary in
Poland.

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Strategic Plan 2021-2024

The strategic cycle launched in 2021 reflects Millennium bcp's determination to
accelerate transformation and strengthen its position for the future, preparing to face
and overcome the challenges that are shaping both the macroeconomic environment and
Bank's competitive landscape.
Successfully executing on the key priorities and
levers of Millennium bcp’s previous Strategic Plan
cycle (2018-2021) was crucial for setting the Bank
on a solid normalization path by significantly
reducing its legacy exposures. It also laid important
foundations for the future by substantially
accelerating Bank’s level of digitization.
This trajectory was particularly influenced by
developments in Portugal (a 40% reduction of NPEs
compared to 2018 and mobile Customers up by 48%
in 2020) where the Bank managed to recover its
volume growth trend (~5% p.a. growth in lending
and customers' deposits over 2018-20) and increase
its share of revenues (+0.6pp in 2018-20), despite
the environment of margin compression and
continued low interest rates.
In Poland, despite a positive operational
performance and the ability shown in the swift
integration of EuroBank, the bottom-line result has
been hindered by negative developments in FX
mortgages (despite the Bank having stopped writing
new FX mortgages in 2008).
Entering in this cycle, the Bank faced an economic
turmoil, whose recovery prospects were expected
to bring promising growth opportunities. Greater
customer expectations, more digital and e-
commerce activity, the increasing threat of tech
platforms and digital attackers and the overriding
requirement of sustainability were factors that
together presented significant challenges but also
major opportunities.
The Bank’s profitability performance was also
constrained by legislative developments in
Portugal, namely in relation to contributions to the
National Resolution Fund and limitations regarding
fair commissions and fees.
The Strategic Plan update was designed to preserve
relevant priorities from the previous strategic
cycle, consolidating the progress made and adding
elements consistent with the new framework.
This Strategic Plan reflected Millennium bcp's
aspiration to achieve robust profitability and
balance sheet position levels and to manage the
impact from the crisis caused by the pandemic,
while accelerating its competitive differentiation in
efficiency and Customer engagement levels,
supported by targeted human touch and new
mobile/digital solutions and business models,
enabled by a highly skilled and effective talent
base, while at the same time addressing societal
sustainability challenges with a focus on climate
change risks and the opportunities that may unfold
from their mitigating.
Therefore, the main strategic priorities for
Millennium bcp in Portugal have been set out for
this cycle, preserving a balance between continuity
and the implementation of bolder initiatives to
reinforce its competitive edge and innovation in
Millennium bcp's positioning:
• Serving the financial and protection needs of
Customers with personalized solutions which
combine targeted human touch with a leading
mobile platform: aiming to expand relevance
and develop high engagement relationships that
empower our customers in their financial lives.
This priority is about serving customers in meeting
all of those profitable retail needs in which
Millennium holds a leadership position:
investment management, bancassurance and
personal lending solutions.
• Being a trusted partner for corporate recovery
and transformation: supporting customers’ pursuit
of opportunities driven by EU funds for economic
recovery (PRR, PT 2030), while enabling solutions
fit for a more digitized, competitive and export-
oriented corporate landscape.
• Capital and risk resilience: reinforcing balance
sheet and ensuring readiness for the post-
pandemic world, strengthening both our risk and
capital management practices.
• Best in class efficiency: realizing cost savings
enabled by productivity gains already achieved
in the previous Cycle by several transformational
changes including the full exploitation of mobile
and automated capabilities, increased efficiency
in the branch network and tech and data-driven
process reengineering and automation.
• Data and technology edge: focusing efforts on
the implementation of our next-generation data
platform while scaling advanced analytics models
to gain differentiating mass personalization
capabilities, intelligent automation and informed
and agile business and regulatory management. In
parallel, the Bank will expand the deployment of

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110 |
its new technology foundations by advancing its
cloud platform, using modular IT building
blocks augmented by the digital experience
platform and new cybersecurity solutions,
designed to deliver agility and speed to market,
scale, resilience and cost efficiency.
• Capability building and talent renewal:
reinforcing Millennium bcp’s ability to attract,
develop and retain the best talent to embrace
modern challenges in critical domains and adapt
working practices to reflect the new paradigm
while promoting an equal-opportunity
environment.
• Sustainability-driven: adapting our business model
to increase differentiation towards the
communities and Customers’ rising expectations
of sustainability while capturing associated
business opportunities as well as addressing
regulatory demands.
• Lastly, Millennium bcp’s innovation initiatives
enable the Bank to explore broader opportunities,
going beyond traditional banking, not only in
order to go on delivering a superior customer
experience but also to support our income growth
and cost-containment goals.
The execution of these priorities in Portugal was
combined with consistent initiatives to explore
prudently the full growth potential of the
international operations, continuously looking for
ways to optimize their footprint.
This plan will enable Millennium bcp to deliver
against a set of bold targets for 2024. The Group
aspires to improve C/I (to ~40% in 2024) and
profitability (aiming at a ROE of ~10%). In parallel,
Millennium bcp will focus on risk management,
aiming to significantly lower the cost of risk (to ~50
bps) and the NPE ratio (to ~4%), while keeping a
prudent CET 1 ratio (>12.5%).
Additionally, the Bank continued to invest in
increasing its mobile penetration (from 48% to more
than 65%) and maintaining its leading digital
customer satisfaction (#1 in digital NPS).

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|111
Targets for 2024
In this Strategic Plan cycle Millennium bcp’s aims to speed up transition to a position of
strength and ready for the future position in Portugal, notwithstanding the risks that
shape the macroeconomic environment and the competitive landscape.
Our aspiration can be synthesised as:
i) Achieve robust levels of profitability, asset
quality and capital, managing the impact of the
crisis caused by the pandemic and the effects of
the war in Ukraine and Middle East with consequent
prices inflation;
ii) Accelerate Millennium bcp's competitive
differentiation in efficiency and Customer
engagement, supported by targeted human touch,
mobile/ digital solutions and in new business
models supported in a talent base of excellence;
iii) Address social, environmental and corporate
governance challenges with a focus on the risks
arising from climate change and the opportunities
associated with the adoption of mitigation and
adaptation solutions to this new reality.
In the international business, Millennium bcp
continued the journey started in 2018, making
adjustments in the light of recent developments. In
Poland, where it is implementing a resilience plan,
the focus is on responding to the risks of exposure
to mortgage loans in Swiss francs, actually reducing
the need for provisions for this risk, ensuring the
continued development of the commercial franchise
and Customer satisfaction. In Mozambique, it will
continue to adapt the business model to improve
the service and address to the evolving needs of
Customers, maintaining a strong commitment to
profitability, efficiency and risk control.
The successful execution of Millennium bcp''s
strategic priorities will reinforce its franchise
position and business model sustainability.
By 2024, the Group’s bold ambition is to improve C/
I to ~40% and to grow ROE profitably to ~10%. In
parallel, Millennium will focus on risk management,
with the goal of reducing the cost of risk (to ~50
b.p.), its NPE ratio (to ~4%) and a prudent objective
for the CET 1 ratio (>12.5%). Finally, there will be a
continued investment around rising levels of mobile
penetration (from 48 to >65%) and a focus on
delivering leading digital Customer satisfaction.

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Ambitious goals aligned with strategic priorities — Group level

| 2023 | 2024
C/I ratio | 32%1 | ~40%
Cost of risk | 42 b.p.2 | ~50 b.p.
ROE | 16.0% | ~10%
CET1 ratio | 15.4% | >12.5%
NPE ratio | 3.4% | ~4%
Share of mobile customers | 68% | >65%
Growth of high engagement customers** (vs. 2020) | +13.5% | +12%
Average ESG rating*** | 67% | >80%

1Adjusted cost to income: without the positive one-off effect related with the sale of 80% of Millennium Financial
Services stake (international operations) and without the charge regarding mainly the compensation for the temporary
reduction of remuneration in the period 2014/2017 in Portugal.
2Includes an impairment reversal in international operations, without this effect, the cost of risk would be 48 bps.
3Active Customers with card transactions in the previous 90 days or funds > €100 (>MZM 1,000 in Mozambique)
4Average of Top 3 indices (DJSI, CDP and MSCI) | NPE include loans to Customers only.

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Risk and Outlook

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Internal Control System

The internal control system governance model encompasses the organizational structure, the lines of
reporting and levels of authority, the set of lines of responsibilities and processes, that result from the
applicable laws and regulations, as well as the Bank’s by-laws and internal regulations, to ensure a prudent
and effective management of the Bank and adequate checks and balances.
The governance model promotes a conduct and risk culture across all the areas of the Bank, which is
materialized in an overarching set of principles, strategies, policies, systems and functions.
The Board of Directors promotes a strong governance and internal control culture, embedded in all levels of
the organization, and based on high standards of ethical behaviour, with rules established in the Code of
Conduct, available in the Bank’s site.
The Board of Directors provides the Bank’s governance, guidance and oversight and sets the broad strategies
and major policies of the organization, approves the overall organizational structure, and has the ultimate
responsibility for ensuring that adequate governance and internal controls system are established and
maintained, being supported in this function by the Audit Committee.
The Audit Committee plays a central role in the development of a governance culture and an internal control
system with a direct relation with the Board of Directors, the Bank’s internal control units and the external
auditors.
The current management of the Bank is delegated in the Executive Committee. This Committee established
different specialized commissions, with the participation of two or more Executive Directors, and first line
Managers who directly report to them.
The organizational structure of the Group is based on the principle of the segregation of functions between
the business units and internal control functions, aiming that any situations of potential conflict of interests
are identified in advance, minimized and subject to careful and independent monitoring.
The internal control system includes a set of principles, strategies, policies, systems, processes, rules, and
procedures established in the Group aimed at ensuring:
• Efficient and profitable performance of the activity, in the medium and long-term, ensuring the effective
use of the assets and resources, the business continuity and survival of the Group, namely through an
adequate management and control of the activity risks, through a prudent and correct assessment of
assets and liabilities, as well as through the implementation of mechanisms for prevention and protection
against errors and fraud.
• The existence of financial and managerial information, which is complete, pertinent, reliable, and
timely, to support decision-making and control processes, both at an internal and external level.
• Observance of the applicable legal and regulatory provisions issued by the Supervision Authorities,
including those relative to the prevention of money laundering and financing of terrorism, as well as
professional and ethical codes of conduct, standards and practices, internal and statutory rules,
guidelines of the Basel Banking Supervisory Committee and European Banking Authority (EBA), so as to
preserve the image and reputation of the institution before its Customers, Shareholders, Employees and
Supervisors.
• An effective Risk Management Function (RMF) with well-defined processes to identify, manage, monitor,
and report the risks that the Group is exposed.
• A Compliance Function ensuring the alignment with legal, regulatory, and statutory requirements, and
with internal rules, including rules of conduct and relationship with Clients, Investors, Supervisors’
Entities, and others, which rules are established in a Code of Conduct.
• An Internal Audit Function ensuring the effectiveness and consistency of the internal control processes
and mechanisms.
• The alignment of subsidiaries operating model with the organizational and managerial principles defined
by the Bank, as the consolidating Entity.
• The adoption of sound sustainability principles, namely regarding Environmental, Social and Governance
(ESG) factors, and its coherence with the Group’s activity.
• The good image and reputation of the Bank towards its stakeholders.

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To achieve these objectives, the internal control system is based on the compliance function, the risk
management function and internal audit function. The Heads of these three divisions are appointed by the
Bank's Board of Directors, by proposal of the Committee for Nominations and Remunerations, after an opinion
from the Audit Committee and of the Committee for Risk Assessment.
The internal control system is based on:
• A control environment supported by high integrity and honesty standards, promoting a strict compliance
with the laws and regulations, by the effective enforcement of a ‘check and balance’ system, including
adequate segregation of duties, with the objective of preventing conflicts of interest, and by process
based operational management models and control activities, that allow for clear identification of the
implemented controls and the assessment of their efficiency.
• A solid risk management system, aimed at the identification, evaluation, follow-up, and control of all
risks which might influence the Group's activities.
• An efficient information and communication system, designed to guarantee the collection, processing and
transmission of relevant, encompassing, and consistent data, within a timeframe and manner that allows
for an effective and timely management and control of the institution's activity and risks.
• An effective monitoring and correction process, implemented with a view to ensuring the adequacy and
effectiveness of the actual internal control system over time, to immediately identify any flaws (defined
as the group of existing, potential, or real defects, or opportunities for the introduction of improvements
that will strengthen the internal control system), and ensuring the triggering of corrective action.
• Strict compliance with all the legal and regulatory provisions by the Group's Employees in general, and by
the people who hold senior or managerial positions, including members of the management bodies.
• A governance model that defines that the business areas are responsible for risk taking, ensuring the
effective monitoring, control and management of the risks assumed, and supporting the independent
review of the risk levels incurred as compliant with the Risk Appetite Framework.
The internal control system is consistently applied across all Group entities, supported on group codes issued
by BCP defining global policies, principles, and rules, considering, and complying with local, legal or
regulatory requirements of the countries where operations are based.
Three lines of defence model
The Bank’s internal control system is based on the “Three Lines of Defence Model”, aiming to ensure:
• A clear accountability of the business areas for the respective assumption of risks.
• The effective monitoring, control and management of the risks assumed.
• An independent evaluation, to be reported to the Board of Directors and to the Executive Committee, of
the levels of risk assumed, their compliance with the Risk Appetite Framework and the effectiveness of
the established internal control systems.
The business lines, as the first line of defence, take risks and are responsible for their operational
management directly and on a permanent basis. For that purpose, business lines have appropriate processes
and controls in place that aim to ensure that risks are identified, analysed, measured, monitored, managed,
reported and kept within the limits of the institution’s risk appetite and that the business activities comply
with the external and internal requirements.
The risk management function and the compliance function form the second line of defence.
The risk management function facilitates the implementation of a sound risk management framework
throughout the institution and has responsibility for further identifying, monitoring, analyzing, measuring,
managing, and reporting on risks and forming a holistic view on all risks on an individual and consolidated
basis. It challenges and assists in the implementation of risk management measures by the business lines to
ensure that the process and controls in place at the first line of defence are properly designed and are
effective.
The compliance function monitors the Bank’s compliance with legal, regulatory, and internal policies
requirements, including the reputational protection of the Bank, comprising, among others, the prevention
of financial crime activities. It provides advice on compliance matters to the management body and
establishes policies and processes to manage compliance risks and to ensure an overall compliance culture
within the Bank.

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Both the risk management function and the compliance function intervene to ensure the improvement and
strengthening of internal control and risk management systems interacting with the first line of defence
whenever necessary.
The internal audit function, as the third line of defence, conducts risk-based audits and reviews the internal
governance arrangements, processes, and mechanisms to ascertain that they are sound and effective,
implemented and consistently applied, to assess the suitability and efficiency of the organizational culture,
of the risk management process, of the internal control system and of the governance models in place. The
internal audit function performs its tasks fully independently of the other lines of defence.
Internal Control subsystems
The internal control system includes the following subsystems: the risk management system, the information
and reporting system and the internal control monitoring system.
Risk management system
The risk management system corresponds to the set of integrated and permanent processes which enable the
identification, assessment, monitoring and control of all risks, to which the Group's institutions are exposed,
in order to keep them at levels that are predefined by the management and Supervisory Bodies, and takes
into consideration the BCP risk taxonomy which includes the risks identified by the Regulatory and
Supervisory Authorities, as well as all other risks which, in view of the specific situation of the Group's
institutions, could become materially relevant. The Risk Office is responsible for keeping the BCP risks
taxonomy updated as well as for promoting and conducting the regular risk identification process in the
Group.
The risk management system takes into consideration the credit risk, market risk, interest rate risk, foreign
exchange rate risk, liquidity risk, compliance risk, operational risk, information technology risk, strategy risk
and reputation risk, as well as all other risks that, in view of the institution’s specific situation, may prove
material for its feasibility and sustainability. Environmental and social aspects are included in the assessment
of these risks, once they are considered risk drivers that are transversal to all risk types.
The risk management system ensures the segregation between the risk management function and the risk-
generating business activities, respectively the second and first lines of defence. The internal audit, as third
line of defence, ensures independent analysis concerning the risk activity of the first and second lines. The
credit analysis and granting process ensure the segregation and independence between the credit analysis
and rating structures and the business origination units.
The risk management system ensures timely reaction to changing circumstances and conditions that
engenders new risks and change the risk profile of the Bank.
Management information and reporting system
The management information and reporting system ensures the existence of information, which is
substantive, up-to-date, understandable, consistent, timely and reliable, to enable an overall and
encompassing view of the financial situation, the development of the business, the achievement of the
defined strategy and objectives, the risk profile of the Group and the behaviour and prospective evolution of
relevant markets and risks.
The output of the system is an information flow enabling the management with a global and comprehensive
view on the Group’s financial standing, non-financial information and risk data on the compliance with the
obligations assumed before third parties, legal and regulatory, and the regular monitoring of the activity, the
implementation of the defined strategy and objectives so as to support decision-making processes, and also
on the Group’s overall risk profile, in aggregate terms and detailed by risk; and the performance, evolution
and risk profile of the market(s) in which the Group operates.
For this purpose, each entity of the Group develops, implements, and maintains formal processes for
obtaining and processing information that is appropriate to the respective size, nature and complexity of the
activity carried out, developing communication processes and reporting lines that ensure an adequate and
swift transmission of relevant information to the due intervenient, both internal and external. An adequate
organizational structure promotes the necessary data flow between the relevant parties in a process and
ensures the necessary confidentiality in information flows.
The financial information process is supported by the accounting and management support systems which
record, classify, associate and archive, in a timely, systematic, reliable, complete, and consistent manner,

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all the operations carried out by the Bank and its subsidiaries, in accordance with the rulings and policies
issued by the Board of Directors and the Executive Committee.
Clear duties and responsibilities are set for each organizational unit in the information and communication
processes and in the decision-making process.
Planning process
The Group planning process defines a long run sustainable strategy, compatible with the corporate vision and
previously established goals, with its market positioning, approved risk profile and with the implemented
internal control system.
The planning process is based on properly grounded assumptions, subject to sensitivity analysis and on
reliable and understandable information. As a result, clear, precise, and sustainable objectives are defined
for the global activity and for each business area, including the products, activities, systems and processes of
the Group and the human and material resources, namely the adequate levels of capital and liquidity,
necessary to fulfill the defined strategy are identified.
The planning process complies with the Risk Policy of the Group, as per the Risk Appetite Framework,
ensuring that the profitability levels are aligned with the risks involved.
The Group’s planning process includes the preparation of the annual and three-year budget, the verification
of the sufficiency of capital and liquidity (ICAAP e ILAAP), the execution of stress tests within the internal or
supervision scope, the preparation of the Funding and Capital Plan and of the Recovery Plan, the activities
deriving from the resolution planning and remaining initiatives that, at each moment, are required to be
implemented to comply with the requirements issued by the Supervision Authorities.
The Chief Financial Officer and Chief Risk Officer of the BCP, are responsible for the different elements of
the Group’s planning process, together with the Chief Financial Officers of the main subsidiaries.
The Group’s strategy is communicated, by the adequate means and detail, to all the Employees of the Bank.
Monitoring process
The monitoring and correcting system includes all the control and assessment actions to ensure the
permanent effectiveness and adequacy of the internal control system, namely, through the identification of
deficiencies in the system - in terms of its design, implementation and/or use.
This process is continuously executed and complemented by independent, periodical and or extraordinary
evaluations made by the Internal Audit.
The frequency of the control and assessment actions depend on the nature and magnitude of the risks
inherent to the activity carried out and the effectiveness of the associated specific controls.
All internal control of deficiencies and events of non-compliance are duly recorded in a deficiencies data
base at Group level, documented, and reported to the appropriate management levels to enable the
adoption of correction measures in line with the respective remediation plan. Processes for the follow-up
and validation of the measures implemented are established with clear deadlines according to the inherent
risk level.
Internal control system governance
The internal control system is supported by a governance model that defines the responsibilities for the
assumption of risks by the Business Areas, and ensures an effective follow-up, control and management of
the risks assumed, and an independent evaluation of the risk levels assumed as per the Risk Appetite
Framework.
The key pillars of the governance model implemented in the Bank are:
• Clear, transparent, and understandable rules are set and communicated to all employees to enable
supporting the development of the activity while ensuring an adequate broad and effective internal
control system.
• Coherent, clear, and objective definition of the competences and responsibilities of each structure unit
and/or function, reporting lines and authority levels, information flows, are communicate across the
organization, including an appropriate segregation of potentially conflicting functions or duties, also
ensure that any potential conflict of interests is identified in advance, minimized and subject to an
independent and careful monitoring.

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• Sufficient and appropriate material and human resources are provided at all levels of the organization for
the execution of the responsibilities, activities, and tasks inherent to the internal control system.
• Physical and functional segregation of the business activities and the respective operational and control
services, avoiding possible conflict of interests through ensure robust control activities, including regular
reviews, physical controls, authorization, verification, and reconciliation.
The Risk Office's activity is essentially focused on ensuring the effective application of the Group's risk
management system, namely, by developing, proposing, implementing, and controlling the use of a set of
assessment methodologies and metrics, that allow for a correct assessment of the risks incurred and arising
from the Group's activities, which are documented by internal rules and regulations. It is also responsible for
promoting and coordinating the policies and rules applicable to risk management and control at all entities of
the Group, with the responsibility of ensuring the global monitoring of risk and the alignment of concepts,
practices, and objectives on a consolidated basis. Under this framework, the Risk Office has access to all the
sources of information of the Group entities that are necessary for the exercise of the identification,
measurement, limitation, monitoring, mitigation and reporting of the various types of risk at consolidated
level.
The activity of the Compliance Office is transversal to all Institutions of the Group, in terms of applicable
compliance policies, with observance of the legal specificities of each jurisdiction. The Compliance Office
has access to the preventive information systems on money laundering and terrorism financing adopted by
the different entities of the Group, being equally informed and giving an opinion on all changes to the IT
alert systems and the processes for identifying Customers and communication of irregular cases verified in
the Group's entities, within the scope of the control of money laundering and terrorism financing, in order to
promote an alignment of systems, methodologies and criteria with those used by BCP.
The Accounting Division and the Studies, Planning and ALM Division receive and centralize the financial
information of all subsidiaries.
The corporate areas of the Bank, namely the Research, Planning and ALM Division, Accounting and
Consolidation Division, the Treasury, Markets and International Division, the Compliance Office, the Risk
Office, and the Audit Division ensure the existence of the procedures necessary to obtain all relevant
information for the consolidation, accounting and financial information and remaining elements supporting
the management, as well as the supervision and control of the risks at Group’s level. These procedures
include:
• The definition of the contents, the terms, and the format of the information to be reported by the
companies included in the consolidation perimeter of the parent-company, in accordance with the
accounting policies and guidelines defined by the management body, as well as the dates when the
reporting is required.
• The identification and control of the intra-Group operations.
• Assurance that the relevant accounting and financial information is consistent between the different
subsidiaries, so that it is possible to measure and monitor the evolution and profitability shown by each
business, verify the compliance with the objectives that have been established, as well as evaluate and
control the risks incurred by each entity, both in absolute and relative terms.
• Timely communication of extraordinary events which are relevant in terms of risk for the subsidiary or for
the Group.
• A financial information and reporting system that is supported by adequate contingency arrangements.
• Validating and monitoring the implementation of the corrective measures to resolve internal control
deficiencies that have a material potential impact.
The Audit Department is responsible for an on-site control function of the internal system, exercising this
function transversally on a permanent and independent basis, assessing, always and pursuant to the
established plan, the adequacy and effectiveness of the different components of the internal control system,
issuing recommendations based on the outcome of those assessments. The Audit Division is informed of the
conclusions of the inspection and internal audit actions carried out in each entity of the Group, especially
from those that assess the effectiveness and integrity of the entity's internal control system.
Common principles across the Group
To foster Group coherence, and keeping up with local laws and regulations, internal control system’s
organizational models similar to that of the Bank are established in the Group’s subsidiaries abroad and in
the entities in Portugal in which the Group participates and which are part of the Group, by anticipating the
existence of an Audit Committee and a Risk Assessment Committee, or equivalent bodies. The local
Supervisory Bodies have, in what the internal control system of each entity is concerned, the mission to

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verify its quality, integrity and effectiveness, as well as to evaluate its coherence and adherence with the
internal control system of BCP and the Group.
The Bank’s governance model and internal control system is extended to all subsidiaries, in a way which is
compatible with their nature, complexity and business model, ensuring the maximum possible level of
coherence and alignment:
• The CRO of BCP is responsible for coordinating the risk management system at Group’s level through the
Risk Officers and the Compliance Officers of each subsidiary.
• The CFO of BCP is responsible for coordinating the financial and accounting information system as well as
for the planning process at Group’s level.
• There is always at least an Executive Board member of BCP representing the parent company in each
subsidiary’s Board of Directors, being responsible for monitoring the overall performance of the entity.
• Notwithstanding, to ensure the maximum consistency of the criteria, methods, processes, and models
used in all subsidiaries, the CRO of BCP is appointed as a non-executive director of the subsidiary’s
management body, with supervision functions, being also designated for the subsidiaries’ Audit
Committee and Risk Assessment Committee when these governance bodies exist.
The Bank, as the Group's parent company, ensure that all subsidiaries implement internal control systems
that are coherent with each other, proportionate to the risks undertaken and with the local regulations and
legislation in force.
Whistleblowing
The Group has in place and maintains a Whistleblowing Policy and procedures, which are available for staff
or any person regardless of their relationship with any entity of the Group to report potential or actual
breaches of regulatory or internal requirements, through specific, independent, and autonomous channels.
The Whistleblowing Policy covers eventual or potential irregularities, the acts and omissions, both with
malicious intent or negligence, related with management, accounting organization, internal supervision or
serious evidence of breaches of duties that, in a serious manner, are susceptible namely of infringe the law,
articles of association, the regulations and other rules in effect, endanger, directly or indirectly, the assets
of the Customers, of the Bank and of the Shareholders or cause reputational damage to Bank.
The Whistleblowing procedures ensure, among others the protection of the identity and personal data of
both the person who reports the breach and the natural person who is allegedly responsible for the breach,
through which the Entity shall adopt the highest form of anonymity legally available and that the person
reporting the breach is appropriately protected from any negative impact (e.g. retaliation, discrimination or
other types of unfair treatment). Any information about irregularities provided through the whistleblowing
procedures is analyzed by the Audit Committee, supported by the Compliance Office and the Audit Division,
ensuring that the potential or actual breaches raised are assessed and escalated, including as appropriate to
the relevant competent authorities.

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Main Risks and Uncertainties

Risk | Sources of Risk | Level of Risk | Trend | Interactions/Mitigations
Regulatory and legal * | • Demanding or under review legislative and regulatory framework, including in emerging areas such as ESG and digital operational resilience, the implementation of the Basel III reform, bank recovery and resolution, and macroprudential policy with a potential impact on operational processes and compliance with regulatory requirements • Increasing regulatory requirements of an AML nature, the initial phase of a new supervisory framework and increased complexity of measures resulting from international sanctions • Possible impacts of Central Bank Digital Currency (CBDC) on the commercial banking model, if not correctly implemented • Impact of government measures to support households, notably in Poland | Medium |  | ▪ Culture of compliance and anticipation of regulatory and legal requirements ▪ Rigorous and efficient management of capital and liquidity and its implications on the business model ▪ Capital buffer growth vs regulatory minimum supported by strong organic capital generation. Robust liquidity buffers ▪ Assessment of the materiality of environmental factors in the Bank's risks and definition of mitigation measures ▪ Promotion of commercial strategies and solutions that promote the transition to low-carbon production models ▪ Development of more sophisticated AML models and adoption of practices in compliance with regulatory requirements, ensuring adequate prevention and compliance with restrictive measures
Sovereign | ▪ Volatile interest rates and confidence of the sovereign debt investors ▪ Uncertainty about the timing of the ECB's monetary policy normalisation: interest rates and quantitative easing ▪ Impacts on the budgets of European states resulting from support for Ukraine in the geopolitical conflict ▪ Size of exposure to Portuguese sovereign debt and those of other Eurozone, Polish and Mozambican countries ▪ Volatility of credit spreads ▪ Increased political instability | High |  | ▪ Implementation of contingency measures at European and national level ▪ Diversification of the sovereign debt portfolio ▪ Adoption of hedging measures of portfolio interest rate risk ▪ Relatively small size of the portfolio classified to fair value through other comprehensive income (FVOCI) ▪ Improvement of Portugal's rating and reduction of the share of public debt in GDP
Operational | ▪ Context with a greater propensity for cybersecurity threats (penetration, digital channels and geopolitical context) and new fraud formats ▪ Growing number of digital Customers and increase in internet and mobile transactions, requiring the maintenance of a high level of availability, security, timeliness and efficiency of the ICT systems (Information and Communication Technologies) ▪ Implications of the acceleration of automation, integration and digitalization of processes on the operational resilience of the banking sector ▪ Increase in reporting information needs, implying a greater rigour in data quality management and control | Medium |  | ▪ Increased capabilities to protect and mitigate cybersecurity risks ▪ Permanent monitoring of the alignment of the technological development plan with the business strategy ▪ Strengthening of the culture and awareness for an adequate internal control environment, with a focus on the training of Employees and awareness / information to Customers ▪ Implementation of a comprehensive technology renewal program ▪ Development of continuous improvement processes of Data Quality according to the principles of the BCBS239 ▪ Strengthening the structure and mechanisms for the protection of personal data
*Excluding litigation associated with the CHF loan portfolio in Poland

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Risk | Sources of Risk | Level of Risk | Trend | Interactions/Mitigations
Credit | ▪ Persistence of geopolitical conflict in Eastern Europe ▪ Conflict in the Middle East has aggravated geopolitical risks and could constrain global growth ▪ Prospect of a political context of greater instability in Portugal ▪ Uncertainty regarding the maintenance of high interest rates in the medium and long term ▪ Potential deterioration in the economic and financial situation of less robust firms, due in particular to the impacts of higher financing costs ▪ Slowdown in the growth of the world economy ▪ Delay in the implementation of the Recovery and Resilience Plan (RRP) ▪ Limitations on access to available and skilled labor ▪ Competitive pressure due to excess liquidity in the market ▪ Impact of ESG risk drivers on credit and collateral portfolio valuation | High |  | ▪ Positive and recurrent track record in the execution of the NPA reduction plan ▪ Reduction in the NPE Ratio, standing at 2.9% in Portugal ▪ Reinforcement of the level of coverage of the NPE portfolio due to impairments ▪ Additional support to the economy through the Recovery and Resilience Plan (RRP) ▪ Protected credit risk in a significant part of corporate credit exposures (including with state or multilateral entity guarantees) ▪ Rigorous approach to loan origination and monitoring ▪ Incorporation of ESG risk drivers into credit and collateral assessment policies ▪ Relatively low volume of exposures to sectors exposed to high climate transition risks ▪ Maintenance of impairment overlays to address the uncertainties of macroeconomic scenarios ▪ Proactivity in the monitoring and implementation of credit restructuring solutions, particularly in private individuals ▪ Increase in the weight of the fixed-rate loan portfolio ▪ Increase in the weight of the securitized loan portfolio
Market | ▪ Volatility in the capital markets ▪ Uncertainty about monetary policy, namely in the Eurozone ▪ Uncertainty about economic growth, the implications of continued geopolitical tensions. | Low |  | ▪ Limited exposure to trading portfolios ▪ Balance sheet hedging of interest rate risk ▪ Hedging of foreign exchange risk arising from financial participations ▪ Preference for placing lower risk products on Customers
Liquidity and Funding | ▪ Pressure on the average cost of customer funds after a cycle of rising interest rates and increased competition from banks and non-banks ▪ Restrictive monetary policy, with systemic impacts, particularly in Mozambique with high minimum reserve requirement ratios ▪ Change in the structure of customer deposits, with a greater weight of savings products | Low |  | ▪ Resources from balance sheet clients, mainly retail, which are decisive in the funding structure and its stability, with wholesale funding needs arising mainly from compliance with MREL requirements ▪ Increase in the cost of resources with no material impact on liquidity ▪ Large size of the portfolio of discountable assets with the ECB and the Polish and Mozambican central banks ▪ Improvement of the Bank's external rating, with an impact on the cost of wholesale funding. ▪ Rigorous management of the transformation ratio in Mozambique

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Risk | Sources of Risk | Level of Risk | Trend | Interactions/Mitigations
Litigation associated with the CHF loan portfolio in Poland | ▪ Increasing in the number of court cases against the banking system in Poland ▪ Increasing participation of lawsuits with judicial decisions not favourable to the Banks ▪ Risks related to verdicts issued by Polish courts in lawsuits against Bank Millennium ▪ Complexity and uncertainty regarding the outcome of judicial proceedings | High |  | ▪ Decrease in Banco Millennium's CHF mortgage loan portfolio ▪ Increase in the level of coverage of the mortgage loan portfolio in CHF by provisions ▪ Agreements with debtors with mortgage claims in CHF
Pension Fund | ▪ Effect of rising inflation on the dynamics of wages, pensions and, consequently, on the volume of liabilities ▪ Portfolio valuation | Medium |  | ▪ Integrated management of assets and liabilities in order to obtain an adequate balance between risk and return ▪ Comfortable coverage ratio of the fund’s liabilities by the assets ▪ Review of the management policy of the Defined Benefit Fund.
Real estate and other investments | ▪ Uncertainty regarding the development of real estate activity ▪ Uncertainty related with market and regulatory trends in terms of environmental awareness ▪ Risks related to the Bank's collaterals and properties ▪ Impact of legislative measures for housing support ▪ Uncertainty about price developments in the real estate market | Medium |  | ▪ Positive track record in asset portfolio reduction ▪ Moderate expectation of entry of new assets as a result of execution processes ▪ Impact of Insurance Policies on Risk Mitigation with Real Estate Assets ▪ Reduction of exposure to Restructuring Funds ▪ Non-material value of real estate and other assets portfolio.
Recurring profitability/ Business Model | ▪ Regulatory limitations on fees and commissions ▪ Impact of economic deterioration on asset values ▪ Pressures on operating costs ▪ New global players and competition from Big Techs ▪ Cycle Reversal Net Interest Margin Rate | Low |  | ▪ Need for strict management of net interest margin ▪ Strict cost structure control ▪ Comfortable capital position of the Bank ▪ Exceeding the objectives of the Bank's strategic plan for 2024 in 2023 ▪ Update of the Bank's strategic plan scheduled for 2024 ▪ Judicious interest rate risk management

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Risk management

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Framework
Risk appetite
The BCP Group carries out its business activities in a prudent and sustainable manner, always based on
the adequacy and compatibility between the business objectives and the levels of risk tolerance defined
in terms of sustainability and profitability, in the long-term.
The Group establishes and implements controls and limits on the material risks to which its activities may
be subject, based on its “Risk Appetite Statement” (RAS) which concurs for a standing of prudence and
sustainability of the business, in view of its profitability, as well as of the satisfaction of the different
stakeholders: Shareholders, Customers and Employees.
The Group RAS is composed by a broad set of indicators of primary importance and representative of the
risks assessed as "material", in the formal risks’ identification and quantification process, that is regularly
updated. The RAS metrics are grouped in five blocs covering solvency, funding, profitability, reputation
and franchise and sustainability risks.
For each indicator, 2 levels of limitation are established: an 'alert level', up to which the level of risk is
still acceptable, but from which corrective measures must be taken to make the level of risk regress to a
level of comfort, and a 'level of excess', which requires immediate measures to reduce the level of risk.
Stemming from the RAS indicators, other lower-level indicators (and respective limits) are established,
with a higher level of granularity, ensuring a more detailed monitoring in the day-to-day approach to the
risks’ control of business processes. All risk limits are approved by the competent Governance bodies
defined in the internal regulations and are periodically reviewed and updated.
For the main Entities of the Group, specific risk appetite indicators (“individual” RAS) are also
established. The Group RAS involves indicators for Portugal, Poland and Mozambique, some of which are
part of the Corporate RAS, which is a set of obligatory metrics for all Entities (but with appropriate limits
for each of the operations and structure in question), disaggregating the Group’s risk appetite into the
risk appetite of each Entity. Besides the Corporate RAS metrics, the RAS of each Entity can include other
metrics aiming to measure, for instance, idiosyncratic risks in each geography.
Risk strategy
The delimitation of risk appetite, translated into the RAS, is one of the guiding vectors of the Group's
"Risk Strategy", which is approved by BCP's Board of Directors, by proposal of the Executive Committee,
after hearing the Risk Assessment Committee. In fact, from the RAS, the main lines of action to be
developed are established in order to address the mitigation and/or control of all identified risks, which
together constitute the Group's Risk Strategy. The RAS and the Risk Strategy are inseparable elements to
the control and mitigation of the risks classified within the scope of the process of identifying them.
In this context, it should be noted that the Group, in the revision of the RAS for 2024 has adopted a
conservative approach in setting the risk tolerance by approving tighter thresholds than those in force in
2023, for circa 25% of the RAS indicators, reflecting a continuity orientation to promote the process of
improving the Group's overall risk profile.
Integration between the business and risk management
The risk appetite framework – which includes the identification of material risks, the RAS and the Risk
Strategy – is reviewed quarterly. The RAS and the risk strategy provide the reference framework for the
establishment of business objectives, which will have to respect the risk appetite and strategy approved
by the Board of Directors.
The planning and risk appetite processes are the foundations for all the activities and business lines
developed, also guiding the overall controls on the robustness of the Group, such as the stress tests and
the internal processes for assessing the adequacy of Capital (ICAAP) and Liquidity (ILAAP), as well as the
Recovery Plan and the activities within the scope of resolution planning.

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The following figure summarizes the relationships described above, providing a graphic representation of
the integration of risk management within the scope of the business developed by the BCP Group.
1 Internal Capital Adequacy Assessment Process
2 Internal Liquidity Adequacy Assessment Process
3 Recovery and Resolution Planning

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Risk management Governance
The composition, capacities and responsibilities of the management and control bodies that intervene in the
risk management governance are the following:
Board of Directors
The ultimate body of the BCP Group's risk management structure is the Board of Directors, which, within
the scope of the functions assigned to it by the Bank's Articles of Association, has the leading role in the
risk management and control structure. The Board of Directors is responsible for defining the Group's
global strategic guidelines and objectives, the profile and risk appetite, promoting the risk culture and
risk strategy, reserving for itself the approval of group codes that establish policies, principles, rules and
risk limits. The Board of Directors monitors the evolution of metrics and risk indicators translated into the
RAS (including the approval of remediation measures in case of breaches to the limits) approves the
conclusions of the ICAAP and ILAAP processes, the performance of the Internal Control System, the
Recovery Plan and the Funding and Capital Plan.
Risk Assessment Committee
The Risk Assessment Committee, appointed by the BoD, is composed by three to five non-executive
Directors and has, among others, the following capacities:
• Evaluate the integrity and adequacy of the Risk Management function, in line with the business
strategy, corporate culture and values.
• Advising the BoD on risk appetite and risk strategy, accompanying and intervening in the definition
and review of the Group's Risk Appetite Framework and providing an opinion on its adequacy to the
BoD.
• Monitoring the evolution of the RAS metrics, verifying their alignment with the defined thresholds and
levels and monitoring the action plans designed to ensure compliance with the established risk limits.
• Advising the BoD on the policies regarding the risks’ identification, management and control within
the Group, monitoring the global risk levels in order to ensure that those are compatible with the
goals, the available financial resources and the approved strategies for the development of the
Group’s activities.
• Oversee the implementation of the strategies for capital and liquidity management as well as for all
other relevant risks to the Group, such as market, credit, operational (including legal, IT and
compliance), and reputational risks, in order to assess their adequacy against the approved risk
appetite and strategy.
• Monitoring the capital and liquidity planning processes (ICAAP and ILAAP), providing an opinion to the
BoD concerning the respective conclusions, as well as analyzing and approving the conclusions of the
regular follow-up on these processes.
• Monitoring and intervening in the Recovery Plan review, the Liquidity Contigency Plan and the
Business Continuity Pans, providing an opinion to the BoD on the respective adequacy.
Within the resolution planning, the Committee for Risk Assessment approves its annual work plan and
monitors its execution.
The Risk Officer, maintains a functional reporting duty to this Committee and participates in its meetings,
presenting the evolution of the key risk metrics and indicators, as well as all incidences, changes and
evolutions relative to the Risk Management System (RMS).
Audit Committee
The BoD’s Audit Committee is elected by the Shareholders’ General Meeting and is composed by three to
five non-executive Directors, mainly independent. Within the competences of this Committee, this
Committee has global corporate supervising capabilities - e.g. in what concerns financial information,
namely risk levels follow-up - as well as those that are attributed within the Internal Control System,
namely:
• Overseeing the management activity of the Bank.

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• Monitoring the suitability and effectiveness of the Bank's organizational culture, governance models
and internal control and risk management systems, including the prevention of money laundering and
terrorist financing.
• Monitoring the accounting policies and processes adopted by the Bank, the financial reporting process
and submit recommendations aimed at ensuring its integrity.
• Overseeing the performance of the Compliance and Internal Audit functions.
• Supervising and controlling the effectiveness of the risk management system, in conjunction with the
Risk Assessment Committee; as well as the internal control system in its different aspects and also the
internal audit system itself.
• Issuing an opinion in relation to operations of acquisition of goods and services and involving related
parties, aiming to avoid conflicts of interests.
• Analyzing the information is received through the whistleblowing mechanism as well as the clients
claims.
• Monitor the activity of the External Auditor and periodically assess its independence and objectivity in
the exercise of its activity.
The Audit Committee holds regular meetings with the Heads of the Audit Division, the Risk Office and the
Compliance Office.
The Compliance Officer participates in the meetings of this Committee, presenting the evolution of the
monitoring of compliance risks, as well as all developments and interactions with regulation/supervision
in terms of regulatory compliance.
The Risk Officer participates in this Committee’s regular meetings, reporting on the evolution of the main
indicators and metrics concerning risks and credit impairment, as well as on the implementation status of
the recommendations that concern the risk management system, issued within the scope of internal
control or by the supervisory/regulatory authorities.
The Head of Audit Division reports regularly to the Audit Committee on interactions and the status of the
recommendations of the prudential supervision entities, as well as on the audits carried out on the Bank's
processes.
Committee for Corporate Governance, Ethics and Sustainability
This Committee, appointed by the Board of Directors, is composed of a minimum of three and a maximum
of five non-executive directors.
Amongst other that may be delegated by the Board of Directors, the competences of the Committee for
Corporate Governance, Ethics and Sustainability include:
• Recommend the adoption by the Board of Directors of policies, that observe the ethical and
professional conduct principles and best corporate governance practices and social responsibility.
• Support the Board of Directors and its Committees in the evaluation of the systems that identify and
solve conflicts of interest.
• Assess the compliance function, analyzing the procedures in place and the identified non-
compliances.
• Issue opinions addressed to the Board of Directors on the Code of Conduct and on other documents
defining business ethical principles.
• Every time it deems necessary, submit to the Board of Directors a report on the evaluation and
monitoring of the structure, ethical and professional conduct principles and corporate governance
practices of the Bank and on the company's compliance with the legal, regulatory and supervisory
requirements on these issues.
• Issue an opinion for the Board of Directors on the Annual Corporate Governance Report.
• Issue an opinion on the Annual Sustainability Report, concerning issues for which it is responsible.
• Time it deems necessary, submit to the Board of Directors a proposal on the guidelines for the
Company's policies, based on a culture identified with the ethical and professional conduct principles
targeted at contributing for the pursuit of social responsibility and sustainability goals. Proposing,
particularly, guidelines for the social responsibility and sustainability policies of the Company,

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including, among other, the values and principles for safeguarding the interests of the shareholders,
investors and of those interested in the institution and also principles of social charity and
environmental protection.
• Issue an opinion on the Group Codes and respective annexes whenever this competence has been
delegated to it by the BoD.
Committee for Nominations and Remunerations
This Committee, appointed by the Board of Directors, is composed of a minimum of three and a maximum
of five non-executive Directors.
The Board of Directors delegates in the Committee for Nominations and Remunerations the monitoring on
issues related with human resources, assessment and composition of the Board of Directors and of its
Committees, reviewing the Remuneration Policies of the Directors and Employees, including the Key
Function Holders (KFH), and monitoring their respective implementation, in accordance with the powers
conferred to it by the law and its own Regulations.
Other functions of this Committee:
• Monitor the existence of specific policies related with selection and recruitment, evaluation of
performance, promotion and career management, training, and development of competences.
• Elaborate and report to the BoD recommendations on the candidates to members of the Governance
and Supervisory bodies of the Bank, ensuring the Fit & Proper assessment process.
• Issue an opinion to the BoD on the Selection, Assessment and Succession policies for members of the
Governance and Supervisory bodies and responsible for control functions.
• Prepare and maintain a succession plan for members of the Board of Directors and KFH.
Executive Committee
The Executive Committee is responsible for the daily management of the Bank aiming to pursue the
corporate objectives within the risk limits approved and defined by the Board of Directors. Particularly
regarding the risk management function, the Executive Committee is responsible for:
• Implement the Bank's general business strategy and main policies, considering the Bank's long-term
financial interests and solvency.
• Implement the global risk strategy approved by the BoD and ensure that management devotes
sufficient time to risk issues.
• Ensuring an adequate and effective internal governance model and an internal control framework,
including a clear organizational structure and independent internal risk management functions.
• Promote the risk culture across the BCP Group, addressing risk awareness and appropriate risk-taking
behaviour.
• Promote a corporate culture and values that foster the ethical and responsible behaviour of
employees.
• Promote the development, implementation and maintenance of formal processes for obtaining,
producing and processing substantive information, appropriate to the size, nature, scope and
complexity of the activities carried out, as well as to the institution's risk appetite, which ensure its
reliability, integrity, consistency, integrity, validity, timeliness, accessibility and granularity.
The Executive Committee is supported, to carry out its responsibilities, by several management
commissions in a wide range of dimensions: Business Activity; Credit Decisions; Risk and Compliance
Management; Planning, Costs and Investments; Capital Structure and Liquidity Management; Human
Resources Management; Operational Resilience. These management commissions can benefit from the
presence of one or more internal control function units (Risk Office, Compliance Office and Internal
Audit) which ensures timely detection of any potential internal control deficiencies.
The Executive Committee delegates in the Risk Commission, the Compliance and Operations Risk
Commission (CORC) and the Operational Resilience Commission, the mission of monitoring the risks the
Group is exposed to, as well as the deficiencies identified regarding the internal control system. These
commissions are also responsible for monitoring the adoption of corrective measures and the overall

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progress of open recommendations. Furthermore, the CORC may also evaluate and propose improvements
to be introduced to the internal control system.
Risk Commission
This Commission is appointed by the Executive Committee and has the responsibility for defining, at an
executive level, the framework and the risk management policies and instruments within the Group,
establishing the respective principles, rules, limits and practices for the Group Entities, considering the
defined risk thresholds by the Board of Directors.
The Risk Commission monitors the overall levels of credit, market, liquidity and operational risk, as well
as all other risks considered materially relevant for the Group, ensuring that the risk levels are
compatible with the goals, available financial resources and strategies that have been approved for the
development of the Group's activity. This Commission also validates the compliance of risk management
with the applicable laws and regulations.
Models Monitoring and Validation Sub-commission
The Models Monitoring and Validation Sub-Commission monitors the performance and confirms the
validity of the rating systems and models used by the Bank within the scope of its risk management
functions and informs the Risk Commission on their adequacy. Moreover, it presents the model’s risk
management results and suggests improvement measures to increase the model’s performance and
adequacy.
Credit and Non-Performing Assets Monitoring Commission
This Commission is appointed by the EC and has the responsibility of monitoring the evolution of credit
risk, under various aspects:
• Monitoring of the evolution of the credit exposure and the credit underwriting process.
• Monitoring the evolution of the credit portfolio’s quality and of the main performance and risk
indicators.
• Monitor the results achieved by the credit monitoring systems.
• Follow-up the counterparty risk and the largest exposures concentration risk.
• Monitoring the impairment evolution and the main cases of individual analysis.
• Assessment of the recovery procedures performance.
• Monitoring the divestment in the foreclosed assets portfolio.
• Follow-up the execution of the operational plans to be developed within the scope of non performing
exposures and reduction of certain asset classes.
Pension Funds Risk Monitoring Commission
This Commission is appointed by the EC and has the following competences:
• Assessing the performance and risk of the Group’s Pension Funds in Portugal.
• Establishing, for these, the appropriate investment policies and hedging strategies.
• Approving changes to the Fund´s actuarial assumptions.
• Issuing a opinion on material investment decisions.
Compliance and Operational Risks Commission
This Commission, appointed by the EC has a number of tasks and responsibilities, with a view to ensuring
that the Bank's activity contributes to an adequate culture of risk and internal control, including ensuring
and monitoring the adoption and compliance by all the Group's institutions with the internal and external
rules that shape its activity, the relevant contractual commitments and ethical values of the
organization, in order to contribute to the mitigation of compliance and operational risks, strengthening
the internal control environment, mitigating or eliminating the imputation of significant sanctions or
property or reputational losses.

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Operational Resilience Commission
This Commission is appointed by the EC and has the following capacities and responsibilities:
• Definition of guidelines and approval of the management policies for IT systems, data management
and quality, physical security, business continuity and data protection.
• Regular review of the emerging threats and most relevant trends in terms of data security and
information technologies, with a particular focus upon cyber-security.
• Analysis of the periodical security incident’s reports (regarding systems/data and physical),
identifying the appropriate remediation and improvement measures.
• Monitoring of performance metrics of information security systems, physical security and protection
and data quality.
• Review of the results of information security evaluation and business continuity.
• Follow-up of initiatives and projects in the area of systems/data security, physical security and data
protection and monitoring of the respective performance metrics.
• Approval of the annual plans for the exercises of security assessment, Disaster Recovery Plan (DRP)
and business continuity, and their respective quantitative/qualitative evaluation.
• Articulation with subsidiaries on the themes of physical security policies, information security,
business continuity and protection and data quality.
Corporate Risk Monitoring Commission
This Commission is appointed by the EC and has the following duties and responsibilities:
• Monitor the evolution recorded by the main performing corporate Clients credit exposures, focusing
on the specific risk factors of each client (sector of activity, financial standing, cost structure, etc.),
issuing opinions regarding the credit strategy to adopt.
• Follow-up the counterparty risk and the largest exposures concentration risk.
Sustainability Commission
This Committee is responsible for defining and monitoring the initiatives that allow the implementation of
the Sustainability Master Plan (SMP), in its strategic components (Environmental, Social and Corporate
Governance), in compliance with the guidelines of the Plan approved by the Executive Committee.
It has the following attributions and responsibilities:
• To assist the EC in integrating the principles of Sustainability (Environmental, Social and Corporate
Governance) in the decision and management processes of the Bank.
• To assess and approve the initiatives required to implement the actions defined to materialize the
strategic axes of the Sustainability Master Plan in force, as well as other changes or adaptations
necessary to meet the defined objectives.
• To follow-up and monitor the progress of approved initiatives, compliance with the respective
deadlines and budgets and the evolution of the results achieved, as well as the key performance
indicators of the plan’s dimensions.
CALCO
The Capital, Assets and Liabilities Management Commission is responsible for the management of the
Group's overall capital, for assets and liabilities management and for the definition of liquidity
management strategies at a consolidated level. Specifically, the CALCO is responsible for the structural
management of interest rate and liquidity risks, including, among others, the following aspects:
• Establishment of management guidelines for assets, liabilities and off-balance sheet items at
consolidated level.
• Definition of the capital allocation and risk premium policies.
• Definition of transfer pricing policy, in particular with regard to liquidity premiums.

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• Monitoring of the capital and liquidity indicators, of the Recovery Plan indicators and of the execution
of the Liquidity Plan.
• Definition of policies and strategies to access wholesale funding markets and definition of the liquidity
buffer composition.
• Definition of the investment policy of the Investment Portfolio and monitoring of its performance.
• Definition of the strategy and positioning within the scope of the interest rate risk and structural FX
risk management, as well as of the respective policies and limits, taking into account the market
conditions at any given moment.
Credit Commission
This Commission is appointed by the EC and its functions are to assess and decide on credit granting to
Customers of Banco Comercial Português, in accordance with the competences established by internal
Credit Granting, Monitoring and Recovery’ regulations. This commission may also issue advisory opinions
on credit proposals from the subsidiary companies of the Group entities.
Risk Office
The Risk Office (ROFF) is the structure unit responsible for the risk control function at Group level,
promoting the overall alignment of concepts and procedures concerning risk monitoring and assessment.
The ROFF is responsible for informing the Board of Directors, the Executive Committee, the Risks
Assessment Committee, and the Risk Commission on the general risk level, for proposing measures to
improve the control environment and for the implementation of controls which assure compliance with
the approved limits. The ROFF has the following functions:
• Supporting the establishment of risk management policies and methodologies for the identification,
measurement, limitation, monitoring, mitigation and reporting of the different types of risk.
• Promoting the revision of the Group’s Risk Appetite and the risk identification process.
• Issuing opinions related with the Group Strategic Plan and compatibility of the risk management
decisions considering the approved RAS limits.
• Participate in the definition of the risk strategy and decisions related with risk management.
• Issuing opinions on the assumption of significant risks by the Bank and its subsidiaries, ensuring they
are properly identified and adequately assessed.
• Integrate the climate, social and internal governance (ESG) dimension into the risk management
framework;
• Coordinating the NPA (non-performing assets) Reduction Plan and of the ICAAP and ILAAP processes.
• Ensuring the existence of a body of rules and procedures, of an effective IT platform and of a
database for the robust and complete management of risk.
• Controlling, on an ongoing basis, the evolution of the different risks and compliance with the
applicable policies, regulations, and limits.
• Participating in the Internal Control System.
• Preparing information relative to risk management for internal and market disclosure.
• Supporting the works of the following Commissions: Risk, NPA Monitoring, Pension Funds Risk
Monitoring and participating in the Credit Commission, CALCO, Operational Resilience, Compliance,
Operational Risk, Sustainability and Corporate Risk Monitoring Commission.
The Risk Officer is appointed by the BoD, and reports to the CRO of the Group, with a functional
reporting duty to the Risk Assessment Committee.
Compliance Office
The Compliance Office (COFF) is part of its organizational structure, construed upon “3 lines of defence
model”. It ensures the compliance function assigned to the “second line of defence”, which includes
control and regulatory compliance activities, analysing and advising the corporate bodies and the various
Divisions of the Bank prior to the making of decisions that may involve the assumption of specific risks
which are monitored by the compliance function.

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Furthermore, the COFF has also the mission to:
• Verify if the respective regulatory requirements are complied with, as well as the ethical values of the
organization, fulfilling all the attributions that are legally conferred on it, ensuring the existence of a
culture of internal control, thus contributing to the mitigation of the risk of attribution to the Group
Entities of sanctions or significant assets or reputation damages.
• Promoting the preparation, approval, application, verification of compliance and periodic updating of
the Code of Conduct.
• Ensure compliance with the regulatory framework on the prevention and fight against money
laundering and terrorism financing (hereinafter “AML/CTF”).
• Participate in the definition of policies and procedures related with Conflicts of Interest and
transactions with Related Parties, following-up their implementation and effective application.
• Ensure the management and controls adequacy of the whistleblowing process.
• Provide support to the International Entities in the development of their activities, seeking to
normalise their action principles, systems and processes, in compliance with local regulatory
specifications.
The Compliance Officer is appointed by the BoD, reports to the Executive Committee, through the CRO,
with a functional reporting duty to the reports directly to the Executive Committee and, functionally, to
the Audit Committee, exercising his/her functions in an independent, permanent and effective manner,
defining the policies, guidelines and tools that are appropriate for a proactive and preventive risks’
assessment.
As a second line of defence structure responsible for compliance risk, for the risks associated with money
laundering and the financing of terrorism, with conduct and market abuse, with conflict of interests and
for other risks of an operational nature, the COFF issues decisions, with binding force for its recipients,
aiming at the legal and regulatory compliance of the various business and business support areas.
The functions attributed to the COFF are exercised in accordance with the law or with other applicable
normative source, as well as by the Bank’s corporate bodies, and the performance of the Compliance
Office should be based on a risk approach, at the level of the business, Customers and transactions,
allowing the identification, assessment, monitoring and control of compliance risks that may influence
the strategy, reputation and objectives defined for the Bank.
Within the scope of opinions and the associated analyses produced at request of several Group areas and
Divisions, the COFF:
• Identifies and evaluates the various types of risks – either concerning in what refers to products and
services approval process, corporate processes and conflicts of interest.
• Issues proposals for the correction of processes and risks mitigation.
• Permanently analyses the general supervisory environment and, in general, provides specialised
support in matters of control and regulatory compliance.
Within the scope of its specific functions, the COFF also ensures an assessment and intervention in what
concerns:
• The control and monitoring of compliance risks.
• The Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT).
• The mitigation of reputation risk at all Group entities, aiming at the alignment of concepts, practices
and goals in these matters.
In compliance with the Principle of Coherence of the Group's internal control, the 1st responsible for the
Compliance Officer of BCP is also responsible for the follow-up and monitoring of the compliance
activities and Policies at Group level, highlighting the follow-up and monitoring of the AML/CFT risk
through the International AML/CFT Committees, with the participation of the management and
Compliance Bodies of the local units.
The COFF is also responsible for coordinating the process of structuring, drafting and approving the
annual self-assessment reports on the effectiveness of the organisational culture and the governance and
internal control systems, both individual and consolidated, and on the ML/FT prevention system to be
submitted to the Banco de Portugal and the Securities Market Commission, under the terms of the

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respective Notices and Regulations, and as well for the preparation and submission of reports to the
management body, at least once a year, identifying the compliance flaws verified and the
recommendations issued for their correction.
The COFF fosters, intervenes and actively participates in the training policy of Employees, namely,
through training actions in Compliance, for the entire universe of the Group, maintaining a large
knowledge repository for matters of its competence, namely, in what concerns the AML/CFT.
Audit Division
The Audit Department (DAU) provides functions of the third line of defence, under the scope called
"Model of the 3 lines of defence" and is responsible for assessing the adequacy and effectiveness of the
risk management process, the internal control system and the governance models. DAU performs its
function on a permanent and independent basis and in accordance with the internationally accepted
principles and best practices of internal auditing, carrying out internal audit inspections to assess the
systems and processes of internal control and risk management which can give rise to recommendations
aimed at to improve its efficiency and effectiveness.
The main functions of the DAU in the scope of risk management are to ensure that:
• The Risks are properly identified and managed and that the controls implemented are correct,
adequate and proportional to the Bank's risks.
• The Bank's internal capital assessment system is adequate in terms of the risk exposure level.
• Transactions are recorded correctly in the systems of the Bank, and the operational and financial
information is true, appropriate, material, accurate, reliable and timely.
• The Employees perform their duties in accordance with internal policies, codes of conduct, rules and
procedures and with the legislation and other applicable regulations.
• The goods and services necessary for the Bank's activity are purchased economically, are used
efficiently and are properly protected.
• The Legal and regulatory provisions with a significant impact on the organization are recognized,
properly assimilated, and integrated into the operational processes.
• The Bank's governance model is adequate, effective, and efficient.
The Head of DAU reports hierarchically to the Chairman of the Board of Directors and functionally to
Audit Commission, is responsible for the general supervision and coordination of the internal audit
activities of the BCP Group subsidiaries and attends the meetings of the Audit Committee of the
subsidiaries of the BCP Group.

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Main developments and accomplishments in 2023
In 2023, the Risk Management Function maintained the focus on the improvement of the Group's risk
control framework, permanently monitoring the risk levels in relation to the RAS tolerance limits, while
ensuring, full compliance with regulatory and supervisory requirements, the update of the internal risk
management and control policies and regulations.
The most relevant activities developed during 2023 were, synthetically, as follows:
• Monitoring the level of compliance with the risk limits, in particular the RAS, at the consolidated level
and of the main entities;
• Preparation of the Risk Management Function Independence Report;
• Carrying out the Risk Identification Process with the revision of the RAS and the Risk Strategy for
2024;
• Preparation of quarterly Risk Assessment Reports updating the perspectives on the evolution of the
risks to which the Bank is subject in its activity and the risk strategy to address them;
• Development and validation of new methodologies for calculating economic capital;
• Completion of ICAAP and ILAAP reports, and their respective regular monitoring, ensuring the Group's
capital and liquidity adequacy on an ongoing basis;
• Continuous improvement of the internal governance, management, measurement and control of risk
at Group level, with a special focus on strengthening credit risk monitoring and the inclusion of
climate and environmental risk factors in the framework of risk management and monitoring of its
implementation within the scope of the Bank's RAS;
• Close monitoring of the financial situation of clients, with the aim of identifying situations potentially
more affected by the macroeconomic context, anticipating possible difficulties in fulfilling their
responsibilities;
• Consolidation of the process of assigning credit strategies to corporate segment costumers, with
different review periodicities, depending on the level of risk associated with the assigned strategy;
• Revision of the parameters of the impairment models and update of the macroeconomic scenarios;
• Approval by the ECB of applications for material changes to the IRB models, namely the Probability of
Default (PD) and Loss Given Default models applicable to the Retail and Corporate segments;
• Implementation of the approved models in the Bank's IT processes and systems, ensuring the start-up
of the new PD models concomitantly with the introduction of a new Rating Master Scale as of January
2024;
• Application to the ECB for authorisation to use a new Credit Conversion Factor (CCF) model;
• Maintenance of the overlay policy to incorporate uncertainty associated with relevant risk factors in
the current macroeconomic and geopolitical context;
• Review, update and implementation of NPA/NPE and exposure to corporate restructuring funds
reduction Plans;
• Participation in the CDP questionnaires – Carbon Disclosure Project and Corporate Sustainability
Assessment (S&P Global);
• Update of the Climate and Environment materiality assessment;
• Preparation of replies to the ECB's "Targeted Review on Digitalization" questionnaire;
• Publication of the Annual Market Discipline Report and quarterly disclosures;
• Execution of EBA's capital stress tests;
• Participation in the ECB's Cyber Resilience Stress Testing;
• Continuous improvement of liquidity and financing risk management and control systems at Group
level;
• Participation in the annual liquidity exercise of the SSM/SRB (Single Supervisory Mechanism/Single
Resolution Board), followed by a self-assessment of the Bank's ability to report the data of the model
(Joint Liquidity Template);
• Consolidation of a liquidity management framework in the context of resolution planning;

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• Improvement of the interest rate risk control and management framework (IRRBB and CSRBB), in line
with regulator guidance (EBA/GL/2022/14);
• Implementation of a new platform to support core risk quantification processes (SAS Cloud);
• Obtaining authorisation from the ECB for the application of Article 352(2) CRR for the exclusion of
structural foreign exchange positions from the calculation of net open foreign exchange positions;
• Submission of the report for the EBA Market Risk Benchmarking Exercise 2024;
• Continuation of projects aimed at continuous improvement of the quality of decision support data and
risk control metrics according to BCBS239 and the development of the upgrade of the technological
platform to support risk management;
• Presentation of the results of the 2022 annual exercise on risk self-assessment (RSA-Risk Self-
Assessment) and execution of the corresponding exercise in 2023;
• Execution of the annual Risk Self-Assessment (RSA) exercise of operational processes;
• Consolidation of the framework for monitoring and controlling ICT (information, communication and
technology) and cybersecurity risks, as well as outsourcing risk;
• Participation in the project of renewal and reformulation of the Business Continuity Management
System;
• Participation in the update of the Group's recovery plan for 2023;
• Continuous updating of the regulations of the risk management function at Group level;
• Participation in the Budget and Plan for 2024/26;
• Follow-up of several On-Site Inspections and Deep Dive exercises of the Supervisory Entities.
In 2023, the compliance function maintained its focus on the continuous improvement of the Group's
compliance risks´s control environment, ensuring, fulfilling regulatory and supervisory requirements and
updating the internal regulation’s compliance risk management and control framework.
The most relevant activities and initiatives developed during 2023 were, as follows:
• Identification and due diligence, for the appropriate pre-validation, substantive and formal, of the
opening and maintenance of entities and accounts and credit operations, in a context of increased
risk, highlighting the effect of the war in Ukraine, with the issuance of successive sanctions packages.
• Examination of operations, with emphasis on the filtering operations process, essential for complying
with the sanctions and embargo regimes decreed by the competent national and supranational
authorities, and their monitoring, with a view to detecting and preventing potentially irregular
situations.
• Control, by improving IT systems and monitoring mechanisms, adapting them to new regulatory
requirements and new risk factors, contributing to the effectiveness of the AML/CFT risk management
model.
• Communication, adapting governance and processes in order to inform the competent authorities in a
timely manner whenever there are suspicions or sufficient reasons to suspect that certain funds or
other assets, regardless of the amount involved, come from criminal activities or are related to their
financing, in a context of growing risk factors in this area.
• Collaboration with all the supervisory and inspection bodies responsible for the activity of BCP and its
Subsidiaries in Portugal.
• Co-operation with Direção-Geral de Política Externa of the Foreign Office and with Gabinete de
Planeamento, Estratégia, Avaliação e Relações Internacionais of the Ministry of Finance, ensuring
compliance with the regulatory and legal framework on restrictive measures.
• Training, through the fulfilment of a training and communication plan.
This functional perimeter, based on dedicated technological solutions, also provides for the definition and
management of risk models according to the evolution of the various competing variables for establishing
the scorings to be applied to operations. Also noteworthy is the development of new, more effective and
efficient solutions based on automation processes for analysing the risk factors inherent in new account
openings and transaction screening, and the effort to update internal rules in order to bring them into
line with recent changes in the legislative environment. Of the various initiatives undertaken in 2023, we
would highlight:

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• Reinforcement of automatic control processes relating to transaction filtering, in order to ensure
permanent and timely compliance with the sanctions and embargoes decreed by the various
international organisations, in a more demanding international context resulting from the war in
Ukraine.
• Strengthening AML/CFT risk control in the area of customer onboarding, in the segments and
jurisdictions involved in business relationships.
• Reinforcement of the model of an integrated view of Customers in the business relationship with the
Bank and the inherent risk factors, in order to strengthen effectiveness in the fulfilment of AML/CFT
duties, mainly identification and diligence, control, examination and communication.
• Continued development of automatic solutions that promote alignment and cooperation between the
Bank's first and second lines of defence in fulfilling the various AML/CFT duties.
• Reinforcement of controls over Correspondent Banks, ensuring a timely periodic review of their AML/
CFT practices and policies according to their risk, the assessment of which now includes a set of new
risk factors, in compliance with recent regulatory changes and restrictive measures related to the war
in Ukraine.
• Continuing to strengthen, train and specialise the Compliance Office teams in the various dimensions
of PBC/FT.
With regard to the effectiveness of the internal control system contribution, the role of the Compliance
Office in monitoring the implementation of the internal control recommendations should be emphasised,
namely through the issuing of periodic reports to the Bank's Management and Supervisory Bodies
responsible for monitoring them and participation in a working group aimed at promoting their
implementation.
In 2023, promoting a culture of compliance was one of the Bank's important initiatives, both through the
normal development of the Training Plan and through communication programmes close to all areas of
the Bank, particularly the commercial networks. The "100% Compliance", "Expedients", "10 Compliance
Commandments", "Prevention is better" and "Compliance Express" headings are some of the most visible
aspects of the transformation that began in 2019. Through weekly headings addressed to all of the Bank's
employees and commercial structures, the aim is to inform, clarify and support employees on the most
important aspects to take into account, both in terms of the risk of financial crime and other compliance
risks, using simple but informative and educational language. Innovative solutions were also used,
including the participation of employees from the Bank's first line of defence on a wide range of
compliance and conduct risks.
As for the most important training activities, we would highlight: the Code of Conduct and the AML/CFT
courses for all Bank employees, a set of training programmes to ensure the necessary certifications in the
Markets in Financial Instruments Directive (MIFID II) and the sale of insurance on the Bank's networks,
among others.
In pursuit of aligning strategies and priorities in the risk management of the Group's Operations, efforts
continued to update Group policies, also applicable to International Operations, ensuring that there were
nodelayed documents and highlighting the adoption of Group policies on the Code of Conduct and
Conflicts of Interest.
In addition, the Compliance Office strengthened its monitoring of the activity of the Compliance function
in those Operations, implementing a series of initiatives, including:
• Continued efforts to adapt the Group's entities' response capacity to the challenges posed by
compliance and regulatory issues, in particular by promoting training programmes for local
compliance teams.
• Consolidation of control procedures, particularly on new business relationships and high risk AML/CFT
products.
• Monitoring and collaborating in the resolution of control deficiencies identified by external auditors.
• Collaboration in the implementation of new IT platforms to reinforce AML/CFT.
• Reinforcement of the process of sharing information on risk clients, within the scope of AML/CFT, for
greater harmonisation of their risk classification, promoting the effectiveness of the duty of
examination and the completeness of information in the exercise of the duty of communication.
It should be noted that monthly reports analysing the transactions of high-risk customers were issued.

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Credit risk
The materialisation of this risk arises from the losses in the loan portfolio, due to the incapacity of
borrowers (or their guarantors, when applicable), issuers of securities or contractual counterparts to
comply with their credit obligations.
The control and mitigation of this risk are carried out through a solid and reliable structure of risk
analysis and assessment, based on internal rating systems suited to the different business segments,
through a model for the early detection of potential default of the portfolio, through processes regarding
the management and follow-up of the collateral value and through structural units that are exclusively
dedicated to credit recovery.
Evolution and breakdown of the loan portfolio
The next table presents the evolution of the Group's portfolio subject to credit risk and counterparty
credit risk between December 31, 2022 and December 31, 2023, in terms of EAD (Exposure at Default) (*),
in the three main geographies in which the Group operates - Portugal, Poland and Mozambique - which
represented the Group's total EAD by December 31, 2023.

|  |  |  | (million euros) |
Geography | Dec. 23 | Dec. 22 | Change |
Amount | % |
Portugal | 62,585 | 61,716 | 869 | 1.4% |
Poland | 26,730 | 24,023 | 2,707 | 11.3% |
Mozambique | 2,466 | 2,446 | 20 | 0.8% |
TOTAL | 91,781 | 88,185 | 3,596 | 4.1% |

* The EAD represents the expected exposure if the customer defaults. 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.
Without impairment deduction to the exposures treated prudentially under the Standardized Approach (STD) and including all risk
classes (i.e. besides credit to Customers, debt positions from Sovereign entities and Institutions are included).
Considering the position on December 31, 2022 as a basis for comparison, the Group's loan portfolio,
measured in euros (EUR), registered an increase of 4.1% during 2023, in contrast to 2022 (a decrease of
3.7%). This evolution is explained by growth in all geographies.
The increase in the portfolio in Portugal is associated with the growth in Sovereign and Institutional
exposures and the retail portfolio, as opposed to the decrease in the portfolio of the Corporate segments
and Banco de Portugal deposits. Additionally, should be noted the decrease in non-performing loans,
particularly in the Corporate segments, which contributed to NPE portfolio´s reduction in Portugal by 260
million euros (circa 19% of reduction) during 2023.
In Poland's loan portfolio there was an increase of 11.3%, measured in euros, largely explained by the
increase in Sovereign and Institutional exposures, which amounted to approximately 4.5 billion euros,
countered by a decrease in credit exposure to Corporate and Retail credit, which amounted to 1.8 billion
euros.
With regard to Mozambique, there was a 0.8% increase in the loan portfolio, measured in euros, mainly
due to the growth in exposure to the Banco de Moçambique.
The portfolio composition by risk classes is illustrated by the following graphs, on December 31, 2023:

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In what concerns the structure of portfolios by counterparty segment, in Portugal the most significant
portion continues to be assumed by the retail segment with 41.5% of the total, 30.8% of which relates to
exposures benefiting from mortgages. The Corporate segment has a weighting of around 27.7%, slightly
lower than at the end of 2022, highlighting the increase in the weight of the Banks and Sovereigns
segment, which recorded an increase in its representativity to a level close to 30.8%, from a weight of
29.7% at December 31, 2022.

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In Poland we highlight the Retail segment, with a weight of 50.3%, observing a decrease in the weight of
exposures collateralized by mortgage guarantee to 28.1%, observed mainly in the CHF loan portfolio, a
reduction in the representativeness of the Corporate segment and an increase in the Banks and
Sovereigns component, ending 2023 with weightings of 8.9% and 40.8%, respectively.
Regarding Mozambique, the structure remained stable, with emphasis on the relevance of the weight of
the Banks and Sovereigns segment, which rose to 80.2% of the portfolio. The Corporate and Retail
segments assumed a representativity of 10.4% and 9.4%, respectively.
The Bank has performed the regular update of the sectors considered to be the most vulnerable in
Portugal, taking into account the evolution of the prevailing environment, characterized by 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 budget
amounts to areas such as Defense, limitations on the movement of goods, pressure on energy costs,
inflationary impacts, high levels of interest rates and rising unemployment rates.
Probability of Default (PD) and Loss Given Default (LGD)
The main parameters for credit risk assessment, used in the calculation of Risk Weighted Assets (RWA)
within the scope of the Internal Ratings Based method (IRB) - the Probability of Default (PD) and the Loss
Given Default (LGD) – assigned to the portfolio’s credit operations, have been registering a continuous
positive evolution, reflecting a clear trend of improvement in the portfolio’s quality.
The following graph illustrates the distribution of the portfolio amounts, in terms of Exposure at Default
(EAD) by the risk grades (internal ratings) attributed to the holders of credit positions in Portugal and
Poland, on December 31, 2023. These risk grades (RG) are defined on an internal scale, transversal to the
Group (the Rating Master Scale), with 15 grades, corresponding to different levels of debtors' PD. Risk
grades 13 to 15 are called “procedural” and correspond to problematic credit; RG 15 corresponds to the
Default status.
As shown in the above chart, the weight of the EAD corresponding to medium and higher quality risk
grades, for the two geographies in consideration, represented 82.9% of total EAD at December 31, 2023,
with the structure remaining close in both geographies, with an increase in the weight of risk grades
between 1 and 6 in the case of Poland, where there was an increase in this segment, while in Portugal
the weight of this segment remained at 64.2%. This weighting compares with year-on-year weights of
82.3%, 80.9%, 80.7% and 76.8% at the end of 2022, 2021, 2020 and 2019, respectively, reflecting a
consistently favourable evolution.

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Regarding the weight of exposure in the set of the two geographies corresponding to customers with
procedural risk grades, it reached 4% on December 31, 2023, maintaining the downward trend in previous
years: 4.2% (2022), 4.8% (2021), 5.9% (2020) and 7.8% (2019). In the case of Portugal, the trend of
reduction is faster: 3.2% (2023), 3.7% (2022), 4.7% (2021), 6.1% (2020) and 8.8% (2019).
Regarding the LGD parameters, representative of expected losses in case of Default and which, to a good
extent, reflect not only the efficiency of credit recovery according to the different types of credit
segments/products, but also the collateralization levels of credit operations, the following table shows
the respective average values for Portugal (weighted by EAD) at the end of 2023 and 2022:

| Mortgages | SME Retail | Retail (other) | Real Estate Promotion | SME Corporate | Corporate | GLOBAL AVERAGE
2023 | 15.8% | 31.9% | 31.2% | 26.5% | 38.2% | 37.4% | 24.5%
2022 | 16,2% | 32,1% | 34,6% | 37,0% | 46,0% | 32,4% | 25,4%

The LGD parameters improving overall, with the exception of the Corporate segments.
It should also be noted that around 28% of the corporate loan portfolio in Portugal benefits from
guarantees issued by various entities (Mutual Guarantee Societies; European Investment Fund and
European Investment Bank), which provide an additional level of protection in the event of default.
In Poland too, part of the corporate loan portfolio benefits from this type of guarantor (around 5%)

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Main credit risk indicators
The following chart presents the quarterly evolution of the main credit risk indicators, between
31/12/2022 and December 31, 2023, for the Group and the portfolios of Portugal, Poland and
Mozambique:

| Dec 23 | Sep 23 | Jun 23 | Mar 23 | Dec 22
CONSOLIDATED |  |  |  |  |
NPE/Gross credit | 3.40% | 3.60% | 3.70% | 3.80% | 3.80%
NPL > 90 days / Gross credit | 0.90% | 0.90% | 0.90% | 0.90% | 0.90%
Past due credit / Gross credit | 1.10% | 1.10% | 1.10% | 1.00% | 1.00%
Impairment / Gross credit | 2.80% | 2.70% | 2.70% | 2.70% | 2.60%
PORTUGAL |  |  |  |  |
NPE/Gross credit | 2.90% | 3.00% | 3.20% | 3.20% | 3.40%
NPL > 90 days / Gross credit | 0.50% | 0.60% | 0.50% | 0.40% | 0.40%
Past due credit / Gross credit | 0.60% | 0.60% | 0.60% | 0.50% | 0.50%
Impairment / Gross credit | 2.60% | 2.50% | 2.40% | 2.40% | 2.30%
POLAND |  |  |  |  |
NPE/Gross credit | 4.60% | 4.70% | 4.60% | 4.80% | 4.50%
NPL > 90 days / Gross credit | 1.60% | 1.70% | 1.60% | 1.60% | 1.60%
Past due credit / Gross credit | 2.10% | 2.20% | 2.10% | 2.10% | 2.00%
Impairment / Gross credit | 3.30% | 3.40% | 3.30% | 3.20% | 3.10%
MOZAMBIQUE |  |  |  |  |
NPE/Gross credit | 5.30% | 7.10% | 11.80% | 12.70% | 13.50%
NPL > 90 days / Gross credit | 2.90% | 3.60% | 7.10% | 7.40% | 7.80%
Past due credit / Gross credit | 3.10% | 3.90% | 7.40% | 7.60% | 7.80%
Impairment / Gross credit | 4.30% | 3.90% | 8.20% | 8.30% | 8.10%
Gross credit = Direct credit to clients, including credit operations represented by securities, before impairment and fair value adjustments. NPE include loans to Customers only.

The evolution of the credit risk indicators during 2023 was favourable at consolidated level, particularly
in Portugal. Overall, the evolution is positive, as shown by the 'NPE/Gross Credit' ratio, with a reduction
of 0.4 percentage points at consolidated level and 0.5 percentage points in Portugal. The overdue loans
and 90-day overdue loans to gross loans indicators remained close to the values of December 2022, with
these indicators registering values of 0.9% and 1.1% at consolidated level and 0.5% and 0.6% in Portugal.
The positive dynamics of these ratios are the result of the continued effort in recent years to reduce
loans classified as non-performing.
The low value of the overdue credit ratio in Portugal (0.6%) when compared to the NPE ratio (2.9%) shows
that a very significant part of the NPE ́s portfolio is associated with "unlikeness to pay" situations".
It should also be noted that between the end of 2022 and 2023 the consolidated 'Impairment/Gross Credit'
ratio increased by 0.2 percentage points, remaining below 3%, despite the reduction in the relative
weight of the portfolio of loans in default in 2023.
In Poland, there was a slightly reduction of 0.2 percentage points in the 'NPE/Gross Credit' indicator, a
maintenance of the ‘Past due 90 days/Gross Credit' ratio and a slight increase of 0.1 percentage points in
the 'Past Due/Gross Credit' ratio.
Reflecting the persistence of a challenging economic and financial environment, the operation in
Mozambique saw a deterioration in the NPE/Gross Credit ratio by 0.7 percentage points and an
improvement in the other credit risk indicators during 2023, as a result of a prudent policy for granting
new loans.

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NPA Reduction Plan
The implementation of the Group's NPA (non-performing assets) Reduction Plan remained a priority
throughout 2023, in its two components - problem loans (NPE-non performing exposures) and assets
received in credit repayment (FA-foreclosed assets) - focusing mainly on the NPE loan portfolios and FA
properties held for sale in Portugal.
The NPA Reduction Plan is framed by a specific governance model and a robust management framework,
based on specialized credit recovery areas and systematized recovery strategies - both resulting from
automatic analysis and decision models (for Retail) and based on the relationship of the recovery
managers with their Corporate Clients, with tailor-made solutions. In order to respond to the challenges
posed by changes in the business environment, particularly the impact resulting from a challenging
geopolitical backdrop and increased financing costs for customers, the Bank has been developing and
strengthening the methodologies and installed capacity of the monitoring and recovery areas, in order to
ensure adequate monitoring of the most potentially impacted exposures and to minimize expected losses.
The FA management is based on a specialized structure, privileging circuits and procedures oriented
towards the speed of the reception-preparation-sale cycle and the enhancement of the properties’
values, in order to facilitate the sale of these assets.
The NPA Reduction Plan is supported by a set of operational initiatives designed with the objective of
promoting an increasing effectiveness in the management of credit processes and foreclosed assets.
The fulfilment of the reduction targets of each area involved in the reduction of NPA is measured on a
monthly basis and reported to senior management, namely to the Credit and Non-performing Assets
Commission.
The following table presents the evolution of NPE volumes between December 31, 2022 and December 31,
2023, for the Group and for Portugal:

| Dec 23 | Jun 23 | Dec 22
CONSOLIDATED | 1,952 | 2,142 | 2,218
Change YoY | -266 | -76 | -539
PORTUGAL | 1,107 | 1,262 | 1,361
Change YoY | -255 | -100 | -521

Comparing the size of the exposure of Customers classified as NPE at the end of 2023 with that seen at
the end of 2022, we see a positive evolution, with a reduction of 266 million euros at consolidated level
and 255 million euros in the activity in Portugal, which corresponds to a contraction of 12% and 18.7%,
respectively. This result reflects the continued success achieved over the last few years in identifying and
implementing solutions to reduce these non-productive assets, even in an adverse context.
Regarding the type of operations that explain the reduction in NPE in Portugal during 2023, the following
graph highlights the contribution of write-offs, which amounted to 100 million euros. The gross value of
sales amounted to 143 million euros, and the combined effect of the other sources of NPE reduction and
new entries had a downward impact of 11 million euros, with a small number of larger exposure cases
that were classified as NPEs.

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(million euros)
The reduction of NPE was accompanied by an effort to reinforce the coverage ratio of the NPE portfolio
by impairment in Portugal to increased to 89%. The following graph, which refers to domestic evolution,
shows the decrease of four percentage points in the NPE´s total coverage (by impairments + collaterals)
to 126% at the end of 2022, explained by the reduction in the weight of collateral coverage.
The trend observed in 2022 regarding assets on the balance sheet resulting from credits repayment
(foreclosed assets - FA) was favourable, as shown in the following table, which presents the evolution of
the total stock of FA in Portugal and its breakdown into the different types of assets, as well as the
aggregate value of assets of this nature of subsidiaries abroad (amounts before impairment):

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|  |  |  | (Million euros)
| Dec. 23 | Dec. 22 | Dec. 21 | Dec. 20
Real estate properties | 169 | 262 | 565 | 809
Real estate Funds and companies | 75 | 182 | 205 | 246
Other assets (non-Real estate) | 57 | 73 | 81 | 92
SUB-TOTAL - Portugal | 300 | 517 | 851 | 1,146
Other geographies Foreclosed Assets | 57 | 65 | 65 | 40
GROUP TOTAL | 357 | 582 | 916 | 1,186

Compared to the position at the end of 2022, there was a 38.6% reduction in the FA portfolio on
December 31, 2023. The overall reduction in Portugal amounted to 217 million euros, explained by the
reduction in the Real estate properties and Real estate Funds Companies components, which amounted to
93 million euros and 107 million euros, respectively.
In this year, the decrease in the stock of these real state assets by a gross amount of 225 million euros
should be highlighted, based on the commercial dynamics of sales and relatively low volumes of new
entries. This reduction can be explained by the shrinking size of the NPE credit portfolio, the sale of
credit portfolios to companies with real estate collaterals, and the proper functioning of judicial sales
instruments to third parties. The assets received in 2023 amounted to approximately €14 million,
primarily consisting of residential properties.
It should also be noted that the reduction in the gross value of the foreclosed assets portfolio was
accompanied by an increase in the level of impairment coverage, with this ratio rising from 38% in
December 2022 to 46% in December 2023, therefore, the value of this net impairment portfolio
represents only 237 million euros at the consolidated level and 196 million euros in Portugal.

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Credit concentration risk
The following chart presents the weights, in total exposure, of the Group’s 20 largest performing
exposures (non-NPE), as at December 31, 2023, in terms of EAD and using the concept of “Groups of
Clients/Corporate Groups”, excluding the risk classes of “Banks and Sovereigns”:

| Dec. 23 | Dec. 22
Client Groups | Exposure weight in total (EAD) | Exposure weight in total (EAD)
Client group 1 | 0.9% | 0.9%
Client group 2 | 0.8% | 0.8%
Client group 3 | 0.5% | 0.7%
Client group 4 | 0.4% | 0.4%
Client group 5 | 0.3% | 0.3%
Client group 6 | 0.3% | 0.3%
Client group 7 | 0.3% | 0.3%
Client group 8 | 0.3% | 0.3%
Client group 9 | 0.3% | 0.3%
Client group 10 | 0.2% | 0.3%
Client group 11 | 0.2% | 0.3%
Client group 12 | 0.2% | 0.2%
Client group 13 | 0.2% | 0.2%
Client group 14 | 0.2% | 0.2%
Client group 15 | 0.2% | 0.2%
Client group 16 | 0.2% | 0.2%
Client group 17 | 0.2% | 0.2%
Client group 18 | 0.1% | 0.1%
Client group 19 | 0.1% | 0.1%
Client group 20 | 0.1% | 0.1%
Total | 6.0% | 6.4%

Overall, the 20 largest productive exposures represented 6.0% of total EAD on December 31, 2023,
compared with a weight of 6.4% on December 31, 2022. Hence, there was a decrease in the concentration
of credit in the 20 largest productive exposures, measured in terms of EAD.
It should be noted that, in addition to complying with the regulatory limits on Large Exposures, the Group
defines specific objectives for controlling credit concentration, materialized into RAS metrics.
Furthermore, other indicators are periodically monitored for various types of credit concentration: single-
name, by sectors of activity, by country, for Institutions and for Sovereign risks.
In the case of the single-name concentration, the limits are defined for performing Clients, since the NPE
are covered by the NPA Reduction Plan. For Clients with exposure above the established limit excess,
specific reduction plans are drawn-up.

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Operational risk
Operational risk materializes in the occurrence of losses resulting from failures or inadequacies of
internal processes, systems or people, or resulting from external events.
In the management of this type of risk, the Group adopts duly documented principles and practices,
promoting the continued improvement of the control environment. This framework has a variety of
features, such as: functions segregation, definitions for lines of responsibility and respective
authorisations’ levels, tolerance limits for exposure to risks, appropriate internal regulations’ framework
(including ethical codes and codes of conduct), risks self-assessment (RSA) exercises, assessment and
monitoring of the risks over technological assets, information security and Outsourcing, key risk indicators
(KRI), access controls (physical and logical), reconciliation activities, exception reports, loss events data
capture, a structured process for new products and services approval, contingency plans, contracting of
insurance (for the total or partial transfer of risk), follow-up of the Bank’s outsourcing contracts and
internal training on processes, products and systems.
The operational risk management framework encompasses the three relevant Group geographies –
Portugal, Poland and Mozambique – and the operational risk management system adopts the 3 lines of
defence model, based on an end-to-end processes' structure. Each geography adapts its own processes'
structure, which is regularly reviewed/updated. This approach, transversal to the functional units of the
organisational structure, is appropriate for the perception of risks and to implement the corrective
measures for their mitigation. Furthermore, this processes’ structures also support other initiatives, such
as the actions to improve operating efficiency and the management of business continuity.
The responsibility for the day-to-day management of operational risk lies with the 1st line of defence,
with special relevance of the operations’ areas and the process owners (seconded by process managers),
whose mission - beyond the management of their processes’ effectiveness and efficiency - is to
characterise the operational losses captured under their processes, to monitor the respective KRI, to
perform the RSA exercises, as well as to identify and implement appropriate actions to mitigate
operational risk exposures, thus contributing to the strengthening of control mechanisms and the
improvement of the internal control environment.
Operational Risks Self-assessment (RSA)
The RSA exercises are based on workshops, attended by the Risk Office and with the participation of the
process owners (and process managers), or performed through answers to questionnaires sent to the
process owners, for a review of previous RSA results, according to predefined updating criteria.
The aim of the RSA exercises is to promote the identification and mitigation (or elimination) of risks,
either actual or potential, in each process, through the assessment of each of the 20 subtypes of
operational risk considered:

R1 Internal fraud and theft | R11 Monitoring and reporting errors
R2 Execution of unauthorised transactions | R12 Customer related errors
R3 Employee relations | R13 Products or services flaws/errors
R4 Issues of workplace health and safety | R14 External fraud and theft
R5 Discrimination over employees | R15 Property and disasters risks
R6 Loss of key staff | R16 Regulatory and tax risks
R7 Hardware and Software | R17 Inappropriate market and business practices
R8 Communications infrastructure | R18 Project risks
R9 Systems security | R19 Outsourcing related problems
R10 Transaction, capture, execution & maintenance | R20 Other third parties’ related problems

The assessments are positioned in a risk tolerance matrix, considering the ‘worst-case event’ that might
occur in each process, for three different scenarios: Inherent Risk (without considering the existing/
implemented controls), Residual Risk (considering the existing/implemented controls) and Target Risk
(the desirable risk level). These exercises are typically carried out in the second half of each year.
The 2023 RSA exercise for operational risk processes incorporated:
• The results of the Information and Communication Technology (ICT) 2022 RSA, computed in 2023, as
input information to process owners, regarding 3 of the 20 risks assessed (R7/R8/R9). The ICT risks
RSA was made over 172 critical technological assets – hardware, software and communication lines
and infrastructures – under 3 evaluation dimensions: availability/integrity/confidentiality;

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• The input stemming from the CORPE (Compliance and Operational Risk Process Evaluation) factors,
which introduce and highlight operational risk components that result from the compliance and
internal control status of the processes;
• With the Process Owners' assessment of the relevance of the most severe information security
scenarios, resulting from the self-assessment exercise carried out by the Information Security Division
(DSI) over identified risk scenarios (vulnerabilities/threats).
In 2023, the results of the RSA covering the operational processes of Portugal, Poland and Mozambique,
for the 20 risk sub-types assessed, point to moderate operational risk levels. In Portugal, on a total of
2164 applicable risks, only 18 residual risks were classified as medium or high (score of 3 or 4, in a scale
of 0 to 5, in which 0 = risk not applicable and 5 = catastrophic risk). In Poland and Mozambique, the
number of medium/high residual risks was of, respectively, 52 (out of 1646 applicable risks) and 21 (out
of 499 applicable risks).
Operational losses capture
The operational losses data capture (i.e. the identification, registration and typification) of operational
losses and of the originating events aims at the strengthening of the awareness to this risk and to provide
relevant information for process owners to incorporate within their process management. As such, it is an
important instrument to assess risk exposures as well as for a generic validation of the RSA results.
The detection and reporting of operational losses is a responsibility of all Employees of the Group, the
process owners playing a crucial role in the promotion of these procedures within the context of the
processes for which they are responsible.
The identified events in which the losses, effective or potential, exceed the defined materiality limits
(for each geographical area) are characterised by the process owners and process managers of the
processes to which the losses are related, including the description of the respective cause-effect and,
when applicable, the valuation of the loss and the description of the improvement action identified to
mitigate the risk (based on the analysis of the loss cause). For losses of amounts exceeding certain
thresholds, “Lessons Learned” reports are presented to and discussed at the specialised Compliance and
Operational Risks Commission). The lessons learned reports include an action plan to mitigate the risks
that led to the losses, where appropriate.
The following graphs present the profile of the losses captured in the respective database in 2023:
LOSSES AMOUNTS DISTRIBUTION
By cause

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LOSSES AMOUNTS DISTRIBUTION
# of events by amount range
LOSSES AMOUNTS DISTRIBUTION
By business line
Regarding the distribution of losses by cause, the weight of those relating to 'External risks' and 'People risks'
totalled around 72.5%, corresponding essentially to external and internal fraud events, respectively. This
distribution of losses does not include the accruals relating to legal cases of foreign currency mortgage loans
from Bank Millennium (Poland), which are allocated to the year of registration of the global event in question
(2022) and was influenced by a significant increase in losses due to external fraud in 2023, caused by events
related to frauds in credit operations in Poland and Mozambique.
In what concerns the distribution of losses by amount range (in number of losses), there was no change on
the typical profile of the distribution of operating losses in 2023.
Finally, regarding the distribution of losses by business line, the weight of losses for 'Retail banking' was
much lower than in 2022 (which was of 90.2%), in contrast to the weight of ‘Payments and settlements’
and ‘Trading and sales’ which, together, reached a weight of around 21.3% (c. 5.0% in 2022). The
increase in the weight of these segments was caused, mainly, by an event in Poland relating to a product
with high FX risk that has been discontinued for some years.

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Key risk indicators (KRI)
KRI provide alerts concerning changes in the profile of the operational risks or in the effectiveness of
controls, thus enabling to identify the need to introduce corrective actions within the processes, in order
to prevent potential risks from materialising into losses. These indicators currently encompass all
processes in the main Group operations (Portugal, Poland and Mozambique).
Processes management also uses Key Performance Indicators (KPI) and Key Control Indicators (KCI), the
monitoring of which, even if oriented towards the assessment of operative efficiency, also contributes for
the detection of risks.
Business continuity management
At the beginning of 2023 in Portugal, the Bank began a project to renew and overhaul its Business
Continuity Management System (SGCN), with the aim of simplifying and optimising its operating and
governance models.
The initiatives developed required the necessary participation of the various areas of the Bank that play a
relevant role in Business Continuity Management (BCM): information and communication technologies (IT
Division), information security (Information Security Division), corporate and customer communications
(Communication Division), operational risk (Risk Office) and other business and/or support areas. The
following activities were completed as part of the project:
• The assessment of the SGCN's current level of maturity in relation to best practices and current
regulations;
• Review of risk scenarios to be considered in business continuity planning;
• The redesign of the operating and governance models in line with the latest developments and threats
identified;
• Definition of a new BIA (business impact analysis) methodology for analysing/assessing the severity of
potential impacts and inclusion of an intermediate phase for assessing the impact of risk associated
with critical resources (RIA – risks’ impact analysis);
• The development of a 'proof of concept' to test the suitability of the ongoing reformulation,
specifically in terms of the degree of scenarios considered and the priorities defined for recovery;
• The revision and creation of normative documents to support the SGCN.
At the end of 2023, the following activities of this revamping were still in deployment:
• Definition and approval of the test plan (in accordance with the revised BCM definitions), aligned with
the areas responsible for critical resources;
• Creation of training content and definition of a global training plan for employees, together with the
Human Resources Department;
• Finalising the preparation and publication of business continuity plans associated with scenarios and
the respective critical resources affected.
The revamping of the SGCN is expected to be concluded within the first half of 2024.
In Poland, as usual and along the established lines, business continuity management was assessed in the
1st half of 2024 by carrying out a business impact analysis (BIA) for the risks of 91 operational processes
(including 2 new ones), the results of which were presented to Bank Millennium's Processes and
Operational Risk Commission. This exercise resulted in no changes in the severity of the impacts
analysed. In the first half of the year there was also an inspection visit by the Polish Central Securities
Depository (KDPW), which resulted in a positive assessment of the Bank's alternative spaces for continuing
its operations. In the last quarter of the year, tests and workshops were carried out on the backup
facilities and infrastructure (equipped with 17 workstations, 2 hot desks and printers), which were
completed with no remarks. In what concerns the remote-working tests (which covered entire units and
not just their critical positions, in order to achieve results without any involuntary influence from those
who remained at the office), these involved 293 employees from 72 units and were completed with a
96.93% level A assessment (without any restrictions in terms of the full execution of current activities)
and a 3.07% level B (normal execution of activities, despite some minor limitations, relative to systems or
equipment).

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In Mozambique, in the first half of 2023, the business continuity team of Millennium bim was mainly
involved in documentation management, pursuing the review the Business Recovery Plans of the
organisational units involved in critical processes, in terms of human and technological resources.
Regarding the equipment of alternative spaces, efforts were made to provide IT capabilities for those
premises, along with the capacity to mobilise employees in up to 24 hours (as it existed before the
pandemic), as a recognition of the need to proceed with integrated exercises, with evacuation drills and
the provision of technological means, within the defined recovery period.
In the second half of the year, business continuity management at Millennium bim focussed on reviewing
and validating the BIA of critical processes with the respective Process Owners, with a view to align
process recovery requirements for the units involved in those processes. An analysis of cybersecurity was
also carried out during the second half of 2023, to take specific preventive actions against this disruptive
threat within the scope of the SGCN.
17 Millennium bim units were involved in the two recovery exercises carried out in 2023 (alternative
location, each lasting 3 days), using alternative technological processing resources for the processing of
Cards, POS and of the Accounting Control Centre team that manages the electronic currency
interoperability process.
Insurance contracting
The contracting of insurance for risks related to assets, persons or third-party liability is another
important instrument in the management of operational risk, where the objective is the transfer - total
or partial - of risks.
The proposals for the contracting of new insurance are submitted by the process owners under their
respective duties for the management of the operational risk inherent to their processes, or are
presented by the head of area or organic unit, and then analysed by the Compliance and Operational
Risks Commission and approved by the EC.

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Legal, Compliance, Conduct and Financial Crime risks
Banco Comercial Português´s activity is governed by operating principles and rules that ensure a good
conduct, following the best international practices and adopting the appropriate measures in terms of
preventing compliance and conduct risks. With the purpose of permanently adapt its internal practices to
the best market practices, to the evolution of Banking activity, and to society as a whole, the Bank
regularly reviews its internal regulations and procedures to safeguard that the conduct of its Employees is
always guided by highest ethical principles, of satisfaction and protection of the interests of the client
and the Bank, in the pursuit of sustainable profitability. The Compliance Office strengthened the
monitoring of the Bank’s activity and internal conduct, by implementing a system for monitoring
potential situations of conflicts of interest, covering various aspects of this issue such as operations with
related parties, credit operations, development of extra-professional activities and the receipt of gifts by
Employees.
To comply with the relevant legal and regulatory norms related with Anti Money Laundering and Counter
Terrorism Financing (AML/CFT), as well as to safeguard the compliance with best international practices
on this matter, the Bank has a set of policies, procedures and systems that ensure an effective control of
the financial crime risk prevention, also ensuring an operational model that allows the Bank to identify,
assess and mitigate the potential risks inherent to the activity of its Clients, non-Clients and business
relationships established with one or the other.
The impact and relevance of this risk in the Banking activity developed, compels the Bank to address this
risk in multiple dimensions and on a continuous basis, whether in the establishment of new business
relationships or in the continuous evaluation of an already established business relationship. Through a
risk-based approach (RBA) for the assessment and monitoring of its business relationships or occasional
transactions execution, the Bank complies with all the required duties enshrined in Law no. 83/2017, of
18 of August, like for example, due diligence, abstention, refusal or communication.
For an effective and efficient AML/CFT activity, the Bank defines a set of policies and procedures that
are supported by a wide range of information systems, of which it is worth highlighting:
• Business Relations monitoring and alerts system;
• Financial transactions monitoring system;
• Entity filtering system;
• New Business relationships validation system;
• External information platforms.
Pursuing the continuous improvement of the internal control processes, these risks’ management system
was enhanced along 2022, to enable the Bank to respond adequately to the demands of the future
Banking business with origin in market dynamics changes and regulation evolution. From the set of
initiatives, it is worth mentioning the following:
• The continued strengthening, training and specialization of the Compliance Office teams within the
scope of AML/CFT model, in its various dimensions.
• The main legislative and regulatory highlights focused on the conflict resulting from the invasion of
Ukraine by Russia, due to the continued establishment of sanctions and embargoes and in preventing
new and emerging ML/CFT risks.
• As a result of the establishment of the referred sanctions and embargoes, development of enhanced
controls to identify transactions and risk entities, ensuring compliance with restrictive measures.
• Reinforcement of the model of an integrated view of Customers in the business relationship with the
Bank and the inherent risk factors, in order to strengthen effectiveness in the fulfilment of AML/CFT
duties, mainly identification and diligence, control, examination and communication.
• Continued development of automatic solutions that promote alignment and cooperation between the
Bank's first and second lines of defence in fulfilling the various AML/CFT duties.
• Changes to the internal rules governing the approval of new products, including the concept of
"grouped approval" for Investment Funds and ETFs, a review of the concepts of Investment Product
and Target Market (positive and negative), scenario analyses of financial products and structured
deposits produced by the Bank detailed in the rules, and the obligation to present concrete
quantitative data on sales outside the positive target market, i.e. within the product's negative target

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market in the annual formal monitoring process, among other small improvements aimed at
strengthening the process.
• Updating of the Group's Code of Conduct, with the following most significant changes:
• Two general principles of conduct have been added for the entities covered by the Code:
sustainability and confidentiality.
• Reinforcement of corruption prevention practices, formalising new internal regulations on the
prevention of corruption and related offences in line with the latest practices in the industry.
• Adjustments to the criteria relating to "liberalities", making them more demanding by seeking
to differentiate between liberalities in accordance with social custom and strictly prohibited
liberalities related to the Bank's activity.
• Added point on training, so that employees are always up to date through the internal training
and dissemination provided by the Bank.
• A new provision has been added on the pricing of each product, namely that it must be drawn
up on the basis of public information, reinforcing the prohibition of any practices typified in
the law that are intended to distort or restrict competition in an appreciable way.
• The way in which communications with clients and other external organisations should be
carried out was reviewed.
• Adjustment of the requirements for exclusivity in the provision of work, bringing the Code into
line with article 129 of the Labour Code.
• Reinforcement of the Bank's regulatory framework on the subject of corruption prevention, with a
Plan for the prevention of corruption risks and related offences of BCP Group entities in Portugal,
which defines, among other provisions, the governance model, prevention mechanisms, training and
culture of corruption prevention, corruption circuits and reporting and evaluation system.
• As provided for in the evaluation system of the aforementioned plan, the annual report on the
implementation of the internal control system for combating corruption was issued and is available in
the public information section.
• Updating, within the scope of Banco de Portugal Notice 3/2020, information on the matters provided
for in its Annex, in a format accessible to all employees, including matters on the Bank such as its
shareholder, organisational and governance structure, its internal control system, its key function
holders, the characterisation of its business, its Code of Conduct, among others.
• Implementation of the Training and Communication Plans on compliance matters for all the Bank's
Employees and commercial structures, with the most important aspects to be considered, both in
terms of the risk of financial crime and in terms of other compliance and regulatory risks.

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Market risks
Market risks are 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, taking
into account not just the correlations that exist between those instruments but also their volatility.
The following management areas are defined for each Group entity for the objectives of profitability
analysis and market risk measurement and control:
• 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 of sales activities;
• Funding - Management of institutional funding (wholesale funding) and money market positions;
• 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 management areas enables effective management separation between trading and
banking books, as well as a proper allocation of each transaction to the most suitable management area,
based on its context and strategy.
To guarantee that the risk levels incurred in the Group’s various portfolios conform to the specified levels
of risk tolerance, various market risks limits are established, at least yearly, and are applicable to all
portfolios of the risk management areas where the risks are incident. The Risk Office monitors these
limits daily (and intra-daily in the case of financial markets areas).
Stop loss limits are also set for the financial markets’ areas, based on multiples of the risk limits defined
for those areas, aimed at limiting the maximum losses that might occur. If these limits are breached, a
review of the strategy and of the assumptions relative to the management of the positions in question is
mandatory.
Trading Book market risks
The daily measurement of generic market risk (relative to interest rate risk, exchange rate risk, equity
risk and price risk of credit default swaps) uses a VaR (value-at-risk) model, considering a time horizon of
10 business days and a significance level of 99%.
Additionally, the Group uses an integrated market risk measurement that monitors all relevant risk
subtypes. This measure includes the assessment of generic risk, specific risk, non-linear risk and
commodity risk. Each risk subtype is measured individually using appropriate risk models and the
integrated measurement is built from the measurements of each subtype without considering any kind of
diversification between the subtypes (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 by 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, in December 31, 2022 and December
31, 2023, as measured by the methodologies referred to above:

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|  |  | (Thousand of euros)
| 31 December 2023 | Max of global risk in the period | Min of global risk in the period | 31 December 2022
Generic Risk (VaR) | 888 | 4,251 | 684 | 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 | 0 | 0 | 0 | 0
Commodities Risk | — | — | — | —
Global Risk | 1,512 | 4,679 | 700 | 1,335

VaR model monitoring and validation
Validation of the internal VaR model’s appropriateness for 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.
The VaR model’s hypothetical back testing exercise for the Portugal’s Trading Book, during 2023, resulted
in four negative excesses (and four positive) over the results predicted by the model in 257 days of
observation. Hence, in terms of the frequency of excesses verified, the back-testing results validate the
model as appropriate for measuring the risk at stake.
Trading Book Stress Tests
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.
The results of these tests on the Group's Trading Book, as of December 30, 2023, in terms of impacts over
this portfolio’s results, were the following:

|  | (Thousand EUR)
| Negative impact scenario | Impact
STANDARD SCENARIOS |  |
Parallel shift of the yield curve by +/- 100 bps | + 100 bps | -2,193
Change in the slope of the yield curve (for maturities from 2 to 10 years) up to +/- 25 bps | - 25 bps | -14
4 combinations of the previous 2 scenarios | + 100 bps & + 25 bps | -2,181
+ 100 bps & - 25 bps | -2,206
Variation in the main stock market indices by +/- 30% | +30% | -2,069
Variation in foreign exchange rates (against the euro) by +/- 10% for the main currencies and by +/- 25% for other currencies | -10%, -25% | -429
Variation in swap spreads by +/- 20 bps | +20 bps | -49
NON-STANDARD SCENARIOS |  |
Widening/narrowing of the bid-ask spread | Widening | -1,009
Significant vertices (1) | VaR w/o diversification | -1,165
VaR w/ diversification | -464
Historical scenarios (2) | 15 July, 2011 | -2,873
27 January, 2012 | -3,577

(1) Scenarios in which the more adverse variations of the last seven years, relative to the portfolio's five most significant risk factors for
VaR, are applied to the current portfolio.
(2) Scenarios in which past extreme markets variations are applied to the current portfolio; in this case, the significant dates refer to the
Eurozone Sovereign Debt crisis (from 2010 onward)
These results show that the exposure of the Group’s trading book to the different risk factors considered
remains relatively limited and that the main adverse scenarios to be taken into account refer to a general

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increase in interest rates, either a parallel shift or accompanied by a change in the slope of the yield
curve. In what concerns the non-standard scenarios, the main loss case refers to the historical scenarios.
Interest rate risk in the Banking Book
The interest rate risk arising from the Banking Book operations is assessed by the Bank in two
complementary ways: the portfolio’s economic value method (EVE) and the financial margin sensitivity
method (NII), through a risk sensitivity analysis carried out every month, for the universe of operations
included in the consolidated balance sheet of the Group, broken down by the currency of exposure.
Variations of market interest rates influence the Group's net interest income and the economic value of
the Group, both in the short term – affecting the Bank’s NII – and in the medium/long term, affecting the
balance sheet economic value (EVE method).
The main risk factors arise from the repricing mismatch of the portfolio positions (gap risk) which may
cause direct or indirect financial losses in the Banking Book, due to changes in interest rates that have
different impacts over assets and liabilities’ classes, making the Bank vulnerable to variations of the yield
curve. In turn, the changes in interest rates may alter the behaviour profile of Clients, inducing pre-
payments/withdrawals in assets and liabilities, including the exercise of options’ rights incorporated in
the products’ design (behavioural and optional risk). Additionally, 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, 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 impacts stemming from the Clients’ behaviour are
also considered, in particular, for the products for which this is especially relevant – namely, for products
without defined term (checking accounts, revolving credit, fixed rate credit lines) – as well as the impacts
resulting from changes in contractual cash flows (credits prepayments) and impacts of any potential
prepayments on credits with defined maturity.
The result of this analysis for a +100 basis points (b.p.) change in the level of Euro interest rates (for all
maturities, i.e., assuming a parallel shift of the yield curve), in the Banking Book portfolio as at 31
December 2023, found a positive impact on the balance sheet´s economic value of around €19.1 million.
On the other hand, the impact of a generalized decrease in euro rates of -100 bps would be around -27.2
million euros.
Complementing the previous approach, the Bank calculates monthly the impact on net interest margin
projected for the following 12 months, due to changes in market interest rates (NII method). For this
purpose, all assets, liabilities and off-balance products that generate interest are considered and the
calculation of interest cash flows is performed based on the repricing and amortization characteristics of
the products and on yield curves for 12 months. This exercise assumes a static balance for 12 months in
which, for each amortization, an exposure with the same features of original maturity and price is
generated. To capture the net interest margin sensitivity, several simulations are processed,
corresponding to 10 different scenarios of the market’s interest rates evolution.
Considering a variation in market interest rates combined with the scenario for the coefficients that
transmit the market variations over the deposit´s rates and other interest-generating liabilities ('betas'),
the evolution of the sensitivity of the net interest margin is assessed. Hence, for a variation in interest
rates of +100 b.p. on December 31, 2023, on a consolidated basis, the net interest income would increase
by around 131.7 million euros, with the sensitivity to a decrease of 100 b.p. of about -132 million euros.
The presented values are indicative and very dependent on the pace of transmission of the interest rate
increase to balance sheet items whose price is not directly indexed to a market benchmark.

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Foreign exchange and equity risks of the banking book
The foreign exchange risk of the banking book is transferred internally to the Trading area, in accordance
with the Group’s 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.
On 24 March 2023, the Group has been formally granted permission to exclude these positions of a
structural nature, deliberately taken or maintained by the Group to hedge against the adverse effect of
exchange rates on the capital ratio, from the calculation of the net open currency positions used for
calculating the capital requirement for foreign exchange risk.
Excluding the financial holdings from the participations in the foreign subsidiaries, the exposure to FX risk
is quite limited, corresponding to 4.3 million euros in terms of VaR, as of December 31, 2023.
Regarding equity risk, the Group maintains a set of small size and low risk equity positions, primarily in
the investment portfolio, mainly resulting from execution processes as payment. Management of these
positions is conducted by a specialized area of the Group, with risk controlled through defined metrics
and limits for market risks’ control.

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Liquidity risk
Liquidity risk consists of the Group's potential inability to meet its financing repayment obligations
without incurring significant losses, either due to onerous financing conditions (funding risk) or by selling
assets at lower than market values (risk of market liquidity).
The Consolidated Liquidity Plan, which forms an integral part of the annual budgeting process and is
formulated at the level of the Group and for the main subsidiaries, includes the projection of the wholesale
funding structure, including the use of market financing, and also the forecast of the internal and
regulatory liquidity indicators, ensuring its compliance with the regulatory and internally defined
requirements. The preparation of this plan is coordinated by the Group Treasurer, and its execution is
continuously monitored throughout the year, with the respective revision being carried out whenever
necessary.
Throughout 2023, the Group's three operations - BCP, Bank Millennium e Millennium Bim - maintained
robust liquidity positions, supported mainly by retail deposit bases with proven stability and which
allowed all liquidity indicators, regulatory and internal, to be maintained comfortably above the minima
required.
At the end of the year and on a consolidated basis, the regulatory liquidity coverage ratio (LCR: Liquidity
Coverage Ratio) reached 276%, vs 212% in December 2022, representing a surplus of 16 billion euros
(compared to 10 billion euros on December 31, 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
discount at European central banks, also had a positive evolution, from 42% to 45%.
From a structural liquidity perspective, the Group continued to reinforce its stable funding base,
characterized by the high weight of customer deposits in the funding structure, complemented by
medium and long-term instruments, mostly composed by MREL related issuances. The relevant regulatory
ratio (NSFR: Net Stable Funding Ratio; Article 428 of Regulation (EU) 2019/876) reached 167% in
December 2023, vs 154% one year before, largely above the regulatory minimum of 100%. The loan to
deposits ratio, also a RAS indicator evolved in the same manner towards greater conservatism, with a
reduction from 73% to 70%.
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 behaviour throughout
the 2nd half of the year, allowing the Bank to protect its market share.
In what concerns the wholesale funding structure, BCP carried out in January 2023 the early repayment of
the second tranche of the Targeted Longer-Term Refinancing Operation III (TLTRO III, "T LTRO III" in the
English abbreviation, in the gross amount of 600 million euros), 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, in accordance with its
Liquidity Plan for 2023. The issue, in the amount of 500 million euros, 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 evolution described above is reflected in the table below, which represents the evolution of the
wholesale funding (net) in 31 December 2022 and 31 December 2023, in terms of each of the instruments
used:

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| Dec. 23 | Dec. 22 | (Millions euros)
Interbank monetary market (Net) | -103 | -157 | -34.4%
ECB (Net) | -2051 | -2574 | -20.3%
Repos | -267 | 0 | —%
Loan agreements | 325 | 377 | -13.8%
Senior Debt | 2350 | 1350 | 74.1%
Subordinated Debt | 1802 | 1777 | 1.4%
Credit-Linked Notes | 232 | 0 | —%
Total | 2289 | 773 | 196.2%

The liquidity buffer available for discount with the ECB stood at 27.9 billion euros at the end of 2023, 1.4
billion euros higher than a year earlier, to which contributed the favourable evolution of 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 2.1 billion euros on the ECB, slightly lower than that observed a year earlier (2.6 billion
euros).
ECB liquidity buffer
(Billion Euros)
Throughout 2023, Bank Millennium showed significant growth of 11% in its retail deposit base. The
operation's liquidity position was further reinforced by the placement on the market of a senior non-
preferred issue of 500 million euros. Initially placed with an amount of 400 million euros, it was
subsequently increased by an additional amount of 100 million euros. It has a maturity of four years and a
remuneration of 9.875% and qualifies for MREL purposes, thus representing the fulfilment of another
stage of the institution's recovery plan.
Millennium bim continues to display a resilient liquidity position, supported by 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.
In consolidated terms, the refinancing risk of medium and long-term instruments will remain at low levels
over the next three years, with annual values with no material expression.
The conclusions of the ILAAP process reiterate the adequacy of the liquidity and is low risk management
process, as well as the compliance of its practices with the requirements defined by the supervision.

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Pension Fund risk
This risk arises from the potential devaluation of the assets of the Fund associated with the Defined
Benefit Plan or from the reduction of its expected returns as well as from actuarial differences that may
occur from the evolution of demographical factors, in relation to the actuarial assumptions considered.
Confronted with such scenarios, the Group may have to make unplanned contributions in order to
maintain the benefits defined by the Fund. The responsibility for the regular monitoring of this risk and
the follow-up of its management lie with the Pension Funds Risk Monitoring Commission.
In 2023 the BCP Group Pension Fund had a net performance in commissions of +7%.
All asset classes contributed positively to this performance, with equity and fixed-rate securities
performance standing out, with a contribution of 2.1% and 4.5%, respectively.
In the equity component, European equities showed a return of +5.7% and international equities +19%.
The portfolio made a significant change in terms of investment policy, where exposure to equities was
reduced to 20%, which represented a reduction of 5% compared to the previous central allocation,
although, with the exception of January, the tactical positioning throughout the year showed a slight
overexposure to this class.
In terms of the Fixed Rate component, it is also worth noting the change in investment policy with a
substantial increase in both the level of exposure and the level of its composition, now composed of
public debt (49.5%) and a corporate debt component (5%). In this way, the portfolio has reduced its
profile and risk, since the long-term interest rate is one of the main vectors for determining liabilities.
With reference to the evolution of the 10-year rate in Germany, which went from 2.57% to 2%, the
discount rate for the calculation of the Fund's liabilities has also been updated. Thus, the discount rate
on 31 December 2022 stood at 4.17%, falling to 4% in June 2023 and to 3.53% at the end of 2023.
As at 31 December 2023, the pension fund's liabilities coverage was over €390 million, corresponding to
13% of total liabilities.

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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.
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’s and counterparties. This
way, the materialisation of their impacts occurs by means of the “traditional” 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’s
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 defense and its responsibilities include:
• the overall management of the sustainability strategy and plans of Millennium BCP and of its financial
group;
• the development of policies, methodologies, analyses and reports that address ESG issues;
• the management of commitments and external communications by the Bank and the Group in this
area; and
• 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:
• Integration of the ESG dimension in risk appetite (Risk Appetite Framework - RAF);
• Syndicating with the Sustainability Function the proposal of ESG metrics to be included in the Risk
Appetite Statement (RAS);
• Carry out stress tests focused on climate and environmental risk factors;
• Introduction of the ESG dimension in capital and liquidity adequacy exercises;
Specifically in terms of compliance, we emphasise the following controls:
• Reporting, disclosure and prudential obligations;
• Design and approval of new products, especially in the cases of ESG product design and labelling;
• Incorporation of ESG-related conditions and requirements into the forms and contracts;
• Ensuring the timely application of the legal and regulatory dispositions related to ESG;
• Potential for conflicting interest or litigation in the provision of ESG-related services and products.
The third line of defence assumes responsibility for the independent review of all ESG aspects through
the annual work plans of the Internal Audit Function.

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The Executive Committee is responsible for ensuring that ESG policies and strategies are followed,
through the mobilization of resources and execution of the necessary business and operational actions.
The Sustainability Commission assists the Executive Committee in integrating the principles of
sustainability in the decision and management processes, being also responsible for assessing and
approving the Sustainability Master Plan initiatives, its alteration and adaptation whenever requires for
its implementation, and its monitoring.
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’s 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).
Identification of ESG risks
Climate change and environmental degradation factors are elements that can affect economic activity
through the mitigation and adaptation effort, as well as the sustainable use and protection of water and
marine resources, the transition to a circular economy, pollution prevention and control, and the
protection/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:
• Physical risks 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.
• 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).
• 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’s 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’s profile.

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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:
• 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.
• 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.
• 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.
• Regular Monitoring of Exposure to Risks Arising from ESG Factors: This is done through established
management information routines for each risk category.
• 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.
• 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.
• 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:
• Regular assessment of the materiality of risks arising from ESG factors to confirm alignment with risk
appetite and the need for implementing mitigation actions.
• Methodologies for assessing risks arising from ESG factors integrated into credit risk assessment
models.
• 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.
• 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.
• Sensitivity analyses and stress tests focusing on climate risks.
Stress testing with a focus on climate risk
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.

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Models validation and monitoring
This function is ensured by the Models Monitoring and Validation Office (GAVM), reporting to the Chief
Risk Officer.
GAVM acts as the second line of defence, within the scope of the model risk management framework,
functionally independent from the areas that are responsible for the models (model owners and
developers) and from the Internal Audit Division. Hence, an adequate functions’ segregation is assured.
Its mission consists in monitor and validate risk quantification methodologies and internal models used in
BCP and other Group entities in Portugal, as well as to independently ensure the assessment of the
quality and adequacy of the risk management framework in what concerns internal models, metrics and
completeness of the associated data, according to the Model Risk Management (MRM) framework.
GAVM scope of action encompasses, inter alia, the validation of the methodologies and internal models
for credit risk (including Probability of Default (PD), Loss Given Default (LGD), Credit Conversion Factors
(CCF) and Expected Credit Loss (ECL) models, under the IFRS scope), market risk (in the trading book),
interest rate risk in the banking book (IRRBB) and for the risks included in the ICAAP, as well as the
regular monitoring of their performance and evolution. The results of the monitoring and validation
exercises are reported to the Models Monitoring and Validation Sub-Commission and to the Risk
Commission. Additionally, GAVM participates occasionally, depending on the agenda, in the Risk
Assessment Committee (CAvR) to report the unit’s activity and annual plan’s execution.
Besides the activities directly related with the monitoring and validation of models, in terms of their
performance and quality, GAVM is responsible for the coordination of the MRM activities, including the
maintenance of a complete repository of the internal risk models used by the Bank and its permanent
monitoring and updating through the use of a model management and risk assessment tool implemented
at the Bank to support the MRM framework.
In 2023, several actions were carried out to monitor and validate the internal models in use by the Bank,
including the regulatory report of the templates with the validation results of the credit risk internal
models, according to the ECB instructions (“Instructions for reporting the validation results of internal
models”). These actions aim, inter alia, to reinforce the confidence in the models, to monitor their
performance and evolution, verifying their business adequacy and their compliance with the applicable
regulatory requirements and best practices, as well as to reinforce the identification and adaptability to
changes in their predictive quality.
GAVM has the responsibility to maintain a robust and documented validation processes for internal risk
methodologies and models, in line with current regulations. For this, it develops and applies validation
procedures and methodologies capable of ensuring proper model assessments and the alignment with the
applicable regulatory requirements, by reinforcing (i) the scope of validation exercises, (ii) the depth of
analysis and (iii) the transparency and auditability of the work performed.
As part of the model’s monitoring activities, GAVM also ensured, among others, the quarterly report to
the Risk Commission regarding the performance and quality of the internal models used under the IRB and
IMA approaches for, respectively, credit and market risk, the annual Model Risk Assessment (MRA)
exercise applicable to all current IRB, IMA (Internal Models Approach) and IRRBB models, as well as the
reporting of the regulatory Credit Risk Benchmarking exercise promoted by EBA.

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Recovery Plan
Complying with the applicable law - Directive 2014/59/EU and its transposition to the Regime Geral das
Instituições de Crédito e Sociedades Financeiras (RGICSF) through Decree-Law 23-A/2015, from the 26th
of March – the Group annually revises the Recovery Plan for its business and activities, in which a set of
recovery options that could be implemented in a timely manner to respond to financial stress
circumstances that may be originated by events of both idiosyncratic and/ or systemic order is identified.
Considering that the Recovery Plan aims to restore the financial viability of the Group, several scenarios
are defined, supported on hypothetical and forward-looking events, against which the impacts of
recovery options, the Recovery Plan feasibility and the overall recovery capacity are tested.
In order to monitor the performance of the Group’s business activity, a set of quantitative and qualitative
key indicators is presented in the Recovery Plan, in line with the guidelines defined by the European
Banking Authority (EBA). This set of indicators is permanently monitored, allowing for immediate
management action whenever there are deviations that exceed pre-defined thresholds (also defined in
the Plan), the report of which, to the Group’s management and Supervision Bodies, is mandatory.
The priorities, responsibilities and specific measures to be taken in a capital and/or liquidity contingency
situation are established in the Recovery Plan, which complements the Early Warning Signals (EWS)
system, for the anticipation of the occurrence of possible crises, namely, of liquidity. Simultaneously, the
Recovery Plan contains a ‘playbook’, intended to provide key information for rapid decision-making in a
crisis, and prescribes the performance of dry-run exercises, with the aim of testing parts of the Plan and
raising the Bank’s preparedness to implement it in a possible crisis scenario.
The Recovery Plan includes components of Bank Millennium’s Recovery Plan (Poland) and information
from Millennium bim’s Recovery Plan (Mozambique). It is aligned with the definition of the business
continuity framework and its respective plans (see the Operation Risk section), the Communication Plan –
towards the market and stakeholders (in contingency situations) and the results from the capital and/or
liquidity adequacy assessment processes already mentioned (ICAAP e ILAAP).

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Ratings assigned to BCP
The prospects for the Portuguese banking sector
benefited from the significant improvement in
Portuguese Republic's rating to the "A" rating
category by the five Rating Agencies that assign
rating to Portugal, reflecting, besides GDP growth
above Euro area average coupled with low levels
of unemployment and positive external balance
developments, positive developments in the
budgetary balance as well as public debt as
percentage of GDP falling to below 100% in 2023
to which should be added the improvement of
conditions in the Portuguese banking sector.
The Portuguese banking sector’s asset quality and
capitalisation have significantly improved since
2016, and this has materially strengthened the
resilience of banks’ credit profiles. The banking
sector is therefore less sensitive to foreign-
investor confidence and asset-quality shocks than
in the past.
There was no material evidence of asset-quality
deterioration for the Portuguese banks in 2023,
despite a more challenging macro-economic
environment than in 2022, due to slowdown in
GDP growth, inflation-led pressure and the higher
interest-rate environment.
Profitability is expected to compare well with
other southern European peers in 2024, due to
high net interest margins, strong cost efficiency,
and moderate cost of risk. Net interest income
has been significantly boosted in 2023 due to a
high share of variable-rate lending and limited
repricing of deposits due to higher euro interest
rates. Despite the expected interest rates
decrease, Portuguese banks’ profitability should
remain significantly higher in 2024 than in recent
years.
Portuguese banks’ capitalisation has strengthened
on the back of significantly higher profitability
and lower balance-sheet risks. Most Portuguese
banks have generally been restrictive with capital
distributions in the most recent years.
BCP has made very significant progress in recent
years:
Asset Quality – Continuous improvement despite
macroeconomic challenges. The NPE ratio in
Portugal stood below the 3% at the end of 2023.
Profitability – Strong operational efficiency
supports improved profitability, despite the still
high legal risk charges associated to CHF
denominated loans in Poland. BCP's operational
result compares well with most other medium-
sized peers in southern Europe due to high
operational efficiency and an efficient business
model.
Funding and Liquidity - Stable funding and
adequate liquidity profile.
Capitalization - Improved organic capital
generation and adequate buffers over SREP
requirements. Substantial strengthening of capital
ratios. At the end of 2023, CET1 ratio stood at
15.4% and total capital ratio at 19.9%,
representing an increase of 293bp and 310bp
compared with the same period of 2022,
reflecting the strong capacity to generate organic
capital.
Developments in 2023:
BCP become Investment Grade by the four Rating
Agencies that assign rating to BCP, after
consecutive upgrade revisions during the year,
which reflect BCP’s normalisation path.

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Moody’s |  |  | Standard & Poor's |
Baseline Credit Assessment | ba1 |  | Stand-alone credit profile(SACP) | bbb-
Adjusted Baseline Credit Assessment | Ba1 |  |  |
Counterparty Risk Assessment LT/ ST | A3 (cr)/ P-2 (cr) |  | Resolution Counterparty Credit Rating LT/ ST | BBB/A-2
Counterparty Risk LT / ST | A3 / P-2 |  | Issuer Credit Rating LT/ ST | BBB-/A-3
Deposits LT / ST | A3 / P-2 |  | Senior Debt | BBB-
Senior Debt | Baa2 / P-2 |  | Senior Non Preferred | BB+
Senior Non Preferred | Ba1 |  | Outlook | Stable
Outlook deposits / senior | Stable |  |  |
Subordinated Debt - MTN | (P)Ba2 |  | Subordinated Debt | BB
Subordinated Debt | Ba2 |  | Additional Tier 1 | B+
Additional Tier 1 | B1(hyb) |  |  |
Other Short Term Debt | P(NP) |  |  |
Covered Bonds | Aaa |  |  |
Rating Actions |  |  | Rating Actions |
On May 26, 2023, Moody's Rating Agency revised the Outlook from stable to positive. On November 22, 2023, Moody's Rating Agency upgraded the BCP's rating of deposits and senior unsecured debt. |  | On April 17, 2023, S&P Global Rating Agency revised the Outlook from stable to positive. On September 12, 2023, S&P Global Rating Agency upgraded the senior debt rating to Investment Grade.
Fitch Ratings |  |  | DBRS |
Viability Rating | bbb- |  | Intrinsic Assessment(IA) | BBB
Support | ns |  | Critical obligations | A (low) / R-1 (low)
Support Floor | No Floor |  |  |
Deposits LT/ ST | BBB/F3 |  | Deposits LT/ST | BBB(high)/R-1 (low)
Senior Debt LT/ST | BBB-/F3 |  | Senior Debt LT/ ST | BBB / R-1 (low)
Senior Non Preferred | BB+ |  | Senior Non Preferred | BBB (low)
Outlook | Stable |  | Trend | Estável
Subordinated Debt Lower Tier 2 | BB |  | Dated Subordinated Notes | BB (high)
Additional Tier 1 | B+ |  | Additional Tier 1 | B (high)
Covered Bonds | AA+ |  | Covered Bonds | A
Rating Actions |  |  | Rating Actions |
On March 17, 2023, Fitch Ratings upgraded BCP's long-term deposit rating to 'BBB-' and the long-term Issuer Default Rating to 'BB+', with a stable outlook. On September 21, 2023, Fitch Ratings upgraded BCP's Issuer Default Rating to 'BBB-' (Investment Grade category). |  | On May 24, 2023, the Rating Agency DBRS revised the trend from stable to positive. On December 18, 2023 the Rating Agency DBRS upgraded BCP’s long-term Issuer Rating to BBB.

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Capital

The estimated CET1 ratio as at 31 December 2023 stood at 15.5% phased-in and 15.4% fully implemented,
reflecting a change of +286 and +293 basis points, respectively, compared to the 12.6% and 12.5% phased-in
and fully implemented ratios reported in the same period of 2022, comfortably above the minimum regulatory
ratios defined within the scope of SREP(Supervisory Review and Evaluation Process) for the year 2023 (CET1
9.41%, T1 11.38% and Total 14.00%) and in line with the medium-term solvability targets.
The evolution of capital ratios in the period continued to be significantly conditioned by the impacts on Bank
Millennium, related to the increase in provisions for legal risks associated with loans in foreign currency. These
effects were, however, more than offset by the positive performance of the recurrent activity in Portugal and
by the careful and proactive management of capital, which includes shareholder remuneration, on a
convergent trajectory towards the levels set out in the strategic plan.

| SOLVABILITY RATIOS |  |  |  | (Euro million)
|  | 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 23 | 31 Dec. 22
|  | PHASED-IN | FULLY IMPLEMENTED
| OWN FUNDS |  |  |  |
| Common Equity Tier 1 (CET1) | 6,157 | 5,442 | 6,124 | 5,382
| Tier 1 | 6,642 | 5,939 | 6,608 | 5,875
| TOTAL CAPITAL | 7,906 | 7,279 | 7,903 | 7,241
| RISK WEIGHTED ASSETS | 39,751 | 43,103 | 39,725 | 43,106
| CAPITAL RATIOS (*) |  |  |  |
| CET1 | 15.5% | 12.6% | 15.4% | 12.5%
| Tier 1 | 16.7% | 13.8% | 16.6% | 13.6%
| Total | 19.9% | 16.9% | 19.9% | 16.8%

(*) Includes the cumulative net income recorded in each period.

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Pension Fund

The liabilities assumed by the Group Banco Comercial Português with pensions on retirement and other
benefits are related with the payment to Employees of pensions on retirement and permanent disability and
orphan and window benefits.
As at 31 December 2023, the Group’s liabilities stood at 3,080 million euros, which compares with the 2,791
million euros recorded at the end of previous year. The Pension Fund’s assets which are financing the above
mentioned liabilities reached 3,470 million euros by the end of 2023, above the 3,384 million euros recorded
as at 31 December 2022.
As at 31 December 2023 and 31 December 2022, the main asset categories in the Pension Fund’s portfolio
presented the following distribution:
STRUCTURE OF THE PENSION FUND’S ASSETS AS AT 31 DECEMBER 2023
(xx%) Proportion as at 31 December 2022
As at 31 December of 2023, the structure of the Pension Fund's asset portfolio shows, compared to the prior
year, increases in investment bonds and other fixed income securities and in shares and reductions in loans
and advances to credit institutions and other, in investment funds and properties and real estate investment
funds.

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The actuarial assumptions considered by the Group for calculating the liabilities with pension obligations
were based on market indicators, particularly long-term debt yield of Euro Zone issuers considered to be of
good risk, as well as the demographic characteristics of its employees. The main actuarial assumptions used
to determine the Pension Fund’s liabilities over the last three financial years are shown below:

Assumptions | 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 21
Discount rate | 3.53% | 4.17% | 1.35%
Increase in future compensation levels (a) | 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 | 0.75%
Rate of pensions increase (a) | 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 | 0.50%
Projected rate of return on fund's assets | 3.53% | 4.17% | 1.35%
Mortality tables |  |  |
Men | TV 88/90 less 1 year | TV 88/90 less 1 year | TV 88/90
Women (b) | TV 99/01 less 2 years | TV 99/01 less 2 years | TV 88/90 less 3 years
Disability rate | Non applicable | Non applicable | Non applicable
Turnover rate | Non applicable | Non applicable | Non applicable
Normal retirement age (c) | 66 years and 4 months | 66 years and 7 months | 66 years and 6 months
Total salary growth rate for Social Security purposes | 1.75% | 1.75% | 1.75%
Revaluation rate of wages / pensions of Social Security | 1.00% | 1.00% | 1.00%

(a) This rate refers to the growth for the years following the reporting year.
(b) 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).
(c) 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’s 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.
The actuarial differences recorded at the end of the year 2023 were negative by 223 million euros, before
taxes (positive in 376 million euros, before taxes, as at 31 December 2022) and include 226 million euros of
actuarial gains, as a consequence of the decrease in the discount rate from 4.17% as at 31 December 2022 to
3.53% as at 31 December 2023 and 54 million euros of actuarial losses following the change of rate of salaries
and pensions increase. The actuarial deviations recognised in 2023 also incorporate 100 million euros of
positive financial deviations related to the pension fund’s return, in particular referring to the gap between
the expected income and the effective income of the Pension Fund. Finally, negative deviations of 43 million
euros were also recorded as a result of differences between expected and actual liabilities.

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The main indicators of the Pension Fund over the last three financial years are as follows:
Million euros

Main indicators | 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 21
Liabilities with pensions | 3,080 | 2,791 | 3,498
Minimum level of liabilities to cover* | 3,042 | 2,757 | 3,445
Value of the Pension Fund | 3,470 | 3,384 | 3,700
Coverage rate | 112.7% | 121.3% | 105.8%
Coverage rate of the minimum level of liabilities* | 114.1% | 122.7% | 107.4%
Return on Pension Fund | 7.1% | (5.1%) | 1.9%
Actuarial (gains) and losses | 223 | (376) | (135)

* According to the Bank of Portugal requirements (assuming the application of the minimum requirement to all Group companies)
As of 31 December 2023, the Group’s responsibilities showed a 112.7% coverage level, being funded at a
higher level than the minimum set by Banco de Portugal.
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, longevity payments, among others, and an increase of 21.43% was
agreed for the lunch subsidy, whose daily value increased to 12.75 euros. 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 operationalised.
Regarding the unions SNQTB – Sindicato Nacional dos Quadros e Técnicos Bancários e SIB – 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.

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Information on trends
Framework
The Bank of Portugal forecasts that Portuguese GDP
will growth moderately in 2024 (1.2%), mainly due
to the slowdown in exports. With regard to the
inflation rate, it is expected that the downward
trend will continue, diminishing from 5.3% in 2023
to 2.9% in 2024.
The favourable evolution of economic activity
contributed to a decrease in the public debt ratio
as a percentage of GDP, from 112.4% in 2022 to 99%
in 2023, which corresponds to the lowest value
since 2010. With regard to external debt, there was
also an improvement, with the current account
balance recording the highest value in the last ten
years, standing at 1.3% of GDP. In this context, the
main Rating Agencies decided to upgrade the credit
rating of the Portuguese Republic to an "A" grade.
The interest rate increase moves by the FED and
the ECB, in 2023, maintained the focus recorded
during 2022. Thus, the FED carried out four
increases of 25 basis points in 2023, while the ECB
carried out six increases, two of 50 basis points and
four of 25 basis points. Until March 2024, the ECB
kept reference interest rates unchanged. The
President of the ECB stated that it was still
premature to discuss rate cuts, having, however,
signalled the possibility of reductions in key rates in
the second half of the year. The US Federal Reserve
has explicitly removed the bias towards a more
restrictive monetary policy. However, the Federal
Reserve will be cautious in lowering interest rates,
which could happen in the second half of 2024.
The profitability of Portuguese banks is expected to
remain robust in 2024, despite a decline in interest
rates in the second half of 2024 and a slight
decrease in net interest income. Operating costs
are expected to increase, reflecting the current
inflationary context. However, Portuguese banks
should remain efficient, with the system's cost-to-
income ratio below 50%.
The cost of risk is expected to maintain its
normalization trend, with no significant impact
expected from a possible deterioration in asset
quality in 2024. Portuguese banks have solid credit
granting policies due to the Bank of Portugal's
macro prudential recommendations issued in 2018.
Portuguese banks have improved their funding
profile over the last decade, with bank deposits
representing the majority of their funding
structures. The ratio between credit and deposits is
expected to remain below 80% in 2024.
The sector has improved its asset quality and
capitalization since 2016 and is now more resilient.
Impact on the Group's activity
In 2024, BCP should maintain a high level of
profitability, benefiting from the environment of
normalized interest rates in the geographies in
which it operates, and strict control over the
evolution of operating costs. The cost of risk should
maintain the normalization trend, even in a context
of slowdown in the Portuguese economy, given the
level close to full employment.
BCP reinforced its liquidity position in 2023. The
Group's balance sheet resources grew 2.5% in
December 2023 compared to the same period last
year. Liquidity indicators were in December 2023
well above regulatory requirements: LCR at 276%,
NSFR at 167% and Loans-to-Deposits ratio at 71%.
The assets available for financing with the ECB
stood at 25.8 billion euros. At Group level, the
Customer base increased by 3.4%, to more than 6.7
million, with emphasis on the 10% increase in
mobile Customers compared to December 2022,
which represent 68% of the Group's total active
Customers (58% in Portugal). As a result of the
higher interest rate environment, loan demand is
remaining moderate. In 2024, the Bank should
continue to present a solid liquidity position.
The BCP Group has been improving asset quality,
particularly in Portugal, with the NPE ratio
remaining below 3% at the end of December 2023,
which compares with 4% of the objective set in the
Strategic Plan. A significant deterioration in asset
quality is not expected even in a scenario of
slowing economic activity.
In 2024, BCP managed to demonstrate its ability to
generate organic capital, with the CET1 ratio
standing at 15.4% and the total capital ratio at
19.9%, representing an increase of 293bps and
310bps compared to the same period of 2022,
exceeding the strategic objective established for
2024. In 2024, the Bank does not anticipate any
adverse effects in terms of the evolution of the
capital ratio, and should continue to generate
capital organically, allowing a dividend and
shareholder distribution policy aligned with sector
practices.

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Non-financial information

The BCP Group pursues dynamic strategies that it adapts to the new challenges imposed by the various
stakeholders with which it interacts. The main objective of the adopted sustainability policies, which foster a
culture of Corporate Social Responsibility, has been to positively influence the organization's long-term value
proposition, in balance with the well-being of people, the company and the communities in which it operates.
inserted and with the preservation of natural resources, climate, biodiversity and the environment.
In this context, it is possible to divide the Bank's intervention into three fundamental axes:
• Environment – implementation of measures that promote a fair and inclusive transition to decarbonized
economic development models, including the incorporation of the environmental aspect in the Bank's risk
models and in the offering of solutions, products and services;
• Social – involvement, in conjunction with the Millennium bcp Foundation, with the external and internal
community in establishing lasting relationships of proximity and cooperation and in the creation of shared
value;
• Corporate governance – integration of sustainability principles into the Bank's decision-making and
management processes and in the definition of its value proposition.
Millennium bcp thus assumes, as an integral part of its business model, the purpose of creating social value,
developing actions for - and with - the various groups of Stakeholders with the aim of contributing to the
development of the countries in which it operates.
Throughout the Bank's Sustainability journey, several external commitments have been made, of which the
following stand out:
• Principles of the United Nations Global Compact and recognition of the importance of the Sustainable
Development Goals (SDGs) and the United Nations 2030 Agenda;
• United Nations (UNEP FI) Principles of Responsible Banking (PRB), a commitment that aims to ensure the
alignment of the Bank's strategy and practice with the SDGs and the goals and objectives of the Paris
Climate Agreement. The framework proposed by the PRB considers six principles that cover all business
areas, at the strategic, portfolio and transactional levels, constituting a holistic tool for integrating
sustainability into the different dimensions of the organization's activity;
• “Letter of Commitment for Sustainable Financing in Portugal”, an aspirational document produced within
the scope of the “Reflection Group for Sustainable Financing in Portugal” promoted by the Ministries of
the Environment, Finance and Economy, which seeks to highlight the importance of integrating risks
environmental, social and governance in decision-making and risk management processes in the financial
sector;
• “CEO Guide on Human Rights”, an initiative of the World Business Council for Sustainable Development
(WBCSD) and the Business Council for Sustainable Development (BCSD Portugal). The Guide incorporates
reference policies and practices and aims to contribute to the implementation and promotion of human
rights in organizations and their value chains;
• “Statement from Business Leaders for Renewed Global Cooperation” from the United Nations Global
Compact, an international declaration that aims to demonstrate commitment to ethical leadership, based
on good governance practices, materialized through values, strategy, policies, operations and business
relationships. proximity and involvement with all Stakeholders;
• “Women’s Empowerment Principles” of the United Nations Global Compact, an international platform for
promoting gender equality that highlights BCP's long-term vision and the desire to integrate – and
promote – a collective dynamic based on cooperation and trust.
The BCP Group's guidance on these matters is translated into corporate Policies and Principles applicable to the
various areas of activity and business (available at https://ind.millenniumbcp.pt/pt/Institucional/sistência/
Pages/cod_internos. aspx) and is implemented in the Sustainability Master Plan (PDS), through which we intend to
respond to the expectations, ambitions and needs of the Bank's Stakeholders and contribute to sustainable
development.

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PDS 2023, a plan structured around dimensions selected to respond to the themes contained in the Bank's materiality
matrix and under which the Bank successfully implemented a large number of initiatives and concrete actions, included
the following lines of action:

Actuation axis | Dimension
a. Positive impact through responsible and sustainable management | i. ESG risk management
ii. Compensation policies
iii. ESG Strategy
iv Corporate policies and commitments
v. Sustainable Purchasing
vi. ESG corporate performance analysis
viii. ESG Compliance
viii. Training and development of top management
ix. Knowledge
x. Resource management
b. Positive impact through sustainable "offer" | i. Responsible and Sustainable Investment
ii ESG product development
iii. Offer ESG risk management
c.Positive impact on the environment | i. Climate change and energy transition
i. Regulations and reporting frameworks
iii. Environmental training and awareness
d.Positive impact on people and communities | i. Training and development
ii. Corporate Volunteering
iii. Human rights
iv. Financial Literacy
v. Partnerships for Sustainability

The implementation of the SDP has made it possible to improve the Bank's performance with regard to the main
sustainability axes, in particular:

Economic / Governance | Social | Environmental
Total number of customers 7,450 thousand. vs. 7,203 thousand. in 2022 % of payments to local suppliers 90.3% vs.90.5% in 2022 Total number of digital customers 5,091 thousand. vs. 4,768 thousand. in 2022 | Total number of employees 15,688 vs. 15,747 in 2022 Training (Hours) 728.681 vs. 715.837 in 2022 Donations 2.4 vs. 2.3 million in 2022 | 11.813 tCO2e emitted vs. 12.710 in 2022 47.760 MWh of electricity consumed vs. 46,424 in 2022 2,252 MWh of renewable energy produced by the Bank

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174 |
In order to promote transparency in communication with its Stakeholders, monitor the evolution of performance,
identifying opportunities for improvement, and communicate the evaluation carried out by recognized entities, the
Bank responded to several specialized indices:

Scope | Index | Performance in 2023 |  | Performance in 2022
BCP Group | MSCI | A | = | A
BCP Group | CSA S&P (before DJSI) | 56% | ↓ | 62%
BCP Group | Carbon Disclosure Project | B | = | B
BCP Group | Bloomberg Gender-Equality Index | 85% | ↑ | 81%
BCP Group | Vigeo Eiris | 46% (88% disclosure) | = | 46% (88% disclosure)
BCP Group | EthiFinance (antes Gaïa Rating) | 70% | = | 70%
BCP Group | LSEG (before Refinitiv) | 74% | ↓ | 78%
BCP Group | Sustainalytics | 1970% | ↑ | 2160%
BCP Group | ISS ESG | C- | ↑ | D+

In the cycle corresponding to the Strategic Plan - Overcoming 2021/2024 -, Millennium bcp continues to seek to identify
business opportunities related to sustainability, as well as manage the physical and transition risks of its portfolio, but
also promote the creation of solutions, products and innovative services with green and social rating aimed at all
customer segments.
Detailed information and indicators on the BCP Group's Sustainability performance are available, in an aggregated view
and by geography, in the 2023 Sustainability Report, at:
https://ind.millenniumbcp.pt/pt/Institucional/consciente/Pages/relatorios_anuais.aspx.

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Correspondence table between the Management Report and Decree-Law 89/2017

Decree-law no. 89/207 of July 28 | Chapter/Section | Page/s
Artº3º (Referred to No. 2 of Article 508-G of the CSC) The non-financial statement must contain enough information for an understanding of the evolution, performance, position and impact of its activities, referring, at a minimum, to environmental, social and worker-related issues, equality between women and men, the non- discrimination, respect for human rights, combating corruption and attempted bribery, including:
a) Brief description of the company's business model | SR 2022 | Creating Value | 10
SR 2022 | Introduction > Governance Model | 25-26
Report and Accounts 2022| Business Model | 39-42
b) Description of the policies followed by the company in relation to these matters, including the due diligence processes applied c) Results of these policies | ENVIRONMENTAL: |
SR 22 | Introduction > Commitments | 28-29 272-274
SR 22 | Introduction > ESG Risk Management | 32
SR 22 | V- Environmental Responsibility | 156-179
SR 22 | Table TCFD | 180-186 241
SOCIAL AND WORKER-RELATED: |
SR 22 | Introduction > ESG Risk Management | 32
SR 22 | Economic and Governance Responsibility > Employees | 55-61
SR 22 | Social Responsibility > Employee Benefits | 126-134
EQUALITY BETWEEN WOMEN AND MEN AND NON-DISCRIMINATION: |
SR 22 | Introduction > Commitments | 28-29
SR 22 | Economic and Social Responsibility and Governance > Employees | 55-75
HUMAN RIGHTS: |
SR 22 | Introduction > Commitments | 28-29
SR 22 | Social Responsibility > Human Rights | 135-137
FIGHTING CORRUPTION AND BRIBERY ATTEMPTS: |
SR 22 | Economic and Governance Accountability > Ethics and Professional Conduct | 76-81
d) Main risks associated with these issues, linked to the company's activities, including, where relevant and proportionate, its business relationships, its products or services likely to have negative impacts in these areas and the way in which those risks are managed by the company | ENVIRONMENTAL: |
SR 22 | Introduction > ESG Management | 32
SR 22 | TCFD | 180-186
SOCIAL AND WORKER-RELATED: |
SR 22 | Introduction > ESG Risk Management | 32
SR 22 | Economic and Governance Accountability > Employees | 55-75
EQUALITY BETWEEN WOMEN AND MEN AND NON-DISCRIMINATION: |
SR 22 | Economic and Governance Accountability > Employees | 55-75
HUMAN RIGHTS: |
SR 22 | Social Responsibility > Human Rights | 135-137
Tabela UNGP- Quadro de Relatórios dos Princípios Orientadores da ONU | 238-240
FIGHTING CORRUPTION AND BRIBERY ATTEMPTS: |
SR 22 | Introduction > ESG Risk Management | 32
SR 22 | Economic and Governance Accountability > Ethics and Professional Conduct | 76-81
e) Key performance indicators relevant to your specific activity | ENVIRONMENTAL: |
SR 22 | Environmental Responsibility | 156-179
SOCIAL AND WORKER-RELATED: |
SR 22 | Economic and Governance Accountability > Employees | 55-75
SR 22 | Social Responsibility > Employee Benefits | 126-129
EQUALITY BETWEEN WOMEN AND MEN AND NON-DISCRIMINATION: |
SR 22 | Economic and Governance Accountability > Employees | 55-75

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Consolidated financial statements

BANCO COMERCIAL PORTUGUÊS
CONSOLIDATED INCOME STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022

| (Thousands of euros)
| 2023 | 2022 (restated)
Interest and similar income | 4,371,289 | 2,737,235
Interest expense and similar charges | (1,545,565) | (587,463)
NET INTEREST INCOME | 2,825,724 | 2,149,772
Dividends from equity instruments | 1,783 | 10,086
Net fees and commissions income | 771,673 | 771,908
Gains/(losses) on financial operations at fair value through profit or loss | (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
Other operating income / (losses) | (60,415) | (193,112)
TOTAL OPERATING INCOME | 3,683,580 | 2,788,614
Staff costs | 631,806 | 580,807
Other administrative costs | 393,246 | 352,961
Amortisations and depreciations | 137,499 | 139,250
TOTAL OPERATING EXPENSES | 1,162,551 | 1,073,018
NET OPERATING INCOME BEFORE PROVISIONS AND IMPAIRMENTS | 2,521,029 | 1,715,596
Results on modification | (19,426) | (309,865)
Impairment of financial assets at amortised cost | (247,992) | (300,829)
Impairment of financial assets at fair value through other comprehensive income | (1,322) | 5,023
Impairment of other assets | (56,374) | (192,059)
Other provisions | (794,158) | (568,297)
NET OPERATING INCOME | 1,401,757 | 349,569
Share of profit of associates accounted for using the equity method | 64,266 | 58,611
Gains/(losses) on disposal of subsidiaries and other assets | 21,809 | 10,167
NET INCOME BEFORE INCOME TAXES | 1,487,832 | 418,347
Income taxes |  |
Current | (179,857) | (109,632)
Deferred | (357,514) | (194,688)
NET INCOME AFTER INCOME TAXES FROM CONTINUING OPERATIONS | 950,461 | 114,027
Net income from discontinued or discontinuing operations | (2,852) | 5,537
NET INCOME AFTER INCOME TAXES | 947,609 | 119,564
Net income for the year attributable to: |  |
Bank's Shareholders | 856,050 | 197,386
Non-controlling interests | 91,559 | (77,822)
NET INCOME FOR THE YEAR | 947,609 | 119,564
Earnings per share (in Euros) |  |
Basic | 0.054 | 0.010
Diluted | 0.054 | 0.010

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BANCO COMERCIAL PORTUGUÊS
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2023 AND 2022

(Thousands of euros)
| 2023 | 2022 (restated)
ASSETS |  |
Cash and deposits at Central Banks | 4,545,526 | 6,022,001
Loans and advances to credit institutions repayable on demand | 337,687 | 213,460
Financial assets at amortised cost |  |
Loans and advances to credit institutions | 908,477 | 963,434
Loans and advances to customers | 53,305,159 | 54,675,793
Debt securities | 17,579,136 | 13,035,582
Financial assets at fair value through profit or loss |  |
Financial assets held for trading | 822,904 | 766,597
Financial assets not held for trading mandatorily at fair value through profit or loss | 467,254 | 552,679
Financial assets designated at fair value through profit or loss | 32,004 | —
Financial assets at fair value through other comprehensive income | 10,834,291 | 7,461,553
Hedging derivatives | 40,628 | 59,703
Investments in associated companies | 356,259 | 314,919
Non-current assets held for sale | 80,317 | 499,035
Investment property | 39,100 | 15,217
Other tangible assets | 606,447 | 574,697
Goodwill and intangible assets | 223,105 | 182,687
Current tax assets | 20,469 | 17,945
Deferred tax assets | 2,554,331 | 2,938,986
Other assets | 1,626,684 | 1,582,455
TOTAL ASSETS | 94,379,778 | 89,876,743
LIABILITIES |  |
Financial liabilities at amortised cost |  |
Resources from credit institutions | 829,126 | 1,468,360
Resources from customers | 75,606,813 | 75,430,143
Non subordinated debt securities issued | 2,712,682 | 1,482,086
Subordinated debt | 1,397,425 | 1,333,056
Financial liabilities at fair value through profit or loss |  |
Financial liabilities held for trading | 207,387 | 241,506
Financial liabilities at fair value through profit or loss | 3,608,487 | 1,817,678
Provisions | 753,103 | 561,786
Current tax liabilities | 197,085 | 23,680
Deferred tax liabilities | 8,795 | 11,708
Other liabilities | 1,691,552 | 1,391,973
TOTAL LIABILITIES | 87,080,280 | 83,939,976
EQUITY |  |
Share capital | 3,000,000 | 3,000,000
Share premium | 16,471 | 16,471
Other equity instruments | 400,000 | 400,000
Legal and statutory reserves | 316,375 | 268,534
Reserves and retained earnings | 1,723,175 | 1,272,262
Net income for the year attributable to Bank's Shareholders | 856,050 | 197,386
Non-controlling interests | 987,427 | 782,114
TOTAL EQUITY | 7,299,498 | 5,936,767
TOTAL LIABILITIES AND EQUITY | 94,379,778 | 89,876,743

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Alternative performance measures

The BCP Group prepares financial information in accordance with International Financial Reporting Standards
(IFRS) endorsed by European Union. As a complement to that information, the BCP Group uses a set of
alternative performance measures that allow monitoring the evolution of its activity over the time. Following
the guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority
(ESMA) on October 2015 (ESMA/2015/1415), the BCP Group presents some indicators related to the
assessment of profitability and efficiency and the quality of the credit portfolio, among others, which are
intended to facilitate comprehension of the evolution of the economic and financial position of the Group.
The information presented in this context does not, under any circumstance, replace the financial
information prepared in accordance with IFRS. It should also be noted that the definitions and concepts used
by the BCP Group for the calculation of these indicators may differ from those used by other entities in the
determination of other similar measures and may therefore not be directly comparable. In accordance with
the aforementioned guidelines, in addition to the alternative performance measures, detailed below,
additional information is presented throughout this document, in the respective chapters, that reconciles the
accounting figures presented in the consolidated financial statements prepared in accordance with IFRS and
financial information reflecting the management criteria adopted by the BCP Group. These indicators and
their components are also described in more detail in the glossary.
1) Loans to customers (net) / Balance sheet customer funds
Relevance of the indicator: the loans-to-deposits ratio is an indicator of liquidity that allows the evaluation
of the Group's retail funding structure.

Million euros
| 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 21
Loans to customers (net) (1) | 55,218 | 56,198 | 56,360
Balance sheet customer funds (2) | 79,215 | 77,250 | 71,175
(1) / (2) | 69.7% | 72.7% | 79.2%

2) Return on average assets (ROA)
Relevance of the indicator : allows measurement of the capacity of the Group to generate results with the
volume of available assets.

|  | Million euros
| 2023 | 2022 (restated) | 2021
Net income (1) | 856 | 197 | 138
Non-controlling interests (2) | 92 | (78) | (113)
Average total assets (3) | 91,040 | 95,884 | 90,484
[(1) + (2), annualised] / (3) | 1.0% | 0.1% | 0.0%

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3) Return on average equity (ROE)
Relevance of the indicator: allows assessment of the capacity of the Group to remunerate its shareholders,
assessing the level of profitability generated by the funds invested by the shareholders in the Group.

Million euros
| 2023 | 2022 (restated) | 2021
Net income (1) | 856 | 197 | 138
Average equity (2) | 5,350 | 5,106 | 5,847
[(1), annualised] / (2) | 16.0% | 3.9% | 2.4%

4) Cost to income
Relevance of the indicator: it allows for the monitoring of the level of efficiency of the Group (excluding
specific items*), evaluating the volume of operating costs to generate net operating revenues.

Million euros
| 2023 | 2022 (restated) | 2021
Operating costs (1) | 1,163 | 1,073 | 1,116
of which: specific items (2) | 15 | 16 | 91
Net operating revenues (3) | 3,770 | 2,857 | 2,334
of which: specific items (4) | 139 | — | —
[(1) - (2)] / [(3) - (4)] | 31.6% | 37.0% | 43.9%

* Specific items: positive impact of 124 million euros, recognised in 2023, including income of 139 million euros related to the sale of 80% of
the shares in Millennium Financial Services sp. z o.o. recognised in the international activity, mainly as net trading income and costs of 15
million euros recognised as staff costs in the activity in Portugal. In 2022 the impact was negative in the amount of 16 million euros,
recognised as staff costs in the activity in Portugal. In 2021, the impact was also negative, in the amount of 91 million euros, mainly related
to the adjustment of headcount carried out by the Bank in that year, including a provision in the amount of 84 million euros.
5) Cost of risk, net of recoveries (expressed in basis points, annualised)
Relevance of the indicator: allows assessment of the quality of the loan portfolio by evaluating the ratio
between impairment charges recognised in the period (net of reversals and recoveries of credit and interest)
and the stock of loans to customers at the end of that period.

|  |  | Million euros
| 2023 | 2022 | 2021
Loans to customers at amortised cost, before impairment (1) | 56,805 | 57,684 | 58,137
Loan impairment charges (net of recoveries) (2) | 240 | 301 | 349
[(2), annualised] / (1) | 42 | 52 | 60

6) Non-performing exposures (NPE) / Loans to customers (gross)
Relevance of the indicator : allows the assessment of the level of credit risk to which the Group is exposed
based on the proportion of the NPE loan portfolio in the loans-to-customers portfolio (gross).

|  |  | Million euros
| 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 21
Non-Performing Exposures (1) | 1,952 | 2,218 | 2,752
Loans to customers (gross) (2) | 56,814 | 57,713 | 58,231
(1) / (2) | 3.4% | 3.8% | 4.7%

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7) Coverage of non-performing exposures (NPE) by balance sheet impairment
Relevance of the indicator: it allows the assessment of the level of coverage of the NPE portfolio by balance
sheet impairment.

Million euros
| 31 Dec. 23 | 31 Dec. 22 | 31 Dec. 21
Non-Performing Exposures (1) | 1,952 | 2,218 | 2,752
Loans impairment (balance sheet) (2) | 1,596 | 1,515 | 1,871
(2) / (1) | 81.8% | 68.3% | 68.0%

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Application of Results

Considering:
A. The provisions of the law and of the articles of association concerning the applicable legal reserve;
B. The dividends policy of Banco Comercial Português (BCP) currently in force, as approved at the General
Meeting of Shareholders held on May 20,2021;
C. That according to the financial statements to be submitted to the approval of the Shareholders, in the 2023
financial year BCP recorded consolidated net earnings amounting to 856,049,865.67 Euros and individual net
earnings amounting to 680,275,978.32 Euros;
D. That the above-mentioned Dividends Policy sets forth as its Guidelines:
i. The promotion of conditions for the sustainable observance of the capital ratios at any moment
applicable to Bank, as well as the remaining applicable legal requirements, including the limitations that
are applicable at any moment, resulting from the calculation of the maximum amount to be distributed;
ii. The retention of own funds that enable to promote coherence with the Risk Appetite Statement (RAS) and
with the results of the internal capital adequacy assessment process (ICAAP);
iii. The safeguard of an appropriate safety margin on the values established by the regulator within the scope
of its assessment and evaluation on the adequacy of strategies, processes, capital, and liquidity that are
appropriate to the risks to which the Bank is or might be exposed to (SREP);
E. That the strengthening of the capital position, the levels of provisioning and risk coverage, achieved, in
particular, by the improvement in profitability, allow the Bank to envisage solvency levels with a margin of safety
considered broad and consistent with the Risk Appetite Statement, even in scenarios still marked by uncertain
factors in the countries where the Group operates, and distributing a relevant portion of earnings (even if below
the long-term pay-out objectives and the current market standards for reference credit institutions);
The Board of Directors
Proposes:
I
In accordance with article 66 (5) (f) and for purposes of article 376 (1) (b), both of the Companies Code, and
article 54 of the Bank’s articles of association, the following application of year-end results amounting to
680,275,978.32 Euros:
a) For the reinforcement of legal reserve: 68,027,597.84 Euros;
b) For dividends distribution: 256,937,829.19 Euros;
c) 355,310,551.29 Euros, that is, the remaining, to Retained Earnings.

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II
Considering that the overall amount proposed for the distribution of dividends in the amount of 256,937,829.19 Euros
was calculated on the basis of a unit dividend per share issued (in the case, 0.0170 Euros per share) and although it is
not expected that BCP will have own shares on the date of the payment of dividends, it is herein proposed that, if that
happens, it is also resolved that:
a) For each share issued, a unit dividend of 0.0170 Euros is paid, which was the basis for the preparation of the
proposal;
b) The non-payment of the unit quantitative corresponding to the shares that, on the first day of the dividend payment
period, belong to BCP, being transferred to Retained Earnings.
Lisbon, 25 March 2024
THE BOARD OF DIRECTORS

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Glossary

Assets placed with customers – amounts held by customers in the context of the placement of third-party
products that contribute to the recognition of commissions.
Balance sheet customer funds – deposits and other resources from customers and debt securities placed
with customers.
Business Volumes - corresponds to the sum of total customer funds and loans to customers (gross).
Commercial gap – loans to customers (gross) minus on-balance sheet customer funds.
Core income - net interest income plus net fees and commissions income.
Core operating profit - net interest income plus net fees and commissions income deducted from operating
costs.
Cost of risk, net (expressed in basis points) - ratio of loans impairment (P&L) accounted in the period to
loans to customers at amortised cost and debt instruments at amortised cost related to credit operations
before impairment at the end of the period.
Cost to core income - operating costs divided by core income.
Cost to income – operating costs divided by net operating revenues.
Coverage of non-performing exposures by impairments – loans impairments (balance sheet) divided by the
stock of NPE.
Coverage of non-performing loans by impairments – loans impairments (balance sheet) divided by the stock
of NPL.
Coverage of overdue loans by impairments - loans impairments (balance sheet) divided by overdue loans.
Coverage of overdue loans by more than 90 days by impairments - loans impairments (balance sheet)
divided by overdue loans by more than 90 days.
Debt instruments – non-subordinated debt instruments at amortised cost and financial liabilities measured at
fair value through profit or loss (debt securities and certificates).
Debt securities placed with customers - debt securities issued by the Bank and placed with customers.
Deposits and other resources from customers – resources from customers at amortised cost and customer
deposits at fair value through profit or loss.
Dividends from equity instruments - dividends received from investments classified as financial assets at
fair value through other comprehensive income and from financial assets held for trading.
Equity accounted earnings - results appropriated by the Group related to the consolidation of entities
where, despite having some influence, the Group does not control the financial and operational policies.
Insurance products – includes unit linked saving products and retirement saving plans (“PPR”, “PPE” and
“PPR/E”).
Loans impairment (balance sheet) – balance sheet impairment related to loans to customers at amortised
cost, balance sheet impairment associated with debt instruments at amortised cost related to credit
operations and fair value adjustments related to loans to customers at fair value through profit or loss.
Loans impairment (P&L) – impairment (net of reversals and net of recoveries - principal and accrual) of
financial assets at amortised cost for loans to customers and for debt instruments related to credit
operations.
Loans to customers (gross) – loans to customers at amortised cost before impairment, debt instruments at
amortised cost associated to credit operations before impairment and loans to customers at fair value
through profit or loss before fair value adjustments.
Loans to customers (net) - 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.
Loan to Deposits ratio (LTD) – loans to customers (net) divided by deposits and other resources from
customers.

| 2023 REPORT & ACCOUNTS

184 |
Loan to value ratio (LTV) – mortgage amount divided by the appraised value of property.
Net commissions - net fees and commissions income.
Net interest margin (NIM) - net interest income for the period as a percentage of average interest earning
assets.
Net operating revenues - net interest income, dividends from equity instruments, net commissions, net
trading income, other net operating income and equity accounted earnings.
Net trading income – 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 (results from derecognition of
financial assets and financial liabilities measured at amortised cost and results from derecognition of
financial assets measured at fair value through other comprehensive income until 2021).
Non-performing exposures (NPE) – non-performing loans and advances to customers (includes loans to
customers at amortised cost, loans to customers at fair value through profit or loss and, from 2023, debt
instruments at amortised cost associated to credit operations before impairment) more than 90 days past-
due or unlikely to be paid without collateral realisation, if they recognised as defaulted or impaired.
Non-performing loans (NPL) – overdue loans (includes loans to customers at amortised cost, loans to
customers at fair value through profit or loss and, from 2023, debt instruments at amortised cost associated
to credit operations before impairment) more than 90 days past due including the non-overdue remaining
principal of loans, i.e. portion in arrears, plus non-overdue remaining principal.
Off-balance sheet customer funds – assets under management, assets placed with customers and insurance
products (savings and investment) subscribed by customers.
Operating costs - staff costs, other administrative costs and depreciation.
Other impairment and provisions – impairment (net of reversals) for loans and advances of credit
institutions classified at amortised cost, impairment for financial assets (classified at fair value through other
comprehensive income and at amortised cost not associated with credit operations), impairment for other
assets, namely assets received as payment in kind, investments in associated companies and goodwill of
subsidiaries and other provisions.
Other net income – dividends from equity instruments, net commissions, net trading income, other net
operating income and equity accounted earnings.
Other net operating income – net gains from insurance activity (only until 2019), other operating income/(loss)
and gains/(losses) arising from sales of subsidiaries and other assets.
Overdue loans – total outstanding amount of past due loans to customers (loans to customers at amortised
cost, debt instruments at amortised cost associated to credit operations and loans to customers at fair value
through profit or loss), including principal and interests.
Overdue loans by more than 90 days – total outstanding amount of past due loans to customers by more
than 90 days (loans to customers at amortised cost, debt instruments at amortised cost associated to credit
operations and loans to customers at fair value through profit or loss), including principal and interests.
Performing loans - loans to customers (gross) deducted from Non-performing exposures (NPE).
Profit before impairment and provisions – net operating revenues deducted from operating costs.
Resources from credit institutions – resources and other financing from Central Banks and resources from
other credit institutions.
Return on average assets (Instruction from the Bank of Portugal no. 16/2004) – net income (before tax)
divided by the average total assets (weighted average of the average of monthly net assets in the period).
Return on average assets (ROA) – net income (before minority interests) divided by the average total assets
(weighted average of the average of monthly net assets in the period).
Return on equity (Instruction from the Bank of Portugal no. 16/2004) – net income (before tax) divided by
the average equity (weighted average of the average of monthly equity in the period).
Return on equity (ROE) – net income (after minority interests) divided by the average equity, deducted from
preference shares and other capital instruments (weighted average of the average of monthly equity in the
period) minus non-controlling interests.

2023 REPORT & ACCOUNTS |

|185
Securities portfolio - 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 and trading derivatives), financial assets at fair value through other comprehensive income and
assets with repurchase agreement.
Specific coverage of NPE - NPE impairments (balance sheet) divided by the stock of NPE.
Spread - increase (in percentage points) to the index used by the Bank in loans granting or fund raising.
Total customer funds - balance sheet customer funds and off-balance sheet customer funds.

| 2023 REPORT & ACCOUNTS

186 |
Accounts and Notes to the
Consolidated Accounts

2023 REPORT & ACCOUNTS |

|187
CONSOLIDATED INCOME STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022

| (Thousands of euros)
| Notes | 2023 | 2022 (restated)
Interest and similar income | 2 | 4,371,289 | 2,737,235
Interest expense and similar charges | 2 | (1,545,565) | (587,463)
NET INTEREST INCOME |  | 2,825,724 | 2,149,772
Dividends from equity instruments | 3 | 1,783 | 10,086
Net fees and commissions income | 4 | 771,673 | 771,908
Gains/(losses) on financial operations at fair value through profit or loss | 5 | (6,550) | 27,306
Foreign exchange gains/(losses) | 5 | 17,469 | 19,390
Gains/(losses) on hedge accounting | 5 | 21,808 | (2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value through profit or loss | 5 | 112,088 | 5,497
Other operating income/(losses) | 6 | (60,415) | (193,112)
TOTAL OPERATING INCOME |  | 3,683,580 | 2,788,614
Staff costs | 7 | 631,806 | 580,807
Other administrative costs | 8 | 393,246 | 352,961
Amortisations and depreciations | 9 | 137,499 | 139,250
TOTAL OPERATING EXPENSES |  | 1,162,551 | 1,073,018
NET OPERATING INCOME BEFORE PROVISIONS AND IMPAIRMENTS |  | 2,521,029 | 1,715,596
Results on modification | 10 | (19,426) | (309,865)
Impairment of financial assets at amortised cost | 11 | (247,992) | (300,829)
Impairment of financial assets at fair value through other comprehensive income | 12 | (1,322) | 5,023
Impairment of other assets | 13 | (56,374) | (192,059)
Other provisions | 14 | (794,158) | (568,297)
NET OPERATING INCOME |  | 1,401,757 | 349,569
Share of profit of associates accounted for using the equity method | 15 | 64,266 | 58,611
Gains/(losses) on disposal of subsidiaries and other assets | 16 | 21,809 | 10,167
NET INCOME BEFORE INCOME TAXES |  | 1,487,832 | 418,347
Income taxes |  |  |
Current | 31 | (179,857) | (109,632)
Deferred | 31 | (357,514) | (194,688)
NET INCOME AFTER INCOME TAXES FROM CONTINUING OPERATIONS |  | 950,461 | 114,027
Net income from discontinued or discontinuing operations | 17 | (2,852) | 5,537
NET INCOME AFTER INCOME TAXES |  | 947,609 | 119,564
Net income for the year attributable to: |  |  |
Bank's Shareholders |  | 856,050 | 197,386
Non-controlling interests | 44 | 91,559 | (77,822)
NET INCOME FOR THE YEAR |  | 947,609 | 119,564
Earnings per share (in Euros) |  |  |
Basic | 18 | 0.054 | 0.010
Diluted | 18 | 0.054 | 0.010

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the consolidated financial statements.

| 2023 REPORT & ACCOUNTS

188 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022

(Thousands of euros)
| 2023
|  |  |  | Attributable to
| Continuing operations | Discontinued operations | Total | Bank's Shareholders | Non- controlling interests
NET INCOME FOR THE YEAR | 950,461 | (2,852) | 947,609 | 856,050 | 91,559
ITEMS THAT MAY BE RECLASSIFIED TO THE INCOME STATEMENT (NOTE 43) |  |  |  |  |
Debt instruments at fair value through other comprehensive income |  |  |  |  |
Gains / (losses) for the year | 210,878 | — | 210,878 | 141,812 | 69,066
Reclassification of (gains) / losses to profit or loss (note 5) | 12,642 | — | 12,642 | 11,287 | 1,355
Cash flows hedging |  |  |  |  |
Gains / (losses) for the year | 507,098 | — | 507,098 | 470,043 | 37,055
Other comprehensive income from investments in associates and others | (5,910) | — | (5,910) | (5,907) | (3)
Exchange differences arising on consolidation | 58,989 | — | 58,989 | 8,307 | 50,682
IAS 29 application |  |  |  |  |
Effect on equity of Banco Millennium Atlântico, S.A. | 8,268 | — | 8,268 | 8,268 | —
Fiscal impact | (201,272) | — | (201,272) | (181,062) | (20,210)
| 590,693 | — | 590,693 | 452,748 | 137,945
ITEMS THAT WILL NOT BE RECLASSIFIED TO THE INCOME STATEMENT |  |  |  |  |
Equity instruments at fair value through other comprehensive income |  |  |  |  |
Gains / (losses) for the year |  |  |  |  |
Subsidiaries (note 43) | 7,326 | — | 7,326 | 6,782 | 544
Associates | 7,073 | — | 7,073 | 7,073 | —
| 14,399 | — | 14,399 | 13,855 | 544
Changes in own credit risk of financial liabilities at fair value through profit or loss (note 43) | (2,778) | — | (2,778) | (2,778) | —
Actuarial gains / (losses) for the year |  |  |  |  |
BCP Group Pension Fund (note 50) | (222,880) | — | (222,880) | (222,880) | —
Pension Funds of foreign subsidiaries and associated companies | 1,775 | — | 1,775 | 2,837 | (1,062)
Fiscal impact | 94,751 | — | 94,751 | 94,665 | 86
| (114,733) | — | (114,733) | (114,301) | (432)
Other comprehensive income / (loss) for the year | 475,960 | — | 475,960 | 338,447 | 137,513
TOTAL COMPREHENSIVE INCOME FOR THE YEAR | 1,426,421 | (2,852) | 1,423,569 | 1,194,497 | 229,072

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the consolidated financial statements.

2023 REPORT & ACCOUNTS |

|189

(Thousands of euros)
| 2022 (restated)
|  |  |  | Attributable to
| Continuing operations | Discontinued operations | Total | Bank's Shareholders | Non- controlling interests
NET INCOME FOR THE YEAR | 114,027 | 5,537 | 119,564 | 197,386 | (77,822)
ITEMS THAT MAY BE RECLASSIFIED TO THE INCOME STATEMENT (NOTE 43) |  |  |  |  |
Debt instruments at fair value through other comprehensive income |  |  |  |  |
Gains / (losses) for the year | (271,021) | — | (271,021) | (250,622) | (20,399)
Reclassification of (gains) / losses to profit or loss (note 5) | 13,386 | — | 13,386 | 13,501 | (115)
Cash flows hedging |  |  |  |  |
Gains / (losses) for the year | (1,646,366) | — | (1,646,366) | (1,644,333) | (2,033)
Other comprehensive income from investments in associates and others | 8,448 | — | 8,448 | 8,445 | 3
Exchange differences arising on consolidation | 12,616 | — | 12,616 | 18,184 | (5,568)
IAS 29 application |  |  |  |  |
Effect on equity of Banco Millennium Atlântico, S.A. | 5,745 | — | 5,745 | 5,745 | —
Fiscal impact | 589,842 | — | 589,842 | 585,630 | 4,212
| (1,287,350) | — | (1,287,350) | (1,263,450) | (23,900)
ITEMS THAT WILL NOT BE RECLASSIFIED TO THE INCOME STATEMENT |  |  |  |  |
Equity instruments at fair value through other comprehensive income |  |  |  |  |
Gains / (losses) for the year |  |  |  |  |
Subsidiaries (note 43) | (3,796) | — | (3,796) | (3,183) | (613)
| (3,796) | — | (3,796) | (3,183) | (613)
Changes in own credit risk of financial liabilities at fair value through profit or loss (note 43) | (63) | — | (63) | (63) | —
Actuarial gains / (losses) for the year |  |  |  |  |
BCP Group Pensions Fund (note 50) | 375,689 | — | 375,689 | 375,689 | —
Pension Funds of foreign subsidiaries and associated companies | 8,372 | — | 8,372 | 6,885 | 1,487
Fiscal impact | (136,759) | — | (136,759) | (136,681) | (78)
| 243,443 | — | 243,443 | 242,647 | 796
Other comprehensive income / (loss) for the year | (1,043,907) | — | (1,043,907) | (1,020,803) | (23,104)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR | (929,880) | 5,537 | (924,343) | (823,417) | (100,926)

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the consolidated financial statements.

| 2023 REPORT & ACCOUNTS

190 |
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2023 AND 2022

(Thousands of euros)
| Notes | 2023 | 2022 (restated)
ASSETS |  |  |
Cash and deposits at Central Banks | 19 | 4,545,526 | 6,022,001
Loans and advances to credit institutions repayable on demand | 20 | 337,687 | 213,460
Financial assets at amortised cost |  |  |
Loans and advances to credit institutions | 21 | 908,477 | 963,434
Loans and advances to customers | 22 | 53,305,159 | 54,675,793
Debt securities | 23 | 17,579,136 | 13,035,582
Financial assets at fair value through profit or loss |  |  |
Financial assets held for trading | 24 | 822,904 | 766,597
Financial assets not held for trading mandatorily at fair value through profit or loss | 24 | 467,254 | 552,679
Financial assets designated at fair value through profit or loss | 24 | 32,004 | —
Financial assets at fair value through other comprehensive income | 24 | 10,834,291 | 7,461,553
Hedging derivatives | 25 | 40,628 | 59,703
Investments in associated companies | 26 | 356,259 | 314,919
Non-current assets held for sale | 27 | 80,317 | 499,035
Investment property | 28 | 39,100 | 15,217
Other tangible assets | 29 | 606,447 | 574,697
Goodwill and intangible assets | 30 | 223,105 | 182,687
Current tax assets | 31 | 20,469 | 17,945
Deferred tax assets | 31 | 2,554,331 | 2,938,986
Other assets | 32 | 1,626,684 | 1,582,455
TOTAL ASSETS |  | 94,379,778 | 89,876,743
LIABILITIES |  |  |
Financial liabilities at amortised cost |  |  |
Resources from credit institutions | 33 | 829,126 | 1,468,360
Resources from customers | 34 | 75,606,813 | 75,430,143
Non subordinated debt securities issued | 35 | 2,712,682 | 1,482,086
Subordinated debt | 36 | 1,397,425 | 1,333,056
Financial liabilities at fair value through profit or loss |  |  |
Financial liabilities held for trading | 37 | 207,387 | 241,506
Financial liabilities at fair value through profit or loss | 38 | 3,608,487 | 1,817,678
Hedging derivatives | 25 | 67,825 | 178,000
Provisions | 39 | 753,103 | 561,786
Current tax liabilities | 31 | 197,085 | 23,680
Deferred tax liabilities | 31 | 8,795 | 11,708
Other liabilities | 40 | 1,691,552 | 1,391,973
TOTAL LIABILITIES |  | 87,080,280 | 83,939,976
EQUITY |  |  |
Share capital | 41 | 3,000,000 | 3,000,000
Share premium | 41 | 16,471 | 16,471
Other equity instruments | 41 | 400,000 | 400,000
Legal and statutory reserves | 42 | 316,375 | 268,534
Reserves and retained earnings | 43 | 1,723,175 | 1,272,262
Net income for the year attributable to Bank's Shareholders |  | 856,050 | 197,386
Non-controlling interests | 44 | 987,427 | 782,114
TOTAL EQUITY |  | 7,299,498 | 5,936,767
TOTAL LIABILITIES AND EQUITY |  | 94,379,778 | 89,876,743

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the consolidated financial statements.

2023 REPORT & ACCOUNTS |

|191
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022

(Thousands of euros)
| 2023 | 2022 (restated)
CASH FLOWS ARISING FROM OPERATING ACTIVITIES |  |
Interests received | 3,574,550 | 2,297,720
Commissions received | 995,405 | 1,019,734
Fees received from services rendered | 124,601 | 101,771
Interests paid | (1,354,351) | (363,636)
Commissions paid | (175,850) | (176,465)
Recoveries on loans previously written off | 57,732 | 20,837
Payments (cash) to suppliers and employees (*) | (1,185,258) | (1,220,319)
Income taxes (paid) / received | (84,618) | (65,340)
| 1,952,211 | 1,614,302
Decrease / (increase) in operating assets: |  |
Receivables from / (Loans and advances to) credit institutions | (137,542) | (227,767)
Deposits held with purpose of monetary control | 197,388 | (280,418)
Loans and advances to customers receivable / (granted) | 554,467 | (656,569)
Short term trading securities | 125,787 | 136,605
Increase / (decrease) in operating liabilities: |  |
Loans and advances to credit institutions repayable on demand | (21,127) | (25,447)
Deposits from credit institutions with agreed maturity date | (624,255) | (7,518,189)
Loans and advances to customers repayable on demand | (3,624,247) | (274,554)
Deposits from customers with agreed maturity date | 5,549,721 | 6,652,456
| 3,972,403 | (579,581)
CASH FLOWS ARISING FROM INVESTING ACTIVITIES |  |
Assignment of investments in subsidiaries and associates which results in loss of control | 115,089 | —
Dividends received | 10,504 | 54,263
Interest income from financial assets at fair value through other comprehensive income and at amortised cost | 605,181 | 342,405
Sale of financial assets at fair value through other comprehensive income and at amortised cost | 3,246,396 | 7,922,631
Acquisition of financial assets at fair value through other comprehensive income and at amortised cost | (131,539,734) | (50,657,550)
Maturity of financial assets at fair value through other comprehensive income and at amortised cost | 120,612,565 | 42,276,068
Acquisition of tangible and intangible assets | (124,883) | (126,189)
Sale of tangible and intangible assets | 6,925 | 9,434
Decrease / (increase) in other sundry assets | 469,310 | (386,643)
| (6,598,647) | (565,581)
CASH FLOWS ARISING FROM FINANCING ACTIVITIES |  |
Issuance of subordinated debt | — | 133,700
Reimbursement of subordinated debt | — | (133,700)
Issuance of debt securities | 1,181,735 | 402,264
Reimbursement of debt securities | (233,366) | (1,156,473)
Issuance of commercial paper and other securities | 32,137 | 34,505
Reimbursement of commercial paper and other securities | (33,623) | (12,374)
Dividends paid to Bank's shareholders | — | (13,603)
Dividends paid to non-controlling interests | (23,719) | (59,572)
Interest paid of the issue of Perpetual Subordinated Bonds (Additional Tier 1) | (37,000) | (37,000)
Increase / (decrease) in other sundry liabilities and non-controlling interests (**) | 328,843 | 52,175
| 1,215,007 | (790,078)
Exchange differences effect on cash and equivalents | 58,989 | 12,616
Net changes in cash and equivalents | (1,352,248) | (1,922,624)
Cash (note 19) | 593,033 | 601,772
Deposits at Central Banks (note 19) | 5,428,968 | 7,194,527
Loans and advances to credit institutions repayable on demand (note 20) | 213,460 | 361,786
CASH AND EQUIVALENTS AT THE BEGINNING OF THE YEAR | 6,235,461 | 8,158,085
Cash (note 19) | 688,501 | 593,033
Deposits at Central Banks (note 19) | 3,857,025 | 5,428,968
Loans and advances to credit institutions repayable on demand (note 20) | 337,687 | 213,460
CASH AND EQUIVALENTS AT THE END OF THE YEAR | 4,883,213 | 6,235,461

(*) In 2023, this balance 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.
(**) In 2023, this balance includes the amount of Euros 54,952,000 (2022: Euros 53,330,000) corresponding to principal payments on lease liabilities.
CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the consolidated financial statements.

| 2023 REPORT & ACCOUNTS

192 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022

(Thousands of euros)
| Share capital | Share premium | Other equity instruments | Legal and statutory reserves | Reserves and retained earnings | Net income for the year attributable to Bank's Shareholders | Non- controlling interests (note 44) | Total equity
BALANCE AS AT 31 DECEMBER 2021 | 4,725,000 | 16,471 | 400,000 | 259,528 | 580,304 | 138,082 | 942,672 | 7,062,057
Transition adjustments - Adoption of IFRS 17 and IFRS 9 (note 59) | — | — | — | — | (89,858) | — | — | (89,858)
BALANCE AS AT 1 JANUARY 2022 | 4,725,000 | 16,471 | 400,000 | 259,528 | 490,446 | 138,082 | 942,672 | 6,972,199
Net income for the year | — | — | — | — | — | 197,386 | (77,822) | 119,564
Other comprehensive income | — | — | — | — | (1,020,803) | — | (23,104) | (1,043,907)
TOTAL COMPREHENSIVE INCOME | — | — | — | — | (1,020,803) | 197,386 | (100,926) | (924,343)
Results application |  |  |  |  |  |  |  |
Legal reserve | — | — | — | 9,006 | (9,006) | — | — | —
Transfers for reserves and retained earnings | — | — | — | — | 138,082 | (138,082) | — | —
Dividends paid | — | — | — | — | (13,603) | — | — | (13,603)
Reduction of the share capital | (1,725,000) | — | — | — | 1,725,000 | — | — | —
Interest of Perpetual Subordinated Bonds (Additional Tier 1) | — | — | — | — | (37,000) | — | — | (37,000)
Dividends (a) | — | — | — | — | — | — | (59,572) | (59,572)
Other reserves | — | — | — | — | (854) | — | (60) | (914)
BALANCE AS AT 31 DECEMBER 2022 | 3,000,000 | 16,471 | 400,000 | 268,534 | 1,272,262 | 197,386 | 782,114 | 5,936,767
Net income for the year | — | — | — | — | — | 856,050 | 91,559 | 947,609
Other comprehensive income | — | — | — | — | 338,447 | — | 137,513 | 475,960
TOTAL COMPREHENSIVE INCOME | — | — | — | — | 338,447 | 856,050 | 229,072 | 1,423,569
Results application |  |  |  |  |  |  |  |
Legal reserve (note 42) | — | — | — | 47,841 | (47,841) | — | — | —
Transfers for reserves and retained earnings | — | — | — | — | 197,386 | (197,386) | — | —
Interests of perpetual subordinated bonds (AT1) | — | — |  | — | (37,000) | — | — | (37,000)
Dividends (a) | — | — | — | — | — | — | (23,719) | (23,719)
Other reserves | — | — | — | — | (79) | — | (40) | (119)
BALANCE AS AT 31 DECEMBER 2023 | 3,000,000 | 16,471 | 400,000 | 316,375 | 1,723,175 | 856,050 | 987,427 | 7,299,498

(a) Dividends of BIM - Banco Internacional de Moçambique, S.A.
CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the consolidated financial statements.

2023 REPORT & ACCOUNTS |

193 |
1. Accounting policies
A. Basis of presentation
Banco Comercial Português, S.A. (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
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’s 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’ 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 – 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.

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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’s 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.

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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 – 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’t 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.

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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
“Reserves - exchange differences”. 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 – 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:
– “Financial assets at amortised cost”;
– “Financial assets at fair value through other comprehensive income”; or,
– “Financial assets at fair value through profit or loss”.
The classification is made taking into consideration the following aspects:
– the Group's business model for the management of the financial asset; and,
– the characteristics of the contractual cash flows of the financial asset.

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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:
– 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;
– how the performance of the portfolio is evaluated and reported to the Group's management bodies;
– 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;
– 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,
– 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:
– contingent events that may change the periodicity and the amount of the cash flows;
– characteristics that result in leverage;
– terms of prepayment and extension of maturity;
– 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 – non-recourse asset); and,
– characteristics that may change the time value of money.
In addition, an advance payment is consistent with the SPPI criterion if:
– the financial asset is acquired or originated with a premium or discount in relation to the contractual nominal value;
– the prepayment represents substantially the nominal amount of the contract plus accrued contractual interest, but
not paid (may include reasonable compensation for prepayment); and,
– the prepaid fair value is insignificant at initial recognition.

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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:
– 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,
– 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:
– 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,
– 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”.

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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
“Other comprehensive income”, 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 “Other comprehensive income”. 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 “Fair value changes” are transferred to “Retained earnings” 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) “Financial assets held for trading”
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) “Financial assets not held for trading mandatorily at fair value through profit or loss”
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) “Financial assets designated at fair value through profit or loss” (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 “Gains/(losses) on financial operations at fair value through profit or loss”. 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".

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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:
– the contractual rights to the cash flows from the financial asset expire; or,
– 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:
– transfers the contractual rights to receive the cash flows of the financial asset; or,
– 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:
– 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;
– 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,
– 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 – 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:
– 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;
– if the Group retains substantially all the risks and benefits arising from owning the financial asset, it shall continue
to recognise the financial asset;
– 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.

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v) The transfer of risks and benefits (see prior note) is evaluated by comparing the Group’s 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:
– 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;
– 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;
– 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);
– 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’s 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.

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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:
– 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;
– 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

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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:
– 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);
– 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);
– 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’ 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.

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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:
– they have impairment as a result of the latest individual analysis;
– are classified in stage 2 as a result of the last revision of the questionnaire analysing the indications of financial
difficulties;
– according to recent information, they show a significant deterioration in risk levels; or,
– are a Special Purpose Vehicle (SPV).
4. The individual analysis includes the following procedures:
– 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;
– 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:
– total exposure of each customer towards the Group and the existence of overdue loans;
– viability of the customer’s business and its capacity to generate enough cash flows to service debt obligations in the
future;
– the existence, nature and estimated value of the collaterals associated to each loan;
– significant deterioration of the customer's rating;
– the customer’s available assets in liquidation or insolvency situations;
– the existence of preferential creditors;
– 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
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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:
– 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;
– 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:
– recovery of collateral in geographies in which the Bank has no relevant recovery experience;
– recovery of debt related to geographies in which there is strong political instability;
– recovery of non-real estate collateral for which there is no evidence of market liquidity;
– recovery of related collateral or government guarantees in a currency other than the country's own;
– 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’s
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.

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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 ‘low default’: Large corporate exposures, Project finance,
Institutions (banks/financial institutions) and Sovereigns;
b) Segments not ‘low default’: - Retail: Mortgages; Overdrafts; Credit cards; Small and medium enterprises - Retail
(‘SME Retail’); and Others - Corporate: Small and medium enterprises - Corporate (‘Large SME’); 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:
– 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;
– financial assets with impairment at the reporting date: the difference between the gross book value and the present
value of the estimated cash flows;
– 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;
– 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:
– Probability of Default – PD;
– Loss Given Default – LGD; and,
– Exposure at Default – 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.

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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:
– “Financial liabilities at amortised cost”;
– “Financial liabilities at fair value through profit or loss”.
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) “Financial liabilities held for trading”
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) “Financial liabilities designated at fair value through profit or loss”
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:
– the financial liability is managed, evaluated and reported internally at its fair value; or,
– the designation eliminates or significantly reduces the accounting mismatch of transactions.

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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:
– 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;
– 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:
– the provision for losses determined according to the criteria described in note C1.5;
– 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.

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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:
– at the inception of the hedge there is formal documentation of the hedge;
– the hedge is expected to be highly effective;
– the effectiveness of the hedge can be reliably measured;
– the hedge is assessed in a continuous basis and highly effective throughout the reporting period; and,
– 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.

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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:
– deferred over the residual period of the hedged instrument; or,
– 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 Português 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’s
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’s 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.

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D2. Synthetic securitizations
As at 31 December 2023, Banco Comercial Português 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.

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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 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.

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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 Comissão do Mercado de
Valores Mobiliários (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:
– from the lessor's perspective, leases will continue to be classified as finance leases or operating leases;
– from the lessee’s 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’s value is below Euros 5,000. Additionally, this
standard was not applied to leases of intangible assets.

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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’s perspective
The Group recognises for all leases, except for those with a term under 12 months or for leases of low-value assets:
– 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);
– a lease liability initially recorded at the present value of the remaining lease payments (NPV), which includes:
– fixed payments deducted from any lease incentives receivable;
– variable lease payments that depend on a rate or an index, initially measured considering the rate or index as at
the commencement date;
– amounts expected to be paid by the lessee under residual values guarantees;
– the exercise price of a purchase option, if the lessee is reasonably certain to exercise that option;
– 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’s incremental borrowing rate, which embodies the risk-free rate curve
(swap curve) plus the Group’s 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:
– by increasing their carrying amount to reflect interest;
– by reducing their carrying amount to reflect lease payments;
– carrying amount shall be remeasured to reflect any leases’ 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:
– 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;
– 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;
– 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.

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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’s financial statements, namely:
– in the consolidated income statement:
(i) recording in “Interest Income” the interest expenses related to lease liabilities;
(ii) recording in “Other administrative costs” the amounts related to short-term lease contracts and to lease
contracts of low-value assets; and,
(iii) recording in “Amortisations and depreciations” the depreciation expenses related to right-to-use assets.
– in the consolidated balance sheet:
(i) recording in “Financial assets at amortised cost – Loans and advances to customers” the recognition of financial
assets related to sublease operations measured accordingly to IFRS 9;
(ii) recording in “Other tangible assets” the recognition of right-to-use assets; and,
(iii) recording in “Other liabilities” the amount of recognised lease liabilities.
– in the consolidated statement of cash flows, the balance “Cash flows arising from operating activities – Payments
(cash) to suppliers and employees” includes amounts related to short-term lease contracts and to lease contracts of
low-value assets, and the balance “Cash flows arising from financing activities - Decrease in other sundry liabilities
and non-controlling interests” includes amounts related to payments of lease liabilities’ capital portions, as detailed
in the consolidated statement of cash flows.
Impact from the lessor’s 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 – Leases requires that the lessor evaluates subleases regarding right-to-use and not regarding the underlying
asset.
The sublease’s lessor, simultaneously lessee regarding the original lease, shall recognise an asset in the financial
statement – 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.

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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 (“over time”) or at an exact moment (“point in time”), 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’s 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.

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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 ‘Investment properties’ 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 “Cash and cash equivalents” 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.

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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’s 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 ‘Plano ACT’ and ‘Plano ACTQ’ of the Banco Comercial Português 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’s 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".

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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 Bancários 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 Supervisão de Seguros e Fundos de Pensões (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’s 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’s 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’s obligations. The net obligations are determined after the deduction of the fair value of the Pension Plan's
assets.

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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 – Sindicato Nacional dos Quadros e Técnicos Bancários e SIB – 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 Português. 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.

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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’ 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.

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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’ 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.

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The item “Deferred tax assets” 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 – 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’s financial statements
resulting from its application.
In 2016, the Banco Comercial Português 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 – 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:
– Retail Banking, also including ActivoBank;
– Companies and Corporate;
– Private Banking;
– 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:
– Poland;
– Mozambique;
– 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.

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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.

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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 – 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.

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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 (“OCI
option”) 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 Português and Banco ActivoBank are entities authorized by the Insurance and Pension Funds
Supervisory Authority (ASF - Autoridade de Supervisão de Seguros e Fundos de Pensões) 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’s
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’s 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’s financial position and results fairly in all material relevant aspects.

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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 Português, 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.

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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.º 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’ 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 – 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.

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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.

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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’s 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’s 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.
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.

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2. 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 | —
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) | —
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.
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.

| 2023 REPORT & ACCOUNTS

232 |
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 - 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.
3. 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.
4. 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

2023 REPORT & ACCOUNTS |

| 233
5. 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)

| 2023 REPORT & ACCOUNTS

234 |

(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 | —
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) | —
Debt securities issued |  |
Certificates and structured securities issued | (224,547) | —
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.

2023 REPORT & ACCOUNTS |

| 235
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.

| 2023 REPORT & ACCOUNTS

236 |
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 Ubezpieczeń na Życie Europa S.A., which
acquires 72% of the Company's shares, and Towarzystwo Ubezpieczeń 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 “Gains arising from
derecognition of financial assets and liabilities not measured at fair value through profit or loss - Others”;
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 “Gains on financial assets held for trading”;
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 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.

2023 REPORT & ACCOUNTS |

| 237
6. 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) | — | (58,972)
Special tax on the polish banking sector | — | (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’s 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.

| 2023 REPORT & ACCOUNTS

238 |
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 (‘SRF’) corresponds to the Bank’s 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 “SRM Regulation”). 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.

2023 REPORT & ACCOUNTS |

| 239
7. 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

| 2023 REPORT & ACCOUNTS

240 |
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 Português,
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 | — | —
Shares | 460 | 1,322 | — | —
Deferred | 534 | 1,024 | — | —
Supplementary retirement pension | 635 | 611 | 144 | 138
Post-employment benefits | (14) | (42) | — | —
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.

2023 REPORT & ACCOUNTS |

| 241
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 Portfólio Imobiliário 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 Portfólio Imobiliário 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.

| 2023 REPORT & ACCOUNTS

242 |
T he 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 Portfólio Imobiliário 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 Portfólio Imobiliário
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 Portfólio Imobiliário 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 Portfólio Imobiliário 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 Portfólio Imobiliário 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 Portfólio Imobiliário Fund, from the years 2020 and 2019, corresponding
to Euros 7,000.
In accordance with regulation (EU) 11º 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.

2023 REPORT & ACCOUNTS |

| 243
8. 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

| 2023 REPORT & ACCOUNTS

244 |
9. 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 | — | 4
| 98,282 | 98,916
| 137,499 | 139,250

10. 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).

2023 REPORT & ACCOUNTS |

| 245
11. 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 | — | (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

12. 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)

| 2023 REPORT & ACCOUNTS

246 |
13. 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 | — | 1,435
| — | 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 | — | 102,770
| — | 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 | —
Reversals for the year | (98) | —
| 34,608 | —
| 56,374 | 192,059

(*) The 2023 values regard to impairment associated with real estate and assets arising from recovered loans.
14. 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).

2023 REPORT & ACCOUNTS |

| 247
15. 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 Atlântico, S.A. (note 26) |  |
Appropriation relating to the current year | 2,977 | 2,431
Appropriation relating to the previous year | — | (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 - Instituição Financeira de Crédito, 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 Moçambique - Companhia de Seguros S.A. | 1,942 | 1,841
Other companies | — | (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.
16. 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).

| 2023 REPORT & ACCOUNTS

248 |
17. Net income from discontinued or discontinuing operations
The amount of this account is comprised of:

| (Thousands of euros)
| 2023 | 2022 (restated)
Banque Privée BCP (Suisse) S.A. |  |
Gains on disposal of the investment held (price adjustment) | (2,843) | 1,765
Fidelidade Moçambique - Companhia de Seguros S.A. |  |
Correction of gains on disposal of the investment held | — | 3,772
Millennium bcp Gestão de Activos - Sociedade Gestora de Fundos de Investimento, S.A. |  |
Losses (expenses) | (9) | —
| (2,852) | 5,537

U nder the agreement entered between Banco Comercial Português, S.A. and Union Bancaire Privée, UBP SA regarding
the sale of the entire share capital of Banque Privée 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 Moçambique, S.A., sold 70% of the
investment held in Seguradora Internacional de Moçambique, S.A. (now designated Fidelidade Moçambique - 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.

2023 REPORT & ACCOUNTS |

| 249
18. 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 December 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 December 2023 and 2022, so the
diluted result is equivalent to the basic result.

| 2023 REPORT & ACCOUNTS

250 |
19. 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.
20. 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.

2023 REPORT & ACCOUNTS |

| 251
21. 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 |  |
Term deposits | (23) | 973
Loans | — | 4,250
Term deposits to collateralise CIRS and IRS operations (*) | 330 | —
Other | 10,175 | 1,068
| 10,482 | 6,291
Loans and advances to credit institutions abroad |  |
Term deposits | 371,647 | 425,152
Term deposits to collateralise CIRS and IRS operations (*) | 58,446 | 124,746
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 | —
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

| 2023 REPORT & ACCOUNTS

252 |
22. 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:
– Asset-backed loans: Financial collaterals, physical collaterals (movable or immovable) and amounts receivable (income
consignment);
– Credit with other guarantees: First-demand guarantees issued by banks or other entities and personal guarantees.

2023 REPORT & ACCOUNTS |

| 253
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 | — | 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

T he balance Loans and advances to customers includes the amount of Euros 10,875,965,000 (31 December 2022: Euros
10,613,589,000) regarding mortgage loans assigned to the cover pool backing the Group’s 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 December 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 December 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.º, n.º 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 December 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

| 2023 REPORT & ACCOUNTS

254 |
The analysis of loans and advances to customers, as at 31 December 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%

2023 REPORT & ACCOUNTS |

| 255
The analysis of loans and advances to customers, as at 31 December 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 | — | 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%

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256 |
The analysis of loans and advances to customers, by maturity and by sector of activity, as at 31 December 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

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| 257
The analysis of loans and advances to customers, by maturity and by sector of activity, as at 31 December 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 | — | 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

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258 |
The analysis of loans and advances to customers, by type of credit and by maturity, as at 31 December 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 | — | 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 December 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 | — | 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.

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| 259
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.

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260 |
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 | — | 3 | — | — | —
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.

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| 261
The breakdown of the restructured loans as at 31 December 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 | — | 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 December 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.

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262 |
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 December 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 December 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 | —
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 December
2022: Euros 976,782,000).

2023 REPORT & ACCOUNTS |

| 263
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 | — | 1
Mining | — | 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

| 2023 REPORT & ACCOUNTS

264 |
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 | — | 1
Telecommunications | — | 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

2023 REPORT & ACCOUNTS |

| 265
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
“Magellan Mortgages No. 3 PLC”. 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’s Financial
Statements, as established in the accounting policy 1.B. As at 31 December 2023, the SPE's credit portfolio associated
with this operation amounts to Euros 160,845,000 (31 December 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 December 2023 (31 December 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 December 2022:
Euros 179,713,000)and the respective gain registered in 2023 amounts to Euros 959,000 (31 December 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 December 2023, the operation
amounts to Euros 393,247,000 (31 December 2022: Euros 506,117,000). The fair value of the relative CDS is recorded as
a positive amount of Euros 60,386,000 (31 December 2022: Euros 61,551,000) and the respective gain registered in 2023
amounts to Euros 648,000 (31 December 2022: loss of Euros 2,026,000).

| 2023 REPORT & ACCOUNTS

266 |
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 December
2023, the operation amounts to Euros 1,697,747,000 (31 December 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 December 2022: positive amount 76,000) and the
respective cost registered in 2023 amounts to Euros 18,010,000 (31 December 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).

2023 REPORT & ACCOUNTS |

| 267
23. 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) |  |
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 December 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 December 2023 amounts to Euros 9,905,849,000 (31 December 2022: Euros 9,248,707,000).

| 2023 REPORT & ACCOUNTS

268 |
The analysis of the balance Debt securities before impairment, by maturity, as at 31 December 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 |  |  |  |  |  |
Bonds | — | — | 10,128 | 105,501 | — | 115,629
Commercial paper | 1,382,628 | 379,825 | — | — | 40 | 1,762,493
Foreign issuers |  |  |  |  |  |
Commercial paper | 19,407 | 19,493 | — | — | — | 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 |  |  |  |  |  |
Portuguese issuers | — | — | 2,876,835 | 675,972 | — | 3,552,807
Foreign issuers | 625,851 | 675,486 | 4,811,329 | 5,125,258 | — | 11,237,924
Public companies and other entities |  |  |  |  |  |
Portuguese issuers | — | 50,030 | 133,699 | 275,663 | — | 459,392
Foreign issuers | — | — | 395,102 | — | — | 395,102
Treasury bills (Public Issuers and Central Banks) |  |  |  |  |  |
Foreign issuers | 42,277 | — | — | — |  | 42,277
| 668,128 | 725,516 | 8,216,965 | 6,076,893 | — | 15,687,502
| 2,070,163 | 1,124,834 | 8,227,093 | 6,182,394 | 40 | 17,604,524

2023 REPORT & ACCOUNTS |

| 269
The analysis of the balance Debt securities before impairment, by maturity, as at 31 December 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 | — | — | 13,480 | 169,780 | — | 183,260
Commercial paper | 860,395 | 396,162 | — | — | 40 | 1,256,597
Foreign issuers |  |  |  |  |  |
Commercial paper | 31,361 | 34,420 | — | — | — | 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 | — | — | 1,865,689 | 1,651,871 | — | 3,517,560
Foreign issuers | 50,410 | 212,482 | 970,601 | 6,083,950 | — | 7,317,443
Public companies and other entities |  |  |  |  |  |
Portuguese issuers | — | — | 153,548 | 94,851 | — | 248,399
Foreign issuers | — | 97,962 | — | 26,476 | — | 124,438
Treasury bills (Public Issuers and Central Banks) |  |  |  |  |  |
Foreign issuers | 237,209 | 99,134 | — | — |  | 336,343
| 287,619 | 409,578 | 2,989,838 | 7,857,148 | — | 11,544,183
| 1,179,375 | 840,160 | 3,003,318 | 8,026,928 | 40 | 13,049,821

| 2023 REPORT & ACCOUNTS

270 |
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 |  |
Financial intermediation | 114,283 | 107,372
Real estate activities | 55,566 | 50,845
Consulting, scientific and technical activities | 751,610 | 473,231
Administrative and support services activities | 11,217 | 12,269
Health and collective service activities | 4,974 | —
Artistic, sports and recreational activities | 7,058 | 10,406
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 | —
Electricity and gas | 99,846 | 88,873
Water | — | 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

2023 REPORT & ACCOUNTS |

| 271
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 | — | — | —
Chemicals | — | — | — | 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 | —
Charge for the year (note 11) | 3,991 | 8
Reversals for the year (note 11) | — | (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) | —
Exchange rate differences | (196) | 270
Balance at the end of the year | 16,720 | 9,563

| 2023 REPORT & ACCOUNTS

272 |
24. 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
Financial assets designated at fair value through profit or loss |  |
Debt instruments | 32,004 | —
| 32,004 | —
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

2023 REPORT & ACCOUNTS |

| 273
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 December 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 | — | 32,004 | 1,950,559 | 2,002,875
Foreign issuers | 25,452 | — | — | 3,435,176 | 3,460,628
Bonds issued by public companies and other entities |  |  |  |  |
Portuguese issuers | — | 50 | — | 403,971 | 404,021
Foreign issuers | 10,395 | — | — | 1,120,454 | 1,130,849
Treasury bills (Public Issuers and Central Banks) |  |  |  |  |
Portuguese issuers | 103,661 | — | — | — | 103,661
Foreign issuers | 192,741 | — | — | 3,899,712 | 4,092,453
Shares of foreign companies (a) | — | 23,498 | — | — | 23,498
Investment fund units (b) | — | 257,010 | — | — | 257,010
Commercial paper | 2,965 | — | — | — | 2,965
| 355,526 | 280,558 | 32,004 | 10,809,872 | 11,477,960
Equity instruments |  |  |  |  |
Shares |  |  |  |  |
Portuguese companies | 142 | — | — | 16,352 | 16,494
Foreign companies | 28 | 15,335 | — | 8,067 | 23,430
Investment fund units (c) | — | 166,907 | — | — | 166,907
Other securities (d) | 53,262 | — | — | — | 53,262
| 53,432 | 182,242 | — | 24,419 | 260,093
Trading derivatives | 413,946 | — | — | — | 413,946
| 822,904 | 462,800 | 32,004 | 10,834,291 | 12,151,999
Level 1 | 405,585 | — | 32,004 | 8,301,377 | 8,738,966
Level 2 | 84,614 | — | — | 2,431,483 | 2,516,097
Level 3 | 332,705 | 462,800 | — | 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 December 2022: Euros 74,000).

| 2023 REPORT & ACCOUNTS

274 |
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 Português, 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 December 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 | — | 2,448,636 | 2,470,086
Foreign issuers | 8,353 | — | 2,916,098 | 2,924,451
Bonds issued by public companies and other entities |  |  |  |
Portuguese issuers | — | 51 | 542,765 | 542,816
Foreign issuers | 74 | — | 897,146 | 897,220
Treasury bills (Public Issuers and Central Banks) |  |  |  |
Portuguese issuers | 308,936 | — | 993 | 309,929
Foreign issuers | — | — | 628,514 | 628,514
Shares of foreign companies (a) | — | 19,387 | — | 19,387
Investment fund units (b) | — | 291,966 | — | 291,966
| 338,813 | 311,404 | 7,434,152 | 8,084,369
Equity instruments |  |  |  |
Shares |  |  |  |
Portuguese companies | — | — | 18,811 | 18,811
Foreign companies | 24 | 27,550 | 8,590 | 36,164
Investment fund units (c) | — | 192,796 | — | 192,796
Other securities (d) | 51,516 | — | — | 51,516
| 51,540 | 220,346 | 27,401 | 299,287
Trading derivatives | 376,244 | — | — | 376,244
| 766,597 | 531,750 | 7,461,553 | 8,759,900
Level 1 | 389,954 | — | 6,489,282 | 6,879,236
Level 2 | 81,347 | — | 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).

2023 REPORT & ACCOUNTS |

| 275
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

T he 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 December 2022:
Euros 5,270,000).
The portfolio of financial assets at fair value through other comprehensive income, as at 31 December 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 | — | 3,550 | 3,899,712
| 11,015,407 | (130,209) | (75,326) | 10,809,872
Equity instruments |  |  |  |
Shares |  |  |  |
Portuguese companies | 23,253 | — | (6,901) | 16,352
Foreign companies | 4,913 | — | 3,154 | 8,067
| 28,166 | — | (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.

| 2023 REPORT & ACCOUNTS

276 |
The portfolio of financial assets at fair value through other comprehensive income, as at 31 December 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 | — | (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 | — | (1) | 993
Foreign issuers | 628,509 | — | 5 | 628,514
| 7,947,951 | (285,374) | (228,425) | 7,434,152
Equity instruments |  |  |  |
Shares |  |  |  |
Portuguese companies | 33,448 | — | (14,637) | 18,811
Foreign companies | 19,799 | — | (11,209) | 8,590
| 53,247 | — | (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 December 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 | — | 2,002,875
Foreign issuers | 3,448,941 | — | 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 | — | — | 1,130,849
Treasury bills (Public Issuers and Central Banks) |  |  |  |
Portuguese issuers | 103,661 | — | — | 103,661
Foreign issuers | 1,749,627 | 2,342,826 | — | 4,092,453
Shares of Foreign companies | — | — | 23,498 | 23,498
Investment fund units | — | — | 257,010 | 257,010
Commercial paper | — | — | 2,965 | 2,965
| 8,685,942 | 2,431,481 | 360,537 | 11,477,960
Equity instruments |  |  |  |
Shares |  |  |  |
Portuguese companies | 142 | — | 16,352 | 16,494
Foreign companies | 28 | — | 23,402 | 23,430
Investment fund units | — | — | 166,907 | 166,907
Other securities | 52,854 | — | 408 | 53,262
| 53,024 | — | 207,069 | 260,093
Trading derivatives | — | 84,616 | 329,330 | 413,946
| 8,738,966 | 2,516,097 | 896,936 | 12,151,999

2023 REPORT & ACCOUNTS |

| 277
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 December 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 | — | 2,470,086
Foreign issuers | 2,908,924 | — | 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 | — | 897,220
Treasury bills (Public Issuers and Central Banks) |  |  |  |
Portuguese issuers | 309,929 | — | — | 309,929
Foreign issuers | — | 628,514 | — | 628,514
Shares of Foreign companies | — | — | 19,387 | 19,387
Investment fund units | — | — | 291,966 | 291,966
| 6,825,619 | 862,640 | 396,110 | 8,084,369
Equity instruments |  |  |  |
Shares |  |  |  |
Portuguese companies | 2,402 | — | 16,409 | 18,811
Foreign companies | 24 | — | 36,140 | 36,164
Investment fund units | — | — | 192,796 | 192,796
Other securities | 51,191 | — | 325 | 51,516
| 53,617 | — | 245,670 | 299,287
Trading derivatives | — | 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 December 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 December 2022: Euros 1,067,000).

| 2023 REPORT & ACCOUNTS

278 |
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 December 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 | — | 2,002,875
Foreign issuers | 65,904 | 501,611 | 2,638,954 | 254,159 | — | 3,460,628
Bonds issued by public companies and other entities |  |  |  |  |  |
Portuguese issuers | — | 56,316 | 319,417 | 28,288 | — | 404,021
Foreign issuers | 31,846 | 140,832 | 644,363 | 313,808 | — | 1,130,849
Treasury bills (Public Issuers and Central Banks) |  |  |  |  |  |
Portuguese issuers | 49,648 | 54,013 | — | — | — | 103,661
Foreign issuers | 2,416,524 | 1,675,929 | — | — | — | 4,092,453
Shares of Foreign companies | — | — | — | — | 23,498 | 23,498
Investment fund units | 6,404 | 3,067 | 205,191 | 37,142 | 5,206 | 257,010
Commercial paper | 2,965 | — | — | — | — | 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

2023 REPORT & ACCOUNTS |

| 279
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 December 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 | — | 8,267 | 2,172,623 | 289,196 | — | 2,470,086
Foreign issuers | 416,699 | 493,389 | 1,863,833 | 150,530 | — | 2,924,451
Bonds issued by public companies and other entities |  |  |  |  |  |
Portuguese issuers | 163,229 | 58,247 | 300,962 | 20,378 | — | 542,816
Foreign issuers | 4,414 | 13,732 | 457,154 | 421,920 | — | 897,220
Treasury bills (Public Issuers and Central Banks) |  |  |  |  |  |
Portuguese issuers | 128,349 | 181,580 | — | — | — | 309,929
Foreign issuers | 56,638 | 571,876 | — | — | — | 628,514
Shares of Foreign companies | — | — | — | — | 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

| 2023 REPORT & ACCOUNTS

280 |
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 December 2023, is as follows:

|  |  | (Thousands of euros)
| 2023
| Bonds and Treasury bills | Shares | Other Financial Assets | Total
Mining | — | 6 | — | 6
Paper, printing and publishing | 47,416 | — | — | 47,416
Chemicals | 7,952 | 2 | — | 7,954
Machinery, equipment and basic metallurgical | 2,477 | 8 | — | 2,485
Electricity and gas | 70,806 | — | — | 70,806
Water | 5,025 | — | — | 5,025
Construction | — | 145 | — | 145
Wholesale business | 7,067 | 238 | — | 7,305
Transports | 43,767 | — | — | 43,767
Telecommunications | 39,126 | 4,553 | — | 43,679
Services |  |  |  |
Financial intermediation | 3,510,636 | 52,163 | 476,771 | 4,039,570
Consulting, scientific and technical activities | 111,525 | 131 | — | 111,656
Administrative and support services activities | 24,216 | 6,149 | — | 30,365
Public sector | 10,645 | — | 408 | 11,053
Other services | — | 26 | — | 26
Other international activities | — | 1 | — | 1
| 3,880,658 | 63,422 | 477,179 | 4,421,259
Government and Public securities | 7,316,794 | — | — | 7,316,794
| 11,197,452 | 63,422 | 477,179 | 11,738,053

2023 REPORT & ACCOUNTS |

| 281
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 December 2022, is as follows:

|  |  | (Thousands of euros) |
| 2022 (restated)
| Bonds and Treasury bills | Shares | Other Financial Assets | Total
Mining | — | 5 | — | 5
Paper, printing and publishing | 45,562 | 2 | — | 45,564
Chemicals | — | 2 | — | 2
Machinery, equipment and basic metallurgical | 2,302 | 6 | — | 2,308
Electricity and gas | 44,627 | — | — | 44,627
Water | 9,460 | — | — | 9,460
Construction | 4,934 | 2 | — | 4,936
Retail business | 20,503 | 2 | — | 20,505
Wholesale business | 6,456 | 260 | — | 6,716
Restaurants and hotels | — | 1,401 | — | 1,401
Transports | 29,491 | — | — | 29,491
Telecommunications | 38,869 | 4,401 | — | 43,270
Services |  |  |  |
Financial intermediation | 1,533,154 | 54,477 | 532,567 | 2,120,198
Consulting, scientific and technical activities | 303,036 | 103 | — | 303,139
Administrative and support services activities | 26,691 | 8,629 | — | 35,320
Public sector | — | — | 325 | 325
Other services | 3,465 | 5,054 | 3,386 | 11,905
Other international activities | — | 18 | — | 18
| 2,068,550 | 74,362 | 536,278 | 2,679,190
Government and Public securities | 5,704,466 | — | — | 5,704,466
| 7,773,016 | 74,362 | 536,278 | 8,383,656

| 2023 REPORT & ACCOUNTS

282 |
The analysis of trading derivatives, by maturity, as at 31 December 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 | —
Interest rate options (sale) | 13,750 | 32,876 | 295,121 | 341,747 | — | 2,779
| 912,925 | 668,147 | 4,628,343 | 6,209,415 | 58,939 | 52,735
Stock Exchange transactions: |  |  |  |  |  |
Interest rate futures | — | — | 28,351 | 28,351 | — | —
| — | — | 28,351 | 28,351 | — | —
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 | — | — | 107,251 | — | —
| 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 | —
Shares/indexes options (sale) | 779,957 | 17,699 | 1,910 | 799,566 | — | 97,923
| 1,712,715 | 2,072,117 | 429,924 | 4,214,756 | 100,949 | 117,788
Stock exchange transactions: |  |  |  |  |  |
Shares futures | — | — | 891,352 | 891,352 | — | —
| — | — | 891,352 | 891,352 | — | —
Commodity derivatives: |  |  |  |  |  |
Stock Exchange transactions: |  |  |  |  |  |
Commodities futures | — | — | 1 | 1 | — | —
| — | — | 1 | 1 | — | —
Credit derivatives: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Credit default swaps (CDS) | — | — | 358,107 | 358,107 | 233,381 | 223
| — | — | 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 | — | — | 771,103 | 771,103 | — | 95,357
Stock Exchange | — | — | 919,704 | 919,704 | — | —
| 4,366,684 | 3,287,085 | 6,349,996 | 14,003,765 | 413,946 | 206,761

2023 REPORT & ACCOUNTS |

| 283
The analysis of trading derivatives, by maturity, as at 31 December 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) | — | 133,738 | 88,199 | 221,937 | 6,668 | —
Interest rate options (sale) | — | 133,738 | 88,200 | 221,938 | — | 6,555
| 79,053 | 500,825 | 3,601,478 | 4,181,356 | 60,662 | 126,192
Stock Exchange transactions: |  |  |  |  |  |
Interest rate futures | — | — | 66,888 | 66,888 | — | —
| — | — | 66,888 | 66,888 | — | —
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 | — | — | 100,177 | 432 | 90
| 100,177 | — | — | 100,177 | 432 | 90
Shares/indexes: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Shares/indexes swaps | — | 523,118 | 459,431 | 982,549 | — | 27,193
Shares/indexes options (sale) | — | — | 597,213 | 597,213 | — | 53,487
| — | 523,118 | 1,056,644 | 1,579,762 | — | 80,680
Stock exchange transactions: |  |  |  |  |  |
Shares futures | — | — | 835,835 | 835,835 | — | —
Shares/indexes options (purchase) | — | 59,735 | 533,092 | 592,827 | 53,707 | —
Shares/indexes options (sale) | — | 4,636 | 11,945 | 16,581 | — | 859
| — | 64,371 | 1,380,872 | 1,445,243 | 53,707 | 859
Credit derivatives: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
Credit default swaps (CDS) | 2,000 | — | 395,831 | 397,831 | 241,349 | —
Other credit derivatives (sale) | — | — | 4,351 | 4,351 | — | —
| 2,000 | — | 400,182 | 402,182 | 241,349 | —
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 | — | 576,242 | — | — | 53,495
Stock Exchange | — | 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

| 2023 REPORT & ACCOUNTS

284 |
25. 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 December 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 December 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 December 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 December 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 |  |  |  |  |  |
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 | — | 348,464 | 2,279 | 6,272
Cash flow hedging derivatives related to |  |  |  |  |  |
interest rate risk changes |  |  |  |  |  |
OTC Market |  |  |  |  |  |
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

2023 REPORT & ACCOUNTS |

| 285
The analysis of hedging derivatives portfolio, by maturity, as at 31 December 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 | — | 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 | — | 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

26. 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

| 2023 REPORT & ACCOUNTS

286 |
The balance Investments in associated companies, as at 31 December 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 | — | 114,767
Banco Millennium Atlântico, S.A. | 75,430 | (28,344) | 47,086
Banque BCP, S.A.S. | 53,037 | — | 53,037
SIBS, S.G.P.S, S.A. | 64,545 | — | 64,545
Fidelidade Moçambique - Companhia de Seguros S.A. | 12,942 | — | 12,942
Unicre - Instituição Financeira de Crédito, S.A. | 51,793 | — | 51,793
Webspectator Corporation | 18,011 | (18,011) | —
Millennium Financial Services Sp. z o.o. | 12,089 | — | 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 December 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 | — | 75,968
Banco Millennium Atlântico, S.A. | 119,180 | (48,252) | 70,928
Banque BCP, S.A.S. | 50,865 | — | 50,865
SIBS, S.G.P.S, S.A. | 55,509 | — | 55,509
Fidelidade Moçambique - Companhia de Seguros S.A. | 12,421 | — | 12,421
Unicre - Instituição Financeira de Crédito, S.A. | 49,228 | — | 49,228
Webspectator Corporation | 18,011 | (18,011) | —
| 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 Atlântico, S.A.) (note 39) | — | 5,000
Impairment charge for the year (note 13) | — | 1,435
Impairment write-off (Banco Millennium Atlântico, S.A.) | — | (16,787)
Exchange rate differences | (19,908) | (1,653)
Balance at the end of the year | 46,355 | 66,263

2023 REPORT & ACCOUNTS |

| 287
In accordance with the requirements of IFRS 12 and considering their relevance, the movements occurred in the
investment held in Banco Millennium Atlântico, 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) | — | (5,000)
Impairment of investments in associated companies | — | (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) | — | (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 Atlântico, 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).

| 2023 REPORT & ACCOUNTS

288 |
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 | —
Other reserves for the year 2022 | 19 | —
Net income for the year 2022 | (10,111) | —
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 | — | 39,811
Transition to IFRS 9 and IFRS 17 (note 59) | — | (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 | — | (109,240)
Transition to IFRS 9 and IFRS 17 (note 59) | — | 116,152
Other comprehensive income attributable to BCP | (1,565) | 6,912
Dividends received | — | (132,251)
Other changes (Transition to IFRS 9 and IFRS 17) (note 59) | — | 19
Other changes | (58) | —
Investment held at the end of the year | 114,767 | 75,968

2023 REPORT & ACCOUNTS |

| 289
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 – Insurance Contracts and IFRS 9 - Financial Instruments by Millenniumbcp
Ageas Grupo Segurador, S.G.P.S., S.A.

| 2023 REPORT & ACCOUNTS

290 |
27. 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 | — | 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” (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 December 2022: Euros 97,975,000). The impairment associated with these
contracts amounts to Euros 24,127,000 (31 December 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) | —
Other transfers | (21,143) | —
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

2023 REPORT & ACCOUNTS |

| 291
28. 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 December 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 | — | 12,532
Revaluations | 94 | (185)
Disposals | 23,789 | —
Balance at the end of the year | 39,100 | 15,217

29. 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 | — | 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 December 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.

| 2023 REPORT & ACCOUNTS

292 |
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) | — | 8,309 | 390,625
Vehicles and equipment | 431 | — | (444) | — | 13 | —
Work in progress | 21,279 | 23,188 | (571) | (24,351) | 1,018 | 20,563
Other tangible assets | 39 | — | — | — | (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) | — | 444 | — | (13) | —
Other tangible assets | (39) | — | — | — | 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

2023 REPORT & ACCOUNTS |

| 293
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 | — | (65) | — | (9) | 431
Work in progress | 20,656 | 24,408 | (1,133) | (22,808) | 156 | 21,279
Other tangible assets | 38 | — | — | — | 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 | — | 9 | (431)
Other tangible assets | (38) | — | — | — | (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

| 2023 REPORT & ACCOUNTS

294 |
30. 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.

2023 REPORT & ACCOUNTS |

| 295
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 | — | — | — | 11,168 | 165,043
Impairment for goodwill | (112,535) | — | — | — | (7,985) | (120,520)
| 41,340 | — | — | — | 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) | — | (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 | — | (2,512) | — | (3,044) | 153,875
Impairment for goodwill | (11,931) | (102,770) | 2,512 | — | (346) | (112,535)
| 147,500 | (102,770) | — | — | (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) | — | (220) | 141,347
| 256,213 | (69,450) | (466) | — | (3,610) | 182,687

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31. 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 | — | 862,261 | 982,465 | — | 982,465
Employee benefits | 732,273 | — | 732,273 | 835,619 | — | 835,619
| 1,594,534 | — | 1,594,534 | 1,818,084 | — | 1,818,084
Deferred taxes depending |  |  |  |  |  |
on the future profits |  |  |  |  |  |
Impairment losses (b) | 419,544 | — | 419,544 | 438,430 | (50,303) | 388,127
Tax losses carried forward | 167,995 | — | 167,995 | 188,693 | — | 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 | — | (7,750) | (7,750) | — | (5,482) | (5,482)
Intangible assets | 968 | — | 968 | 1,143 | — | 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 | (334,866) | 334,866 | — | (407,579) | 407,579 | —
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) | — | 17,945 | (23,680) | —

(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.

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Special regime applicable to deferred tax assets
The Extraordinary General Meetings of Banco Comercial Português 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 Português 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.

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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 Português, 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’s tax losses is 21%, in 2023 and 2022.
The average deferred tax rate associated with temporary differences of Banco Comercial Português, 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 Português, 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’s the dominant company. The remaining companies
covered by the RETGS are Banco ActivoBank, S.A., Interfundos - Sociedade Gestora de Organismos de Investimento
Coletivo, S.A., BCP África, S.G.P.S. Lda., Millennium bcp Participações, S.G.P.S., Sociedade Unipessoal Lda. and
Millennium bcp Teleserviços – Serviços de Comércio Electrónico, 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 Português, 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.

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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
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’ classification as Non-Performing Exposures (NPE).

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300 |
- 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;
- 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;
- 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 | —
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 | —
No expiry date | 792,326 | 795,047
Total | 820,628 | 810,646

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| 301
The impact of income taxes in Net income and in other balances of 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) | — | —
Employee benefits | (89,567) | (13,779) | —
| (209,771) | (13,779) | —
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 | — | (195,343) | 17,404
Derivatives | — | — | (2,268)
Intangible assets | (253) | — | 78
Other tangible assets | 851 | — | (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 | —
Correction of previous years | (338) | — | —
| (179,857) | 387 | —
| (537,371) | (106,521) | 9,813

The impact of income taxes in Net 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) | — | —
| (712) | — | —
Deferred taxes depending on the future profits |  |  |
Impairment losses | (160,953) | — | (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 | — | 575,491 | (1,271)
Derivatives | — | — | (559)
Intangible assets | (463) | — | (33)
Other tangible assets | 503 | — | 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) | —
Correction of previous years | 919 | — | —
| (109,632) | (18) | —
| (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.

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302 |
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 Português, S.A. In 2022 includes
the negative amount of Euros 32,227,000 regarding the goodwill impairment associated to this subsidiary. On 6 December 2023, the Supreme
Administrative Court issued a judgment on the Bank Millennium’s 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 – 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 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.

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| 303
32. 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 | —
Debtors |  |
Residents |  |
Receivables from real estate, transfers 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 December 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 December 2023, the balance Capital supplies includes the amount of Euros 165,837,000
(31 December 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.

| 2023 REPORT & ACCOUNTS

304 |
The detail of the item Real estate and other assets arising from recovered loans is analysed as follows:

|  | (Thousands 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 | — | (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 | — | —
Transfer of Non-current assets held for sale (note 27) | 51,802 | —
Other transfers | 52,488 | —
Charge for the year (note 13) | 34,706 | —
Reversals for the year (note 13) | (98) | —
Amounts charged-off | (1,953) | —
Exchange rate differences | (105) | —
Balance at the end of the year | 136,840 | —

2023 REPORT & ACCOUNTS |

| 305
33. 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 | — | — | — | — | 592,740 | 592,740
Central Banks abroad | — | 110,776 | 110,776 | — | 14,736 | 14,736
| — | 110,776 | 110,776 | — | 607,476 | 607,476
Resources from credit institutions in Portugal |  |  |  |  |  |
Sight deposits | 63,128 | — | 63,128 | 92,493 | — | 92,493
Term Deposits | — | 79,198 | 79,198 | — | 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 | — | 88,864 | 74,890 | — | 74,890
Term deposits | — | 127,224 | 127,224 | — | 152,385 | 152,385
Loans obtained | — | 264,635 | 264,635 | — | 293,387 | 293,387
CIRS and IRS operations collateralised by deposits (*) | 88,633 | — | 88,633 | 92,299 | — | 92,299
Other resources | — | 6,668 | 6,668 | — | 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 – 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 | — | 881,333
| 829,126 | 1,468,360

| 2023 REPORT & ACCOUNTS

306 |
34. 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 | — | 25,106,121 | 25,106,121 | — | 19,742,066 | 19,742,066
Saving accounts | — | 4,487,509 | 4,487,509 | — | 6,315,477 | 6,315,477
Cheques and orders to pay | 630,497 | — | 630,497 | 564,369 | — | 564,369
Other | — | 60,000 | 60,000 | — | 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

2023 REPORT & ACCOUNTS |

| 307
35. 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 December 2023 are analysed as follows:

|  |  |  | (Thousands of euros)
Issue | Issue date | Maturity date | Interest rate | Nominal value | Book value
Banco Comercial Português: |  |  |  |  |
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.º 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% = 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% = 18,15% | 112,577 | 113,753
|  |  |  |  | 2,712,682

(*) In the last quarter of 2023, the issuer was replaced by Banco Comercial Português

| 2023 REPORT & ACCOUNTS

308 |
This balance as at 31 December 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 | — | — | — | — | 238,355 | 238,355
Medium term notes (MTNs) | — | 311 | — | 2,360,372 | — | 2,360,683
Securitisations | — | — | — | — | 113,644 | 113,644
| — | 311 | — | 2,360,372 | 351,999 | 2,712,682

This balance as at 31 December 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 | — | — | — | 52,066 | 54,074
Medium term notes (MTNs) | — | — | — | 852,706 | 443,148 | 1,295,854
Securitisations | — | — | — | — | 132,158 | 132,158
| 2,008 | — | — | 852,706 | 627,372 | 1,482,086

36. 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 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

2023 REPORT & ACCOUNTS |

| 309
As at 31 December 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 Português |  |  |  |  |  |
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 | —
|  |  |  |  | 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 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) 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%.

| 2023 REPORT & ACCOUNTS

310 |
As at 31 December 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 Português |  |  |  |  |  |
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 | —
|  |  |  |  | 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 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) 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

2023 REPORT & ACCOUNTS |

| 311
37. 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) |  |
Swaps | 96,824 | 170,165
of which: Embedded derivatives | — | 8
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 December 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 December 2022: Euros 53,495,000). This note should be analysed together with note 24.
38. 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.

| 2023 REPORT & ACCOUNTS

312 |
As at 31 December 2023, the analysis of Debt securities at fair value through profit and loss, is as follows:

|  |  | (Thousands of euros)
Issue | Issue date | Maturity date | Interest rate | Nominal value | Book value
Banco Comercial Português: |  |  |  |  |
Bcp Cabaz 3 Ações 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 Ações 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 December 2023, the analysis of Debt securities at fair value 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 | — | 2,321,000
Certificates | — | — | — | 32,088 | 957,615 | 989,703
Debt securities at fair value through profit and loss |  |  |  |  |  |
MTN | 71,170 | 63,405 | 163,209 | — | — | 297,784
| 820,369 | 340,811 | 1,223,070 | 266,622 | 957,615 | 3,608,487

As at 31 December 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 | — | — | — | — | 850,681 | 850,681
Debt securities at fair value through profit and loss |  |  |  |  |  |
MTN | — | 80,858 | 116,899 | 292,569 | — | 490,326
| — | 80,858 | 432,591 | 453,548 | 850,681 | 1,817,678

2023 REPORT & ACCOUNTS |

| 313
39. 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 | — | 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).

| 2023 REPORT & ACCOUNTS

314 |
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 December 2023, the provisions
constituted to cover tax contingencies totalled Euros 54,384,000 (31 December 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 December 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 December 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.
With reference to 31 December 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.

2023 REPORT & ACCOUNTS |

| 315
40. 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
Other creditors |  |
Residents | 35,660 | 66,158
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 December 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

| 2023 REPORT & ACCOUNTS

316 |
41. Share capital, Share premium and Other equity instruments
As at 31 December 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 December 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 December 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 December 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.à.r.l. (Fosun Group) | 3,927,436,381 | 25.99% | 25.99%
Sonangol - Sociedade Nacional de Combustíveis 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.à.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.
42. 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 December 2023 the Legal Reserves amount to Euros 316,375,000
(31 December 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).

2023 REPORT & ACCOUNTS |

| 317
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) |  |
Debt instruments (*) | (75,326) | (228,425)
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 |  |
Debt instruments | 20,266 | 58,780
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 |  |
Bank Millennium, S.A. | (35,347) | (92,629)
BIM - Banco Internacional de Moçambique, S.A. | (152,108) | (139,373)
Banco Millennium Atlântico, S.A. | (180,187) | (143,989)
Others | 2,031 | 2,073
| (365,611) | (373,918)
Application of IAS 29 |  |
Effect on equity of Banco Millennium Atlântico, S.A. | 50,584 | 42,316
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.

| 2023 REPORT & ACCOUNTS

318 |
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 | — | — | 9,594 | (3,747)
Associated companies and other changes |  |  |  |  |  |
Millenniumbcp Ageas | (3,725) | (1,533) | — | — | (1,350) | (6,608)
Other associates and other changes | 11,563 | 2,699 | — | — | (5,723) | 8,539
| 7,838 | 1,166 | — | — | (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) | — | — | 7,579 | (25,846)
Associated companies and other changes |  |  |  |  |  |
Millenniumbcp Ageas | (24,485) | 6,522 | — | — | 14,238 | (3,725)
Other associates and other changes | 9,640 | 1,923 | — | — | — | 11,563
| (14,845) | 8,445 | — | — | 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.

2023 REPORT & ACCOUNTS |

| 319
44. 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 Moçambique 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)

| 2023 REPORT & ACCOUNTS

320 |
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 Moçambique 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 | — | — | (3,447) | —
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 | — | — | 47,478 | 119,244
attributed to the non-controlling interests | — | — | 23,719 | 59,572
| — | — | 71,197 | 178,816

2023 REPORT & ACCOUNTS |

| 321
45. 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 December 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 December 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.

| 2023 REPORT & ACCOUNTS

322 |
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

46. 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 Português, S.A. (*) | 3,738,751 | 3,618,326
Interfundos - Sociedade Gestora de Organismos de 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.

2023 REPORT & ACCOUNTS |

| 323
47. 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 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.

| 2023 REPORT & ACCOUNTS

324 |
The amounts accumulated as at 31 December 2023, related to these operations, are analysed as follows:

|  |  | (Thousands of euros)
| Assets transferred | Net assets transferred | Received value | Net gains / (losses)
Fundo Recuperação 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 December 2022, related to these operations, are analysed as follows:

|  |  | (Thousands of euros)
| Assets transferred | Net assets transferred | Received value | Net gains / (losses)
Fundo Reestruturação Empresarial FCR (a) | 84,112 | 82,566 | 83,212 | 646
Fundo Recuperação 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 Reestruturação Empresarial FCR were sold, as a
result the Group no longer held a position in that Fund.

2023 REPORT & ACCOUNTS |

| 325
As at 31 December 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 Recuperação FCR |  |  |
Gross value | 166,637 | 74,631 | 241,268
Impairment and other fair value adjustments | (138,607) | (74,631) | (213,238)
| 28,030 | — | 28,030
Fundo Aquarius FCR |  |  |
Gross value | 105,498 | — | 105,498
Impairment and other fair value adjustments | (7,379) | — | (7,379)
| 98,119 | — | 98,119
Discovery Real Estate Fund |  |  |
Gross value | 157,716 | — | 157,716
Impairment and other fair value adjustments | 4,568 | — | 4,568
| 162,284 | — | 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 | — | 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 | — | 324,575

As at 31 December 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.

| 2023 REPORT & ACCOUNTS

326 |
As at 31 31 December 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 Reestruturação Empresarial FCR |  |  |
Gross value | 60,963 | — | 60,963
Impairment and other fair value adjustments | (37,966) | — | (37,966)
| 22,997 | — | 22,997
Fundo Recuperação FCR |  |  |
Gross value | 169,033 | 85,018 | 254,051
Impairment and other fair value adjustments | (134,767) | (85,018) | (219,785)
| 34,266 | — | 34,266
Fundo Aquarius FCR |  |  |
Gross value | 119,631 | — | 119,631
Impairment and other fair value adjustments | (11,527) | — | (11,527)
| 108,104 | — | 108,104
Discovery Real Estate Fund |  |  |
Gross value | 157,716 | — | 157,716
Impairment and other fair value adjustments | (1,801) | — | (1,801)
| 155,915 | — | 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 | — | 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 | — | 360,145

As at 31 December 2022, t he 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 Reestruturação Empresarial FCR | — | — | — | 51,212 | 46,486 | 4,726
Fundo Recuperação 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 | — | 158,991 | 158,991 | —
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 December 2023 and 2022, there are additional subscription commitments for the fund Discovery, in the amount of
Euros 1,107,000.

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Additionally, are booked in Loans and advances to customer’s 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
Recuperação and the sale of all shares/units of participation of the FLITPTREL and Fundo Recuperação 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 Português, 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 Imobiliário Fechado | 18,780 | 26,429
Fundo Especial de Investimento Imobiliário Fechado Eurofundo | 8,467 | 12,091
| 68,005 | 88,946
Non-current assets held for sale (note 27) |  |
Imoserit, S.A.* | — | 17,919
Other assets (note 32) |  |
Imoserit, S.A.* | 14,805 | —
| 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.

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48. Relevant events occurred during 2023
Banco Comercial Português, S.A. informed about the upgrade of senior unsecured debt and
deposits ratings by DBRS Morningstar
Banco Comercial Português, S.A. (“BCP” or “Bank”) 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’s adequate funding structure coupled with solid liquidity buffers.
Banco Comercial Português, 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 Português, 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
(“Legal Regime of Covered Bonds”), 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
“Programme”), was approved on the present date by the Portuguese Securities Commission (Comissão do Mercado de
Valores Mobiliários) (“CMVM”).
Accordingly, Banco Comercial Português, 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 Português, 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 “other systemically important institution” (O-SII).
The ECB’s 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%).

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Banco Comercial Português, S.A. informed about the upgrade of deposits and senior
unsecured debt ratings by Moody’s
Banco Comercial Português, S.A. (“BCP” or “Bank”) informed that Moody’s 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’s 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’s, 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’s 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 Português, 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 Português, S.A. (“Bank”) 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 Português, 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 (“AT1”) instrument with an outstanding amount of
Euros 400 million
As at 13 November 2023, Banco Comercial Português, S.A. (“Bank”) 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 (“AT1”) instrument, considering that following the said reduction, BCP´s 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´s final terms and conditions.

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330 |
Banco Comercial Português, S.A. informed about issue of senior preferred debt securities
eligible for MREL
As at 25 September 2023, Banco Comercial Português, S.A. (“Bank”) 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 Português, S.A. informed about the upgrade to Investment Grade of senior
debt ratings by Fitch Ratings
As at 21 September 2023, Banco Comercial Português, S.A. (“BCP” or “Bank”) 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’ view that BCP’ 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 Português, S.A. informed about the upgrade to Investment Grade of senior
debt ratings by S&P Global
As at 12 September 2023, Banco Comercial Português, S.A. (“BCP” or “Bank”) 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’s 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
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.

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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 Português, S.A. informed about 2023 EU-Wide Stress Test Results
As at 28 July, Banco Comercial Português, 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 Português, S.A.
profits.
Considering the results of Banco Comercial Português, S.A, in the stress test, it should be highlighted the following:
• 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.
• 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 Português, S.A.
As at 12 July 2023, Banco Comercial Português, 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 Moçambique and their respective subsidiaries), from 1
January 2024 is of:
• 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
• 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.

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332 |
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.

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Resolutions of the Annual General Meeting of Banco Comercial Português, S.A.
Banco Comercial Português, 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 – 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 – Approval of the proposal for the appropriation of profit concerning the 2022 financial year;
Item Three – 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 – 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 – 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 – 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 “Shares”) in
Millennium Financial Services sp. z o.o. (the “Company”) to Towarzystwo Ubezpieczeń na Życie Europa S.A. which
acquires 72% of the Company’s shares and Towarzystwo Ubezpieczeń Europa S.A. which acquires 8% of the Company’s
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.
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 Ubezpieczeń in Życie Europa S.A. which acquired 72% of the Company's shares and to
Towarzystwo Ubezpieczeń 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.

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334 |
49. 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.

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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%

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336 |
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.

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| 337
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 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 December 2022: a
positive amount of Euros 72,745,000) and includes a payable amount of Euros 95,357,000 (31 December 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%

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338 |
The following table shows the fair value of financial assets and liabilities of the Group, as at 31 December 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 | — | — | 4,545,526 | 4,545,526 | 4,545,526
Loans and advances to credit institutions repayable on demand | — | — | 337,687 | 337,687 | 337,687
Financial assets at amortised cost |  |  |  |  |
Loans and advances to credit institutions | — | — | 908,477 | 908,477 | 904,728
Loans and advances to customers (i) | — | — | 53,305,159 | 53,305,159 | 52,389,825
Debt securities | — | — | 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 | — | — | 822,904 | 822,904
Financial assets not held for trading mandatorily |  |  |  |  |
at fair value through profit or loss | 467,254 | — | — | 467,254 | 467,254
Financial assets designated at fair value |  |  |  |  |
through profit or loss | 32,004 | — | — | 32,004 | 32,004
Financial assets at fair value through |  |  |  |  |
other comprehensive income | — | 10,834,291 | — | 10,834,291 | 10,834,291
Hedging derivatives (ii) | 40,628 | — | — | 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 | — | — | 829,126 | 829,126 | 820,805
Resources from customers (i) | — | — | 75,606,813 | 75,606,813 | 75,460,202
Non subordinated debt securities issued (i) | — | — | 2,712,682 | 2,712,682 | 2,831,229
Subordinated debt (i) | — | — | 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 | — | — | 207,387 | 207,387
Financial liabilities designated |  |  |  |  |
at fair value through profit or loss | 3,608,487 | — | — | 3,608,487 | 3,608,487
Hedging derivatives (ii) | 67,825 | — | — | 67,825 | 67,825
| 3,883,699 | — | 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.

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| 339
The following table shows the fair value of financial assets and liabilities of the Group, as at 31 December 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 | — | — | 6,022,001 | 6,022,001 | 6,022,001
Loans and advances to credit institutions repayable on demand | — | — | 213,460 | 213,460 | 213,460
Financial assets at amortised cost |  |  |  |  |
Loans and advances to credit institutions | — | — | 963,434 | 963,434 | 953,643
Loans and advances to customers (i) | — | — | 54,675,793 | 54,675,793 | 53,436,993
Debt securities | — | — | 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 | — | — | 766,597 | 766,597
Financial assets not held for trading mandatorily |  |  |  |  |
at fair value through profit or loss | 552,679 | — | — | 552,679 | 552,679
Financial assets at fair value through |  |  |  |  |
other comprehensive income | — | 7,461,553 | — | 7,461,553 | 7,461,553
Hedging derivatives (ii) | 59,703 | — | — | 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 | — | — | 1,468,360 | 1,468,360 | 1,453,270
Resources from customers (i) | — | — | 75,430,143 | 75,430,143 | 75,129,795
Non subordinated debt securities issued (i) | — | — | 1,482,086 | 1,482,086 | 1,554,561
Subordinated debt (i) | — | — | 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 | — | — | 241,506 | 241,506
Financial liabilities designated |  |  |  |  |
at fair value through profit or loss | 1,817,678 | — | — | 1,817,678 | 1,817,678
Hedging derivatives (ii) | 178,000 | — | — | 178,000 | 178,000
| 2,237,184 | — | 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.

| 2023 REPORT & ACCOUNTS

340 |
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.

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| 341
The following table shows, by valuation levels, the fair value of financial assets and liabilities of the Group as at
31 December 2023:

(Thousands of euros)
| 2023
| Level 1 | Level 2 | Level 3 | Total
Assets |  |  |  |
Cash and deposits at Central Banks | 4,545,526 | — | — | 4,545,526
Loans and advances to credit institutions repayable on demand | 337,687 | — | — | 337,687
Financial assets at amortised cost |  |  |  |
Loans and advances to credit institutions | — | — | 904,728 | 904,728
Loans and advances to customers | — | — | 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 | — | — | 467,254 | 467,254
Financial assets designated at fair value through profit or loss | 32,004 | — | — | 32,004
Financial assets at fair value through other comprehensive income | 8,301,377 | 2,431,483 | 101,431 | 10,834,291
Hedging derivatives | — | 40,628 | — | 40,628
| 27,249,150 | 3,491,964 | 56,893,815 | 87,634,929
Liabilities |  |  |  |
Financial liabilities at amortised cost |  |  |  |
Resources from credit institutions | — | — | 820,805 | 820,805
Resources from customers | — | — | 75,460,202 | 75,460,202
Non subordinated debt securities issued | — | — | 2,831,229 | 2,831,229
Subordinated debt | — | — | 1,456,002 | 1,456,002
Financial liabilities at fair value through profit or loss |  |  |  |
Financial liabilities held for trading | — | 108,767 | 98,620 | 207,387
Financial liabilities designated at fair value through profit or loss | 989,703 | — | 2,618,784 | 3,608,487
Hedging derivatives | — | 67,825 | — | 67,825
| 989,703 | 176,592 | 83,285,642 | 84,451,937

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342 |
The following table shows, by valuation levels, the fair value of financial assets and liabilities of the Group as at
31 December 2022:

(Thousands of euros)
| 2022 (restated)
| Level 1 | Level 2 | Level 3 | Total
Assets |  |  |  |
Cash and deposits at Central Banks | 6,022,001 | — | — | 6,022,001
Loans and advances to credit institutions repayable on demand | 213,460 | — | — | 213,460
Financial assets at amortised cost |  |  |  |
Loans and advances to credit institutions | — | — | 953,643 | 953,643
Loans and advances to customers | — | — | 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 | — | — | 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 | — | 59,703 | — | 59,703
| 22,576,739 | 1,698,176 | 57,439,788 | 81,714,703
Liabilities |  |  |  |
Financial liabilities at amortised cost |  |  |  |
Resources from credit institutions | — | — | 1,453,270 | 1,453,270
Resources from customers | — | — | 75,129,795 | 75,129,795
Non subordinated debt securities issued | — | — | 1,554,561 | 1,554,561
Subordinated debt | — | — | 1,305,013 | 1,305,013
Financial liabilities at fair value through profit or loss |  |  |  |
Financial liabilities held for trading | — | 186,130 | 55,376 | 241,506
Financial liabilities designated at fair value through profit or loss | 850,681 | — | 966,997 | 1,817,678
Hedging derivatives | — | 178,000 | — | 178,000
| 850,681 | 364,130 | 80,465,012 | 81,679,823

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| 343
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) | — | 203
Net interest income | (31) | 2,202 | — | —
Purchases / (Sales, repayments or amortisations) | 26,408 | (86,915) | (14,487) | 43,437
Gains / (losses) recognised in reserves | — | — | 6,124 | —
Exchange differences | — | 5,010 | (626) | —
Accruals of interest | — | — | 715 | —
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) | — | 47,221
Net interest income | — | 6,109 | — | —
Transfers between levels | (1,860) | — | — | (145)
Purchases / (Sales, repayments or amortisations) | 44,028 | (351,744) | (11,130) | 702
Gains / (losses) recognised in reserves | — | — | (4,138) | —
Exchange differences | — | (2,338) | 1,061 | —
Accruals of interest | (2) | — | (32) | —
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).

| 2023 REPORT & ACCOUNTS

344 |
50. 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 Português 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 December 2023 amounts to Euros 195,420,000 (31 December 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 – Sindicato Nacional dos Quadros e Técnicos Bancários e SIB – 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.

2023 REPORT & ACCOUNTS |

| 345
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

T he pensions paid by the Fund, including the Additional Complement, amounts to Euros 149,634,000 (31 December
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 December 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 December 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.

| 2023 REPORT & ACCOUNTS

346 |
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 | — | 1,995,531 | 1,120,132 | — | 1,120,132
Participations units in investment funds | — | 497,830 | 497,830 | — | 969,232 | 969,232
Participation units in real estate funds | — | 298,969 | 298,969 | — | 308,404 | 308,404
Properties | — | 264,968 | 264,968 | — | 275,493 | 275,493
Loans and advances to credit institutions and others | — | 80,903 | 80,903 | — | 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 December 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 | — | 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

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| 347
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".

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348 |
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’s 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 December 2023, the Group used a discount rate of 3.53% (31 December 2022: 4.17%).

2023 REPORT & ACCOUNTS |

| 349
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)
Salary and pensions growth rate |  | 54,217 |  | 279,108
Mortality tables |  | — |  | 63,571
Other changes |  | — |  | 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 Português.
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.

| 2023 REPORT & ACCOUNTS

350 |
51. 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 Português 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 Português, 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 December
2022: Euros 914,000) for Loans and advances to customers and for Debt securities the amount of Euros 237,000
(31 December 2022: Euros 257,000).

2023 REPORT & ACCOUNTS |

| 351
T he 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 | —
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

T he Group has accounted for provisions for guarantees granted the amount of Euros 8,000 (31 December 2022: Euros
3,000) and provisions for revocable credit lines the amount of Euros 141,000 (31 December 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 | — | — | 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.

| 2023 REPORT & ACCOUNTS

352 |
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 | — | — | 27 | 29
Executive Committee | 1 | — | 23 | 10
Closely related people | — | — | 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 | — | —
Executive Committee (*) | 26 | — | — | 1
Closely related people | 33 | 9 | — | —
Key management members |  |  |  |
Key management members | 101 | 6 | 1 | 4
Closely related people | 20 | 2 | 1 | 2
Controlled entities | 21 | — | 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 | — | — | 143 | 113
Executive Committee (*) | — | — | 160 | 140
Closely related people | — | — | 63 | 43
Key management members |  |  |  |
Key management members | 5 | 5 | 844 | 825
Closely related people | — | — | 180 | 164
Controlled entities | — | — | 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.

2023 REPORT & ACCOUNTS |

| 353
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 Fátima Sebastián González Villamarin | BCP Shares | 0 | 0 |  |  |  |  |  |
Ana Paula Alcobia Gray | BCP Shares | 0 | 0 |  |  |  |  |  |
Cidália Maria da Mota Lopes | BCP Shares | 2,184 | 2,184 |  |  |  |  |  |
Fernando da Costa Lima | BCP Shares | 18,986 | 18,986 |  |  |  |  |  |
João 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 Magalhães 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
José 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
José Pedro Rivera Ferreira Malaquias | BCP Shares | 9,808 | 9,808 |  |  |  |  |  |
Júlia Gu (Xiao Xu Gu) | BCP Shares | 0 | 0 |  |  |  |  |  |
Lingjiang Xu | BCP Shares | 0 | 0 |  |  |  |  |  |
Lingzi Yuan (Smilla Yuan) | BCP Shares | 0 | 0 |  |  |  |  |  |
Maria José 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 Bragança | 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 António 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
Américo João Pinto Carola | BCP Shares | 140,747 | 104,945 | 63,588 | (a) | 27,786 | (b) | 23/6/2023 | 0.2200
Ana Maria Jordão F. Torres Marques Tavares | BCP Shares | 255,931 | 215,340 | 63,819 | (a) | 23,228 | (b) | 23/6/2023 | 0.2200
Ana Patrícia Moniz Macedo | BCP Shares | 35,864 | 0 | 63,588 | (a) | 27,724 | (b) | 23/6/2023 | 0.2200
António Augusto Amaral de Medeiros | BCP Shares | 178,245 | 143,063 | 62,599 | (a) | 27,417 | (b) | 23/6/2023 | 0.2200
António Ferreira Pinto Júnior | BCP Shares | 11,842 | 11,842 |  |  |  |  |  |
António José Lindeiro Cordeiro | BCP Shares | 93,898 | 64,134 | 49,854 | (a) | 20,090 | (b) | 23/6/2023 | 0.2200
António Luís Duarte Bandeira | BCP Shares | 321,903 | 285,425 | 64,906 | (a) | 28,428 | (b) | 23/6/2023 | 0.2200
António Ricardo Fery Salgueiro Antunes | BCP Shares | 120,117 | 61,361 | 58,756 | (a) |  |  | 23/6/2023 | 0.2200
António Vítor 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.

| 2023 REPORT & ACCOUNTS

354 |

|  | 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 Aragão de Portugal Collaço | 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 António Caspa Monteiro | BCP Shares | 225,015 | 186,219 | 69,030 | (a) | 30,234 | (b) | 23/6/2023 | 0.2200
Gonçalo 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
João Adriano Azevedo Seixas Vale | BCP Shares | 43,222 | 43,222 |  |  |  |  |  |
João Brás Jorge | BCP Shares | 91,709 | 91,709 |  |  |  |  |  |
João 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 Góis | BCP Shares | 190,352 | 134,204 | 56,148 | (a) |  |  | 23/6/2023 | 0.2200
Jorge Manuel Magalhães 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 Octávio Neto dos Santos | BCP Shares | 471,191 | 471,191 |  |  |  |  |  |
José Artur Gouveia Coelho Caetano | BCP Shares | 0 | 0 |  |  |  |  |  |
José Carlos Benito Garcia de Oliveira | BCP Shares | 37,941 | 37,941 |  |  |  |  |  |
José Gonçalo Prior Regalado | BCP Shares | 147,115 | 79,184 | 67,931 | (a) |  |  | 23/6/2023 | 0.2200
José Guilherme Potier Raposo Pulido Valente | BCP Shares | 315,008 | 280,081 | 62,144 | (a) | 27,217 | (b) | 23/6/2023 | 0.2200
José Maria Gonçalves Pereira Brandão 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 Constança C. Brandão Amado Fonseca G. Santos | BCP Shares | 800 | 800 |  |  |  |  |  |
Maria de Fátima 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 Araújo Mesquita Reis | BCP Shares | 228,036 | 190,663 | 62,599 | (a) | 25,226 | (b) | 23/6/2023 | 0.2200
Mário António Pinho Gaspar Neves | BCP Shares | 142,301 | 108,172 | 60,616 | (a) | 26,487 | (b) | 23/6/2023 | 0.2200
Mário Madeira Robalo Fernandes | BCP Shares | 220,539 | 156,951 | 63,588 | (a) |  |  | 23/6/2023 | 0.2200
Nelson Luís 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 José 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.

2023 REPORT & ACCOUNTS |

| 355

|  | 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 Bárbara | 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 Conceição 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
Vânia 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: Cidália Maria da Mota Lopes |  |  |  |  |  |  |  |  |
Alexandre Miguel Martins Ventura | BCP Shares | 2,184 | 2,184 |  |  |  |  |  |
of: José Miguel Bensliman Schorcht da Silva Pessanha |  |  |  |  |  |  |  |  |
Herança de Anne Marie Bensliman Silva Pessanha | BCP Shares | 139 | 139 |  |  |  |  |  |
of: Maria José 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 Catão | BCP Shares | 576 | 576 |  |  |  |  |  |
of: Américo João Pinto Carola |  |  |  |  |  |  |  |  |
Ana Isabel Salgueiro Antunes | BCP Shares | 29 | 29 |  |  |  |  |  |
of: Ana Maria Jordão F. Torres Marques Tavares |  |  |  |  |  |  |  |  |
Álvaro Manuel Coreia Marques Tavares | BCP Shares | 25,118 | 25,118 |  |  |  |  |  |
Francisco Jordão Torres Marques Tavares | BCP Shares | 1,016 | 1,016 |  |  |  |  |  |
of: António Luís Duarte Bandeira |  |  |  |  |  |  |  |  |
António 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: António Ferreira Pinto Júnior |  |  |  |  |  |  |  |  |
Paula Alexandre Cardoso de Miguel Pinto | BCP Shares | 33,187 | 33,187 |  |  |  |  |  |
of: António Vítor Martins Monteiro |  |  |  |  |  |  |  |  |
Isabel Maria Vaz Leite Pinto Martins Monteiro | BCP Shares | 3,104 | 3,104 |  |  |  |  |  |
of: Francisco António 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 |  |  |  |  |  |  |  |  |
João Paulo Rodrigues Taborda Gonçalves | BCP Shares | 130 | 130 |  |  |  |  |  |
of: Maria Manuela de Araújo Mesquita Reis |  |  |  |  |  |  |  |  |
Luís Filipe da Silva Reis | BCP Shares | 280,000 | 280,000 |  |  |  |  |  |
of: José 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.ª Maria José Campos is the 2nd holder of the
securities account.
(d) - solidary ownership in both securities accounts, and Dr. José Pedro Ferreira Malaquias is the first holder and Maria Joana Ferreira Malaquias is the 2nd
holder of the securities account.

| 2023 REPORT & ACCOUNTS

356 |
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 | —
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 | —
Other operating losses | 1 | 51
| 9,958 | 5,404

2023 REPORT & ACCOUNTS |

| 357
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 | —
| 30,436 | 17,066

Under the scope of the Group's insurance mediation activities, the remuneration from services provided is analysed as
follows:

| (Thousands of euros)
| 2023 | 2022 (restated)
Life insurance |  |
Saving products | 24,166 | 27,966
Mortgage and consumer loans | 20,424 | 20,699
Others | 1 | —
| 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 – use of fixed rates on gross premiums issued;
- investment contracts – use of fixed rates on the responsibilities assumed by the insurance company under the
commercialisation of these products.

| 2023 REPORT & ACCOUNTS

358 |
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 | — | 209
| — | 209
Liabilities |  |
Resources from customers | 54,850 | 145,303
Non subordinated debt securities issued | 9,075 | 13,199
Financial liabilities held for trading | — | 3,475
Other liabilities | 231 | —
| 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 | —
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 December 2023 and 2022, the guarantees granted by the Group to the Pension Fund amount to Euros 5,000.

2023 REPORT & ACCOUNTS |

| 359
52. 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 Português 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
“Mass Market” 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;
– 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.

| 2023 REPORT & ACCOUNTS

360 |
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 – Banco Internacional de Moçambique, 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’s 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.

2023 REPORT & ACCOUNTS |

| 361
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 | — | 756 | 756 | — | — | 1,027 | 1,783
Share of profit of associates under the equity method | — | 4,651 | 4,651 | — | — | 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) | — | (19,426) | (19,426) | — | — | — | (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) | — | — | (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 | — | — | — | — | (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 | — | (97,148) | (97,148) | — | — | 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 investments held in Angola, in Banco Millennium Atlântico.
(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.

| 2023 REPORT & ACCOUNTS

362 |
A s 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) | — | 10,269,402 | 10,269,402 | — | — | 17,594,007 | 27,863,409
Other assets | — | 1,000,590 | 1,000,590 | — | — | 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 credit institutions (3) | 259,026 | 151,175 | 410,201 | 1,618,782 | — | (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) | — | 538,311 | 538,311 | — | — | 1,134,326 | 1,672,637
Other liabilities (7) | — | 1,268,020 | 1,268,020 | — | — | 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.

2023 REPORT & ACCOUNTS |

| 363
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 | — | 811 | 811 | — | — | 9,275 | 10,086
Share of profit of associates under the equity method | — | 925 | 925 | — | — | 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) | — | (309,865) | (309,865) | — | — | — | (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) | — | — | (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 | — | 3,772 | 3,772 | — | 1,765 | — | 5,537
Net income for the year | 460,902 | (220,714) | 240,188 | 127,422 | 28,541 | (276,587) | 119,564
Non-controlling interests | — | 72,802 | 72,802 | — | — | 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 investments held in Angola, in Banco Millennium Atlântico.
(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.

| 2023 REPORT & ACCOUNTS

364 |
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) | — | 5,458,513 | 5,458,513 | — | — | 14,895,710 | 20,354,223
Other assets | — | 942,640 | 942,640 | — | — | 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 credit institutions (3) | 229,245 | 158,808 | 388,053 | 1,140,782 | — | (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 | — | 141,613 | 1,428,011 | 2,823,093
Other financial liabilities (6) | — | 535,648 | 535,648 | — | — | 1,216,914 | 1,752,562
Other liabilities (7) | — | 907,471 | 907,471 | — | — | 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.

2023 REPORT & ACCOUNTS |

| 365
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 | — | 2,825,724
Net fees and commissions income | 435,629 | 141,435 | 32,370 | (49,156) | 560,278 | 172,346 | 39,049 | — | 771,673
Other net income | 12,535 | 10,609 | 49 | (88,213) | (65,020) | 21,822 | 4,592 | — | (38,606)
Net gains arising from trading activity (2) | 1,513 | 106 | 67 | 11,190 | 12,876 | 115,625 | 16,314 | — | 144,815
Dividends from equity instruments | — | — | — | 1,027 | 1,027 | 756 | — | — | 1,783
Share of profit of associates under the equity method | — | — | — | 59,615 | 59,615 | — | 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 | — | 1,162,551
Results on modification (3) | — | — | — | — | — | (19,426) | — | — | (19,426)
Impairment for credit and financial assets (4) | (44,223) | (154,511) | (178) | (14,290) | (213,202) | (57,192) | 20,410 | — | (249,984)
Other impairments and provisions (5) | (98) | — | — | (155,068) | (155,166) | (681,857) | (12,839) | — | (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) | — | (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 | — | — | — | (9) | (9) | — | — | (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 | — | — | — | 5,589 | 5,589 | (63,283) | (33,865) | — | (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 investments held in Angola, in Banco Millennium Atlântico.
(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.

| 2023 REPORT & ACCOUNTS

366 |
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 | — | 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 | — | 55,217,967
Financial assets (2) | — | — | — | 17,594,007 | 17,594,007 | 9,594,785 | 674,653 | (36) | 27,863,409
Other assets | — | — | — | 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 | — | (1,199,857) | 677,951 | 130,131 | 21,044 | — | 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 | — | 77,927,813
Debt securities issued (5) | 1,144,133 | 1,408 | 133,442 | 1,957,355 | 3,236,338 | 763,831 | — | — | 4,000,169
Other financial liabilities (6) | — | — | — | 1,134,326 | 1,134,326 | 538,311 | — | — | 1,672,637
Other liabilities (7) | — | — | — | 1,382,515 | 1,382,515 | 1,187,710 | 80,310 | — | 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 | — | 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.

2023 REPORT & ACCOUNTS |

| 367
As at 31 December 2022, the net contribution of the major geographic segments, for the 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 | — | — | — | 9,275 | 9,275 | 811 | — | — | 10,086
Share of profit of associates under the equity method | — | — | — | 57,686 | 57,686 | — | 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) | — | — | — | — | — | (309,865) | — | — | (309,865)
Impairment for credit and financial assets (4) | (66,953) | (149,529) | 591 | 2,156 | (213,735) | (74,067) | (8,327) | — | (296,129)
Other impairments and provisions (5) | (394) | — | — | (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) | — | (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 | — | — | — | — | — | — | 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 | — | — | — | 5,020 | 5,020 | 108,125 | (35,323) | — | 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 investments held in Angola, in Banco Millennium Atlântico.
(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.

| 2023 REPORT & ACCOUNTS

368 |
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 | — | 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 | — | 56,197,684
Financial assets (2) | — | — | — | 14,895,710 | 14,895,710 | 4,506,830 | 951,716 | (33) | 20,354,223
Other assets | — | — | — | 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 | — | (60,475) | 1,309,552 | 155,411 | 3,397 | — | 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 | — | 75,906,814
Debt securities issued (5) | 1,201,403 | — | 141,613 | 1,428,011 | 2,771,027 | 52,066 | — | — | 2,823,093
Other financial liabilities (6) | — | — | — | 1,216,914 | 1,216,914 | 535,648 | — | — | 1,752,562
Other liabilities (7) | — | — | — | 1,081,676 | 1,081,676 | 839,464 | 68,007 | — | 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 | — | 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.

2023 REPORT & ACCOUNTS |

| 369
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) | —
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.

| 2023 REPORT & ACCOUNTS

370 |
53. Solvency
The Group’s 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‐
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’s 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 artº 473º-A of CRR.
CRD IV/CRR 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, 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 the supervisor on this matter.

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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’s 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.

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54. 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’s 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’s risk appetite and risk
strategy.
Internal organisation
The Board of Directors of Banco Comercial Português 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 Português 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.

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Risk assessment
Credit Risk
Credit granting is based on a prior classification of the customers’ 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’s 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.

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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’s 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’s),
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’ 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 – 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.

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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’ PD, ensuring a
risk assessment that considers the clients’ 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’ credit quality and are referred to by
“procedural risk grades”: 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 – 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’ 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 |  | ≤ B- | ≤ B- | ≤ B3 | ≤ B-

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c) Impairment and Write-offs
The credit impairment calculation as at 31 December 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 December 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 | — | — | — | 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 | — | 17,604,524
Debt instruments at fair value through other comprehensive income (note 24) (*) | 10,809,872 | — | 1,150 | — | 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 | — | — | — | 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 | — | 25,388
Debt instruments at fair value through other comprehensive income (note 24) (*) | — | — | 1,150 | — | 1,150
Guarantees and other commitments (note 39) | 12,880 | 14,686 | 94,008 | — | 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 | — | — | — | 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 | — | 17,579,136
Debt instruments at fair value through other comprehensive income (note 24) (*) | 10,809,872 | — | — | — | 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.

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As at 31 December 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 | — | — | — | 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 | — | 13,049,821
Debt instruments at fair value through other comprehensive income (note 24) (*) | 7,434,152 | — | 1,067 | — | 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 | — | — | — | 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 | — | 14,239
Debt instruments at fair value through other comprehensive income (note 24) (*) | — | — | 1,067 | — | 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 | — | — | — | 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 | — | 13,035,582
Debt instruments at fair value through other comprehensive income (note 24) (*) | 7,434,152 | — | — | — | 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

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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 | —
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 | — | — | —
Transfers from stage 1 to stage 3 | (285,020) | — | 285,020 | — | —
Transfers from stage 2 to stage 1 | 1,889,217 | (1,889,217) | — | — | —
Transfers from stage 2 to stage 3 | — | (415,277) | 415,277 | — | —
Transfers from stage 3 to stage 1 | 36,667 | — | (36,667) | — | —
Transfers from stage 3 to stage 2 | — | 291,025 | (291,025) | — | —
Write-offs | (811) | (2,261) | (186,529) | (2,872) | (192,473)
Net balance of new financial assets and derecognised |  |  |  |  |
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

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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) | —
Transfer to Stage 2 | (12,326) | 129,062 | (116,736) | — | —
Transfer to Stage 3 | (4,882) | (36,867) | 42,105 | (356) | —
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 | — | — | —
Transfers from stage 1 to stage 3 | (258,614) | — | 258,614 | — | —
Transfers from stage 2 to stage 1 | 1,946,027 | (1,946,027) | — | — | —
Transfers from stage 2 to stage 3 | — | (631,859) | 631,859 | — | —
Transfers from stage 3 to stage 1 | 26,176 | — | (26,176) | — | —
Transfers from stage 3 to stage 2 | — | 174,249 | (174,249) | — | —
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

| 2023 REPORT & ACCOUNTS

380 |
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 | —
Transfer to Stage 2 | (14,016) | 47,552 | (33,614) | 78 | —
Transfer to Stage 3 | (4,314) | (55,508) | 58,004 | 1,818 | —
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

2023 REPORT & ACCOUNTS |

| 381
As at 31 December 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 | — | 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 | — | 540,727
Other loans | 15,596,245 | 308,938 | 2,266 | 13 | 311,217 | 1 | 2 | 3 | — | 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 | — | 1,384 | 34,559 | 6 | 34,565 | — | 59,424
Non-financial companies - Corporate | 36,533 | 25,712 | 247 | 312 | 26,271 | 91,151 | 20,578 | 111,729 | — | 174,533
Non-financial companies - SME- Corporate | 49,075 | 78,177 | 1,490 | 760 | 80,427 | 313,575 | 59,279 | 372,854 | — | 502,356
Non-financial companies -SME- Retail | 83,013 | 75,676 | 4,281 | 4,152 | 84,109 | 92,830 | 59,457 | 152,287 | — | 319,409
Non-financial companies - Other | 370 | 74 | — | 2 | 76 | 8 | 1,482 | 1,490 | — | 1,936
Other loans | 16,881 | 2,763 | 116 | 1 | 2,880 | — | 1 | 1 | — | 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 | — | 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 | — | 538,791
Other loans | 15,579,364 | 306,175 | 2,150 | 12 | 308,337 | 1 | 1 | 2 | — | 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%

| 2023 REPORT & ACCOUNTS

382 |
As at 31 December 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 | — | 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 | — | 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 | — | 46,615 | 113 | — | 113 | — | 605,540
Other loans | 11,812,537 | 342,203 | 39 | — | 342,242 | — | 30 | 30 | — | 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 | — | 1,705 | 36,543 | 1,245 | 37,788 | — | 47,984
Non-financial companies - Corporate | 27,484 | 18,218 | 22 | — | 18,240 | 87,043 | 43,500 | 130,543 | — | 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 | — | 336,768
Non-financial companies - Other | 512 | 129 | — | — | 129 | 5 | — | 5 | — | 646
Other loans | 11,087 | 2,860 | 5 | — | 2,865 | — | 9 | 9 | — | 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 | — | 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 | — | 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 | — | 46,486 | 108 | — | 108 | — | 604,894
Other loans | 11,801,450 | 339,343 | 34 | — | 339,377 | — | 21 | 21 | — | 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%

2023 REPORT & ACCOUNTS |

| 383
As at 31 December 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 | — | 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 | — | 115,880
Non-financial companies - Construction | 15,896 | 13,624 | 978 | 645 | 15,247 | 91,537 | 17,927 | 109,464 | — | 140,607
Non-financial companies - Manufacturing industries | 54,770 | 57,777 | 1,909 | 1,842 | 61,528 | 53,536 | 35,826 | 89,362 | — | 205,660
Non-financial companies - Other activities | 10,608 | 18,371 | 771 | 170 | 19,312 | 38,378 | 8,562 | 46,940 | — | 76,860
Non-financial companies - Other services | 59,261 | 64,219 | 1,497 | 1,485 | 67,201 | 273,576 | 59,189 | 332,765 | — | 459,227
Other Services /Other activities | 40,356 | 4,144 | 119 | 1 | 4,264 | 34,559 | 7 | 34,566 | — | 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 | — | 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%

| 2023 REPORT & ACCOUNTS

384 |
As at 31 December 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 | — | 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 | — | 201,571
Non-financial companies - Manufacturing industries | 54,925 | 54,821 | 1,293 | 1,258 | 57,372 | 65,474 | 58,761 | 124,235 | — | 236,532
Non-financial companies - Other activities | 7,701 | 15,667 | 529 | 154 | 16,350 | 44,356 | 8,459 | 52,815 | — | 76,866
Non-financial companies - Other services | 56,082 | 79,700 | 1,077 | 1,076 | 81,853 | 192,285 | 36,003 | 228,288 | — | 366,223
Other Services /Other activities | 19,578 | 4,561 | 9 | — | 4,570 | 36,543 | 1,254 | 37,797 | — | 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 | — | 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%

2023 REPORT & ACCOUNTS |

| 385
As at 31 December 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 | — | 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 | — | 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 | — | 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 | — | 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 December 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 | — | 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 | — | 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 | — | 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 | — | 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%

| 2023 REPORT & ACCOUNTS

386 |
As at 31 December 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 | — | — | — | 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 | — | 10,809,873
stage 3 | — | — | — | — | 1,150 | 1,150 | 1,150 | —
| 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 | — | — | — | 336,351 | 147 | 336,498 | 94,008 | 242,490
POCI | 6 | 5 | 1 | 2,563 | — | 2,575 | — | 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 December 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 | — | — | — | 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 | — | 629,167 | 7,434,152 | — | 7,434,152
stage 3 | — | — | — | — | 1,067 | 1,067 | 1,067 | —
| 6,600,955 | 169,240 | 34,790 | — | 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 | — | — | — | 364,627 | 64 | 364,691 | 84,435 | 280,256
POCI | — | — | — | 921 | — | 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).

2023 REPORT & ACCOUNTS |

| 387
As at 31 December 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 | — | 15,907,464 | 15,907,464 | — | 19,762 | 19,762
Total | 892,471 | 89,215,582 | 90,108,053 | 558,742 | 1,171,094 | 1,729,836

As at 31 December 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 | — | 605,540 | 605,540 | — | 646 | 646
Other loans | — | 12,154,809 | 12,154,809 | — | 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 December 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

| 2023 REPORT & ACCOUNTS

388 |
As at 31 December 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 December 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 December 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.

2023 REPORT & ACCOUNTS |

| 389
As at 31 December 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.

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390 |
As at 31 December 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

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| 391
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 December 2023, t he 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€ |  |  |  |  |  |
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€ and < 1 M€ |  |  |  |  |  |
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€ and < 5 M€ |  |  |  |  |  |
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€ and < 10 M€ |  |  |  |  |  |
Number | 126 | 1 | 128 | 15 | 16 | —
Value (Euros '000) | 883,759 | 5,424 | 892,174 | 111,364 | 102,113 | —
>= 10 M€ and < 20 M€ |  |  |  |  |  |
Number | 52 | 1 | 62 | 12 | 2 | —
Value (Euros '000) | 705,360 | 10,415 | 882,748 | 176,111 | 21,129 | —
>= 20 M€ and < 50 M€ |  |  |  |  |  |
Number | 32 | 1 | 47 | 2 | — | —
Value (Euros '000) | 900,127 | 20,241 | 1,393,377 | 46,125 | — | —
>= 50 M€ |  |  |  |  |  |
Number | 4 | — | 15 | 4 | — | —
Value (Euros '000) | 263,193 | — | 1,124,438 | 855,609 | — | —
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.

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392 |
As at 31 December 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€ |  |  |  |  |  |
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€ and < 1 M€ |  |  |  |  |  |
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€ and < 5 M€ |  |  |  |  |  |
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€ and < 10 M€ |  |  |  |  |  |
Number | 108 | 2 | 118 | 15 | 14 | —
Value (Euros '000) | 737,705 | 10,838 | 852,256 | 102,251 | 86,476 | —
>= 10 M€ and < 20 M€ |  |  |  |  |  |
Number | 50 | 2 | 57 | 13 | 1 | —
Value (Euros '000) | 651,146 | 21,833 | 809,825 | 194,916 | 11,110 | —
>= 20 M€ and < 50 M€ |  |  |  |  |  |
Number | 22 | — | 40 | 1 | — | —
Value (Euros '000) | 636,352 | — | 1,208,432 | 20,452 | — | —
>= 50 M€ |  |  |  |  |  |
Number | 6 | — | 14 | 2 | — | —
Value (Euros '000) | 455,600 | — | 1,245,381 | 523,630 | — | —
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.

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| 393
As at 31 December 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 December 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

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394 |
As at 31 December 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 | — | — | 790 | 529
Mortgage loans | 2,474 | 1,438 | — | — | 2,474 | 1,438
Constructed buildings |  |  |  |  |  |
Commercials | 29,968 | 15,391 | — | — | 29,968 | 15,391
Mortgage loans | 52,120 | 35,758 | — | — | 52,120 | 35,758
Other | 30,495 | 30,261 | — | — | 30,495 | 30,261
Other assets | 5,400 | 5,400 | — | — | 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 December 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 | — | — | 869 | 517
Mortgage loans | 2,550 | 1,491 | — | — | 2,550 | 1,491
Other | 11 | 11 | — | — | 11 | 11
Constructed buildings |  |  |  |  |  |
Commercials | 62,390 | 43,304 | — | — | 62,390 | 43,304
Mortgage loans | 82,549 | 64,015 | 185 | 185 | 82,734 | 64,200
Other | 38,697 | 38,574 | — | — | 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

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| 395
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 “Comité de Acompanhamento de Risco de Empresas” (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;

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396 |
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%

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| 397
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.

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398 |
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’t overlay
allocations in this geography).
Government measures to mitigate the impacts on mortgage contrac ts
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
Habitação", 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.

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Credit concentration risk
The Group’s policy relating to the identification, measurement, and evaluation of the concentration risk in credit risk is
approved by the Bank’s 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 “Customer Groups” - 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’ 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 ‘Net exposures’ (*), relating either to a counterparty or a group of counterparties – cases for
1), 2) and 3) – or to the set of exposures to an activity sector or to a country (the counterparty country of residence) –
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 “always in excess” 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.

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400 |
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’s 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:
• Minimize the risks associated with the real estate portfolio;
• Minimize management costs, maintenance and sale of properties;
• Maximize the financial results from the sale of foreclosed assets;
• 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.

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| 401
By managing this portfolio, the following risks were identified and monitored by the Bank:
• Price risk – 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;
• 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;
• 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);
• 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;
• Fiscal risk – associated with possible tax contingencies relating to properties owned by the Bank and monitoring the
administrative and judicial processes;
• 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;
– 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 – Trading and Funding – 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.

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402 |
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 | — | — | — | —
Commodities Risk | — | — | — | —
Global Risk | 1,513 | 4,678 | 699 | 1,335

Validation of the internal VaR model’s 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)

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| 403
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).

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404 |
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’s 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.

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| 405
Liquidity risk
The evaluation of the Group’s 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’s 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 Moçambique -
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.

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406 |
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 Moçambique 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 December 2023 the gross amount discounted with the European Central Bank is null (31 December 2022: Euros
600,000,000). The amount discounted with the Bank of Mozambique amounts to Euros 1,469,000 (31 December 2022:
Euros 2,165,000). There are no discounted amounts with other central banks.
The evolution of the ECB’s 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 December 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.

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| 407
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 | — | — | — | — | 108,617 | — | 108,617 | —
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 | — | — | — | — | 49,735 | — | 49,735 | —
of which: securitisations | — | — | — | — | 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 | — | — | — | — | 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 | — |  |  | 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 | — | — | 253,362 | 139,971
Debt securities | — | — | 139,971 | 139,971
of which: issued by general governments | — | — | 139,971 | 139,971
Loans and advances other than loans on demand | — | — | 111,455 | —
Own covered bonds and securitisations issued and not yet pledged |  |  | 9,114,834 | —
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).

| 2023 REPORT & ACCOUNTS

408 |
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’ 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’s 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 (“BCP Programme”) 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 “Covered Bonds (Premium)” (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’s insolvent estate, for the benefit of
covered bond holders, who have precedence over claims of any other of the issuer’s 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’s Programme documentation limits property location to Portugal only.

2023 REPORT & ACCOUNTS |

| 409
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 | — | — | — | — | — | 4,545,526
Loans and advances to Credit Institutions - Repayable on demand | 337,687 | — | — | — | — | — | 337,687
Other loans and advances (a) | — | 703,056 | 205,645 | — | — | — | 908,701
Loans and advances to customers (a) | — | — | 8,758,135 | 13,062,576 | 32,451,042 | 616,056 | 54,887,809
Other financial assets (b) | — | 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 | — | 516,776 | 312,350 | — | — | — | 829,126
Resources from costumers | 45,049,544 | 15,685,920 | 14,117,747 | 693,602 | 60,000 | — | 75,606,813
Debt securities issued | — | — | 311 | 2,360,372 | 351,999 | — | 2,712,682
Subordinated debt | — | — | — | 328,679 | 1,068,746 | — | 1,397,425
| 45,049,544 | 16,202,696 | 14,430,408 | 3,382,653 | 1,480,745 | — | 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 “3 Lines of Defence” 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’ 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.

| 2023 REPORT & ACCOUNTS

410 |
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’s 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 to 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 (“negative
pledge”). 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’s 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 Português, there are no relevant covenants related to a
possible downgrade of BCP.

2023 REPORT & ACCOUNTS |

| 411
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.

| 2023 REPORT & ACCOUNTS

412 |
As at 31 December 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 December 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 | — | 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

2023 REPORT & ACCOUNTS |

| 413
As at 31 December 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 | — | (24,592) | 13,551 | (33,462) | n/a | n/a
| (H) | 1,599,095 | — | (21,780) | — | 55,434 | n/a | n/a
| (C) | 2,997,010 | — | (126,169) | — | 93,925 | n/a | n/a
| (D) | — | 10,000 | — | (221) | 221 | n/a | n/a
| (E) | — | 2,387,825 | — | 103,603 | (16,516) | n/a | n/a
| (F) | — | 1,329,345 | — | (34,224) | (32,636) | n/a | n/a
| (G) | — | 1,037,079 | — | (41,831) | (30,208) | n/a | n/a
Foreign exchange risk |  |  |  |  |  |  |  |
Currency and interest rate swap |  | — | 348,464 | — | 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 | — | — | — | (1,310,159) | (470,250) | (808,471)
Foreign exchange risk |  |  |  |  |  |  |  |
Currency and interest rate swap | (B) | 454,268 | — | — | — | (16,027) | (2,138) | (51)
|  | 10,712,966 | — | — | — | (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

| 2023 REPORT & ACCOUNTS

414 |
As at 31 December 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 | — | (71,691) | — | (70,012) | n/a | n/a
| (H) | 1,524,001 | — | (510,086) | — | (181,718) | n/a | n/a
| (C) | 3,437,415 | — | (285,374) | (3,278) | (210,181) | n/a | n/a
| (D) | — | 10,000 | — | 517 | 580 | n/a | n/a
| (E) | — | 12,350 | — | (1,232) | 718 | n/a | n/a
| (F) | — | 1,295,542 | — | (66,860) | 65,881 | n/a | n/a
| (G) | — | 998,066 | — | (72,040) | 67,509 | n/a | n/a
Foreign exchange risk |  |  |  |  |  |  |  |
Currency and interest rate swap |  | — | 431,257 | — | (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 | — | — | — | 1,513,397 | (1,775,249) | 7,644
Foreign exchange risk |  |  |  |  |  |  |  |
Currency and interest rate swap | (B) | 1,273,663 | — | — | — | 11,473 | (20,123) | (280)
|  | 15,832,587 | — | — | — | 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

2023 REPORT & ACCOUNTS |

| 415
The reconciliation of each equity component and an analysis of other comprehensive income attributable to hedge
accounting, with reference to 31 December 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) | — | 55,326
Amounts recognised in other comprehensive income: |  |  |  |
Hedging cash flows |  |  |  |
Changes in fair value of currency and interest rate swaps | 1,326,186 | (1,523,207) | — | —
Foreign exchange changes | (6,747) | 1,725 | — | —
Hedge breakage | (816,115) | (123,938) | — | —
Ineffectiveness of coverage recognised in results | (517) | 1,333 | — | —
Others | 4,291 | (2,279) | — | —
Hedging of net investments - foreign exchange risk |  |  |  |
Reclassified to the income statement | — | — | — | 3,685
Change in the fair value of settled transactions | — | — | — | (59,011)
Balance at the end of the year | (1,280,910) | (1,788,008) | — | —

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 December 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) | — | (6,273) |  | — | —
Foreign exchange risk |  |  |  |  |  |
Currency and interest rate swap | (D) | — | 683 |  | — | —
|  | — | (5,590) |  | — | —
Cash flows hedging |  |  |  |  |  |
Interest rate risk |  |  |  |  |  |
Interest rate swaps | (D) | 61,205 | — | (E) | (45,947) | —
Foreign exchange risk |  |  |  |  |  |
Currency and interest rate swap | (D) | 19,801 | 517 |  | — | —
|  | 81,006 | 517 |  | (45,947) | —
Total |  | 81,006 | (5,073) |  | (45,947) | —

(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

| 2023 REPORT & ACCOUNTS

416 |
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 December 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) | — | (17,717) |  | — | —
Foreign exchange risk |  |  |  |  |  |
Currency and interest rate swap | (D) | — | 362 |  | — | —
|  | — | (17,355) |  | — | —
Cash flows hedging |  |  |  |  |  |
Interest rate risk |  |  |  |  |  |
Interest rate swaps | (D) | (66,333) | (238) | (E) | 54,861 | —
Foreign exchange risk |  |  |  |  |  |
Currency and interest rate swap | (D) | (15,838) | (1,333) |  | — | —
|  | (82,171) | (1,571) |  | 54,861 | —
Total |  | (82,171) | (18,926) |  | 54,861 | —

(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

2023 REPORT & ACCOUNTS |

| 417
The table below shows the detail of hedging instruments, as at 31 December 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 | — | 348,464 | 2,279 | 6,272
Cash flow hedging derivatives related to |  |  |  |  |  |
interest rate risk changes: |  |  |  |  |  |
OTC Market: |  |  |  |  |  |
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 | 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 December 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 | — | 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 | — | 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

| 2023 REPORT & ACCOUNTS

418 |
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.
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’s and counterparties. This way, the materialisation of
their impacts occurs by means of the “traditional” 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’s 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:
• the overall management of the sustainability strategy and plans of Millennium BCP and of its financial group;
• the development of policies, methodologies, analyses and reports that address ESG issues;
• the management of commitments and external communications by the Bank and the Group in this area; and
• 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:
• Integrate the ESG dimension in risk appetite (Risk Appetite Framework - RAF);
• Syndicating with the Sustainability Function the proposal of ESG metrics to be included in the Risk Appetite Statement
(RAS);
• Carry out stress tests focused on climate and environmental risk factors;
• Introduce the ESG dimension in capital and liquidity adequacy exercises.
Specifically in terms of compliance, we emphasise the following controls:
• Reporting, disclosure and prudential obligations;
• Design and approval of new products, especially in the cases of ESG product design and labelling;
• Incorporation of ESG-related conditions and requirements into the forms and contracts;
• Ensuring the timely application of the legal and regulatory dispositions related to ESG;
• Potential for conflicting interest or litigation in the provision of ESG-related services and products.

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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’s 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:
• 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.
• 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).
• 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’s 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’s profile.

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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:
• 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.
• 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.
• 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.
• Regular Monitoring of Exposure to Risks Arising from ESG Factors: This is done through established management
information routines for each risk category.
• 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.
• 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.
• 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:
• Regular assessment of the materiality of risks arising from ESG factors to confirm alignment with risk appetite and the
need for implementing mitigation actions.
• Methodologies for assessing risks arising from ESG factors integrated into credit risk assessment models.
• 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.
• 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.
• 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.

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55. 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 Notícias de Moçambique, 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’s credit claim is prejudiced by the settlement mentioned
below.

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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 Moçambique (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).

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56. 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 Português, 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’s statement of objections (“SO”) 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 (“Competition Court”) on procedural grounds (namely, on the right to
have access to confidential documents which were not used as evidence by the Authority – for several months, the PCA
denied the Defendant’ 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’s
defence was sent to the PCA, at the latter’s 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’s legal representatives).
In May 2018, the PCA refused the BCP’s application for confidential treatment of some of the information in the Bank’s
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’s defence; subsequently, in January 2019, it requested BCP to provide
summaries for the co-defendants’ 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’
confidential information an illegitimate burden.
In April 2019, at the PCA’s 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’s 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’s report on complementary evidence measures.

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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’s decision, for breach of the right of the parties to be heard on the PCA’s 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’s 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’s right to be heard, the PCA notified the BCP of its intention to reject the above-
mentioned complementary evidence measures. Following BCP’s 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’s 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’s 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 "Associação Ius Omnibus – Nova Associação 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 “rights 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”. 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).

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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’s 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 Concorrência, Regulação e Supervisão") 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.

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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 “popular
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”, an action
brought by the Ius Omnibus Association, under the terms n.º 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 Fundação José Berardo and José
Manuel Rodrigues Berardo against Banco Comercial Português, S.A., Caixa Geral de Depósitos, S.A., Novo Banco, S.A.
and Banco Espírito 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 Fundação José 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 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 José 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, Fundação José Berardo, was
declared extinct. This decision was legally contested by the José 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.

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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’s clauses determined by the court 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’s decision to the said 78 clients;
2) place the information on 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’s decision confirming this circumstance) and publish the decision of the case on Bank Millennium’s
website.

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In the decision justification delivered in writing the OPCC Chairman stated that FX rates determined by Bank Millennium
were determined at Bank Millennium’s 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’s 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
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’s attorney submitted a binding copy of final verdict of
Appeal Court in Wrocław 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’s
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).

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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 – 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’s interests;
- use of clauses linking the value of insurance benefit with the amount of borrower’s debt;
- use of clauses determining the amount of insurance premium without prior risk assessment (underwriting);
- use of clauses excluding insurer’s 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.

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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 reference index is 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
Espírito Santo, S.A. (BES) and Euros 52,021,558.11 regarding Caixa Geral de Depósitos, 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.

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12. Resolution Fund
Resolution measure of Banco Espírito 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 Espírito 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 “Banking Law”), 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’s 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 “eventual negative effects of future decisions regarding the resolution process that may result in liabilities or
contingencies”.
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 Espírito 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 Espírito 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’s annual report of 2022, “Legal 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. (…) 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”.

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According to note 22 of the Resolution Fund’s 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”.
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”.
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’s 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 (“SREP”) 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”.
According to an Investor Presentation dated January 2024, from Novo Banco’s, 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’s earnings institutional presentation, the “minimum capital condition” 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%

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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’s 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’s 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.

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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’s 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’s 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 (“Court of Auditors”) 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’s 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’s 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’s decision regarding its approval
of the CCA of Novo Banco.
According to Novo Banco’s 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’s 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%.

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Resolution measure of Banif – Banco Internacional do Funchal, S.A.
On 19 December 2015, the Board of Directors of Banco de Portugal announced that Banif “was failing or likely to fail”
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’s 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’s resolution measures applied by Banco de Portugal. In its
decision, the Court determined the legality and maintenance of Banco de Portugal’s 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:
• 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;
• in 2021 by seven domestic credit institutions, including BCP, to finance payments due under the CCA up to a
maximum of Euros 429 million;

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- 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’s 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’s 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’s 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:
- “The conditions of the loans obtained from the Fund to finance the resolution measures applied to Banco Espírito
Santo, S.A. and to Banif – 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";

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- “Those 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’s 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”.
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’s 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 (“instrução”), 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.

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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 – 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’s 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 – 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’s 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 Português, S.A., Banco ActivoBank S.A. and Banco de Investimento Imobiliário, S.A. (company
merged into Banco Comercial Português, 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.

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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 Mário 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 Português 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’ 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’s 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.

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57. 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.

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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’s 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 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.

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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
‘Result on exchange differences’ and also in ‘Result on modification’ in the profit and loss statement.
Legal risk from former Euro Bank portfolio is fully covered by Indemnity Agreement with Société Générale.
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 Jastrzębski, the Chairman of the Polish Financial Supervision Authority (‘PFSA’)
proposed a ‘sector’ solution to address the sector risks related to FX mortgages. The solution would consist in offering
banks’ 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.

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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’s 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 Gdańsk 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;

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(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 Śródmieście 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 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 – in this case thirty years – well in excess of the
ten-year statutory limitation period.

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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 ‘consumer’, 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 ‘consumer’, 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.

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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.

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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;

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(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) § 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 § 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 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.
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’ 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.

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58. 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 — 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 – 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 – 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 “monetary amounts in financial statements
that are subject to measurement uncertainty”, 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 — 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 – 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’s financial statements.

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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 — 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’s 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.

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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 Português, 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.

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IFRS 17 – Insurance Contracts
Ocidental adopted IFRS 17 – 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:
• The information in Ocidental's existing reporting systems about historical cash flows was based on assumptions
that were developed based on retrospective;
• 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;
• 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 “Modified
Retrospective Approach” or applying the “Fair Value Approach” (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

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| 453
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:
• the assessments of insurance contracts or groups of insurance contracts that would have been made at the
date of inception or initial recognition;;
• the amounts related to the contractual service margin or the loss component for insurance contracts without
direct participation features;
• the amounts related to the contractual service margin or the loss component for insurance contracts with
direct participation features;
• 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 – 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::
– Financial assets at amortized cost
– Financial assets at fair value through other comprehensive income (FVOCI)
– Financial assets at fair value through profit or loss (FVPL)

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454 |
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 (“VOBA”) 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.

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Impacts on the BCP Group´s 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 | — | 7,796,299
Loans and advances to credit institutions repayable on demand | 361,786 | — | 361,786
Financial assets at amortised cost |  |  |
Loans and advances to credit institutions | 453,213 | — | 453,213
Loans and advances to customers | 54,972,401 | — | 54,972,401
Debt securities | 8,205,196 | — | 8,205,196
Financial assets at fair value through profit or loss |  |  |
Financial assets held for trading | 931,485 | — | 931,485
Financial assets not held for trading mandatorily at fair value through profit or loss | 990,938 | — | 990,938
Financial assets at fair value through other comprehensive income | 12,890,988 | — | 12,890,988
Hedging derivatives | 109,059 | — | 109,059
Investments in associated companies | 462,338 | (89,858) | 372,480
Non-current assets held for sale | 780,514 | — | 780,514
Investment property | 2,870 | — | 2,870
Other tangible assets | 600,721 | — | 600,721
Goodwill and intangible assets | 256,213 | — | 256,213
Current tax assets | 17,283 | — | 17,283
Deferred tax assets | 2,688,216 | — | 2,688,216
Other assets | 1,385,292 | — | 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 | — | 8,896,074
Resources from customers | 69,560,227 | — | 69,560,227
Non subordinated debt securities issued | 2,188,363 | — | 2,188,363
Subordinated debt | 1,394,780 | — | 1,394,780
Financial liabilities at fair value through profit or loss |  |  |
Financial liabilities held for trading | 231,241 | — | 231,241
Financial liabilities at fair value through profit or loss | 1,581,778 | — | 1,581,778
Hedging derivatives | 377,206 | — | 377,206
Provisions | 458,744 | — | 458,744
Current tax liabilities | 20,427 | — | 20,427
Deferred tax liabilities | 16,932 | — | 16,932
Other liabilities | 1,116,983 | — | 1,116,983
TOTAL LIABILITIES | 85,842,755 | — | 85,842,755
EQUITY |  |  |
Share capital | 4,725,000 | — | 4,725,000
Share premium | 16,471 | — | 16,471
Other equity instruments | 400,000 | — | 400,000
Legal and statutory reserves | 259,528 | — | 259,528
Reserves and retained earnings | 580,304 | (89,858) | 490,446
Net income for the year attributable to Bank's Shareholders | 138,082 | — | 138,082
Non-controlling interests | 942,672 | — | 942,672
TOTAL EQUITY | 7,062,057 | (89,858) | 6,972,199
TOTAL LIABILITIES AND EQUITY | 92,904,812 | (89,858) | 92,814,954

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456 |
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 (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 | — | 116,152
Other reserves | — | 19
Net income | — | (10,111)
Investment held in Millennium Ageas (IFRS 9 and IFRS 17) | 171,588 | 75,968

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| 457
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 | — | 6,022,001
Loans and advances to credit institutions repayable on demand | 213,460 | — | 213,460
Financial assets at amortised cost |  |  |
Loans and advances to credit institutions | 963,434 | — | 963,434
Loans and advances to customers | 54,675,793 | — | 54,675,793
Debt securities | 13,035,582 | — | 13,035,582
Financial assets at fair value through profit or loss |  |  |
Financial assets held for trading | 766,597 | — | 766,597
Financial assets not held for trading mandatorily at fair value through profit or loss | 552,679 | — | 552,679
Financial assets at fair value through other comprehensive income | 7,461,553 | — | 7,461,553
Hedging derivatives | 59,703 | — | 59,703
Investments in associated companies | 298,717 | 16,202 | 314,919
Non-current assets held for sale | 499,035 | — | 499,035
Investment property | 15,217 | — | 15,217
Other tangible assets | 574,697 | — | 574,697
Goodwill and intangible assets | 182,687 | — | 182,687
Current tax assets | 17,945 | — | 17,945
Deferred tax assets | 2,938,986 | — | 2,938,986
Other assets | 1,582,455 | — | 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 | — | 1,468,360
Resources from customers | 75,430,143 | — | 75,430,143
Non subordinated debt securities issued | 1,482,086 | — | 1,482,086
Subordinated debt | 1,333,056 | — | 1,333,056
Financial liabilities at fair value through profit or loss |  |  |
Financial liabilities held for trading | 241,506 | — | 241,506
Financial liabilities at fair value through profit or loss | 1,817,678 | — | 1,817,678
Hedging derivatives | 178,000 | — | 178,000
Provisions | 561,786 | — | 561,786
Current tax liabilities | 23,680 | — | 23,680
Deferred tax liabilities | 11,708 | — | 11,708
Other liabilities | 1,391,973 | — | 1,391,973
TOTAL LIABILITIES | 83,939,976 | — | 83,939,976
EQUITY |  |  |
Share capital | 3,000,000 | — | 3,000,000
Share premium | 16,471 | — | 16,471
Other equity instruments | 400,000 | — | 400,000
Legal and statutory reserves | 268,534 | — | 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 | — | 782,114
TOTAL EQUITY | 5,920,565 | 16,202 | 5,936,767
TOTAL LIABILITIES AND EQUITY | 89,860,541 | 16,202 | 89,876,743

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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 | — | 2,737,235
Interest expense and similar charges | (587,463) | — | (587,463)
NET INTEREST INCOME | 2,149,772 | — | 2,149,772
Dividends from equity instruments | 10,086 | — | 10,086
Net fees and commissions income | 771,908 | — | 771,908
Gains/(losses) on financial operations at fair value through profit or loss | 27,306 | — | 27,306
Foreign exchange gains/(losses) | 19,390 | — | 19,390
Gains/(losses) on hedge accounting | (2,233) | — | (2,233)
Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value through profit or loss | 5,497 | — | 5,497
Other operating income/(losses) | (193,112) | — | (193,112)
TOTAL OPERATING INCOME | 2,788,614 | — | 2,788,614
Staff costs | 580,807 | — | 580,807
Other administrative costs | 352,961 | — | 352,961
Amortisations and depreciations | 139,250 | — | 139,250
TOTAL OPERATING EXPENSES | 1,073,018 | — | 1,073,018
NET OPERATING INCOME BEFORE PROVISIONS AND IMPAIRMENTS | 1,715,596 | — | 1,715,596
Impairment of financial assets at amortised cost | (300,829) | — | (300,829)
Impairment of financial assets at fair value through other comprehensive income | 5,023 | — | 5,023
Impairment of other assets | (192,059) | — | (192,059)
Other provisions | (568,297) | — | (568,297)
NET OPERATING INCOME | 349,569 | — | 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 | — | 10,167
NET INCOME BEFORE INCOME TAXES | 428,458 | (10,111) | 418,347
Income taxes |  |  |
Current | (109,632) | — | (109,632)
Deferred | (194,688) | — | (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 | — | 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) | — | (77,822)
NET INCOME FOR THE YEAR | 129,675 | (10,111) | 119,564

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| 459
60. List of subsidiary and associated companies of Banco Comercial Português
Group
As at 31 December 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% | —
BCP África, S.G.P.S., Lda. | Funchal | 214,223,800 | EUR | Holding company | 100% | 100% | 100%
BIM - Banco Internacional de Moçambique, S.A. | Maputo | 4,500,000,000 | MZN | Banking | 66.7% | 66.7% | —
BCP Finance Bank, Ltd. | George Town | 246,000,000 | USD | Banking | 100% | 100% | —
BCP International B.V. | Amsterdam | 18,000 | EUR | Holding company | 100% | 100% | 100%
M Representações Ltda | São Paulo | 77,780,760 | BRL | Financial Services | 100% | 100% | 100%
Millennium bcp Participações, S.G.P.S., Sociedade Unipessoal, Lda. | Funchal | 25,000 | EUR | Holding company | 100% | 100% | 100%
Interfundos - Sociedade Gestora de Organismos de Investimento Coletivo, S.A. | Oeiras | 1,500,000 | EUR | Real estate investment fund management | 100% | 100% | 100%
Monumental Residence - Sociedade de investimento coletivo imobiliária fechada, S.A. | Oeiras | 31,900,000 | EUR | Real-estate management | 100% | 100% | 100%
Millennium bcp - Prestação de Serviços, A.C.E. | Lisbon | 331,750 | EUR | Services | 98.6% | 97.7% | 93.2%
Millennium bcp Teleserviços - Serviços de Comércio Electrónico, 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 – Empreendimentos Turísticos e Imobiliários S.A. | Oeiras | 2,150,000 | EUR | Real-estate management | 100% | 100% | —
Finalgarve – Sociedade de Promoção Imobiliária Turística, S.A. | Oeiras | 250,000 | EUR | Real-estate management | 100% | 100% | —
Fiparso – Sociedade Imobiliária S.A | Oeiras | 50,000 | EUR | Real-estate company | 100% | 100% | —
Millennium Consulting S.A. | Warsaw | 4,339,500 | PLN | Consulting services | 100% | 50.1% | —
Millennium Goodie Sp.z.o.o. | Warsaw | 500,000 | PLN | Web portals | 100% | 50.1% | —
Millennium Leasing, Sp.z o.o. | Warsaw | 48,195,000 | PLN | Leasing | 100% | 50.1% | —
Millennium Service, Sp.z o.o. | Warsaw | 1,000,000 | PLN | Services | 100% | 50.1% | —
Piast Expert Sp. z o.o (em liquidação) | Tychy | 100,000 | PLN | Marketing services | 100% | 50.1% | —
Millennium Telecommunication Services Sp. z o.o. | Warsaw | 100,000 | PLN | Brokerage services | 100% | 50.1% | —
Millennium TFI - Towarzystwo Funduszy Inwestycyjnych, S.A. | Warsaw | 10,300,000 | PLN | Investment fund management | 100% | 50.1% | —
BCPBT CI Liquidation Company I | George Town | 1 | USD | Liquidation trust | 100% | 100% | —
BCPBT CI Liquidation Company II | George Town | 1 | USD | Liquidation trust | 100% | 100% | —

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460 |
As at 31 December 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 acumulação – Fundo de Investimento Imobiliário Fechado | Oeiras | 102,385,157 | EUR | Real-estate investment fund | 100% | 100% | 100%
Imorenda – Fundo de Investimento Imobiliário Fechado | Oeiras | 85,156,715 | EUR | Real-estate investment fund | 100% | 100% | 100%
Sand Capital - Fundo de Investimento Imobiliário Fechado | Oeiras | 88,082,695 | EUR | Real-estate investment fund | 100% | 100% | 100%
Fundial – Fundo de Investimento Imobiliário Fechado | Oeiras | 17,340,985 | EUR | Real-estate investment fund | 100% | 100% | 100%
Fundipar – Fundo de Investimento Imobiliário Fechado | Oeiras | 11,345,348 | EUR | Real-estate investment fund | 100% | 100% | 100%
Domus Capital– Fundo de Investimento Imobiliário Fechado | Oeiras | 3,799,969 | EUR | Real-estate investment fund | 95.8% | 95.8% | 95.8%
Predicapital – Fundo de Investimento Imobiliário 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 Oceânico II – Fundo de Investimento Imobiliário
Fechado and Funsita - Fundo de Investimento Imobiliário 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 December 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.

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| 461
As at 31 December 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 Atlântico, S.A. | Luanda | 53,821,603,000 | AOA | Banking | 22.7% | 22.5% | —
Banque BCP, S.A.S. | Paris | 215,335,898 | EUR | Banking | 19% | 19% | 19%
Lubuskie Fabryki Mebli, S.A. (em liquidação) | Swiebodzin | 13,400,050 | PLN | Furniture manufacturer | 50% | 25.1% | —
Europa Millennium Financial Services sp. z o.o. (*) | Warsaw | 100,000 | PLN | Services | 20% | 10% | —
SIBS, S.G.P.S., S.A. | Lisbon | 24,642,300 | EUR | Banking services | 23.3% | 21.9% | —
UNICRE - Instituição Financeira de Crédito, 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 December 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, 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% | —
Ageas - Sociedade Gestora de Fundos de Pensões, S.A. | Lisbon | 1,200,000 | EUR | Pension fund management | 49% | 49% | —
Fidelidade Moçambique - Companhia de Seguros S.A. | Maputo | 295,000,000 | MZN | Insurance | 22% | 14.7% | —

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462 |
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 Português, 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 Moçambique, 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 África, S.G.P.S., Lda. | 280,742 | 279,680 | 2,338 | 561,713 | 560,269 | 60,975
Millennium bcp Participações, 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 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 Atlântico, 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.
61. 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 Português, S.A. informed about the issuance of perpetual subordinated
notes (Additional Tier 1)
As at 11 January 2024, Banco Comercial Português, S.A. (“Millennium bcp”) 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%.

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| 463
Banco Comercial Português, S.A. informed about the resignation of a member of the Board of
Directors
As at 5 January 2024, Banco Comercial Português, S.A. (“Bank”) 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 Português S.A. informed about decision to call the currently outstanding
Additional Tier 1 instrument (“AT1”) in the amount of Euros 400 million
As at 1 January 2024, Banco Comercial Português, S.A. informed that it has decided to exercise its option to early
redeem all of its Additional Tier 1 notes “Fixed Rate Reset Perpetual Temporary Write Down Additional Tier 1 Capital
Notes” (ISIN: PTBCPFOM0043), issued on 31 January 2019 (the “Notes”), 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.

| 2023 REPORT & ACCOUNTS

464 |
Accounts and Notes to the
Individual Accounts

2023 REPORT & ACCOUNTS |

| 465
SEPARATE INCOME STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022

| (Thousands of euros)
| Notes | 2023 | 2022
Interest and similar income | 2 | 2,171,317 | 1,064,034
Interest expense and similar charges | 2 | (760,141) | (147,703)
NET INTEREST INCOME |  | 1,411,176 | 916,331
Dividends from equity instruments | 3 | 76,122 | 158,365
Net fees and commissions income | 4 | 537,334 | 534,048
Gains/(losses) on financial operations at fair value through profit or loss | 5 | (32,378) | 10,420
Foreign exchange gains/(losses) | 5 | 21,245 | 43,430
Gains/(losses) on hedge accounting | 5 | 19,716 | 970
Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value through profit or loss | 5 | (7,165) | (26,997)
Other operating income / (losses) | 6 | (44,451) | (62,869)
TOTAL OPERATING INCOME |  | 1,981,599 | 1,573,698
Staff costs | 7 | 341,963 | 326,905
Other administrative costs | 8 | 192,661 | 189,719
Amortisations and depreciations | 9 | 74,177 | 80,051
TOTAL OPERATING EXPENSES |  | 608,801 | 596,675
OPERATING NET INCOME BEFORE PROVISIONS AND IMPAIRMENTS |  | 1,372,798 | 977,023
Impairment of financial assets at amortised cost | 10 | (204,714) | (213,836)
Impairment of financial assets at fair value through other comprehensive income | 11 | (1,098) | 5,273
Impairment of other assets | 12 | (61,448) | (12,542)
Other provisions | 13 | (111,410) | (103,901)
NET OPERATING INCOME |  | 994,128 | 652,017
Gains/(losses) on disposal of subsidiaries and other assets | 14 | 2,872 | 12,826
NET INCOME BEFORE INCOME TAXES |  | 997,000 | 664,843
Income taxes |  |  |
Current | 27 | 6,818 | 2,343
Deferred | 27 | (323,542) | (188,778)
NET INCOME FOR THE YEAR |  | 680,276 | 478,408
Earnings per share (in Euros) |  |  |
Basic | 15 | 0.043 | 0.029
Diluted | 15 | 0.043 | 0.029

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the separate financial statements.

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466 |
SEPARATE STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022

| (Thousands of euros)
| Notes | 2023 | 2022
NET INCOME FOR THE YEAR |  | 680,276 | 478,408
ITEMS THAT MAY BE RECLASSIFIED TO THE |  |  |
INCOME STATEMENT | 39 |  |
Debt instruments at fair value through other comprehensive income |  |  |
Gains / (losses) for the year |  | 56,032 | (225,728)
Reclassification of (gains) / losses to profit or loss (note 5) |  | 9,928 | 45,411
Cash flows hedging |  |  |
Gains / (losses) for the year |  | 432,839 | (1,642,293)
Fiscal impact |  | (156,123) | 570,476
|  | 342,676 | (1,252,134)
ITEMS THAT WILL NOT BE RECLASSIFIED TO |  |  |
THE INCOME STATEMENT | 39 |  |
Equity instruments at fair value through other comprehensive income |  |  |
Gains / (losses) for the year |  | 4,164 | (13,261)
Changes in credit risk of financial liabilities at |  |  |
fair value through profit or loss | 39 | (2,801) | (63)
Actuarial gains / (losses) for the year | 45 | (220,483) | 367,323
Fiscal impact |  | 95,002 | (133,892)
|  | (124,118) | 220,107
Other comprehensive income / (loss) for the year |  | 218,558 | (1,032,027)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |  | 898,834 | (553,619)

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the separate financial statements.

2023 REPORT & ACCOUNTS |

| 467
SEPARATE BALANCE SHEET AS AT 31 DECEMBER 2023 AND 2022

(Thousands of euros)
| Notes | 2023 | 2022
ASSETS |  |  |
Cash and deposits at Central Banks | 16 | 1,709,232 | 2,956,492
Loans and advances to credit institutions repayable on demand | 17 | 155,794 | 131,400
Financial assets at amortised cost |  |  |
Loans and advances to credit institutions | 18 | 370,409 | 384,164
Loans and advances to customers | 19 | 35,310,145 | 37,334,829
Debt securities | 20 | 11,584,291 | 10,255,688
Financial assets at fair value through profit or loss |  |  |
Financial assets held for trading | 21 | 685,971 | 692,796
Financial assets not held for trading mandatorily at fair value through profit or loss | 21 | 647,871 | 789,153
Financial assets designated at fair value through profit or loss | 21 | 32,004 | —
Financial assets at fair value through other comprehensive income | 21 | 4,714,386 | 2,914,514
Hedging derivatives | 22 | 22,335 | 28,426
Investments in subsidiaries and associated companies | 23 | 2,207,974 | 2,481,732
Non-current assets held for sale | 24 | 97,213 | 257,616
Other tangible assets | 25 | 323,354 | 300,169
Intangible assets | 26 | 99,696 | 77,923
Current tax assets | 27 | 14,044 | 10,926
Deferred tax assets | 27 | 2,439,081 | 2,750,881
Other assets | 28 | 1,105,592 | 1,283,266
TOTAL ASSETS |  | 61,519,392 | 62,649,975
LIABILITIES |  |  |
Financial liabilities at amortised cost |  |  |
Resources from credit institutions | 29 | 1,522,945 | 2,244,784
Resources from customers | 30 | 45,786,768 | 49,625,808
Non subordinated debt securities issued | 31 | 1,835,210 | 1,297,551
Subordinated debt | 32 | 1,037,079 | 998,066
Financial liabilities at fair value through profit or loss |  |  |
Financial liabilities held for trading | 33 | 107,415 | 187,438
Financial liabilities at fair value through profit or loss | 34 | 3,602,285 | 1,817,679
Hedging derivatives | 22 | 22,536 | 59,548
Provisions | 35 | 465,961 | 363,699
Current tax liabilities | 27 | 65,291 | 2,027
Other liabilities | 36 | 945,986 | 787,307
TOTAL LIABILITIES |  | 55,391,476 | 57,383,907
EQUITY |  |  |
Share capital | 37 | 3,000,000 | 3,000,000
Share premium | 37 | 16,471 | 16,471
Other equity instruments | 37 | 400,000 | 400,000
Legal and statutory reserves | 38 | 316,375 | 268,534
Reserves and retained earnings | 39 | 1,714,794 | 1,102,655
Net income for the year |  | 680,276 | 478,408
TOTAL EQUITY |  | 6,127,916 | 5,266,068
TOTAL LIABILITIES AND EQUITY |  | 61,519,392 | 62,649,975

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the separate financial statements.

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468 |
SEPARATE STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022

(Thousands of euros)
| 2023 | 2022
CASH FLOWS ARISING FROM OPERATING ACTIVITIES |  |
Interests received | 1,858,296 | 963,703
Commissions received | 702,118 | 721,513
Fees received from services rendered | 56,060 | 60,889
Interests paid | (661,012) | (13,268)
Commissions paid | (109,756) | (121,771)
Recoveries on loans previously written off | 10,532 | 6,217
Payments (cash) to suppliers and employees (*) | (612,933) | (636,594)
Income taxes (paid) / received | (2,346) | 1,769
| 1,240,959 | 982,458
Decrease / (increase) in operating assets: |  |
Receivables from / (Loans and advances to) credit institutions | 17,383 | (332,692)
Loans and advances to customers receivable / (granted) | 1,859,280 | (847,592)
Short term trading securities | 11,916 | 122,529
Increase / (decrease) in operating liabilities: |  |
Loans and advances to credit institutions repayable on demand | 28,271 | 453,017
Deposits from credit institutions with agreed maturity date | (756,766) | (9,335,071)
Loans and advances to customers repayable on demand | (5,306,932) | 1,330,581
Deposits from customers with agreed maturity date | 3,240,324 | 3,249,209
| 334,435 | (4,377,561)
CASH FLOWS ARISING FROM INVESTING ACTIVITIES |  |
Sale of investments held in associated companies | 225,000 | 542,524
Acquisition of shares in subsidiaries and associated companies | (1,429) | (1,208)
Dividends received | 72,351 | 154,482
Interest income from financial assets at fair value through other comprehensive income and at amortised cost | 211,696 | 103,295
Sale of financial assets at fair value through other comprehensive income and at amortised cost | 2,045,634 | 7,372,586
Acquisition of financial assets at fair value through other comprehensive income and at amortised cost | (16,963,014) | (15,406,563)
Maturity of financial assets at fair value through other comprehensive income and at amortised cost | 11,703,534 | 9,526,056
Acquisition of tangible and intangible assets | (61,614) | (67,780)
Sale of tangible and intangible assets | 746 | 983
Decrease / (increase) in other sundry assets | 575,176 | (296,144)
| (2,191,920) | 1,928,231
CASH FLOWS ARISING FROM FINANCING ACTIVITIES |  |
Issuance of subordinated debt | — | 133,700
Reimbursement of subordinated debt | — | (133,700)
Issuance of debt securities | 499,998 | 350,465
Reimbursement of debt securities | (208,181) | (1,838,664)
Issuance of commercial paper and other securities | 32,137 | 34,505
Reimbursement of commercial paper and other securities | (33,623) | (12,374)
Dividends paid to shareholders of the Bank (note 43) | — | (13,603)
Dividends paid of perpetual subordinated bonds (Additional Tier 1) | (37,000) | (37,000)
Increase / (decrease) in other sundry liabilities (**) | 381,288 | 87,865
| 634,619 | (1,428,806)
Net changes in cash and equivalents | (1,222,866) | (3,878,136)
Cash (note 16) | 326,291 | 340,871
Deposits at Central Banks (note 16) | 2,630,201 | 6,428,190
Loans and advances to credit institutions repayable on demand (note 17) | 131,400 | 196,967
CASH AND EQUIVALENTS AT THE BEGINNING OF THE YEAR | 3,087,892 | 6,966,028
Cash (note 16) | 415,873 | 326,291
Deposits at Central Banks (note 16) | 1,293,359 | 2,630,201
Loans and advances to credit institutions repayable on demand (note 17) | 155,794 | 131,400
CASH AND EQUIVALENTS AT THE END OF THE YEAR | 1,865,026 | 3,087,892

(*) In 2023, this balance includes the amount of Euros 34,000 (31 December 2022: Euros 30,000) related to short-term lease contracts and the amount of
Euros 1,808,000 (31 December 2022: Euros 1,742,000) related to lease contracts of low value assets.
(**) In 2023, this balance includes the amount of Euros 33,202,000 (31 December 2022: Euros 19,592,000) corresponding to payments of lease liabilities’
shares of capital.
CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the separate financial statements.

2023 REPORT & ACCOUNTS |

| 469
SEPARATE STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022

(Thousands of euros)
| Share capital | Share premium | Other equity instruments | Legal and statutory reserves | Reserves and retained earnings | Net income for the year | Total equity
BALANCE AS AT 31 DECEMBER 2021 | 4,725,000 | 16,471 | 400,000 | 259,528 | 379,231 | 90,060 | 5,870,290
Net income for the year | — | — | — | — | — | 478,408 | 478,408
Other comprehensive income | — | — | — | — | (1,032,027) | — | (1,032,027)
TOTAL COMPREHENSIVE INCOME | — | — | — | — | (1,032,027) | 478,408 | (553,619)
Results applications: |  |  |  |  |  |  |
Legal reserve (note 38) | — | — | — | 9,006 | (9,006) | — | —
Transfers for Reserves and retained earnings | — | — | — | — | 90,060 | (90,060) | —
Dividends paid | — | — | — | — | (13,603) | — | (13,603)
Interests of the perpetual subordinated bonds (Additional Tier 1) | — | — | — | — | (37,000) | — | (37,000)
Reduction of the share capital | (1,725,000) | — | — | — | 1,725,000 | — | —
BALANCE AS AT 31 DECEMBER 2022 | 3,000,000 | 16,471 | 400,000 | 268,534 | 1,102,655 | 478,408 | 5,266,068
Net income for the year | — | — | — | — | — | 680,276 | 680,276
Other comprehensive income | — | — | — | — | 218,558 | — | 218,558
TOTAL COMPREHENSIVE INCOME | — | — | — | — | 218,558 | 680,276 | 898,834
Results applications: |  |  |  |  |  |  |
Legal reserve (note 38) | — | — | — | 47,841 | (47,841) | — | —
Transfers for Reserves and retained earnings | — | — | — | — | 478,408 | (478,408) | —
Interests of the perpetual subordinated bonds (Additional Tier 1) | — | — | — | — | (37,000) | — | (37,000)
Other reserves | — | — | — | — | 14 | — | 14
BALANCE AS AT 31 DECEMBER 2023 | 3,000,000 | 16,471 | 400,000 | 316,375 | 1,714,794 | 680,276 | 6,127,916

CHIEF ACCOUNTANT THE EXECUTIVE COMMITTEE
See accompanying notes to the separate financial statements.

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470 |
1. Accounting policies
A. Basis of presentation
Banco Comercial Português, S.A. (the 'Bank') is a private capital bank, established in Portugal in 1985. It started
operating on 5 May 1986, and these separate financial statements reflect the results of the operations of the Bank 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 Bank’s separate financial
statements are required to be prepared in accordance with International Financial Reporting Standards (IFRS), as
endorsed by the European Union (EU), since 2016. 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 separate 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 separate 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 separate 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 Bank has adopted IFRS and interpretations mandatory for accounting periods beginning on or after 1 January 2023.
The accounting policies are consistent with those used in the preparation of the financial statements of the previous
period.
The Bank'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.X.

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| 471
B. Financial instruments (IFRS 9)
B1. Financial assets
B1.1. Classification, initial recognition and subsequent measurement
At the initial recognition, financial assets are classified into one of the following categories:
- “Financial assets at amortised cost”;
– “Financial assets at fair value through other comprehensive income”; or,
– “Financial assets at fair value through profit or loss”.
The classification is made taking into consideration the following aspects:
– the Bank's business model for the management of the financial asset; and,
– the characteristics of the contractual cash flows of the financial asset.
Business Model Evaluation
With reference to 1 January 2018, the Bank 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:
– 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;
– how the performance of the portfolio is evaluated and reported to the Bank's management bodies;
– 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;
– 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,
– 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 Bank 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 of time 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 Bank 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 Bank considered:
– contingent events that may change the periodicity and the amount of the cash flows;
– characteristics that result in leverage;
– terms of prepayment and extension of maturity;
– terms that may limit the right of the Bank to claim cash flows in relation to specific assets (e.g., contracts with
terms that prevent access to assets in case of default – non-recourse asset); and,
– characteristics that may change the time value of money.

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In addition, an advance payment is consistent with the SPPI criterion if:
– the financial asset is acquired or originated with a premium or discount in relation to the contractual nominal value;
– the prepayment represents substantially the nominal amount of the contract plus accrued contractual interest, but
not paid (may include reasonable compensation for prepayment); and,
– the prepaid fair value is insignificant at initial recognition.
B1.1.1. 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:
– 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,
– 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 Bank 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 B1.5), 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 B3.
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".
B1.1.2. 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:
– 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,
– 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 Bank 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.

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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”.
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 B1.5). Impairment losses are recognised in the
income statement under "Impairment of financial assets at fair value through other comprehensive income", against
“Other comprehensive income”, 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 B3.
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 “Other comprehensive income”. 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 “Fair value changes” are transferred to “Retained earnings” at the
time of their derecognition.
B1.1.3. 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 Bank 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 Bank 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 Bank classified "Financial assets at fair value through profit and loss" in the following items:
a) “Financial assets held for trading”
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) “Financial assets not held for trading mandatorily at fair value through profit or loss”
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) “Financial assets designated at fair value through profit or loss” (Fair Value Option)
This item includes the financial assets that the Bank has chosen to designate at fair value through profit or loss to
eliminate accounting mismatch.

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Initial recognition and subsequent measurement
Considering that the transactions carried out by the Bank 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 “Gains/(losses) on financial operations at fair value through profit or loss”. 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".
B1.2. 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.
B1.3. Modification and derecognition of financial assets
General principles
i) The Bank shall derecognise a financial asset when, and only when:
– the contractual rights to the cash flows from the financial asset expire; or,
– 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 Bank transfers a financial asset if, and only if, it either:
– transfers the contractual rights to receive the cash flows of the financial asset; or,
– 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 Bank 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 Bank
shall treat the transaction as a transfer of a financial asset if all the following three conditions are met:
– the Bank 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;
– the Bank 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,
– the Bank 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 – 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 Bank 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:
– if the Bank 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;
– if the Bank retains substantially all the risks and benefits arising from owning the financial asset, it shall continue to
recognise the financial asset;

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– if the Bank 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 Bank 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 Bank retained control, it shall continue to recognise the financial asset to the extent of its continued
involvement in the financial asset.
v) The transfer of risks and benefits (see prior note) is evaluated by comparing the Bank’s 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 Bank 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 Bank 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:
– 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;
– 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;
– 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);
– 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’s 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).

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Loans written-off
The Bank 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.
B1.4. 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:
– 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 B1.3)
and recognition of a new contract that reflects the credit losses incurred;
– 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).
B1.5. Impairment losses
B1.5.1. Financial instruments subject to impairment losses recognition
The Bank recognises impairment losses for expected credit losses on financial instruments recognised in the following
accounting items:
B1.5.1.1. 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).
B1.5.1.2. 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).
B1.5.1.3. 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).
B1.5.2. 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

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The Bank 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:
– 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);
– Stage 2: the operations in which there is a significant increase in credit risk since its initial recognition (note B1.5.3)
but are not impaired (note B1.5.4) 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);
– Stage 3: impaired operations are classified in this stage. Impairment losses associated with operations classified at
this stage correspond to lifetime expected credit losses.
B1.5.3. 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’ behaviour towards the financial system.
B1.5.4. 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.

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B1.5.5. 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:
– they have impairment as a result of the latest individual analysis;
– are classified in stage 2 as a result of the last revision of the questionnaire analysing the indications of financial
difficulties;
– according to recent information, they show a significant deterioration in risk levels; or,
– are a Special Purpose Vehicle (SPV).
4. The individual analysis includes the following procedures:
– 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;
– 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 Bank 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:
– total exposure of each customer towards the Bank and the existence of overdue loans;
– viability of the customer’s business and its capacity to generate enough cash flows to service debt obligations in the
future;
– the existence, nature and estimated value of the collaterals associated to each loan;
– significant deterioration of the customer's rating;
– the customer’s available assets in liquidation or insolvency situations;
– the existence of preferential creditors;
– the amount and expected recovery term.

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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:
– 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;
– 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:
– recovery of collateral in geographies in which the Bank has no relevant recovery experience;
– recovery of debt related to geographies in which there is strong political instability;
– recovery of non-real estate collateral for which there is no evidence of market liquidity;
– recovery of related collateral or government guarantees in a currency other than the country's own;
– 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 months 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’s
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.
B1.5.6. 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 Bank's credit portfolio is divided by internal risk grades and
according to the following segments:
a) Segments with a reduced history of defaults, designated ‘low default’: Large corporate exposures, Project finance,
Institutions (banks/financial institutions) and Sovereigns;
b) Segments not ‘low default’: - Retail: Mortgages; Overdrafts; Credit cards; Small and medium enterprises - Retail
(‘SME Retail’); and Others - Corporate: Small and medium enterprises - Corporate (‘Large SME’); and Real Estate.
The Bank performs statistical tests in order to prove the homogeneity of the segments mentioned above, with a
minimum period of one year.

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Expected credit losses are estimates of credit losses that are determined as follows:
– 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 Bank expects to receive;
– financial assets with impairment at the reporting date: the difference between the gross book value and the present
value of the estimated cash flows;
– 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 Bank expects to receive;
– financial guarantees: the current value of the expected repayments less the amounts that the Bank expects to
recover.
The main inputs used to measure ECLs on a collective basis should include the following variables:
– Probability of Default – PD;
– Loss Given Default – LGD; and,
– Exposure at Default – 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 Bank 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 Bank 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 Bank 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 Bank 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 Bank has the
right to require payment or end the commitment or guarantee.
The Bank 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.

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The Bank 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.
B2. Financial liabilities
B2.1. Classification, initial recognition and subsequent measurement
At initial recognition, financial liabilities are classified in one of the following categories:
– “Financial liabilities at amortised cost”;
– “Financial liabilities at fair value through profit or loss”.
B2.1.1. 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) “Financial liabilities held for trading”
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) “Financial liabilities designated at fair value through profit or loss”
The Bank 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:
– the financial liability is managed, evaluated and reported internally at its fair value; or,
– the designation eliminates or significantly reduces the accounting mismatch of transactions.
Initial recognition and subsequent measurement
Considering that the transactions carried out by the Bank 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:
– 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;
– 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.

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B2.1.2. 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:
– the provision for losses determined according to the criteria described in note B1.5;
– 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".
B2.1.3. 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.
B2.2. Reclassification between categories of financial liabilities
Reclassifications of financial liabilities are not allowed.
B2.3. Derecognition of financial liabilities
The Bank derecognises financial liabilities when these are cancelled or extinct.
B3. 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 Bank 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.

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B4. Hedge accounting
As allowed by IFRS 9, the Bank opted to continue to apply the hedge accounting requirements in accordance with IAS
39.
The Bank 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 Bank. A hedge relationship exists when:
– at the inception of the hedge there is formal documentation of the hedge;
– the hedge is expected to be highly effective;
– the effectiveness of the hedge can be reliably measured;
– the hedge is assessed in a continuous basis and highly effective throughout the reporting period; and,
– 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.
B4.1. 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.
B4.2. 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:
– deferred over the residual period of the hedged instrument; or,
– 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.
B4.3. Hedge effectiveness
For a hedge relationship to be classified as such according to IAS 39, effectiveness must be demonstrated. As such, the
Bank 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.

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B4.4. 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.
B5. 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 B1.1.3.
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.
C. Securitization operations
C1. Traditional securitizations
As at 31 December 2023, the Bank has two residential mortgage credit securitization operations, Magellan Mortgages
no.3 and no.4, in which the respective portfolios were derecognised from the Bank’s 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 Bank maintained control of the assets and
liabilities of Magellan Mortgages no.3, this Special Purpose Entity (SPE) being consolidated in the Group’s 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
Titularization Fund, which has financed this purchase through the sale of titularization units to a SPE with office in
Ireland. At the same time, this SPE issued and sold in capital markets a group of different portions of bonds.
C2. Synthetic securitizations
As at 31 December 2023, the Bank has 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.

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Note that in all of 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.
D. 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 of 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 Bank are considered as an equity instrument when redemption of the shares is solely at
the discretion of the Bank and dividends are paid at the discretion of the Bank.
Income from equity instruments (dividends) are recognised when the obligation to pay is established and are deducted
to equity.
E. Securities borrowing and repurchase agreement transactions
E1. 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).
E2. Repurchase agreements
The Bank 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.
F. Investments in subsidiaries and associates
Investments in subsidiaries and associates are accounted for in the Bank's financial statements at their historical cost
less any impairment losses.
Subsidiaries are entities controlled by the Bank (including investment funds and securitization vehicles). The Bank
controls an entity when it holds the power to designate the relevant activities of the entity, and when it is exposed or
has rights to variable returns from its involvement with the entity and is able to take possession of those results through
the power it holds over the relevant activities of that entity (de facto control).

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Investments in associates
Associates are those entities in which the Bank has significant influence but not control over the financial and operating
policy decisions of the investee. It is assumed that the Bank has significant influence when it holds, directly or
indirectly, 20% or more of the voting rights of the investee. If the Bank holds, directly or indirectly less than 20% of the
voting rights of the investee, it is presumed that the Bank does not have significant influence, unless such influence can
be clearly demonstrated.
The existence of significant influence by the Bank 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 Bank and the investee;
– interchange of the management team; or
– provision of essential technical information.
Impairment
The recoverable amount of the investments in subsidiaries and associates is assessed annually, with reference to the
end of the year or whenever exists any impairment triggers. Impairment losses are calculated based on the difference
between the recoverable amount of the investments in subsidiaries and associates and their book value. Impairment
losses identified are charged against results and subsequently, if there is a reduction of the estimated impairment loss,
the charge is reversed, in a subsequent period. The recoverable amount is determined based on the higher between the
assets value in use and the fair value deducted of selling costs, calculated using valuation methodologies supported by
discounted cash flow techniques, considering market conditions, the time value of money and the business risks.
Merger of companies
The process of merging companies by incorporation corresponds to the incorporation of the assets and liabilities of a
company (merged) into another company (acquirer). In the event that the Bank is the acquirer company and the
merged company is controlled by the Bank, the merger is classified as a transaction between companies under common
control, and the Bank uses the denominated ‘predecessor approach’ as a criterion for recording in its individual
accounts, which consists of recording the assets and liabilities of the merged company at their book value as presented
in the Bank's consolidated accounts. This criterion provides for intra-group balances and historical transactions between
the two companies to be eliminated and the amounts regarding assets and liabilities to be adjusted accordingly. The
net difference between the amount recorded by the Bank and the amounts of the assets and liabilities incorporated is
recorded as a “Merger reserve”.
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 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 Bank 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 Bank 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 24 and
28.

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The Bank 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.
G1. Non-operating real estate (INAE)
The Bank also classifies as non-current assets held for sale the non-operating real estate (INAE), which include
properties acquired by the Bank as a result of the resolution of customer credit processes, as well as own properties
that are no longer used by the Bank's services.
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 Comissão do Mercado de
Valores Mobiliários (CMVM).
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 Bank'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 Bank 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:
– from the lessor's perspective, leases will continue to be classified as finance leases or operating leases;
– from the lessee’s 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 Bank 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’s 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.

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Impacts from the lessee’s perspective
The Bank recognises for all leases, except for those with a term under 12 months or for leases of low-value assets:
– 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);
– a lease liability initially recorded at the present value of the remaining lease payments (NPV), which includes:
– fixed payments deducted from any lease incentives receivable;
– variable lease payments that depend on a rate or an index, initially measured considering the rate or index as at
the commencement date;
– amounts expected to be paid by the lessee under residual values guarantees;
– the exercise price of a purchase option, if the lessee is reasonably certain to exercise that option;
– 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’s incremental borrowing rate, which embodies the risk-free rate curve
(swap curve) plus the Bank’s 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:
– by increasing their carrying amount to reflect interest;
– by reducing their carrying amount to reflect lease payments;
– carrying amount shall be remeasured to reflect any leases’ revaluations or changes, as well as to reflect the review
of in-substance fixed payments and the review of the lease term.
The Bank remeasures the lease liability (and makes a corresponding adjustment to the right-of-use asset) whenever:
– 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;
– 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);
– 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 Bank 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 Bank 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.

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The implementation of this standard implies changes in the Bank’s financial statements, namely:
– in the income statement:
(i) recording in “Interest Income” the interest expenses related to lease liabilities;
(ii) recording in “Other administrative costs” the amounts related to short-term lease contracts and to lease
contracts of low-value assets; and,
(iii) recording in “Amortisations and depreciations” the depreciation expenses related to right-to-use assets.
– in the balance sheet:
(i) recording in “Other tangible assets” the recognition of right-to-use assets; and,
(ii) recording in “Other liabilities” the amount of recognised lease liabilities.
– in the statement of cash flows, the balance “Cash flows arising from operating activities – Payments (cash) to
suppliers and employees” includes amounts related to short-term lease contracts and to lease contracts of low-
value assets, and the balance “Cash flows arising from financing activities - Decrease in other sundry liabilities and
non-controlling interests” includes amounts related to payments of lease liabilities’ capital portions, as detailed in
the separate statement of cash flows.
Impact from the lessor’s 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 – Leases requires that the lessor evaluates subleases regarding right-to-use and not regarding the underlying
asset.
The sublease’s lessor, simultaneously lessee regarding the original lease, shall recognise an asset in the financial
statement – 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 (“over time”) or at an exact
moment (“point in time”), 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 B.3).

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J. Gains/(losses) on financial operations at fair value through profit or loss, Foreign exchange
gains/(losses), Gains/(losses) on hedge accounting, 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 Bank’s 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 Bank.
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 Bank are recognised as ‘Investment properties’, 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.

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N. Intangible assets
N1. Research and development expenditure
The Bank does not capitalise any research and development costs. All expenses are recognised as costs in the period in
which they occur.
N2. Software
The Bank 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 Bank does not capitalise internal
costs arising from software development.
O. Cash and cash equivalents
For the purposes of the cash flow statement, the item “Cash and cash equivalents” 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 Bank has a legal right to
offset the amounts recognised and transactions can be settled at their net value; and, ii) the Bank intends to settle on
a net basis or realize the asset and settle the liability simultaneously. Considering the current operations of the Bank,
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 Bank has the responsibility to pay its employees' retirement pensions, invalidity pensions and survivor's 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 ‘Plano ACT’ and ‘Plano ACTQ’ of the Banco Comercial Português 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 Bank 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.

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Until 2011, in addition to the benefits provided for in the two plans above-mentioned, the Bank had assumed the
responsibility, if certain conditions of profitability were verified in each year, of assigning retirement supplements to
the Bank's employees hired up to 21 September 2006 (Complementary Plan). The Bank, 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 Bank's benefit plan, effective from 1 January 2012. The plan was
cut, and employees were given individual acquired rights. On that date, the Bank 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 Bancários 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.

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These changes were framed by the Bank 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 Supervisão de Seguros e Fundos de Pensões (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 Bank’s net obligation in respect of pension plans (defined benefit pensions plan) is calculated on a half year basis
at 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 Bank’s 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 in order 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 Bank’s 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 Bank, 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 Bank 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.

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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 Bank'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 January 1, 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 – Sindicato Nacional dos Quadros e Técnicos Bancários e SIB – 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 Bank's employees are
recognised as expenses when incurred.
As at 31 December 2023, the Bank has two defined contribution plans. One plan covers employees who were hired
before 1 July 2009. For this plan, called non-contributory, Bank'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 Português. 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 Bank 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’ 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.

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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.

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S. Income taxes
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’ 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 “Deferred tax assets” 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 Bank, 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 either the same taxable
entity.
The Bank 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, not having occurred any material impact on the Bank’s financial statements
resulting from its application.
In 2016, the Bank 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 bank'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 Bank adopted IFRS 8 – Operating Segments for the purpose of disclosing financial information by operating and
geographic segments. A business segment is a Bank'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.

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Since the separate financial statements are presented with the Group's report, in accordance with paragraph 4 of IFRS
8, the Bank is exempt of presenting information on an individual basis regarding segmental reporting.
U. Provisions, Contingent liabilities and Contingent assets
U1. Provisions
Provisions are recognised when (i) the Bank 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 Bank 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
Bank; 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 Bank by the weighted
average number of ordinary shares outstanding, excluding the average number of ordinary shares purchased by the
Bank 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 as a result of an
issue with premium or discount or other event that changed the potential number of ordinary shares or as a result of
changes in the accounting policies, the earnings per share for all presented periods should be adjusted retrospectively.

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W. Insurance or reinsurance intermediation services
Banco Comercial Português is an entity authorized by the Insurance and Pension Funds Supervisory Authority (ASF -
Autoridade de Supervisão de Seguros e Fundos de Pensões) 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, the Bank 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.
X. 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 Bank’s
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 Bank’s 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 Bank’s 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.
X1. Income taxes
Interpretations and estimations were required to determine the total amount of income taxes on profits. 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 Bank 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.
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.

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In 2022, the Bank 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.º 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 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.
X2. 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.
X3. Pension and other employees’ 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).
X4. Financial instruments – IFRS 9
X4.1. 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.

| 2023 REPORT & ACCOUNTS

500 |
The Bank 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 Bank 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 Bank 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.
X4.2. 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 Bank
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 uncertainty associated with the current geopolitical crisis, 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 Bank 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 Bank 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.

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| 501
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.
X4.3. 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.
X5. Impairment of investments in subsidiary and associated companies
The Bank assesses annually the recoverable amount of investments in subsidiary and associated companies, regardless
of the existence of any impairment triggers. Impairment losses are calculated based on the difference between the
recoverable amount of the investments in subsidiary and associated companies and their book value. Impairment losses
identified are recognised against profit and loss, being subsequently reversed by profit and loss if there is a reduction in
the estimated impairment loss in a subsequent period.
The recoverable amount is determined based on the highest between the value in use of the assets and the fair value
deducted of selling costs, calculated using valuation methodologies supported by discounted cash flow techniques,
considering market conditions, the time value of money and the business risks, which require the use of assumptions or
judgments in establishing fair value estimates.
The use of alternative methodologies and different assumptions and estimates could result in a different level of
impairment losses recognized, with the consequent impact on the Bank’s consolidated income statement.
Y. Subsequent events
The Bank 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 financial statements.

| 2023 REPORT & ACCOUNTS

502 |
2. Net interest income
The amount of this account is comprised of:

| (Thousands of euros)
| 2023 | 2022
Interest and similar income |  |
Interest on deposits at Central Banks and on loans and advances to credit institutions repayable on demand | 51,563 | 19,598
Interest on financial assets at amortised cost |  |
Loans and advances to credit institutions | 20,295 | 9,633
Loans and advances to customers | 1,651,364 | 859,008
Debt instruments | 229,246 | 91,540
Interest on financial assets at fair value through profit or loss |  |
Financial assets held for trading | 30,884 | 1,718
Financial assets not held for trading mandatorily at fair value through profit or loss | 2,462 | 1,641
Financial assets designated at fair value through profit or loss | 452 | —
Interest on financial assets at fair value through other comprehensive income | 63,784 | 47,361
Interest on hedging derivatives | 104,523 | 26,410
Interest on other assets | 16,744 | 7,125
| 2,171,317 | 1,064,034
Interest expense and similar charges |  |
Interest on financial liabilities at amortised cost |  |
Resources from credit institutions | (55,524) | 24,472
Resources from customers | (159,872) | (18,693)
Non subordinated debt securities issued | (52,643) | (39,561)
Subordinated debt | (52,796) | (44,582)
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 | (32,522) | (1,013)
Financial liabilities at fair value through profit or loss |  |
Resources from customers | (8,582) | —
Non subordinated debt securities issued | (631) | (3,565)
Interest on hedging derivatives | (388,260) | (60,127)
Interest on leasing | (8,520) | (2,658)
Interest on other liabilities | (791) | (1,976)
| (760,141) | (147,703)
| 1,411,176 | 916,331

The balance 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 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 interest Euros 58,153,000), Interest on financial assets at amortized cost - Debt securities: positive interest of
Euros 63,964,000 (2022: positive interest Euros 30,752,000), Interest on financial assets at fair value through other
comprehensive income: positive interest of Euros 10,837,000 (2022: positive interest Euros 12,004,000), no hedge
breaks were recorded for customer's deposits.
The balance Interest and similar income - Interest on financial assets at amortised cost - Loans and advances to
customers includes the amount of Euros 50,653,000 (2022: Euros 40,659,000) related to commissions and other gains
accounted for under the effective interest method, as referred in the accounting policy described in note 1.B3.
This balance also includes the amount of Euros 41,263,000 (2022: Euros 38,379,000) related to interest income arising
from customers classified in stage 3.

2023 REPORT & ACCOUNTS |

| 503
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 29.
The balances Interest on non-subordinated debt securities issued and Interest on subordinated debt include the amount
of Euros 979,000 and Euros 712,000, respectively (2022 : Euros 608,000 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.B3.
The balance 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.
3. Dividends from equity instruments
The amount of this account is comprised of:

| (Thousands of euros)
| 2023 | 2022
Dividends from financial assets through other comprehensive income | 1,136 | 9,370
Dividends from subsidiaries and associated companies | 74,986 | 148,995
| 76,122 | 158,365

The balance Dividends from financial assets through other comprehensive income includes dividends from shares of
Tiicc, Sarl and Octal Group, Ltd. in the amount of Euros 615,000 and 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.
The balance Dividends from subsidiaries and associated companies includes in 2023 the amounts of Euros 57,926,000,
Euros 11,406,000 and Euros 1,876,000 related to the distribution of dividends from "BCP África,S.G.P.S., Lda.",
"Millennium bcp Participações, S.G.P.S., Sociedade Unipessoal, Lda." and "Interfundos - Sociedade Gestora de
Organismos de Investimento Coletivo, S.A.", respectively. This balance included in 2022, the amounts of Euros
132,251,000, Euros 10,353,000 and Euros 2,500,000 related to the distribution of dividends from "Millenniumbcp Ageas
Grupo Segurador, S.G.P.S., S.A.", "Millennium bcp Participações, S.G.P.S., Sociedade Unipessoal, Lda." and "Interfundos
- Sociedade Gestora de Organismos de Investimento Coletivo, S.A.", respectively.
4. Net fees and commissions income
The amount of this account is comprised of:

| (Thousands of euros)
| 2023 | 2022
Fees and commissions received |  |
From guarantees granted | 43,693 | 40,424
From commitments to third parties | 5,245 | 5,195
Banking services provided | 282,041 | 298,343
Bancassurance | 83,174 | 83,458
Management and intervention commissions | 23,381 | 23,597
Securities operations | 62,149 | 65,853
Management and maintenance of accounts | 141,974 | 140,284
Other commissions | 3,829 | 4,504
| 645,486 | 661,658
Fees and commissions paid |  |
From guarantees received | (8,919) | (9,132)
Banking services provided by third parties | (82,355) | (96,042)
Securities operations | (7,015) | (8,119)
Other commissions | (9,863) | (14,317)
| (108,152) | (127,610)
| 537,334 | 534,048

| 2023 REPORT & ACCOUNTS

504 |
5. Gains / (losses) on financial operations
The amount of this account is comprised of:

| (Thousands of euros)
| 2023 | 2022
Gains/(losses) on financial operations at fair value through profit or loss |  |
Gains/(losses) on financial assets held for trading | 161,944 | (154,627)
Gains/(losses) on financial assets not held for trading |  |
mandatorily at fair value through profit or loss | (18,246) | (5,212)
Gains/(losses) on financial assets and liabilities designated at fair value through profit or loss | (176,076) | 170,259
| (32,378) | 10,420
Foreign exchange gains/(losses) | 21,245 | 43,430
Gains/(losses) on hedge accounting | 19,716 | 970
Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value through profit or loss | (7,165) | (26,997)
| 1,418 | 27,823

The balances Gains/(losses) on financial operations at fair value through profit or loss is comprised of:

| (Thousands of euros)
| 2023 | 2022
Gains /( losses) on financial assets held for trading |  |
Gains |  |
Debt securities portfolio | 7,772 | 4,422
Equity instruments | 4,166 | 189
Derivative financial instruments | 297,410 | 196,734
Other operations | 1,375 | 1,963
| 310,723 | 203,308
Losses |  |
Debt securities portfolio | (4,694) | (9,834)
Equity instruments | (371) | (8,051)
Derivative financial instruments | (143,305) | (339,426)
Other operations | (409) | (624)
| (148,779) | (357,935)
| 161,944 | (154,627)
Gains /( losses) on financial assets not held for trading mandatorily at fair value through profit or loss |  |
Gains |  |
Debt securities portfolio | 47,352 | 39,670
Equity instruments | 9,346 | 8,016
| 56,698 | 47,686
Losses |  |
Debt securities portfolio | (56,237) | (41,027)
Equity instruments | (18,707) | (11,871)
| (74,944) | (52,898)
| (18,246) | (5,212)
|  | (continues)

2023 REPORT & ACCOUNTS |

| 505

(continuation) | (Thousands of euros)
| 2023 | 2022
Gains/(losses) on financial assets and liabilities designated at fair value through profit or loss |  |
Gains |  |
Debt securities portfolio | 207 | —
Resources from customers | 6,193 | 3,936
Debt securities issued |  |
Certificates and structured securities issued | 66,658 | 142,982
Other debt securities issued | 188 | 25,993
| 73,246 | 172,911
Losses |  |
Resources from customers | (11,464) | —
Debt securities issued |  |
Certificates and structured securities issued | (224,547) | —
Other debt securities issued | (13,311) | (2,652)
| (249,322) | (2,652)
| (176,076) | 170,259
| (32,378) | 10,420

In the balances Gains /(losses) on financial assets and liabilities designated at fair value through profit or loss - Gains/
(Losses) - Certificates and structured securities issued are recorded the valuations and devaluations of certificates
issued by the Bank. These liabilities are covered by futures, which valuation and devaluation are recorded in Gains /
( losses) on financial assets held for trading - Profit/(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
Foreign exchange gains/(losses) |  |
Gains | 65,857 | 57,312
Losses | (44,612) | (13,882)
| 21,245 | 43,430
Gains/(losses) on hedge accounting |  |
Gains |  |
Hedging derivatives | 191,470 | 1,279,578
Hedged items | 196,888 | 199,895
| 388,358 | 1,479,473
Losses |  |
Hedging derivatives | (215,194) | (361,702)
Hedged items | (153,448) | (1,116,801)
| (368,642) | (1,478,503)
| 19,716 | 970
Gains/(losses) arising from derecognition of financial assets and liabilities not measured at fair value through profit or loss |  |
Gains |  |
Credit sales | 9,827 | 12,928
Debt securities portfolio at amortized cost | 1,070 | 10,466
Debt securities portfolio at fair value through other comprehensive income | 1,795 | 39,620
Others | 6,495 | 647
| 19,187 | 63,661
Losses |  |
Credit sales | (14,608) | (4,637)
Debt securities portfolio at fair value through other comprehensive income | (11,723) | (85,031)
Others | (21) | (990)
| (26,352) | (90,658)
| (7,165) | (26,997)

| 2023 REPORT & ACCOUNTS

506 |
In 2023, the main contributions to the balance Gains/(losses) on hedge accounting were the gains of Euros 10,889,000
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 of Euros 156,969,000), 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.
6. Other operating income / (losses)
The amount of this account is comprised of:

| (Thousands of euros)
| 2023 | 2022