Proﬁle of the Crédito Agrícola Financial

Annual Report 2009 - Consolidated

01Profile of the Crédito Agrícola Financial Group


01 PROFILE OF THE CRÉDITO AGRÍCOLA FINANCIAL GROUP

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1. CAIXA CENTRAL GOVERNING BODIES

BOARD OF THE ANNUAL GENERAL MEETING

Caixa de Crédito Agrícola Mútuo de Terras de ViriatoChairmanNuno Carlos Ferreira Carrilho

Caixa de Crédito Agrícola Mútuo de Cantanhede e MiraDeputy Chairman Carlos Alberto Pereira Martins

Caixa de Crédito Agrícola Mútuo de Bairrada e AguieiraSecretaryJoão Batista Moreira Peres

SENIOR AND SUPERVISORY BOARD

Caixa de Crédito Agrícola Mútuo de PombalChairmanCarlos Alberto Courelas

Caixa de Crédito Agrícola Mútuo dos AçoresFrancisco Amâncio Oliveira Macedo

Caixa de Crédito Agrícola Mútuo de Baixo MondegoAntónio João Mota Cachulo da Trindade

Caixa de Crédito Agrícola Mútuo de Guadiana InteriorJosé Artur Palma Estrela

Caixa de Crédito Agrícola Mútuo de Porto de MósJorge Manuel da Piedade Volante

Caixa de Crédito Agrícola Mútuo de Região do Fundão e SabugalJoão Fernandes Chendo

Caixa de Crédito Agrícola Mútuo de S. TeotónioAntónio Manuel Nobre Louçã



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Caixa de Crédito Agrícola Mútuo de Sotavento AlgarvioJoão Lázaro da Cruz Barrote

Caixa de Crédito Agrícola Mútuo de Vale do Sousa e Baixo Tâmega Henrique Vasconcelos Teixeira

EXECUTIVE BOARD

Chairman

João António Morais da Costa Pinto

Member

Licínio Manuel Prata Pina

Member

Renato Manuel Ferreira Feitor

Member

José Fernando Maia Alexandre

Member

Maria Júlia de Almeida Rocha



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CHARTERED ACCOUNTANT

Deloitte e Associados, S.R.O.C., S.A.Represented by Luís Augusto Gonçalves Magalhães

ADVISORY BOARD

Caixa de Crédito Agrícola Mútuo de Baixo Vouga

Chairman

José Luís Sereno Gomes Quaresma

Caixa de Crédito Agrícola Mútuo de Albufeira

João Manuel Correia da Saúde

Caixa de Crédito Agrícola Mútuo de Alenquer

Hélio José de Lemos Rosa

Caixa de Crédito Agrícola Mútuo de Batalha

João Afonso Marto Ramos

Caixa de Crédito Agrícola Mútuo de Beja e Mértola

Francisco José Salgueiro Correia

Caixa de Crédito Agrícola Mútuo de Douro, Corgo e Tâmega

Alcino Pinto dos Santos Sanfins

Caixa de Crédito Agrícola Mútuo de Lourinhã

António Augusto Nascimento Mateus

Caixa de Crédito Agrícola Mútuo de Ribatejo Norte

Arnaldo Filipe Rodrigues Santos

Caixa de Crédito Agrícola Mútuo de Zona do Pinhal

Ângelo de Jesus Antunes

Co-opted under the terms of clause 2 article 35 of the Caixa Central statutes

Adriano Augusto Diegues



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2. ORGANIGRAM OF THE GROUP

(1) Fenacam holds 98.78% of its own capital; total Group 99.98%

Full Consolidation Consolidation by Asset Equivalence

As at 31/12/2009

CAIXAS ASSOCIADAS

CAIXA CENTRAL

CA VIDA

CA SEGUROS

CRÉDITO AGRÍCOLAS.G.P.S.

CA CONSULT CA GEST

CA FINANCE

CA IMÓVEIS

CA INFORMÁTICA

CA SERVIÇOS

CCCAM SGPSUnipessoal Lda.

RURAL RENT

(1) FENACAM

AGROCAPITALSCR

FIQCENTRAL FRIE

FCR INOVCAPITALGLOBAL 2

FIQAGROCAPITAL 1

FII CAIMOBILIÁRIO

FII CAPATRIMÓNIOCRESCENTE

FII CAARRENDAMENTO

HABITACIONAL

SICAM

100.00%

10.00%

100.00%

79.20%

12.34%

23.79%8.09%

5.85%

92.16%

7.84%

100.00%

100.00%

0.10%

0.68%

57.28%

32.64%

96.72%

100.00% 100.00% 100.00%

100.00%

84.68%

20.25%

1.10%

66.67% 30.00% 26.05% 27.78% 100.00%

3.33%

2.58%0.37%



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3. THE MAIN FEATURES OF GROUP OPERATIONS

During the year, the operations of the Crédito Agrícola were carried out in a markedly dismal

macroeconomic climate, characterized by a considerable fall in economic activity, a major

impact on the business fabric and the rise in unemployment to historic highs.

The following are the salient points in Group operations over the year, to be read in conjunction

with the financial and business analyses also detailed in this report.

Institutional, Organizational and Technological Development

The modernization programme has included a range of initiatives that have aimed at ensuring

the Group’s readiness for increased demands in regulations, improved effectiveness and

productivity, and the reining in of operational costs.

In terms of business and efficiency (the Plano de Negócios e Eficiência), one of the highlights

is the new functionalities in Internet Banking that have come on stream for company clients.

The model to automate the related platform and document management has been defined and

the infrastructure will be up and running during 2010.

Mergers between Caixas continued during the year, as a vehicle for economic and financial

consolidation and the structural overhaul of SICAM. There were three mergers completed,

bringing the number of Caixas down to 88.

Commercial support is being provided for the Caixas which are participating in a project to

bring an extra dynamic approach to business (known as AND), with the following initiatives

undertaken: monitoring attainment of objectives and local planning, and management of

commercial operations; support for the definition of commercial objectives per individual

Caixa and branch; development of commercial action plans; support in preparing and carrying

out marketing campaigns, commercial campaigns and local activities; and implementation of

the proactive commercial management scheme (Gestão Comercial Proactiva).

A plan was initiated during the year to provide SICAM with management tools supported

on Workflow and Document Management technologies. The automated platform includes

components that are procedural (improved practices and recommendations on processes),

organizational (functions and rules on segregation, methodologies for operational management



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of working groups) and technological (workflow systems and digitalized document handling).

Work continued on the organizational platform, the main aims for the year being to systematize

risk management practices and prioritise areas for adopting the automated platform. The aim of

this platform is to create a reference point for best practices and recommendations that can be

applied to the various aspects of Caixa operations, including business and support procedures

in line with the technological, organizational and methodological tools available in SICAM.

In the first half of the year, the compliance expansion project was well under way. Individuals

were selected in all the Caixas Agrícolas and in various areas of the Caixa Central, their mission

being to ensure that operations are carried out in conformity with legislation on regulations in

force and that best practices are in place for analysis and control of the risks associated with

compliance. With this in mind, there were training courses for all the compliance monitors in

the Caixas Agrícolas and in the Caixa Central.

In March, the DFOA On line application was made available for al users in the associated

Caixas. This is a platform which brings together the data base created by the information

infrastructure for management of Ruris+, integrated with the existing data base and providing

the wherewithal for each Caixa to undertake economic and financial analysis in due time for a

wide range of management indicators while using relevant accounting ledger data.

The new application for branches, SIBAL, which is being developed through CA Serviços,

reached its final stages, with quality control tests undertaken in a pilot scheme in the Caixas of

Loures, Sintra and Litoral (15 branches).

The e-learning platform of the Crédito Agrícola (Sal@ctiva) was finalized and came on stream

during the year, with a course completely structured in-house, and 1,170 participants.

The documentation for accreditation of the Caixa Central as a training unit was handed in to

the relevant authority (the Direcção Geral para o Emprego e Relações de Trabalho – DGERT).

During the year, the multipurpose project (Projecto Multifuncional) was started up. The aim

is to lead to a better understanding of what happens in the office and the working procedures

involved. This should lead to an increase in efficiency, an improvement in productivity, reduction

and control of costs, and a contribution towards simplifying business support operations.

The project was successfully piloted in the building in Rua do Castilho and then extended

to other buildings, and to some of the associated Caixas.



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As part of the expansion of the Crédito Agrícola “reference branch”, the model for use in

the Caixas was made available via the Group’s intranet, with technical support, the supply

of services within the scope of the projects focusing on its architecture and its management

consultancy and job coordination features.

The Asset and Liabilities Managements function (ALM) was finalized during the year. The

management committee for this area (ALCO) was centred above all on the development

of solutions that could help minimize the impact of the dismal state of the markets on the

financial margin of the Caixa Central and SICAM. Against a backdrop of great uncertainty,

various operations were slotted into place to enhance management and defence of liquidity in

the Group.

A special mechanism was devised to cover term deposits from Caixas placed at the Caixa

Central. The product was monitored and there were adaptations to concrete situations

presented by the Caixas, with control and report mechanisms.

The IT platform developed by CA Seguros for the distribution of structured deposits was

upgraded. This was to cover specific requirements and make its use more flexible. The upgrade

involves automatic production of documentation, and more flexible cover, along with a new

contract focused on attracting and retaining deposits.

There was proactive support for the Crédito Agrícola auditors, involving on-going assessment

of the committee for auditing and internal control and a programme of events to foster and

develop skills and strengthen team spirit among them.

Image, Awareness-Raising and Business Promotion

The Crédito Agrícola hosted the meeting of the Executive Committee of the European

Association of Cooperative Banks in Lisbon at the start of June. A large number of banks

took part, including institutions that carry great weight in the European banking system. The

Governor of the Banco de Portugal delivered an important address during the work of the

committee.

In terms of image and marketing, the Group shifted its position and its focus during the year,

putting forward a new campaign for savings.

The new logo, “Together we are more. Since 1911” (Juntos somos mais. Desde 1911), mirrors



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the distinctive positioning of the Crédito Agrícola, where values for mutual help and solidarity

are summed up in one expression: the cooperative spirit.

The actress Silvia Alberto was again featured on the advertising campaign for the new CA

savings schemes (Depósitos a Prazo L, XL and XXL, Contas Super Depósito Crescente and

Super Depósito Crescente Mais, Poupança CA Aforro and Poupança Máxima tradição). The aim

was to put across the image of a modern, human institution, with a relevant position in today’s

market, and able to satisfy the needs of existing and potential customers. The new products

detailed above, with specific cover portfolio management, were geared to raising funds with

the offer of particularly attractive conditions.

On the marketing side, one highly relevant operation was the sponsoring of a television

programme, “CA – Minuto de economia 2009”, which presented up-to-date financial and

economic information in a distinctive format.

New products were also created in the area of disintermediation. Among them were Euribor

II, a special open investment fund, the Fundo de Investimento aberto CA Saúde Valorização

a 4 anos, a 4-year open investment fund and the CA PPR, a medium to long-term savings plan

to cover supplementary pension income.

In terms of credit, the following products were created: mortgage credit for the unemployed,

which is a special credit line made available by the State (covered by Decree Law 103/2009),

and the housing credit Fundo Investimento Imobiliário, which is a medium to long-term loan

for purchasing, building and exchanging property available through the FII CA.

Also on the credit side, the Crédito Agrícola, through the Caixa Central, signed up to a protocol

with IAPMEI (the support service for small and medium sized enterprises).

There were innovations and improvements introduced in specific areas to provide a response to

greater demand and the need to increase the number of products available. These included: a

boost to operations involving credit recovery using the direct line service, overhaul of the contents

on the CA site, the insertion of an additional security level in the on-line channel (known as Sistema

de Autenticação Forte – SAF) and the launch of a pilot scheme based on an innovative concept, the

CA banking kiosk (Qiosque bancário CA). The project was presented at the 28th Crédito Agrícola

meeting in Vila Real and was a response to the need for a space where no CA branches exist, for

the provision of services and financial solutions available for existing and potential customers.



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The Crédito Agrícola signed a protocol with the Portuguese state, through the Ministry of

Finance and the Ministry of the Economy, as part of the national plan for energy efficiency

(Portugal Eficiência 2015). The aim of this was to provide special financing conditions for

individuals wishing to purchase thermal solar panels.

In the second quarter of the year, a new product was launched, the “Leasing em Consórcio”

(Leasing through a consortium), which enables a large number of Caixas to provide finance

for customers wishing to purchase property. It gives the advantage of a real guarantee, since

instead of a mortgage, the Caixa holds the property, in proportion to the amount that has been

financed.

Another point worth highlighting is the growth of commercial paper issuance with specific

placements. There were six of these during the year, totaling 80.5 million euros.

In terms of electronic means of payment, a number of highly profitable products and services

were introduced, giving a boost to cross-selling and to customer loyalty. Among these were

CA&Companhia, Pharma+, Business, and Piloto Contactless, all of which put across a modern

image through the introduction of new technologies applied to means of payment. The Risco II

product was concluded within the new credit recovery model, and there was a strengthening of

the infrastructures covering security and fraud detection.

Emphasis also continued to be given to products known as “Fora do Balanço” (Off-balance-

sheet), given their importance for bringing in commissions and playing a part in boosting the

complementary margin.

The expansion of the network of Caixa Central branches continued, and there are now nine in

Lisbon and Oporto. This has led to more penetration in these major urban centres.

There was a substantial increase in Caixa Central activity in specific markets, among them the

credit institutions’ debt market and repo operations.

The overall value of assets under management at CA Gest grew by a substantial 19.1%, higher

than the average across the system, where the figure stood at 11.5%. The amount topped

a thousand million euros for the first time. As in 2008, CA Gest moved up one notch in the

ranking of institutions providing invesment funds, to stand now in 11th place.

In May 2009, the Portuguese Consumers’ Association (DECO) carried out an analysis of



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the domestic market for financial products in its magazine “Dinheiro e Direitos”, where it

considered the CA Património Crescente product as one of the “right choices”, pointing out

that “it is the recommended fund for periods of more than two years.” In August, the business

newspaper Jornal de Negócios, in an article entitled “Invist como um milionário” (Invest as a

millionaire would) allocated 18% of the investment total in property funds and recommended

the CA Património Crescente as the best domestic property investment fund.

Regulatory framework

A number of actions were carried out with specific and direct reference to Basel II, among

them the enlargement of the compliance function in SICAM, devising and putting into place

the ICAAP framework (internal definition of capital requirements), definition of the disclosure

requirements, an integrated stress testing model, a framework for internal controls and related

documentation on risks and controls as well as backtesting for in-house models.

Other important steps taken were the creation of a central balance sheet for SICAM, the definition

of requirements for the new system of guarantee management, the project underpinning the

development of the infrastructure to support the risk function (to be put into place in 2010),

the opening up of functionalities that match systems and procedures with the DMIF (directive

on markets and financial instruments), and of a system for management of proposals and a

scoring model for credit cards and the reorganization of accounting procedures.

Faced with the changes brought in through Banco de Portugal Notice 8/2009, relating to

regulation of the pricing for customer products and services, it was essential to put together

a pricing scheme that would serve as a reference for SICAM and would include the range of

prices charged by Caixas. The new price list covers all the Caixas except for the CCAM of Costa

Verde and the CCAM of the Azores. The changes introduced towards the end of the year, among

them the updating of the prices for the most important commissions, are important to bring

the Group into line with current market practice, though they also reflect the specific nature of

the Crédito Agrícola.

There were a number of changes to the regulatory framework during the year, among them

in the area of market conduct, and they had an impact on the main areas of Crédito Agrícola

operations, and indeed on the banking system as a whole. It was also necessary to look into the

demands placed on the internal control system, a situation that meant a deep-seated revision

and update of internal norms, processes and procedures. This frequently impacted on the



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Group’s information systems, in areas such as credit, deposits and means of payment.

Caixa Central operations also continued to be impacted by the structural changes in the

European payment market stemming from SEPA, the Single Euro Payments Area. Among the

Group’s activity here was participation in the interbank committee for payment systems (CISP)

and in the European Association of Cooperative Banks (EACB), along with the monitoring of

actions being undertaken by the regulators, this through participation in VISA Portugal.

We are going through a period when institutions are investing more and more in sustainability

and social responsibility, with concern for the environment and society. In the light of this, the

Group started on a series of actions which led to the publication during the year of the first

annual sustainability report. The purpose of this report was to give the stakeholders and the

public in general information on the practices that the Group has put or intends to put in place in

terms of the environment, social affairs and governance, over and above what is required by law.

It is worth noting here that in the Banco de Portugal’s half-yearly report on market conduct

for 2009, the Crédito Agrícola is in almost all the fields one of the credit institutions with least

number of complaints (a situation that is common to other cooperative banks across Europe).

Own funds

Changes in the prudential regulations applicable to financial institutions required the Tier I

solvency ratio figure to be not less than 8% (recommended by the Banco de Portugal) and in

the light of this there was a special securities issue (Títulos Especiais de Investimento Tier

I – Caixa Central/2009), with total placement of 35,5 million euros. The issue was in line with

subordinated debt equivalent to Tier I, for an unspecified period, taken up entirely by associated

Caixas between September and November 2009.

Insurance operations

The Group has two insurers, CA Vida and CA Seguros. The first came in with net annual results

of 6,015 thousand euros and the second with 2,565 thousand euros.

In this particularly dismal economic climate, the life insurance market was down by 5.7% year on

year, but CA Vida reached its highest ever production figures, at around 207,990 thousand euros,

a 61% rise over a year earlier. For the first time, it took 8th place in the ranking of life insurers in

Portugal.



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CA Seguros in its turn celebrated its 15th anniversary and saw its performance recognized by

being elected best non-life insurer in its segment, for the second year running. This was in a

review carried out by the magazine Exame in its special edition for 2009, devoted to the biggest

and best enterprises in Portugal.

Other highlights

There were substantial changes introduced into the legal regime covering the Crédito Agrícola

(the Regime Jurídico do Crédito Agrícola Mútuo).

From the legal point of view, the aim of the revision was to bring the governance of the Caixas into

line with the provisions of the commercial code, without harming the cooperative spirit of SICAM.

Under the terms of this regime, the Caixas Agrícolas can carry out credit operations in areas that

are not designated as “agricultural credit operations” using up to 35% of their individual net assets.

This percentage can be raised to 50% on authorization by the Banco de Potugal.

In terms of auditing, it is now mandatory for Caixas to have their books audited by a chartered

accountant (revisor oficial de contas), who should also verify that they comply with legal and

regulatory norms that govern their activity, as well as the provisions set down in the general regime

for credit institutions and financial companies.

The stated purpose of the Caixa Central was also expanded so as to give it authorization to

undertake all operations allowed to banks in general. This authorization was complemented by the

requirement to increase minimum equity to 17.5 million euros, through Executive Order 746/2009

of 14 July. This does not, in fact, have any practical impact, since equity is way above this figure.

As for its functions as the central body in the SICAM structure, there is in the first place no longer

the demand for prior authorization from the Banco de Portugal for the Caixas to carry out certain

operations, including approval for setting up branches, which is now in the hands of the Caixa

Central. Along with intervention in these institutions, under the provisons of article 77-A of the

new statutes, there are stipulations on the appointment of interim boards, the right to suspend

governing bodies, inspections carried out through this intervention and the extension of these acts

for more than one year. The Banco de Portugal will continue to oversee the Caixa Central in its

remit, though this oversight will be on a control a posteriori.



23

Moreover, any official opinion from the Caixa Central for the purposes of special register at the

Banco de Portugal of members of the governing bodies of the associated Caixas Agrícolas will

become binding. Unfavourable opinion will lead to immediate removal from the register.



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SICAM Evolution (In millions of euros)

2002 a) 2003 a) 2004 a) 2005 a) 2006 a) 2007 2008 2009

Customer Deposits 6,863 7,181 7,599 8,174 8,671 9,158 9,613 10,070

Credit to Customers (net) 6,387 6,690 6,942 7,290 7,464 7,467 8,373 8,859

Net Assets 7,946 8,251 8,696 9,319 10,044 10,566 11,447 12,097

Operating Income 520.0 569.7 656.9 738.1 828.2 873.6 979.1 999.7

Financial Margin 306.5 305.7 315.9 325.8 351.7 387.1 403.2 315.2

Net Worth 370.4 376.3 396.1 403.7 423.6 486.2 513.0 423.7

Net Results 33.1 80.6 89.9 86.8 95.6 113.3 121.1 42.3

Net Results GCA c) 120.7 52.4

Solvency Ratio - GCA (%) 10.5% 11.3% 12.9% 14.0% 14.4% 14.4% 13.3% 12.7%

Tier 1 8.1% 9.1% 10.4% 10.5% 11.6% 11.5% 12.0% 11.8%

Transformation Ratio (%):

general 93.1% 93.2% 91.4% 89.2% 86.1% 81.5% 87.1% 88.0%

without commercial paper 86.4% 88.5% 86.7% 85.5% 81.5% 79.3% 82.0% 84.0%

Efficiency Ratio (SICAM) (%) 52.5% 52.1% 52.5% 55.2% 58.4% 54.1% 55.5% 69.5%

Return on Equity (ROE) (%) 6.4% 14.1% 13.7% 11.8% 11.5% 13.0% 12.4% 4.2%

Return on Assets (ROA) (%) 0.4% 1.0% 1.0% 0.9% 1.0% 1.1% 1.1% 0.3%

More than 90-day Overdue Credit Ratio (%) 73.6% 94.7% 98.4% 105.4% 113.6% 108.9% 136.0% 127.4%

Number of CCAMs 126 120 118 111 105 100 92 88

Number of branches (Total SICAM) 584 598 616 628 632 647 670 682 b)

Average net assets per Caixa 61.5 67.0 71.8 82.0 91.6 102.5 116.9 137.5

Average number of branches per Caixa 4.6 5.0 5.2 5.6 6.0 6.4 7.2 7.8

a) Ratios for 2002 to 2006 calculated in accordance with Portuguese rules (PCSB), transitional rules in 2007 (NCA) and IAS in 2008 and 2009.

b) Includes 9 branches of the Caixa Central and 2 offices for business with companies.

c) The accounting framework before 2008 was the PCSB, so figures are not directly comparable.

4. SICAM MAIN INDICATORS

Documents

Proﬁle of the Crédito Agrícola Financial