ITAU Unibanco loan book to grow at end of forecast

Brazil’s largest lender, Itau Unibanco Holding SA, sees its loan book growing near the low end of its forecast range in 2019, reflecting the cut in the country’s economic growth estimate, Chief Financial Officer Milton Maluhy told journalists.

At the beginning of the year, Itau said its loan book was likely to grow between 8% and 11% this year.

Itau’s prediction comes as Brazil’s economy has been struggling to rebound and demand for corporate loans has been weak.

The bank’s second-quarter loan book grew by 5.9% from the same period a year earlier, mainly driven by consumer demand for credit cards and auto loans.

Itau also faces a more competitive banking arena, executives said. Partly as a result, fee income growth this year is unlikely to exceed 3.5%, the midpoint of its outlook provided in January, Maluhy said.

On Monday, the bank reported recurring net income of 7.034 billion reais ($1.86 billion), up 10.2% from a year earlier, helped by loans to individuals and trading gains.

Original Story:Reuters |Carolina Mandl |
Photo: Site ITAÚ
Edition: Prime Yield

Moody’s outlook positive for Piraeus Bank


Moody’s said that Piraeus Bank’s outlook is positive, reflecting expectations of an improvement in the systemic lender’s fundamentals in the next 12 to 18 months, after the completion of its restructuring plan.

In its update to investors, the agency gave Piraeus a Caa2 rating, which reflects the challenge the bank is facing in the reduction of its nonperforming exposures.

Non performing Exposures (NPEs) accounted for 52.1%of Piraeus’ loans in March, amid a gradual improvement of financial conditions in Greece, Moody’s said, adding that the bank’s prospects for further improvement in its financing, the quality of its assets and its profits are likely to have a favorable impact in its next rating assessment.

Piraeus is seen as able to return to sustainable profits in 2019-20, putting an end to a period of capital reduction; however, the failure of efforts to reduce its bad loans in 2019 and 2020 or a deterioration in the general economic environment could lead to a credit rating downgrading, Moody’s warned.

Original Story:Ekathimerini 
Photo: Piraeus Bank Site
Edition:Prime Yield

SAREB is looking for alternative servicers to manage its portfolio

Spain’s bad bank has recently put in the market  a contract for the management of €34 billion in non-performing loans (NPL) and real estate assets (REO) that it still has in its portfolio, according to El Confidencial.

The biddings presented by the four major servicers failed to comply SAREB’s targets, making the entity to contact other specialezed companies such as Hipoges, Finsolutia or Copernicus. With this, the bad bank has also sent a message to Haya Real Estatem Servihabitat, Solvia and Altamira, that they should improve their offers in order to they are not left without contracts.

In this way, SAREB is also analysing the possibility of splitting some parts of tis portfolios by geographic areas or by keeping two managers by are in order to simplify the management.

Original Story:EJE Prime
Photo: Sareb Linked In
Translation & Edition:Prime Yield

BCP shrinks its bad credit pile in Portugal by €1.8 billion

Over the year between June 2018 and June 2019, Millennium bcp has reduced by €1,8 billion its non-performing credit portfolio in Portugal.

The bank headed by Miguel Maya closed the first semester of this year with a non-performing exposure (NPE) portfolio of €4,1 billion in the Portuguese market, comparing to the €5,9 billion recorded in June last 2018.

On a consolidated basis, the BCP group is still sit on a non-performing stockpile of €5 billion, less €1,7 billion than one year ago. Its NPE ratio decreased to 9,1% in june, from the 13,2% recorded twelve months ago.

BCP’s profits increase by 12,7% in the first half of 2019, up to €169,8 million.

Original Story: Dinheiro Vivo | Elizabete Tavares
Photo: Millennium BCP site
Translation & Edition:Prime Yield

Brazil’s largest lender launches voluntary severance program


Brazil’s largest lender, Itaú Unibanco Holding SA,  announced it has closed nearly 200 brick-and-mortar branches and that was launching a voluntary severance program to slash costs amid rising competition.

The bank revealed the cost-cutting moves even as quarterly estimates met analysts’ forecasts. It reported recurring net income of 7.034 billion reais ($1.86 billion), up 10.2% from a year earlier, helped by loans for individuals and trading gains.

Itau said in a securities filing that it will offer buyouts to some employees aiming to «adjust the company’s structures to the reality of the market,» but did not disclose the number of reductions targeted.

Its workforce had already decreased by 1.2% in the quarter as the bank closed branches.

Still, Itau said it has hired new employees for its technology department as it seeks to speed up its digital transformation.

In May, Itaú said it would tighten its belt to compensate for fiercer competition, especially in the card-processing business.

Itau is not alone in its cost-cutting efforts. On Monday, state-controlled lender Banco do Brasil also announced a voluntary severance program, seeking to cut personnel.

Itau’s quarterly results showed that while its client revenues are under pressure, they are still on an upward trend. The bank’s fee income increased by 3.5% from the year-ago period, helped by its investment banking and asset management units.

The bank’s net financial income came in at 18.4 billion reais, up 6.7% from the same period a year earlier.

The bank’s loan book grew by 2%, reaching 659.7 billion reais in the quarter, mainly boosted by loans for individuals and small companies.

Loans in arrears for more than 90 days stood at 2.9% of its portfolio in June, down 0.1 percentage point from March. Loan-loss provisions grew by 12.3% from a year earlier, driven by higher provisions in loans for individuals.

Still, Itau’s return on equity came in nearly in line with the previous quarter, at 23.5%.

Original Story:Reuters | Carolina Mandl
Photo: ITAÚ
Edition: Prime Yield

Real Estate shows «great potential» in Greece’s economic rebound

Greece’s property and construction sector could play a significant role in the country’s economic rebound, thanks in part to the measures on property taxation and bolstering building activity that the new government is about to pass, according to a report by Alpha Bank.

In its economic bulletin published in the end of July, the lender’s analysts wrote that the construction sector’s contribution toward Greece’s gross domestic product amounted to 0.9% over the first quarter of the year, up 32% on an annual basis.

This is the biggest sectoral contribution toward the growth of GDP, the same as that of the tourism sector.

Besides the rise in residential property prices last year, for the first time in a decade, there has also been an increase in the construction sector output index, which last year expanded 18.8 % year-on-year to reach 43.5 points.

Original Story:Ekathimerini 
Photo: Site Alpha Bank
Edition:Prime Yield

Castlelake and Urbania take up Unicaja’s toxic asset

Castlelake and Urbania have bought toxic assets from Unicaja. The US investment fund and the real estate group have acquired the lands from a portfolio that included problematic assets and mortgages that were paid-up to date. The mortgage part was bought by Mediterráneo Vida.

Among the lands bought by Urbania there is a plot located in Sánchéz Blanca area, in Malaga, for which are planned 2,000 dwellings, according to El Confidencial.

These assets were part of a portfolio valued in €830 millions, that the bank as finally successfully sold for €949 million, getting capital gains of €17 millions.

Original Story:EJE Prime 
Photo: Unicaja banco site
Translation & Edition:Prime Yield

Novo Banco plans to halve its NPL ratio to 10% until 2020

Portugal’s Novo Banco, controlled by U.S. private equity fund Lone Star, expects to halve its non-performing loan (NPL) ratio to 10% this year or next, putting it on a par with domestic rivals, its chairman told Reuters.

The bank, which emerged from the ruins of Banco Espirito Santo after its collapse in 2014, shed €3.7 billion of bad loans between the end of 2017 and March 2019, leaving it with €6.5 billion worth and reducing its bad loan ratio from 28% to 21.8%.

Chairman Byron Haynes said an additional halving of the ratio was key to the bank’s medium-term plans as Portugal’s third-largest lender by assets needed to align itself with local peers.

«Whether that’s going to be a 2019 or 2020 event, let’s see…we need to continue to take advantage of the good market conditions that exist at this point in time,» he said.

The average NPL ratio in Portugal’s banking sector remains high compared to the euro zone average of around 4.5%.

Novo Banco, 75% owned by Lone Star since October 2017 and 25% by the Portuguese Resolution Fund, has been offloading bad loans, real estate and non-core assets under restructuring commitments agreed with Brussels.

It is currently selling a portfolio of large debtors’ NPLs with a gross book value of more than €3 billion and a real estate portfolio valued at up to 500 million.

«The level of interest has been very high…and we expect these transactions to materialise in the near future,» Haynes said, adding that he also expected the insurance market regulator to approve the €190 million sale of GNB Vida to Bankers Insurance Holdings in the third quarter.

Novo Banco posted a €93 million first-quarter loss due to its balance sheet clean-up efforts but recurring profit rose more than 3% to €85 million with the net interest income jumping 33%.

«The recurrent business is where the growth will come,» Haynes said. «The other one is about how quickly can we de-risk the balance sheet and clean up the legacy issues

Original Story: Reuters | Sérgio Gonçalves |
Photo: Novo Banco site
Edition: Prime Yield

Brazil’s deficit falls 14% y-o-y in the first half of 2019

In the first half of 2019, Brazil’s deficit stood at 186 billion reais (about USD $49.5 billion dollars), value at 14.05% lower than the deficit for the same period in 2018, the Central Bank reported.

The deficit is the difference between revenues and expenditures of the Brazilian public sector in the first six months of this year, and dropped by 22.71% in comparison with that of the same period in 2017, according to government data.

The sharp fall in the fiscal deficit reflects the success of the measures taken by the government of President Jair Bolsonaro to reduce public spending, one of his main objectives.

Since assuming office on January 1, Bolsonaro has promoted a liberal economic policy that seeks to reduce the size of the state, privatize non-strategic state companies, and cut costs to reduce deficits and Brazil’s crushing debt load.

The Ministry of Economy has already announced two cuts amounting to 31.2 billion reais (about USD $8.326 billion) in public expenditures provided for in the budget approved by Congress last year.

Bolsonaro also presented to Congress a project to reform Brazil’s troubled pension system, which is considered vital both to set in order Brazil’s public spending and to boost the economy; the legislation has already passed its first vote in the lower house.

The deficit in the Brazilian public sector accumulated so far this year is equivalent to 5.35% of Brazil’s Gross Domestic Product (GDP), a significant improvement upon the figure of 6.53% of GDP in the first half of 2018, and 7.53% in the same time period in 2017.

According to the report released by the Central Bank, the nominal public deficit of Brazil over the course of the last twelve months amounted to 456.8 billion reais (about USD $121.192 billion dollars), equivalent to 6.54% of GDP.

In 2018, Brazil registered a nominal deficit in its public accounts of 487.442 billion reais (about USD $124,985 billion), equivalent to 7.14% of GDP and the lowest in the last four years.

Brazil’s deficit amounted to 10.22% of GDP in 2015 and 8.98% of GDP in 2016, but was reduced by fiscal measures promoted by the then president, Michel Temer, who decreed the freezing of public expenses, a strategy now reinforced by Bolsonaro.

In June, the negative balance in the public accounts was 30 billion reais (about USD $7.9 billion), a value 48.05% lower than the same month last year.

The balance in public accounts measures the difference between the income and the expenses of the state in general, including those of the central government, state companies, and the regional and municipal administrations, as well as the resources destined for the payment of interest on debt.

The Central Bank also reported that the Brazilian national debt rose in March to 5,498 trillion reais (about USD $1.488 trillion dollars), equivalent to 78.7% of GDP, a slight increase from 77.2% of GDP, where it stood in December of 2018.

In April, however Brazil’s national debt stood at 79.1% of GDP, its highest level since the data began to be measured with the current criteria in December 2001.

This is one of the indicators that most worries the risk rating agencies, since, according to the data of the International Monetary Fund, the gross debt of other emerging countries such as Brazil is less than 50% of GDP.

Original Story:PANAM Post | EFE 
Photo: Site do Banco Central do Brasil
Edition:Prime Yield

NPG sells secured NPL portfolio for €250 million

Greece’s National Bank (NBG) is transferring its first portfolio of loans secured against property, named “Symbol,” to a consortium comprising Centerbridge Partners and Elliott Advisors for €250 million.

The lender announced that the price of the transaction comes to about 28% of the outstanding capital on the package’s loans, which stands at €900 euros, and the sale forms part of NBG’s strategy for managing non-performing exposures (NPE) as submitted to the European Central Bank’s Single Supervisory Mechanism.

The Symbol package contains 2,800 non-performing loans (NPL) issued to small and medium-sized enterprises and professionals, with collateral that comes to a sum of 8,000 properties. After the transaction is completed the consortium will concede the management of the portfolio to Cepal Hellas Financial Services.

Symbol is the third portfolio of loans secured against properties that a Greek bank has conceded in the battle against bad loans. It follows the sale of the Amoeba package by Piraeus Bank, which is worth €1.4 billion, and the Jupiter portfolio by Alpha Bank (800 million). Eurobank and Piraeus intend to concede two new portfolios within 2019.

Original Story:Ekathimerini | Evgenia Tzortzi
Photo: Photo by Michalis Famelis / Wikimedia Commons
Edition:Prime Yield

Spain’s credit supply shows to be less expansionary

The recently published Survey of Banking Loans in Spain and Monetary Union shows a less expansionary evolution in the supply of credit in Q2 2019 compared to previous quarters. Specifically, the criteria for the approval of credit to households in Spain have been tightened.

In addition, the demand for credit in Spain has also slowed. The entities surveyed believe that regulatory measures have led to a certain tightening of the credit supply.

For Bankinter analysis team, the tightening of the criteria for the approval of credit to households is consistent because, on the one hand, the strong growth in credit for consumption which has been observed in recent years and, on the hand, with the metrics for the concession of mortgage credit which already had the highest Loan-to-Value (LTV) in recent years, much higher than in the years of the housing bubble.

Original Story:The Corner 
Photo: Xexo Xeperti/
Edition:Prime Yield