NPL&REO News

Savings from companies in Portuguese banks reach a new historic high

15 October, 2021

The Bank of Portugal (BoP) announced that deposits by companies in resident banks increased 16.3% in August compared to the same month in 2020, reaching a new historic high of 58.8 billion euros.

“Concerning deposits by individuals in resident banks, which in July had reached a record €169.9 billion, grew by 7.1% in August, year-on-year, adding 169.3 billion euros (they had increased by 6.6% in the previous month).”

According to the BoP, “since March 2020, households have increased their deposits with banks”, with this growth “a trend and values close to those of the euro area”.

Regarding the total amount of loans granted to households for housing, it grew by 4% year-on-year to 95.6 billion euros, after increasing by 3.9% in the previous month.

Consumer loans grew by 1.3% year-on-year to 19 billion euros in August 2020 (they had increased by 1.6% in the previous month).

Regarding companies, the total amount of loans granted in August 2021 grew by 5.2% year-on-year to 76.2 billion euros, decelerating slightly from the 5.9% increase in the previous month.

“Contrary to the evolution seen in 2020 and early 2021, largely related to the impact of the lines of support for the economy granted in the context of the pandemic, the pace of growth in loans to companies has once again slowed for the fourth consecutive month,” says the central bank.

“Still – it adds – loans to businesses have been increasing at a faster pace than observed in the euro area.”In August, the reduction in the pace of growth of loans to businesses “was across all size classes”

Original Story: Eco News | Lusa
Photo: Bank of Portugal website
Edition: Prime Yield

Bank of Spain asks Banks to monitor state-backed loans

15 October, 2021

Spanish banks must carefully monitor the performance of state-backed loans granted during the COVID-19 pandemic to identify risks and any potential rise in bad debts, the central bank’s deputy governor said.

Last year, the government approved up to 100 billion euros in so-called ICO liquidity lines, where Spain guaranteed up to 80% of the loans that were channelled through banks to small and mid-sized companies and the self-employed.

“The evolution of these portfolios will have to be monitored over the coming months … because the few remaining waivers … have expired and also because of the performance of ICO-backed exposures,” Bank of Spain deputy governor Margarita Delgado told a financial event.

Delgado said assets under special surveillance, or considered subject to heightened credit risk, had increased in recent quarters but were still at a “relatively low level”, including in the hard-hit areas such as tourism.

The deputy governor urged lenders to continue strengthening their capital buffers and not ease up on provisions to cope with a potential rise in bad loans.

“There should be no rush to reverse last year’s provisions until there is full confidence that the loan portfolio is performing as expected,” she said.

So far, bad loans have not risen in Spain due to guarantees and moratoriums but could climb once those protections are withdrawn, analysts say.

In July, non-performing loans at Spanish banks stood at 4.39%, its lowest level since March 2009.

Several Spanish banks have merged to cope with the effects from ultra-low interest rates and a potential rise in bad loans.

Delgado said there appeared to be more limited scope for mergers after a wave of consolidation that has number of Spanish lenders to 10 from 55 before the financial crisis in 2008.

Original Story: Reuters | Jesús Aguado, Emma Pinedo
Photo: Bank of Spain website
Edition: Prime Yield

Bankers confident about the growth prospects for Greece’s economy

15 October, 2021

Greek bankers expressed their high confidence over the growth outlook of the Greek economy and the domestic banking system. Speaking during a conference organised by MasterCard on innovation, the CEOs of the four systemic banks agreed that the Greek economy’s growth rates will be high in the coming years based on recent estimates, creating increased interest for investments in the country.

The bankers emphasised the Recovery Fund and the prospects created for changing the country’s economic model through the use of these funds. They added that Greek banks have made the necessary preparation, created infrastructure and have contacted their clients to achieve the maximum exploitation of these funds.

Enterprises, particularly those that are small- and medium-sized, will become more competitive, they noted, adding that the role of banks will not be limited to offering loans but it will also focus on consultancy services.

Original Story: The National Herald | Athens News Agency
Photo: Photo by Svilen Milev in FreeImages.com
Edition: Prime Yield

Default among the micro and small companies fell 0.9% in August

15 October, 2021

In August, 5.33 million of micro and small companies closed the month in the redline. This figure is 0.9% lower compared to July, when 5.38 companies of this size were in default, according to a survey by Serasa Experian.

The industrial and retail sectors boosted the improvement in the indicator, both with 1.0% retraction in defaults. The services sector also fell, albeit by a smaller 0.7%.

The North region had the best performance on the balance sheet, with a drop of 5.0% in the number of insolvent companies, followed by the Southeast, with a decline of 0.9%; the Centre West, with a retreat of 0.7%; the South, with a drop of 0.3%; and the Northeast, with a decrease of 0.1%.

Original Story: Isto é Dinheiro | Estadão Conteúdo
Photo: Photo by Wundelman in FreeImages.com
Edition & Translation: Prime Yield

Spain’s NPL rate at its lowest in 12 years

7 October, 2021

The nonperforming loan (NPL) rate of Spanish banks stood at 4.34% in July, its lowest figure in twelve years, since March 2009.

According to the latest data from the Bank of Spain, the outstanding loan portfolio at the end of July reached 1.220 billion euros, compared with 1.232 billion euros the previous month.

The balance of NPL also fell from 54.218 to 53.644 million, which also contributed to the decline in the indicator.

Since July 2020, when it stood at 4.72%, the NPL ratio has fallen by three tenths of a percentage point.

So far this year, bank NPLs have ranged from 4.55% in February and May to a low in July.

In addition to the total data for the sector, the Bank of Spain publishes each month the aggregate default rate of banks, savings banks and cooperatives (cajas rurales), on the one hand, and, on the other, that corresponding to financial credit institutions (EFCs), which finance the purchase of large consumer goods.

The combined NPL ratio of banks, savings banks and cooperatives also reached an annual low of 4.33%, down from 4.34% in June.

The loan portfolio stood at 1.1172 billion euros, with a volume of doubtful loans of 50.793 million euros, down from 51.356 million euros in June.

In the case of financial credit institutions (FCIs), which specialise in financing large consumer goods, the NPL ratio was also the lowest of the year at 6.50%, with a volume of non-performing loans of 26.250 million euros, down from 26.320 million euros in June, for a loan portfolio of 40.362 million euros.

Original Story: Agencia EFE | Madrid
Photo: Photo by Victor Iglesias in FreeImages.com
Edition: Prime Yield

Business loans are being repaid with cheap liquidity from State aid

7 October, 2021

According to banking sources, a large number of companies have repaid their loans in full, using mainly the low-interest subsidized loans they have received from the State through TEPIX.

Many companies are repaying bank loans with the cheap state aid they have received under support programs to deal with the pandemic, sources say. The phenomenon has alarmed banks, which have high liquidity and want to transform it into new loans, while being criticized by the government for their poor performance in financing the economy.

The data of the Bank of Greece show that last July, despite the unexpected acceleration of tourism and the general good course of the economy, net inflows of new loans to businesses were -341 million euros, that is, the loans repaid were more than new loans disbursed to businesses.

Bank sources point out to Business Daily that this worsened in September.

According to bank executives, the companies received a very large boost of liquidity through government support programs, having received about 8 billion euros through 7 payment cycles, while subsidized loans have been granted, on extremely attractive terms, amounting to over 2 billion through TEPIX and other guarantee schemes. At the same time, the course of the economy, especially this year, is much better than the initial estimates.

According to banking sources, a large number of companies have repaid their loans to the banks in full, using mainly the low-interest subsidized loans they have received through TEPIX. Quite logically, they took advantage of the favorable situation by utilizing the financing they received to repay more expensive bank loans.

This trend concerns banks, as increased lending is a priority in broadening their revenues and mainly to replace revenues lost from NPL sales with new healthy interest income. According to Eurobank Securities, this loss of interest income will reach 1 billion euros this year. The repayment of loans combined with the issuance of bonds made by companies has the effect of reducing the demand for new loans at a time when the government is exerting great pressure on banks to increase lending to the economy.

The situation also worries the government, which wants state aid to reach the market and subsidized loans to be transformed into investments, recruitment and expansion of activities, something that has not been done so far. The defensive stance of companies is typically reflected in the accumulation of deposits.In total, from December 2019 until July 2021, business deposits have increased by + 51% and amount to 35.28 billion euros, while household deposits, in the same period, rose by + 12.6 % and amount to 131.37 billion euros.

Original story: Business Daily | Staff
Photo: Photo by Pierre Amerlynck in FreeImages.com
Edition: Prime Yield

NPL ratio fall to new low before moratoria end

1 October, 2021

As the Portuguese banks continue to clean up their balance sheets, this has been reflected in an improvement in the levels of non-performing loans (NPL), despite the impact of the pandemic. The NPL ratio stood at 4.3% at the end of June, down 0.6 percentage points from the end of 2020. Still, NPL stock amounted to €13.5 billion.

After peaking in 2016 (17.9%), the NPL ratio have maintained a downward trajectory in recent years; a trend that the Covid-19 pandemic has not yet halted, although the reduction has been at a less intense pace in recent quarters.

Over the past four and a half years domestic banks have cleared more than €30 billion of non-performing loans from their balance sheets and managed to achieve a ratio below the 5% that is required by national authorities. The NPL ratio is today at its lowest level since 2008, according to official statistics.

If we count impairments, the NPL ratio is even lower: 1.9%, representing about €5.99 billion in toxic loans.

Original Story: Eco | Alberto Teixeira
Photo: Photo by Armindo Caetano in FreeImages.com
Edition & Translation: Prime Yield

Intrum buys a €1bn portfolio from Cerberus and removes it from secondary market

1 October, 2021

Intrum has completed one of the largest deals since the pandemic began, acquiring a portfolio of 100,000 unsecured loans worth 1.000 million euros from Cerberus and shaking up the secondary market.

The portfolio consists of 100,000 unsecured loans, mainly consumer loans, although there is also a part of corporate finance. These loans are part of some of the portfolios previously acquired from banks by Cerberus and managed by Gescobro.

Named Project Segura, the operation has been advised by Alantra and involves a significant movement in the secondary market. That is to say, instead of buying directly from the bank or institution where the defaults have occurred, it has been carried out between collection managers.

Even before covid, the debt collection industry expected an upturn in secondary market transactions, something that did not happen due to the paralysis of the sector as a result of the pandemic. The operation, according to market sources, shows that movements in the sector are being reactivated. Unsecured loan portfolios are usually sold at discounts of more than 80%, although in the secondary market the discount is greater.

In fact, several operations are already underway. Banco Santander has put up for sale a portfolio of 600 million euros in non-performing loans (NPL) to SMEs, a project called Titán, which is being advised by Alantra, as reported by El Confidencial. The Cantabrian bank has already sold two portfolios of NPL at the beginning of the summer, for a nominal value of 800 million euros.

Waiting for more defaults

Expectations of defaults due to the effects of the crisis anticipate a boom in impaired credit portfolios, especially in consumer and corporate lending. However, the economy is still supported by cheap financing, both by the stimuli of the European Central Bank (ECB) and by public guarantees through the Official Credit Institute (ICO), and also by temporary lay-offs (ERTE). The moratoriums have also prevented an initial wave of defaults, although banks such as BBVA and Sabadell have already recorded increases in refinancing, which are usually the prelude to defaults.

As a result, default forecasts have improved in the financial sector, and it is unclear when the expected upturn in defaults will arrive and on what scale.

As shown by the purchase of Intrum, more movement is expected in the secondary market. In other words, entities will sell large portfolios of unrecovered loans through their servicers, given the different appetite and strategies in the recovery management sector. With this acquisition from Cerberus, Intrum approaches 53.000 million euro under management in Spain, where 2,000 of its 10,000 global employees are based.

Original Story: El Confidencial | Óscar Giménez
Photo: Intrum website
Edition & Translation: Prime Yield

More than 28% of Greek households had bank loans in 2020

1 October, 2021

A 28.4% of Greek households were burdened with bank loans (excluding mortgages) in 2020, of which 20.1% had one loan, 6.4% had two loans, 1.6% had three loans and 0.3% had four loans, while 71.6% of Greek households did not any loan, Hellenic Statistical Authority revealed.

The statistics service said that 16.1% of poor households had at least one loan, while non-poor households with at least one loan totaled 30.9%. Of these, 55.1% of loans covered the purchase of assets, 45.8% daily expenses, 9 %were for education, 7.7% for a vehicle, 6.9% for holidays, 3.7% for medical services and 1.7% financed a private company while 1.4% refinanced a loan. Bank or other financial institution accounted for 98.3% of funding, followed by a private source (relatives, friends, etc) with 1.5%.

The average sum paid in interest and capital for household loans (excluding mortgages) was 236.15 euros. Greek households spent 295.82 euros last month to buy food and beverages, 120.46 euros to consume food and beverage outside the home and 150.36 euros for the use of private transport means.

Original story: The National Herald | Athens News Agency
Photo: Photo by Takis Kolokotronis in FreeImages.com
Edition: Prime Yield

Brazil: over 62 million have fallen into debt in the current financial crisis

1 October, 2021

According to the latest study carried out by Serasa, about 62.5 billion Brazilians have their names in bad debt, with each one oweing an average off of R$ 3,937.98 – the equivalent of more than three minimum wages.

The Default Map shows that the largest volume of debt corresponds to the bank/ credit card category, which represents 29,7% of the more than R$ 211 million in debt. Next are the bills with electricity, water and gas, with 22.3%. Retail purchases represent 13% of the debts of Brazilians

Serasa also points out that Brazilians are seeking negotiation through Serasa Limpa Nome. The age group of 31 to 40 years old was the one that most sought a financial solution for debts, followed by those between 18 and 25 years old.

Original Story: A Cidade On |Agência do Estado
Photo: Photo by Bruno Leiva in FreeImages.com
Edition & Translation: Prime Yield