Piraeus Bank reported a sixfold jump in first-quarter net earnings

Piraeus Bank reported a sixfold jump in first-quarter net earnings from last year’s fourth quarter, boosted by strong trading income.

Greece’s fourth-largest lender by market value reported net profit from continued operations of 521 million euros after a profit of €78 million in the fourth quarter of 2021.

The bank had lost €404 million in the first quarter of 2021.

Trading income was boosted by one-off gains booked in its sovereign bond portfolio and other transactions, Piraeus Bank said.

Net interest income fell 10% quarter-on-quarter to €286 million, affected by the bank’s accelerated balance sheet bad loan cleanup.

Excluding forgone income from so-called nonperforming exposures (NPEs), net interest income reached €246 million in the first quarter and was up 11% year-on-year, the bank said, supported by an expansion of its performing loan book.

Chief Executive Christos Megalou said he was confident about meeting business plan targets. 

Original Story: Ekatemerini | Evgenia Tzortzi
Photo: Piraeus website
Prime Yield

Caixabank ups profitability target

Caixabank raised its key profitability target for 2024 and announced a €1.8 billion share buy-back programme, expecting higher interest rates and economic recovery to boost banking revenue.

As part of a new strategic plan, Spain’s biggest domestic lender by assets said it planned to grow revenue by around 7% between 2022 and 2024, driven by an increase in insurance income and moderate growth in fees and commissions.

Against this backdrop, Caixabank targeted a return on tangible equity ratio (ROTE), a measure of profitability, of above 12% by 2024 from an adjusted 7.2% at the end of 2021.

The lender forecast Spain’s economic growth at an average 3.4% over the three years of the plan, boosting demand for mortgages and consumer loans.

It said that while the war in the Ukraine and its effects on energy prices would slow the pace of recovery in the short term, that would be offset by the return of foreign tourists, the normalisation of saving rates and the roll-out of EU funds.

Spanish banks, with a purely retail model, have been among the hardest hit by ultra low interest rates and are expected to benefit from tighter monetary policy.

Caixabank said it expected the 12-month Euribor rates curve to rise from an average of -0.5% in 2021 to 1.5–1.6% in 2023–24.

Net interest income – earnings on loans minus deposit costs – would rise by 8% in the period, the bank said, while its cost-to-income ratio would fall to below 48% from 58% at end-2021 thanks also to cost savings from its Bankia acquisition.

Higher cost of risk, BPI to grow revenues 9%

The bank plans to generate capital of around €9 billion, including a dividend payout policy of more than 50%, a €1.8 billion share buy-back to be distributed this year, or 7.7% of its outstanding capital, and solvency excess over 12%. The bank has a capital target of 11% to 12%.

Broker Jefferies said that revenue upsides would be partly offset by costs, with the bank targeting costs of 6.3 billion in 2024 versus consensus expectations at €6.0 billion and a step up in provisions.

Caixabank expected cost of risk, which measures the cost of managing credit risks and potential losses for the bank, to be lower than 35 basis points by 2024 from a target of around 25 basis points for this year.

The bank said its Portuguese subsidiary BPI is expected to grow revenues at an annual average rate of around 9%, with profitability and efficiency converging with those of the whole group.

Original Story: Reuters | Jesús Aguado 
Photo: Caixa Bank website
Edition: Prime Yield

IMF warns of the risk of banks’ exposure to real estate in Portugal

In its annual assessment of Portugal, the International Monetary Fund (IMF) considers that the risks of rising real estate prices should be “closely monitored”.

The IMF suggests that the Bank of Portugal (BdP) consider a countercyclical capital buffer or a sectoral systemic risk buffer against potential risks from banks’ exposure to real estate and advocates a gradual recomposition of capital levels.

“Once the recovery is well established, the BoP could consider introducing a positively-rated countercyclical capital buffer or a sectoral systemic risk buffer against potential macro-financial risks from banks’ real estate exposures,” the IMF suggests in the conclusions of its annual assessment of Portugal, released on 16 May 2022.

At a press briefing, Rupa Duttagupta, who led the IMF mission to Portugal, pointed out that the banking system has withstood the two double shocks – pandemic and war – “relatively well” so far.

“Capital levels have increased in the past year, non-performing loans (NPL) are down and overall bank profitability is slightly higher. All of this is good news,” he said. However, he warned that “there are some domestic risks that fortunately have not materialised, but they have not disappeared”.

Real estate prices should be “closely monitored

In the conclusions of its assessment of Portugal, the IMF notes that close monitoring of banks’ credit quality remains essential, warning that the impact of the end of moratoria and new risks, including from the property market, on credit quality are likely to remain sources of uncertainty for some time.

“Prudential authorities are actively monitoring the credit quality of banks and confirm that the materialisation of credit risk so far has not been as significant as expected at the start of the pandemic. Strategies to reduce NPLs are bearing fruit, but some banks have not yet completed their adjustment processes,” the findings read.

Even so, Rupa Duttagupta said that Portugal should continue to be “attentive” to the impact of the end of the moratoriums. The IMF considers that the risks of rising property prices, although contained, should also be “closely monitored”. Rupa Duttagupta said that “these risks are not high at the moment,  but could increase if house prices continue to rise”.

For the IMF official, in order to avoid these risks, it is necessary to “gradually build buffers” (when, in the capital structure, the regulatory capital maintained is greater than the minimum required by the regulator) of capital where they are smaller, but also to make the banking system more resilient.

“The recomposition of capital buffers should be done gradually and dividend distributions and share repurchases should be cautious until the uncertainties about capital needs, also in light of new economic shocks, are better assessed,” the institution explains.

Original Story: Idealista | Lusa 
Photo: Photo by Hugo Humberto Plácido da Silva in FreeImages
Edition & Translation:Prime Yield

Banco do Brasil will release over R$ 6 billion in credit for micro and small entrepreneurs

President of BB says there are currently more than R$ 210 billion to lend to these entrepreneurs

The president of Banco do Brasil (BB), Fausto de Andrade Ribeiro, revealed that the financial institution will make another R$ 6 billion in loans available to Brazilian micro and small entrepreneurs.

“We will announce R$ 6 billion in Fampe (Micro and Small Business Guarantee Fund),” he said during a ceremony at the Planalto Palace to announce new measures of the Credit Brazil Entrepreneur program.

Ribeiro said that the BB currently has more than R$210 billion to lend to micro and small businesses.

Original Story:  Valor Globo | Estevão Taiar, Fabio Murakawa 
Photo: Banco do Brasil website
Edition & Translation: Prime Yield