Banks are more profitable and have less NPL

System banks show good results against bad debts as well as good profitability levels in the second quarter of the year, says the Bank of Portugal.

In the second quarter of the year, the total assets within the Portuguese banking sector increased 1.7%, a result leveraged by the increased in loans ad advances to customers and deposits at central banks by 0.68% and 0.63%, respectively.

Although loans to customers rose by 1.2%, there was a 2.3% increase in deposits, resulting in a decrease in the transformation ratio (difference between loans and deposits).

NPL ratio falls 3.4%

In the period under review, and according to banking system data released by Banco de Portugal, the gross non-performing loans (NPL) ratio fell 0.2 percentage points to 3.4%, which reflected “the decrease in NPLs (-4.0%) and the increase in performing loans (+1.8%)”. In net terms, the NPL ratio fell marginally by 0.1 percentage points to 1.6%.

Also, the NPL ratios of companies and individuals decreased. In companies 0.4 percentage points to 7.6% and in individuals 0.1 percentage points to 2.6%.

The supervisor led by Mário Centeno adds that “the decrease in NPLs had a greater contribution than the increase in productive loans in the reduction of both ratios”.

Profitability at 8.8%

Between April and June, return on equity (ROE) rose compared to the first quarter by 3.7% to 8.8%, a significant improvement on previous years, particularly 2020.

In the second quarter of the year banks as a whole recorded a 1.7% increase in total assets. Contributing to this were the increase in loans and advances to customers and central bank assets by 0.68 percentage points (pp) and 0.63 pp, respectively.

Although loans to customers rose by 1.2%, there was a 2.3% increase in deposits, resulting in a decrease in the transformation ratio (difference between loans and deposits).

Original Story: Expresso | Isabel Vicente 
Photo: Photo by Armindo Caetano in
Edition and translation: Prime Yield

Spanish banks reduce credit at risk of default by 17.1 billion euros

The Spanish financial system is performing better than the euro area as a whole in terms of credit quality. The country’s institutions have reduced both doubtful loans and loans on special watch, those that have not yet defaulted but there are indications that they may do so, in the last year. Specifically, with regard to loans at risk of default, the Spanish financial sector has removed a volume of credit of €17.1 billion  from surveillance. 

Thus, the current volume of special surveillance loans held by banks is €191.2 billion at June 2022, compared with €208.3 at the end of the first half of 2021, which represents a reduction of around 8%. Thus, according to the latest data published by the European Banking Authority (EBA), the special surveillance credit ratio of Spanish institutions fell from 7.3% in June 2021 to 6.7% in June 2022.

With this ratio, the Spanish financial sector is below the average for euro area institutions, which have a volume of loans under special surveillance of 9.5%. In fact, European institutions as a whole have increased the volume of loans at risk of default by 14% in the last year, to € 1.48 trillion as of June this year, compared with €1.2 trillion in the same period last year.

The situation of non-performing loans

The case of non-performing loans  (NPL) in the euro area has declined over the last year. The NPL ratio in June 2021 was 2.3% and in the same month of this year it is 1.8%. The Spanish financial sector, which includes institutions beyond the traditional credit banks, has also been in line with this decline, with the NPL ratio falling from 3.1% to 2.8% in the same period, according to EBA data, to €78.9 billion. However, with this rate, the national sector’s NPL ratio remains well above the average for the euro area, only surpassed by that of eight countries: Greece (5.2%), Poland (4.3%), Hungary (3.7%), Cyprus (3.6%), Bulgaria (3.5%), Portugal (3.3%), Croatia (2.9%) and Romania (2.9%).

In view of the risks for banks that could result from a worsening of the euro area economy, and also the Spanish economy, due to the rise in interest rates, persistent inflation and the increase in raw material and energy prices, European and national supervisors are urging banks to be prudent in their provisioning policy, as although non-performing loans are falling, they expect impairment to begin to be reflected in a two-year scenario.

National banks, on the other hand, assure that, for the moment, no deterioration has been noted and, although they admit that the first problems will come from the side of micro-SMEs, SMEs and the self-employed, they assure that the sector is protected since it has not used the bulk of the provisions made during the pandemic. In fact, the six Spanish listed institutions have reduced provisions for credit losses by 22% from June 2021 to June 2022 in their national activity, to 2.1 billion. Supervisors also call for prudence in the capital strategy.

Original Story: El Economista | Eva Díaz 
Edition and translation: Prime Yield

EBN creates the first Spanish securitisation fund on NPL portfolios

The EBN Group has set up the first uncollateralised bad debt (NPL) securitisation fund, whose securities are marketed in Spain in the form of a five-year bond, it announced.

EBN Titulización SAU, with advice from EBN Capital SGIIC, has set up ‘NPLs Unsecured Fondo de Titulización’. A first compartment will pay a coupon of 7.5% per annum semi-annually and will additionally repay 7.5% of the principal from the first year. The fund also provides for a series of additional kickers, giving the vehicle a resulting IRR ranging from 8% to 14%, depending on the date of full repayment.

EBN pointed out that Spain is, after France, “the great source of unsecured NPL portfolios in Europe, from which foreign funds that have been buying large portfolios of this type, mainly from the banking sector, have been drinking from it for years”.

With this vehicle, EBN Titulización is the first Spanish entity to manage a securitisation fund of unsecured NPLs, whose securities are offered to qualified Spanish investors, a type of financial asset that until now has been reserved mainly for large funds, and which is very common in other European countries, but that has little or no presence in investors’ portfolios in Spain.

“The ‘NPL unsecured’ is, contrary to what it seems, an asset that is very decorrelated to the economic cycle, being very attractive in the current situation. It has the advantage that its recovery follows highly predictable behavioural patterns, which reinforces its securitisation in bond format”, said Silvia Bonales, Managing Director of EBN Titulización.

EBN Capital’s Director of Business Development, Enrique Castañeda, added that “this is an innovative proposal in line with the fund manager’s DNA”, to provide clients with “sources of true diversification and access to the best risk-return ratio”.

Original Story: Europa Press | News 
Edition and translation: Prime Yield

Revolving credit card interest rose in August to 398% per year, the highest in 5 years

Information was released by the Central Bank. Interest rates have been rising along with Selic. Delinquency is the highest since 2020; debt hits record.

The Central Bank of Brazil (BC) revealed that the average interest rate charged by banks in operations with revolving credit card rose from 349.9% per year in July to 398.4% per year in August. This is the highest rate since August 2017 (428% per year).

The revolving credit of the credit card, whose demand in 2021 was the highest in ten years, can be triggered by those who cannot pay the full amount of the invoice on the due date, but do not want to be delinquent.

This is the most expensive line of credit on the market and, according to analysts, should be avoided. The recommendation is that bank customers pay the full amount of the bill monthly.

Selic Increase

Bank interest rates have increased over the last few years, as a consequence of the increase in the Selic, the economy’s basic interest rate, by the Central Bank.

With this measure, the Central Bank tries to contain the rise in inflation. Currently, the Selic is at 13.75% per year, the highest level in six years.

Last month, also according to the Central Bank, average banking interest rates with free resources in operations with individuals and companies reached 40.6% per annum in August.

According to the institution, this is the highest rate since March 2018, when it added 41% per year, that is, in just over four years.

The average bank interest with free resources does not include the housing, rural and National Bank for Economic and Social Development (BNDES) sectors.

According to the Central Bank, the average interest rate charged on operations with companies dropped from 23.4% per annum in July to 22.8% per annum in August.

In operations with individuals, interest rates rose from 53.4% per year in July to 53.9% per year in August, the highest level since April 2018 (56.3% per year).

In the special check of individuals, the rate rose from 127.4% per year in July to 128.6% per year in August. It is the highest rate since June this year (129.2% per year).

Bank Credit

The total volume of bank credit on the market, according to the Central Bank, advanced 1.6% in August to R$ 5.06 trillion.

There was an increase of 0.9% in the corporate loans portfolio and a 2.1% rise in personal loans.

According to the institution, among the types of credit for families in August, the following stood out: total credit cards (+2.4%), non-consigned personal credit tied to debt composition (+6.7%), non-consigned personal credit (+1.3%), consigned credit for civil servants (+0.8%) and consigned credit for retirees and pensioners from the INSS (+1%).

In twelve months, the growth in the total volume of bank credit reached 16.8% in August, against 16.9% in July.

For this entire year, the Central Bank estimates an expansion of 11.9% in bank credit. In 2021, driven by emergency lines of credit to combat the effects of the pandemic, bank credit rose 16.5%.

BC data show that the concessions of new bank loans also advanced in August, when they expanded 1.7% against the previous month.

This was the second month in a row in which the indicator rose. The calculation was made after seasonal adjustment, a kind of “compensation” to compare different periods.

Delinquency and Indebtedness

The average default rate registered by banks on credit operations was stable at 2.8% in August. Even so, it remains at the highest level since June 2020.

In the case of loans to individuals, defaults rose from 3.6% in July to 3.7% in August, the lowest since May 2020 (4%).

Already the default of companies was stable at 1.5% in August, the highest since August 2020 (1.8%).

The Central Bank also released statistics on household debt with banks. In this case, the new figures are for July this year.

According to the Central Bank, indebtedness hit a record in that month, adding up to 53.1% of the accumulated income over the previous twelve months. The BC’s historical series for this indicator begins in January 2005.In February 2020, before the Covid-19 pandemic, household indebtedness was at 41.8%.

Original Story: G1 Globo |Alexandre Martello
Photo: Photo by Lotus Head in
 Edition and translation: Prime Yield

BPI sells a €140 million NPL portfolio

BPI has completed the sale of the €140 million non-performing loans (NPL) portfolio Project Citron to funds managed by LX Investment Partners, the Portuguese bank informed. 

With a gross value of approximately € 140 million, the Project Citron is made of 15,000 contracts from about 5,000 clients, including both mortgage-backed and non-mortgage-backed loans.

“This transaction reinforces the strong position of BPI, which maintains the best  non-performong exposure (NPE) risk ratio in the Portuguese financial sector,” the bank said.

In the end of the 1st semesters, BPI’s NPE ratio stood at 1.6%.

Original story: Jornal de Negócios | Hugo Neutel 
Photo: BPI Facebook
Edition and translation: Prime Yield

Banks change structure of their securitizations

National Bank and Piraeus Bank are heading to a change in the structure of the two pending securitizations, Frontier II and Sunrise III respectively, in order for the two portfolios to adapt to the requirements of Eurostat and to obtain the approval of the Finance Ministry for their inclusion in the Hercules scheme.

The new rule that Eurostat has set for the pending securitizations to be included in Hercules is for the mezzanine part of the securitization – i.e. what is sold to investors – to be at least 8% of the senior security.

Thus, if a securitization is e.g. 1 billion euros and the senior bond is €500 million, the mezzanine bond should be at least €40 million.

This rule has not been observed in most of the securitizations that have taken place to date, and for that reason Eurostat has raised the issue of registering the guarantees in the public debt.

Original Story: Ekathimerini | Newsroom 
Photo:Piraeus Bank
Edition: Prime Yield

Large banks delay NPL rebound from April 2023

Spanish banks, together with financial regulators such as the European Central Bank (ECB) and the Bank of Spain, confirm that bank arrears will start to rise at some point due to the rise in interest rates, which translates into a greater financial effort for companies and families with variable credits, inflation and the rise in the price of energy, as well as the expected slowdown in the economy. However, for the moment and publicly, they refuse to put a date on when this upturn will be seen. However, as has learned, internal forecasts from several of the country’s large banks already point to non-performing loans beginning to flourish in the second quarter of 2023.

The forecast that delinquency is going to get worse has sounded like a mantra since the pandemic broke out in Spain. However, the measures implemented by the government and banks to alleviate the effects of Covid-19, such as the ERTEs, credit moratoriums and loans guaranteed by the ICO, together with the ECB’s lax monetary policy, have anaesthetised the situation of households and companies, leading, contrary to initial estimates, to the lowest levels of the last 14 years. According to the latest data from the Bank of Spain, at the end of July, the country’s financial sector NPL ratio stood at 3.85%.

But now, with the rise in interest rates with the aim of curbing inflation, the situation looks set to turn around. The ECB could raise rates to 2.5%, as predicted by the governor of the Bank of Spain, Pablo Hernández de Cos. Despite this hike, inflation in the euro area, which is targeted to reach 2% in the medium term, will remain high over the next two years. The ECB’s forecast is for it to moderate to 7% in 2023, compared with almost 10% at present. As a result of this rate hike, the European body also expects a recession next year.

Far from the last crisis

The arrival of a crisis could complicate employment, the already strained situation of families and companies and lead to more credit defaults. However, no one has yet given a forecast of how high the default rate could rise, although all bankers point out that it will be far from the last great crisis, when the default ratio exceeded 13% in the year 2023, and that it will be manageable.

For the time being, banks have kept down the toxic assets (foreclosed plus doubtful) on their balance sheet thanks to the sale of portfolios, which in the first half of 2022 alone amounted to 14,000 million. In view of the forecasts, banks will have to start increasing provisions to protect themselves from defaults, as requested by regulators. Moreover, the ECB has already asked the European sector for an estimate of the provisions needed in the case of the worst macroeconomic scenario, which assumes that Russia cuts off all gas supplies to Europe. However, the European supervisor is already working with a central macroeconomic scenario based on Russia’s gas supply to Europe being only 20%.

Construction stagnates arrears

Construction stagnates the reduction in NPL that it has been leading since the last great crisis, after reaching maximum thresholds with the bursting of the real estate bubble. The sector closed June with a rate of 8.4%, the same level as three months earlier, breaking the rate of decline. In the case of defaults only in credit institutions, the ratio stood at 8.4%, slightly higher than the 8.3% in March. For their part, consumer finance companies increased their default ratio to 6.28% in June, compared with 6.22% a month earlier.

Original Story: El Economista | Eva Díaz
Photo: Banco de Espana
Edition and translation: Prime Yield 

Brazil bank lending grows 1.6% in August

Outstanding loans in Brazil kept growing in August, according to the latest central bank data, with credit showing robustness despite rising costs amid an aggressive monetary tightening.

Outstanding loans were up 1.6% in August from the month before to R$ 5.067 trillion.

In July, outstanding loans rose 0.6%, a figure that had not yet been released by the central bank, which is still normalizing its data after a strike by its employees earlier this year.

Year-to-date growth reached 8.4% and, in 12 months through August, outstanding loans jumped 16.8%, driven mainly by the rise in credit to individuals, the central bank said.

This has occurred despite policymakers’ strong monetary tightening to curb inflation, which has put the benchmark interest at 13.75% from a 2% record low in March 2021.

In a rate-setting meeting in the end of september, the central bank paused its tightening cycle but stressed hikes could be resumed if disinflation does not happen as expected.

In August, bank lending spreads rose to 28.3 percentage points from 27.5 points in July, to the highest level since February 2020.

A broad measure of Brazilian consumer and business default ratios increased to 3.9% from 3.8% the month before.

Original Story: Nasdaq |Marcela Ayres/ Reuters
 Edition: Prime Yield

Banks must be “vigilant” as defaults increase for families and companies

Banks should be “vigilant” with the possible increase in defaults by families and companies due to the current economic context of rising prices and rising interest rates, warned Rui Pinto, who was speaking in Parliament about his appointment as a director of the Bank of Portugal.

He explained that the rise in interest rates and inflation will reduce the income of families, which will consume less with companies.

In a scenario of cooling economic activity, which is already beginning to be felt, Pinto noted, this context would create “pressure on the ability of families and companies, particularly in economies with high levels of debt, to meet their debts.

This “will create some pressure on the evolution of default” in relation to which banks should be “vigilant”, said the current administrator of the Securities Market Commission (CMVM) in the Budget and Finance Committee.

Rui Pinto stressed two aspects: “We are not yet seeing a negative evolution” in defaults; on the other hand, banks have had a very significant reduction in non-performing loans in recent years, so the level of problematic credit “is now relatively low and in line with other jurisdictions”.

With the rise in interest rates, banks may benefit from an increase in financial margins, Pinto continued. But this increase in margin “may be offset by a need to increase impairments, as there may be pressure on credit quality,” he said, noting that “banks have profitability that is not yet desirable.

Rui Pinto was heard in parliament as part of his appointment by the Finance Ministry to the board of directors of the Bank of Portugal.

Original Story: ECO |Alberto Teixeira
Photo: Bank of Portugal
Edition and translation: Prime Yield

Kruk accelerates in Spain and invests 90 million to buy NPL

Polish debt collection firm Kruk is picking up speed in Spain and has ambitious plans for the future. “At group level we have invested more than €160 million – in the acquisition of non-performing debt (NPL) portfolios – and in Spain, to date, we have invested around €90 million so far this year,” says its general manager in Spain, Alina Giurgea.

Founded in Poland in 1998, the company landed in Spain in 2015 with the integration of the Espand platform. Its total investment in those seven years amounts to 200 million and 45% – that 90 million – corresponds to the acquisition of four debt portfolios of unsecured financial institutions closed precisely this year.

Although each portfolio has a price, depending on its characteristics and risk, the average price on the market tends to oscillate on average between 5 and 15% of the debt acquired, so that the final total exposure acquired is several times the amount paid.

“It marks a new phase of development for us,” she says, convinced that it consolidates the firm’s position as a major player on the board. Giurgea declares herself “very optimistic about the future” and says that “the development we have had so far is even going to accelerate”.

Up to June – when it had invested 55 million euros in three portfolios – its investment represented 30% of the 160 million euros committed by the group as a whole. The firm is active in Poland, where it has its roots and headquarters, Italy, Romania, the Czech Republic, Slovakia and Spain. Its main activity is the purchase of defaulted debt in order to manage the recovery in a negotiated and “friendly” way, but it also has clients to whom it offers the recovery of their defaults.

“The group’s results are very good and we hope to replicate this strategy in Spain,” adds the director of Strategic Transactions and Client Relations at Kruk España, Francisco Álvarez, who assures that the firm is “on the right track” and therefore aspires to work with “the largest consumer financial institutions in the sector”.

“We are optimistic, we are looking at opportunities and we are going to try to close the year with some more investment if possible, logically without going crazy. We are very rational, we always do things very carefully thought out and in progression,” he adds.

The portfolio sales market experienced a notable reactivation in 2021, which has even been boosted this year without any more failures. “It was thought that there was going to be a wave of defaults and we were going to see very adverse effects, but this effect is being delayed and, although it is difficult to predict, we are analysing each portfolio in a very analytical way,” says Giurgea.

“The latest bank NPL ratio published – 3.85% in July, according to Bank of Spain data – is one of the lowest historically for ten or 15 years, which means that a very high level of NPLs is not being generated and we are not seeing it either,” adds Álvarez, although he is convinced that it will come.

“Now, as of today, the macroeconomic reality is that we have 10.5% inflation. That means that those of us who are paid on twelve pay slips are losing one of our monthly salaries. The continued rise in interest rates means an increase of between 100 or 200 euros in variable mortgage payments every month for people who have to pay at some point. The unemployment figures are not positive…. So, at some point it has to come. When? We don’t know,” he adds.

Debt with less seniority

“What we do see is that financial institutions are preparing themselves a bit and the portfolios that are being sold have a different type of seniority, we see portfolios that are a bit fresher. In other words, institutions are tending not to wait so long and to sell portfolios earlier,” says the general manager.

Kruk holds 9% of consumer bad debts

Kruk accounted for 9% of the nominal value of defaulted consumer loans sold in Spain up to June. These figures are included by the group in its financial report where it calculates that operations of this type were placed with a nominal balance of close to 3,000 million and for which 186 million was paid. Those closed by Kruk totalled a nominal value of close to 260 million (not including investments after June). Within the group, it was the unit that invested the most, with 31%, followed by Romania (21%), Poland (18%) and Italy (29%).

Original Story: El Economista | Eva Contreras 
Photo: Kruk Twiter
Edition and translation: Prime Yield

Rio de Janeiro

Delinquency hits new record and reaches 67.9 million Brazilians, says Serasa

The number of people in arrears in Brazil has again hit a record high. According to data from Serasa Experian, the country recorded 67.9 million defaulters in August, the highest figure since the survey began in 2016.

This represents a rise of 300,000 people compared to the previous month, or 0.5% in percentage terms.

The institution points out, however, that the month recorded a high number of debt negotiations, which reached 2.8 million debts – this is 22% more than in July, which gave a brake on the growth of arrears in the country.

“As Brazilians are on a tight monthly budget, debt negotiation with hire purchases was a solution sought to increase the number of regularization of debts, which in fact occurred,” he continues.

According to Serasa, the month had the second highest volume of renegotiations, second only to March. That month, there was the Feirão Limpa Nome Emergencial, which renegotiated more than 3.7 million contracts.

Banks and credit cards continue to account for the majority of debts, 28.8% of the total. Then come the basic bills such as water, electricity and gas, with 22.1%. In third place is the financial sector, with 13.8% of the total.

In the breakdown by region, São Paulo led the number of defaulters, with 16,072,592. At the other end, Roraima was the state with the fewest defaulters, 214,557.

Original Story: G1 Globo | G1
Photo:Photo by Bruno Leiva in
Edition and translation: Prime Yield 

Housing credit slows for the first time in almost two years

In August, the total amount of loans for house purchase grew, year-on-year, less than it had grown in July. It’s the first slowdown since October 2020.

Mortgage lending in Portugal recorded its first slowdown in almost two years in August. This news should be seen in light of the tightening of monetary conditions by the European Central Bank.

In that month, the total amount of loans for house purchase grew 4.6% in year-on-year terms. This is a slowdown of 0.2 percentage points which, although slight, is the first to be recorded since October 2020, the Bank of Portugal said.

In August, banks had contracted housing loans with individuals totaling €99.7 billion. The growth recorded represents a rise of €200 million compared to the end of July.

In consumer credit, the amount totalled €20.5 billion at the end of August. This is also an increase of €200 million in comparison to July. But in this case there was an acceleration in the year-on-year growth rate, from 5.5% last month to 5.9% in August.

As for deposits by individuals, there was a reduction of €1.3 billion, but a growth of 6.8% compared to August 2021, to 181.4 billion. Deposits tended to shrink in August, recalls the Bank of Portugal, a period marked by summer holidays. The reduction was mainly in demand deposits.

Credit to companies also slows down

From households to companies, the Bank of Portugal reports that the amount of loans was €76.4 billion at the end of August. Loans to companies grew 1.5% year-on-year, which is 0.1 percentage points less than the growth recorded in July.

“This deceleration was more expressive in small and medium-sized companies and in companies in the manufacturing and accommodation and catering sectors. Loans granted to large companies and companies in the trade and transport sectors accelerated,” the supervisor’s statement said.

Finally, corporate deposits increased by €1.5 billion in August to 64.8 billion. It is a growth rate of almost 10%, but “represents a deceleration for the fifth consecutive month”.

Original Story: ECO | Flávio Nunes 
Photo: Photo by Miguel Saavedra in
Edition and translation: Prime Yield

Process for concession of 20% of NBG goes on

The proposal of the Hellenic Financial Stability Fund on the three nominations from which the disposal adviser for a package of shares of National Bank of Greece will be chosen is already in the hands of Finance Minister Christos Staikouras.

Kathimerini understands the three candidates are Goldman Sachs, J.P. Morgan and Bank of America, and the minister will recommend the most suitable one in order to run the process of selling the NBG share package in the context of the official expression of interest submitted by the Saudi Arabian sovereign wealth fund Public Investment Fund (PIF) for the acquisition of 20% of the lender.

The interest of PIF, which according to information has started due diligence at National, has taken on an exclusive character in discussions with the HFSF, which is committed until the end of November not to conduct corresponding discussions – at least officially – with another interested party.

The consultant to be selected will submit a valuation report to the HFSF and provide it with advisory support at all stages of the implementation of the transaction, if it proceeds.

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

SPAIN Bank NPLs fall to 3.85% in July and remain at 2008 lows

Non-performing loans (NPL) granted by all credit institutions to companies and individuals fell in July to 3.85%, slightly down from 3.88% in the previous month, when it fell below the 4% mark for the first time in 14 years.

Provisional data from the Bank of Spain show that the doubtful assets ratio remains at its lowest level since December 2008. The decline with respect to a year earlier is 54 basis points.

The reduction in the NPL ratio of the private sector is due to the fact that the fall in the volume of doubtful loans (-1%) exceeded the decline in credit granted (-0.16%).

Specifically, credit to the resident private sector fell by €1.987 Billion to €1.232 trillion, while the total volume of non-performing loans fell by  €481 million to €47.435 billion (the lowest figure since August 2008).

Compared with July 2021, total lending increased by €11.776 billion and the doubtful balance decreased by €6.209 billion.

The figures include the methodological change in the classification of Financial Credit Establishments (EFCs), which since January 2014 are no longer considered within the category of credit institutions. Excluding the change, the NPL ratio would stand at 3.95%, since the credit balance was €1.2 trillion in July, when excluding the credit of CFCs.

The data broken down by type of institution show that the doubtful assets ratio of all deposit institutions (banks, savings banks and cooperatives) closed July at 3.77%, compared with 3.77% in June and 4.33% a year earlier.

The NPL ratio of financial credit institutions stood at 6.28% in the seventh month of the year, up from 6.22% in June and down from 6.5% a year earlier.

According to data from the Bank of Spain, provisions for all credit institutions fell to €33.18 billion in July, down €178 million in the month and €5.802 billion in the year.

Original Story: Estrategias de Inversión | Europa Press 
Photo: Photo by Victor Iglesias from FreeImages
Edition and translation: Prime Yield

Investment banks in Brazil focus on debt in the short-term

Investment banks in Brazil are focusing on debt issuance through the third quarter, an area that kept strong activity even with higher interest rates.

Felipe Thut, director at Bradesco BBI, the investment bank controlled by Banco Bradesco, expects total local debt issuance to reach around R$ 430 billion reais this year. Between January and August, issuance rose 30% over the same period last year. “The current volume of debt issued in reais is around double of 2020 levels, even with much higher interest rates than we had at the time”, Thut added.

Local fixed income issues represented 96% of capital markets activity in Brazil in August, according to industry group Anbima, even as benchmark interest rate Selic reached 13.75%, up from a record low of 2% in 2020.

Equity issuance volume is down 53.5% in dollars this year and M&A deals volume is also 31% lower than the same period a year ago, according to Refinitiv data. Uncertainties related to the presidential election are weighing on deals, as well as volatility in global interest rates.

Large local inflows into fixed exchange portfolios are fueling demand for private debt, Thut added. Fixed income funds received net inflows of R$ 309 billion in the 18 months through July.

Another factor is this year’s growth higher than expected, making companies issue debt to finance expansion, Thut said.

Tax-exempt bonds for infrastructure, real estate or agriculture businesses have lower costs and have been the first choice for companies, approaching R$ 20 billion in the first five months of 2022.

The executive believes the volume of equity issues, specially initial public offerings, may rise again once it becomes clear when the Brazilian central bank may begin to reduce interest rates. Brazil posted deflation last month as fuel prices fell.  

So far this year, there were no IPOs in Brazil, but 18 follow-on offerings. Last year there were 78 transactions, including 46 IPOs, according to Refinitiv data. Thut said Bradesco BBI will not make any changes in the team this year, as the bank expects a recovery on equity capital markets on the medium term.

Original Story: Reuters |Tatiana Bautzer 
Photo: Photo by Bruno Neves in
Edition: Prime Yield

Greek private sector bank deposits rise in August

Greek private sector bank deposits rose slightly in August for a fifth month in a row, central bank data showed.

Business and household bank deposits increased to €183.09 billion at the end of August from €182.93 billion in July, Bank of Greece data showed.

Greek banks’ deposit inflows had been rising since the beginning of 2021 as lockdowns to stem the spread of the COVID-19 pandemic put a dent in consumer spending.

Greece’s economy expanded from April to June at a slower pace than in the first quarter and its annual growth rate decelerated.

Original Story: Zawya | George Georgiopoulos 
Photo:Photo by Markellos P. from FreeImages
Edition: Prime Yield