In the third quarter of 2018, the Portuguese NPL (Non-Performing Loan) ratio decreased 0.4 p.p. to 11.3%, benefiting from a reduction of non-performing loan stock by 1.3 €Bn (4%), according to the latest report released by the Banco of Portugal (BdP, the Portuguese Central Bank).

The reduction of this ratio was more significant in the household’s segment (housing purpose), whose NPL stock decreased by 269 €Mn (5%) in the quarter ended in September.

According to BdP, the NPL ratio decreased by 6.6 p.p. (SNF: -8.1 p.p., households: -3.2 p.p.) since the historical peak observed in June 2016, reflecting a 38% reduction in total NPL stock (NFC: -37%, households: -36%), corresponding to 19.2 €Bn (SNF: -12.2 €Bn, households: -4.6 €Bn).

Between July and the end of September 2018, the NPL impairment coverage ratio increased by 0.3 compared to the previous quarter, standing at 53.2%. This figure is 10 p.p. above that observed in June 2016, when the NPL ration reached its maximum value.

The Portuguese Central Bank explains that the quarterly variation was mainly due to an increase of 0.8 p.p. in the impairment coverage ratio of the SNF segment, which stood at 58.7%. The coverage ratio of the consumption and other purposes segment decreased by 2.1 p.p., mainly reflecting a reduction of the accumulated impairments for NPL in this segment.

Original Info: Banco de Portugal (BdP)
Photo: Banco de Portugal
Written and Edition: Prime Yield