NPL&REO News

Almost two thirds of Portuguese NPL is in the corporate segment

«The improving economic conditions are contributing to NPL reduction» in Portugal, underlines the rating agency DBRS.

The corporate segment was the one that contributed the most for the high non-performing loans (NPL) levels recorded in the national banking systems, being responsible for almost two thirds from the total stock.

Looking into the financial landscape, the Canadian rating agency recognises that the «risks for financial stability are lowering gradually», even though it assumes that «the high levels of corporate NPL and debt are still risks for the financial stability».

Supported by data released by Portugal’s Central Bank, DBRS highlights that the NPL ratio fell 8,5 basis points in 18 months, to 9.4% in 2018, stressing out that the Portuguese business sector was the one that contributed the most for the high NPL levels recorded by the country’s banking sector, being responsible for «almost two thirds from the total NPL stock». The Portuguese corporative total NPL remain “high”, standing at 18.5%, but below the 30% recorded back in 2016.

«The improving Economic conditions is contributing to the NPL reduction» in Portugal, said the rating agency.

Besides, DBRS also recognised the exposition from the Portuguese banks to real estate «constitutes almost 40% of the total assets». However, the rating agency warned that, «a strong housing prices increase may also be a reason of concern», though the «price rise had cooled down in 2018».

Last year, the NPL ratio stood below the 10% for the first time since June 2016, at 9.4%, and going 1,9 percentage points down from the previous quarter.

Original Story: Jornal Económico | António Vasconcelos Moreira
Photo: Bank of Portugal
Edition & Translation:Prime Yield

 

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