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 FreeImages.com
Edition and translation: Prime Yield