NPL&REO News

Eurobank to sell NPL portfolio for €232 million

Greek lender Eurobank is preparing to sell a mixed portfolio of non-performing loans (NPLs) worth €232 million, according to its first-quarter financial statements.

The portfolio includes housing, business, small business, and consumer loans.

At the end of 2023, Eurobank classified this portfolio, known as Portfolio Leon, as held for sale, initiating negotiations with potential investors. The bank also recognised an additional impairment loss of €55 million, impacting its 2023 financial results.

In March, Eurobank revised the portfolio’s scope, adding loans with a gross book value of approximately €240 million. This adjustment increased the portfolio’s total gross book value from €398 million to €638 million.

According to the financial statements, the expected sale price of the portfolio is €232 million, which is 36.3 per cent of its gross book value. Consequently, the impairment provision stands at €406 million.

The expansion of Project Leon by €240 million, with these loans reclassified as held for sale, reduced the group’s non-performing exposures (NPEs) by €0.2 billion to €1.3 billion.

This reduction lowered the NPE ratio from 3.5 per cent at the end of 2023 to 3 per cent. The coverage ratio of NPEs by provisions increased to 92.6 per cent from 86.4 per cent at the end of 2023.

Moreover, as part of its NPE management strategy for 2024-2026, submitted to the Single Supervisory Mechanism (SSM) last March, Eurobank said that its aim was to achieve an NPE ratio of 3.2 per cent by the end of 2026. The bank has already reached this target.

Original Story: Cyprus Mail | Author: Kyriacos Nicolaou
Edition: Prime Yield

CaixaBank’s NPL ratio at 2.8%.

CaixaBank Group posted an attributable net profit of €1.01 billion in the first quarter of 2024, up +17.5% vs. the €855 million registered in the same period of 2023, as it leverages its financial and commercial strength, which has allowed it to continue supporting families and businesses.

The NPL ratio was virtually unchanged in the quarter and below the sector average, at 2.8% (compared to 2.7% in December 2023) after applying stricter criteria for the classification of non-performing loans (NPL) within the prudential framework, thanks to rigorous and prudent management of credit risk. NPL increased slightly to €10.79 billion, with no discernible signs of deterioration in the organic evolution of credit exposures. Provisions for insolvency risk (€7.67 billion) brought the coverage ratio to 71%. Meanwhile, the cost of risk (trailing 12 months) remained low at 0.29%.

CaixaBank Group also has an optimal liquidity position, with €157.02 billion, and the Liquidity Coverage Ratio (LCR) stood at 197% as of 31 March, well above the regulatory minimum requirement of 100%.

As for the Group’s capital position, the CET1 capital ratio stood at 12.3% following the impact of the new €500 million share buyback programme that began in March (-22 bps) and which has now been fully deducted. On the other side, the solid organic capital generation in the first quarter stands out (+36 bps).

CaixaBank Group serves 20.1 million customers through a network of over 4,100 branches across Spain and Portugal and has more than €600 billion in assets.

Gonzalo Gortazar, CaixaBank’s CEO, has highlighted that “in the context of a resilient Spanish economy, at CaixaBank, we started 2024 with intense commercial activity and market share gains, while maintaining solid levels of profitability and efficiency”.

The CEO has underscored that “in these first three months of the year, CaixaBank has registered €1.13 billion in taxes, a figure that exceeds the profit obtained in the period. Out of those, €493 million correspond to the banking tax, 32% more than last year”.

Evolution of the income statement
CaixaBank’s income statement for the first quarter of 2024 with growth in all margins, reflects the strength of the bank and its positive business dynamics, with higher loan production and positive net inflows into wealth management products, in a context of interest rate normalisation.
As a result, gross income rose +12.7% year-on-year to €3.5 billion, on the back of higher net interest income (+27.4%), which reflects the impact of new production and the prevailing interest rate backdrop.
Revenues from services (wealth management, protection insurance and banking fees) amounted to €1.2 billion in the first quarter, +1.3% year-on-year following an increase in activity. The growth in revenues from wealth management (+15.8%) and protection insurance (+6.9%) offsets the decrease of banking fees (-10.8%), which were down, among other factors, due to lower account maintenance fees.
As a result, return on equity (ROE) stood at 13.4% at the end of March and the cost-to-income ratio improved once again to reach 40.3%.

Business volumes at an all-time high
Strong activity in the quarter cemented CaixaBank’s status as the leading financial institution in Spain and brought the bank’s business volume close to the one trillion-euro mark, an all-time high, after growing by more than €15 billion in the last year.
Customer funds amounted to €636.49 billion, up €6.16 billion in the quarter (+1%), underpinned by wealth management products.
On-balance sheet resources remained stable in the quarter at €463.51 billion and assets under management totalled €168.69 billion (+4.9% in the quarter), following the solid performance of the markets and significant inflows.
Net inflows into mutual funds, savings insurance and pension plans reached €3.44 billion between January and March, with money market funds being the main growth driver on the funds side. Meanwhile, protection insurance continued to perform well, with premiums growing +8.7% year-on-year.
The performing loan portfolio remained stable in the period at €344.44 billion (+0.1%). Mortgages continue to be affected by repayments, albeit at a slower pace. This factor, together with the growth in new production, allowed the registered decline (-0.7%) in the first quarter to be the smallest in the last five quarters. The consumer loan portfolio was up +2%, while the loans to business portfolio rose by +1.1%.

New loan production picked up during the period
Commercial activity remains buoyant, picking up the pace starting in late 2023 and speeding up into the first quarter of 2024, with significant growth in new loans to individuals. In particular, new mortgage lending amounted to €2.79 billion in the first quarter of 2024, up +24.1% year-on-year, while new consumer lending stood at €3.03 billion, up +15%.
New production in loans to businesses exceeded €10.5 billion through to the end of March, with 43,000 loans granted to SMEs during the quarter (+28% year-on-year).

Banks puts 700 million in bad loans up for sale

Montepio and BPI, which already had two portfolios of €200 million in the market, were joined by BCP, Santander Totta and Banco CTT with NPL portfolios of around €500 million.

According to information gathered by ECO from market sources, Portuguese banks have non-performing loan portfolios (NPL) worth almost €700 million up for sale.

At the beginning of April, ECO reported that Banco Montepio and BPI had already launched two processes for the sale of NPL portfolios worth €200 million.

These two banks have been joined in recent weeks by BCP, Santander Totta and Banco CTT, with portfolios with a gross book value of around €500 million.

BCP has the largest portfolio: Project Spring is worth €265 million and is made up of single names, i.e. large exposures that are in default.

Santander Totta launched two portfolios simultaneously: Pool 62 and Pool 63. The first portfolio has a value of €70 million and consists of unsecured loans. The second has a value of €30 million and is made up of secured loans.

Banco CTT’s Boavista project, worth €100 million, has only unsecured NPLs. The bank confirmed that it had carried out an “organised market consultation for the sale” of an old portfolio of 321 Crédito, an institution specialised in consumer credit, acquired in 2018.

None of the other banks would comment on the transactions.

Original Story: ECO | Author: Alberto Teixeira
Edition and translation: Prime Yield

Santander sees higher profitability in 2024 as Spanish business outperforms

Spain’s biggest international bank Santander signalled higher profitability this year as growth in lending income, particularly in its home market, helped drive first-quarter earnings higher.

The bank’s revenue rose 10% to a record high 15.38 billion euro, above the 15.06 billion analysts had expected.

The euro zone’s second-biggest bank by market value relied in the past on Latin America for revenue growth, but has recently also benefited from higher European interest rates.

“It has been a very strong start to the year… supported by good growth in net interest income in Europe and the Americas,” Executive Chair Ana Botin said in a statement.

The bank is “well on track” to meet its targets for the year, including a return on tangible equity (ROTE) of 16%, she added.

Chief Financial Officer Jose Garcia Cantera told analysts on call that would imply ending 2024 with a net profit above 12 billion euros.

Including the 335 million euro impact of the Spanish banking levy in Spain, ROTE already stood at 16.2%, compared with 14.9% reported in the quarter.

Net profit jumped to 2.85 billion euros in January to March, just short of the 2.87 billion expect by analysts.

Overall net loan provisions rose 9% while the cost of risk, which measures potential losses, rose 2 basis points to 120 bps.

LENDING BOOST IN SPAIN

At a group level, net interest income (NII) – earnings on loans minus deposit costs – rose 17.7% to 11.98 billion euros, above the 11.5 billion that analysts expected.

Against the previous quarter, NII rose 7.7% as euro zone interest rates remained higher for longer than expected, helping its Spanish business, which has been charging more on loans while keeping a lid on rates paid to savers.

Net profit in Spain rose 66%, while NII was up 24%.

In Brazil, net profit rose almost 20% despite higher provisions as net interest income increased by 25%.

The U.S. and the UK were weak spots, with net profit in the U.S. falling 6.8% due to higher investment costs and NII down 4.7% due to higher funding costs. In the UK net profit fell 22.8%.

Santander’s Tier-1 fully loaded capital ratio, the strictest measure of solvency, rose to 12.28% from 12.26% in the previous quarter.

Original Story: Reuters | Author: Jesus Aguado
Edition: Prime Yield

Credit expanded by 8% in Q1

The Bank of Greece’s (BoG) data for the first quarter of the year confirm the recovery in corporate financing, which will support credit expansion in 2024, as the net flow of financing moved into positive territory in the order of 333 million euros.

The net flow of financing captures new loan disbursements after repayments of existing debt, and the positive sign in the first quarter is a consequence of the increase in borrowing of €1.9 billion in March, which raised the rate of credit expansion to businesses to 8%.

Loans to enterprises amounted to €76.4 bn, of which €67.4 bn are loans to industry, trade, tourism, construction, etc. – i.e. non-financial businesses (NFC) – and a further €8.9 bn are loans to insurance companies. A further €4.5 billion are loans to professionals, farmers and sole traders, which make up a small proportion of business loans. In addition to the high cost of money resulting from the rise in interest rates, the reluctance of sole proprietors and especially the self-employed to borrow is also attributed to widespread tax evasion and undeclared income, with the result that their low income status does not allow them access to bank loans.

According to the BoG’s figures, business lending, with a focus on small and medium-sized enterprises (SME), is the main driver of the acceleration in financing, which is currently being boosted by loans from the Recovery and Resilience Fund (RRF), which ensure low financing costs. According to the banks’ estimates, the rate of credit expansion to businesses will rise to an average of 5% over the three years 2024-2026, a period that coincides with the end of the RRF, whose resources should have been absorbed by August 2026.

On the contrary, loans to households continued to show a negative net financing flow both in March (-€21 million) and in the first quarter (-€201 million). The big problem is mortgages, whose balances are constantly shrinking as repayments exceed new disbursements, resulting in a negative flow of €292 million at the end of the first quarter.

Original Story: Ekathimerini | Author: Evgenia Tzortzi
Edition: Prime Yield

NPL increased by €144 million in February to 3.62%

The volume of doubtful loans in February was €42.248 billion, according to the Bank of Spain. In February last year the rate was 3.55%.

Non-performing loans (NPL) granted by all credit institutions to companies and individuals stood at 3.62% in February, barely one hundredth of a percentage point higher than the 3.61% recorded in January, although higher than the 3.55% recorded a year earlier, according to data published by the Bank of Spain.

The volume of doubtful loans in February was €42.248 billion, a figure that has risen by 144 million (+0.34%) compared to January. Compared with a year earlier, the volume of doubtful loans fell by 0.81%, €347 million less.

At the same time as this increase in doubtful loans, there was no change in the total amount of credit granted. In February, banks registered €1.135 billion in loans, barely one million euros less than in January. Moreover, it is €33,494 billion less than in February 2023.

The data broken down by type of institution show that the doubtful assets ratio of all deposit institutions (banks, savings banks and cooperatives) closed January at 3.52%, up from 3.50% the previous month, and also up from 3.46% a year earlier.

The NPL ratio of financial credit institutions stood at 6.59% in the second month of the year, up from 6.53% in January, and also up from 6.04% a year earlier.

According to data from the Bank of Spain, the provisions of all credit institutions rose to €30.026 billion euros in February, an increase of 96 million euros compared with the previous month.

Original Story: Idealista News
Edition and translation: Prime Yield

Bank of Greece 1

ECB will let Greece’s big 4 banks to pay dividends

After being urged by Bank of Greece Governor Yannis Stournaras, the European Central Bank (ECB) is reportedly poised to let the country’s Big four banks pay dividends when supervisors take it under consideration in June.

That was reported by POLITICO, citing unnamed Greek banking sources who said the banks will be able to pay out €840 million as the financial institutions have come back to big profitability.

The country’s banks had to be bailed out with €50 billion during a 2010-18 financial and austerity crisis that also saw them under a mountain of bad loans since sold over to collection agencies hounding people to repay.

If approved, it would be the first time in 15 years that bank shareholders could cash in on their investments, another Greek banking source also not identified told Pro Morning Central Banker (MCB) Europe.

National Bank of Greece payouts will be capped at 20-25% of the lenders’ 2023 profits, Piraeus Bank is expected to return 10% of its profit to shareholders, Alpha Bank 20%, and Eurobank 25%, all in line with the banks’ own guidance, the source said.

National Bank of Greece shareholders will have to lower their expectations, as the ECB is only likely to let it pay out 25% of its profits, below the 30% the bank guided for in March.

The payouts of the four systemic lenders will be smaller than for most of their European peers, as the supervisor still has concerns about the quality of their capital. Around 40% of the groups’ capital is in the form of deferred tax credit (DTC), which the ECB sees as lower-quality equity, said Business Daily Greece.

Earlier, Stournas told Yahoo Finance in an interview in Frankfurt – the ECB’s home – that the recovery of Greek banks has to be acknowledged. “It’s the time to allow dividends,” Stournaras said. “This decision and the exact parameters will be taken later in the year — in June.”

“We all know the constraints, but nobody can deny the huge improvement in the NPL (Non-Performing Loan) situation, the profitability situation, the capital metric situation, the liquidity situation,” he said. “The time has come for the supervisors to consider allowing the shareholders of the banks to get some dividend.”

Original Story: The National Herald
Edition: Prime Yield

Greece gets €3.5bn windfall from selling state stakes in big banks

The sale of state stakes in five banks by the end of the year is expected to raise €3.5 bn for Greece, Finance Minister Kostis Hatzidakis told a parliamentary committee.

He said the New Democracy government was focused on “saving Greek deposits as well as Greek businesses and households from a wider collapse and crisis”, even as debt collectors hound those who can’t pay their loans.

Many defaulted during a 2010-18 economic crisis in which Greece received €326 bn in three international bailouts to stave off collapse, with banks receiving €50 bn in rescue packages to stay afloat.

The sale comes after the recovery of the investment grade, the high growth rates and the positive course of most of the main parameters of the economy,” he said, referring to Greece being upgraded to the highest level by most agencies and attracting foreign investors.

Bank of Greece Governor Yannis Stournaras said the sales, together with other proceeds from the Hellenic Financial Stability Fund (HFSF), would total about €53.7 bn.

Earlier, Finance Minister Kostis Hatzidakis told Reuters that “we’ve had very strong interest from many investors and that’s why we’re aiming to complete this process by the end of this year” as Greece recovers.

The state recently sold its stake in three major banks, raising more than €2 bn, with the latest sale of a 27% stake in Piraeus Bank oversubscribed eight times as investors jockeyed for position.

Under an agreement with creditors, Greece has until the end of 2025 to complete the sales, but has decided to move faster. The remaining 18.4% stake in National Bank, the country’s largest lender, and 72% in smaller Attica Bank will be sold this year.

“We found there was no reason to delay, to drag our feet,” said Hatzidakis, as banks have seen deposits return and made big profits after selling off bad loans to debt collectors who hound people to pay back debts even when they can’t.

Original Story: The National Herald
Edition: Prime Yield

Banks increase profitability and capital and improve efficiency in 2023

In 2023, the banking sector became fatter. According to the Bank of Portugal, profits increased due to interest income, and as a result profitability grew, capital was strengthened and the efficiency ratio also improved.

Banking profitability “continued its growth trajectory with return on equity (ROE) standing at 14.8 % in annual terms”, 6.14 percentage points more than in 2022, says the Bank of Portugal in its quarterly analysis of the Portuguese banking system.

This growth reflects the increase in net interest income (the difference between interest paid by customers and interest paid by banks) due to the increase in interest rates by the European Central Bank (ECB) to curb inflation.

Return on assets (ROA) also improved, standing at 1.28% (up 0.59 percentage points).

Although slight, the cost of credit risk increased by 0.16 percentage points to 0.45%, due to the strengthening of credit impairments by the banks.

In the note from the supervisor led by Mário Centeno, for banks as a whole, it is also stated that the cost-to-income ratio (dividing operating expenses by operating income to obtain the cost benefit) improved, falling 13.7% compared to 2022 and standing at 36.9%. The increase in operating income contributed to this, as did the improvement in net interest income.

According to the Bank of Portugal’s note, asset quality also improved. The non-performing loans (NPL) ratio fell 0.2 percentage points to 2.7%, an evolution that reflects not only “the reduction in NPLs” but also “the increase in productive (risk-free) loans”.

In this context, the gross NPL ratio for companies stood at 5% (down 0.8 percentage points), due to the reduction in NPL. In the private segment, the gross NPL ratio remained at 2.4%.

In terms of capital, both the total own funds ratio and the Common Equity Tier 1 (CET1) ratio increased by 0.7% to 19.6% and 17.1% respectively.

The average risk weight also improved, decreasing by 0.6% to 42.7%, due to the importance of the lower risk components in assets.

Original Story: Expresso | Author: Isabel Vicente | Data: 27.03.2024
Edition and translation: Prime Yield

Greece sets cap on new mortgages

The Bank of Greece is imposing a cap on new mortgages to prevent excessive lending. In other words, the country’s central bank has decided to set a maximum loan limit in relation to the value of the property and a maximum limit for servicing the debt from housing loans in relation to the borrower’s total income.

The limits will be more flexible for first-time buyers in an effort to make it easier for young people to access bank loans to buy property.

The new limits will apply from 1 January 2025 and provide that the loan cannot exceed 80% of the commercial value of the property. Exceptions will be made for first-time mortgage borrowers, for whom the loan cannot exceed 90% of the value of the property. In addition, the cost of servicing a borrower’s loan obligations cannot exceed 40% of their annual income. The exception is again young buyers, for whom the limit rises to 50%.

Under the new rules, banks will be allowed to exceed the above two limits by 10% of the number of new disbursements, and the excess will be tracked separately for first-time buyers and other borrowers.

A first-time buyer is defined as someone who borrows from a bank for the first time to buy a house, regardless of whether they already own a property – e.g. following a parental allowance. The limit for the calculation of the debt service ratio (debt service in relation to income) will concern all the debts one has with the bank. In particular, if the instalment of a mortgage consumes 30% of your income, the bank should also take into account any other debts – e.g. from consumer loans or cards – and add these costs when calculating the index.

Net income, i.e. income after tax and social security contributions, is also taken into account when calculating the debt service ratio.

The setting of limits for housing loans is a measure applied by the majority of European countries, where the limits are in fact much stricter than those applied in the United States.

Original Story: Kathimerini | Autor: Evgenia Tzortzi
Edition: Prime Yield

NPL pile

Europe’s debt collectors face reckoning as bad loans vanish

Europe’s debt collectors have gone from feast to famine amid a collapse in the number of bank loans turning sour.

Companies that recover unpaid bank debts, and which thrived in the aftermath of the euro zone sovereign debt crisis, are rethinking their business models and examining tie-ups with rivals after COVID-19, an energy crisis and two-decade-high interest rates failed to unleash a new wave of loan defaults.

Banks in Europe’s south have largely completed the clean-ups that once fed the bad loan bonanza and pulled in overseas investment firms such as Apollo, opens new tab, Cerberus, PIMCO, Elliott and Lone Star, while government support measures have helped keep companies and households on their feet.

Non-performing loans (NPLs) have held at 1.8% of total bank loans in Europe for six straight quarters, official data show.

In Italy, the continent’s biggest market for bad debts, sales last year totalled 31 billion euros, a third of the 2018 peak. Back then, virtually all disposals came from banks, while more than half of the total in 2023 were re-sales.

Shares in some of the continent’s main players including Sweden’s Intrum, opens new tab – Europe’s biggest debt collector – and Italian leader doValue, opens new tab hit record lows this month as investors weigh whether efforts to restructure their business can work. Both companies declined to comment.

“Several players are undergoing a metamorphosis,” said Francesco Cataldo, a director at consultancy PwC Strategy& in Milan.

Keeping loan managers in activity is important because they can provide a new lease of life to assets – sometimes businesses or properties – that are tied up in insolvency or restructuring procedures, helping economic growth.

Higher debt costs, lower bad loan flows

Many collectors have not only stopped buying new impaired loans now that debt costs make that economically unviable, but are also shedding assets bought in the past.

Intrum, whose shares are down 78% this year, in January sold a nominal 33 billion euro loan portfolio to Cerberus, retaining management of the loans and using the cash to cut its recently downgraded debt. It is working with advisers to improve its debt position.

Similarly, Italy’s Mediobanca (MDBI.MI), opens new tab in October quit the NPL investment business and sold its arm that held a nominal 6.5 billion euros in bad loans.

Intrum’s ‘capital light’ model was embraced last week by Italian state-owned bad loan manager AMCO when it presented a new three-year strategy, saying it would reduce loans under management and cut its financial debt to zero.

“Banks have minimal impaired loan levels and high capital buffers,” AMCO said, pointing to structurally lower new bad loan flows and mounting competition in the sector, where firms must comply with new European Union regulation by mid-2024.

Banks’ healthy loan books also threaten collectors that never invested directly in NPLs, relying instead on contracts with lenders outsourcing debt recovery. As they gradually expire, those multi-year contracts may not be renewed.

Italy’s doValue, which is backed by Japan’s SoftBank Group, opens new tab and has a key UniCredit, opens new tab contract ending in 2025, is expected to outline alternative revenue sources.

Its shares have lost 47% this year after it reported a 2023 loss on an impairment it booked on its operations in Spain, where it lost a major contract in 2022.

M&A Revival

In a crowded market, mergers offer an obvious way for debt collectors to reduce competition and increase scale.

But investment bankers say the poor performance of listed bad loan specialists renders valuations unattractive for sellers.

Multiple deals have been explored but failed to go through in recent years, with varied business models making it hard to set price tags that would spur big investment funds to sell the debt servicers they bought in the boom times, the bankers said.

Hopes of an M&A revival are now pinned on fintech group ION’s 1.3 billion euro acquisition of Italian loan manager Prelios from U.S. hedge fund Davidson Kempner.

Valued at around nine times its core profit, Prelios could set a benchmark for future deals, two industry sources said.

ION gained government clearance this month to buy Prelios and now needs central bank approval. It is then expected to merge Prelios with Cerved, another NPL business it bought in 2021.

Original Story: Reuters | Author: Valentina Za
Edition: Prime Yield

Acropolis tourism of greece

Greece continues to have the worst performance in household credit

Greece continues to have the worst performance in household credit in Europe, registering a consistently negative rate, which was -1.7% in January against a 0.3% increase in the eurozone, according to a report published by DBRS Morningstar, focusing on the “slow production of new mortgage loans.”

The rise in interest rates and high inflation have made the growth rate of loans in the eurozone shrink, as it plunged from 4.5% in the first half of 2022 to a marginally positive rate in 2023. This contrasts with a steady contraction in Greece, due to large repayments exceeding new disbursements.

The aversion to borrowing by households is observed despite the fact that the vast majority of new mortgage disbursements in Greece are at fixed interest rates, which, through successive reductions made by Greek banks recently, have fallen to historic lows. 

Fixed term rates start at 3% for a 3-year term, while last week Eurobank further reduced the 10-year fixed rate and above by 0.30 points, which starts at 4.10% and reaches 4.30% for periods of 15, 20, 25 and 30 years.

As DBRS observes, the high interest income of Greek banks, which increased by 51% year-on-year, is mainly linked to the strengthening of the portfolio of business loans, which grew by 5.1% in 2023, against an average increase of just 0.2% in the eurozone, despite stricter lending criteria, high interest rates and high repayments. 

Interest income amounted to €8.1 billion at the end of 2023 compared to €5.4 billion in 2022 and according to DBRS this is mainly due to the overall better performance of the Greek economy, as well as the disbursement of loans linked to the country’s growth and the Recovery Fund funds, which “will continue to support the growth of the loan portfolio combined with some recovery foreseen for new mortgages.”

Fee income in 2023 was €1.8 billion compared to €1.7 billion in 2022, up 7%, driven by increased trading income, grant activity and sales growth activity investment and bancassurance products.

Original Story: Kathimerini | Author: Evgenia Tzortzi
Edition: Prime Yield

Digo Poster

Diglo achieves 3 million profit in 2023

Diglo, Santander’s servicer, made a profit of €3m in 2023, more than double that of 2022, when it posted a profit of €1m, according to the bank’s annual report.

In addition, it has launched a technology investment plan for the period 2024-2025 with an amount of more than €4 million.

The aim of the plan, according to sources from the ‘servicer’ explained to Europa Press, is to boost the efficiency of daily internal procedures through automation and the application of artificial intelligence, which will, in turn, result in an improvement in the quality of customer service.

With regard to its activity during 2023, the firm has managed more than 400,000 contracts for debt recovery in the non-performing loan portfolios (NPLs) business and has recorded a 10% increase in the recovery rate on managed stock of NPL compared to 2022.

In addition, the portfolio turnover has been above 30% of published properties, while in the business of managing real estate assets acquired in foreclosure processes (REOs), the servicer has managed nearly 4,000 properties.

Diglo began operating in early 2022 as Santander Group’s real estate servicer under the Deva umbrella, with a total portfolio of more than €5 billion in assets.

Its function is to manage assets acquired in foreclosures (REOs) and non-performing loans (NPLs) of both Santander Group and third parties. In the REOs area, these 4,000 assets of various types (primary residences, holiday homes, logistics assets, residential and offices) spread throughout Spain are grouped together, while in the NPLs business, at the start of its operations, it had around 200,000 contracts under management, 70% of which were SMEs.

This ‘servicer’ is headquartered in Madrid and has ten branches in seven regions: Western and Eastern Andalusia, Catalonia, Central, Levante, Northwest and North, although the network covers the whole of Spain.

Original Story: Bolsamania | Author: Europa Press
Translation and edition: Prime Yield

HFSF is one step before its full divestment from banks

The Hellenic Financial Stability Fund (HFSF) is one step before the complete divestment from Greece’s four systemic banks, after the successful sale of all the shares it owned in Piraeus Bank.

In this way, the cycle of recapitalizations in the Greek banking system will be officially closed and, by extension, for the Greek economy, which is showing resilience as, despite the new challenges, it is moving at a growth rate four times the average of the eurozone.

The HFSF has fully divested from Eurobank, Piraeus Bank and Alpha Bank while maintaining a stake of approximately 18% in National Bank and a holding of approximately 70% in Attica Bank.

As pointed out after the completion of the divestment of the HFSF from Piraeus Bank by the government, the HFSF, the Bank of Greece and financial analysts, this was a vote of confidence by the international investment community, not only for the Greek banking system, but also for the Greek economy.

As noted by the Minister of National Economy and Finance, Kostis Hatzidakis, on the occasion of the successful completion of the sale of 27% of Piraeus Bank shares to foreign and Greek investors, the banking system is turning the page: “From the crisis and the recapitalizations, [we have moved to the] time when high-quality investors express, as was seen in the last months, their interest in all systemic Greek banks,” said the minister, pointing to the fact that the investment interest expressed was eight times greater than the offer.

He added: “The latest developments reward the strategy of the HFSF management which prepared and organized the process effectively. They underline the correctness of the government’s choices, not only for the way and the time the divestment of the state proceeded, but also more generally for the banking system itself. And they are, after all, a very serious national success.”

Double benefit

The successful cycle of the HFSF divestment from the systemic banks started with Eurobank and was followed by Alpha, National and Piraeus. According to data Hatzidakis presented to Parliament in February, the state has not only an accounting but also, above all, a more general benefit from divestment. The data show that for the rescue of the four systemic banks, the Greek state – through the HFSF – has paid a total of 30.9 billion euros, while the benefit it has had is €34.8 billion. That is, the benefit of the state in relation to the €30.9 billion it gave for the recapitalization is €3.9 billion, not counting the 2013-2023 dividends, amounting to €5.5 billion paid by the Bank of Greece to the state, mainly due to the provision of extraordinary liquidity support to the banking system through the emergency liquidity assistance.

Speaking to Parliament on February 19, Hatzidakis emphasized that the results of the divestment in Eurobank, Alpha and National Bank prove the correctness of the government’s choices.

Hatzidakis’ position is echoed by many experts, including University of Athens professor of Finance Dimitris Kenourgios, who told Kathimerini English Edition that developments “signal a new era for our banking system. We appear to have overcome, with evidence, a period of crisis during which almost half of the loan portfolios were not serviced and banks were unable to play the role of the credit supplier in the Greek economy.”

By saving the systemic banks, of course, the deposits of the Greek citizens were also saved, which were approximately 10 times the cost of the recapitalization, and businesses and households were protected from collapse, according to government officials.

Kenourgios agreed that the purpose of the state’s investment has been fulfilled, even when the PSI haircut and the CoCo redemption are not factored in: “The revenues of the state will be no more than €5 billion, but the flipside of the coin is that through the recapitalizations the banks assisted the Greek economy, the Greek households and the Greek enterprises, and bad loans were reduced. Therefore there has been an indirect effect of the recapitalizations for the Greek economy,” he explained.

Original Story: Ekathimerini | Author: George Georgakopoulos
Edition: Prime Yield

Santander Consumer Lisbon

Santander Consumer earned €1.321 billion in 2023

Santander Consumer Finance, the Santander Group’s subsidiary specialising in consumer finance, posted a net profit of €1.321 billion in 2023, 17.4% less than in 2022, according to the accounts sent by the company to the National Securities Market Commission (CNMV).

The business in Spain and Portugal posted earnings of €806.3 million, almost quadrupling its 2022 result of €206.6 million. Ordinary revenues in this unit increased 65.0% to €1.6 billion.

At the consolidated level, net interest income fell 4.0% to €3.425 billion, affected by the change in the conditions of the TLTRO programme and the rise in interest rates.

In the first half of the year, Santander told Europa Press that the bank was “actively” repricing loans, focusing on the most profitable segments and increasing customer deposits”.

In fact, interest income soared 53.3%, although interest expenses quadrupled to €3.006 billion euros.

Customer loans grew 8.45% to €115.507 billion, while deposits rose 18.1% to  €48.844 billion.

Santander Consumer Finance paid a dividend of €0.32 per share to its parent company, Banco Santander, for a total of €607.4 million and almost 46% of the profit obtained by the finance company in 2023.

Original Story: Capital Madrid | Author: C.M.
Translation and Editions: Prime Yield

Lending to households slows down at the start of the year, falling by 16.3 bn

Lending starts 2024 with the brakes on. Lending by financial institutions to households fell by 2.4% year on year to €679.183 billion, while the decline in lending to non-financial corporations was somewhat milder at €922.960 billion, 1.4% less than in January 2023. From one period to the next, interest rates in the eurozone have risen by 200 basis points, from 2.5% at the beginning of last year to the 4.5% set by the European Central Bank (ECB) in September, leading to an increase in the cost of financing.

Faced with higher borrowing costs and rising inflation, the granting of loans was reduced by more than €16.361 billion in the case of families and by €12.736 billion in the case of companies. This decline was also observed on a monthly basis, albeit at a more moderate pace. Household borrowing fell by €2.757 billion, 0.4% less than in December, while business borrowing rose by €24 million.

These data were recorded in the midst of the moderation experienced by the twelve-month Euribor, the index to which most mortgages in Spain are referenced, which closed January at 3.609%, its third consecutive monthly fall. In the same month of 2023 it stood at 3.337%. Although far from the highs of 4.1% recorded last summer, the rise in interest rates has caused a slowdown in lending activity in recent months, especially compared to the second half of last year.

The rise in house prices and the use of savings to repay mortgages, which have risen sharply since they were granted free of charge, have caused the outstanding balance of household mortgage loans to continue to fall, to €494.793 billion, down 3%. This is the lowest figure since 2006, when it fell below the €500 billion mark, according to data published by the Bank of Spain. Nevertheless, the amount that families allocate to their homes continues to account for the majority of their debt, at around 73%.

The moderation in the volume of loans earmarked for housing contrasts with consumer financing, which rose by 3.5% to €98.821 billion. At the same time, the balance of bank loans to enterprises fell by 4.4% to €453.641 billion. On the other hand, debt securities remained above 134 billion, while foreign loans rose by 2.2% year-on-year to 335.242 billion.

Original Story: La Información
Edition and translation: Prime Yield

doValue logo

Attica Bank selects doValue Greece to manage a €500 million NPE portfolio

doValue Greece has inked a pivotal servicing contract with Attica Bank SA, marking a significant expansion in its portfolio. The deal, involving the management of Non-Performing Exposures (NPEs) worth approximately €500 million Gross Book Value (GBV), is integrated into a larger decuritized portfolio known as Project Omega, which was reassigned to Attica Bank in February 2024.

Attica Bank, ranking as the fifth-largest banking entity in Greece, provides a comprehensive spectrum of financial services to individuals and SMEs, including deposit, investment, and insurance products. With doValue Greece now managing €30 billion of NPEs, including 7 HAPS securitizations, this transaction further solidifies its standing in the Greek Non-Performing Loan (NPL) market.

Original Story: BNN Breaking | Author: Sakak Costu
Edition: Prime Yield

Coimbra Shutterstock

Salaries aren’t enough to pay mortgages in more than 80% of Portuguese municipalities

Mainland Portugal has only 45 municipalities – less than a fifth – where half the families have the minimum income needed to buy a house on credit. According to data from the Ministry of Economy, the median income in Portugal (1,091 euros) is only enough for half of what is needed to pay the bank: 2,063 euros.

The analysis by the Strategy and Studies Office, quoted by the Jornal de Negócios, also pointed to the difficulties felt not only in the metropolitan areas of Lisbon and Porto, but also in the rest of the mainland.

Along with Lisbon, the Algarve region has seen its housing accessibility deteriorate, and is even the region with the lowest levels of accessibility. In the Central Alentejo, the Beiras and Serra da Estrela concentrate more than a third of the municipalities where most families are able to meet their mortgage instalments.

This housing affordability index compared, at a local level, the median income of families with the monthly effort required to cover a credit instalment plan.

The study concluded that in only 45 of the 278 mainland municipalities (16.18%) does the median income manage to cover the value of the instalments required for the houses – these are mainly concentrated in the interior, except for four municipalities in the Leiria region and two in the Coimbra region. Alentejo Central has the highest number of municipalities with affordability – 10 – with another seven in the Beiras and Serra da Estrela region.

Another reality is found in Vila do Bispo, in the Algarve, the municipality with the worst affordability and where half of the families don’t have enough income to cover even a third of the instalment that would be due on a loan.

Original Story: Executive Digest | Author: Press
Edition and translation: Prime Yield
Photo: Shutterstock

Banks reduce NPL stock by €1.3 billion in 2023

Spanish banks reduced their portfolio of nonperforming loans (NPL) (NPL) by 1.291 billion euros in 2023, although the NPL remained unchanged at 3.54% due to the fall in the total stock of credit, which was 38.208 billion euros, according to data from the Bank of Spain consulted by Europa Press.

Specifically, the NPL ratio was 3.54% in December, three basis points lower than the 3.57% recorded in November. With respect to December 2022 there has been no change. The annual maximum in 2023 was recorded in October (3.60%), while the minimums were in June and July (3.50% in both cases).

Thus, the total stock of doubtful loans was 41.868 billion euros in December, 1.291 billion less than the 43.159 billion in December 2022. Compared with November, the fall was 549 million euros.

On the other hand, during 2023, the total balance of credit granted contracted by 38.208 billion euros at a year-on-year rate, standing at 1.181 trillion euros. Compared with November, the total credit balance decreased by 5.22 billion euros.

The data broken down by type of institution show that the NPL ratio of deposit institutions as a whole (banks, savings banks and cooperatives) closed 2023 at 3.44%, one basis point lower than in November and also than in December 2022. During the year, these institutions reduced their doubtful assets portfolio by 1.508 billion euros, to 38.768 billion euros.

The NPL ratio of financial credit institutions contracted to 6.33% in the last month of the year, up from 6.97% in October and above the 5.93% of a year earlier. In 2023, this type of institution recorded a rise in doubtful assets of 216 million euros, to a total of 2.908 billion.

According to data from the Bank of Spain, provisions for all credit institutions fell to 29.870 billion euros in December, a decrease of 379 million compared with November (1.25%). Compared with a year earlier, they fell by 1.198 million euros (-3.85%).

Original Story: Bolsamania | Author: Europa Press
Translation and edition: Prime Yield

Greece likely to sell Piraeus Bank stake in early March

Greece’s bank bailout fund is likely to sell its entire 27% stake in Piraeus Bank  in early March, a source close to the process told Reuters.

It will be the fourth such sale since October by the Hellenic Financial Stability Fund (HFSF) that was set up to recapitalise Greek banks during the country’s decade-long financial crisis from 2008-2018.

“There is strong interest from many foreign investors,” a second source with knowledge of the matter told Reuters.

Piraeus, Greece’s third-largest lender, has a market value of 4.9 billion euros, which means that state-controlled HFSF could sell its stake for more than a billion euros.

Having injected about 50 billion euros into the sector, HFSF began reducing its holdings in four major Greek banks last autumn.

It sold a 20% stake in National Bank NBGr.AT and 9.4% of Alpha Bank in November and a smaller stake in Eurobank in October.

Original Story: Reuters / Nasdaq
Author: Renee Maltezou
Photo: Reuters

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