NPL&REO News

Montepio expects losses of up to €100 million from selling Finibanco Angola

After the deal with Mário Palhares failed, Banco Montepio has already found a buyer for its Angolan bank, in an operation that could represent losses of up to €100 million.

The Associação Mutualista Montepio Geral (AMMG) bank agreed to sell Finibanco Angola to a Nigerian bank, Access Bank, but the operation is not yet closed, according to information gathered by ECO. The bank headed by Pedro Leitão is still doing its sums for the operation. And they are not exactly the best. It is estimated that the sale could represent losses of between €80 million and €100 million, two sources told ECO.

The impact of the transaction (if it goes ahead) is not insignificant for a financial institution that has posted poor results in recent years (6.6 million in 2021 and 11 million in the first quarter of this year) and where the financial capacity has to be managed carefully. 

Officially, the bank makes no comments on this process. ECO knows that there is still no final decision regarding the sale, which may not materialise. 

The buyers have already been presented to the National Bank of Angola (BNA), the Angolan banking supervisor, which has to allow the sale. Access Bank, which has been in existence for around 30 years, is headquartered in Lagos, the Nigerian capital and is present in ten other markets, including the United Kingdom, South Africa and Mozambique. 

In Lisbon, the Bank of Portugal is also closely monitoring this dossier, which it wants to see resolved so that the next board can focus on the core business of a bank which, after restructuring over the last two years, continues to make its way towards profitability. 

Finibanco Angola joined the Montepio group in 2010, when Finibanco was acquired for €250 million

Original Story: ECO News
Photo: Montepio website
Edition: Prime Yield

Novobanco sells logistic portfolio with a positive impact of €62 million

Novobanco has sold a portfolio of logistics assets in Portugal for €208 million and says the deal will have a positive impact of €62 million on this year’s accounts, as well as a 35 basis point improvement in the capital ratio. 

Without giving figures on the deal, the bank revealed an agreement for the sale of a real estate portfolio comprising predominantly logistics assets, held by real estate funds NB Património and NB Logística, both managed by GNB Real Estate, and in which the banking institution held, on average, a stake of around 75%.

Later, the Portuguese lender made a new clarification to the market, informing the price of the sale after a competitive bid process and the impact it will have on the bank’s income statement if the transaction is completed. It did not indicate who the buyer would be.

In the previous statement, the bank spoke of the success of the operation, which “reflects the positive moment of the market in this real estate segment, with a significant reduction in yield over the last 12 months and consequent increase in price, given the higher demand for logistics assets post-pandemic.

This deal will give an even bigger boost to Novobanco’s profits, which doubled in the first quarter of the year to €142.7 million. 

Since it was sold to the Lone Star fund, the bank has been undergoing deep restructuring and making portfolio sales of troubled and deemed non-core assets. Many of these operations generated million-dollar losses for the bank, forcing the Resolution Fund to inject money (more than €3 billion) into the institution to offset the losses and restore the capital balance.

Original Story:  ECO News | News 
Photo: Novo Banco website
Edition & Translation: Prime Yield

Crédito Agricola’s profits cut for half in Q1

The Crédito Agrícola group added a first-quarter profit of €35.7 million, which compares with earnings of €72.5 million in the same period last year.

Crédito Agrícola posted a net profit of €35.7 million in the first quarter of this year, 50.7% less than in the same period last year, the group led by Licínio Pina said in a statement.

Net interest income fell 12.3% to €75.3 million, but the bank’s net commissions rose 23.3% to €33.2 million euros, the financial institution said.

Operating income ultimately fell 27% year-on-year to €132.2 million.

According to Crédito Agrícola, the fall in first quarter profit was influenced by the results, non-recurring, obtained in the first quarter of 2021, related to net gains from financial operations, amounting to €51.3 million, and retroactive interest, relating to 2020, received under the ECB – European Central Bank financing programme.

Included in the result of the Crédito Agrícola group are contributions from the insurance business in the amounts of €2.7 million in the case of CA Vida and €3.4 million via CA Seguros.

In the first quarter the loans and advances to customers portfolio grew 3.5%, to €11.5 billion.

The NPL (non-performing loans) ratio improved from 7.2% at the end of 2021 to 6.7% at the end of March.

“At the end of the first quarter of 2022, the Crédito Agrícola Group’s solidity and liquidity levels remain above the recommended minimum levels,” indicates the group, which reports CET1 and total equity ratios of 18.8% (including net income for the 2021 financial year), a leverage ratio of 8.2%, a liquidity coverage ratio (LCR) of 429% and a stable funding ratio (NSFR) of 155.2%.

Original Story:  Expresso | Miguel Prado 
Photo: Crédito Agricola Website
Edition & Translation: Prime Yield

NPL from households and NFC fall as credit concession is on the rise

According to the latest data from Bank of Portugal, at the end of the 1st quarter of 2022, the balance of the volume of loans granted to non-financial companies (NFCs) was 2.1 billion euros, 98.6 million euros more than at the end of March 2021 and 21.7 million euros more than in December 2021. And, now the Regional Directorate of Statistics (DREM) from Madeira released its analysis of these figures, highlighting them as another indicator of market confidence among consumers.

This is because “the overdue credit ratio for this type of company increased 0.4 percentage points (p.p.) in relation to the end of 2021 at 2.4% at the end of the reference period”, the directorate stresses,  but “compared with the same quarter of the previous year, there was a reduction of 1.2 p.p.”,. “On a national level, the overdue loans ratio fell 0.1 p.p. in comparison with the previous quarter and 1.1 p.p. in homologous terms, not exceeding 2.2% at the end of the first quarter of 2022”.

It should be noted that “the amount of non-performing loans (NPL) among non-financial companies, headquartered in the Region [Madeira], stood, in the period in question, at 49.0 million euros (+8.1 million euros than last December and -22.3 million euros compared to March of the previous year)”, which can still be seen as a warning sign to be taken into account.

In the case of debtors in the NFC sector (companies) with overdue loans, at the end of March 2022, the percentage “was 14.4%, and this indicator has remained below the national average (15.0% in the same period) since July 2020,” says the DREM.

“In the sector of households and Non-Profit Institutions Serving Households (NPISHs) there was a year-on-year increase of € 62.6 million in the balance of loans granted, bringing it to € 3.2 billion at the end of the 1st quarter of 2022,” it reveals. “When the balance is compared with the previous quarter, there is also an increase of around €35.5 million. If the analysis is more detailed, it can be seen that 67.5% of that balance referred to the housing segment and the remaining 32.5%, to consumption and other purposes”, the document explains.

With regard to non-performing loans (NPL) “in the housing segment, these did not exceed €11.9 million euros, representing a NPL ratio of 0.5%, thus maintaining the historical minimum for the available series, which began in March 2009. This percentage is slightly above the national value (0.4%). Between March 2021 and March 2022, the ratio of overdue housing loans ratio was reduced by 0.3 p.p. in the Region” of Madeira, the DREM guarantees.

To attest to this good wave of banking, “the number of debtors of the institutional sector households and NPISHs grew in relation to the previous quarter to 100.100, and at the end of the 1st quarter of 2022, there were around 44,400 debtors with mortgages and 83,500 with consumer credit and other purposes”, almost double.

Original Story:  Diário de Notícias Madeira  | Francisco José Cardoso 
Photo: Photo by Svilen Milev in FreeImages
Edition & Translation: Prime Yield

IMF warns of the risk of banks’ exposure to real estate in Portugal

In its annual assessment of Portugal, the International Monetary Fund (IMF) considers that the risks of rising real estate prices should be “closely monitored”.

The IMF suggests that the Bank of Portugal (BdP) consider a countercyclical capital buffer or a sectoral systemic risk buffer against potential risks from banks’ exposure to real estate and advocates a gradual recomposition of capital levels.

“Once the recovery is well established, the BoP could consider introducing a positively-rated countercyclical capital buffer or a sectoral systemic risk buffer against potential macro-financial risks from banks’ real estate exposures,” the IMF suggests in the conclusions of its annual assessment of Portugal, released on 16 May 2022.

At a press briefing, Rupa Duttagupta, who led the IMF mission to Portugal, pointed out that the banking system has withstood the two double shocks – pandemic and war – “relatively well” so far.

“Capital levels have increased in the past year, non-performing loans (NPL) are down and overall bank profitability is slightly higher. All of this is good news,” he said. However, he warned that “there are some domestic risks that fortunately have not materialised, but they have not disappeared”.

Real estate prices should be “closely monitored

In the conclusions of its assessment of Portugal, the IMF notes that close monitoring of banks’ credit quality remains essential, warning that the impact of the end of moratoria and new risks, including from the property market, on credit quality are likely to remain sources of uncertainty for some time.

“Prudential authorities are actively monitoring the credit quality of banks and confirm that the materialisation of credit risk so far has not been as significant as expected at the start of the pandemic. Strategies to reduce NPLs are bearing fruit, but some banks have not yet completed their adjustment processes,” the findings read.

Even so, Rupa Duttagupta said that Portugal should continue to be “attentive” to the impact of the end of the moratoriums. The IMF considers that the risks of rising property prices, although contained, should also be “closely monitored”. Rupa Duttagupta said that “these risks are not high at the moment,  but could increase if house prices continue to rise”.

For the IMF official, in order to avoid these risks, it is necessary to “gradually build buffers” (when, in the capital structure, the regulatory capital maintained is greater than the minimum required by the regulator) of capital where they are smaller, but also to make the banking system more resilient.

“The recomposition of capital buffers should be done gradually and dividend distributions and share repurchases should be cautious until the uncertainties about capital needs, also in light of new economic shocks, are better assessed,” the institution explains.

Original Story: Idealista | Lusa 
Photo: Photo by Hugo Humberto Plácido da Silva in FreeImages
Edition & Translation:Prime Yield

Bison Bank becomes Portugal’s first institution to receive crypto licence

Portugal’s Bison Bank became the first authorized bank to get a crypto license from Portugal’s central bank.

Banco de Portugal, the country’s central bank, shared the announcement regarding the new move, revealing that Bison Bank will develop a new division for dealing with the crypto industry. This new, special business division will be known as the Bison Digital Assets.

Its purpose will be to operate as a virtual asset exchange. This will also make it the first entity in Portugal to be owned by an official bank, authorized by a central bank, and a division dealing with cryptocurrencies, offering custody and trading services.

On top of that, Bison Bank is also an institution that offers services such as wealth management, depositary and investment banking — available for individual and institutional clients alike — and more. The bank is actually owned by a Chinese private capital group based in Hong Kong.

Portugal’s central bank’s decision to grant the licenses to Bison Bank is not that surprising given that there were past activities and signals pointing toward Portugal warming up to crypto. For example, back in March of this year, the central bank granted the first full all-categories VASP license to a Portugal-based on-chain crypto payments firm, Ultrust. This was a piece of big news at the time.

Before that, in June 2021, Banco de Portugal also granted trading licenses to two digital currency exchanges — Mind The Coin and Criptoloja. The licenses allowed the platform to operate as VASPs. Finally, the central bank also granted an additional license to another platform called Luso Digital Asset.

All of this signaled that Portugal is slowly getting more and more comfortable with the idea of the crypto industry, and now that its first financial institution became a licensed crypto trading/custody service, it is only a matter of time before institutional investors of Portugal rush to enter the crypto industry through the bank. This will, in turn, attract other banks, and more crypto and retail investors, continuing to push adoption in Portugal.

Original Story: Securities.o | Ali Raza 
Photo:Photo by Lotus Head on FreeImages
Edition: Prime Yield

2/3 home owners will only pay mortgage off after 70

Almost two-thirds of people with mortgages in Portugal will only finish paying for their house after they reach the age of 70.

“Given the aging of the Portuguese population and the significant reduction in the income of borrowers in the transition from working life to a retirement situation, despite the reduction in expenses that may occur, the high concentration of loans in borrowers over 70 years of age in the term of the loan could pose a risk to the financial system,” says the BdP in the report.

According to the regulator, at the end of 2021, “almost two-thirds of the housing loan stock was associated with borrowers whose age at the end of the loan will be over 70 years and around a quarter was associated with borrowers whose age will be over 75 years”.

“Most of these borrowers took out their loans between 27 and 40 years of age”, the document also reads.

For the BdP, the granting of loans with very long maturities means that, very often, “the term of the loans exceeds the active life of the borrowers”.

Original Story: The Portugal News |TPN 
Photo: Big Stock Photo
Edition: Prime Yield


NPL ratio within the Portuguese banks retreats to 3.6% by the end of 2021

The non-performing loan (NPL) ratio within the Portuguese banking sector decreased to 3.6% at the end of 2021, 0.4 percentage points less than in September and 1.3 percentage points below 2020, the BdP said.

According to the latest report from the Bank of Portugal (BdP) on the Portuguese banking system for the fourth quarter of 2021, the gross NPL ratio decreased 0.4 percentage points from the previous quarter to 3.6 percent, reflecting the decrease in NPLs and the increase in productive loans, with contributions of -0.3 percentage points and -0.1 percentage points, respectively. The NPL ratio net of impairments stood at 1.7% (1.8% in September 2021).

Data released by the BdP indicate that the gross value of NPL owned by Portuguese banks fell by €1.012 billion between September and December 2021, standing at €12.032 billion at the end of last year. In year-on-year terms, the decrease in the value of NPL was €2.384 billion.

Net of impairments, NPL totalled €5.747 billion at the end of 2021, down from €5.775 billion in September and €6.494 billion year-on-year. According to the BdP, the gross NPL ratios of companies (non-financial corporations – NFCs) and individuals stood at 8.1% (-0.3 percentage points) and 2.8% (-0.2 percentage points), respectively, with their variation “reflecting, in particular, the reduction in NPLs”.

The NPL coverage ratio by impairments decreased 3.5 percentage points in relation to the previous quarter, to 52.2%, reflecting “the decrease in accumulated impairments, partially offset by the reduction in NPLs”.

In companies there was a decrease of 3.8 percentage points, to 52.9%, while in individuals the coverage ratio fell to 50.9%, with an increase of 0.3 percentage points in consumption and other purposes, to 64.8%, and a decrease of 1.5 percentage points in the housing segment, to 32.6%.

Original story: ECO| Lusa 
Photo: Photo by Svilen Milev on FreeImages
Translation and Edition: Prime Yield

DBRS fears increase in the NPL in the post-moratorium period

Even though the fact that Portuguese banks have shown “resilience” throughout the pandemic, in general, “it may take some time” before some credits that were under moratorium may go into default, warns DBRS.

According to the rating agency says, it is necessary to keep an eye on “post-Covid” impacts and monitor risks associated with rising interest rates, rising energy costs on businesses, difficulties in supply chains and developments in the conflict in Ukraine.

In a recent report, DBRS Morningstar points out that “even despite the pandemic, the stock of non-performing loans (NPL) continued to fall, thanks to continued sales of old problematic assets”. The (aggregate) NPL ratio in Portuguese banking fell, on average, to 4.7% at the end of 2021, down from 5.9% the previous year and below the important psychological threshold of 5%.

“At the same time, the end of most moratoria (in September 2021) has not resulted in a sharp increase in new non-performing loans,” says DBRS, stressing that this is an analysis that is valid “at least at this time”. DBRS’s caution is justified by the fact that there has been “an increase in the percentage of loans that are classified as Stage 2″ and were previously under moratorium.

At issue is the qualification that banks have to make, under the accounting rules in force, on each loan they grant and on the risk that each of these loans will suffer a default.

DBRS also notes that there has been an average increase of eight percentage points in the proportion of loans classified as stage 2, which justifies an “expectation of a moderate deterioration in asset quality in the medium term”. In other words, DBRS argues that the soundness of some of these loans could be in question, especially if economic conditions are not the most favourable.

There are some sectors, such as hotels and part of the manufacturing industry, that have not yet fully recovered,” DBRS says.

Original story: Observador | Edgar Caetano 
Photo: Photo by Ricardo Gurgel on FreeImages
Translation and Edition: Prime Yield

Novobanco posts record profit od €184.5 million

The Portuguese bank reports its first annual profit ever, a total of €184.5 million.

After accumulated losses of €8.4 billion since the resolution of former BES bank in August 2014, Portugal’s Novobanco finally reached the light at the end of the tunnel by achieving an unprecedented profit of €184.5 million last year.

This positive result compares with losses of €1,329 million in 2020, but does not, however, prevent a new request to the Resolution Fund for €209.2 million.

On the possibility of a new capital injection, the Resolution Fund and also the finance minister, João Leão, had already responded negatively to the bank even though the request had not been publicly announced, so a new dispute between the two parties is expected. And this surges at a time when the contingent capital mechanism ceiling of 3.89 billion, valid until 2026, is about to run out – with this request, another 200 million remain, and there are disputes in the arbitration court in the amount of €170 million.

A year of profits was already forecast for the financial institution, according to the signs that were being given by António Ramalho throughout last year, and which were confirmed quarter after quarter.

The bank justifies the first positive results in its eight-year history with the improvement in the bank’s operating results (with a contribution of €377.7 million), a lower level of impairments and provisions (down 70.4% to 352 million) and and by the recording in 2020 of the 300.2 million loss on the revaluation of restructuring funds.

Original Story: Eco News | News
Photo: Novo Banco Website
Edition: Prime Yield

Portuguese are depositing more in banks

In January, €173.4 billion were deposited in Portuguese banks, almost €500 million more than in December.

In January 2022, the stock of deposits reached a record value of €173.4 billion, almost €500 million more than in the previous month, which represents an increase of 6.3%, according to data released by the Bank of Portugal (Bdp).

“At the end of January 2022, individuals had deposited €173.4 billion with resident banks, and companies €60.5 billion. During the month of January, these deposits grew by 6.3% and 17.4%, respectively, compared to January 2021”.

This means that the Portuguese have never entrusted so much money to banks as they do now, even though the remuneration offered by this type of applications is very low, writes ECO, noting that this is a trend that has accelerated with the pandemic.

Original Story: The Portugal News | TPN
Photo: Photo by Magda S from FreeImages.com
Edition & Translation: Prime Yield

BCP completed the sale of NPL portfolio “Lucia”

Portugal’s BCP bank has completed the sale of the nonperforming loans (NPL) portfolio named “Project Lucia”, made up of bad loans with a nominal value of 60 million and real estate assets worth 50 million euros. According to Jornal Económico, the buyer was LX Partners (in partnership with Cabot).

BCP will continue its efforts to clean up its balance sheet. “We will continue to go to the market and carry out operations”, said Miguel Maya when asked if they were going to sell NPL portfolios once again.

The bank recorded a 543 million euro reduction in Non-Performing Exposure (NPE) by 2021, with a 485 million euro reduction in domestic activity. This reduction in NPE, gives “continuity to the successful strategy of disinvestment in NPE implemented by the Bank in recent years”, says the institution.

The group’s NPE ratio for loans and advances to customers stands at 4.7%. In the results presentation, the bank revealed that by 2021 the NPE ratio as a percentage of the total loan portfolio continued to evolve favourably, having decreased from 5.9% at the end of 2020, to 4.7% at 31 December 2021, highlighting the contribution of domestic credit, whose NPE ratio fell from 6.1% to 4.7% in the same period.  Also with regard to coverage indicators there was a general improvement in the last year (to 68%), highlighting the performance of the activity in Portugal, whose degree of NPE coverage by impairments, increased from 63% at the end of the previous year, to 68.5% at 31 December 2021.

Regarding the net portfolio of properties received through recovery, it decreased 32.8% between December 2020 and December 2021.

The value of the portfolio, calculated by independent valuers, is 32% above its book value, the bank said.

BCP sold 1,677 properties in 2021 (2,414 properties in 2020), with the sale value exceeding the book value by 22 million euros.

The bank posted annual profits of 138.1 million, down 24.6% on the previous year. BCP’s return on equity remained very low and far from the management’s target. In 2021 it did not exceed 2.4%, well below the cost of capital.

Original Story: Jornal Económico| Maria Alves 
Photo: Millennium bcp website
Translation & Edition: Prime Yield

New consumer credit increases 11.5% in 2021, but still bellow pre-pandemic figures

New consumer credit operations increased by 11.5% in 2021 compared to the values recorded in 2020. According to data released the Bank of Portugal (BdP), new credit granted last year reached €6.5 billion, which compares with €5.8 billion financed the previous year. 

Despite the recovery, the amounts are still 13.6% below the operations carried out in 2019, before the pandemic, when the amount reached €7.6 billion, a record breaking year.

As for December’s figures, these reveal a drop of 6.4% compared to the previous month, in which the €600 million threshold had been exceeded for the first time since February 2020. In the last month of the year, 591.3 million euros were granted to consumers. The amount represents an increase of 24% compared to the same month in the previous year. 

Personal credit represents the biggest slice of the cake. 269.6 million euros were lent for this purpose, equivalent to 45.5% of the total.

This portion includes credit for education, health, renewable energy and equipment leasing, which totalled €10.3 million, up 47.1% on December 2020, and down 19.1% compared to November. 

It also includes other personal loans (no specific purpose, home, consolidated and other purposes), which totalled €259.3 million, equivalent to a year-on-year increase of 45% and a monthly drop of 9%.

In total, 38,920 new personal loans were granted, down 13% on November. 

New car loans totalled €226 million, equivalent to 15,001 new operations, up 0.7% on November. 

In turn, credit cards, credit lines, bank current accounts and overdraft facilities reached €95 million of financing. 68,415 new operations were signed, down 14.6% on the previous month.

Original Story: Jornal de Negócios | Ana Sanlez
Photo: Photo by Ricardo Gurgel from FreeImages.com
Translation and Edition: Prime Yield

Housing loans’ stock hit €96.6 billion, hitting a 5 year high

The stock of housing loans totalled €96.9 billion last December, up 1.99% compared to the same month of 2020 and hitting a new maximum since at least 2016, according to Bank of Portugal data.

According to the central Bank latest data, the total amount borrowed on housing loans (€96.9 billion) in December means 1.99% more compared to December 2020 and 0.37% compared to last November.

This is still the highest `stock’ value of home loans since at least December 2016.

Already the ratio of overdue loans on housing was 0.5% in December (the same as November and down from 0.6% in December 2020).

In consumer loans the amount lent in December was €19.2 billion, up 0.23% compared to December 2020 and 0.17% compared to November.

According to the Bank of Portugal, “the pace of growth in consumer loans continues to lag behind the years prior to the pandemic”.

In loans for other purposes were borrowed 8.9 billion euros in the last month of 2021, up 36% from December 2020 and 0.33% more than in November.

Regarding the non-performing loans (NPL), the NPL ratio for Consumer credit and other purposes was 4.5% in December (down from 6.3% in December 2020 and 4.6% in November).

As for companies, 75.7 billion euros in credit were granted in December, in this case up 2.3% year-on-year but down 0.48% on November. In this case, 2.3% of the total amount of loans was in default (down from 3.3% in December 2020).

“This was the lowest value recorded since 2008, extending the downward trend observed since late 2016,” says the Bank of Portugal, adding that the reduction in the NPL ratio is more significant for companies in the construction and real estate activities sectors (it went from 10.3% and 4.8%, respectively, in December 2020, to 7.5% and 2.4% in December 2021).

As for deposits, last December, individuals had deposited €172.9 billion, up 6.8% compared to December 2020. Household deposits are at their highest since at least December 2016.

The central bank highlights demand deposits, as, “at the end of 2021, they represented 48% of the total deposits of private individuals”.

The amount of corporate deposits in banks in Portugal, meanwhile, grew by 17.0% compared to 2020, to €61.8 billion.

“It is necessary to go back to the end of 2010 to find growth rates similar to those seen in the two years of the pandemic,” says the Bank of Portugal.

Original Story: RTP| LUSA 
Photo:
Photo by Svilen Milev in FreeImages
Translation & Edition:
Prime Yield

Montepio closes the sale of a €253 million NPL portfolio

The deal was closed with LX Investment Partners III, BTL Ireland Acquisitions II Designated Activity Company and BTLP Acquisitions.

Montepio bank announced on 31 December the sale of a non-performing loans (NPL) portfolio valued at 253 million euros, including 10,318 on-balance-sheet and off-balance-sheet contracts.

The deal was made “after a competitive sale process”, through the signing of «a public deed of sale of a portfolio of non-performing loans, in the form of direct sale to the entities LX Investments Partners III, BTL Ireland Acquisitions II Designated Activity Company and BTLP Acquisitions I Unipessoal, Lda, companies validly incorporated and governed by Portuguese law and headquartered in Portugal”, can be read in the note sent by the bank to the CMVM.

According to Montepio, “after the total derecognition of the credits, the estimated impact of this sale on Banco Montepio’s results will be immaterial, representing, however, an important reduction in non-productive exposures, contributing to a decrease of 1 percentage point in the NPE ratio”.

For now, the transaction “contributed to an increase of 3 base points in Banco Montepio’s Total Capital ratio, consolidating the strategy launched by the Board of Directors of continuous reduction of non-productive assets and reinforcement of capital ratios”, it can also be read.

Original Story: Iberian Property | Ana Tavares
Photo: Banco Montepio
Edition: Prime Yield

Deva fund buys Novobanco’s NPL portfolio for €52.3 million

The Deva fund has paid €52.3 million to Novobanco for its Harvey Project, a non-performing loans (NPL) portfolio with a gross value of €164 million.

This was one of the main NPL portfolios still owned by the Portuguese bank by the end of 2021, which had been previously put in the market with an initial gross book value close to €640 million.

However, in the final stretch of the year the Portuguese bank decided to recast the portfolio composition, excluding some of the initial credits. 

The transaction was agreed with the Deva fund for €52.3 million – less than a third of the gross book value of the portfolio, which was €164.4 million.

In the statement sent to the Securities and Exchange Commission (CMVM), the financial institution writes that the sale “should have a marginal impact on Novo Banco’s capital position and income statement for 2021”.

Novo Banco assures that the sale contract “represents a reduction of €162.6 million in its stock of NPL.

Negócios understands that with this  operation the bank should reduce its NPL ratio to 5%.

Original Story: Jornal de Negócios | Hugo Neutel
Photo:
Novo Banco website
Translation & Edition:
Prime Yield

Novobanco sells NPL portfolio with a 70% discount

Portugal’s Novobanco completed the sale of the Project Orion, comprising non-performing loans (NPL) and related exposures, to a consortium of funds managed by British company West Invest and Luxembourg-based LX Partners (LXP). 

In a statement sent to the Securities and Exchange Commission (CMVM), the financial institution led by António Ramalho said that this portfolio, which in September 2021 had an outstanding balance of €231.3 million, was sold for a total amount of €64.7 million. That is, with a 70% discount in relation to the gross value.

The Portuguese bank stresses that the completion of this transaction “is expected to have a marginal positive impact on Novobanco’s capital position and in 2021 income statement.”

“Together these agreements represent a €168.1 million reduction of non-performing loans (“NPL”) and are an important milestone for Novobanco, allowing the Bank to pursue its strategy of converging towards EU average,” stresses the bank controlled by the American Lone Star, which this Thursday received 112 million from the Resolution Fund.

Original Story: eCO News | Luís Alexandre
Photo: Novo Banco
Edition: Prime Yield

DBRS: NPL will increase, but how much is still uncertain

The impact of the withdrawal of advanced measures due to the pandemic is not certain, but it should lead to an increase in non-performing loans. The deterioration will depend on the economic recovery of countries, says DBRS.

Portuguese banks managed to reduce non-performing loans (NPLs) during the pandemic, and this, along with the provisions made, improved the banks’ coverage ratio, according to rating agency DBRS. Still, it is necessary to wait and see the effects of the reversal of the support measures. In addition, DBRS also notes that Portugal still has several moratoria pending and the effect on credit is still uncertain.

According to the data from EBA, the NPLs of Portuguese banks “declined significantly between Q4 2019 and Q2 2021 (-42%), also leading to an improvement in the NPL ratio to 4.2% at the end of Q2 2021 from 6.5% at the end of Q4 2019″, DBRS signals in a commentary where it analysed the situation in Italy, Greece, Spain, Portugal, Ireland and Cyprus.

In addition, Portuguese banks have also increased provisions since the end of Q4 2019, which, together with the reduction in NPL, “resulted in the banks’ coverage ratio improving to 58.4% at the end of the second quarter of 2021 from 50.1% at the end of the fourth quarter of 2019”, they add.

The rating agency also notes that while Spain, Ireland, Greece and Cyprus “evenly distributed NPLs between households and non-financial companies”, in the remaining NPLs in Italy and Portugal non-financial companies have more weight. This suggests a pipeline skewed towards small and medium-sized enterprises and corporate loans, rather than individual borrowers, in Italy and Portugal.

Already looking at moratoria granted, EBA-covered banks in Portugal had 73% still outstanding at the end of Q2 2021, followed by EBA banks in Italy (23% of total moratoria granted) and Spain (13% of total moratoria granted) at the end of Q2 2021.

To do this analysis, DBRS also looked at the evolution of key metrics, forecasting that unemployment in Portugal will have a slight drop in 2022. Growth in the Portuguese economy will also be higher next year, unlike the other countries analysed. In terms of property prices, Portugal is well above the other countries, having shown a very sharp upward trend

DBRS thus concludes that the “comprehensive response from European governments and the EC has so far been effective in preventing an increase in NPLs” in these jurisdictions in the short term. Unemployment and residential property “have performed better than expected in these jurisdictions, with Portuguese property price increases outperforming other jurisdictions”, they stress.

The agency also notes that the effects of the reversal of the relief measures have yet to be assessed, with NPLs expected to increase, but “deterioration will depend on several factors, including the country’s full economic recovery.

Original Story: ECO | Mariana Espírito Santo 
Photo: Big Stock Photo
Translation & Edition: Prime Yield

Portugal’s six main banks report a combined €1.04 billion profit until September

Six of the main banks operating in Portugal had a combined €1.043 billion in profit in the first nine months of this year, contrasting with combined losses of €178 million in the same period of 2020.

Contributing to the turnaround was, above all, Novo Banco which went from losses of €853.1 million in the first nine months of 2020 to a profit of €154.1 million in the same period this year.

This year is the first in which the bank – which created in 2014 to carry on the commercial business of Banco Espírito Santo, which that bank was wound up – has had a positive result.

The highest nine-month profit was that of state-owned Caixa Geral de Depósitos (CGD), which reported €429 million, up 9.4%.

BPI, meanwhile, almost tripled its profit to €242 million.

BCP and Santander, by contrast, saw their profits fall. BCP’s fell 59.3% to €59.5 million and Santander’s 32% to €172.2 million.

Banco Montepio, for its part, narrowed its nine-month loss to €14 million from a €57 million loss a year earlier.

Despite the renewed profits for most banks, executives said that profitability in the sector remains very low in relation to the money invested by shareholders.

At CGD’s results presentation, CEO Paulo Macedo said that in recent years the aggregate profitability of banks has been negative and stressed that shareholders’ money has to be remunerated.

“There are those headlines that banking earns I don’t know how much a day, when Caixa has 9.4 billion euros in capital that it has to remunerate,” he said. “It has to return money to taxpayers.”

Macedo announced that CGD would pay in November an extraordinary dividend of €300 million to its sole shareholder, the Portuguese state, in addition to the €83.6 million already paid out this year.

He added that although the CGD results were very positive, the future business conditions it faces are “very difficult”.

Banking consolidation, a recurring issue in recent years, was one of the themes of the results presentations.

BCP’s CEO, Miguel Maya, said it was not looking to make any acquisitions: “Let that be clear.”

BPI’s CEO, João Pedro Oliveira e Costa, also said that the bank he runs took a similar view: “We are not focused there and it is not just talk, it is not our point.”

Novo Banco’s CEO, António Ramalho, by contrast, said that it may weigh up the purchase of smaller banks in good time.

“We will look at all growth hypotheses, especially in the second tier of banks,” he said, stressing that possible acquisitions can be made from the moment the bank concludes its own restructuring process.

In terms of the moratoria on loans, which ended for most at the end of September, the bank CEOs said they were not too worried about defaults, noting that – despite there being problems – the vast majority of customers were paying their debts regularly. But they also said that the situation would evolve depending on economic developments and employment.

In August, the government approved legislation to force banks to restructure oustanding loans to customers who, after the moratoria, have problems paying their debts. CGD has already restructured loans to 3,000 households (totalling €330 million) and 600 companies (with a total €150 million); other banks have not disclosed these figures.

Original Story: Macau Business |Lusa 
Photo: Photo by Armindo Caetano in FreeImages.com
Edition: Prime Yield

Montepio to sell 300 million NPL “Project Gerês” portfolio

Bank Montepio is analysing the transfer of between 1 and 2 billion euro in toxic assets to a specialised vehicle, aiming to perform a «carve-out» operation. And has already placed a new 300 million euros NPL portfolio on the market.

Named “Project Gerês”, this is a granular NPL portfolio, whose sale process is being managed by KPMG. The 300 million euro concern the gross value of the credits, excluding the impairments registered by the bank for this set of contracts and loans.

The bank has one of Portugal’s highest toxic asset rates, having registered in June an NPE (Non-Performing Exposure) ratio of 9.3%, according to the second quarter’s statements. During the same period, the banking system showed an NPL rate of 4.3%, below the 5% rate required by the European authorities.

Original Story: Iberian Property |Ana Tavares 
Photo: Montepio website
Edition: Prime Yield

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