In February, Portugal’s banks lent €734 million euros for home purchases, down 1.7% from January but up 8.6% from February of 2018, according to the latest figures release by the Bank of Portugal.

They lent €2.259 billion to companies in the month, 16.7% more than in February of 2018.

Among other loans to private individuals, banks provided €365 million in consumer loans, up 8.0% from January and up 2.0% from February 2018; for other purposes they lent €163 million, up 22.6% on the month and up 9.4% on the year.

In February this year, the average interest rate for home loans granted to individuals was 1.37%, down three basis points from January’s average rate.

For consumer credit and other purposes, average rates were 7.23% and 4.06% respectively.

Finally, the average rate for new loans to companies was 2.42%, against 2.41% in January.

Original Story:The Portugal News | TPN/Lusa
Photo: FreeImages.com/Miguel Saavedra
Edition:Prime Yield

«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

Since its June 2016 historic peak, of €50 billion, the non-performing loans (NPL) stock fell by almost 50%. This is due not only to write-offs but also to the sales of toxic assets portfolios.

The shrinking trend towards the NPL reduction continues within the Portuguese Banks. And much of it on the “free ride” from Novo Banco, which accelerated the sales of these toxic assets over the last year.

By the end of 2018, the total volume of NPL reached €25,8 billion, showing a 30% reduction from the €37 billion recorded just one year before, according to the latest data released by Portugal’s Central Bank (BdP).

In just one year the NPL stock retreated €11 billion, helping the NPL ratio to keep its downward trend, reaching 9.4% in the end of 2018, Bdp figures show.

Original Story: Jornal de Negócios | Rita Atalaia
Photo:  FreeImages.com/Armindo Caetano
Edition & Translation:Prime Yield

Portuguese banks should take advantage of the benign economic and political environment to accelerate along this year the cleaning of the problematic assets still standing in their balance sheets, Fitch advises.

«2018 was another year of significant balance sheets’ cleaning for the largest Portuguese banks», underlines the rating agency Fitch, adding that its non-performing loan (NPL) ratio fell to 11% by the end of the last year, four percentage points below 2017.

Analysing the results of Portugal’s major banks – BPI, BCP, Banco Montepio, Caixa Geral de Depósitos, Novo Banco and Santander Totta -, Fitch explains this improvement in the NPL ratio was due to a «mix of credit cures, write-offs and active portfolio sales». According to the agency, these banks can benefit from the «benign economic and political environment in 2019 to accelerate their problematic assets’ reduction, including real estate assets and problematic estates».

By the end of September, the Portuguese banks held more than €30 billion in toxic assets in their balance sheets, according to data from Banco de Portugal (Portugal’s Central Bank).

Fitch also adds that the financial institutions provisioning efforts will continue along this year, «since Europe’s Central Bank (ECB) requires higher NPL coverage ratios». «This will hinder the sector’s already weak profitability», stresses the rating agency. «However, the Portuguese banks will have a relatively long transition period to improve their NPL coverage ratio» it says, adding that the sector’s coverage ratio stood above 50% in the end of 2018.

Original Story: ECO | Alberto Teixeira
Photo: FreeIamges.com/LotusHead
Edition & Translation:Prime Yield

The Bank of Portugal downgraded its projections for the country’s economic growth this year, saying that it sees gross domestic product (GDP) swelling by 1.7%, while maintaining projections for 2020 and 2021, when growth is seen slowing to 1.6%.

In its March Economic Bulletin, central bank reduced its 2019 growth forecast by 0.1 of a percentage point from the 1.8% it had been projecting in December, citing a global slowdown and international trade tensions. It sees growth staying at 1.7% in 2020, before slowing to 1.6% in 2021 – the latter figure in line with previous projections.

The slight downward revision in 2019 GDP is, according to the bank, related to the greater dynamism of imports than exports, which will result in a «negative trade balance in goods and services from 2020».

However, it anticipates a maintained «surplus on the current and capital balance, along the projection horizon, with an important contribution from European Union transfers in this period».

The projection for inflation was also revised down by the bank, by 0.6 of a percentage points in 2019, to 0.8%, and by 0.3 of a point in each of 2020 and 2012, to 1.2% and 1.3% respectively.

The report foresees export growth of 3.8% in 2019, 3.7% in 2020 and 3.6% in 2021, thanks to stronger external demand directed to the Portuguese economy plus small gains in market share, mainly associated with tourism. However, it notes, growth «should slow down along the projection horizon» as it did last year.

Imports, meanwhile, are expected to swell 6.3% this year, 4.7% in 2020 and 4.1% in 2021.

As for employment, it is projected to continue to grow, albeit at a gradually slower pace, reflecting «the maturation of the economic cycle and the increase in restrictions on the level of labour supply».

The jobless rate – which averaged 7% last year – should fall to 5.2% by 2021, according to the report.

In the report, the bank also notes continuing risks and constraints specific to Portugal in the medium and long term – demographic, technological and institutional – as well as the high levels of indebtedness of economic agents. Against that background, it argues, «it is essential to create conditions that promote increased productivity through better allocation of resources, the smooth functioning of product and labour markets and the commitment to human capital and innovation.»

Original Story:Macau.Business | Lusa
Photo: Free Images.com/Pasqualantonio Pingue
Edition:Prime Yield