The volume of non-performing loans amid mortgage credit in Portugal stood at €1 billion at the end of June, stabilising compared with the previous quarter, representing 1.1% of the total volume of such loans.

In the second quarter, the volume of non-performing loans (NPLs) held by the Portuguese financial system fell slightly compared with the previous quarter, totalling €6.3 billion, or €100 million less than the €6.4 billion recorded at the end of March. The decrease is more significant in year-on-year terms, with non-performing loans shrinking by €1.2 billion compared to the €7.5 billion recorded at the end of the second quarter.

This is in the context of a decline in the total volume of credit held by the banking sector, which fell from €226 billion at the end of June 2022 to €207.9 billion in the same month of 2023. On a quarterly basis, the trend is also downward, with total loans standing at €209.6 billion at the end of March.

As a result, the NPL ratio in the Portuguese financial system continued its downward trend over the past year, falling by 0.2 percentage points (p.p.) between June 2022 (3.3%) and the same month in 2023 (3.0%), although it remains one of the highest in Europe, above the EU average (1.8%).

In the quarter ending in June, NPLs to households totalled €2.2 billion, of which €1 billion related to loans for house purchases. However, these figures reflect some improvement compared with the stock of NPLs in the same categories a year earlier, when NPLs to households totalled €2.4 billion, of which €1.1 billion were for house purchase.

Original Story: Barómetro APEMIP |  Staff
Photo: BigStock Photo
Translation and edition: Prime Yield