NPL won’t be a brake on credit

The “expectation of continued support for the most affected sectors” by the pandemic together with the end of the moratoria regime leads the Portuguese banks to rule out an increase in credit restrictions. And this time, bad credit won’t be a brake to new financing, concludes the Bank of Portugal (BdP) in one of its latest papers, according to a new from ECO.

“Progress made by the banking system since the last crisis to make it more robust and resilient to shocks will be contributing to a lower impact of NPLs on lending.”, says the BdP.Even with the deadline for the moratoria ending in September, the surveyed banks are calm. According to the Bank of Portugal, the largest national financial institutions “expect the NPL ratio to have practically no impact on lending criteria,” which, according to the survey, have become only slightly more restrictive than before the pandemic.

Original Story: ECO |Paulo Moutinho
Photo: Banco de Portugal website
Edition & Translation: Prime Yield