NPLs shrink €9,3 billion in one year

Portuguese banks have accelerated the pace in cleaning up Non-Performing Loans (NPLs) from their balance sheet in the 4th quarter 2017, when this indicator recorded the highest quarterly decrease ever. For total 2017, NPLs were reduced by € 9,3 billion.

“The stock of NPLs continued to decline in the fourth quarter of 2017. This decrease, of € 2,9 billion, is the largest quarterly reduction since the beginning of the publication of the European Banking Authority (EBA) series (in December 2015)”, notes the Statistical Bulletin of Banco de Portugal (Portugal Central Bank).

“The NPL’ stock reduced by € 9,3 billion compared to December 2016 and by €13,5 billion regarding the highest volume recorded in June 2016”, adds the document. Although the positive input from all sectors, the Portuguese Central Banks highlight the companies segment performance, recording a € 5,9 billion-decrease compared to December 2016.

“Thus, the NPLs ratio decreased 1.3 percentage points (p.p.) in the quarter, to 13.3%, which represents a 3.9 p.p. reduction with respect to the end of 2016 and of 4.6 p.p. compared to June 2016. As for the non-financial private sector, NPls ratio decreased 0.6 p.p. compared to September 2017”.

While the NPLs ratio falls, the coverage ratio for NPLs is increasing. “By December 2017, the coverage ratio of NPL for liabilities was 49.3%, increasing 2.8 p.p. compared to the previous quarter”. “The evolution was dued to an increase of 3.4 p.p. of the coverage ratio within the non-financial companies segment, states the Central Bank.

Original Story: ECO (Paulo Moutinho)
Photograph: Depositphotos
Translation and Edition: Prime Yield