Portuguese lender Novo Banco’s nine-month net profit almost tripled from a year earlier, the bank said, citing improved commission income, capital market gains and a steep drop in impairments and provisions.

The bank, which emerged from the ruins of collapsed Banco Espirito Santo in 2014, netted €428 million in the nine month’s to Sept. 30, up from €154 million a year earlier.

Novo Banco, 75% owned by U.S. private equity firm Lone Star and 25% by Portugal’s Resolution Fund, said its pretax return on tangible equity (ROTE) rose to 12.4% in September from 11% in June.

It said in a statement the results showed sustainable growth and “ability to generate revenue and capital despite the uncertain macro (economic) background” and high inflation.

Although nine-month net interest income (NII), or earnings on loans minus funding costs, fell 5.6% due to the higher funding cost of senior debt issuance and other factors, NII increased by 2.5% between July and September from the previous three months, benefiting from rate hikes by the European Central Bank.

After a major clean-up of its balance sheet, impairments and provisions fell by 86% to €22.5 million, while non-performing loans(NPL) fell to €1.75 billion, or 5% of total credit, in September from 2.2 billion a year ago

Fees and commissions rose 3.8% to €215.7 million in the nine months, while capital markets results increased 34.5% to €68.2 million.

Novo Banco’s fully loaded Common Equity Tier 1 solvency ratio improved to 12.1% in September, 90 basis points higher than in June.

Original Story: Reuters | Sérgio Gonçalves
Photo: Novo Banco website
Edition: Prime Yield