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Write-offs are the main tool for the cleaning up of Portuguese banks’ balance sheets

  • 12 April, 2019

The Portuguese banking system’s non-performing loan (NPL) ratio continued to decline, to 11.7% as of Q2 2018 (and 11.3% as of Q3 2018), after peaking at 17.9% as of Q2 2016. This 6.2 percentage points contraction in the NPL ratio is mainly due to a nearly 40% reduction in non-performing loans outstanding amount, compared to a 2.1% decline in total loans outstanding amount.

According to the Bank of Portugal’s data, 42% of the decline in the NPL ratio is due to write-offs. Sales and securitisations accounted for 23% of the ratio’s decline. Nearly two thirds of the cleaning up of Portuguese bank balance sheets occurred via the removal of non-performing loans from the banking system.

Moreover, the reclassification of NPL as “performing loans” more than offset the flow of loans that turn non-performing. The net flow of non-performing loans contributed to a 24% reduction in the NPL ratio.

Breakdown of the decline in the NPL ratio in Portugal between Q2 2016 and Q2 2018

Original Story: FXStreet 
Photo: Banco de Portugal
Edition: Prime Yield

Novo Banco plans to sell even more NPL in 2019

  • 7 March, 2019

Portugal’s Novo Banco will maintain the efforts towards the reduction of its nonperforming loans (NPL) stockpile along this year, preparing to launch soon the bidding process for another two bad debt portfolios: the projects “Nata 2” and “Viriato 2”.

«Yes, our aim is to close more NPL sales this year», said Novo Banco President, António Ramalho, during the bank’s annual results presentation.

These portfolios arrive into the market a pair of months after the sales completion of projects “Nata” and “Viriato”, which took place in the end of 2018. The larger NPL portfolio to be sold in Portugal ever, Project Nata was divided into two tranches: one with a gross book value of €500 million and other, larger, of €1.2 billion. Besides this, in the same period, the Portuguese bank have also sold its Project Viriato, involving more than 9,000 real estate owned (REO) assets.

Considering the «success» of these «toxic assets» sales, António Ramalho announced that «Yes, we will have the Nata 2 and the Viriato 2», ensuring that this will be another year for the bad debt shrinking.

«We have to do a very clear and precise NPL plan and deliver it to ECB. Its part of our programme», explained the president of the bank which was bought by US’s Lone Star in 2017 after former Banco Espírito Santo collapse in 2014. The goal, stresses António Ramalho, is that «the bank’s NPL ratio reach 5%», in line with ECB’s targets. As for the «bad bank» in which remains the burden legacy of Banco Espírito Santo, the NPL ratio should stand «close to 12%».

As revealed in the same occasion, Novo Bank recorded losses of €1.412 billion in 2018.

Original Story:Jornal de Negócios | Rita Atalaia
Photo:  Novo Banco
Translation and Edition: Prime Yield

Portugal’s top 6 banks sold €5.7 billion in NPL along 2018

  • 4 March, 2019

The six largest banks operating in Portugal speeded up the sales of non-performing loans portfolios in 2018, with at least €5.719 billion having been passed on in this way, according to Lusa’s calculations.

Although Novo Banco – the successor entity to Banco Espírito Santo, which was wound up by the Bank of Portugal – is not to present its 2018 results until 1 March, at the end of the year it informed the market that it had sold to investment funds as many as 102,000 loan contracts for €2.15 billion.

Banco Montepio hasn’t presented its 2018 results yet too, but by the end of 2018 announced the sale of a portfolio including 10,000 loans worth €239 million to a company in Ireland.

As for the banks that have presented their results, Caixa Geral de Depósitos (CGD) last year sold €1.2 billion in non-performing loans and Santander Totta sold €1 billion in non-performing loans and real estate owned (REO) collateral, much of which were inherited from the former Banco Popular. BCP, by its hand, announced disposals of NPL valued €730 million last year, while BPI bank had completed bad debt sales worth €400 million until November.

Reaching 12% as to September 2018, the Portuguese banking sector NPL ratio is up to three times higher than the European Union 4% average.

Original Story: ECO |Lusa
Photo: Novo Banco
Edition:Prime Yield

 

Portugal’s NPL stock is still too high, says ESM

  • 8 February, 2019

Despite all the progress towards the reduction its NPL stock pile since 2016’s peak, Portugal’s bad debt level is still among the highest within the Eurozone, warns the European Stability Mechanism (ECB), while recalling the need to further enhance the efforts to reducing it.

At a conference organized by Fitch in Lisbon a few days ago, Matjaž Sušec, the assistant director of the Strategy and Institutional Relations of the ESM, noted, that the Portuguese banking sector is definitely more resilient, «but some of the challenges are still there».

Four recapitalizations allowed for the banking system to go through a major «clean-up» of its accounts. The NPL level is now one third below the peak recorded in 2016, and in 2018, the country’s banking system presented its best results since the crisis. However, regardless of these signs of progress «Portugal still presents very high levels of NPL, one of the highest in the Eurozone», Sušec added.

For the ESM’s director, «enhancing asset quality a very important step if we want to improve the banking system’s resilience and its capacity to finance the economy».

The specialist also noted that the debt pile of the country was still very high, but that the current recovery has allowed for the country to have a larger fiscal buffer, as fiscal revenue increases and debt progressively decreases.

During his speech, the ESM’s representant noted that Portugal has reinforced its status as a country which «successfully overcame the crisis» and that the country’s positive economic performance has opened the door to new financial markets, making it «less vulnerable to shocks».

Original story:Dinheiro Vivo | DV/Lusa
Photo: FreeImages.com / Svilen Milev
Translation & Edition:Prime Yield

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