Banks raked in €2.4 million per day in 2019
Portugal’s five main banks made profits of €2.4 million per day in 2019 in a year in which Caixa Geral de Depósitos saw results skyrocket from the sale of international operations.
On the downside, Novo Banco once again recorded losses above €1Bn while Spanish bank Santander and BPI used the year to clean the slate of NPLs and other debts.
As a whole, CGD, BCP, Santander, BPI and Novo Banco enjoyed profits of €874 million, an increase of 130% compared to 2018.
But this performance was strongly influenced by Novo Banco accounts. On Friday, its CEO António Ramalho announced losses of €1.058Bn provoked by the cost of restructuring the bank and clearing its balance sheets from toxic debts left behind as the legacy from the collapse of Banco Espírito Santo.
Without Novo Banco, the four main banks in Portugal recorded profits of €1.9Bn, an increase of 8% year-on-year.
There are specific factors that explain each institution’s results. For example, the public bank CGD saw its profits soar 57% to €776 last year. It was the bank’s best result in 12 years helped to a great extent by CGD’s sale of banks in Spain and South Africa.
On the other hand, the net results of BPI fell 33% to €328 million, also explained by non-recurrent factors — in 2018 it registered a profit of €491 because it sold off its cards business and its position in Super Bock (Viacer).
However, with the European Central Bank (BCE) bringing pressure to bear on the banking sector in Portugal, the financial margin (the difference between interest charged and interest paid) rose almost 4% to €1.5Bn, with BCP (8.7%) and Novo Banco (19%) registering considerable increases.
Net bank charges have also climbed by around 2% and have been a worry for the Portuguese parliament which has been preparing to put in place controls on bank charges. Net receipts from charges made the banks €2.156Bn.
The banks are naturally against any legislative initiatives to control bank charges with the CEO of BCP Miguel Mayer saying that, “Services have to be paid for”. Novo Banco’s António Ramalho reacted to tightening up on bank charges by saying, “Hell is full of good intentions” and warned about a reduction in the quality of service.
On the balance side, client loans fell across the board of the five banks by 0.6% resulting in credit stock of €194Bn. Deposits, however, climbed 5% to €211.5Bn.
The acquisition of EuroBank in Poland had a relevant role, preventing a greater fall in loans (which continue to be pressured by sales of NPL portfolios in the sector) and contributed to an increase in deposits.
Regarding the quality of assets, 2019 was the year for clearing bank balances of toxic assets in order to meet the demands of the bank regulators.
CGD reduced its ratio of NLPs from 6.7% to 3.9%, BCP from 7.6% to 5.3% while the lowest NPL ratios were achieved by BPI (2.5%) and Santander (3.3%). Novo Banco managed to slash its NPLs by a half from a staggering 22.8% to 11.2%.
Portugal’s banks have also become slimmer outfits in terms of branch and staff numbers: 919 jobs were eliminated and 95 banks closed, the exception being BCP which registered 109 new staff members.