EuroBic registers €5.3M losses

The last accounts signed off by former CEO of EuroBic, Fernando Teixeira dos Santos who left the bank last week, saw a €5.3 million loss.

The Covid-19 pandemic has put pressure on the accounts of the entire banking system in Portugal and EuroBic has not escaped challenging times. The bank closed the first nine months of the year with losses of €5.3 million in what were the last quarterly results of the bank’s outgoing CEO who was the former finance minister under the PS José Sócrates government.
The new CEO of EuroBic who replaces him is the ex-director of the Portuguese tax authorities, José Azevedo Pereira.
The loss compares to the €42 million profit that EuroBic had accumulated for the same period in 2019.
The reversal in results is mostly down to the loans impairments that the bank suffered during the pandemic: they increased to around €28 million by the end of September, when in March impairments stood at €4 million.
“The net results of -€5 million registered by EuroBic for this period are strongly influenced by the measures for the Covid-19 pandemic,” the bank told ECO online.
“In effect, despite the credit risk indicators comparing very favourably with what is being seen in the sector, namely an NPL ratio of 6%, with coverage for impairments of 83.1%, out of prudence, the bank opted to set aside an additional €30 million ‘cushion’ to cover eventual losses caused by defaults and this has naturally had a direct impact on the results,” the bank adds.
That trend in results and prudent behaviour is not solely restricted to EuroBic, The main national banks in Portugal have set aside a safety cushion of around €827 million to offset possible defaults caused by the coronavirus pandemic at a time when a large share of the loans conceded to help companies stay afloat (21% according to the EU) continues to be protected under the regime of bank moratoria.
In the case of EuroBic, the stock of loans and moratoria stood at €4.8Bn by the end of September, €80 million more than a year ago.
In relation to deposits, after a rather “sensitive” period that followed the Luanda leaks case in January this year, the amount of cash deposited in the bank recovered in the second quarter and stabilised in the third: €6.3Bn.
This places EuroBic in the “second division” in the league of Portuguese banks such as Millennium bcp, Caixa Geral de Depósitos and BPI, which therefore makes it a tasty target for mergers, acquisitions and takeovers.
Abanca wanted to buy it, but the deal fell through. Haitong and Montepio have also expressed an interest, as has the Lebanese entrepreneur Roger Tamraz.
Portuguese analysts widely believe that EuroBic will be swallowed by another bank, either national or foreign, in the next two to three years, but it will all depend on the willingness of the other shareholders, most importantly, Fernando Teles (37.5%), to sell.