Portugal third worst NPL ratio in EU

Portuguese banks are succeeding in slashing their ratios of soured loans but still have the third highest amount of NPLs in the Euro Zone.

This is according to the European Central Bank which states that Portugal’s banks have the lowest capital ratios in Europe.
Portugal attained an NPL ratio of 5.5% at the end of the third quarter of 2020, one percentage point down on December 2019.
Only Greek and Cyprus banks had higher levels of NPLs with ratios of 28.8% and 14.3% respectively.
The data was released at a time when a sharp increase in NPLs is expected because of the economic fallout from the Coronavirus pandemic and which will become evident with the end of the credit moratoria.
At a Euro Zone level, the NPL ratio was set at 2.8% in September last year, with a slight increase of 0.1% points compared to the end of 2019.
With a ratio of NPLs at 1.4%, banks in Luxembourg enjoyed the cleanest bank balances in the Euro Zone.
On the other hand, Portuguese banks has the lowest capital ratios in Europe even through the banks had strengthened their capital ratios since the last economic crisis a decade ago.
In fact, only Spain had worse capital ratios than Portugal, according to the ECB.
As to the moratoria, at the end of the third quarter of 2020, Portugal had €46Bn of credit under the terms of the regime which allowed for a temporary suspension of bank loan repayments, which corresponds to over 20% of the total credit stock — one of the highest in the Euro Zone.
In the Euro Zone, credit offset by the moratoria climbed to €587Bn, €223Bn less than in June 2020.
As to loans granted to companies under the terms of public guarantee schemes which was earmarked to support the economy in the face of the pandemic, the ECB granted €289Bn of which Portuguese banks received €5.8Bn in credit lines to loan to companies to see them through the crisis.