Banking sector makes €1.5Bn in 2021

 In Banks, News

The collective of banks in Portugal made profits of €1.5Bn with an average profitability of 5% against a target of 10%.

Novobanco exceeded the results of bank BCP both in terms of net results and profitability. Portugal’s banks also continued to clear the amount of Non-Performing Loans (NPLs) on their books, they increased their revenues from bank charges while loans and deposits also increased across the board in 2021.
However, capital ratios continues to be the Achilles’ heel for three banks – Novobanco, BCP and Montepio.
Six banks posted their annual results in 2021 and the total profits were €1.517Bn but together their own capital ratio profitability was only 5% when the target set had been 10%.
One of the main problems currently faced by banks is below cost of capital profitability. The results, reports Jornal Económico, saw some surprises. First, Novobanco enjoyed better net profits and overall profitability than Millennium bcp.
State-owned Caixa Geral de Depósitos made the most profit in 2021 from the six banks posting €583.4 million, and also posted a higher profitability of 7%.
This was followed by the bank BPI with profits of €307 million and a tangible own capital profitability (ROTE – Return on Equity) of 6.8% in Portugal.
Santander Portugal was third place in terms of profitability with €298.2 million with a profitability of 6.30%.
The fourth bank on the list of the six larger banks which have posted their profits for 2021 is Novobanco which reported profits for the first time since it was created after the winding up of Banco Espírito Santo in 2014, with €184.5 million and a ROTE (pre-tax) profit of 8.8%.
Millennium BCP came fifth place in the table of profits with €138.1 million with a low profitability return of 2.40%.
Novobanco therefore exceeded the results of the largest private bank in Portugal which had been undermined by the accounts of BCP’s bank in Poland (Millennium Bank) and which accumulated losses because of provisions set aside to cover litigation over loans granted in Swiss francs to 2008.
The last of these six, Banco Montepio posted profits of €6.6 million in 2021, an improvement on the losses of the previous year. Moreover, it managed to exceed BCP in terms of profitability with an ROE of 2.60%.

Image: Vítor Bento, President of the Portuguese Banking Association (APB).