Portugal’s banking sector dismisses immoral profits

The CEOs of Portugal’s main 5 high street banks have dismissed the criticisms that the country’s banks are making huge profits at time when families and companies are suffering from sky high interest rates.

After making €900 million in profits in Q1 of 2023 – a 10-year record — they say that they are available to help families that are suffering from the highest interest rates on mortgages since the early 1980s.
At this year’s Banking Forum organised by SIC Notícas/Expresso on Thursday, the CEO of Millennium BCP, Miguel Maya when asked if the bank’s profits were “immoral” and why they were not helping their customers in difficulties given the current circumstances, said: “Immoral profits? That just doesn’t make sense. Portuguese banks support the economy as they did under Covid-19 and we’re doing all we can to help our customers that are in most difficulty.”
And continued: “If the profits are so high given the capital invested, then the people would be investing in the banks because they offer very high returns. This isn’t the case” perhaps in an allusion to depositors shifting savings into Portuguese government bonds currently offering around 3.5%.
The President of Santander Totta, Pedro Castro e Almeida reminded that there was an “aversion to profit in Portugal” which contributed to putting talent off and towards low salaries.
“Profits should be seen as something positive. Now we’re talking about the banks, but not long ago we were criticising the food distribution sector, and two months ago it was the electrical energy companies.
“In the case of the banks, profit is very important to be able to help families and make big investments like JP Morgan has with the announcement of €15Bn to invest in technology and talent attraction,” he said.
And added: “Will we be profitable this year? Yes. Is it a scandal in comparison to Europe? No. Will we be as profitable as the US banks? No. Do investors believe that the banks will be profitable in the future? Also no”, said Pedro Castro e Almeida.
The banker also reminded that over the past 14 years, the banks were only profitable in eight, and in the other years the profitability was low.
The CEO of Caixa Geral de Depósitos (CGD), Paulo Macedo announced at the Forum that the State bank would achieve capital of €10Bn this year and suggested that it needed to use the profits to pay the State back the help that the State gave it during the Covid-19 pandemic.
“Caixa will pay the investment from private sources this year. Over the next three months it will repay the €500 million of AT2 bonds issued in 2018. By 2024 and 2025 the bank will be able to repay all of the €2.5Bn it owes to the State. That is our goal.”
The CEO of BPI, João Pedro Oliveira e Costa said the Portuguese had a short memory and had forgotten the efforts made to ensure the banks were solid and healthy to support families and companies and reminded that the banks are supporting families in difficulties.
In terms of State aid, the banks received €22Bn over a decade. Miguel Maya said that house repossessions were six times lower than in 2018 which went to show that the banks were showing more sensitivity regarding the difficulties that families were facing.
Paulo Macedo of CGD said families in the most difficulties would get a temporary stay on their interest repayments and extra help with a cut of 50 base points on the contract spread.
The Santander president that the bank was not seeing a relevant number of defaults from either families or companies with defaults at a lower level than in 2019. “If the banks wren’t helping then we would have more defaults”, he said.