Non-performing loans stock falls 70% in four years

The stock of non-performing loans in Portugal’s financial system has fallen by 70% over the past four years according to the consultants Prime Yield.

According to a report in business daily Negócios, the accumulated value of NPLs on bank books stands at around €1.4Bn in 2023, but fell by 18% on 2022.
The calculations by Prime Yield show that the amount is “just above values registered for 2020, the year in which the sale of this type of portfolios was practically at a standstill due to the pandemic.
The assets valuation consultancy calculates that in 2022 around €1.7Bn in NPL portfolios were transacted. However, it was a fall of around 50% on the €3.5Bn of sour loans the banks were saddled with on their books.
The slowdown reflects a combination of factors such a reduction in the average size of the portfolios that appear on the market, and the relative stagnation of new products for sale, while at the same time the secondary market is not particularly developed.
In the second quarter of this year, financial institutions had €6.3Bn on their balances, €1.2 million less than the same period in 2022.
Of that volume, only 17% or €200 millions related to 2023 according to Prime Yield. The Portuguese company, which in 2018 was bought out by the Spanish company Gloval, states: “Portugal continues to make progress in reducing its credit default stock in the Portuguese financial system, but the rate of reduction of this type of loans is still slow”.

Photo: Nelson Rego, MD Prime Yield Portugal. (RR)