Novobanco rakes in record €743 million

Novobanco has posted record results of €743 million in its first year operating as a normal bank after years in which it was propped up by the Portuguese tax payer.

It was a result that led the bank’s Irish CEO, Mark Bourke to say that Novobanco’s recovery was a “success for all” in Portugal despite having torn through €3.4Bn from the Resolution Fund over the past six years.
In an interview with ECO, Mark Bourke said that despite the bank doubling its financial margin last year on the back of interest rates, Novobanco does still expect some level of pressure over the next few years but its goal is to stabilise revenues and maintain the bank’s profitability at a high level.
In 2025, the bank’s income will result from the performance of its portfolio of securities, loans, and some expansion, as well as growth from its bank charges, to be able to bring in around €1.3Bn.
He also predicted that the Portuguese economy would probably grow three times more than the EU average (or 2.3%) and that it was important for employment levels to remain stable, and that over the next 18 months he believed company investments that had been postponed would move forward.
Mark Bourque also explained that the bank’s impairments and provisions had risen 56% because the bank was being more conservative and not because of an increase in risk or tension within its portfolio of companies.
On the past speculation of a EuroBic bank bid and the possible acquisition of Spain’s Wizink, he told the news source that it wasn’t the appropriate time to discuss acquisitions.
“What I can say is that we are well capitalised, are meeting requirements, and not consuming much capital. We would like to expand our balance, but to do so in line with GDP. So, if it were by 2% or 3% that would be middle to long term,” he said.
He also said the bank was not yet in a position to pay dividends, but in terms of payments, asset management, and individual portfolios that appeared on the market it would study these seriously and had the capacity to do so.
“When we see individual portfolios come onto the market, in businesses that are adjacent and consistent with a pure retail and companies portfolio, we would take a serious look at it,” he said.
Two years ago, the previous CEO had admitted to Essential Business that Novobanco had cost a total of €8Bn to keep afloat and restructure, all of it coming from the State either via the Resolution Fund, the taxpayer, or government money, but that the cost of letting it collapse would have cost €11Bn. At the time the EU’s monopoly entity did not favour the bank’s client portfolio being absorbed by an existing bank in Portugal’s banking sector. Novobanco was created as a “good bank” from the detritus from the collapse of Banco Espírito Santo in 2014, and has spent much of the past decade selling off non-performing loans to US and other funds, bringing them down from 16.5% in 2014 to 4.4% for 2023.