Development bank turns the corner and enjoys bumper profits for 2023

 In Development banks, News, Portugal 2030, Portugal RRP

Portugal’s development bank Banco de Fomento saw profits of €27.8 million last year, well above the €3 million for 2022.

The bank’s development made a strong contribution to the bank’s product (+54.8% to €53.9 million) with improved financial margins while provisions and impairment had a much less impact on accounts last year.

There were also better results in financial operations and results for equity accounted earnings that increased €3.9 million and €2.1 million respectively.

Management of funds (much of which came from the EU through the Portugal RRP) represented 57.4% (€31 million) of bank product.

The bank’s financial margin also had a relevant role in the positive results (24.6% of total banking product) with a positive variation of €11.9 million, to attain €13.2 million with the indicator increasing 10-fold.

Operational and structural costs were up €1.5 million on 2022 to €18.4 million “partially reflecting the beginning of a process of the bank’s transformation and an increase in its staff complement”.

The BFP Group also includes four mutual guarantee companies in addition to Portugal Ventures and Turismo Funds with accounts going from loss to profit.

BFP as whole posted a net result of €22 million after reporting a loss of €30,000 for 2022, thanks to bank product and less provisions and impairments.

Having concluded 2023 with a net result of €22.5 million in its individual accounts, and considering the importance of strengthening the Bank’s equity to increase support to the national economy, the decision of the General Shareholders’ Meeting, on a proposal from BPF’s Board of Directors, points to the constitution of a reserve of €12 million, intended to support appropriations for future instruments to support the national economy.

It was decided by the Shareholders that a significant part of the results for the year 2023 would be carried forward, after the constitution of the mandatory legal reserve of €2.25Bn.

The shareholders decided to distribute dividends of just €1.7 million.

The Banco Português de Fomento manages the Capitalisation and Resilience Fund (FdCR) that was launched on the back of the Recovery and Resilience Plan (Portugal RRP).

In 2023 it launched two instruments aimed at startups (The indirect Venture Capital Investment Programme and the Deal-by-Deal Direct Investment Programme.

With €864 million of FdCR operations, it exceeded the application target of €214 million. This amount includes €779 million earmarked for venture capital companies to invest in companies and €108 million in direct investments (Strategic Recapitalisation).

The development bank approved operations totalling €1.006 million through four strategic programmesConsolidar (Consolidate), Strategic Recapitalisation, Venture Capital and Deal-by-Deal Co-Investment – achieving 76% of the overall total initial allocation from the FdCR.