Portugal: Six main banks report combined €1.04B in 9M profit after year-ago loss

Six of the main banks operating in Portugal had a combined €1.043 billion in profit in the first nine months of this year, contrasting with combined losses of €178 million in the same period of 2020.

Contributing to the turnaround was, above all, Novo Banco which went from losses of €853.1 million in the first nine months of 2020 to a profit of €154.1 million in the same period this year.

This year is the first in which the bank – which created in 2014 to carry on the commercial business of Banco Espírito Santo, which that bank was wound up – has had a positive result.

The highest nine-month profit was that of state-owned Caixa Geral de Depósitos (CGD), which reported €429 million, up 9.4%.

BPI, meanwhile, almost tripled its profit to €242 million.

BCP and Santander, by contrast, saw their profits fall. BCP’s fell 59.3% to €59.5 million and Santander’s 32% to €172.2 million.

Banco Montepio, for its part, narrowed its nine-month loss to €14 million from a €57 million loss a year earlier.

Despite the renewed profits for most banks, executives said that profitability in the sector remains very low in relation to the money invested by shareholders.

This Thursday, at CGD’s results presentation, CEO Paulo Macedo said that in recent years the aggregate profitability of banks has been negative and stressed that shareholders’ money has to be remunerated.

“There are those headlines that banking earns I don’t know how much a day, when Caixa has 9.4 billion euros in capital that it has to remunerate,” he said. “It has to return money to taxpayers.”

Macedo announced that later this month CGD would pay an extraordinary dividend of €300 million to its sole shareholder, the Portuguese state, in addition to the €83.6 million already paid out this year.

He added that although the CGD results were very positive, the future business conditions it faces are “very difficult”.

Banking consolidation, a recurring issue in recent years, was one of the themes of the results presentations.

BCP’s CEO, Miguel Maya, said it was not looking to make any acquisitions: “Let that be clear.”

BPI’s CEO, João Pedro Oliveira e Costa, also said that the bank he runs took a similar view: “We are not focused there and it is not just talk, it is not our point.”

Novo Banco’s CEO, António Ramalho, by contrast, said that it may weigh up the purchase of smaller banks in good time.

“We will look at all growth hypotheses, especially in the second tier of banks,” he said, stressing that possible acquisitions can be made from the moment the bank concludes its own restructuring process.

In terms of the moratoria on loans, which ended for most at the end of September, the bank CEOs said they were not too worried about defaults, noting that – despite there being problems – the vast majority of customers were paying their debts regularly. But they also said that the situation would evolve depending on economic developments and employment.

In August, the government approved legislation to force banks to restructure oustanding loans to customers who, after the moratoria, have problems paying their debts. CGD has already restructured loans to 3,000 households (totalling €330 million) and 600 companies (with a total €150 million); other banks have not disclosed these figures.