npl-reo Market News: Spanish Real Estate Intelligence

Portugal’s Banks Continue to Reduce NPL Ratio
4 April 2020 Portugal’s banks managed to reduce their stock of non-performing loans (NPLs) last year by a total of 4.5 billion euros, equal to a drop of 20.9% since the previous quarter. According to the report by the Bank of Portugal (BdP), the "Portuguese Banking System: Recent Developments," local banks had holdings of €17.194 billion as of December 2019, down from €21.736 billion in September. The banks’ total NPL ratio fell by 1.6% to 6.1%. Non-performing loans to companies fell by €3.7 billion (-3.5% q-o-q), while NPLs to individuals fell by 400 million euros or 3.7%. At the same time, total assets decreased by 1.3% in the fourth quarter of 2019, from €397.2 billion to €392.2 billion. In a broader measure, the Tier 1 ratio (CET 1) rose by 0.3% to 14.1%, mainly due to the 1.8% decrease in risk-weighted assets. The return on assets of banks operating in Portugal improved last year compared to 2018, to 0.75%, while the return on equity (ROA) rose to 8.1%. Original Story: Jornal Económico - António Vasconcelos Moreira Translation/Summary: Richard D. Turner
Portugal to Decree Debt Moratorium for Borrowers
20 March 2020 The Portuguese government is close to approving legislation to reduce the effects of the coronavirus crisis on non-performing loans (NPLs) in the country. The new regulations would postpone the European Central Bank’s requirements for lowered NPL ratios while simultaneously freezing interest payments on outstanding loans. The freeze on loan payments to individuals and companies will continue until the end of the year if the legislation goes through in its current form. The aim is to help out individuals and small and medium-sized companies who are otherwise financially above water, and that, in any case, are not subject to tax enforcement processes of tax enforcement or hold existing overdue Social Security debts of over 90 days. The Portuguese would also prevent the freeze on interest payments from negatively affecting the banks’ NPL, or bad debt, ratios. The credit moratorium must, however, comply with European banking regulations. Therefore, the government must structure the measures in a way that avoids classifying the delayed payments as NPE - Non Performing Exposure. In Spain, new measures are expected to classify the debt moratorium as a debt freeze with deferred maturity. Based on this, Spanish banks would not assume any losses on unpaid debts. The impact of the measures has not yet been calculated, but 2020 is already considered a wash for recovering profitability and reducing the banks’ level of unproductive assets. The economic downturn is sure to reduce demand for the NPLs and REOs, while temporarily leading to new inflows of non-performing loans. Original Story: Jornal Económico - Maria Teixeira Alves & António Vasconcelos Moreira Translation/Summary: Richard D. Turner
NPL Sales to Moderate This Year, Even Without the Coronavirus
20 March 2020 A yearly study by Prime Yield, called "Keep an Eye on the NPL & REO Markets," reported that last year saw heightened activity in the NPL and REO markets on the Iberian Peninsula once again. Sales in Portugal accounted for 27% of the total, versus 73% for Spain. Total sales of those assets reached 8 billion euros in the former, compared to €22 billion in its larger neighbor. However, sales in Spain had previously reached 60 billion euros in 2018. The firm, a subsidiary of Gloval, predicted that both countries will continue to see strong, but moderating, sales this year. Nelson Rêgo, the CEO of Prime Yield, noted that "now that the peak in the sale of large banking portfolios seems to have passed in Spain, deals in the secondary market and securitizations are gathering pace." At the same time, the executive expects sales to stabilize in the coming year. Sales volumes are also expected to moderate in Portugal, as the largest portfolios have already been sold. There is a decreasing amount of the type of deals that typically attract opportunistic investors as the local market reaches a higher level of maturity. Original Story: Público Translation/Summary: Richard D. Turner