António Ramalho: “We Will Double Our Reduction of Bad Debts By the End of the Year”

30 November 2018

Novo Banco “has a legacy that is being resolved,” the CEO of the bank stated, referring to the bank’s €419.6 million loss in the third quarter. “The bank will sell a €1.7-billion portfolio of NPLs by the end of the year, doubling our reduction of bad debts,” the CEO, António Ramalho said.

The executive, in statements to Jornal Econômico regarding the bank’s results for the third quarter of 2018, in which the bank posted a loss of €419.6 million, nearly equal to the previous loss of €419.2 million in the same period last year, explained that Novo Banco “has a legacy that is being resolved.”

“The bank’s current activities are going well, but there is a legacy that is being resolved,” said the bank’s CEO.

Mr Ramalho also addressed changes to the quality of the bank’s total loan portfolio. Non-performing loans (NPLs) fell by 380 basis points to a ratio of 27.7%, or 1.6 billion euros.

However, “the bank will sell a €1.7-billion portfolio of NPLs by the end of the year, doubling our reduction of bad debts.”

The stock of non-performing loans fell from a total of €10.1 billion in September 2017 to €8.5 billion in September 2018 (a reduction of 1.6 billion euros).

Non-performing loans (NPLs) stood at 27.7% (down by 3.8 percentage points since September 2017) due to the continued reduction of non-performing loans, with the coverage ratio reaching 63.5% (+11.6% year-on-year).

The reduction in credit to companies (-€1.59 billion) “had a significant impact on non-performing loans (-€1.6 billion),” the bank explained. On September 30, 2018, corporate loans fell -7.7% year-on-year, with loans to companies representing 62.5% of the total portfolio.

The net of impairment NPL ratio fell from 18.1% in September 2017 to 12.3%, a decrease of about 5.8 percentage points.

In the first nine months of 2018, impairments totalled €456.2 million, compared to €563.2 million in the same period last year, with loan impairments totalling €232.6 million compared to €347.7 million in the year before; while the other provisions, amounting to €208.4 million, including the impact of the signing of the contract for the sale of a portfolio of real estate assets (Project Viriato), the bank said in a statement.

Original Story: Jornal Econômico – Maria Teixeira Alves

Photo: Cristina Bernardo

Translation: Richard Turner