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