NOVO BANCO Group’s results reflect the operational consolidation effort pursued during 2016. Net operating income amounted to EUR 386.6 million (+209%, from EUR 125.0 million in 2015), bolstered by the improvement in banking income and the reduction of operating costs.
Banking income reached EUR 977.5 million (+11.1% YoY), underpinned by increases in net interest income (+14.2%) and capital markets results (+ 25.2%).
Operating costs were reduced by EUR 163.8 million YoY (-21.7% YoY), to EUR 590.9 million.
The contraction in operating costs allowed for a significant improvement in the efficiency ratio, with the Cost to Income ratio decreasing to 60.4%, which compares favourably with the 85.8% ratio reported in December 2015.
The year’s provision charge reached EUR 1,374.7 million, which is EUR 316.8 million more than in the previous year. Impairments include EUR 672.6 million for credit, EUR 315.9 million for securities and EUR 98.2 million for restructuring costs.
The high provisioning level (EUR 1,374.7 million) led to a negative net income of EUR 788.3 million, which compares favourably with the EUR 929.5 million net loss in 2015.
In line with the ongoing balance sheet deleveraging process, particularly targeted at the international portfolio, customer loans contracted by EUR 3.7 billion in 2016 in large part reflecting the transfer to discontinued assets of BESV and NB Asia. In the last quarter of the year customer loans decreased by EUR 0.4 billion, with residential mortgage loans and other loans to individuals remaining flat compared to the end of the 3rd quarter.
In the 4th quarter, customer deposits increased by EUR 0.9 billion, recovering from the downturn at the beginning of the year. Nonetheless, the amount of customer deposits at 31 December 2016, EUR 25.6 billion, was EUR 1.8 billion lower than a year earlier, to a large extent related to the retransfer of bonds to BES.
The targets set in the Restructuring Plan were fully met. Hence, compared to November 2015, the base date for the commitments assumed with DG Comp for the Restructuring Plan, there was an effective reduction of 1,312 employees (including the activities being discontinued), comparing with the target of reducing 1,000 employees on 31 December 2016. The distribution network was downsized to 537 branches (target: 550 on 31 December 2016), corresponding to the discontinuation of 116 units. The operating costs contraction target of -EUR 150 million on 31 December 2016 was also exceeded.
Regarding the ‘Side Bank’, i.e., the non strategic assets of NOVO BANCO Group, its value, net of provisions, was EUR 8,737 million on 31 December 2016 (Dec. 15: EUR 10,843 million on 31 December 2015).
The estimated regulatory capital ratio Common Equity Tier 1 (CET1) for 31 December 2016 was 12.0%, which compares with 13.5% in December 2015 and is in line with the main Portuguese banks.
Thursday, 13 April 2017 9:11