Caixa Geral de Depósitos reduces losses to 39 million euros in the first quarter


Page created: Wednesday, 14 June 2017 15:16 GMT

BES   Caixa Geral de Depósitos  DBRS   Financial Margin  Novo Banco  Portuguese Banking Sector

Novo Banco also improves but continues to register negative results

Caixa Geral de Depósitos and Novo Banco improved their financial results in the first quarter of 2017, but continued to record losses. The rating agency DBRS analysed the 2016 results of the Portuguese banking system and praised the improvements in the balance sheet and the strengthening of capital.

In the first quarter after the implementation of the strategic plan, Caixa Geral de Depósitos reduced losses to 39 million euros due to a reduction in non-recurring costs of 58 million euros. The financial margin increased by 18.4% to 326 million euros, but net fees paid to customers decreased by 3.7% to 108.7 million euros. Provisions and impairment charges rose 34.6% to 112.8 million euros and operating costs stood at 345.5 million euros This corresponds to an increase of 16%. The Common Equity Tier 1 ratio, which already included the state capitalization of 3 900 million euros, was 12.3%, 3 pp above the value recorded at the end of 2016.

Novo Banco closed the first quarter with losses of 130.9 million euros as a result of a reduction in costs, provisions and impairments, which offset the decrease in the bank’s income. Banking income fell by 22.8% to 180.8 million euros and provisions and impairments to provisions also decreased to 137.4 million euros. The Common Equity Tier 1 ratio at the end of the quarter was 10.8%, down from 12% at the end of 2016.

The Canadian rating agency DBRS published an analysis of the Portuguese banking sector’s results for 2016, where it considers that even with high losses, banks have improved their profitability and asset quality, as well as their ability to generate more revenues in the long term, as a result of the adoption of restructuring plans. DBRS suggests that banks should implement the problematic and unproductive credit reduction plans that remain the highest in Europe. The agency also noted that capital increases made already in the first quarter of 2017 should result in an increase in banks’ capacity to meet future challenges.

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