Novo Banco announced this Monday that it posted a net profit of €428.3 million in the first nine months of the year, up 178% on the same period last year.
According to a statement released by the Securities Markets Commission (CMVM), the bank said the increase of more than EUR 274.3 million in the first nine months compared to the same period last year indicates “strong business growth demonstrating the ability to generate income and capital, despite the current macroeconomic context, inflationary pressures and rising interest rates.”
In the third quarter of the year, the result was 161.6 million euros, which is 30.3% more than in the previous quarter.
In terms of this quarter, Novo Banco justifies “the positive momentum with improved banking revenue (+7.1%), control over operating costs (+0.4%) and lower impairment and provisions.”
“Commercial banks’ revenues reached EUR 209.2 million as a result of positive interest rate dynamics, which was reflected in net interest income (+2.5%; +3.4 million EUR), which partially offset lower customer service efficiency (-5 .7%; -4.3 million euros),” he clarifies.
Other operating results were €88 million positive, “mainly justified by capital gains generated from the sale of the head office building (€71.5 million; €67.0 million excluding contingencies)”, and the amount charged for impairment and reserves amounted to 2.7 million euros, “mainly reflecting the recovery of impairment and specific provisions, as well as the normalization of the bank’s balance sheet.”
Back in the first nine months, the bank reports that the customer service fee amounted to 215.7 million euros, which is 3.8% more than in the same period last year.
The revenue of commercial banks amounted to 621.6 million euros, which is 2.6% less than in the same period in 2021.
Quoted in a statement to CMVM, Novo Banco CEO Mark Bourque says that “the increase in activity in the first nine months of 2022 is a reflection of the strategy for sustainable growth of the banking business in Portugal with increasing revenues. and capital, led to the creation of value for all stakeholders”.
As of September, net interest income was €405.9 million (-5.6% year-on-year), “reflecting the improvement in the average asset rate, costs incurred on senior debt in the fourth quarter of 2021 and conservative interest bet. speed record for TLTRO III in the third quarter of 2022.”
According to the bank, “given the changes to the terms of said financing announced on 27 October 2022, the ‘pro forma’ net interest income for the quarter would have been €7.5 million higher.”
“Performance is in line with expectations for September 2022, despite the current macroeconomic environment characterized by inflationary pressures and resulting interest rate volatility exacerbated by the conflict in Ukraine,” Novo Banco said.
For the period, net interest income was 1.29% (1.35% in September 2021) and loans to customers (net) amounted to EUR 24,600 million (+3.9% compared to December 2021), which confirms growth trajectory of the loan portfolio in the corporate and individual segment, in conditions of favorable interest rates.
Novo Banco reports that loans to customers “increased in all segments”: loans to customers (gross) amounted to 25,823 million euros (+3.7% compared to the percentage compared to December 2021), 39% housing loan (minus one interest point) and 5% on consumer loans and others.
Total customer funds increased by 3.0% compared to December 2021, while customer deposits increased by 4.6% (+€1,300m).
In the first nine months of the year, Novo Banco’s NPL stood at 5.0% (compared to 5.7% in December 2021) and the coverage ratio increased from 71.4% to 77.2%, “in line with c “risk reduction” strategy and approximation to the average ratio of “analogues” [pares] Europeans.”
The cost-to-income ratio (efficiency ratio) was 51% (48% yoy), equivalent to 49% on a recurring basis, with operating expenses of €314.2 million (+2.8% yoy). calculus). year), “while reducing staff costs is offset by a one-off increase in general and administrative expenses and depreciation, which support investments in operational and business process improvements.”
Until 30 September 2022, Novo Banco Group recorded an increase in impairment and provisions of EUR 22.5 million (-85.9% year-on-year), with a cost of risk of 20 basis points (61 basis points as September 2021), “benefiting from a portfolio risk reduction strategy.”
As a “reflection of positive performance dynamics”, Novo Banco had a CET 1 ratio of 12.7% as of September 30, 2022 (+90 basis points from 11.8% in June 2022) and an overall solvency ratio of 14 .9% (+100). basis points compared to 13.9% in June).
With regard to the amount for 2020 requested by Novo Banco from the Settlement Fund, the bank states that there are “two differences between the two institutions that are the result of differences”: one concerns the provision for termination of operations in Spain, and the other concerns the valuation of the holdings, with respect to which the award is made.
“Novo Banco considers these amounts (165 million euros) to be due under the conditional capitalization mechanism and uses the legal and contractual mechanisms at its disposal to ensure that they are received,” he says.
In addition, “Novo Banco and the Settlement Fund still have, subject to arbitration, Novo Banco’s application at the end of 2020 of the IFRS 9 dynamic transition option.”
Author: Lusa
Source: CM Jornal
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