Novo Banco made the first profit of its history
It is an historic result for Novo Banco. The 3.7 million profit in the third trimester was marginal, but it is the first positive result the institution resultant from the BES settlement has had.
Novo Banco has profited 3.7 million euros in the third trimester of this year – the first positive net result since the institution was created as a measure of the resolution of BES in august 2014 by the Bank of Portugal.
This value compares to the losses of around 118 million euros the bank headed by António Ramalho suffered one year ago. And it also compares with the average 250 million euros of trimestral losses Novo Banco had since its birth. In spite of the difficult and sensitive situation of the bank, the CEO had already thanked employees for their commitment to the process leading to the sale of the institution.
Novo Banco profits as never before
According to information brought forward by Novo Banco this Thursday, “the result shows a clear improvement compared to the previous trimesters”. And the CEO justifies the profit with an improvement in banking product and with the “very prominent reduction in operational costs”, of over 24% to 449.9 million euros.
Concerning banking products, they grew 7.5% to 667.7 million euros in the first nine months of the year, a performance that increased the financial margin by 29.9%.
More impairment, less costs
In spite of the profit, the bank continues to suffer from the impact of the rise in impairment. The amount of provisions has increased around 300 million euros to 762.6 million by September, in an “effort for Novo Banco’s consolidation”. The majority of the impairment concerned credit at risk (425.8 million euros), but included impairment of 113.7 million euros for securities as well and also included 110.6 million for restructuring costs.
Concerning the restructuring process, the bank pointed out the “choice was to anticipate many of the yearly goals”. The foreseen reduction of employees was reached in September (a reduction of 1062 employees, compared to the goal of less than 1000). The reduction in operating costs is also already assured (145 million euros reduction until September, compared the reduction of 150 million goal for the end of the year). And the number of counters is now of 540, compared to the 550 reduction goal the plan predicted. The regulated capital ratio Common Equity Tier 1 (CET1) estimated for September 30, 2016, was of 12.3%, which represents an improvement of 30 basis points compared to June 2016.
