Portuguese banking NPL “causes significant uneasiness abroad”, states Horta Osório
The CEO of Lloyds Bank compliments Portuguese bank's efforts to solve the NPL issue, but advocates for the need to do more. Internationally, the high level of NPL creates "uneasiness", he says.
António Horta Osório acknowledges that the Portuguese banking sector has made significant progress. Yet, the CEO of Lloyds Bank says it’s necessary to do more, namely concerning the reduction of the weight of nonperforming loans (NPL), whose high levels still weight in on Portuguese banks’ profitability and create “uneasiness” abroad.
Looking into the future, Horta Osório warns against the need to solve three issues: reduce the country’s indebtedness, the demographic issues, and also the banking sector. “The sector has made significant in terms of capital and banking deleveraging, but the quality of the assets still needs to be improved”, the CEO of Lloyds Bank states, in a conference in Lisbon.
The manager compliments the banks’ efforts to reduce the toxic assets from its assets, but he mentions that the “clearance” has been faster in other countries. “Spain has been solving NPL in a faster way. Italy and Portugal are also decreasing the weight of toxic assets from its balance, which is very positive”, Horta Osório says. However, the CEO highlights that, in Portugal, “NPL still represents 15% of the total amount of credits, so a lot more needs to be done”.
“It is very relevant because, internationally, it causes significant uneasiness”, Lloyds CEO stresses, because if this particular issue is not solved, it could lead to the need for additional provisions. “It is very important for us to continue on this path [of reducing NPL]” so that the banking sector does not become exposed to external shocks that could lead to an increase in defaulted loans, Horta Osório states.
