BCP and CGD will distribute dividends to its shareholders for the first time since the crisis, yet the banking regulator is asking the banks to proceed cautiously and adopt sensible strategies
The Portuguese banking sector is more profitable now and presenting fewer disparities — however, the BdP advises banks to manage their profits wisely. The warning is signed by the Portuguese Central Bank (BdP) and it is part of their Financial Stability Report, and it comes in a time when the CGD and Millenium BCP are getting ready to redistribute dividends between shareholders for the first time since the crisis.
Return margins and cost efficiency in the Portuguese banking sector have improved significantly in the first semester of the year when compared to the same period the year before, the BdP noted.
The increase in profitability is mostly connected with the reduction in credit impairments, however high the NPL still is and regardless of how capital returns still do not outweigh costs.
“The banking system should maintain efforts to improve its operational efficiency, and it should also continue focusing on the righteous allocation of resources needed for the control of the banking sector, namely when it comes to risk management, the monitoring of money laundering operations and the prevention of operations financing terrorism. As such, despite all the progress achieved, the Portuguese banking system should still adopt sensible strategies in terms of applying the profits generated recently, particularly in regards to the distribution of dividends to shareholders”, the BdP announced in the report.
The government is awaiting CGD’s dividends from this year’s activity, having counted that as revenue already for the State Budget of 2019, with a value which can get as far up as €200m.
The largest Portuguese private bank, Millenium BCP, still hasn’t set a date for the repayment of dividends, but Miguel Maya, the CEO of this institution, confirmed in November this year that it is his intention to distribute dividends without putting in jeopardizing the bank’s solidity.