Novo Banco doubles losses to 400M€

Novo Banco (NB) ended this first semester with losses of 400,1M€, almost the double when compared with the same period of 2018. The bank led by António Ramalho keeps being daunted by the former Espírito Santo Bank legacy.

The newly created bank as a consequence of the Espírito Santos’ default is five-years-old this weekend as is currently owned by the American fund Lone Star (75%) and the Resolution Fund (25%).

Once more, António Ramalho insists on presenting different reports for either the “good” Novo Banco (the one operating) and the bad (the legacy) to explain the ongoing restructuring plan. And it is through this logic that one can understand the abovementioned results.

While the “good” NB registered a profit of 113.4M€, increasing by 300% in nominal terms, the “bad” bank registered losses of 513M€, being penalised by the alienation of toxic assets (Sertorius and Albatroz) and of the insurance company GNB Vida. Both these three transactions provoked losses of 340 M€, the bank explained.

Thus, consolidating the results of both banks, NB registered losses of 400,1M€, which the alienation of a 3Bn€ NPL portfolio  (Nata 2) in the second semester of the year might aggravate. Nata 2 is estimated to provoke even more losses and to force the Resolution Fund to inject more liquidity into the bank.

“We have progressed in our non-performing asset reduction strategy”, the NB’s CEO stressed. “Novo Banco keeps accomplishing its goals with a performance that reflects an increasing financial margin as well as a growing credit volume both in retail and corporate”, Ramalho continued.

Regarding the “good” bank, profits went up significantly both in the financial margin (+47.5M€) and the financial operations (+43M€), which might be explained by the public debt’s positive impact on the bank’s accounts. The same phenomenon was observed in other banks, such as Santander Totta.