EuroBic with losses of 5.3 million in the first nine months of 2020

  • ECO News
  • 3 December 2020

EuroBic arrived in September with losses of 5.3 million euros, with credit impairments weighing.

With the pandemic putting pressure on the results of all banks, EuroBic is also not immune to the adverse operating environment that the sector is currently facing. The bank closed the first nine months of the year with losses of 5.3 million euros. These were the last quarterly results signed by Teixeira dos Santos, who last week ceded the CEO position to the former director general of the Tax Authority José Azevedo Pereira.

This loss compares with the 42 million euro profit that EuroBic had accumulated in the same period last year. This inversion in results is a reflection, above all, of the credit impairment that the bank registered during the pandemic: it increased to around 28 million euros at the end of September, when in March it was around four million.

“The negative net results of 5 million euros recorded by EuroBic in this period are strongly influenced by the response to the COVID-19 pandemic,” explains the bank to ECO.

“In fact, although the credit risk indicators compare very positively with that observed in the sector, namely an NPL ratio of 6%, with coverage by impairments of 83.1%, as a matter of prudence, the bank opted for a preventive reinforcement of impairments for credit granted of around 30 million euros, a fact that naturally has a direct impact on the results”, it adds.

The trend is not exclusive to EuroBic. Among the main national banks, with impairments and provisions, some 827 million euros have been set aside to deal with a possible wave of defaults caused by the pandemic crisis.

In EuroBic’s case, the stock of loans amounted to 4.835 billion euros at the end of September, 80 million more than a year ago. Regarding deposits, after the most sensitive period that followed the Luanda Leaks case, the money deposited in the bank recovered in Q2 and stabilized in the third: it is 6.345 billion. These numbers place EuroBic in a sort of second division of the Portuguese banking championship in terms of business size and, to that extent, a desirable target for mergers and acquisitions, also due to the circumstances imposed by the Luanda Leaks case.

If 2020 has been a particularly challenging year for the sector, for EuroBic even more so. Even before the pandemic, the bank saw its reputation dragged along at the beginning of the year by the controversy with shareholder Isabel dos Santos, who soon placed its 42.5% position on sale.

Until today, the process of selling the bank is still on the table. Abanca even had exclusive negotiations, but the deal failed. The interest of other banks, such as Haitong and Banco Montepio has already been mentioned. At this moment it is the Lebanese businessman Roger Tamraz who appears as the main candidate, having already an agreement with Isabel dos Santos and another shareholder. There are doubts, however, if Tamraz passes the regulators’ examination and, before that, if he can convince the other EuroBic shareholders, namely Fernando Teles (37.5%), to sell their positions.