The bank led by António Ramalho had already registered profits in the first quarter. It maintained the trend in the second one, raising its net profit to €137.7 million in the first half of 2021.
Novo Banco closed the first six months of the year with profits of €137.7 million, which compares with losses of €555.3 million in the same period of 2020. This is the first time that the Portuguese bank has posted positive half-year results (it had already posted profits in the first quarter).
“Novo Banco announces second consecutive profitable quarter with a net profit of €138mn in the 1H21,” the bank says in the statement sent to CMVM, pointing to profits of €70.7 million in the first quarter followed by a further €67 million in the second quarter.
The bank explains these profits with the net interest income, which “increased 13.1% YoY, contributing to an improvement in commercial banking income, +9.7% YoY.” Thus, taking into account the “lower operating costs (-4.7%)”, Novo Banco’s core operating income increased to €220.7 million.
There were fewer operating costs, but also a less heavy burdened invoice with impairments. “Impairments for credit totalled €84.7 million, including €35.2 million impairments for Covid-19 related risks, a YoY reduction of -69.9% or -€196.4 million.”
Loans to customers (gross) totalled 24,986 million (in line with March 2021), “with the year to date evolution (-0.9%) influenced by the execution of the strategy to reduce the stock of non-performing loans (NPL),” explains the bank, pointing out that it “sold a portfolio of non-performing loans and related assets in the first half of 2021 with a gross value of €210.4 million.”
This decrease was visible in both corporate and individual loans, but did not prevent the increase in net interest income, which boosted the bank’s balance sheet. Commissions also impacted positively the results: “commission income for the first half of 2021 was up +3.1% year-on-year, totalling 135.5 million,” it said.
At the same time, “total customer funds increased by +3.7% YTD, with customer deposits increasing by 3.0% (+€782 million)”. This is, according to the bank, a reflection of “the continued confidence of clients in Novo Banco.”
Novo Banco closed the semester with a non-performing loans ratio of 7.3% (8.9% last December), “while increasing the coverage ratio to 78.4% (Dec/20: 74.1%), demonstrating the continued de-risking of the balance sheet and efforts to match the European average ratio in the medium-term.”