The Portuguese bank reports its first-ever net profit in a fiscal year: a total of €184.5 million.
After accumulated losses of €8.4 billion since the resolution of BES in August 2014, Novobanco finally reached the light at the end of the tunnel by achieving an unprecedented profit of €184.5 million last year.
This positive result compares with losses of €1,329 million in 2020, but does not, however, prevent a new request to the Resolution Fund for €209.2 million.
On the possibility of a new capital injection, the Resolution Fund and also the finance minister, João Leão, had already responded negatively to the bank even though the request had not been publicly announced, so a new dispute between the two parties is expected. And this surges at a time when the contingent capital mechanism ceiling of 3.89 billion, valid until 2026, is about to run out – with this request, another 200 million remain, and there are disputes in the arbitration court in the amount of €170 million.
A year of profits was already forecast for the financial institution, according to the signs that were being given by António Ramalho throughout last year, and which were confirmed quarter after quarter.
The bank justifies the first positive results in its eight-year history with the improvement in the bank’s operating results (with a contribution of €377.7 million), a lower level of impairments and provisions (down 70.4% to 352 million) and by the recording in 2020 of the 300.2 million loss on the revaluation of restructuring funds.
Operating result quadruples since 2016
At the press conference, António Ramalho said the results confirm the end of the restructuring plan started in 2016 and confer “promising profitability” for the bank’s future.
Ramalho highlighted the core operating result (the sum of the financial margin with commissions, removing costs), which reached €477.7 million, a 13% rise compared to 2020. “But this figure should be compared with the beginning of the restructuring, in December 2016, which was €117 million. This means that the bank, in this period, quadrupled the core result of its activity,” he said.
Net interest income rose 3.3% to €573.4 million, countering ECB pressure, while commissions rose 3.9% to €282.5 million.
The bank talks of a “solid business model” with net customer loans stable at €23.7 billion and customer deposits up 4.7% to €26.6 billion.
(article last updated at 5h40 pm)