Novobanco H1 profits rise 94%

Novobanco’s profits increased 94% in the first six months of this year, compared to the same period last year. According to the information sent to CMVM, the institution that will now be led by Irishman Mark Bourke posted a net profit of €266.7 million.

The results are presented on the day António Ramalho steps down as chief executive after six years of controversy, many disputes with the government, parliament and regulator, as well as €7 billion in losses.

“The results confirm Novobanco’s business momentum and its accretive business model, combined with specific capital-generation measures. Novobanco is creating value for all its stakeholders with the progress done over recent years reflected in Moody’s 2-notch upgrade. The Bank is well positioned to continue to grow and compete in the Portuguese corporate and retail market,” said António Ramalho.

In a statement released this Monday, the banking institution attributed this performance, which almost doubled its results year-on-year, to “solid business performance delivering further improvement in profitability against an uncertain macro background characterised by inflationary pressures and consequent volatility of interest rates.”

Net interest income was 1.3% and totalled €268 million (-7.3% YoY), “reflecting stable loan book yield and impact of senior debt issuance in 4Q21 and the negative interest rates on money market placements”. Net customer loans amounted to 24.3 billion, an increase of 2.8% compared to December, “confirming trajectory of an expanding loan book in both retail and corporate segments and a more favourable rate environment.”

Fees and commissions increased 6.5% to €144.4 million.

Operating costs rose €208.7 million (+€4.6 million YoY), reflecting “the increase of General and administrative expenses, mostly one-off, to support the continuous investment in the improvement of operational and business processes required to deliver Novobanco’s strategic program, partially offset by lower staff costs,” the bank explained.

“All in all, Novobanco continued to grow its profitability, reaching a RoTE of 11.0% (pre-tax), with underlying pre-tax profitability1 of €160.2mn, a further confirmation of the sustainability of its trajectory,” added the Portuguese bank.

The Non-performing loans (NPL) ratio is now at 5.4% (Dec/21: 5.7%; Jun/21: 7.3%), “with 73.0% coverage ratio, reflecting the de-risking of the balance sheet and progress towards achieving an NPL ratio in line with the European average.”