Novobanco profit falls 4.1% as sale to BPCE adds costs

Novobanco posted a net profit of €585.6 million in the first nine months of the year, down 4.1% from a year earlier, as costs linked to its sale to France’s BPCE weighed on earnings. The result matters for investors and market watchers because it shows the short-term financial impact of the Portuguese bank’s integration into its new owner.

The bank said net interest income and fees both increased in the period, helping banking income rise 2.5% to €1.12 billion. Of that total, €856 million came from interest income, up 3.3% year on year. But operating costs rose faster, climbing 11.1% to €426.9 million, driven by higher staff expenses and extraordinary costs related to the sale completed at the end of April for €6.7 billion.

Novobanco did not detail the one-off cost of the transaction, but it said operating costs would have risen only 7.4% without that impact, which was around €15 million. Chief executive Mark Bourke said the integration into BPCE was progressing “consistently” and “in full alignment”.

The bank also reported strong loan growth, with gross lending up 7.9% to €33.3 billion, or €2.4 billion more than at the end of last year. That increase included around €300 million from the acquisition of Unibanco’s credit card business. Mortgage lending rose 4.7% to €11.5 billion, while deposits were up 2.7% from the end of last year to €32.89 billion.

Novobanco did not comment on any dividend distribution to its new shareholder. It said the decision not to distribute last year’s earnings added €498 million to its CET1 capital, helping lift the CET1 ratio to 21% at the end of September including current-period results, well above regulatory requirements.

Originally published at Eco.pt