Portuguese Banks: Results Down in H1 2020 on COVID Impact
In H1 2020, Portuguese banks (BCP, CGD, Novo Banco, Santander Totta, Banco BPI, Caixa Economica Montepio Geral-CEMG) reported an aggregate net loss of EUR 66 million. This represented a significant decline on the net result in H1 2019 which was a profit of around EUR 600 million. The results were mostly affected by an increase in provisioning levels as well as revenue pressure on the back of the worsening economic environment caused by the COVID-19 pandemic. Aggregate core revenues declined YoY, with the lockdown hurting business activities and consumer spending, whilst credit provisions more than doubled YoY in H1 2020. Some banks have also reported losses on restructuring funds (i.e. banks’ legacy assets managed by third party companies). Loan moratoria and state guaranteed loans continue to protect asset quality for the time being. Nonetheless, in our view, the asset quality deterioration will be more pronounced in 2021 in connection with the loosening of these support measures.
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