In 2020, banking profits and profitability skidded compared to 2019 and banks had to reinforce provisions due to the pandemic. But non-performing loans (NPL) had a positive development: 2841 million euros fell compared to 2019.
According to the synthesis of indicators of the banking sector in 2020 released this Thursday by the Portuguese Association of Banks (APB), the net results of banks fell 77% to 435 million euros compared to 2019, when they amounted to 1.8 thousand euros millions of euros. The reinforcement of impairments due to the pandemic contributed to this. APB stresses that this is a result “mostly explained by the significant reinforcement of impairments, which totaled 2.9 billion euros (74% more than the value recorded in 2019) “
But non-performing loans (gross values) fell from 17.2 billion euros in 2019 to 14.4 billion euros in 2020, a reduction of 2.8 billion. Which shows the efforts of the banks in this indicator. The bad debt ratio (NPL) of the APB group of associated banks improved in 2020, standing at 4.9%, compared to 6.2% in 2019.
The profitability (ROE) that allows measuring a bank’s capacity to remunerate the capital invested by its shareholders remained on positive ground, but fell from 4.9% in 2019 to 0.5% in 2020 in the group of banks.
In Portugal, customer deposits grew 4.7% to 279.7 billion euros, loans to companies rose 10.4% to 73.9 billion and loans granted to individuals 1.6% to 120.8 thousand millions of euros. The transformation ratio, credits on deposits, is 84.9%.
Data from the association that represents the banks also reveals that there was an increase in capital. CET1 increased to 15.4%, while the solvency ratio rose to 18.1%. The strengthening of capital “allowed banks to continue to respond effectively to the financing needs of the economy”, APB says.
Banks closed 2020 with 1198 fewer workers, employing 40,475 workers at the end of December, which represented a 2.9% reduction compared to 2019. The number of branches also shrank from 4028 to 3826 in 2020, a 5% cut in open branches, that is, 202 fewer branches.
APB stresses that in 2020 “banks continued their restructuring process, a trend that has been observed in recent years and that results from the need to improve operational efficiency and adapt business models to the new needs of customers”.