Analysts have speculated that the lucrative Novo Banco, which emerged from the ruins of Banco Espirito Santo in 2014 and is controlled by US private equity fund Lone Star, could be merged with another lender seeking to consolidate its position in Portugal.
But Bourke, who took office in August, said that “Portugal is not like some northern European countries, which are massively overloaded”, as the five largest players hold 80% to 85% of the banking assets, a high level of concentration.
Novo Banco is now “a profitable and well-capitalized bank that can truly compete, resist, remain independent in the Portuguese market and that can invest and grow,” he said.
The bank should build on its turnaround track record and “be ready to seize the opportunity of an IPO if and when it arises,” he added.
Mr. Bourke, who has been CFO since 2019, wouldn’t say where the bank might look for a listing, although Portuguese companies generally choose Euronext Lisbon.
MASS CLEANING OF DOUBTS
Since Lone Star bought its 75% stake in 2017, Novo Banco has focused on de-risking, closing foreign branches, clearing bad debts and real estate with debt commitments. difficult restructuring agreed with Brussels. The Portuguese Resolution Fund holds the remaining 25%.
Non-performing loans (NPLs) fell to 1.6 billion euros (1.60 billion dollars), or 5% of total credit, in September, from 2.2 billion the previous year. In 2017, its NPLs were 10.1 billion, or 28% of total credits.
“Most of the work is done. But we have to look at the European average, which is between 2.5% and 3% … in the short and medium term,” said Bourke.
Novo Banco’s net profit in the first nine months of the year almost tripled to 428 million euros, thanks to the improvement in commissions, capital market capital gains and the sharp decline in write-downs and charges.
“This is the seventh consecutive quarter of profitability. We can generate 80,100 basis points of capital per year from the underlying profitability, which means we are in control of our destiny,” said Bourke.
Although nine-month net interest income (NII), i.e. loan income minus financing costs, fell by 5.6% due to higher financing costs from issuing senior debt and other factors, the ‘RNI increased by 2.5% between July and September compared to the previous three months, benefiting from rate hikes by the European Central Bank.
The average rate of its net interest margin was 1.29%, but the impact of the upward revaluation of portfolios should be felt in the fourth quarter and Novo Banco should close the year “well above 1. , 5%, “the upper limit of his forecast range, he said.
($ 1 = 0.9998 euros)