By Sergio Goncalves
LISBON (Reuters) -Portugal’s fourth-largest bank, Novo Banco, on Thursday posted a 4.4% drop in nine-month net profit as an increase in interest margins and commissions was countered by higher provisions.
Novo Banco, which is considering an initial public offering (IPO), said consolidated net profit fell to 610.4 million euros ($662.16 million).
It said that excluding a one-off provision of 30 million euros for the bank’s innovation and simplification process, net income would have increased by 0.3% from the same period a year earlier.
Total impairments and provisions were 32% higher at 107.7 million euros.
Net interest income (NII) – a measure of earnings on loans minus deposit costs – rose 6.6% to 886.3 million euros, despite a downward trend in European Central Bank interest rates.
The bank, 75% owned by U.S. private equity firm Lone Star, said net customer credit had risen 2.3% year to date to 27.6 billion euros and it achieved an overall loan market share of 10.1% in August, putting it in a “strong position”.
Fees and commissions increased 10.7% from a year earlier to 240.4 million euros.
Commercial cost-to-income efficiency remained flat at 32.5%.
CEO Mark Bourke said the bank showed a “robust commercial performance and consistent capital accretion” while continuing to grow the business and improve efficiency.
“Every part of this machine is working well, the delivery has continued and we believe it can be continued,” he told Reuters.
The bank is “overcapitalised” with a core Tier-1 fully loaded capital ratio of 20.7%, more than double the minimum requirement of 9.3% because it has been banned from making dividend payments since Lone Star bought its stake in 2017 until December 2025.
The CEO is “optimistic” an agreement between shareholders to lift the ban could be reached “in the very near future”, allowing it to be ready for a potential IPO in early 2025 although he noted that the window of opportunity for listings tends to be in the second and third quarters.
($1 = 0.9218 euros)
(Reporting by Sergio Goncalves; Editing by Kirsten Donovan)
