LISBON: Portugal’s largest listed bank, Millennium bcp, said on Friday it obtained “clearly positive” results in the latest stress test by the European Central Bank, even as it posted a first-half loss after impairments for bad loans to clean up its books.
BCP, whose shares have lost over 60 percent of their value so far this year due, in a large part, to concerns about its capital needs, said in a statement that its common equity Tier 1 phased-in ratio was 7.2 percent under the adverse scenario, up from 2.99 percent in a stress test carried out in 2014.
That was also above the minimum 5.5 percent that was required in 2014 and kept as a reference in the latest test. BCP said it had a net loss of 197 million euros in the first half, after a year-ago profit, due mainly to the booking of additional one-off impairment charges of 211 million euros to increase loan coverage.
Its net interest income rose over 5 percent to 601 million euros on the back of positive performance in Portugal and abroad, the bank said. The core income rose 10 percent, leading to a 4 percentage point improvement in the cost to core income ratio, which hit 52.5 percent.
BCP also said it ended June with a CET1 ratio of 12.3 percent under phased-in criteria, and a fully-loaded ratio of 9.6 percent, which was unchanged from a year earlier. The adverse scenario in the test involved an economic recession, aggravated by deflation, unemployment, increase in public debt yields and massive real estate devaluation.
The European Banking Authority on Friday published the results of stress tests carried out on 51 European banks. Although Portuguese lenders were not tested by EBA, the ECB in addition tested another 56 banks in the euro zone, including Portuguese, without making the results public.
These results will be fed into the next supervisory review and evaluation process aimed at guaranteeing adequate capital levels to match an institution’s risk profile. It was up to the tested banks to comment on the results.
Portugal is still reeling from two bank rescues by the state in as many years that pushed the country’s 2015 and 2014 budget deficits above the targets promised to Brussels and hit the credibility of the country and its banking system in the eyes of bond and stock investors. The government is still negotiating with Brussels a recapitalisation plan for the country’s largest lender, state-owned Caixa Geral de Depositos, which some analysts have said could require up to 5 billion euros due to massive bad loans.
