By Sergio Goncalves
LISBON, April 28 (Reuters) - Portugal's fourth-largest
bank, Novo Banco, reported on Friday a 4% rise in first-quarter
net profit, benefiting from higher interest rates and strict
cost controls, which allowed it to further boost its capital
ratios.
The unlisted Novo Banco, which was carved out of failed
lender BES in 2014 and has been 75%-owned by U.S. private equity
firm Lone Star since 2017, netted 148.4 million euros ($163.3
million) between January and March.
Its net interest income (NII) - earnings on loans minus
costs on deposits - jumped 84.5% year-on-year to 246.3 million
euros, it said.
As of March, the average rate of its NII rose to 2.34% from
1.31% a year ago, and "above 2023 guidance of 2.2%", it said.
Chief Executive Mark Bourke said in a statement the bank was
"delivering consistent growth, increasing profitability and
exceeding expectations".
"In hard numbers progress is evident from our rate of
capital accretion: 100 bps (basis points) in the quarter," he
said.
The fully loaded Common Equity Tier 1 solvency ratio
improved to 14.1% in March, from 13.1% at end-2022.
Novo Banco's commercial cost-to-income ratio dropped to
35.5% in the first quarter from 45% in the previous three months
and 51.2% a year ago.
Non-performing loans dropped to 1.29 billion euros, or 4.4%
of total loans, in March from 5.7% a year earlier. In 2017, when
Lone Star acquired control, the share of bad loans was 28%.
Portugal's Resolution Fund and the state have the remaining 25%
stake in the bank.
The cost of risk, which measures the cost of managing
potential losses, increased to 41 bps from 34 bps a year ago,
but was "consistent with the guidance", Novo Banco said.
($1 = 0.9087 euros)
(Reporting by Sergio Goncalves Editing by Andrei Khalip and
Mark Potter)
Messaging: sergio.goncalves.reuters.com@reuters.net))
