Caixa Geral de Depósitos (CGD) recorded a year-on-year decrease of 41% in net income for the first half, reaching 249 million euros in the consolidated.
The State bank, led by Paulo Macedo, constituted impairment of credit and provisions for bank guarantees of 156 million euros due to the impact of Covid-19 on the economy, which essentially explains the drop in the net result, which are of a provisional nature .
The net result includes an extraordinary result of 51 million euros resulting from actuarial gains in liabilities with post-employment benefits. Without this extraordinary gain, the recurring net income amounted to 198 million, which represents a year-on-year drop of 30%.
The result of exploration core in domestic activity - which includes net interest income and commission income and removes structural costs - amounted to 265 million euros, which translates a 3,8% drop compared to the first six months of last year.
The State bank explains that the financial margin was pressured by the evolution of the stock credit and low interest rates. In domestic activity, net interest income amounted to 310 million euros, that is, a year-on-year decrease of 10,9%.
Income from bank fees, which include bank fees and fees with funds and insurance, amounted to 244 million euros, which represents a year-on-year increase of 1%. Explaining this result is the 19,1% rise in revenue from commissions on funds and insurance, which offset the 1,4% drop in revenue from banking commissions.
The public bank achieved a 7% reduction in structural costs, which fell from June 2019 to June 2020, from 472 million to 412 million. Administrative costs fell 13%, personnel costs contracted 5% and depreciation and amortization decreased by 1%.
The efficiency ratio, cost-to-income, stood at 44% for domestic activity. Paulo Macedo, CEO of CGD, said that "it is in line with the objective of the strategic plan, and that it is a difficult objective". But he warned: “it is to be expected that they will not improve because of the drop in profits. An average 20% drop in earnings for European banks is expected ”.
Turnover grew by 3,9% compared to the first half of last year, amounting to 118.272 million euros in Portugal.
Customer resources went from around 73 billion euros to more than 77 billion euros. And the loan portfolio rose from 40.900 million euros to 41.247 million euros, driven by the corporate segment, whose credit grant rose 3,2% to 14.145 million euros. The transformation ratio stood at 68%.
The total NPL ratio fell from 7,3% in June 2019 to 4,4% in June 2020. Looking only at NPL over 90 days, the ratio dropped from 4,7% to 2,6%. José de Brito, CGD's CFO, explained that the decrease in the ratio was due to credit recovery, cure and small sales, and during the period there was no write-offs.
The NPL coverage ratio increased from 105,5% to 124,2%. The bank has approximately 300 million euros in NPL that are not covered by impairments. The ratio of net NPL to impairments is 0,6%.
NPL increased from 2,7 billion euros in December 2019 to 2,6 billion euros in June 2020. Since 2016, the State bank has reduced NPL by eight billion euros.
CGD has 517 million euros in real estate on the balance sheet, ie a 7,8% decrease compared to December 2019.
O return on equity (ROE), which is a profitability ratio, stood at 6,7%, which compares with 8% in 2019 and the objective set in the strategic plan set at 9%.
With regard to capital, the CET1 ratio reached 16,6%, “which is quite robust in view of the capital needs”, said Paulo Macedo, and is at a level higher than the objective set in the strategic plan, which is at 14 %.
The total capita ratio reached 19,1%.
(updated with more information)