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Novo Banco FY'17 net loss widens 77% YOY to €1.40B


According to Market Intelligence, February 2023


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Novo Banco FY'17 net loss widens 77% YOY to €1.40B

Novo Banco SA, which was acquired by U.S. private equity firm Lone Star in 2017, reported a net loss attributable to shareholders of €1.40 billion for full year 2017, compared to the year-ago loss of €788.3 million.

The Portuguese lender booked €2.06 billion of net impairments and provisions in 2017, up from €1.37 billion in 2016. Credit provisions increased year over year to €1.23 billion from €672.6 million, while securities provisions declined to €134.8 million from €315.9 million.

Net interest income dropped year over year to €394.6 million from €514.5 million, while fees and commissions rose to €324.8 million from €277.1 million.

Operating costs amounted to €549.2 million, down from €590.9 million a year earlier. The bank said the decline reflected its ongoing implementation of restructuring measures that included a reduction in the number of branches and employees.

Novo Banco noted that it received €791.7 million in compensation from Portugal's resolution fund, which has a 25% stake in the bank, to allow it to remain well-capitalized. The compensation is part of a contingent capital agreement that was set up in line with the sale process of the bank. Under the deal, the lender may be compensated up to a maximum of €3.89 billion for losses that may be recognized in some of its problematic assets in case its capital ratios decrease below a predefined threshold.

Novo Banco's BIS III phased-in common equity Tier 1 ratio stood at 12.8% at the end of 2017, compared to 12.0% as of Dec. 31, 2016. On a fully implemented basis, the CET1 ratio was 12.0% at 2017-end, up from 9.8% at the end of 2016.