The Banque Centrale Populaire presented its accounts for the first quarter, and at first glance, what do we see? It can be seen that the bank is experiencing low demand for credit. During the press conference for the first quarter results, the CEO of Millennium Bank BCP explained that this monetary policy cycle is restricted and therefore there is a slowdown in demand, which was expected.

But Miguel Maia believes that the ECB will cut interest rates sooner than expected, so this “cycle will reverse.”

The Director General said that the Central People's Bank is “fully prepared” to grow the bank's credit portfolio when this session arrives, pointing to the rate of converting deposits into loans, which reached 68.3% on March 31, 2024.

At the same time, the Director General of the Banque Centrale Populaire is counting on the public guarantee to make housing loans viable, which should target young people up to the age of 35 to increase the demand for housing loans. The initiative is part of a new housing strategy, called Construir Portugal, but details are not yet known.

In the first quarter, the Banque Centrale Populaire revealed a total credit portfolio of 56,822 EUR million, in consolidated terms, 0.8% lower than last year. With credit to businesses falling by 7.2% (to 21,776 million).

In Portugal, the decline in activity was more pronounced. Credit fell 3.8% to 38,409 million euros, 1.53 billion less. The “performing” credit portfolio decreased by 3.5% to 37.3 billion euros, 1.34 billion euros less.

Real estate credit declined slightly compared to last year while consumer credit showed positive developments.

The decline in housing credit and banks' focus on consumer credit to compensate increasingly looks like the sector's picture, partly shaped by the Bank of Portugal's macroprudential credit restrictions. They are the limits on LTV – loan-to-value ratio (loan value compared to property value), DSTI – debt service-to-income (effort ratio) and maturity (loan term).

The housing issue “is a serious issue” and “there is a housing shortage in Portugal,” defended the bank's CEO. It is a problem on the supply side (houses) and on the demand side, highlighted the banker, who praised the fact that the problem is that the majority of young people do not have 10% of their own money to be able to do so. To make a down payment on a home, this affects the residential credit market. Therefore, Miguel Maya considers the action taken by the state to help young people obtain housing loans as a positive measure.

The general guarantee to enable housing loans for young people will be subject to restrictions on the income of beneficiaries and real estate prices.

“It is very positive for society,” the banker said of the general guarantee to make housing credit viable, which should target young people up to 35 years of age and will be subject to a cap on beneficiaries' income and price. of acquired property.

“Quo vadis” BCP?

Where is BCP headed? Profits increased in the first quarter thanks to lower impairment charges and provisions resulting from improved credit portfolio quality. The reduction in impairment charges and provisions contributed to the bank's consolidated profits. The same thing happened in Portugal. The evolution of the credit portfolio's risk profile has allowed provisions to be reduced ruin to credit (liquid in refunds), he is called in activity in Portugal.

NPE ratio (Non-performance exposure), known as distressed, was improved to 3.4%, Decreased from 3.8% the previous year (in Portugal it decreased from 3.2% to 2.8%).

The bank highlighted the reduction I continued in active no productive, Face the He walks in 2023, reduced 223 Millions in Prophet, who 60 Millions in Properties Receive for every Recovery (to 158 million) and From 43 Millions in funds in Restructuring to $373 million, a reduction of 10.3%.

The bank is preparing a new strategic plan to present in the third quarter, but at the moment, in the first quarter of the year, banking revenues decreased by 13.1%, despite the (still) positive development of financial margin revenues (+4.8%). And a slight increase in commission income (+0.5%).

Run result essence The value of the Banque Centrale Populaire group reached 584.6 million euros in the first quarter of 2024, or 584.6 million euros. -1.2% over what was achieved in the same quarter of the previous year, and this is due to the increase in costs (+14.7%) greater than the increase in revenues. In Portugal, costs also rose by 5.5% to 154.6 million.

The efficiency ratio (cost to income), although at a good level, deteriorated from 31% to 35% on a consolidated basis, and in Portugal from 21% to 29%. However, this is better than what the current strategic plan expected.

Profitability is at a high level, with ROE reaching 15%, but it is on a downward trend (just see that at the same time last year it was 17%).

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The bank will distribute profits because “it is the best way to protect the bank.” [de OPAs] It is to reward shareholders.

(updated)