Portuguese Banking Industry, February – Loans volumes continue to grow, namely Mortgages and Consumer Loans, +9.9%YoY, and 7.2%YoY

(reading time: 4 mins)

Summing up, February’s banking data maintained the positive trend, despite a small increase in individual new time-deposit average interest rates, +1bpMoM (the first increase since December/23), meanwhile Loans volumes, +6.9%YoY, o/w Mortgages, +9.9%YoY and “Consumption and Other Purposes” +7.2%YoY are performing in line with the recent past, while Corporate Loans, +2.7%YoY, the pace is improving.

The Bank of Portugal released yesterday, February’s second set of banking data, namely Interest rates on new Loans and Interest rates on new time Deposits.

We would highlight the following points:

* Banking Interest rates:
    • Corporates (new Loans): 3.74% vs. Stock: 3.83% and compares with 12MMA (12 months moving average): 3.74%/3MMA: 3.70%;
    • Mortgages (new Loans): 2.83% vs. Stock: 3.11% and compares with 12MMA: 2.91%/3MMA: 2.84%;
    • Consumer Loans and Other Purposes (new Loans): 7.23% vs. Stock: 7.32% and compares with 12MMA: 7.10%/3MMA: 7.05%.

* Banking Interest rates:
   • Corporates (new time Deposits, up to 1 year): 1.69% vs. Stock: 1.62% and compares with 12MMA 1.76%/3MMA 1.70%;
   • Individuals (new time Deposits; up to 1 year): 1.37% vs. Stock: 1.10% and compares with 12MMA 1.43%/3MMA 1.36%.
   • Net Interest Margin (new Loans/new deposits, proxy): +2.36% vs. Stock: 2.76%; and compares with 12MMA +2.32%/3MMA 2.32%.

Separately, the BoP released, by the end of last week, the first set of monthly banking data, namely Loans and Deposits volumes in February, we highlight the following:
   • Total Loans: +6.9%YoY vs. 12MMA: +5.60%/3MMA: +6.81 (Corporates: +2.7%YoY; Mortgages: +9.9% vs. 12MMA: 7.97% and 3MMA: +9.75%; Consumption and Other Purposes: +7.2%)
   • Total Deposits: 5.21%YoY vs. 12MMA 5.92% and 3MMA 5.26%;
   • Loan to Deposit ratio: 0.816 vs. 12MMA: 0.808/ 3MMA: 0.811;
   • Overdue Loans ratios:
       Corporates: 2.00% vs. 12MMA 1.96% and 3MMA 1.97%;
      Mortgages: 0.19% vs. 12MMA 0.22% and 3MMA 0.19%;
      Consumption and Other Purposes: 2.42% vs. 12MMA 2.47% and 3MMA: 2.39%.

Our comments: the banking sector in February, maintained the positive trend, even so, average interest rates on individual new time-Deposits, increased 1pb to 1.37%, the first increase since December 2023. Meanwhile, Loans growth remains slightly below 7%YoY, o/w “Mortgages”, 9.9% and “Consumer Loans and Other purposes”, 7.2% are stable, while Corporate Loans, +2.7% is improving. Deposits continue to grow close to 5%. Finally, overdue loans ratios remain at low levels, even so Corporate overdue loans ratio slightly increased.

All in all, the banking sector, in February maintained the positive trend, despite a small increase in time deposit average interest rates, +1bpMoM (the first increase since December/23). Meanwhile, loans volumes, +6.9%YoY, o/w Mortgages, +9.9%YoY and “Consumption and Other Purposes” +7.2%YoY are performing in line with the recent past, while Corporate Loans, +2.7%YoY, the pace is accelerating.

Source: BoP, INE AS Independent Research