Macro View

(reading time: 4 mins)

Summing up, demand on Consumer Loans and Mortgages remains strong, 5.6%YoY and 6.7%; respectively; above moving averages, meanwhile Corporate Loans demand is also improving, +1.1%YoY/+0.3%QoQ. So, Loans grew +1.3%QoQ (blended average data, April and May) while NIM, blended proxy, went slightly up on a quarterly basis, which bodes positively to NII over the 2Q25 and above our forecasts.

The Bank of Portugal has just released May’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): +3.77% vs. Stock: 4.29% and compares with 12MMA (12 months moving average): +4.54% and 3MMA: +3.98%;

• Mortgages (new Loans): +2.96% vs. Stock: 3.48% and compares with 12MMA: +3.33% and 3MMA: 3.05%;

• Consumer Loans and Other Purposes (new Loans): +7.47% vs. Stock: 7.56% and compares with 12MMA: 7.51% and 3MMA: 7.46%.

* Banking Interest rates:

• Corporates (new time Deposits, up to 1 year): 1.84% vs. Stock: 1.92% and compares with 12MMA 2.61% and 3MMA of 2.00%;
• Individuals (new time Deposits; up to 1 year): 1.50% vs. Stock: 1.37% and compares with 12MMA 2.17% and 3MMA 1.62%.

* Net Interest Margin (new Loans/new deposits, proxy): +2.32% vs. Stock: 2.85%; and compares with 12MMA +2.09% and 3MMA 2.31%.

Separately, the BoP released, by the end of last week, the first set of banking data, namely Loans and Deposits volumes in May, we highlight the following:

• Total Loans: +4.5%YoY vs. 12MMA: +2.04% and 3MMA: +3.90% (Corporates: +1.1%YoY; Mortgages: +6.7% vs. 12MMA: 3.32% and 3MMA: +6.06%; Consumption and Other Purposes: +5.6%)  
• Total Deposits: +6.04%YoY vs. 12MMA +6.43% and 3MMA 6.28%;

• Loan to Deposit ratio: 0.8069 vs. 12MMA: 0.8061 and 3MMA: 0.8054;  

• Overdue Loans ratios:

Corporates: 1.96% vs. 12MMA 1.99% and 3MMA 1.93%;

Mortgages: 0.24% vs. 12MMA 0.26% and 3MMA 0.25%;

Consumption and Other Purposes: 2.63% vs. 12MMA 2.63% and 3MMA: 2.59%.  

Our comments: the banking sector, over the last 6/7 months has been able to keep the blended NIM’s proxy, almost flat, as the strong reduction on Loans interest rates, our proxy points to -65bp over the last 7 months was followed by roughly -63bp on blended deposits remuneration, so NIM has been almost unchanged.  Nevertheless, we notice that, while remuneration on new deposits is now almost in line with the stock; interest rates on new Loans is still roughly 40bp/50bp below the stock, so the downwards pressure on NIM should resume.

Finally, regarding the current quarter Net Interest Income (NII), the banking industry should present flat to positive figures on a quarterly basis, as NIM is flat and Loans volumes grew on average +1.3%QoQ (April and May data).        

Source: BoP, INE AS Independent Research