Portuguese Banking Industry, May – The sector keeps protecting the NIM, namely trough higher interest rates on Corporate Loans

(reading time: 4 mins)

Summing up, the banking sector keeps protecting the NIM, basically the Sector increased interest rates on Corporate Loans, the average figure to new loans increased 14bpMoM to 3.92% in May and Corporate Loans stocks increased 6bpMoM to 3.90%; meanwhile interest rates on new Time-Deposits also increased but at a slower pace. Finally, Mortgage Loans volumes continue to increase, +10.4%YoY; above moving averages, Consumer Loans 8.2%YoY, below 3MMA and Corporate Loans at 4.3%YoY, also below 3MMA. Overdue Loans ratios remain at historical low levels.

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): 3.92% vs. Stock: 3.90% and compares with 12MMA (12 months moving average): 3.68%/3MMA: 3.74%;

• Mortgages (new Loans): 2.89% vs. Stock: 3.11% and compares with 12MMA: 2.86%/3MMA: 2.85%;

• Consumer Loans and Other Purposes (new Loans): 7.16% vs. Stock: 7.41% and compares with 12MMA: 7.07%/3MMA: 7.13%.

* Banking Interest rates:

• Corporates (new time Deposits, up to 1 year): 1.88% vs. Stock: 1.72% and compares with 12MMA 1.72%/3MMA 1.83%;
• Individuals (new time Deposits; up to 1 year): 1.48% vs. Stock: 1.08% and compares with 12MMA 1.39%/3MMA 1.45%.

* Net Interest Margin (new Loans/new deposits, proxy): +2.30% vs. Stock: 2.78%; and compares with 12MMA +2.31%/3MMA 2.26%.

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

• Total Loans: +7.95%YoY vs. 12MMA: +6.61%/3MMA: +7.95 (Corporates: +4.3%YoY; Mortgages: +10.4% vs. 12MMA: 9.07%/3MMA: +10.27% and Consumption and Other Purposes: +8.2%)  
• Total Deposits: +6.60%YoY vs. 12MMA 6.00% and 3MMA 6.16%;

• Loan to Deposit ratio: 0.8168 vs. 12MMA: 0.8105/3MMA: 0.8153;  

• Overdue Loans ratios:

Corporates: 1.95% vs. 12MMA 1.96%/3MMA 1.93%;

Mortgages: 0.17% vs. 12MMA 0.20% and 3MMA 0.18%;

Consumption and Other Purposes: 2.60% vs. 12MMA 2.48% and 3MMA: 2.54%.  

Our comments: the Banking sector keeps protecting the NIM, the proxies, slightly increased MoM, mainly due to higher interest rate on Corporate Loans, “New Corporate Loans” interest rates increased 14bpMoM to 3.92%, above moving averages, while Time Deposits interest rates increased at a slower pace. Meanwhile, Loans volumes keep growing, mainly Mortgages, +10.4%YoY above moving averages and Consumer Loans, +8.2%YoY, slightly below 3MMA; finally Corporate Loans growth rate slowed down, 4.3%oY; below 3MMA. Overdue Loans ratios remain at historical record low levels.       

Source: BoP, INE AS Independent Research