CGD makes record €1.4Bn in 9 months but admits such profits won’t continue

Portugal’s State-owned bank Caixa Geral de Depósitos enjoyed a record result of €1.4Bn for the first three-quarters of the year.

The net profit was up 2% on the same period last year, although the bank’s CEO, Paulo Macedo said that the “next few years” won’t show such high profits.

The bank’s results were driven by a growth in the volume of business which offset the fall in interest rates from the European Central Bank.

While the bank’s activity in Portugal was responsible for €1.2Bn of its consolidated net result, international operations contributed €106 million, particularly BNU Macau, BCI Mozambique and BCG Angola.

Presenting the bank’s results earlier in the month, Paulo Macedo said that the results achieved were compatible with the distribution of €1Bn in anticipated dividends, but the final decision would depend on the dividends policy, capital conditions, and the general financial situation. The dividends are paid to the State.

“Caixa could, in theory, distribute an even greater amount given its level of capital, but this would have to be weighed against market conditions and regulatory demands,” he said.

In the first nine months of the year, CGD’s financial margin, which reflects the difference between what the bank pays for deposits and what it receives for loans, fell to €1916 million, €206 million less than a year ago, reflecting the context of falling interest rates. “[Of all the banks operating in Portugal] we are neither the one with the highest margin, nor the one with the lowest,” noted Paulo Macedo.

Bank charges reached €439 million, practically in line with September last year, in a context of price stability for the third consecutive year. “We do not increase commissions as a rule of thumb but prefer to grow with the business and not at the expense of customers,” said the president of the public bank.

The domestic market business turnover increased by €10Bn like-for-like, while the group’s consolidated activity reached €172Bn – up 6%.

The bank’s domestic credit portfolio reached €51Bn, up 7% like-for-like, both down to an increase in loans to companies and families.

To September, the bank loaned out €4.1Bn in new mortgages, up 49% like-for-like, helping 27,000 families to buy a house.

“Mortgage lending is one of the areas where we have grown the most, and for us it is very important that we have supported thousands of young people in accessing their own home,” said the president of CGD.

Paulo Macedo explained that the current context of lower rates and increased disposable income “has allowed more families to finance themselves and buy a home”.

“Today, a family that pays €1000 or €1200 euros in rent can, with the current mixed rates, buy a house for about €300,000 something unthinkable two years ago,” he explained.

Macedo also revealed that the bank has asked the government for an injection of €250 million of funding for mortgages that are backed by public guarantees because of the strong demand for the government-backed programme aimed at young people aged 35 or under.

The bank has already used 58% of its share of these funds and awaits the next tranche so that it can continue to help young people and families.

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