Novobanco generated net profits of €638.5 million through September, up 49.1% compared to the same period a year earlier, supported by growth in net interest income that more than doubled compared to the same period last year.
Novobanco generated net profits of €638.5 million as of September, up 49.1% compared to the same period of the previous year, supported by growth in net interest income that more than doubled compared to the same period last year (+105%).
In the third quarter, net income amounted to 265.3 million euros.
The bank’s CEO, Mark Burke, said in the statement, “In the third quarter, the bank continues to deliver strong results.” “In addition to being profitable, it has the potential to generate capital. We have a strong, highly liquid balance sheet and continue to focus on our customers and meeting their financial needs.”
The gross financial margin reached 831.2 million euros in the first nine months of the year, after it was 307.2 million euros in the third quarter, an increase of 10.6% compared to the same quarter last year. This is “the reflection of the improvement in the average interest rate on assets exceeding the increase in the cost of financing.”
Customer service commissions amounted to 217.1 million euros, an increase of 0.7% compared to the same period last year.
But trading results fell by 42.3% to 39.3 million euros.
Thus, banking income increased by 29.5% to 1,102.1 million euros from the beginning of the year to date.
As a result of inflation, operating costs rose 8.1% to 339.6 million euros in the nine months of the year, of which staff costs rose 8.2% to 183.8 million, an increase of 14 million compared to the first nine months of 2022. Not only costs with increased salaries, but also costs with Increased number of employees (+119 compared to the end of the year), reaching 4,209 as of September 30.
“The positive development of commercial activity, in an environment of rising interest rates, had an impact on the growth of commercial banking products by 68.6%. The bank notes that this performance offset the impact of inflation and investment in improving the bank’s operations, which resulted in an increase in operating costs by 8.1%.
The cost to income ratio improved from 50.6% to 33.6%. Business cost to income improved by 32.4%, reflecting revenue performance.
On the balance sheet, total customer credit reached €25.7 billion, a value that represents a growth of 0.2% compared to December 2022, of which 54% is granted to companies, 40% to housing credit, and 6% to consumer and other credit. . “The asset in the first nine months amounted to EUR 2.6 billion, supported by the positive development in customer acquisition, after being partially mitigated by the increase in consumptions.”
The average balance of customer deposits reached 28.8 billion euros, with a pay rate of 0.66%, compared to 0.17% last year. Deposits decreased by 1.1% compared to December and a decrease of 1.7% compared to September 2022.
Customer resources in the nine months compared to December decreased by 0.4% to 34,543 million euros.
The non-performing loans (NPL) ratio decreased from 5.4% in December to 4.7% as of September 30, with impairment coverage of 83.7%.
Novobanko Group recorded an increase in impairment charges and provisions in the first nine months of 2023 in the amount of EUR 81.7 million, almost all for customer credit and securities, as these two totals showed a slight decrease compared to the same period last year (-2.1 million).
The cost of credit risk improved by 36 basis points, including credit and corporate bond impairment, “in line with 2023 guidance.”
As of September 30, 2023, the company’s liquidity coverage ratio (LCR) was 136%, “reflecting the repayment of TLTRO III, and a net stable financing ratio of 118%, both above regulatory requirements.”
The fully loaded CET 1 capital ratio increased by approximately 340 basis points, compared to December 2022, to 16.5%, while the global solvency ratio increased by approximately 390 basis points to 19.3% (+140 basis points and +150 basis points versus June 23, respectively).
Novobanco says that “none of the amounts not paid by the Resolution Fund under the emergency capitalization mechanism were taken into account when calculating regulatory capital.” But the bank “takes into account the unpaid amounts for the years 2020 and 2021 due under the emergency capitalization mechanism, after activating the legal and contractual mechanisms available to it to ensure their receipt.”
“With regard to the amount requested from the Resolution Fund for the fiscal year 2020, there remain two differences, between Novobanco and the Resolution Fund, regarding the provision for discontinued operations in Spain and the estimation of participation units, which are settled in an ongoing arbitration process, through which the application is disputed. before
Novobanko, at the end of 2020, for the dynamic option of the transitional regime for IFRS 9,” reads the statement.
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