DBRS warns outlook worsening for Portuguese banks in 2021

The DBRS agency has predicted a more pronounced deterioration in the quality of Portuguese banking assets in 2021, given the easing of lease moratoriums, loans with State guarantees and other public support related to the pandemic. It warns that in addition to the foreseeable increase in non-performing loans related to this flexibility in support, credit risk has increased significantly since the initial assessment of loans and the deterioration of the economy makes it much more difficult for banks to reduce levels of credit.

It reports that in the first half of 2020, Portuguese banks liked BCP, CGD, Novo Banco, and Santander Totta reported an aggregate net loss of €66 million, which represented a significant decline compared to the aggregate net profit of €600 million in the first half of 2019. According to the agency, in the first half of this year, loans covered by default, public and private, represented on average 22 of the total credit exposure of banks in Portugal.