Novo Banco’s executive president, António Ramalho, said the business is “not focusing on immediate profit” but still the first quarter results showed a profit of over €60 million.
A year earlier in the same quarter, the bank lost €130.9 million and later in 2017 drew €792 million from the Resolution Fund under the terms of the sale agreement with US vulture fund, Lone Star.
One of the reasons for the €60.9 million profit was the sale of insurance company GNB Vida, which had a positive impact on results.
This is the first quarter in which Novo Banco has been owned by Lone Star after the American fund bought 75% of the bank in October 2017.
Despite the good result, António Ramalho called for calm, "At Novo Banco we are focused on sustainable recovery and not on immediate profits"
The profit was largely due to an accounting change: "GNB Vida's classification as a discontinued activity (€51.2 million) which is offset by a negative change in reserves of equal value."
The bank's net interest income (the difference between interest charged on loans and interest paid on deposits) slipped 18.1% to €97.4 million. Negative interest and the need to offer more in deposits to avoid losing customers are justifications.
Costs have been driven 9.8% to €135.2 million, "reflecting the restructuring measures associated with a continued downsizing of the branch network," as well as the decrease in personnel.
Personnel costs decreased by 8.2% and the bank closed the quarter with 473 branches, down 63 from a year earlier.
