The management of Portugal Post Office (CTT) today gave the go-ahead for a Post Office banking service.
The project has been talked about for ages with the Bank of Porugal giving its final approval in 2013, but only since privatisation has CTT management taken the final step in establishing a banking network across its branches.
"A more detailed and thorough market study to confirm some of the assumptions behind the creation of a Post Office Bank was conducted during 2014," announced CTT in a statement published on the day it announce its third quarter results.
CTT is headed by Francisco Lacerda who today said he recognised "clear market opportunity to launch a bank for a financially conservative population of middle to low income customers."
The business plan will achieve break even in three years, according to management estimates. The maximum investment will be €100 million over the first five years and CTT aims to distribute dividends from its banking service in year six.
CTT increased its earnings by 16.5% to €52.6 million in the first nine months of 2014, according to a statement issued today to the stock market regulator CMVM.
These results reflect an increase in earnings before interest, taxation and amortisation to €101.7 million, "mail services contributed 67%, financial services 28% and the parcels service 5%," according to the statement.
Profits from traditional mail services are down and follow an established trend due mainly to email replacing letters as a form of communication.
However, operating income was up to €527.9 million, reversing a 5 year decline, growing 2.1% over the same period last year. This, combined with slightly lower operational costs, has produced a profitable period with financial services growing 23.4%, and set to grow significantly higher when the bank is launched.
