Whichever percentages and performance indicators the company chooses to select in its latest report, Novo Banco remains a money pit with first quarter losses shocking an already jaded market.
The bank that was created in 2014 from the ruins of BES reported a €249 million loss for Jan to March 2016 which compares to a loss of €117.8 million in the same period for 2015. Despite an easy birth, the bank has yet to make a cent.
In a statement sent to the Portuguese Securities Market Commission (CMVM), Novo Banco came up with many reasons why it has failed to make a profit despite the bank of Portugal sweeping away over €2 billion in liabilities to make Novo Banco look a better sale prospect.
Commercial banking income was up, to €210.9 million, "with the financial results showing a growth of 24.9% over the quarterly average of 2015, confirming the growing contribution to improve revenue," stated the report, not explaining why its directors have chosen quarterly average figures, rather than comparing the same quarter year on year.
Operating costs were €155.2 million, a “strong decrease of 17.8% over the quarterly average of 2015, reflecting the cost reduction efforts undertaken by the group through, inter alia, simplifying and improving processes and optimising operational and commercial structure."
“Provisions amounted to €348.2 million include a provision for costs of the ongoing restructuring process, amounting to €109.6 million,” read the report. In fact the restructuring process is in disarray with the agreed staff reduction target of 1,000 still to be met.
Customer deposits were up, despite low levels of savings among the general public and the bank complained of a "national situation characterised by still sluggish economic activity" which clearly has not helped any of Portugal banks.
Whether there is any chance of selling Novo Banco this year in the light if this doubling of Q1 losses remains to be seen but the Prime Minister has pledged that the bank will be sold “at no loss to the taxpayer.” How he intends to do this also remains to be seen as at the moment, the chances of getting €4.9 billion for Novo Banco are slim indeed.
The bank's leader, Stock da Cunha is going back to Lloyds Bank in London this summer and there has been no real news on the sales process, apart from further criticism of the €30,000 a month being paid to the former Secretary of State for Transport and Communications, Sérgio Monteiro.
