Portugal's CGD first-half profit plunges 41% as coronavirus bites

LISBON, July 31 (Reuters) - Portugal’s largest bank, state-owned Caixa Geral de Depositos, on Friday reported a 41% drop in first-half net profit, hurt by credit impairment charges due to the severe economic recession arising from the coronavirus pandemic.

In the first six months of 2020, the bank posted a profit of 249 million euros, it said in a statement.

The National Institute of Statistics said earlier on Friday that Portugal’s gross domestic product shrank a record 14.1% in the second quarter of 2020 as lockdowns hit key sectors of the economy.

The bank said it had increased provisions and impairments by 156 million euros in the first half of the year.

“Net income was affected by the preventive reinforcement of impairments to deal with the expected effects of the pandemic,” it said.

Caixa Geral de Depositos said it had already granted 48,826 moratoriums on bank loans, amounting to around 7 billion euros or 17% of the total loan portfolio, to help businesses and families hit by the pandemic.

Last month Portugal’s government extended the suspension of loan repayments by six months until March to avoid an expected jump in bad debt.

The bank’s net interest income - the difference between interest earned from lending and how much the bank pays for deposits - fell 8.6% to 257 million euros.

Client deposits increased 7.6% to 70.6 billion euros. (Reporting by Sergio Goncalves, Editing by Kirsten Donovan)