(Updates with details, quotes)
LISBON, June 1 (Reuters) - Portugal’s Novo Banco, purged of the legacy of the collapsed Banco Espirito Santo (BES), is focusing on boosting profits to increase shareholder value, its chief executive said.
The bank reported 70.1 million euros ($85.8 million) in quarterly profit and a 12% jump in net interest income on Monday after billions of euros in losses since its rescue in 2014.
“It will be one of several quarters of positive results. Now, our priority - what guides and inspires us - is to increase the value of Novo Banco’s profitability and generate capital (internally),” CEO Antonio Ramalho told Reuters on Tuesday.
Portugal’s fourth-largest bank, 75% owned by U.S. private equity fund Lone Star and 25% by a state-backed Resolution Fund, has received 3 billion euros in capital since 2017, fuelling political controversy.
After years of a tough restructuring process negotiated between Lisbon and the European Commission, the bank has cleaned its balance sheet of BES’s toxic assets, Ramalho said, as well as offloading real estate and non-core assets.
It has also sold 15 operations abroad, including its bank in Spain, leaving Ramalho “comfortable and confident” that the restructuring will be completed by the end of 2021.
“In this new phase it is crucial to increase the value of our shareholders’ stakes,” he said, adding he expected the bank to fulfil its profitability and efficiency goals for the year.
Building on investments in digitalisation, Ramalho said the bank hoped to bring its cost-to-income ratio, which stood at 49.3% in March when it was down from 54.7% a year ago, to 47% in December and 40% in 2023.
Bringing down the NPL ratio, which stood at 8% in March - down from 11.1% a year ago and over 33% in 2017 - to 5% by the end of the year, the average for Portuguese banks, would be the “icing on the cake”, the CEO said.
“This would put to an end any doubt about BES’ legacy.”
Ramalho dismissed speculation that Novo Banco could be caught up in an immediate wave of consolidation as “our banking system in Portugal is still at the stage of its reinvention”.
“We can be there in two years. Novo Banco will always be available to analyse all options. The bank is available to grow in Portugal, and that is an important point,” he said. ($1 = 0.8174 euros) (Reporting by Sergio Goncalves, Editing by Victoria Waldersee, Nathan Allen and Alexander Smith)