DBRS warns of low profitability and increase in bad debt at Banco Montepio – Banca & Finanças


DBRS maintained the “rating” of Banco Montepio at “B”, with a negative outlook, warning that the low profitability of the bank led by Pedro Leitão, as well as the increase in bad debts, represent risks for the rating of the financial institution.

“The confirmation of the rating takes into account the measures taken by the bank under the leadership of the new CEO to strengthen the financial institution’s balance sheet, as well as restore profitability in the medium term”, says the rating agency in a note released this Monday, July, 5th.

Pedro Leitão, CEO of Banco Montepio, initiated a three-year restructuring plan. A process that involves reducing the number of employees – it should cover between 600 and 900 people – and closing the branches of the financial institution. In addition to this reduction, “the bank is implementing measures aimed at strengthening capital ratios and reducing bad debt and exposure to non-strategic assets”.

However, says DBRS, the “rating and negative outlook continue to reflect the bank’s weak profitability, vulnerable capital buffers and the still high bad debt stock”.

Furthermore, “the impact of covid-19 on the economy represents an additional risk for the bank’s balance sheet and restructuring process.”

DBRS considers that “non-performing loans should increase at the end of the moratoriums”, which mostly ended in September. At the end of the first quarter, Banco Montepio had close to 24% of the loan portfolio in default.


Source: Jornal de Negócios by www.jornaldenegocios.pt.

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