Finance
Portugal's Novo Banco quarterly profit falls on lower interest margin
Published by Global Banking & Finance Review®
Posted on May 6, 2025
2 min readLast updated: January 24, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on May 6, 2025
2 min readLast updated: January 24, 2026
Novo Banco's Q1 profit fell 1.9% due to lower interest margins. Fees increased, and impairments dropped, showcasing resilience.
By Sergio Goncalves
LISBON (Reuters) -Portugal's fourth-largest lender Novo Banco, which is preparing for an initial public offering, said on Tuesday its first-quarter net profit fell 1.9% to 177.2 million euros ($200.5 million) due to growing pressure on its interest margin.
The unlisted bank said net interest income, or gains on loans minus deposit costs, fell 6.7% year-on-year to 279 million euros in the first quarter, negatively impacted by the downward trend in European Central Bank interest rates.
CEO Mark Bourke said the results confirmed the "strength and resilience" of the bank's business model.
"We are on track to meet our full-year guidance, underpinned by disciplined execution, solid commercial dynamics, and continued focus on efficiency," he said in a statement.
Fees and commissions increased 12.3% to 84.3 million euros in the first quarter.
Total impairments and provisions were 55.8% lower at 12.3 million euros, while the cost of risk, which measures the cost of managing potential losses, decreased to 17 basis points from 35 bps a year ago.
Novo Banco was created in 2014 from the collapsed BES after a state bailout, with U.S. private equity fund Lone Star buying a 75% stake in 2017. The remaining 25% stake is held by the resolution fund, financed by Portugal's banks, and the Portuguese state.
The bank was banned from making dividend payouts from 2017 until December 2025, but in December its shareholders agreed to lift that ban.
In March, the bank distributed 225 million euros in dividends to its three shareholders for the first time and on Monday it announced a capital reduction that will allow it to give them an additional 1.1 billion euros.
It expects to have more than 3.3 billion euros of available capital for distribution over the next three years. It has a fully loaded Common Equity Tier 1 solvency ratio of 16%, six percentage points above the central bank's minimum requirement.
($1 = 0.8839 euros)
(Reporting by Sergio Goncalves; Editing by Christian Schmollinger and Lincoln Feast.)
The article discusses Novo Banco's Q1 profit decline due to lower interest margins.
Fees and commissions increased by 12.3% in the first quarter.
Novo Banco plans to distribute over 3.3 billion euros in capital over the next three years.
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