The total bad credit in Portuguese banks has fallen by around 24 billion euros in the last three years, contributing to dubious loans in the EU continue to decline, according to data released by the European Commission today.
The fourth report on progress in reducing lending in the European Union (EU), now published by the EU executive, reveals that the ratio of non-performing loans "continues its downward trend, towards pre-crisis levels" and financial services, having been reduced by more than half since 2014, with Portugal following this trend in the last three years, with a reduction of around 50% since 2016.
The Commission points out that it "has worked constructively with the Member States to find solutions to specific cases in banking, within the framework of banking and state aid rules, with the clear objective of limiting costs for taxpayers, while ensuring that deposits are always protected ".
"This has led to transactions that have removed some € 133 billion of bad credit from bank balance sheets over the last three years, including about € 103 billion in Italy, approximately € 24 billion in Portugal, and close to six billion euros in Cyprus, "points out Brussels.
According to figures published in April by the Bank of Portugal – more updated than those published by the European Commission, which date back to the third quarter of last year – Portuguese banks reduced bad loans accumulated by 50% between June 2016 and December 2018 , with the loan loss ratio down to 9.4% at the end of last year.
According to the publication 'Recent Developments in the Banking System', last December the gross value of bad loans was still 25,850 million euros, which corresponds to a bad credit ratio (bad credit against total credit) of 9.4% in December.
The bad debt ratio in banks operating in Portugal has been declining in recent years, compared to the 17.9% maximum reached in June 2016 (17.5% in 2015, 17.2% in 2016 and 13.3% in 2017).
Portuguese banks are, however, still far from the average bad credit in the euro zone, which was about half of the total in the middle of 2018.
The European Commission notes that "despite clear improvements, high bad credit ratios remain a challenge in some Member States and deserve constant attention" and therefore urges the 28 and the European Parliament to "speed up the work around of outstanding legislative proposals to complement EU action to tackle this problem. "