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Profits at Portugal’s largest private banks tumble 40%

By CHRIS GRAEME [email protected]

Adverse business conditions, greater credit risk provision and constant difficulties in obtaining financing have eroded profits at Portugal’s banks by around 40%.

The four main banks, Millennium bcp, Banco Espírito Santos, BPI and Santander Totta, brought in €452.8 million in earnings in the first half of the year, but last year’s figures were almost double at €770 million for the same period.

It means that Portugal’s financial institutions will have to increase their solvency ratios to 9% this year and 10% in 2012.

On Monday BES released its figures, which in terms of liquid results revealed a fall of 44.7% to €156 million. In the same period last year the bank headed by Ricardo Salgado turned profits of €282.2 million.

Despite the fall, BES succeeded in obtaining the best results in the entire banking sector in Portugal.

The largest fall in profits was suffered by Millennium bcp, down 45% from €163.2 million to €88.4 million.

Santander Totta also saw its results plummet by 40% from €225.9 million to €129.3 million.

BPI saw its profits tumble below the €100 million mark to €79.1 million, 20.4% down compared with the €99.5 million registered for the first half of last year.

With the exception of Santander Totta, (part of the Spanish group Santander), which only has activities in Portugal, the profits achieved abroad by the three other Portuguese banks were higher.

BES foreign operations contributed €83.5 million whereas national profits stood at €72.5 million.

The difference between earnings at home and earnings abroad were even more glaring in the case of BCP, which saw national profits fall to €23.6 million against the €64.4 million achieved in Poland, Angola and Mozambique.

BPI’s foreign profits total €47.4 million against €31.8 million at home, while the profitability of the three banks’ own capital reflect an enormous disparity nationally, standing at between 3% and 5% compared with around 10% to 30% abroad.

In a press conference on Monday, BES’s Ricardo Salgado said that BES would continue to pursue a number of initiatives to ensure that the bank fulfilled the measures for capital ratios fixed by the Bank of Portugal and the ‘troika’.

Portugal’s banks have to end this year with a Tier 1 Core Ratio of 9% in terms of capital, and 10% in 2012.