Portugal's Millennium bcp 2020 profit drops 39% on COVID-19 provisions

LISBON (Reuters) - Portugal’s largest listed bank Millennium bcp on Thursday reported a 39.4% drop in its 2020 net profit to 183 million euros ($223.83 million), hit by higher impairments and provisions in the wake of the COVID-19 pandemic.

Loan provisions increased by 30.7% to around 509.9 million euros in 2020 from a year ago, while other impairments and provisions surged 118.9% to 331.4 million euros, the bank said in its statement.

Its net interest income, a measure of earnings on loans minus deposit costs, fell 1% to 1.53 billion euros compared with the previous year.

Chief Executive Miguel Maya said the bank was “greatly impacted by the pandemic in all geographies” but he pointed out its core net income - NII plus net fees minus operating costs - still grew 2.8% to 1.1 billion euros.

“2020 was an extremely complex year, full of ambiguities and uncertainties... but the bank demonstrated an enormous capacity for resilience,” Maya said at a press conference.

Portugal’s banks have suspended capital and interest repayments on 46 billion euros of corporate and household debt to avoid a jump in bad loans, according to latest Bank of Portugal data up to the end of September.

Maya said Millennium bcp has approved around 8.5 billion euros in moratoriums on bank loans to support families and businesses hit by the pandemic, but 93% of these show no signs of future default.

The bank reduced non-performing exposures by 900 million euros to 3.3 billion euros in 2020 compared to the previous year.

Millennium bcp, whose main shareholder is China’s Fosun group, said its fully implemented Tier 1 common equity (CET1) capital ratio stood at 12.2%, above the required 8.8%.

Millennium also operates in Poland, Angola and Mozambique.

Poland’s Bank Millennium, which is half owned by Millennium bcp, announced earlier this month its 2020 net profit fell 96% to 5.1 million euros, mainly due to provisions for legal risk related to its portfolio of foreign currency mortgage loans.

($1 = 0.8176 euro)

Reporting by Sergio Goncalves; Editing by Victoria Waldersee, Jane Merriman, Alexandra Hudson