Portugal’s Bad Loans Declining but Still ‘Very High’

Non-performing loans held by Portuguese banks are declining at a substantial rate as the economy expands but remain “very high” by European standards, Moody’s said on Wednesday. The rating agency said the ratio of NPLs to gross lending fell to 15.2 per cent at the end of 2017, down from 19.5 per cent a year earlier, the Financial Times reported. The ratio had peaked at 20.1 per cent in 2016 in the wake of the eurozone debt crisis, which forced Portugal to seek an international bailout. The decline was driven by strong economic growth, increased loan recoveries, write-offs and the sale of NPL portfolios, Moody’s said. “We expect this trend to continue in 2018 as the economic recovery continues and regulatory pressure induces banks to further accelerate efforts to reduce their NPL ratios,” said Pepa Mori, a senior credit officer at Moody’s. Read more. (Subscription required.)