CGD warns that renegotiated loans are going to risk level

Many families may even be “catalogued” with danger as they are forced to renegotiate their own and permanent housing loans, under the new government diploma. If there was any doubt yesterday, the chairman of the executive committee of Caixa Geral de Depósitos (CGD), Paulo Macedo, was very clear: “By imposition of the EBA (European Banking Authority) the client goes to phase 2”, that is, to a level where a non-performing loan is considered risky when it is restructured. “The government’s project has no reference, but this is the EBA’s rule and neither governments nor national banks have the power to deviate from this rule,” the public bank’s CEO stressed at the end of the press conference. in which he reported the third quarter results.

The executive branch’s decree law forces banks to renegotiate loans when the effort rate exceeds 36%, either by raising the interest rate by five percentage points, or by raising the interest rate by three points compared to what was initially agreed. The amendment to the Default Risk Action Plan (PARI) tightens the risk loophole, as so far only when the effort rate reaches 50%, i.e. half of the taxpayer’s net income is earmarked to pay credits to housing or consumption , it becomes that financial institutions were obliged to restructure loans. When handing over the diploma, the State Secretary for Finance, João Nuno Mendes, asked, “Be careful not to lead to appointments that do not effectively correspond to payment difficulties, so as not to have a hasty view of what a limited universe is”. But rules are rules.

Nevertheless, Paulo Macedo believes that there is no cause for concern, as the average effort rate of the home loans provided by Caixa is 33%, i.e. 23% for contracts signed after 2017, according to the bank’s results relating to the first nine months of the year. The average repayment is 256 euros and 90% of the loans have a monthly repayment of less than 432 euros.

Still, aware of the negative impact of the constant increases in Euribor rates, caused by the deterioration of the European Central Bank’s key rates, on mortgages, the CEO of the public bank acknowledged that “there is a number of credits” . And he added: “We’re already doing it just like we did during the pandemic, when we restructured more than 3,000 loans.” Therefore, regardless of government diploma, “the bank would always contact its customers,” he guaranteed. In this sense, Paulo Macedo revealed that the bank has already contacted about 500 home loan customers to avoid defaults.

With a profit rising 61% to 692 million euros and net interest income rising 25% to 931 million euros, the bank will pay a record dividend of 286 million euros to the state shareholder in the third quarter of the year. Given the good results, the bank has also decided to freeze the costs of maintaining accounts, debit and credit cards in 2023. “Caixa will not increase commissions in 2023, which means in practice there will be a 10% cut, according to inflation,” he announced. However, he left the caveat: “If we stay out of the market, we’ll have to talk again”. It means that if the other banks increase the commissions, the bank has to follow. Between January and September, the bank earned EUR 460 million in commissions, an increase of 11% compared to the same period in 2021. Macedo explained that this increase is mainly due to the “payment of commissions from six international banks, insurance and investment funds.” .

As for the increase in the profitability of deposits, which are not yet benefiting from the increase in Euribor rates, unlike credit, the banker stated that the bank will “reimburse deposits as the market allows”. And he added: “What to expect is an increase in reward with some decalage”. In other words, the increase in the compensation of deposits will not be for the time being.

Salomé Pinto is a journalist for Dinheiro Vivo