The coming year is expected to be difficult. This was perhaps the most important unifying element in the Money Conference, organized by DN, Dinheiro Vivo and TSF. Fernando Medina, finance minister, warned that the interest rate hikes by the European Central Bank will also take place in 2023, reminding that the banking sector will also have to “go through the process of rising interest rates”. But there are national specifics that give us an edge, such as full employment and the resilience of a bank that is much stronger than in the recent past. The ruler emphasized this role and the bankers took up the challenge to lend the economy a hand.
Even earlier, the macro scenario had been outlined by Hélder Rosalino, director of the Bank of Portugal, who warned of the expected “economy slowdown” with countries such as Germany and Italy potentially falling into recession. To which Medina added: “We will have high inflation for a longer period of time,” although the analyzes point to values ”lower than the current”.
The situation is not easy and both Medina and Rosalino chose to paint a realistic picture of what we are dealing with, with the director of the Bank of Portugal recalling that the general rise in interest rates translates into more unfavorable financing conditions . “This is an unfavorable context and we are still dealing with the impact of the pandemic,” he stressed. In addition, “confidence could deteriorate further if supply-side conditions continue to deteriorate”. However, there is hope, they say.
Banking as a guarantee of economic stability
Although the problems we are experiencing are imposed on us by an “external context” in which we cannot intervene, as Medina emphasized – “We will face challenges for which we have no responsibility”, the war will continue to mark the agenda and there is ” total uncertainty about when and under what conditions the conflict will end” – there are reflection and policy options the government can and will take to mitigate what is possible. “Normalizing energy prices” and fueling the European movement towards energy autonomy are examples.
And the bank has an important role to play, the minister acknowledges. “Banking has been one of the fundamental factors for the stability of Portugal,” emphasizes João Pedro Oliveira e Costa, CEO of BPI, an idea that was confirmed by the other bankers. In fact, one of the examples given was the support from banks during the Covid-19, demonstrating the resilience of the sector and helping families and the economy to resist. Oliveira e Costa even reminded that banking is a development factor these days: just look at the indicators, for example in terms of capital, to notice the solidity of Portuguese banking.
Miguel Belo de Carvalho, administrator of Santander, made this interest a reality and recalled the moratoria. “They lasted the right amount of time and didn’t hurt the customer base,” he said, underscoring the bank’s commitment to boosting the economy. A support that, in the opinion of Luís Ribeiro, director of Novo Banco, will continue. According to the manager, banks will be part of the solution to the crisis we are going through. “It’s a long road that hasn’t started yet [a resposta aos desafios da economia]🇧🇷 Since 2008, we’ve had challenges after challenges,” noted Novo Banco’s CCO, adding that “all banks will be part of the solution” and NB will be at the forefront, “with its strict operations [focada] in Portugal”.
In the same vein, Pedro Leitão, CEO of Montepio, assured that the bank is willing to support customers in difficulties with rising borrowing costs. Commenting on the government mechanism mandating credit renegotiation, he guaranteed: “We will not stop supporting more or less one customer because we have the diploma or not. I am sure there is no bank that will stop supporting a customer for there is some clarification.”
‘Banks don’t want to keep the houses’
Asked about the obligation to renegotiate credit, Miguel Belo de Carvalho judged it to be an “important measure”, which is “the measure in force since 2012”, and which “banks have applied for over the past ten years, at a permanent basis, if warranted”.
“Banks don’t want to keep anyone’s houses, otherwise they will run out of credit,” simplifies BCP CEO Miguel Maya, but warns of the injustice of placing the responsibility of institutions that support the economy and housing on the banks that support the economy and housing, they give credit and not. The banker also warned that the banks’ results are still below the cost of capital. “We are finally able to move towards a minimum sustainable level”, but “it is not possible to have a robust banking system without a robust economy” and vice versa.
On the day he presented Caixa’s results, Paulo Macedo also defended the soundness of the accounts. “Banking is healthier,” he admitted, dismissing the idea of unexpected gains and a possible new tax on the sector. “Since 2011, we have already paid extraordinary profits and since 2020 we have the extra. Only CGD paid an extra 37 million euros. […] it’s normal for them to start to get more significant results,” he recalls. Finally, he assured that the bank’s health will help it cope with the shocks that will come next year.
Source: DN
