By Sergio Goncalves
LISBON (Reuters) -Novo Banco, Portugal’s fourth-largest lender, reported a record net profit of 744.6 million euros ($804 million) on Thursday, ahead of a planned initial public offering (IPO), and said it would begin distributing 60% of earnings in dividends.
Net profit was up 0.2% last year, attributable in part to an increase in interest margins and commissions, which offset higher provisions, the lender said.
It expects to have “more than 3.3 billion euros of available capital for distribution over the next 3 years”.
The bank was banned by authorities from making dividend payouts from 2017 until the end of 2025, but, in December, the three shareholders came to an agreement to lift that ban, paving the way for the IPO.
Novo Banco’s core Tier-1 (CET1) capital ratio stood at 20.8% at the end of 2024, more than double the central bank’s minimum requirement, but the medium-term target is now between 13% and 13.5%, it said.
It will propose a dividend of 224.6 million euros, or 60% of earnings it booked in the second half of 2024, at a shareholders’ meeting on March 21.
Additional measures such as special dividends and share buybacks may be adopted in future, it said, subject to approvals.
Net interest income rose 3.2% year-on-year to 1.18 billion euros in 2024, despite the downward trend in European Central Bank interest rates. Net loans grew 3.6% to 27.9 billion euros, while non-performing loans fell 23.7% to 864 million euros.
Fees and commissions increased 9.1% to 323 million euros. However, total impairments and provisions were 8.4% higher at 188.4 million euros.
Novo Banco was carved out of the collapsed Portuguese bank BES in 2014. Since 2017, it is 75%-owned by U.S. private equity firm Lone Star, with the remaining stake held jointly by the Portuguese banking resolution fund and the state.
($1 = 0.9261 euros)
(Reporting by Sergio Goncalves; Editing by Jan Harvey and Rachna Uppal)
