LISBON (Reuters) - Portugal’s largest private bank, Millennium bcp (BCP.LS), reported on Tuesday a 55.3% drop in first-half net profit to 76 million euros (69 million pounds), after costly provisions to offset the economic impact of the coronavirus outbreak.
Portugal is entering its worst recession in a century due to the pandemic, with the country’s central bank forecasting the economy will contract 9.5% this year, much worse than the government’s own estimate of a 6.5% drop.
“Results were heavily influenced by this entire coronavirus situation with a significant reinforcement of impairments in the first half, already reflecting the unfavourable evolution of the economy due to the pandemic,” the bank’s chief executive Miguel Maya told a news conference.
The bank’s provisions and impairments increased 44.5% to around 351 million euros in the first six months of 2020 compared to the same period last year, it said in a statement.
Millennium bcp said it has already approved around 123,000 moratoriums on bank loans to support families and businesses hit by the pandemic.
In June, Portugal’s government extended its suspension of loan repayments by another six months until March to avoid an expected jump in bad debt as a result of the crisis.
Although the increase in provisions and impairments is hitting its profitability, the bank said its net interest income increased 2.7% to around 759 million euros in the first half of 2020.
Millennium also operates in Poland, Angola and Mozambique.
Poland’s Bank Millennium, which is half owned by Millennium bcp, announced last week its first-half profit fell 79% to 16.2 million euros.
Millennium bcp’s largest shareholder is Hong Kong-based investment holding company Fosun, followed by Angolan state oil company Sonangol.
Reporting by Sergio Goncalves and Maria Goncalves, Editing by Catarina Demony, Kevin Liffey and Emelia Sithole-Matarise