Banking and financial system group report

The quarterly report of the banking and financial system group for Q4 2013 is now out. We continue to assess the evolution of four main areas concerning the Portuguese banking system (and its major banks) in the context of the MoU implementation: liquidity, deleveraging, solvency and profitability. We detected a few interesting patterns in each of these areas: total deposits (clients’ deposits and Eurosystem resources acquired by the banks) are still declining; the loan-to-deposit aggregate weighted average indicator fell by 0.6% ending at 117.9% (just below the 120% goal set by the troika), even though, individually, most of the major banks are not there yet; non-performing loans (mostly at the household level) show signs of stabilizing but still at very high levels and, finally, disappointing but somewhat expected negative figures for banks’ profits as the recession pushed up non-performing loans while cutting the amount of banking business opportunities short.

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