Sale of Non-Performing Loans in Portugal set to accelerate by 20% in 2018
Prime Yield launches the Spring Update of “Investing in NPLs in Portugal: The time is now!”
The transaction of Non-Performing Loans (NPLs) in Portugal is set to further accelerate this year, reaching a new record high, says the Portuguese Valuation & Advisory company Prime Yield in its latest research, “Investing in NPL in Portugal: The Time is Now! – Spring Update”. Company estimates point out to a €2 billion (bn) volume of NPLs transacted over 2017, forecasting in its Spring update of the research that this value will grow by at least 20%. The report analyses the Portuguese NPLs market and its deal’s potential, also comprising an outlook over the Economy and the real estate market.
“Significant steps have been taken into reducing NPLs in the Portuguese banking system over the last year, an effort that has been recognized by the European. Nevertheless, Portugal continues to be under a lot of pressure to tackle NPLs, as it remains among the European countries with the highest NPL ratios”, comments Nelson Rêgo, CEO of Prime Yield.
“So, given this pressure, the transactional pipeline of NPLs portfolios continues to be very strong and also several Banks have already announced their intention to reinforce the sale of this type of portfolios in 2018. These two facts, associated with the economic improvement, which opens very good prospects for credit recovery, will certainly further increase investor appetite towards NPLs portfolios, specially the property-backed credits. The main challenge continues to be the misfit between buyers and seller’s price expectations”, adds Nelson Rêgo.
According to Prime Yield’s research’ Spring update (with figures released by Portuguese central bank Banco de Portugal), the stock of NPLs in Portugal (as for June 2017) totals €42,2 billion, after declining 16.5% from the €50,5 billion recorded one year before. NPLs ratio in the country was down from 17.9% to 15.5% over the same period, although remaining as the third highest in European Union, being only surpassed by Greece and Ciprus, and continuing to be three times the 4.6% European average.
Prime Yield released this research’ Spring update during the most important NPL European conference – the “NPL Europe – Spring Conference 2018”, held in London on the 8th and 9th of March and organized by Smith Novak -, where the company participated in the discussion block focused in Portugal, represented by its CEO. At the time, Prime Yield also launched, first hand, a similar research for the Brazilian market named “NPL in Brazil: The next (emerging) hot market!”
As for Brazil, Prime Yield highlights that the pace of transaction of NPLs in the country is also expected to accelerate in 2018, this being one of the most promising emerging markets. Brazil’s current NPLs stock is estimated to sit at R$ 450-500 billion, with the NPLs ratio (as for December 2017, according with the national central bank Banco Central do Brasil) at around 3.2%. NPLs deals are forecasted to have doubled in 2017 (from the R$ 20-25 billion annual average to R$ 30-40 billion in 2017) and are expected to grow by at least 15% in 2018. The Banks’ intention to place NPLs portfolios in the market, the country’s economic recovery after two years of deep recession and the opportunity of attractive returns in an emerging but still immature market, are drawing investor’s increasing attention.
The two researches are part of Prime Yield’s new business line NPL&REO Services, for which the company has also created exclusive online platforms for both Portugal and Brazil, offering updated information on NPLs in these markets. Designed to support players (both buy and sell sides) that are active (or want to be active) in Portugal and Brazil, this new business provides consultancy, research and valuations services for NPL&REO purposes, using, in a fully-integrated approach, the innovative Prime AVM &Analytics, an advanced technological solution for property valuations, that allows to undertake valuations for both single assets or entire portfolios (Resi and CRE) in a fast, simple and reliable way.
Acess the report:
Investing in NPL in Portugal: The Time is Now! – Spring Update