NPL sales accelerate in Portugal, reversing two years of decline, according to Prime Yield’s latest research
In the latest edition of its Iberian study ‘Investing in NPL in Iberia’, Prime Yield concludes that the sale of non-performing loan (NPL) portfolios in Portugal will have increased by 2024, reversing a two-year decline in transactions.
The study’s main conclusions for Portugal show that:
- In 2024, in addition to the atypical €4.2 bn Cascais project transaction, other NPL portfolios worth €3.4 bn are expected to have been sold.
- If confirmed, this would represent a rebound in activity from the previous two years, when the domestic market lost momentum with annual transactions of less than €2.0 bn
- Banks continue to launch new sales processes, but one of the current drivers of activity is the secondary market.
- Portugal has €5.1 bn of NPL in the financial system and continues to reduce them. This represents 2.4% of total loans.
- Around 55.0% of NPLs are generated by the NFC segmet, amounting to € 2.8 bn, and 41% by households, amounting to € 2.1 bn. Mortgages account for about half of NPL in the household segment, or € 1.1 bn.
Francisco Virgolino, Managing Director of Prime Yield, explains: “Between 2019 and 2024, non-performing loans in the Portuguese financial system went from €21.3 bn to €5.1 bn. Obviously, the number of portfolios coming to the market from the banks over this period has been reduced, which has slowed down transactional activity. However, the market has also become more mature and different types of deals are emerging. In a European trend, business models and strategies are being rethought to adapt to smaller, changing markets and to gain efficiencies. In particular, there are more corporate deals between servicers and investors and an increase in secondary market transactions. Portugal is no exception to this. Banks continue to put portfolios on the market for sale, but the big boost in 2024 has come from secondary market transactions and servicer sale agreements, such as the sale of Algebra Capital and Do Value and their portfolios”.
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