Nuno Amado

Nuno Amado

Chairman of Millennium bcp

Finance / Portugal

“Portugal has come a long way since 2010 in terms of budget and deficit management”

Few Portuguese financial institutions managed to withstand the impact of the economic crisis as resolutely as Millennium bcp. The largest private bank in the country, with operations in Angola, Mozambique, Poland, Switzerland and Macao, Millennium bcp has been a fundamental pillar of the Portuguese economy since 1985. As Millennium bcp emerges from the crisis stronger than ever, Chairman Nuno Amado reflects on his hopes for the country’s economy and explains what was behind BCP’s recovery.

How did Millennium bcp survive the banking crisis?

Like every other bank, we were in a very difficult situation in the early years of the crisis. Our difference in relation to others, including Banco Espírito Santo, is that in 2012 we did not deny the problem. We asked for financial support from the state worth €3 billion, which was further supported by a capital increase from private shareholders, and we drew up a restructuring plan. At the time, for every €100 of deposited capital, we loaned out €168. Today, the average is €100 of deposits to €100 of credit. Second, we improved our cost-to-income ratio, which in 2014 was at 80%. The European average is between 60% and 70%. Today, we have a cost-to-income ratio between 45% and 50%, which is below the European average. We further reduced our debt and increased our capital ratio significantly. We managed to overcome the crisis by deploying discipline and identifying our fragilities early.

Do you believe that the current growth of the Portuguese economy is sustainable in the medium term?

The Portuguese economy will continue to grow strongly for a long time. For the next few years the estimated average growth is around 2% in real terms and 3.5%-4% in nominal terms. It is important to realize that for this to be sustainable, we do not depend on just one or two driving sectors. Fortunately, the Portuguese economy has diversified considerably since 2010. There is a reasonable number of sectors both at the industrial level and at the service level that are fuelling growth. Beyond tourism and real estate, added-value services, for example in service centres, and research and development areas of multinational companies, have also witnessed very strong growth, and that brings sustainability to this national economic expansion.

How do you see the country’s budgetary situation?

We have come a long way since 2010 in terms of budget and deficit management. In 2010, we had a negative primary national budget balance of nearly €15 billion, around 8% of GDP. In 2017 we had a positive primary balance of €1.8 billion, so the change is clear. We have been in the green since 2015. The external trade balance, also in 2010, was measured at a deficit of €18 billion, or 10% of GDP. That was unsustainable. Last year we had a positive external trade balance of €1.3 billion, almost 0.7% of GDP, so there has been a structural change that has shifted the profile of the Portuguese national budget and has laid the grounds for the current economic growth. It is fundamental to continue with policies that help maintain and expand these positive indicators and find the balance between the role of the state as a promoter of growth and the space the private sector needs in order to develop competitively. So far, the policies in place have brought positive outcomes.

How do you evaluate the foreign investment business environment in the Portuguese market?

If we look at value-added companies in Portugal, there are already a number of them with very strong partnerships with European companies. There is a very interesting agreement in Braga, with Bosch, where the company is implementing productive capacity, but also creating additional research capacity through proximity protocols with universities. There are already several others that are similar. These are partnerships of tens of millions of euros between domestic companies, foreign companies and research centres, which are closely linked with the creation of value-added employment. Siemens is doing the same in Lisbon in the service and research areas. So the business environment is quite favourable. If we take into account the high level of education of the local population, the attractive fiscal regime, the low cost of labour and the overall favourable living conditions, I can see many more companies coming to Portugal in the coming years.