Press Release

DBRS Morningstar Confirms Caixa Geral’s BBB Long-Term Issuer Rating; Trend Remains Negative

Banking Organizations
May 28, 2021

DBRS Ratings GmbH (DBRS Morningstar) confirmed the ratings of Caixa Geral de Depósitos (CGD or the Bank), including the Long-Term Issuer Rating of BBB and the Short-Term Issuer Rating of R-2 (high). The Bank’s Deposit ratings were confirmed at BBB (high)/R-1 (low), one notch above the Intrinsic Assessment (IA), reflecting the legal framework in place in Portugal which has full depositor preference in bank insolvency and resolution proceedings. The trend on the ratings remains Negative. The IA of CGD is maintained at BBB and the Support Assessment at SA3. See a full list of ratings at the end of this press release.


The confirmation of the ratings reflects the Bank’s leading market position in Portugal, the solid funding and capital position, the progress made in reducing non-performing loans (NPLs) and other legacy assets, as well as the streamlining of its operating structure. The Negative Trend reflects the downside risks for the Bank’s already modest profitability levels stemming from the economic impact of COVID-19. The current environment is putting pressure on the Bank’s revenues and could result in higher NPL inflows and impairment charges. DBRS Morningstar notes that although CGD’s credit quality has remained largely resilient since the onset of the pandemic, helped by the support measures put in place by the government, NPLs are expected to rise as these measures are withdrawn, although a rebound in economic activity may mitigate this.


Given the Negative trend, a rating upgrade is unlikely at this time. However, the trend on the ratings would revert to Stable if the Bank were able to contain the pressure on its revenues as well as demonstrate limited asset quality deterioration in the current environment.

A downgrade would be driven by a significant deterioration of the Bank’s risk profile or a further deterioration in profitability.


CGD is the largest banking group in Portugal where it is the market leader in several products and services in commercial and retail banking. Owned by the Portuguese State, the Bank has embarked on a restructuring program agreed with the European Commission (EC) following the State-backed recapitalisation process. As part of this plan, the Bank has reduced its stock of non-performing assets, streamlined its operating structure by reducing headcount and branches, and downsized its operations outside Portugal. Reflecting this progress, in April 2021, the European Commission concluded its monitoring process of the Bank’s 2017-2020 strategic plan which had been agreed with the Portuguese State as part of the 2017 recapitalisation.

CGD’s profitability has improved somewhat in recent years mainly due to lower impairment charges and good cost control. However, revenue generation remains modest and it has come under further pressure during the COVID-19 pandemic. Net interest income fell by 11.5% YoY in Q1 2021, due to the low interest rate environment, fierce market competition and growing stock of customer deposits, whilst fee income suffered from lower transaction volumes during the lockdown. Provisioning costs also increased in 2020 and Q1 2021 as a result of the downward revision of the macroeconomic scenario for COVID-19 and preventive measures in anticipation of future asset quality deterioration. For Q1 2021, CGD reported a RoE of 4.2%, down from 4.5% in the same period of 2020.

CGD’s credit quality has remained largely resilient since the onset of the pandemic, as loan moratoria and other government-support measures have largely shielded the Bank from asset-quality deterioration, especially in sectors such as tourism & hospitality, food services, transportation, leisure and entertainment which have been the most affected by the pandemic. At end-Q1 2021 the gross NPL stock stood at EUR 2.3 billion, down from EUR 2.5 billion at end-Q1 2020, while the NPL ratio fell to 3.6% from 4.5% at end-Q1 2020.

At end-April 2021, CGD had EUR 5.7 billion of loans under moratoria which represent a sizeable 13% of the gross loan book. This portion is higher than many of its international peers. Since the peak of around EUR 7 billion at end-July 2020, this stock has steadily declined as customers resumed their debt payments without any meaningful impact on the Bank’s asset quality. The bulk of the outstanding moratoria is set to expire by September 2021. With the removal of the support measures, including moratoria, we expect NPLs to rise through 2021 and 2022.

Portugal’s economic prospects have improved since April 2021 as the rollout of COVID-19 vaccine gained momentum. Restrictions on business and mobility have been largely lifted and the expected economic rebound in H2 2021 should provide some relief to the most affected sectors, including the tourism industry, which is a key contribution to the Portuguese economy.

The Bank maintains a solid funding and liquidity position, underpinned by its leading franchise position in customer deposits in Portugal, and a solid liquidity position with a stock of ECB eligible assets of around EUR 18 billion. At end-Q1 2021, the net loan to deposit ratio was 66%, down from 71% in Q1 2020 amid a steep rise in deposit funds as lower consumption and higher business uncertainty pushed retail and corporate clients to hold their liquidity in deposit accounts.

CGD’s capital position remains solid. In Q1 2021, CGD reported its fully-loaded Common Equity Tier 1 (CET1) ratio at 18% and total capital ratio of 20.6%, providing a solid cushion over the regulatory minimum requirements and against a potential adverse environment.


A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at

The Grid Summary Grades for Caixa Geral de Depósitos are as follows: Franchise Strength – Good; Earnings – Moderate; Risk Profile – Moderate; Funding & Liquidity – Good; Capitalisation – Good/Moderate.

All figures are in EUR unless otherwise noted.

DBRS Morningstar notes that this Press Release was amended on 1st June, 2021 to incorporate the link to the sensitivity analysis.

The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (8 June 2020). Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (3 February 2021) .

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release:

The sources of information used for this rating include CGD Presentation and Press Release Q1 2021 results, CGD 2016-2020 Annual Reports, and S&P Global Market Intelligence. DBRS Morningstar considers the information available to it for the purposes of providing this rating to be of satisfactory quality.

DBRS Morningstar does not audit the information it receives in connection with the rating process, and it does not and cannot independently verify that information in every instance.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar's outlooks and ratings are under regular surveillance.

For further information on DBRS Morningstar historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: DBRS Morningstar understands further information on DBRS Morningstar historical default rates may be published by the Financial Conduct Authority (FCA) on its webpage:

The sensitivity analysis of the relevant key rating assumptions can be found at:

This rating is endorsed by DBRS Ratings Limited for use in the United Kingdom.

Lead Analyst: Nicola De Caro - Senior Vice President - Global FIG
Rating Committee Chair: Ross Abercromby – Managing Director - Global FIG
Initial Rating Date: December 23, 2011
Last Rating Date: May 28, 2020

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