Bank of Portugal Says Banks Have Enough Capital

LISBON--Portugal's banks have set aside enough money to cover bad debts and are holding enough capital to weather any deterioration of their loan portfolios, the country's central bank said Friday, summing up its review of their loan books.

Bank of Portugal said the group of eight lenders had a core Tier 1 capital ratio of 11.2% as of April 30, above the 10% minimum established by the bank.

The evaluation also found the lenders needed to fill a combined shortfall of 1.1 billion euros ($1.5 billion) in impairment charges as of April 30, which they did by the end of the second quarter.

"The results of this exercise confirm the resilience and robustness of the banks' own funds," the central bank said.

Last week, two of the country's main banks--Banco Espirito Santo SA (BES.LB) and Banco Comercial Portugues SA (BCP.LB)--reported losses for the first half of the year as bad-debt charges pile up.

BES said that credit at risk of not being repaid rose to 10.7% of total loans from 7.9% in the year-ago period. Corporate loans in particular are turning sour as companies continue to struggle with an austerity program imposed under a EUR78 billion international bailout.

Portugal is in a third year of recession and its unemployment rate has surpassed 17%.

-Write to Patricia Kowsmann at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires