Portuguese Banks: Strong Performance in 9M 2023 Supports Outlook for 2024 Amid Rising Risks

Summary highlights from the commentary include:

-- Results of the largest Portuguese banks remained strong in Q3 2023 and continued to benefit from higher net interest income and resilient asset quality. For 9M 2023, the total net income increased to EUR 3,267 million, up by 71% compared to the same period in 2022. On a quarterly basis, net income increased to EUR 1,322 million in Q3 2023, up from EUR 626 million in Q3 2022.
-- In 9M 2023, NII was up by around 78% YoY as loans re-priced faster than deposits.
-- Asset quality remained largely resilient for the time being. Downside risks have been largely mitigated by a still benign economic environment in Portugal.

"For 2024, we expect revenue to remain solid despite some margin pressure due to rising deposit remuneration as well as sluggish loan growth. Asset quality should also remain resilient although a modest deterioration is expected on the back of high interest rates and economic slowdown” said Nicola De Caro, Senior Vice President from DBRS Morningstar Global Financial Institutions team.