Portuguese Banking Sector: A New Normal for Profitability?

Morningstar DBRS released a commentary discussing the F2024 results of the largest Portuguese banks: Caixa Geral de Depósitos, Banco Comercial Português, Novo Banco, S.A., Caixa Económica Montepio Geral, Banco BPI, and Banco Santander Totta.

-- Portuguese banks reported record results again in 2024.
-- Profitability was supported by strong net interest income and significantly lower loan loss provisions.
-- The banks' asset quality remains sound, evidenced by the persistent decline in nonperforming loans.
-- Improved capital positions provide banks with a cushion to confront external challenges.

"The Portuguese banking sector in 2024 had another strong year, and there is reason to believe the level shift in net income from a few years ago represents a new normal," said Jason Graffam, Senior Vice President of Global Sovereign & Financial Institution Ratings. "Increasing geopolitical risk and trade tensions could destabilize what has been a healthy operating environment in Portugal, although strong profits in recent years and internal capital generation allow for ample buffers to cushion against the macroeconomic uncertainty."