Portuguese Banks Q1 2025: Strong Profits Persist Despite Lower Net Interest Income

Morningstar DBRS released a commentary discussing the Q1 2025 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 healthy results once again in Q1 2025.
-- Profitability was supported by strong net interest income and significantly lower loan loss provisions.
-- The banks' asset quality remains sound, and nonperforming loans further declined.
-- Improved capital positions provide banks with a cushion to confront external challenges.

"Profitability for the largest Portuguese banks remained strong in the first quarter of 2025, though we anticipate that aggregate income growth for the largest banks will remain flat or gradually contract as net interest income reflects the downward path of interest rates," said Jason Graffam, Senior Vice President of Global Sovereign & Financial Institution Ratings. "The main Portuguese banks should nonetheless continue to benefit from structurally higher interest rates and the improved loan demand linked to the strong performance of the Portuguese economy."