Morningstar DBRS highlighted this Monday, 17th, the high profitability of Portuguese banks in the results until September this year, despite the pressure on financial margin.
In a published comment, the financial rating agency noted that the six largest banks in Portugal are “on track for another year of gains”, in part due to income unrelated to net interest income.
Until September, Caixa Geral de Depósitos (CGD), Millennium BCP, Montepio, Novo Banco, Santander Totta and BPI made a profit of 3,989 million euros, a value slightly below (-0.6%) the 4,014 million euros for the same period last year.
Morningstar DBRS points out that the combined results of these six banks are “even more impressive given the reduction in interest margins and financial margin [a diferença entre os juros pagos nos depósitos e os cobrados nos créditos]”.
For this amortization of the effect of the fall in the financial margin, of 7.4%, which went from 7,397 million euros until September 2024 to 6,849 million euros in the same period this year, the agency highlighted the continuous release of provisions for credits and the improvement in commission income.
Non-interest income rose 6.9%, as a result of an increase in commissions resulting from the growth in activity by customers.
“We expect sustained profitability, as lower interest rates reduce deposit financing costs and healthy economic activity supports demand for credit”, say the authors of the commentary.
The reduction in provisions was possible due to the improvement in asset quality and the health of the economy, which boosted portfolio growth.
Until September, the banks analyzed allocated 423 million euros in provisions, which represents decreases of 46.7% compared to the same period in 2024 and 73.9% compared to the same period in 2023.
With the improvement in non-performing loans ratios, Portuguese banks present this indicator in better health than neighboring countries in southern Europe.
At the same time, the authors highlighted the high level of equity ratios, which remained above the minimums established by regulators.
“Looking ahead, stable economic and employment growth should prevent a significant deterioration in asset quality,” the commentary authors add.
Morningstar DBRS also highlighted the results of CGD and BCP in the European Banking Authority (EBA) stress tests, in which they had a “strong performance”.