Bank of Portugal posts operational losses in 2023

Portugal’s central bank, the Bank of Portugal, posted an operational loss of €1.0Bn in 2023 and is likely to suffer loses this year and will only break-even by 2025.

The losses at the bank led by Portugal’s former minister of Finances, Mário Centeno, will be offset by accumulated provisions made over the past 10 years, so the only impact it will have on public accounts is that dividends will not be paid out to the public purse.
The central bank will present its annual accounts on May 16, although under the law it must send its results to the Ministry of Finances by March 31 each year.
In May 2023, Mário Centeno advised that the Bank of Portugal would suffer a phase of negative results because of higher interest rates instigated by the European Central Bank and the fall in the profitability of Portuguese debt.
However, Mário Centeno will use General Risk Provisions to absorb the losses leaving the bank with a 0 net result.
The Bank of Portugal had posted record profits since 2016 on the back of low interest rates and income on public debt applications.
Between 2016 and 2022 the central bank handed dividends over to the State worth €3Bn in addition to a significant amount of IRC tax revenues while total provisions hit almost €4Bn.
It is these provisions that have enabled the bank to offset its negative operational losses and thereby avoid a deterioration in the bank’s accounts.