Portugal’s bank profits likely to fall in 2025 but sector will continue robust and profitable
Falling interest rates will reflect on Portugal’s banking sector resulting in lower profits in 2025 than have been the case over the past four years.
Nevertheless, profits will continue to be solid according to the US ratings agency Standard’s & Poor’s which forecasts a Return on Investment (ROE) of over 10% reports business outlet ECO Online.
In a report published this Tuesday, the rating agency said that net interest income and revenues will fall, but “banks will benefit from simplified operating structures and contained credit losses, which will contribute to lower but still profitable and solid results”.
S&P estimates that the ROE of Portugal’s banking sector had been close to 14% in 2024 but expects a fall of 12% this year, in both cases slightly below the average of European banks.
Santander Totta is likely to present the highest ROE at above 25%, followed by BCP (14%), Caixa Geral de Depósitos (13%) and BPI (12%) according to the ratings agency.
S&P also notes that Novobanco could become a large player in the Portuguese market in terms of profits should it be put on the market for sale and bought by a national competitor.