Portuguese banks reported solid results in the 2025 fiscal year and enter 2026 with robust capital and risk buffers, despite a more uncertain macroeconomic and geopolitical environment, according to rating agency DBRS Morningstar.

“Portuguese banks delivered resilient 2025 results, supported by strong profitability, improved asset quality, and robust capital buffers, despite margin pressures. As they enter 2026, banks are well positioned to face a more uncertain macroeconomic and geopolitical backdrop, though risks to growth and credit quality remain,” DBRS noted.

Asset quality strengthened further, with lower non-performing loan ratios and high coverage levels, while capitalisation remained solid despite modest CET1 declines driven by risk-weighted asset inflation and capital distributions.

Profitability in 2025 was underpinned by significant provision releases, strong fee income, and growth in other revenues, which helped offset a general decline in net interest income.

“Portuguese banks start 2026 with solid profitability, strong asset quality, and robust capital reserves, positioning them well to absorb a more uncertain macro and geopolitical environment,” said María Jesús Parra, CFA, Vice President of European Financial Institutions Ratings. “While some margin pressure may persist, we expect banks to remain resilient, supported by solid fundamentals and disciplined risk management.”

Original Story: Jornal Económico | Author: Maria Teixeira Alves
Edition and translation: Prime Yield