Banks stepped up the monitoring of mortgage borrowers throughout 2025, increasing the number of cases opened to identify situations of potential default.

Banks stepped up the monitoring of mortgage borrowers throughout 2025, increasing the number of cases opened to identify situations of potential default. According to the latest Credit Markets Monitoring Report published by the Bank of Portugal, 801,780 cases were opened under the Action Plan for Default Risk (PARI), equivalent to an average of around 67,000 cases per month, covering loan agreements with a combined outstanding debt of close to €20 billion. Compared with 2024, the number of cases increased by around 9%, a trend the regulator attributes to enhanced early identification of customers at risk of financial difficulties, as well as borrowers who alerted their banks to problems in meeting their mortgage repayments.

Despite the increase in preventive measures, the Bank of Portugal found that more than 60% of the cases were ultimately closed after no risk of default was identified. Of the remaining cases, only 0.1% resulted in an agreement to renegotiate the terms of the credit contract, while around 230,000 cases ended without any agreement between the financial institution and the customer.

By contrast, the number of cases opened due to actual default fell again in 2025. The monthly average declined from 8,165 cases in 2024 to 7,846 last year. The Bank of Portugal also highlights that, in most instances, arrears are resolved through the payment of overdue amounts, noting that “the regularisation of default situations occurs predominantly through the payment of overdue amounts, highlighting the decisive role of the customer’s behaviour in resolving them.”

Original Story: Executive Digest | Author: Pedro Zagacho Gonçalves
Edition and translation: Prime Yield

In an interview with Jornal Económico, Hipoges General Manager Sofia Costa said the Southern European NPL servicing market has entered a new stage, with significantly lower volumes of non-performing loan (NPL) portfolios available than in the years following the financial crisis.

According to Costa, while banks continue to dispose of distressed assets, transactions are now smaller, more frequent and increasingly diversified, replacing the large-scale portfolio sales that previously characterised the market.

To adapt to this changing environment, Hipoges is broadening its business beyond traditional NPL servicing. The company is expanding into complementary areas such as real estate asset management, property development, valuation, legal services, mortgage brokerage and alternative credit, with the aim of managing the entire lifecycle of distressed assets.

Costa also highlighted the growing role of private credit funds in financing real estate projects and stressed that investment in technology and artificial intelligence is key to improving operational efficiency and supporting the company’s long-term growth strategy.

Original story: Jornal Económico | Data: Maria Teixeira Alves
Edition and translation: Prime Yield

Mortgage credit arrears continued to decline in Portugal in 2025, while consumer credit recorded a slight deterioration, according to the Bank of Portugal’s 2025 Credit Markets Monitoring Report.

In the mortgage market, the default ratio fell further, both in terms of the number of contracts and the outstanding amount. By the end of December 2025, the arrears ratio stood at around 0.1% for owner-occupied housing loans and 0.3% for mortgage credit overall, confirming the continued improvement in the quality of banks’ loan portfolios.

By contrast, consumer credit recorded a modest increase in defaults. As a share of the outstanding amount, the default ratio rose from 1.1% to 1.2%, while, in terms of the number of contracts, it increased from 4.5% to 4.7%.

The figures come in a year marked by a strong recovery in mortgage lending. The total amount of new housing loans rose by 34.9% to €23.4 billion, driven by falling Euribor rates, rising house prices and the impact of the State Guarantee scheme for first-time buyers aged up to 35. The number of new mortgage contracts increased by 11.5% to 133,602, while the average loan amount climbed by 21.1% to €175,141.

At the end of 2025, financial institutions held around 1.33 million mortgage contracts on their balance sheets, representing an outstanding balance of €111.7 billion, up 11.6% from the previous year.

The State Guarantee scheme played a significant role in new lending, accounting for 18.8% of new owner-occupied housing loan contracts and 21.3% of the total amount granted.

Consumer lending also continued to expand during the year. The total amount of new consumer credit increased by 11% compared with 2024, while the average monthly number of contracts rose by 4%. Personal loans and car finance were the main drivers of growth, increasing by 12.7% and 12.2%, respectively, whereas revolving credit posted more modest growth.

Despite the increase in consumer lending, the average Annual Percentage Rate of Charge (APRC) fell to 12.6% at the end of 2025, reversing the upward trend recorded in previous years.

The Bank of Portugal also notes that early repayments and mortgage renegotiations continued to decline. Early repayments fell by 16.2% to 153,092 transactions, following the expiry at the end of 2025 of the temporary suspension of early repayment fees. Mortgage renegotiations dropped by 27%, totalling 45,539 operations.

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

Five months after the new rules for credit managers came into force, the non-performing loan (NPL) market is finally showing signs of life, with the first portfolio of the year being ‘officially put on the market’ by 321 Crédito.

Since the new rules for credit managers came into force in December 2025, only five entities have so far obtained authorisation from the Bank of Portugal to operate. This is why the NPL market has virtually ground to a halt during this period and why the first portfolios of the year are only now beginning to be launched.

“Everyone is sorting out the paperwork so that [non-performing loan] processes can resume,” a market source told ECO. This information was corroborated to the newspaper by another source: “nothing new, just the issue of servicers being approved by the Bank of Portugal”.

Finsolutia, one of the major market operators with over €10 billion under management, was the most recent NPL manager to be authorised by the regulator. Previously, four other entities had already received the “green light” to carry out credit management activities in Portugal: Servedebt, Duo Capital, Soligest and the German firm Global Loan Agency Services.

It should be noted that the new regime for the assignment and management of bank loans came into force on 10 December, following the transposition of a European directive, bringing clearer rules for the sector and greater protection for debtors. In addition to mandatory registration, which subjects credit managers to strict criteria regarding suitability, experience and financial capacity, the new rules have banned practices involving harassment or coercion of customers.

Although the market has virtually stagnated, the regime came into force at a relatively quiet time for the banking sector, which is seeing NPL at historic lows, and also for bank customers, given economic growth and a robust labour market.

Only now is the market beginning to receive the first deals of the year: 321 Crédito has just launched ‘Project Boavista 3’, an unsecured loan portfolio worth €28 million, with the deal being organised by Alantra. A market source indicated that the transaction is scheduled to close in September, so no difficulties are anticipated regarding the registration of servicers. More portfolios from major banks are expected in the coming months.

The national system’s NPL ratio fell from a peak of 17.5% in 2015 to just over 2% at the end of last year, according to the latest data from the banking supervisor.

Source: ECO | Author: Alberto Teixeira
Edition and translation: Prime Yield
Image: by wsdamiao from Pixabay

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

A study by Intrum also shows that unexpected expenses, stagnant incomes and greater reliance on credit cards are putting pressure on household budgets, with the percentage of people paying their bills on time falling compared with 2024.

Half of Portuguese consumers cited the rising cost of living as the main reason for falling into debt, according to a study by Intrum, which also highlighted the use of credit cards over the past six months to pay bills or other expenses.

In a statement, the organisation stressed that the “increase in the cost of living continues to be the main factor behind the financial difficulties of Portuguese households”. The study found that 50% of consumers in Portugal “who face difficulties in paying their debts point to rising prices of essential goods, such as food and energy, as the main reason for this situation”.

According to the Intrum study, which operates in the credit management services sector in Europe, “43% of Portuguese people fall into debt due to unexpected expenses, such as family emergencies or medical costs”, while 34% point to the stagnation of their “wages or income, as they have not kept pace with the rising cost of living”.

Even so, 77% of consumers in Portugal say they are “able to pay all their bills on time, a figure slightly above the European average”. However, this result “shows a significant deterioration compared with 2024, when 85% of consumers were able to do so”, signalling “increasing financial pressure on household budgets”.

On the other hand, a regional analysis in the study shows that although the rising cost of living is a cross-cutting factor, “the specific reasons for financial difficulties vary between regions of the country”.

In the Autonomous Regions of Madeira and the Azores, 71% of consumers indicate “the rising cost of living as the main reason for difficulties in paying debts”. In Alentejo, meanwhile, “82% of consumers facing financial difficulties point to unexpected expenses as one of the main reasons for indebtedness, highlighting greater exposure to unforeseen financial events”.

The Lisbon Metropolitan Area is where consumers most frequently complain that “their income has not kept pace with the rising cost of living (56%), leading them into debt”.

The Intrum study, the ECPR — European Consumer Payment Report, also identifies differences between generations regarding the reasons for indebtedness.

“Among Generation X, 74% point to the cost of living as the main reason for difficulties in paying debts, making it the age group most affected by this factor. Half of this generation (50%) also mention the impact of incomes that have not kept pace with rising prices.” Among Millennials, however, 43% cite unexpected expenses.

“Generation Z shows greater vulnerability to unforeseen financial events: 59% point to unexpected costs as the main reason for difficulties in paying debts, reflecting a smaller financial cushion to deal with unexpected expenses,” the statement reads.

When asked about the reasons for not paying bills on time, “40% of Portuguese consumers surveyed say they do not have enough money available at the time the payment is due”.

According to the study, “46% of consumers in Portugal say they have used a credit card in the past six months to pay bills or other expenses”, Intrum also noted, while 19% of consumers said they had borrowed money.

The study was conducted by FT Longitude in August 2025, based on a survey of 20,000 consumers in 20 European countries. In Portugal, the sample consisted of 1,000 consumers.

Original Story: Expresso
Edition and translation: Prime Yield

Alantra advised BBVA Portugal on the sale of a portfolio of non-performing loans (NPLs) and properties received as collateral. The value of the portfolio was not disclosed.

The portfolio consisted of two distinct segments: a segment of secured NPLs, predominantly backed by high-end residential properties, and the seller’s entire exposure to properties received in lieu of payment.

Alantra said in a statement that it ‘played a key role in designing and executing a competitive sale process, ensuring strong investor engagement and aligning bidder expectations.’

This mandate also represents BBVA’s first portfolio sale in Portugal and reflects the trust placed in Alantra by long-standing clients, as the firm continues to support the group in various regions.

Joel Grau, partner at Alantra, believes that “this transaction clearly demonstrates our end-to-end execution capabilities in NPLs and secured repossessed properties. We are proud to have supported BBVA Portugal in achieving this strategic milestone and look forward to continuing our collaboration in different markets.”

This transaction reinforces Alantra’s recent track record of advising financial institutions, including the sale of Hipoges to Finsolutia, with the support of Pollen Street Capital; the transfer of a €450 million portfolio of non-performing SME assets from Alpha Bank to Waterwheel Capital Management; the securitisation and transfer of a €300 million NPE portfolio from Piraeus Bank to an affiliate of Waterwheel Capital Management; and the sale of performing credit exposures from Banco Santander Totta.

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