In 2024, due to the materialization of balance sheet structure risk, the bank utilized the General Risk Provision to cover the negative Result Before Provisions and Taxes (RAPI), resulting in a zero Result Before Taxes (RAI), according to the Bank of Portugal’s 2024 Board of Directors Report released today.
This zero value, combined with the estimated current tax and accrued deferred tax, resulted in a net profit of 1.5 million euros. The Bank of Portugal noted that the negative RAPI reflected the balance sheet structure risk, posting an interest margin of 573 million euros—94 million euros higher than the losses in 2023—and a net monetary income distribution result of 337 million euros—153 million euros above the losses in 2023.
Administrative expenses increased by 7.8% to 213 million euros. During a presentation at the Álvaro Pais building in Lisbon, the first event held at the premises which the Bank of Portugal will occupy until the completion of works at the former Feira Popular site, Vice-Governor Clara Raposo mentioned that the regulator’s provision cushion was adequate, and the central bank still has “sufficient cushion” for the upcoming years.
Governor Mário Centeno emphasized that monetary policy “continued to dominate the bank’s activities,” noting that last year the bank allocated 1.054 billion euros from its provisions. Following this allocation, the total amount of the general risk provision decreased to 1.716 billion euros. The Bank of Portugal’s report indicates that this provision acts akin to a reserve due to its permanent nature and is intended to cover potential balance sheet risks, from a medium to long-term perspective.
By the end of last year, the Bank of Portugal’s balance had risen to 191.177 billion euros, which is an increase of 6.330 billion euros from the end of 2023. According to the central bank, this increase principally reflected the impact of a 34% appreciation of gold and the increased adjustment to circulating notes, partially offset by the noted reduction in excess liquidity in the Eurosystem.
Looking forward to 2025, the Bank of Portugal forecasts a negative RAPI, yet “far from the magnitude” of the previous two years, according to Clara Raposo.
