“Our forecast is that the results, like in the vast majority of the banking sector, will adjust in the coming quarters,” stated João Pedro Oliveira e Costa during the press conference presenting BPI’s first-quarter results in Lisbon.
BPI announced today a profit of 137 million euros between January and March, marking a 13% increase compared to the first three months of 2024. This rise was attributed to the accounting of dividends from Banco de Fomento Angola for 2024 (amounting to 46 million euros) in the first quarter. However, the net interest margin, which is a bank’s main revenue source—derived from the difference between interest charged on loans and interest paid on deposits—dropped by 9% to 223 million euros.
The CEO explained to journalists that the expectation is for the net interest margin to continue declining in the coming months, due to the reduction in market interest rates (notably Euribor), leading the bank to charge less on loans.
“We will continue to witness a gradual and consistent decrease in the net interest margin every quarter,” said Oliveira e Costa.
Oliveira e Costa noted that the decline in the net interest margin would be widespread across the sector and further suggested that competition among banks for customers would “encourage more of a decline.”
Back in November 2024, the rating agency DBRS estimated that in 2025, Portuguese banks would experience the greatest reduction in net interest margins among European banks, as interest rates decreased. These banks had previously benefited considerably from interest rate hikes.
Despite the reduction, DBRS believed that these countries would maintain structurally high net interest margins.
The DBRS analysis of European banking suggested that while European banks’ profits would remain strong in 2025, there would be a decline from the exceptional levels seen in 2024.
The five largest banks operating in Portugal (Caixa Geral de Depósitos, BCP, BPI, Novo Banco, Santander Totta) recorded aggregated profits of 4.964 billion euros last year, setting a record that made 2024 the best year ever for banking in Portugal, according to figures from Lusa.
