The quarterly analysis from the banking regulator and supervisor indicates that in 2024, the return on assets (ROA) and return on equity (ROE) increased compared to 2023, reaching 1.38% (an increase of 0.10 percentage points) and 15.2% (an increase of 0.33 percentage points), respectively.
The rise in ROA was attributed by the Banco de Portugal (BdP) to a reduction in provisions and impairments, adding 0.28 percentage points. Conversely, operational costs (-0.10 percentage points) and financial operation results (-0.08 percentage points) negatively impacted the ROA.
In 2024, the operating result as a percentage of the average asset decreased by 0.15 percentage points to 1.99%, which the BdP attributes to a “reduction in credit impairment losses.”
During the same year, the cost of credit risk also fell by 0.33 percentage points to 0.12%, “explained by the decrease in credit impairment losses.”
Meanwhile, the ratio between operational costs and banking product (‘cost-to-income’) increased by 2.8 percentage points to 39.7%, “reflecting the rise in operational costs.”
Several banks reported historically high profits for 2024, taking analysts by surprise in a year when interest rates remained elevated.
The five largest banks operating in Portugal reported aggregated profits of 4.964 billion euros last year, a record figure making 2024 the most successful year ever for the banking sector in Portugal, based on calculations.
The combined profits of 4.964 billion euros from the five largest banks represent a 12% increase over the net profit of 2023.
The total net results of the Portuguese banking system, comprising credit institutions and investment firms, grew by 13% to 6.3233 billion euros, while the financial margin rose by 1.2% to 12.3647 billion euros.
Regarding asset quality, in the last quarter of 2024, the gross non-performing loan (NPL) ratio decreased by 0.1 percentage points to 2.4%.
The NPL ratio for companies continued to decline to 4.3% (-0.5 percentage points), and the same ratio for individuals slightly decreased to 2.3% (-0.1 percentage points).
Finally, concerning bank solvency indicators, both the total equity ratio and the Common Equity Tier 1 (CET 1) ratio increased by 0.2 percentage points to 20.5% and 18.0%, respectively.
