According to ECO, bank profits in Portugal rose 13% to a record 6.323 billion euros in 2024, a year marked by the inversion of interest rates, according to data released by the Bank of Portugal.

At the end of last year, the Portuguese banking system had a return on equity (ROE) of 15.2%, 0.4 percentage points above 2023.

Several factors contributed to the historic profit of Portuguese banks last year, including income generated by interest and commissions, but also the reversal of provisions and impairments, among other factors.

On the other hand, banks kept their costs relatively under control, with the cost-to-income ratio rising slightly to 39.7%, 2.7 percentage points more than a year earlier but almost 20 percentage points below the levels recorded in 2020.

Regarding asset quality, the non-performing loan ratio fell again, reaching 2.4% in December, 0.3 percentage points below the previous year.

However, banks still had €7.8 billion in non-performing loans on their balance sheets, €700 million less than a year ago. Non-performing loans' net of impairments amounted to €3.48 billion.

Indicators from the Portuguese banking system also show that, although total bank assets grew from 442.2 billion in 2023 to 467.8 billion in 2024, the weight of bank assets in relation to GDP fell slightly to 164.2%.

Customer deposits represented 73.9% of banks' assets, which corresponds to an increase of 1 percentage point in annual terms.

The banks' transformation ratio fell again, reflecting the challenges banks face in providing liquidity to the economy in terms of credit granted: It fell from 78% in 2023 to 75% last year.