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In 2024, the Portuguese banking sector once again registered an improvement in profitability, primarily driven by a reduction in provisions and impairments, which more than offset the increase in operating costs. Net interest income also recorded a modest increase, despite the decline in interest rates.
Solvency indicators further strengthened in 2024, reaching historically high levels and widening the differential relative to the Euro Area average. The accumulation of profits in recent years has substantially reinforced banks’ internal capital generation capacity, enabling them to establish robust capital buffers and support the sector’s resilience in the face of potential adverse shocks. Nonetheless, sustaining profitability above the cost of capital remains essential to safeguarding financial soundness, attracting investment, and ensuring the effective financing of the economy.
The banking sector continues to confront increasingly complex challenges of an economic, climate-related, regulatory, and competitive nature, requiring comprehensive strategic response. Notable among these challenges are the ongoing digital transformation of financial services, the transition towards a more sustainable economy, the incorporation of these considerations into risk management practices, and the reinforcement of operational resilience in the face of increasingly sophisticated cyberattacks and payment system fraud.