Portuguese Banks - Revenue Growth and Lower Provisions Underpin 9M 2022 Results

This commentary analyses the 9M 2022 results of the large Portuguese banks.

Summary highlights from the commentary include:

• In 9M 2022, the total net income of the largest Portuguese banks almost doubled compared to the same period of 2021, mainly on the back of higher revenues and lower provisioning and impairment charges.
• Commercial revenues grew by around 14% in 9M 2022, driven by the combination of higher net interest income (NII) and fee income
• Total provisions and impairments for 9M 2022 were down by 34% compared to the same period in 2021 and reflected, in some cases, a reversal in provisions made in 2020 and 2021

"Most banks have exceeded pre-pandemic profit levels, benefitting from a significant increase in net interest income and commissions, on the back of a more favourable rates environment and sustained recovery of the economy post pandemic, particular across exports oriented sectors as well as tourism,” said Nicola De Caro, Senior Vice President from DBRS Morningstar Global Financial Institutions team. “Asset quality remained resilient, however, the persistent inflationary pressure and high energy costs will likely add stress to borrowers and increase asset quality risks in the medium term."