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HomeEconomyHigh interest rates...

High interest rates boost banking sector profits

Profitability of the Portuguese banking system rose again in 2023, while the cost of credit risk also rose due to worsening impairments, according to data published this Wednesday by the Bank of Portugal (BdP). The information from the institution headed by Mario Centeno comes after the publication of results from the five largest banks, which earned 12.1 million euros per day during the past year.

Profits at CGD, BPI, Santander, BCP and Novo Banco rose 72.5% last year compared to 2022. The profit of the state bank alone amounted to 3.5 million euros per day.

Thus, Caixa Geral de Depósitos recorded a profit of 1,291 million euros, followed by Santander Totta with 1,030 million euros, BCP with 856 million euros, Novo Banco with 743.1 million euros and BPI with 524 million euros.

The increase in asset returns was, according to BdP, mainly due to an increase in financial margins (the difference between what banks charged on loans and what they paid on deposits), although partly offset by increases in provisions and impairment charges.

Profitability “continued its upward trajectory” last year, with return on equity rising to 14.8% (plus 6.14 percentage points) and return on assets rising to 1.28, according to the banking regulator’s quarterly analysis of the banking sector last year. % (plus 0.59 points).

BdP reports that the cost of credit risk increased (0.16 percentage points) to 0.45%, justified by the strengthening of these impairments.

Author: Raquel Oliveira This Lusa
Source: CM Jornal

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