Banking sector's profitability decreased by 77% in 2020

8th April, 2021

In 2020, the Portuguese banking sector’s profitability was severely penalized by the impact of the COVID-19 pandemic, with net income decreasing by 77% year-on-year to 435 million euros. This result is mainly explained by the increase in impairments, which totalled 2.9 billion euros (74% higher than in 2019).

Despite the adverse environment, Portuguese banks reinforced their solvency levels (the CET 1 ratio rose to 15.4% and the total solvency ratio to 18.1%), which enabled an effective response to the economy’s financing needs. 

In 2020, in the domestic activity, loans to non-financial corporations increased more than 10% and loans to households rose 1.6%, both in year-on-year terms. Deposits, on a consolidated basis, increased almost 5% over 2019, to 279.8 billion euros.

In 2020, the Portuguese banks continued to implement restructuring programmes, following the trend of recent years, in response to the need to increase operational efficiency and adapt business models to customers’ needs.