Portugal's Banking Sector Reports Minor Decline in Profits Amid Competitive Environment

Portugal's banking sector saw a minor decline in profits for the first half of 2026, falling by just 1% compared to the same period last year. Despite this slight drop, the sector remains relatively healthy, with banks reporting comfortable levels of capitalisation and non-performing loans.

The European Central Bank's decision to raise interest rates had a significant impact on the banking sector, leading to an automatic boost in net interest income for many banks. However, when the trend reversed, banks were forced to seek volume to compensate, operating in a fiercely competitive environment characterised by attempts to 'lure' customers from rivals.

Banco Comercial Português (BCP) was the star of the season, posting a 12.7% increase in profits year-on-year, driven primarily by strong performance in its operations in Portugal. On the other hand, Banco BPI recorded a 13% drop in first-half profits compared to the same period last year.

The four major banks in Portugal, Caixa Geral de Depósitos, Banco Comercial Português (BCP), Banco BPI, and Santander, reported a combined net profit of approximately €2.17Bn in the first half of 2026, with BCP accounting for nearly 26% of this total.