Portugal’s top banks lift Q1 profit to €1.3 billion

Portugal’s five largest banks posted combined net profit of €1.3 billion in the first quarter, according to ECO’s review of their results, showing the sector remained resilient even as lower European Central Bank (ECB) rates started to erode lending margins. These lenders account for more than 70% of the domestic market.

At Caixa Geral de Depósitos (CGD), BCP, Santander Portugal, BPI and Novobanco, net interest income fell by more than 1% year on year to €2.19 billion in the first three months of 2026. That helps explain profit declines at Santander Portugal and BPI, where earnings fell 9.8% and 2.95% respectively. CGD, BCP and Novobanco still increased profit, with the state-owned Caixa reporting almost €400 million.

Caixa chief executive Paulo Macedo said the rest of the year will depend “to a significant extent” on the path of interest rates, while warning that any prolongation of the war in the Middle East and disruption to the strait could affect companies. BCP was helped by its Polish business, as Bank Millennium continued to benefit from reversals of provisions linked to Swiss franc mortgages. At Novobanco, now acquired by Groupe BPCE, lower margins were offset by loan-loss recoveries, tax effects and higher fee income.

The quarter also showed strong growth in housing credit. ECO’s review found the five banks’ mortgage books were expanding by more than 10% and had reached €108 billion, supported by the state guarantee scheme for young first-time homebuyers. The programme has become a point of tension between the government and the Bank of Portugal, the central bank, which is preparing tighter lending rules amid concerns over risk accumulation.

Costs rose a modest 3% to more than €1 billion, helping banks preserve solid efficiency levels. Most lenders reduced headcount from a year earlier, but BPI was an exception, adding 269 employees, which its chief executive João Pedro Oliveira e Costa said reflected the bank’s growth and investment in new technology.

Originally published at Eco.pt