Portuguese banks are less profitable and solid than their European competitors

Portuguese banks are less profitable and solid than their European competitors

A study by an ISEG professor compared banking in Portugal with that of other European countries. The study shows a fragile sector with low profits and a lot of bad credit.

Less profitable and less solid. This is the overview of a study on Portuguese banks in comparison to the ones of other European countries. One of the problems of banks in Portugal remains the high level of bad credit. But it's not only that. "The profitability of Portuguese banks is insufficient. The average rate of return on equity is lower than in most other European countries," says the analysis by Professor and Director of Economic Studies at the French School of Management IESEG, Eric Dor. The study was based on the European Banking Authority (EBA) report published on November 30.

Regarding profitability, Portugal appears at the bottom of the table in this indicator. Admittedly, the country's average is hampered by the high losses recorded by Novo Banco, the study explains. However, as of June of 2019, the EBA Bank Risk Panel, which uses a sample that includes more banks examined than the transparency exercise, "confirms that the average return on banks' equity in Portugal remains below most European countries".

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