As Portugal recovers from a punishing adjustment programme and a deep recession, the country’s banks are becoming profitable again. But the legacy of the past still weighs heavily on a sector in which lenders are struggling to ease the burden of non-performing loans (NPLs) and cut their costs to take better advantage of a gradually improving economy.
The way forward will inevitably involve a new wave of consolidation, with the ownership and control of leading players set to change hands. This could help drive further synergies as banks have already stripped back, restructured and recapitalised to focus leaner, more solvent operations on the domestic market. But the level of economic, political and business risk remains high.
