BPI Profits Fall 13%: What It Means for Savings and Mortgages in Portugal

Portugal’s Banco BPI has logged a €512 M profit for 2025—down 13 % on the previous year—tightening the margin for future dividends and signalling that the era of easy money from rising rates is over.

Why This Matters

• Lower net interest income means banks will be less generous on deposit rates in 2026.

• Dividend of €428 M goes almost entirely to Spanish shareholder CaixaBank, not retail investors in Portugal.

• Housing loans still rising 13 %, so mortgage approvals remain attainable despite thinner bank profits.

• CET1 ratio at 14 % keeps BPI comfortably above regulatory minima, reducing systemic-risk worries for savers.

Why Profits Fell

The sharpest hit came from the 10 % drop in net interest margin, to €875 M. Normalisation of Euribor—now hovering around 2 %—forced BPI to re-price legacy variable-rate mortgages at lower spreads, eroding the cushion it had enjoyed during 2024’s rate-hike cycle. In parallel, net fees slipped 6 % to €307 M as clients moved money from asset-management products into low-fee time deposits. While gross operating income fell 8 %, personnel expenses in Portugal rose 4.9 %, reflecting union-negotiated wage updates and 242 new hires focused on digital banking.

Overseas Stakes Drag, Again

African subsidiaries produced mixed results. Banco de Fomento Angola (BFA) chipped in €43 M, up 4 %, helped by oil-related foreign-currency flows. The picture darkened in Mozambique, where BCI posted a €20 M loss after additional impairments tied to the sovereign-debt downgrade. BPI has already trimmed its BFA holding to 33.35 % and is openly shopping the remaining BCI stake, describing both positions as “non-strategic.” Analysts say exiting could free roughly 60 bp of capital and reduce earnings volatility.

Cost Discipline vs. Wage Pressure

Total operating costs eased 8 % to €509 M, thanks to branch rationalisation and IT consolidation. Yet salaries climbed as the bank accelerated its “Operações 0” automation program—irony not lost on staff reps, who warn of productivity targets creeping higher. Management promises flat costs in 2026, counting on cloud migration and API-based middleware to trim back-office headcount without forced layoffs.

Strategy 2025-27: Housing, Green Loans, Technology

Chief executive João Pedro Oliveira e Costa framed the new plan—“Aproximar, Transformar, Crescer”—around three levers:

Client proximity: beefing up advisory teams in private banking and SME lending.

Digital transformation: pushing toward a so-called cognitive bank with real-time credit-scoring via open APIs.

Selective growth: doubling down on housing finance, where government youth guarantees lifted new mortgage origination 35 % last year, and expanding €1.8 B in sustainable lending lines.

What This Means for Residents

For everyday customers, the headline dip in profit is less important than how BPI juggles pricing.

• Expect modest cuts to mortgage spreads if Euribor remains stable; the bank wants to defend its 12 % market share.

• Deposit rates are unlikely to rise much further—competition from digital challengers is tame and BPI’s funding base grew 9 % to €32.5 B.

• SME borrowers may see tighter covenant packages as the bank prioritises capital-efficient lending, but credit availability should stay intact given a healthy CET1 buffer.

• Savers should feel reassured: a 14 % capital ratio is well above the 10.6 % minimum imposed by the Banco de Portugal, protecting insured deposits up to €100 000.

Analyst View: Looking to 2026

Brokerage houses in Lisbon interpret the profit slide as a “normalisation, not a red flag.” Consensus forecasts point to a low-single-digit earnings rebound next year, contingent on flat interest rates and a clean exit from Mozambique. That said, wage inflation and tech spend could keep the cost-to-income ratio just above 50 %. Rating agencies maintain a stable outlook, citing robust liquidity and BPI’s proven ability to absorb shocks without state aid.

Bottom line for households and investors: BPI remains profitable, well-capitalised and on a clear strategic path, but the double-digit returns seen in 2024 are unlikely to return unless rates surprise on the upside or overseas divestments release hidden value.