Portugal's Five Major Banks Close Q1 2026 With €1.279 Billion in Combined Profit, Up 4.9% — BCP Carries the Tape With +25.6%, Net Interest Margin Slips €21.6 Million as ECB Cuts Bite

The five largest banks operating in Portugal — Caixa Geral de Depósitos, Banco Comercial Português, Novobanco, Santander Totta and BPI — closed the first quarter of 2026 with €1.279 billion in combined net profit, a 4.9% year-on-year increase against the €1.219 billion print of Q1 2025. Together the five institutions control more than 80% of the Portuguese banking system, so the aggregate is effectively the system print. With the individual reports now all on the table after Caixa's Thursday release, the picture for the first three months of the year is one of headline growth concentrated in two banks, mortgage volumes carrying the credit line, and the net interest margin starting to feel the ECB's rate-cutting cycle.

BCP and Novobanco do the heavy lifting

Two banks account for almost the entirety of the year-on-year improvement. BCP printed €305.8 million in Q1 net profit, up 25.6%, with the Polish franchise carrying the franchise contribution and the domestic operation booking €265 million on its own. Novobanco was up 13.2% to €200.7 million, its strongest quarterly print under the post-resolution franchise. CGD edged 1% higher to €397 million — the largest absolute number on the table — but the year-on-year delta is essentially flat. Santander Totta moved in the opposite direction, falling 9.8% to €242.4 million, and BPI slipped 2.4% to €133.3 million. Strip BCP and Novobanco out and the four-bank aggregate would have shrunk year on year.

Net interest margin: the ECB pass-through has begun

The combined net interest margin for the five banks fell 1.0%, dropping €21.6 million to €2.191 billion. Only BCP improved its margin, up 2.4% to €738.4 million; the other four contracted. The pattern is the textbook lag of the ECB rate-cutting cycle hitting Portugal's mortgage book, which is overwhelmingly variable-rate and tied to twelve-month Euribor. Lending volumes are still expanding fast enough to mask part of the margin compression, but the trend now points the same way as the rate path. The first quarter is the cleanest read yet of how much the banks can defend their pre-2025 profitability into the medium term.

The mortgage book is still the engine

New mortgage credit accelerated above 10% year-on-year through March, lifted by the public guarantee scheme for first-time homebuyers under 35, which the previous Government reinforced with an additional €750 million in late 2025. The Banco de Portugal flagged earlier this week that the under-35 envelope is already close to fully committed at the Caixa Geral level, with the system as a whole running ahead of schedule. The total mortgage portfolio across the five institutions is now around €108 billion. Miguel Maya, BCP's chief executive, defended the public-guarantee book on the conference call, telling analysts the "non-performance rate in the public guarantee is the same as other credits."

What the second quarter will test

Three things to watch in the next print. First, whether the margin compression accelerates as more Euribor-linked mortgages reset at lower indexed rates through Q2. Second, the impact of the storm and energy-price shocks that hit Portuguese corporates through April — Q1 numbers do not yet include the full cost-of-risk feedback. Third, CGD's binding-bid deadline of 3 June for its Brazilian subsidiary, which Paulo Macedo has flagged as the largest single transaction event of the bank's year. The system has just printed a four-and-a-half-year peak for absolute profitability. The harder quarters are most likely still ahead.

Sources: Lusa via Notícias ao Minuto (8 May 2026); ECO; Q1 2026 results presentations from CGD, BCP, Novobanco, Santander Totta and BPI; Banco de Portugal mortgage statistics.