Portugal: Financial System Stability Assessment, including Reports on the Observance of Standards and Codes on the following topics: Banking Supervision, Securities Regulation, and Insurance Regulation

IMF Staff Country Reports, October 24, 2006

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Canonical URL: Portugal: Financial System Stability Assessment, including Reports on the Observance of Standards and Codes on the following topics: Banking Supervision, Securities Regulation, and Insurance Regulation

Portugal’s financial system is sound, well-managed and competitive, with shorter-term risks and vulnerabilities well contained, and with the system buttressed by a strong financial policy framework.
Portuguese banks’ profitability, asset quality, and solvency have held up well in recent years, despite a difficult operating environment.
Household debt levels are well above the EU average.
Corporate debt levels are also high, although bank credit to firms has been growing moderately in recent years.
The government should continue to carefully monitor the key risk areas.

Asset quality, balance sheet health, and liquidity conditions are highlighted as key monitoring points.
Identified thematic areas: Banking, Credit, Credit risk, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Market risk, Money, Mortgages, Stress testing.
Keywords emphasized in the assessment: asset quality, balance sheet, bank, banking market, banking sector, control market risk, CR, Credit, credit risk, Credit risk, Europe, ISCR, liquidity, liquidity risk, liquidity situation, market, Market risk, Mortgages, Portugal, price risk, risk, Stress testing.

Continue close monitoring of household and corporate indebtedness given levels noted relative to EU averages.
Maintain supportive and robust financial policy framework to contain shorter-term risks and vulnerabilities.
Preserve supervisory attention on bank profitability, asset quality, solvency, liquidity, and market-risk controls.