## Portugal: Financial Sector Assessment Program: Technical Note: Stress Testing

_IMF Staff Country Reports, January 30, 2007_

## Source details

**Canonical URL:** [Portugal: Financial Sector Assessment Program: Technical Note: Stress Testing](https://www.imf.org/en/publications/cr/issues/2016/12/31/portugal-financial-sector-assessment-program-technical-note-stress-testing-20347)

## Other formats

- [Markdown version](/en/publications/cr/issues/2016/12/31/portugal-financial-sector-assessment-program-technical-note-stress-testing-20347/index.md)
- [Structured JSON version](/en/publications/cr/issues/2016/12/31/portugal-financial-sector-assessment-program-technical-note-stress-testing-20347/index.json)
- [Bundle manifest](/en/publications/cr/issues/2016/12/31/portugal-financial-sector-assessment-program-technical-note-stress-testing-20347/bundle-manifest.json)

## Bibliographic details
- Published: January 30, 2007
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451832266.002

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### Summary
- This technical note explains stress testing for Portugal’s financial sector.
- A core part of the banking stress tests was the bottom-up exercise implemented by individual institutions.
- The bottom-up stress tests focus only on the impact of expected losses on indicators of profitability and capitalization.
- The results are presented in terms of the actual solvency levels before and after the shock, allowing for an assessment of the capacity of banks to withstand the shocks.

### Stress testing approach and methodology
- Primary approach: bottom-up exercise implemented by individual institutions.
- Scope of bottom-up tests: only the impact of expected losses on indicators of profitability and capitalization.
- Output metric: actual solvency levels reported before and after the shock.

### Presentation of results
- Results are expressed as actual solvency levels before and after the shock to assess banks’ capacity to withstand shocks.
- Focused outcomes: indicators of profitability and capitalization affected by expected losses.

### Subjects and key technical terms
- Subject areas: Banking, Capital adequacy requirements, Credit risk, Financial regulation and supervision, Financial sector policy and analysis, Income, Market risk, National accounts, Stress testing.
- Keywords preserved from the source:
  - capital adequacy ratio
  - Capital adequacy requirements
  - CR
  - Credit risk
  - Equity price risk
  - exchange rate risk
  - foreign exchange
  - Global
  - Income
  - interest income
  - interest rate risk
  - ISCR
  - life lapse risk
  - life lapse risk nonlife premium
  - market financing
  - Market risk
  - market share
  - net interest income
  - nonlife CAT risk
  - price shock
  - profit and loss
  - risk absorption properties
  - Stress testing
  - underwriting risk
  - volatility risk

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## Content in this bundle

- [Cr0734 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2007/_cr0734.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/portugal-financial-sector-assessment-program-technical-note-stress-testing-20347_