Portugal
The following data have been gathered by Capgemini and are part of the World Retail Banking Report published annually in March.
Macro economic indicators (2006)
| GDP at current prices and PPP | $ 210 billion |
| Inhabitants | 10,5 million |
| GDP per head | $ 19,800 |
| Economic growth rate | 1.3% |
| Consumer confidence indicator | -29.1 |
| Unemployment rate | 7.7% |
| Consumer Price Index | 3.1% |
| Banking staff | 57,473 |
| Number of branches | 5,562 |
| Number of ATMs | 11,440 |
| Households savings ratio | 9.2% |
| Inflation rate | 3.1% |
| Interest rate, consumer credit | 8.1% |
| Interest rate, residential mortgage | 4.3% |
| Interest rate on long term bonds | 3.9% |
Type and size of players
Credits and Deposits refering to Private individuals and small companies (in million Euros)
• 6 Banks represent 94% of the credits and 92% of all retail deposits
• Household represents up to 55% of this credits
Distribution of total branches in Portuguese market (number and %)
• 6 Institutions represent as much as 72% of all bank branches
Net banking income and cost to income ratio (in million Euros / %)
Products
Credit and deposits market (2005) (in million Euros / %)
Deposits Market - Liabilities (in million Euros / % )
Credit Market - Assets (in million Euros / % )
Market share mortgages in total retail credit market (in million Euros / % )
• Liabilities are mainly in retail banks
• Credit market is fairly divided between retail banking and other banking institutions
Evolution of household credit in Portugal and Market share for 2004 (in million Euros / %)
• The total credit increased by 44% between 2000 and 2004
Trends
Regulatory changes
• Basel II - The Bank of Portugal (BoP) has established a clear timeline for Basel II (beginning of 2007) implementation. The banking sector is now almost compliant with the Directives.
• Other Issues – In 2006 the tax burden for the banking sector has suffered a significant increase. 2006 also brought new regulation regarding commissions for mortgage transfers to other institutions.
Competition environment
• Major competition in mortgages - increased competition in mortgage-backed loans, wish conjugated with the increase on interest rates, is leading to a reduction in interest rate spreads in this product and the introduction of zero-spread products, as well as a increase in the promotion effort based on this product. Banks will attempt to recover margin through other consumer related products (e.g. credit cards) and transaction based products that allow for the charging of fees.
• Affluent Segment and Credit Cards – Banks are determined to attract segments with higher margin and potential growth, like Affluent costumers and credit cards.
Most significant business models
• Organic growth vs. Internationalization - Within the major banking groups two distinct strategies exist: growth through foreign expansion (joint-ventures and equity holdings), BCP, CGD and BPI, and on the other hand internal organic growth (Totta and BES). International efforts are being made in economies with bigger growth rates, like eastern European countries (e.g.: Poland and Romania), Greece and former Portuguese African colonies such as Angola and Mozambique. BCP public offer to acquire BPI failed maintaining, for now, the level of concentration of the sector.
• Client service – increasing the product quota of the existing clients is one of the fundamental banking goals; therefore banks strive to develop one to one marketing strategies, based on branding strategies (BPI, BES, Montepio)
Channels
• Internet banking – Banks continue to deploy new functionalities on this channel, following the intention to decrease the transactions made over branch.
• Branches – There was an increase in the number of branches, following the strategic decision made by some banks of enlarging their physical distribution network, to allow a closer relationship with customers and insure the quality of service.
Profits and losses
• Increase of profits through more efficiency.
