Portugal ended 2025 with a stock of non-performing loans (NPLs) standing at €4.1 billion, confirming a decade of consecutive deleveraging in the national financial system. The data, analysed by Prime Yield based on information from the European Banking Authority (EBA), places the country among the most effective European markets in reducing NPLs.
The trend is evident in the NPL ratio — an indicator measuring the proportion of non-performing loans in total outstanding loans — which fell from 19.6% in 2015 to just 2.0% in 2025. During the same period, the total volume of credit remained relatively stable, falling from €215.2 billion to €208.7 billion.
The performance recorded in 2025 reinforces this path of adjustment. Over the past year NPLs fell by €500 million, dropping from €4.6 billion at the end of 2024 to €4.1 billion at the end of 2025, representing an annual decline of 11%. In line with this trend, the NPL ratio fell from 2.3% to 2.0%, approaching the European average of 1.8%.
This progress contrasts with the situation observed a decade ago, when Portugal had one of the highest levels of NPLs in Europe. In 2015, the country accounted for around 4% of total European NPLs. In 2025, it maintained that share of total credit, but reduced its share of European non-performing loans to just 1%.
This reduction in risk took place against a backdrop of economic resilience. In 2025, Gross Domestic Product (GDP) grew by 1.9%, above the European average, with forecasts pointing to growth of 2.3% in 2026. At the same time, the dynamism of the property market helped to strengthen the quality of collateral: residential sales rose by 8.6%, prices increased by 17.6% and mortgage lending grew by 34%.
“Over the past decade, Portugal has undergone a structural transformation in the handling of NPLs, evolving from one of Europe’s most strained markets to one of the most efficient. This journey reflects not only the actions of the banks, but also the growing maturity of the ecosystem of investors and servicers, as well as a more robust regulatory framework. Today, we are entering a new phase, characterised by greater selectivity, smaller-scale transactions and a growing role for the secondary market,” says Francisco Virgolino, Managing Director at Prime Yield.
According to the study “Keep an Eye on the NPL & REO Markets”, the non-performing loan portfolio transaction market is currently undergoing a repositioning phase. By 2025, sales volume is expected to have reached around €2 billion, reflecting a recovery compared to 2023 and a return to normality following a 2024 marked by large-scale transactions. This new phase is characterised by greater concentration of operators, increased activity in the secondary market, and more selective, smaller-scale transactions. The majority of portfolios put up for sale in 2025 did not exceed €200 million.
The sector has also seen consolidation, such as the acquisition of Hipoges by the British firm Pollen Street Capital, via the Portuguese company Finsolutia, creating an operator with €55 billion in assets.
In legislative terms, 2025 was also marked by the entry into force of the new Legal Framework for the Assignment and Management of Bank Loans.
As for 2026, Prime Yield anticipates that these trends will continue, “with a more selective market, greater prominence of the secondary market, and a gradual adaptation to the new legal framework for the sale and management of loans, which has been in force since December”.
Francisco Virgolino adds that “the developments seen in 2025 demonstrate that Portugal has become a highly efficient market in reducing NPLs, whilst maintaining growth levels above the European average. This duality makes the country particularly attractive for complex and specialised operations, at a time when the sector is facing consolidation and regulatory transformation”.
