Maria Vinuela, an analyst with the financial rating agency, said she hoped that the capital of Portuguese banks, profits, and financing conditions will remain stable over the next 12-18 months.

“Profits are likely to remain close to current low levels, with lower spending on provisions and cost-cutting initiatives largely offsetting moderate turnover and very low-interest rates,” the analyst said.

Moody’s further predicts that banks’ non-productive assets will continue to fall organically and helped by portfolio sales but will remain high by European standards. “Its [Portuguese] average non-performing loan was 8.9 percent at the end of June, compared to a European Union average of 3.0 percent,” the agency said.

The US institution also believes that the financing needs of Portuguese banks will remain low thanks to deleveraging and a stable deposit base.

“Portugal’s economic growth moderated in the first half of 2019 to 1.9 percent, and Moody’s expects it to slow to 1.7 percent for 2019 as a whole, then converging to a potential rate of 1.5 percent,” the agency noted.

Moody’s pointed out that although credit conditions in the country have improved, household debt remains above the eurozone average.

The five largest banks in Portugal recorded aggregate profits of €983.1 million up to September this year, a decrease of €405.4 million compared to the same period in 2018.