Households ended 2025 in a stronger financial position
Between 2005 and 2025, households’ financial net worth increased from €172 billion to €402 billion. As a percentage of GDP, it rose from 108% to 131%.
This ratio reached its highest value in 2021, when it stood at 146% of GDP, in the context of the COVID-19 pandemic, marked both by higher saving and by the contraction in economic activity. In the following years, financial net worth as a percentage of GDP declined, in line with the economic recovery.
The evolution over the last two decades results from two movements. On the one hand, financial assets remained at high levels, reaching 194% of GDP in 2025. On the other hand, liabilities decreased from 84% to 63% of GDP.
This change made the relationship between assets and liabilities more favourable. In 2005, households’ financial assets amounted to around 2.2 times the value of their liabilities. In 2025, they came to represent around three times that value.
Source: Banco de Portugal and Statistics Portugal
Debt came to weigh less on the economy
The improvement in households’ financial position is closely associated with the reduction in the weight of debt in the economy.
Loans to households accounted for around 80% of GDP in 2005 and reached a peak of 91% in 2009. From that year onwards, this ratio followed a downward path, interrupted only in 2020, in the context of the pandemic, and in 2025, when it recorded a slight increase compared with the previous year, standing at 53% of GDP.
This reduction does not mean that households stopped resorting to borrowing. In nominal terms, that is, considering the value in euro, the total amount of loans reached around €164 billion in 2025, the highest value in the series. What changed was the relationship between that amount and the size of the economy: nominal GDP grew faster than credit granted to households.
Over this period, banks also wrote off loans considered unrecoverable from their balance sheets. Over the last 20 years as a whole, these write-offs amounted to around 5% of GDP and were concentrated mainly in 2018 and 2019.
Source: Banco de Portugal and Statistics Portugal
Deposits remain the main financial investment instrument
Deposits continue to play a central role in Portuguese households’ financial assets.
In 2025, currency and deposits represented 44% of households’ total financial assets, up from 39% in 2005. As a percentage of GDP, they corresponded to 86%, compared with 73% in 2005.
Banks continued to hold the largest share of household deposits, accounting for 77% of the total in 2025, compared with around 81% in 2005. Holdings with general government, which include saving certificates and Treasury certificates, represented around 18%, while deposits abroad accounted for the remaining 4% (in 2005, these shares were 14% and 5%, respectively).
Although saving certificates and Treasury certificates are not bank deposits, they are classified in the same statistical category due to their characteristics, namely high liquidity and low risk.
In 2023, holdings with general government gained weight, reflecting the increase in subscriptions of saving certificates. This development happened simultaneously with the rise in interest rates, which increased the return of these instruments and reinforced their attractiveness to households.
Source: Banco de Portugal
How have interest rates influenced households' financial net worth in recent years?
Portuguese households tend to favour low-risk investments, such as bank deposits and saving certificates, which yield an interest. In the case of deposits, the return depends on the rate agreed between the customer and the bank. For saving certificates, it depends on the formula set for each series which, in the most recent series, is related to changes in the three-month Euribor.
As the return of saving certificates is directly indexed to short-term interest rates, this product promptly captures changes in monetary policy. Thus, the increase in the European Central Bank’s (ECB) key interest rates, which began in 2022, favoured the rise in demand for this form of saving.
Interest rates also affect the valuation of other financial assets. In 2022, their rise contributed to the depreciation of market-traded financial instruments whose price is sensitive to interest rates, notably debt securities and investment fund units with exposure to such securities. In the following years, the stabilisation and subsequent decline in interest rates favoured the recovery in the value of these assets.
In addition, interest rates affect borrowing decisions. The prevalence of variable interest rates in housing loans, especially in contracts concluded up to 2023, led to a rapid increase in instalments in the context of rising interest rates that began in 2022. This development encouraged households to make early repayments and contributed to lower demand for new borrowing, favouring the reduction in household indebtedness in 2023.
Financial worth became more diversified
Although deposits remain households’ main financial investment, the allocation of their financial assets became more diversified.
Equity holdings and investment fund units rose from around 30% of total financial assets in 2005 to almost 40% in 2025. As a percentage of GDP, they increased from 60% to 77%.
This development reflects two movements. On the one hand, the growth in households’ holdings of unlisted shares, including family businesses. On the other hand, the emergence of investment funds as one of the main channels through which households participate in capital markets.
In recent years, investment funds received a significant share of households’ new investments in financial markets. As a result, a growing share of households’ financial worth came to be exposed to price variations in financial markets.
Conversely, insurance and pension schemes lost relative importance. In 2005, they accounted for 20% of households’ financial assets; in 2025, that share stood at around 11%. As a percentage of GDP, their weight decreased from 38% to 21%.
This reduction does not mean that this type of investments have disappeared or ceased to be relevant. Their value remained significant, but grew less than households’ financial assets as a whole and than the economy itself. This development also reflected the one-off transfers of pension funds to public pension schemes carried out in the early 2010s and 2020s.
Source: Banco de Portugal
New investments and assets appreciation contributed to the increase in net worth
Developments in households’ financial net worth do not depend only on the amount of financial assets and liabilities accumulated at each point in time. They also depend on new financial investments, changes in debt, and changes in the value of the assets already held.
When households invest more in financial assets than the increase in their liabilities, they record net lending. Conversely, when the increase in liabilities exceeds new financial investments, they record net borrowing.
For most of the last 20 years, households recorded net lending. The exceptions were 2007 and 2008, years marked by increased borrowing.
Net lending was particularly high in 2009, 2012 and 2013, 2020 and 2021 and, more recently, in 2024 and 2025.
In 2020 and 2021, this outcome mainly reflected the increase in household savings during the pandemic, amid a sharp decline in consumption possibilities. In 2024 and 2025, it was supported by growth in disposable income, associated with the rise in employment and wages.
Source: Banco de Portugal and Statistics Portugal
In addition to new investments, financial worth is influenced by the appreciation or depreciation of the assets held by households.
Part of these assets corresponds to instruments whose value reflects developments in financial markets, such as investment fund units, listed shares and debt securities. Therefore, worth may increase not only because households make new investments, but also because the assets they already hold appreciate. In periods of falling markets, the opposite may occur.
Between 2005 and 2018, developments in households’ securities portfolio were marked mainly by negative price changes, reflecting the impact of the international financial crisis and the sovereign debt crisis. Over this period, households recorded net sales of €7.7 billion in these assets and holding losses of €12 billion.
From 2019 onwards, this trend reversed. Net acquisitions, that is, new investment net of divestment, amounted to €14.8 billion, while the appreciation of assets reached around €10 billion. These two effects reinforced each other and contributed to the growth in households’ financial assets portfolio.
Source: Banco de Portugal
A larger financial net worth with a different structure
Twenty years on, the financial balance sheet of Portuguese households is not only larger, but also different.
Financial net worth more than doubled. The value of financial assets increased relative to that of liabilities, and debt lost weight in the economy. Although deposits still represent the largest share of households' financial investments, equity holdings and investment fund units now play a greater role.
The main change is therefore observed not only in the value of households’ financial net worth, but also in its structure. Households’ financial balance sheet became less constrained by debt and more dependent on both the way savings are invested and developments in financial markets.
Nevertheless, compared with the euro area, the structure of Portuguese households’ financial assets continues to show a higher concentration in currency and deposits. In 2025, these instruments, including saving certificates and Treasury certificates, represented 44% of households’ financial assets in Portugal, compared with 31% in the euro area.
By contrast, insurance and pension schemes had a smaller weight in Portugal: 11%, compared with 26% in the euro area. Instruments more directly linked to financial markets also had a more limited expression. Debt securities, investment fund units and listed shares together represented 10% of Portuguese households’ financial assets, whereas in the euro area that value was 19%.
This comparison helps to better understand the developments observed in Portugal. The structure of households’ financial investments became more diversified over the last 20 years, but still remains more concentrated in liquid instruments and less exposed to financial market fluctuations than in the euro area.
The financial net worth of Portuguese households increased and became more diversified over the last 20 years, although it remains relatively concentrated in low-risk instruments.