the european banking authority, international best practice, reflection and practical supervisory experience accumulated by banco de portugal, as well as for reasons of legal certainty and security. this consultation will take place in a context in which, in the significant institutions supervised by the single supervisory mechanism as a whole, there remains a significant number of opportunities for improvement at internal governance, risk management, data aggregation, reporting and internal audit. 7 being undoubtedly a common aim, i hope that you are able to participate actively in this consultation, contributing with your experience to the final design of a fundamental instrument in the defence of financial stability. thank you all. 1 banco de portugal ( 2019 ), series longas – setor bancario portugues 1990 – 2018,, available at www. bportugal. pt / sites / default / files / anexos / documentosrelacionados / series _ longas _ setor _ bancario _ portugues. xlsx and banco de portugal ( 2019 ), sistema bancario portugues : desenvolvimentos recentes – 2. º trimestre de 2019, available at : www. bportugal. pt / sites / default / files / anexos / visaosistemabancarioportuguesdados _ pt. xlsx both in portuguese only. 2 first date from which data are available. 3 banco de portugal ( 2019 ), portuguese banking system – 2nd quarter 2019, available at : www. bportugal. pt / sites / default / files / anexos / pdf - boletim / overviewportuguesebankingsystem _ 2019q2 _ en. pdf and ecb ( 2019 ), supervisory banking statistics q2 2019, available at : www. bankingsupervision. europa. eu / banking / statistics / html / index. en. html. 4 guindos, l. ( 2019 ), “ key vulnerabilities for euro area financial stability ”, remarks at the meeting of the financial stability contact group, frankfurt am main, 2 october. 5 see discussions within ecofin informal session, september ( eu2019. fi / documents / 11707387 / 15400298 / cmu + reboot + informal + ecofin + final + issues + note + 2019 – 09 – 09 _ s4. pdf / 05142af6 - 25f0 - 74d0 -

carlos da silva costa : the portuguese banking system – challenges and possible responses opening note by mr carlos da silva costa, governor of the bank of portugal, at the 4th money conference, lisbon, 22 november 2019. * * * as prepared for delivery. good morning, it is with great pleasure that i take part in the 4th edition of the money conference. in this opening note i aim to comment on some of the challenges that the portuguese banking system faces and highlight some of the possible responses. let me begin with a summary of some relevant indicators. in recent years, the portuguese banking system has been characterised by a series of positive developments. portuguese banks are today more capitalised and are more stable in terms of resource intermediation. they have abundant liquidity and have improved their productivity indices. observed in quantitative terms in1 : an increase in the total capital ratio from 10. 3 % to 16. 1 % ( between the end of 2010 and june 2019 ) ; an increase in the liquidity coverage ratio ( lcr ) from 151. 5 % to 212. 3 % ( between the third quarter of 20162 and june 2019 ) ; a reduction in the loan - to - deposit ratio ( ltd ) from 150. 6 % to 88. 2 % ( between the end of 2010 and june 2019 ) ; an increase in the total average assets per branch from 81. 5 to 94. 9 million euro ( between the end of 2010 and the end of 2018 ). in the first half of 2019, there was an increase in profitability of the portuguese banking system. the return on equity ( roe ) in june 2019 was 8. 4 %, compared with 6 % of the average of significant institutions supervised by the single supervisory mechanism3. for this increase there were, on the one hand, factors of a structural nature, namely the increase in the sector ’ s efficiency and, on the other, the lower weight of losses associated with the assets generated over the period of great credit expansion, observed in the reduction of costs with provisions and impairments. however, there are enormous challenges for the sector against a background of moderate future economic growth, low interest rates and high indebtedness of public and private agents. thus, in the first place, banks must continue to reduce their non - performing assets in line with the guidelines and reduction plans submitted to the supervisory authorities. it must be considered that the ratio of non - performing loans ( npls ) net of impairments in the portuguese banking system remains