Forecasts point to gains exceeding €8 billion, only in Spain. The consolidated net income will be even better: Bloomberg estimates that Bank Santander’s profit will exceed €4,5 billion and that BBVA’s will also be above €4 billion. It is, without a doubt, good news, but still far from the numbers that both banks achieved in the pre-crisis.
The picture of the Spanish banking system as a whole improves in almost every respect. However, it is essential to reduce late payments in order to reach a stable and fast speed when looking for profitability.
For now, doubtful debts keep increasing month after month, although the rhythm of deterioration has slowed down. According to experts at Afi, 2013 will end with a 13.3% upturn in the NPL rate, 2014 will exceed 14% and 2015 will go down to 13.5%.
The banking sector is also worried about the results of the ECB’s stress tests and, especially, about the possibility of penalization due to sovereign debt holdings in their balances. The carry trade has been really beneficial for the Spanish entities.
The reduction in the liability cost was also very positive for banks, although not so much for savers. The Bank of Spain recommended limiting remuneration of deposits, which offset the decline in financial income. Thus, retail deposits went up by €12,9 billion last November. However, the most significant element is the reduction in costs: the average interest rate for term deposits has diminished by 55 basis points since December 2012.