Spanish Banks Earned 23% Less In 2016 Due To Special Factors

Retail interest rates in Spain are high compared to other Eurozone countriesTop of the Bank of Spain

Spanish banks registered net profit of 7.987 billion euros in 2016, 23.1% less than a year earlier, according to data provided on Thursday by the Spanish Banking Association chairman José María Roldán.

These results were affected by special temporary and specific factors in 2016, without which earnings would have been 12% higher than in 2015.

These factors include the negative trend versus the euro in the exchange rate of the main currencies in which the banks operate, provisions to cover claims related to the floor clauses and one-off restructuring activities in 2016.

Roldán explained that the banking sector is currently operating in an environment which “is still not wholly satisfactory for the financial business” and that 2016 was a year in which there continued to be “very important” efforts made to restructure the balance sheets.

The interest rate environment “is still not favourable,Roldán added. Despite the fact the improvements in the sector are evident in terms of liquidity and solvency, in terms of profitability, the improvement is not yet complete,” he said. In this respect, he noted that in terms of profitability “there is more dispersion amongst the lenders.”

The banks’ solvency ratio was an average 12.36% of risk-weighted assets at end-2016, in line with a year earlier.

The basic margin increased 0.3% in 2016 from a year earlier. 

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.