Aurelio Medel (5 Días) | The fall in indebtedness of companies and families can be interpreted as proof of the improvement of their financial health, also as further evidence of the low investment made in Spain, or as a warning that the restructuring of the financial sector will continue. The decline in credit activity adds to a context of a permanent increase in capital requirements, which have placed the sector in low profitability, despite the seemingly scandalous profits, which largely come from business in other countries. This explains why Inditex, which is very profitable, is worth €150 billion on the stock market, which is equivalent to the sum of BBVA, CaixaBank, Sabadell, and Unicaja, when in 2024 it earned €5.866 billion, less than a third of the €18.241 billion earned by these four banks.
Spanish companies ended last year with debt equivalent to 63.5% of Spain’s GDP, the lowest rate since 2001. Families, for their part, ended the year at 43.7%, the level of the first quarter of 2000. These rates are half of those reached in 2009, the record year since records began, when the real estate bubble led companies and families to owe the equivalent of 119% and 85% of GDP, respectively.
This deleveraging of the private sector has occurred in a context of very low interest rates, so it is not a consequence of a restrictive monetary policy. It has much to do with the shock of the global crisis fifteen years ago, which has brought housing construction to a minimum and caused a mixture of respect and fear of debt. Many countries, including Spain, had to resort to public money to save large entities and prevent their collapse from affecting citizens’ savings. The result has been more complex and demanding regulations. Hence, in 20 years, the net worth of Spanish banks has doubled, from €111.7 billion to €248 billion between 2004 and 2024.
If you look at their return, which is the ratio between net worth and profit, the profitability is mediocre. The sector earned €33.872 billion in 2024. The number seems enormous, but the truth is that it represents a return of 14.5% on the net worth they had at the beginning of the year. This return is much lower than what banks obtain in other countries and is three points below that of 2007.
In summary, if credit continues to fall in Spain and capital requirements remain, which do not fit with the current cost of risk, the banking sector will continue with low profitability, the adjustment of networks and staff will continue, and it will be a drag on economic growth.
