T.C. | The five big Spanish banks posted net profit of 7.825 billion euros in the first quarter of this year, compared with a loss of 1.053 billion in the first quarter of 2020, when they made provisions of 3.9 billion to deal with the coronavirus crisis. It should be noted, however, that without the effect of the Caixabank / Bankia merger, the Q1’21 profit would be considerably lower at…
Spanish banks’ debt with the European Central Bank, which reflects their gross demand of the institution’s regular financing operations, did not show any change in February and remained unchanged at 261.21 billion euros, exactly the same as a month earlier. However, according to Bank of Spain data reported by Europa Press, the increase is 100.24% compared to the same month of the previous year.
Renta 4 | The reasons for the cease of negotiations would be, on the one hand, the lack of agreement on the exchange equation and the price to be paid, and on the other, the distribution of power. The suggested retirement for Sabadell’s chairman Josep Oliú in exchange for the operation being paid for in cash would not be well received by the ECB, given the risk of BBVA’s chairman Carlos Torres being charged in relation with the Villarejo case. This could then leave the merged group without a chairman. So the ECB would have urged a joint presidency between Torres and Oliú.
Spanish banks recorded aggregate attributed losses of 11.531 billion euros in the first half of 2020. This came in the wake of an effort in terms of provisions and write-offs to the tune of 26.518 million euros. Preparation for the economic impact of the Covid-19 pandemic was behind this effort, according to the Spanish Banking Association (AEB).
The Bank of Spain has decided to maintain the counter-cyclical capital buffer applicable to credit exposures in Spain at 0% during the third quarter of the year. It will probably also do the same in the coming quarters due to the current context of the coronavirus crisis as the severe macroeconomic and financial impact of the Covid-19 crisis require credit institutions to maintain the flow of financing to the real economy. The aim of the counter-cyclical capital buffer is to reinforce the solvency of the banking system in phases of excessive credit growth.
The sale of non-performing loans (NPLs) in Spain totalled € 22 billion in 2019, 63% lower than the 60 billion registered the previous year, according to data from Prime Yield’s ‘Keep an Eye on the NPL & REO Markets’ report.
The Mortgage Loan Reference Index (IRPH) represents approximately 10% of the loans granted in Spain and is the most used for Spanish mortgages after the Euribor, used in 90% of contracts. The Court of Justice of the European Union (CJEU) has left it to Spanish judges to analyze, on a case-by-case basis, whether the banks commercialized their mortgages referenced to IRPH in a transparent manner. They will be able to cancel them if it is found they have been abusive.
The credit quality of Spanish banks looks solid, despite the pull-back in reported profits. Solvency ratios sitting comfortably above requirements offer greater leeway for capital distribution and will result in higher returns, benefiting investors, says Scope Ratings. Spanish bank creditors should see the banks’ improved capital-generation capacity as a sign of strength, even if capital ratios have peaked for this cycle.
Bankia’s results were much better than market expectations, however, there are some uncertainties about its share price. The bank has achieved a profit of € 542 million, 23% less, with experts expecting a greater adjustment due to the bank’s efforts to get rid of unproductive assets.
Spanish banks, represented by 8 entities (Santander, BBVA, Caixabank, Sabadell, Bankia, Bankinter, Kutxabank and Abanca) occupy the seventh place worldwide by brand value and account for 4% of the total brand value of the banking sector, according to Brand Finance Banking 500 ranking of Brand Finance, the leading global independent brand valuation consultant.