2023-11-20 15:24:15
The main Spanish entities increase their profitability to cover the cost of capital, except Unicaja and Sabadell
MADRID, 20 Nov. (EUROPA PRESS) –
The main Spanish banks increased the volume of doubtful loans and under special surveillance by 4,772 million euros in the third quarter compared to the second, concentrated especially in Santander and BBVA, according to the latest quarterly Accuracy report on Spanish banking.
The firm highlights that the positive trend in delinquencies in recent quarters “seems to have changed direction” and between July and September it began to worsen, in such a way that banks have increased their provisions.
Thus, it points out that Santander has increased its loans under special surveillance by 3.3% and its doubtful loans by 1.74%, a situation that is due to the growing instability outside Europe. In this way, it has increased its provisions by 22.5% compared to last year, driven by North and South America, despite the fact that the delinquency ratio remained almost unchanged. The cost of risk increased by 27 basis points, together with higher provisions regarding a loan portfolio that was 2.3% lower year-on-year.
For its part, BBVA recorded an increase in the balance of loans under special surveillance of 2.93% due to an increase in credit risk of 2% across all geographies. However, the increase in delinquencies is mainly due to the worsening of retail loans in South America and Mexico.
Thus, it has increased provisions by 30.6%, a fact that is reflected in a higher cost of risk, which was 111.2 basis points accumulated in the third quarter. Even so, BBVA’s default rate remains below the 2022 level, decreasing from 3.5% to 3.3%.
At CaixaBank, according to Accuracy, the balance of doubtful loans decreased by 0.9% quarter-on-quarter thanks to the significant decrease in consumer loans, but loans under special surveillance increased by 4.4% due to market uncertainties of housing that force certain mortgages to be reclassified.
In this way, the provisions reported by this entity until the third quarter increased by 39.0% year-on-year and 36.7% in the quarter, reaching 933 million euros. Even so, Accuracy does not see a deterioration in asset quality, with a default rate that remained stable at 2.7% in September compared to June.
As for Bankinter, there was a slight increase in the default rate of 9 basis points, although doubtful loans were reduced by 20 million euros. The entity reported the largest percentage increase (191.9%) in provisions for insolvency among the main Spanish banks, in a context in which the default rate remains stable: in 2022 it stood at 2.1% at closing September, at 2.2%.
As for Sabadell, the figures for doubtful loans remained stable, so that the level of provisions for bad debts decreased by 3.7% compared to 2022 due to lower provisions for financial assets and investments in real estate.
Unicaja reduced the balance of doubtful loans by 9.6% thanks to the sale of an NPL portfolio. Thus, the bank reported a 5.6% drop in provisions in line with the 8.6% decrease in loans and advances to customers and with a 23% lower volume of entry into doubtful loans. The default rate decreased to 3.4%.
Although there are also slight increases in the cost of risk, Accuracy rules out the possibility of a banking crisis.
Analyzing the data by geography, the provisions of Spanish entities in Europe increase across the board, with Poland being the country in which they increased the most, 11%.
PROFITABILITY AND STOCK MARKET VALUATION
On the other hand, Acuraccy points out that the profitability of Spanish banks has also improved across the board, and except for Sabadell and Unicaja, they have begun to cover the cost of capital, while BBVA’s stock market value in recent months (+64 .7%), Santander (+46.8%) and Sabadell (+56.7%) have surpassed the Ibex 35 (+26.4%) and the S&P 500 (16.6%). The worst performances were those of Bankinter (+3.7%) and Unicaja (+9.2%).
“After the volatility of the stock market value suffered by the banks during the crisis of the American regional banks, the European entities, and the Spanish ones in particular, continue with a short-term upward trend with results that continue to improve generally in line with the rising markets, thanks to a significant increase in their income due to the increase in rates and higher efficiency ratios than their European and American counterparts,” the report states.
Regarding the volume of credit investment, the firm perceives a reduction in some entities, although for the moment it remains at “acceptable” levels. The portfolio of the main banks decreased on average by 2.7% quarterly (1.5% on average in the case of mortgage loans). On the other hand, the volume of consumer loans resists the rise in rates. “These variables will be what will allow the good results of Spanish banking to be maintained in 2024, especially at the gross margin and interest margin,” explains the report.
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