The big bank won 3,739 million euros for its activities in Spain in the first semester, 36% more compared to the same of 2021, without taking into account the capital gains of merger by absorption of Bankia by CaixaBank and for the IPO of Línea Directawhich led to the split of the insurer from Bankinter.
These figures were collected by Neovantas in its report on the results of the first half of Santander Spain, BBVA Spain, CaixaBank Spain, Sabadell Spain, Unicaja Banco and Bankinter. The firm explained that the increase in profits is caused by the increase in the interest margin, by 9.9% over the same period of 2021, commissions (+20.8%), and by the drop in expenses. , which fell by 12.4%, and due to the fall in provisions (-133.4%).
In this regard, among the Big Six banks, CaixaBank stands out, which achieved an increase in its recurring revenues of 15.9% in the first half compared to the same period of 2021, i.e. some 4,767 million euros, in thanks in part to the profitability of its products (funds, savings and deposit insurance), reports European press.
Neovantas however explained that this data does not take into account the result generated by Bankia before the merger in 2021, nor the exceptional elements related to this merger. Two other banks that stand out in the positive area are Santander, with a 7.8% revenue increase, and Bankinter, with a 7.2% year-on-year increase.
Despite these good results, Neovantas pointed out that the short and medium term situation of the major Spanish banks is “uncertain”given the continuity of the conflict in Ukraine due to the Russian invasion, which represents a “redefinition” of the geopolitical panorama that has an economic impact on all markets.
Recession
The firm explained that the “galloping” inflation in the world “This will lead to a certain economic recession” and force central banks to raise interest rates. In this sense, the president of Neovantas, Jose Luis Cortinastressed the importance of observing the “virulence” of the situation and its impact on Spain, its domestic consumption and the payment of debts, with “the corresponding increase in delinquency”.
“This will lead the big Spanish banks to make higher provisions, as the American banks are already doing, and translates into a drop in their profits. To which is added the new tax that the government will apply to financial entities. A setback for them,” Cortina said.
“With all this, we will see if the big banks can continue to be a relevant lever of the national economy in the short-medium term as they have been during the difficult period of the pandemic,” he added.
However, the Neovantas report envisages a “promising horizon” for the sector in the long termin which the valuations of Spanish banks on the stock market “will be revived”, compared to the current situation in which prices are “well below their book values”.
Evolution of non-performing loans
Regarding bad debts, the bad debt ratio stood at 4.18% last May, compared to a marked 4.55% in 2021. This implies that loans “are repaid without particular difficulties”, although Neovantas has said supervisors are warning of a “more than possible increase in arrears” due to weaker growth and greater payment difficulties for businesses and individuals.
“However, with the exception of Unicaja Banco, with an increase of 9.5%, all banks have reduced their delinquency rates in recent months,” the firm explained.