Santander has increased its profits by 25 percent during the first half of the year and becomes the second Spanish bank with the highest growth in this period.
The six main Spanish banks – Santander, BBVA, CaixaBank, Sabadell, Bankia, and Bankinter – obtained a net profit of 3,713 million euros during the first half of 2018, which represents an increase of 17.5% over the same period one year earlier.
These data, collected by the Neovantas consultancy, reflect only the banking activity of the entities in Spain, thus excluding their operations in the foreign territory.
CaixaBank, with a 37.3% increase in profit, followed by Santander (+ 25%) and BBVA (+ 19.2%), consolidated as the fastest growing banks during the analyzed period.
Sabadell is the only entity that stands out on the negative side, with a fall of 10.4%, due to the provisions made for the reduction of its problematic assets, with which it sought to eliminate almost all of its toxic real estate exposure, as well as the costs of the migration of its British subsidiary TSB Bank.
However, during the first six months of the year, the Ibex 35 registers a negative behavior, with losses of around 2.1%. Banking, moreover, has been one of the most punished sectors, mainly due to the continuous political instability arising from the change of Government, the tensions between Spain and Catalonia, the new banking regulations that came into force on January 1 of this year, as well as the concern of the implementation of a new tax.
All in all, Neovantas points out that recurring revenues, which include interest margins and net commissions, have again increased to an aggregate level of 5.5%. The change in the policy of charging fees, which began at the beginning of 2017, continues to give “very good” results, with Santander (+ 31.1%), with linkage as a key factor, and Bankia (+25, 6%).
In turn, the commissions of the different financial products marketed by the banks continue to improve and constitute in themselves a determinant element of banking revenues. Here CaixaBank stands out, with close to 45% of its income by the commission, an increase of 18.6% in the commercialization of insurance and a growth of 20.9% in investment funds, portfolios, and sicav’s.
Bankia has also improved the fees charged, in its case by 25.6%, thanks to the increased activity and customer relationship, in addition to the integration of Banco Mare Nostrum, which has contributed 24.2% to total growth of the semester.
THE CREDIT GRANT GROWS
Regarding the granting of consumer loans, Bankia stands out, with a 30.5% increase in the issuance of loans for this purpose and Bankinter, with a growth of 26.1%. To this must be added the fact that the average interest rate of these loans is above the European average, which makes banks obtain higher margins.
“The highlights of this first semester are the new mortgage lending and consumer credit since all banks have increased their loans for the purchase of homes and goods,” stressed the president of Neovantas, José Luis Cortina.
The Bank of Spain recently warned of the increase observed in recent months in the granting of consumer loans by Spanish banks, because these products have a higher return than other types of loans and, the sector, has since 2016, when the rates reached historical lows, facing a context of low profitability, which leads him to assume greater risks.
The average delinquency rate, however, has been reduced to 6.7% as of May 2018 (last published data), 24.1% lower than the one registered a year earlier. In addition, Spanish banks have been reducing this ratio for five years. All banks in the country have reduced their default rate, where Santander stands out positively, with a decrease of 40.7%, to 6.2%.