Banks are subject to an ongoing assessment process. In the case of Spanish banks, the latest analysis corresponds to the report periodically prepared by the European Commission and the European Central Bank. Its conclusions are positive, portraying institutions that are solid and continue to make adjustments, adapting to the challenging regulatory environment and to the digital transformation their customers demand. The improvement in profitability is a consequence of all this, although it remains below the cost of capital that would reinforce its future sustainability.
The banking sector’s performance is positive, although it is not entirely clear what the authorities’ ultimate objective is. They speak of challenges, among which improving profitability stands out, and of operating in a context of growing non-bank competition on an uneven playing field, given the emergence of new competitors free from the strict regulation and supervision applied to banks. Improvements in banks’ profitability depend on the success of their strategy and on the decisions taken by regulators, supervisors, and economic policymakers. It is not easy to set a strategy in such an uncertain environment. Despite this, banks are very clear about their objectives: to finance growth and provide the best service.
The link with the economy is both banks’ strength and their weakness. Their sustainability depends on the economy’s own strength, to which they contribute through their activity. On the other hand, there are numerous examples of past financial crises triggered by economic problems. The authorities seek to prevent a new financial crisis, whatever its origin, by limiting the risk assumed by institutions and emphasizing their solvency under increasingly demanding parameters. It is important to reflect on and assess the potential effects on the sector’s stability.
José Luis Martínez Campuzano, spokesperson for the Spanish Banking Association
