This first year as Chair of the Spanish Banking Association has been marked by a complex and shifting geopolitical landscape, with consequences for the economic and financial sphere. These months have shown the strength of the Spanish banking sector in facing global challenges and the issues we face as a country. A strong balance sheet and responsiveness to society’s needs are the pillars that define our sector in an environment of constant change.
Russia’s invasion of Ukraine, energy constraints and disruptions to supply chains have driven a sharp rise in inflation, which has become persistent.
Central banks have responded with a rapid and significant increase in interest rates. This return to normality after years of zero and even negative rates has helped improve profitability, but it has also created new challenges, as has become evident in recent weeks with certain institutions in the United States and Europe.
These episodes involving specific institutions with specific problems are a good opportunity to focus on and underscore the strength of the Spanish banking sector.
AEB member institutions are facing the new monetary and financial environment with a sound and sustainable business model. A diversified and profitable retail commercial banking sector for which 2022 was a year of healthy growth. The increase in balance sheets during the year was driven by growth in their core activity: customer lending and deposits.
In our banks, lending accounts for 58% of total assets, above the euro area banking systems’ average of 49%. At year-end, customer lending reached a record €1.7 trillion for AEB banks. This figure reflects the sector’s ability to support millions of families and businesses in developing their projects to generate wealth and employment. Supporting investment is contributing to the progress of the economy and society.
Diversification is one of the features that characterise our institutions’ funding sources. Customer deposits—largely the result of household savings—account for 58% of liabilities, and their aggregate volume reached €1.7 trillion at the end of 2022.
Over the past year, Spanish banks have maintained profitability above the euro area average, also characterised by the high recurrence of income from their core activity, focused on retail commercial banking and less exposed than other business models to wholesale market volatility.
In particular, it was the increase in net interest income that explains the improved results achieved in 2022.
Profitability is the best defence against uncertainty and, in this regard, AEB banks’ 2022 results—€19.524 billion—are good news for the sector and, I dare say, also for the country. Profitability makes it possible to strengthen capital, continue granting credit to generate more investment, more employment, more consumption and more growth. It also makes it possible to pay taxes, and the Spanish banking sector is among the leading European countries in terms of taxation. It also enables the payment of dividends to its more than 5 million shareholders, the vast majority of whom are retail investors.
The sector also helps lead society’s challenges such as ageing and depopulation. Spanish banks have improved service for older people by extending cash-desk opening hours—already benefiting more than 6.5 million people over 65—providing personalised telephone support, used by 2.4 million people, and improving websites and apps.
That same commitment also underpins the goal of achieving full financial inclusion in rural Spain before the end of this year, and it was the driver behind the agreement to help families facing the greatest difficulties in coping with higher mortgage payments due to rising interest rates.
All of this is accompanied by our own initiatives and collaboration with various organisations to improve digital skills and financial education through the AEB Foundation’s projects. Good examples include our recent digital skills project “Connecting Older People”, and the expansion—together with the Bank of Spain—of the “Your Finances, Your Future” programme to primary school students, which over its nine editions has trained more than 50,000 pupils.
Our commitment to the talent of the future is reflected in CUNEF University, an expanded development ecosystem with new degree programmes and a new campus. It has a new Chair following a successful transformation into a leading private university. To broaden the horizons of knowledge and public debate, we have strengthened the Spanish Institute of Banking and Finance with a project aimed at raising awareness of the role of banks in the economy and society.
Of particular importance is the sector’s role in leading the digital transition and addressing the challenges of climate change. Spanish banks top the global ranking for customer digital experience, far ahead of their European competitors. The share of digital customers is 71%, of whom 90% access their bank via mobile. Our institutions remain at the forefront in areas such as electronic payments, where Bizum is close to reaching 25 million users. At the same time, the sector maintains a commitment to combating cybercrime and fraud, as demonstrated by our participation in the Action Plan against Financial Fraud.
In terms of sustainability, institutions are continuing their own transformation and are determined to support their customers through the transition. In parallel, the sector has promoted the definition of short-, medium- and long-term sector climate targets as a credible demonstration of its commitment to advancing the decarbonisation of balance sheets in line with the recommendations set out in the Paris Agreement. In addition, through the Spanish Centre for Responsible and Sustainable Finance (FINRESP), the AEB, together with the other sector associations, remains committed to disseminating basic knowledge for the development of sustainable finance, with particular attention to SMEs.
On the regulatory front, the AEB continues to work towards a balanced regulatory framework that enables the sector to fulfil its role safely and effectively. That is why we have challenged the bank tax. We believe it has counterproductive effects on the economy and that it has been justified on two fallacies: extraordinary profits and the bailout. The institutions that today form the core of the Spanish system have contributed more than €30 billion to the Deposit Guarantee Fund and to SAREB. We have also proposed changes to the design of the Financial Customer Protection Authority currently under consideration.
These two initiatives have been accompanied by an unjustified targeting of the sector, which contrasts with banking’s economic and social commitment and its willingness to contribute to improving regulatory quality.
Finally, we believe that Spain’s upcoming EU Presidency could be a good opportunity to complete the Banking Union and ensure that each institution, regardless of its nationality, can be assessed on its solvency and strength. This would be a decisive step in strengthening the global scale of Spanish and European banks.
We are living in times when our economies need the full support of the sector to address challenges such as strategic and financial autonomy, and the ability to compete in a more fragmented world undergoing rapid change. From the Spanish Banking Association, we are ready to cooperate and to contribute to overcoming them.
