CONSOLIDATED INCOME STATEMENT
Spanish banks obtained an attributed profit of 11.199 billion euros in the first nine months of 2018, representing an 11% increase compared to the same period of the previous year.
Lower provisioning requirements and improved results from the sale of non-current assets, including foreclosed properties, account for most of the profit performance, which also reflects a slight decrease in operating expenses in line with the reduction of the balance sheet.
Gross margin decreased by 3.4% through September, primarily due to the negative performance of exchange rate differences and the reduction in other operating results. Expenses were reduced by 1.2% over the last twelve months, and the efficiency ratio was established half a point below 50%.
The sharp decrease in the need for impairment losses and provisions for bad debts by 2.3 billion euros, or 15%, as well as lower requirements for write-downs of other assets and better results obtained from the sale of non-current assets, raised the pre-tax profit by 7.5% annually.
After reflecting tax expense, which increased by 12.5% in the first nine months of the year, the consolidated result rose to 13.133 billion euros, representing a 5.6% increase and a return on assets (ROA) of 0.69%, compared to the 0.64% ratio recorded a year earlier.
Attributed profit reflects a 17.7% reduction in the result corresponding to minority interests during this period and represents a return on equity (ROE) of 7.4%, half a percentage point above that obtained in September 2017.
CONSOLIDATED BALANCE SHEET
The aggregate consolidated balance sheets of Spanish banking groups stood at 2.5 trillion euros as of September 30, 2018, representing a reduction of 32.604 billion euros, or 1.3% year-on-year.
Fixed-income securities experienced the most significant variation on the balance sheet, with a reduction in the balance of 20 billion euros, or 5% annually, across the set of portfolios held in assets. Conversely, the balance of issued securities other than shares grew by more than 11 billion euros, more than 3% annually.
Customer loan and deposit balances remained at levels similar to those of the previous year, following slight reductions of around 0.5% annually, such that the loan to deposits ratio (LtD) remained at 108%.
Following an intense process of reducing non-performing assets, the NPL ratio fell to 4.3% in September, compared to 4.7% a year earlier, with coverage exceeding 67% of the balances accounted for as doubtful, which is more than two percentage points higher than in September 2017.
In line with the trend experienced over recent years, wholesale funding from central banks and credit institutions was reduced to 27 billion euros, 40% less than a year ago, representing just 1.1% of the total balance sheet.
Equity exceeded 200 billion euros and now accounts for more than 8% of the total balance sheet, with year-on-year growth of 3%. Meanwhile, the solvency ratio stood at 11.17% measured in terms of CET1 fully loaded, 10 basis points above the level obtained twelve months ago.
