Consolidated income statement
Spanish banks obtained an attributable profit of €7.12 billion in the first half of 2018, representing an increase of 2.3% compared to the same period of the previous year.
Lower provisions for insolvencies, maintenance of the most recurring margins in the profit and loss statement, and cost containment explain the performance of results through June, despite the average balance sheet being 2.3% lower than a year earlier.
Net interest income was established at around €29 billion in this period, 1% lower year-on-year, while the upward trend in fee income continues, contributing nearly €10 billion, 2.6% higher.
Along these lines, lower results from exchange rate differences were partially offset by improved results from financial operations and equity-accounted investments, so that, overall, gross margin decreased by 1.8%.
Operating expenses barely changed, with an increase of 0.9%, which kept the efficiency ratio below 50%. Meanwhile, provisions and allowances for insolvencies decreased by 12%, approximately €1.1 billion, and were established at €8.3 billion.
Completing the evolution of the income statement are the higher corporate tax expense, which increased by 3%, as well as the decrease of €243 million, 14.6%, in results attributable to minority interests.
Return on equity (ROE) decreased slightly in the first six months of the year, reaching 7.1%, affected by the 3% increase recorded in average equity, the denominator of the ratio.
Consolidated balance sheet
The aggregate consolidated balance sheets of Spanish banking groups stood at €2.52 trillion as of June 30, 2018, compared to €2.54 trillion a year earlier, representing a decrease of approximately €20 billion, 0.76%.
Fixed-income securities portfolios experienced a greater year-on-year reduction, of 6.8%, approximately €27 billion. Meanwhile, customer loans remained above €1.5 trillion in balance, barely 0.7% lower.
Following an intensive process of reducing non-performing assets, the non-performing loan ratio decreased to 4.4%, compared to 5.5% a year earlier, with coverage exceeding 67% of balances recorded as non-performing, representing more than one percentage point higher than in June 2017.
Customer deposits, with nearly €1.4 trillion in balance at the end of the semester, remained at levels similar to those of the previous year following an annual increase of 0.5%, so that the loan-to-deposit ratio (LtD ratio) stood at 108%, compared to 110% a year earlier.
Wholesale funding obtained from central banks and deposit-taking institutions represented, in net terms, approximately €45 billion, a figure close to the minimum of the preceding fifteen years and representing less than 2% of total assets, following a 44% reduction.
Net equity grew by 0.8% due to the increase in equity of 6.3%, nearly €12 billion, from capital increases carried out and capitalization of earnings. Thus, equity continued to gain weight in the balance sheet, representing 8% of the total, compared to 5% just before the onset of the crisis.
Meanwhile, the solvency ratio, measured in terms of CET1 fully loaded capital, stood at 10.8%, virtually equal to that of the first half of the previous year.
