THE EXTRAORDINARY INCREASE IN PROVISIONS LEADS TO SPANISH BANKS’ ATTRIBUTABLE PROFIT IN THE FIRST HALF OF 2012 REACHING 3,196 MILLION EUROS, A 51.7% DECREASE COMPARED TO A YEAR AGO.
IMPAIRMENTS AND PROVISIONS RISE TO 16,527 MILLION EUROS IN THE FIRST HALF, A 64% INCREASE COMPARED TO JUNE 2011.
SOLVENCY LEVELS REMAIN HIGH ACROSS SPANISH BANKS, WITH CORE CAPITAL ABOVE 10.2%.
The attributable profit of Spanish banking groups was 3,196 million euros during the first half of 2012, representing a 51.7% decrease compared to that obtained in June 2011.
The top line of the income statement continues to show high stability, with an operating margin before provisions of 21,289 million euros (1.79% of average total assets), due to: I) the strength of the interest margin, which grows at an annual rate of 6.9%; II) strong financial transaction results for the half-year, 56.2% higher than in the same period of 2011; and III) contained operating expenses.
The recurrence of the top line of the income statement has allowed for an intensified effort, especially high in the second quarter of the year, in provisions for insolvencies, which increased by 64.3% compared to June 2011, reaching a record figure of 16,527 million euros in the first half, largely allocated to the clean-up of real estate risk in Spain, and representing 1.39% of average total assets.
After accounting for higher impairments and negative net results from sales of other assets, totaling 514 million euros, the attributable result stands at 0.27% of average total assets, compared to 0.59% a year earlier.
The aggregate balance sheet, which is affected by the incorporation of an entity from FROB after being awarded to a bank, increased by 8.5%, with a modest growth in customer funds, both in the form of deposits and issued negotiable securities, an annual 0.4% between both concepts.
Credit, for its part, increased by 6% compared to June 2011 and, after reclassifications and provisions made in the second quarter of the year, the non-performing loan ratio stands at 5.2% compared to 4.5% in June 2011, with a coverage ratio of 68%, 6 percentage points higher than the previous year.
Equity, which maintains the continuous growth observed in recent years, grows at a rate of 7% and allows its highest quality component, core capital, to remain above 10.2%, 120 basis points higher than that achieved in the first half of 2011. Regarding the aggregate of individual accounts, the net profit for the period, including the tax effect, is positive at 729 million euros, 82% lower than in June 2011.
Before taxes, the result is a negative 35 million euros. Without the incorporation of the awarded bank, the pre-tax result would have been a positive 1,472 million euros.
The significant impairments and provisions made in the first half, anticipating the substantial fulfillment of the increased requirements derived from recently published Royal Decree-Laws, more than double those of the previous year and absorb all the improvement achieved in the operating margin before provisions, which grows at an annual rate of 20%, with advances in almost all categories and cost containment.
The balance sheet increased by 9.6% compared to June 2011, following the incorporation of the aforementioned FROB entity. Stagnation in credit evolution persists, with an annual increase of barely 2.7%, and a non-performing loan ratio of 8.7%, including the awarded entity, compared to 5.9% in June 2011.
Deposits and issued negotiable securities, on the other hand, show a combined decrease of almost 60,000 million euros.
