Spanish banking groups recorded an attributable profit of 8,551 million euros as of June 2009, 12.1% lower than that obtained at the same date in the previous year. The aggregate net profit of individual banks amounted to 6,088 million euros, representing a decrease of 16.7%.
Profits maintain a high level of recurring income, which together with the traditionally controlled costs of Spanish banks, has enabled a significant effort in provisions for insolvencies and provisions to be made in the first half of 2009.
The profitability obtained in terms of ROA (on total assets) is 0.88% in consolidated accounts and 0.82% in individual accounts, similar to those at the close of the previous financial year. In terms of ROE (on equity), the profitability obtained was 14.28% in consolidated accounts and 12.35% in individual accounts, despite the decrease in the amount of results obtained and the strong increase in equity.
Regarding solvency, the quality and high BIS ratio of 12.61% stand out, after having increased eligible equity by 24.6%. Spanish banks have achieved this improvement through their own means and without having received any public recapitalization assistance. Tier 1 stands at 8.85% in June 2009 (7.28% core capital), 110 basis points higher than that published a year earlier. Likewise, as of June 2009, Spanish banks have an excess of equity of 47,382 million euros over their minimum regulatory requirements, 53% more than the excess existing a year earlier.
As of June 30, 2009, the consolidated balance sheet amounts to 2,143 million euros, 15.5% higher than at the same date in 2008, and the aggregate of individual balance sheets is 1,497 million, with an increase of 6.6%.
Regarding the evolution of the margins in the income statement, the increases in net interest income stand out (32.2% and 36.5% in consolidated and individual accounts, respectively) as a result of the defense of business volumes and the decrease in interest rates, which have offset, on the one hand, the stagnation in the amounts of dividends received and net fee income in the consolidated account, and on the other hand, the sharp decline in these two items in the individual aggregate account.
The result of operating activities in the consolidated account recorded a decline of 4.8% in the first half of the year after absorbing the significant effort made in provisions, to which a total of 9,097 million euros were allocated, 87% more than the previous year. In the aggregate of individual accounts, the decline in the result of operating activities is 34%, but it would be only 14% if the same criterion as last year had been used in recording the results of financial operations.
The significant effort in provisions in the income statements for the first half of 2009, which represents 0.87% and 0.47% on average total assets in consolidated and individual accounts respectively, is due to the growth experienced by the non-performing loan ratio, which reaches 3.34% at consolidated level and 3.81% in Spain, with the coverage ratio reduced in both cases to 68%.
The increase in non-performing loans reflects the deterioration suffered by the real economy and the lower level of existing activity, which has resulted in widespread declines in credit demand and a worsening of the risk profile of operations. In Spain, despite this recessionary environment, customer lending has grown by 1.5% and customer deposits by 3.4%, improving the deposits/loans coverage ratio to 80% (78% a year earlier).
Finally, in the first half of 2009, the efficiency ratio remains around 40%, thanks to the fact that general expenses grow in a controlled manner, at a rate lower than the growth of the aggregate consolidated balance sheets and much lower than that recorded by individual balance sheets.
