Consolidated income statement
Spanish banks recorded attributable profit of €3,993 million in the first quarter of 2018, representing an increase of 15.3% compared with the same period of the previous year. Lower provisioning needs and reduced expenses drove this growth.
In a scenario of very low, even negative, official interest rates in Europe and with an average balance sheet 2.7% lower than a year earlier, net interest income stood at €14,449 million in the first three months of 2018, a year-on-year decrease of 2.4%.
Lower gains on financial transactions and foreign exchange differences, around €530 million, were almost entirely offset by higher net fee and commission income and income from other operating results. As a result, gross income remained above €21,000 million through March, down 3.2%.
Operating expenses posted a slight year-on-year reduction of 0.8%, bringing the cost-to-income ratio to 49%, one percentage point higher than in the first quarter of the previous year. Loan-loss provisions, affected by the significant write-downs recorded by one institution in the first three months of 2017, fell by €1,146 million through March, a decrease of 22%.
Following a 17.6% increase in recognised income tax expense, profit for the period rose to €4,662 million, representing a return on average assets (ROA) of 0.74%, up seven basis points.
Non-controlling interests, affected by extraordinary results recognised at the start of 2017, fell by 27%, bringing attributable profit to €3,993 million, up 15.3%. Return on equity (ROE) reached 7.97% and, despite a 1.9% annual increase in average equity, exceeded the ratio a year earlier by 92 basis points.
Consolidated balance sheet
The aggregate consolidated balance sheets of Spanish banks stood at €2.53 trillion as of March 31, 2018, a 3% reduction (€79,000 million) compared with the same period of the previous year.
Among the main balance-sheet items, lending to customers fell by 3.6% to €1.48 trillion. The non-performing loan ratio declined by almost one percentage point to 4.6%, while the coverage ratio rose to 69% of doubtful assets, an increase of four percentage points.
Customer deposits, amounting to €1.37 trillion, fell by 2.5%, bringing the loans-to-deposits ratio (LtD, loan to deposits ratio) to 108%, compared with 110% a year earlier.
The remaining main balance-sheet headings, especially those related to fixed-income securities, also declined, and funding taken from central banks and credit institutions fell significantly to €47,000 million, representing just 1.9% of total assets.
Equity, affected by negative translation-difference reserves recognised in the second half of 2017 and, to a lesser extent, by the entry into force of IFRS 9, fell by 5.1%, but still accounts for 7.5% of total assets. The CET1 capital ratio stood at 11.3%, 53 basis points lower.
