Spanish banking groups achieved an attributable profit of 3,386 million euros in the first nine months of 2012, representing a 63.7% decrease compared to the same period of the previous year. This result was reached after a clean-up effort of 25,581 million euros, 71.6% higher than that carried out a year earlier, a figure that includes a large part of the extraordinary provisions required for the current fiscal year.
This intense provisioning effort has been possible because all business margins in the income statement maintain recurring growth, exceeding 6%. The interest margin increased by 6.7%, or an additional 2,511 million euros compared to the amount obtained from January to September 2011. Meanwhile, the gross margin grew by 6.1%, mainly supported by the strong performance of financial operations results.
Operating expenses increased by 5.6%, below balance sheet growth (8.7%), despite the incorporation of significant banking franchises into the scope, which usually implies an increase in costs.
This evolution of expenses allows the positive trend of the income statement to be maintained up to the operating margin before provisions, which grew by 6.5%. As a result, the efficiency ratio remains below 47%.
The rest of the income statement is heavily conditioned by the additional clean-up requirements mandated for this year alone by Royal Decree-Law 2/2012 and Law 8/2012. A large part of this extraordinary clean-up is already reflected in the allocations and provisions made up to September, which increased by 10,673 million euros (71.6%). This implies that allocations and provisions increased from representing 0.88% of Average Total Assets (ATA) to 1.41%.
The clean-up operations carried out resulted in an operating profit of 6,219 million euros, 58.4% lower than that obtained a year earlier. This decrease is accentuated when impairment losses on other assets (up 65.2%), extraordinary results, and corporate tax expenses are accounted for. This leads to an attributable profit of 3,386 million euros in these first nine months, 63.7% lower than that obtained in the previous year.
As of September 30, 2012, the consolidated balance sheet of Spanish banking groups reached 2.49 trillion euros, almost 200,000 million more than recorded a year ago.
This 8.7% increase in the consolidated balance sheet is largely due to the incorporation of acquired entities, mainly in Spain, into the scope of consolidation during the second and third quarters of 2012. Of this balance sheet increase, almost 50% materialized as an increase in customer loans of 80,910 million euros, representing an annual growth of 5.8%. Within assets, fixed-income investments increased by 34,318 million euros, an 11.7% relative increase, and tax assets, with an increase of 12,938 million euros, experienced a 38.7% variation. At the end of the third quarter, the consolidated non-performing loan ratio stood at 5.76%, 1.1 percentage points higher than the previous year.
This significant increase in assets was primarily financed by an increase in the net balance with central banks of 126,409 million euros and an increase in customer deposits of 37,077 million euros (up 3.3%). Furthermore, it is worth noting the 14,167 million euro increase in net equity, raising the balance existing twelve months ago by 9.5% to 162,820 million euros.
The solvency ratios of Spanish banking groups improved at all levels compared to those presented a year earlier. The improvement in core capital, the highest quality part of the ratio, stands out, advancing 131 basis points to 10.46% as of last September 30.
The individual income statement of Spanish banks follows the same patterns as the consolidated one, though more pronounced. The interest margin grew by 18.2%, while the gross margin, as a result of the strong performance of capital instrument returns, grew by 24.2%.
As a result of the containment of operating expenses, the operating margin before provisions reached 15,600 million euros, 40.7% higher than that obtained a year ago. However, once the 11,183 million euro increase in clean-up operations is taken into account, which is three times the amount carried out a year earlier, a pre-tax loss of 48 million euros was recorded. After the tax effect, the result for the first nine months of 2012 stood at 1,373 million euros, 68% lower than the previous year.
Regarding the individual balance sheets of Spanish banks, their aggregate amount reached 1.6 trillion euros after an increase of 117,393 million euros, equivalent to an annual growth rate of 7.94%, mainly due to the incorporation of one of the entities acquired in Spain, one of whose effects has been to raise the aggregate non-performing loan ratio to 9.49%.
The main variations in the individual balance sheet are similar to those experienced in the consolidated balance sheet, except for customer deposits, which decreased by 41,403 million euros (5.9%). This decrease and the 24,896 million euro fall in the net position with credit institutions have been offset by the 124,554 million euro increase in the net balance with central banks.
The increase in funding obtained, as was the case in the consolidated figures, has been primarily used to finance the growth of customer loans by 22,534 million euros (2.7%), fixed-income investment by 31,493 million euros (17.7%), and the 7,357 million euro increase in tax assets.
