THE BALANCE SHEET GROWS AT A RATE OF 4%, AT THE SAME PACE AS CREDIT AND DEPOSITS
THE NON-PERFORMING LOAN RATIO DECREASES AGAIN AND STANDS AT 5.9%, DOWN FROM 6.7% A YEAR EARLIER, WITH A COVERAGE RATIO OF 64%
REGULATORY CAPITAL (COMMON EQUITY TIER 1) REACHED 12.43%, 14 BASIS POINTS ABOVE THE LEVEL RECORDED IN JUNE 2015
CONSOLIDATED RESULTS: The attributed profit of Spanish banking groups at the end of the first half of fiscal year 2016 amounted to 5,874 million euros, 27.2% lower than that achieved in the same period of the previous fiscal year. The result from operating activities, which includes all income and expenses derived from ordinary activities, decreased by 4% compared to that obtained in June 2015, resulting in a decline of 7 basis points in terms of return on average assets to 0.82%, compared to 0.89% a year earlier.
INCOME AND MARGINS: On the income side, the main items explaining this reduction are those relating to net interest income, results from financial operations, and foreign exchange differences. Net interest income, the amount of which is similar to that of the first half of last year, reduces its contribution to return on average total assets by 9 basis points due to the increase in the latter by 4.5% annually. The greater contribution from results on financial operations, 10 basis points higher on average total assets than in June 2015, is entirely offset by losses recorded in foreign exchange differences, which are far below (18 basis points on average total assets) the unusually high profits recorded in the first half of 2015.
EXPENSES AND PROVISIONS: With regard to expenses, the trend continues both in the containment of operating expenses, which as in the previous year represent 1.55% of average total assets, and in the reduction of provisions and impairment losses on financial assets, which stood at 0.76% of average total assets for both items combined in June 2016, compared to 0.91% a year earlier.
PROFITABILITY: Below the result from operating activities, negative net results obtained from the disposal of assets and higher tax expenses, which increased by 51%, leave the attributed profit at 5,874 million euros, representing a return on average total assets of 0.45%, 19 basis points less than in the same period of 2015, placing ROE at 7.56%, compared to 9.89% in the previous fiscal year.
BALANCE SHEET: As of June 30, 2016, the consolidated balance sheet totaled 2.64 trillion euros, with an increase of 98,276 million (3.9%) over the last twelve months. In line with this growth, customer deposits increased by 52,263 million compared to June 2015, representing an increase of 3.9%. Thus, the loan-to-deposit ratio (LtD ratio) reaches 111.6%, almost one percentage point lower than a year earlier.
CREDIT AND NON-PERFORMING LOANS: Customer credit grows at a rate of 3.3% and its total amount exceeded 1.5 trillion euros at the end of the semester, with an annual increase of 48,676 million. The non-performing loan ratio stands at 5.9%, significantly below the 6.7% of June 2015, with a coverage ratio of 64%.
EQUITY: Equity, with annual growth of 3.9%, evolves similarly to total assets and maintains its weight of 7.5% in the balance sheet structure, thanks to the increase in equity and minority interests. This increase offset the decrease in valuation adjustments in equity derived mainly from translation differences. Regulatory capital, measured in terms of CET 1 (common equity tier 1), stands at 12.43%, 14 basis points above that recorded in June 2015.
INDIVIDUAL FINANCIAL STATEMENTS The evolution of the individual financial statements of Spanish banks over the last 12 months has been characterized by the stability of balances with only slight variations compared to June 2015.
RESULT: During this first half, Spanish banks obtained a profit for the year of 3,918 million euros, maintaining the same return on average total assets, 0.54%, as that achieved in the same period of 2015. This result is explained, firstly, by the 5% decrease in gross margin, eight basis points less on average total assets, which in turn stems from lower results from financial operations, whose profitability decreases by 16 basis points on average total assets. This decrease in gross margin was offset by the lower amount of provisions and allowances, a fact that is consistent with the decrease recorded in doubtful balances, a trend that Spanish banks have been experiencing in recent fiscal years. The total amount of provisions and allowances made in this first half amounted to 3,300 million euros, equivalent to 0.46% of average total assets.
CREDIT AND NON-PERFORMING LOANS: Like the income statement, the aggregate of individual balance sheets has been characterized by stability both in absolute terms, with an increase of 0.7% in total assets (1.46 trillion euros) and in the distribution and proportion of accounting items. On the asset side, it is worth mentioning the decrease in customer credit by 1.1% annually, as well as fixed-income securities portfolios by 4.6%, 8,300 and 10,700 million euros less, respectively. Regarding the non-performing loan ratio, it shows a positive evolution from 11.54% as of June 30, 2015 to 10.01% at the end of the first half of 2016.
DEPOSITS: On the liability side, the improvement in customer deposits, which increased by 0.7% (4,700 million), and the reduction in securities issued by 6.3% stand out. For their part, the net treasury position of Spanish institutions as of June 2016 decreased by almost 16,000 million euros, 11.4% lower than that of the previous fiscal year.
EQUITY: Equity continues its positive evolution, with levels above 10% of total assets. Specifically, as of June 30, it totaled 150,000 million euros, with an increase of 4.4% compared to the first half of the previous fiscal year.
