The Spanish banking sector has experienced a process of improvement in all relevant metrics in recent years, which, far from ending, is expected to continue, even more intensely, in the coming years. This progressive improvement is due to two reasons. In part, it is driven by the favorable evolution of the Spanish economy which, immersed in the deleveraging of households and non-financial companies and an improvement in the financial health of businesses, fosters an increase in credit, economic activity—which is growing steadily at around 3%—and, consequently, employment. But the figures for Spanish banking also continue to improve thanks to the efforts made in recapitalization, balance sheet clean-up, and operational efficiency gains, areas in which our banks have been working tirelessly since the beginning of the 2008 economic crisis.
This set of circumstances is enabling Spanish banks to boost credit conditions and drive lending to families and businesses. In particular, new loan operations granted to families in the first seven months of the year are 37% higher than in the same period last year, and for loans under one million euros for SMEs, growth until July has been 15% compared to the same period in 2014.
Despite the improvement that economic activity is generating in the sector’s results, we must not forget that in a low-interest-rate environment, the intermediation margin tends to shrink, and the same applies to Return on Equity (ROE). To address this situation, Spanish banks are simultaneously working in three complementary directions. Firstly, by expanding their customer bases, which allows them to leverage the advantages of economies of scale—a strategic orientation that, in a competitive banking context, could lead to a new consolidation process. This time, perhaps, cross-border, taking advantage of obstacles removed during the construction of the Banking Union. This first line of work is accompanied by an effort to get closer to the market and customers, providing them with different access channels and a portfolio of solutions, rather than just products and services; that is, improving the customer experience in their interaction with the bank.
