The aggregate profit after tax of individual banks increased by 13.6% to \u20ac3,359 million.<\/p>\n
Spanish banks\u2019 profits in this period can be considered of high quality, as they stem from ordinary activity and make it possible to sustain high profitability, despite the growing difficulties in the economic and financial environment.<\/p>\n
In addition, the results achieved by Spanish banks in the first three months of the year contrast with the substantial losses recorded by numerous international banking groups, whose risky investment strategies in subprime mortgages and structured products have plunged the international financial system into a complex crisis since last August.<\/p>\n
Practices linked to the abuse of the “originate-to-distribute” model have created a shadow banking system, financed in the short term and thriving outside any supervision by circumventing even the minimum regulatory capital requirements. Far from this way of operating, Spanish banks have conducted their business transparently and have complied with the required capital requirements. This is thanks to a solid, differentiated and profitable retail banking business model, customer-focused, which provides recurring income and a lower relative risk profile in their operations. <\/p>\n
The quality of Spanish banks\u2019 results can be seen in the progress recorded in the first quarter across all business margins, as a result of both higher income and cost containment. Thus, the ordinary margin\u2014the most recurring part of the income statement\u2014shows growth of 14% in consolidated accounts and 15% in individual accounts. <\/p>\n
Growth in the ordinary margin has been achieved despite net fee and commission income falling by 7.5% (in individual accounts), mainly as a result of lower customer securities activity amid adverse developments in capital markets.<\/p>\n
Operating expenses continue to evolve favourably, after recording increases below those of assets under management, leading to a further improvement in the efficiency ratio. It is now below 38%, both on a consolidated and individual basis, despite institutions having increased the number of employees and branches in Spain. <\/p>\n
The improvement in the ordinary margin and cost containment result in an operating margin that increases by 5 basis points over ATA in individual accounts and exceeds 2% in consolidated accounts.<\/p>\n
Balance sheet strength remains high, as shown by stable solvency indicators and eligible own funds that exceed the required minimums by more than 40%.<\/p>\n
The higher relative growth in equity has led to a slight reduction in the return on these resources, with ROE standing at 20% on a consolidated basis and 15.4% on an individual basis. In terms of ROA, profitability is 1.21% and 1.02%, respectively, rates similar to those of the first quarter of 2007. <\/p>\n
The slowdown in economic activity growth, both in Spain and in the main developed countries, has been reflected in smaller increases in institutions\u2019 balance sheets and a clear deceleration in quarter-on-quarter changes in margins.<\/p>\n
This evolution in economic activity has been reflected, as expected, in an upturn in non-performing loans. Doubtful assets represent almost 1% of credit to other resident sectors: 0.97% in individual balance sheets and 1.20% in consolidated ones. These rates are still very close to the historical lows recorded in recent years and, in any case, are well below those of other countries in our environment. <\/p>\n
The increase in non-performing loans has led to the expected decline in the insolvency coverage ratio, although at 197% at the end of March it still represents almost twice the balance of doubtful assets and compares very favourably with other financial systems. The impact on the income statement from provisioning for insolvency coverage remains, in this first quarter, at the average of the last two years (0.23% over ATA on an annualised basis). <\/p>\n
Moreover, it is worth highlighting the balanced financial position of Spanish banks, with moderate recourse to funding provided by central banks and credit institutions which, in net balances as of 31 March, financed barely 2.5% of lending to customers, according to the aggregate of individual balance sheets. Lending and customer funds have recorded lower growth than in previous quarters, although they remain at reasonable levels, especially considering the difficulties in financial markets and the global economic situation. <\/p>\n
Finally, it should be noted that restoring investor confidence and the return of capital markets to normal are indispensable conditions for Spanish banking to continue meeting the financing needs of the Spanish economy effectively. The measures proposed by the Financial Stability Forum and other international bodies will contribute to this desired normalisation of markets and will enable investors to distinguish between those institutions that, like Spanish banks, are demonstrating greater capital strength and recurring results. <\/p>\n
In the first quarter of 2008, Spanish banking groups recorded attributable profit of \u20ac5,153 million, equivalent to growth of 10% compared with the same period of the previous year.<\/p>\n","protected":false},"featured_media":0,"parent":0,"template":"","etiquetas-prensa":[868,809,805,803],"class_list":["post-38629","notas-de-prensa","type-notas-de-prensa","status-publish","hentry","etiquetas-prensa-credit","etiquetas-prensa-markets","etiquetas-prensa-results","etiquetas-prensa-spanish-banking"],"yoast_head":"\n