Banks have obtained record results in 2023 and seem to have money for everything, also to cover themselves against future inclemencies. In Spain alone, they have increased the expense item intended to cover possible business deteriorations by 39% during the last year, up to 2,816 million euros. Much or little, the increase comes after repeated messages from the European Central Bank (ECB), the Bank of Spain and the European banking authority, the EBA, about the need to exercise extreme caution in the face of possible unwanted consequences of increases in interest rates.
The increase in provisions in Spain has been especially significant among the country's three largest banks. Santander has provisioned 984 million euros in its domestic market, 82% more, compared to CaixaBank's 344 million, 76% more, and BBVA's 145 million, 51% more.
All this data has been compiled by the consulting firm Neovantas, which also offers its interpretation of what happened. The exit from the scenario caused by Covid is mixed, as he says, with a new environment of high interest rates. “Large Spanish banks have been releasing provisions linked to the pandemic, but without losing focus on those that must be established to be prepared for the complex economic scenario that has been brewing in recent months,” he says.
There is, he assures, a “supply strategy taking advantage of the exponential rise in interest margins and covering its back in the face of a greater future problem.”
The increase in provisions has actually been more in proportion to the rise in profits than in delinquencies, which have decreased against all expectations. Santander, BBVA, CaixaBank, Sabadell, Bankinter and Unicaja together earned 26 billion euros last year, most of it outside Spain. In its country of origin, the profit was 11,727 million, 53% more, after paying 1,120 million for the extraordinary tax.
On the other hand, late payments seem under control, at least for now. The Bank of Spain put the figure at the end of December at 3.54%, compared to 3.45% a year earlier, according to data released yesterday.
Banks have separately reported their defaults in Spain. It oscillates between the rates of BBVA and Sabadell, which slightly exceed 4%, and the lowest levels, which are those of CaixaBank, of 2.8%, and of Bankinter, of 2.1%. These are very positive percentages if compared to the experts' forecasts regarding interest rate increases and are mainly due to the good performance of employment.
An Accuracy report concludes that “credit quality in Spain remains under control,” even with a slight decrease in the default rate among large entities. If provisions increase, he affirms it is out of “the greatest prudence.”
This word, prudence, has been dropped by the vice president of the ECB, Luis de Guindos, in almost all his speeches since the central bank began raising rates in mid-2022. He usually accompanies it with the warning that the banks' profits can be “a mirage” in the face of a more complex situation.
In Spain, banks report above all a decrease in the granting of loans, especially those intended for the purchase of a home. They also agree to highlight the high level of family savings, which has allowed many households to repay their mortgages and reduce their risk of default.
