Andorran banking closes the 2022 financial year with an aggregate result of the three banking entities of 113 million euros. In a year marked by the corporate operations of MoraBanc and Crèdit Andorrà, by the increase in interest rates by the ECB and by strong inflation, banks grew 16% in profits, but also in the volume of resources managed from customers 3.3%, up to 63,691 million euros.
The entities' business model demonstrates resilience and sustainability. The three banks as a whole present a profitability of 7.62%, in line with the average profitability of European entities (EBA data 3rd quarter 2022), with an increase of 158 basis points compared to 2021 (6.04% in 2021 ). The profitability of the business on assets, measured by ROA, reaches 0.69% and improves compared to 2021 (0.60%) above the European average. During 2022, the rise in interest rates, on the one hand, has made the traditional activity of granting loans profitable and has boosted profits, but, on the other hand, corporate operations, the continuous adaptation to international banking regulations and the Technological investments have continued to pressure the results of the sector.
Andorran banking maintains its solidity with a good capitalization of entities with a CET1 solvency ratio of 15.76% as of December 31, 2022 (17% as of December 31, 2021), above the average for European banks , which stands at 14.8% according to data from the EBA (3rd quarter of 2022). This ratio has been affected by the corporate operations that have taken place in the market. Corporate operations both nationally and internationally allow growth to be generated inside and outside Andorra's borders and thus have a more efficient, solid and more responsive system for customers.
The liquidity ratio is 201%, much higher than the minimum of 100% set by European regulators and higher than the average for European banks, which is 162% at the end of the third quarter of 2022. The NPL ratio, Despite the increase in Euribor, it continues to fall to 3.3% at the end of 2022 (3.7% in 2021 and 5.32% in 2019).
Although the total number of credit investment has remained stable at around 5,000 million euros, 702 new mortgages have been formalized for families, which add up to a total amount granted of 375 million euros (16% compared to 2021), which represents 12% of GDP. New loans to companies and individuals have been 676 million euros, 25% more than in 2021, and represent 21% of the country's GDP. Finally, banks have accompanied consumption through their means of payment, with a 36% growth in the volume of card operations, which represents 1,547 million euros and 49% of GDP.
The general director of Andorran Banking, Esther Puigcercós, pointed out that "Andorran banks are profitable and accompany the growth of the economy with 1,000 million euros of new financing operations constituted during 2022". In her opinion, “Andorran entities have a solid capital position with liquidity ratios higher than the average for European banks. The universal banking business model of the Andorran banking sector, which combines banking for individuals, companies and private banking, in itself provides diversification in risk management that makes it more resilient”.
