The main Spanish banks increased the volume of non-performing loans (NPLs) and loans under special supervision by €4,772 million in the third quarter compared with the second, concentrated mainly in Santander and BBVA, according to the latest quarterly report by Accuracy on Spanish banks about the Spanish banking sector.
The company points out that the positive trend in NPLs in recent quarters “seems to have reversed” and began to deteriorate between July and September, leading banks to increase their provisions.
Santander has increased its special monitoring loans by 3.3% and its doubtful loans by 1.74%, due to the growing instability outside Europe. Provisions increased by 22.5% year-on-year, driven by the Americas, although the NPL ratio remained almost unchanged. The cost of risk increased by 27 bp, combined with higher provisions on a loan portfolio that was 2.3% lower year-on-year.
BBVA recorded an increase of 2.93% in the balance of loans under special surveillance due to a 2% increase in credit risk across all geographies. However, the increase in NPLS was mainly due to the worsening of retail loans in South America and Mexico. Provisions increased 30.6%, reflected in a higher cost of risk of 111.2 b.p. in the third quarter. quarter. Even so, BBVA’s NPL ratio remained below the 2022 level, falling from 3.5% to 3.3%.
At CaixaBank, according to Accuracy, the balance of NPLS declined 0.9% quarter-on-quarter thanks to the significant drop in consumer loans, but special surveillance loans increased by 4.4% due to the uncertainties in the housing market, forcing the reclassification of certain mortgages. reclassification of certain mortgages.
Provisions reported by this bank in the third quarter increased 39.0% year-on-year and 36.7% in the quarter to €933 million. Even so, Accuracy does not see a deterioration in asset quality, with an NPL ratio that remained stable at 2.7% in September compared to June.
Bankinter’s NPL ratio increased slightly by 9 b.p., although NPLS declined by €20 million. The bank reported the largest percentage increase (191.9%) in loan-loss provisions among the main Spanish banks, in a context in which the NPL ratio remained stable: in 2022 it stood at 2.1% and at the end of September at 2.2%.
Sabadell’s NPL ratios remained stable, with loan-loss provisions down 3.7% compared to 2022 due to to lower provisions for financial assets and real estate investments.
Unicaja reduced its NPL balance by 9.6% thanks to the sale of an NPL portfolio. Thus, the bank reported a 5.6% drop in provisions in line with the 8.6% decline in loans and advances to customers and a 23% lower volume of inflows to NPLs. The NPL ratio declined to 3.4%.
Although there are also slight upturns in the cost of risk, Accuracy rules out the possibility of a banking crisis.
Analysing the data by geographies, the provisions of Spanish institutions in Europe increased across the board, with Poland being the country where they rose the most (11%).
On the other hand, Acuraccy points out that the profitability of Spanish banks has also improved across the board, and with the exception of Sabadell and Unicaja, they have started to cover their cost of capital, while the stock market value in recent months of BBVA (+64.7%), Santander (+46.8%) and Sabadell (+56.7%) have outperformed the Ibex 35 (+26.4%) and the S&P 500 (16.6%). The worst performers were Bankinter (+3.7%) and Unicaja (+9.2%).
“After the stock market volatility suffered by banks during the US regional bank crisis, European banks, and Spanish banks in particular, are still on an upward trend. In the short term bullish trend with results that continue to improve across the board in line with the rising markets, thanks to a significant increase in revenues due to the rise in interest rates and efficiency ratios higher than their European and American peers”, says the report.
Original Story: Europa Press | Author
Photo: Photo by Victor Iglesias from FreeImages
Edition and translation: Prime Yield