In her first intervention before a large audience full of representatives of the financial sector, the new deputy governor of the Bank of Spain, Soledad Núñez, took the opportunity to reinforce key messages that the institution has sent to banks for several quarters. «The profitability is one of the highest of the main countries in Europe. However, the CET1 capital ratio remains below,” he indicated in the 31st Financial Sector Meeting organized by ABC and Deloitte.
The slap on the wrist has been, as on other occasions, in the levels of capital accumulated by financial entities and their comparison with Europe. He has justified that solvency ratios tend to be lower in Spain for different reasons, such as requirements, greater use of internal models, etc., but that does not prevent them from being strengthened.
“It wouldn’t hurt to take advantage of the economic boom to increase the CET1 ratio”he indicated, adding that “maintaining a position of solvency is crucial, especially in the current environment marked by geopolitical uncertainties and the persistence of some macroeconomic risks. Favorable profitability forecasts would facilitate the potential reinforcement of bank solvency and compliance with additional capital requirements, such as the activation of the countercyclical capital buffer (CCA) on exposures in Spain.
Despite everything, Núñez has indicated that “the banking system is in a good situation, both in terms of profitability and solvency, liquidity, bad debts… “The sector is in a good situation that it must take advantage of to strengthen itself and face the challenges such as digitalization, sustainability and geopolitical uncertainty,” he highlighted.
Regarding credit, the deputy governor has indicated that a change in trend can already be seen once the reductions in official interest rates by the European Central Bank (ECB) and in net terms it is growing since new loans already exceed amortizations. Behind this, he said, is both the relaxation of monetary policy and the good performance of the Spanish economy.
Even so, the sector faces risks ahead that make the Bank of Spain and the entities themselves have to be alert: «In the current macroeconomic context, the consequences of a potential escalation of geopolitical tensions continue to be the main risk for entities. Spanish. “The risk of an abrupt correction in valuations in financial markets is also very relevant.”
“Credit quality has remained stable at reasonable levels despite the rise in interest rates,” said the number two at the Bank of Spain. At the same time, he has also mentioned the importance of technological and sustainability challenges, the need to adapt to new times, and has focused on the challenge of reinforcing cybersecurity in a critical sector such as the financial sector.
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