The reduction in interest rates is beginning to take its toll on banking clients in Spain. This parameter, which measures the difference between what a financial institution charges for loans granted and what it pays clients for deposits, hit a ceiling in March and until September the narrowing has been general.
The average margin ended September at 3.21%, compared to the peak of 3.31% in March or 3.29% in June – then it was already reduced in some entities. This is an average ratio based on the data of the six listed banks (Banco Santander, BBVA, CaixaBank, Banco Sabadell, Bankinter and Unicaja). For the calculation, the margin is taken only in Spain in the banks that have broken it down when presenting their accounts to look for more homogeneous trends as the parameter has different behaviors in the countries due to the disparate composition of the business or the impact of the change in policy. monetary in the balance of assets and liabilities.
Entities are compensating for their deterioration with a greater volume in granting financing thanks to the fact that demand has returned to flow, favored precisely by the beginning of the reversal of the increase in interest rates. Banks have lent 335,414 million between January and August, 15.8% more and with figures that have not been seen since 2012.
Business increase
This situation allowed large banks to break a new record with 23,656 million profits until September, a figure that represents a year-on-year increase of 19.71% and has surprised the market to the upside. And, despite the adjustment of the Euribor, the average profitability of 3.21% still represents a substantial improvement compared to the 1.71 that existed when the Euribor was at its lowest in 2021.
By entities, only Santander has managed to maintain the margin between June and September in Spain, although the parameter falls to 3.48% from its peak of 3.61% in March. The rest of the banks do suffer an adjustment in the third quarter. In BBVA it falls from 3.44 to 3.39%; in CaixaBank at 3.43% from its maximum in the year of 3.64 – this entity does not break down the ratio in Spain -; in Sabadell it drops from 3.41 to 3.3%; in Bankinter it rises from 3.01 to 2.96% and in Unicaja it stands at 2.75%, compared to the 2.91% reached in the first quarter.
The customer margin has been key in the growth of the sector’s results in the last two years thanks to the increase in the price of money by the European Central Bank (ECB). By raising rates from 0% to 4.5%, the Euribor went from -0.502% in 2021 to 4.16% in October 2023, boosting the profitability of the credit portfolio as its prices appreciated with the new references, higher. In favor of the expansion of the parameter has also run the slow and low transfer of the same references to bank deposits, which the big banks have not had the need to remunerate massively because they have excess liquidity and the demand for credit was flagging.
The trend was in favor until March, even with the Euribor already on the decline since last autumn, due to a double effect: the accommodation of the prices of these credit portfolios takes a certain delay in time when the operations are signed with the Euribor of several months ago, and because the remuneration of liabilities has also taken time to improve.
By entities, the highest cost of deposits is declared by Bankinter, with 1.42%, the highest since rates began to rise, while the yield on its loans fell in the third quarter from 4.41 to 4. 38%. Sabadell follows, with 1.12% after the launch of the account with which it remunerates customer acquisition and payrolls at 2.5% APR. Even so, this cost is lower than the 1.17% in March, while the rate on loans has dropped from 4.55 to 4.42 in the last three months.
At CaixaBank it rose to 1.04% in September, the highest of the year, although the profitability of the credit balance has decreased from 4.62 to 4.47% in six months. Santander maintains the highest credit price, at 4.5% (it was 4.64% in March), and has reduced the cost of liabilities from 1.6 to 1.02% in six months. This parameter reaches 1.04% in BBVA, where it has not registered a downward inflection either; while the credit yield has increased, from 4.35 to 4.25%. Unicaja maintains the lowest cost of liabilities, standing at 0.72%, also the highest for the year; and in credit (down from 3.59 to 3.48%).
A higher cost of liabilities and performance in financing is usually linked to having a business with companies, self-employed workers and SMEs; and, conversely, lower average volume prices tend to be due to a dominant or superior business with private clients.
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