The latest Financial Stability Report issued by Bank of Spain dated November 2018 provides an updated description of the Spanish banking sector. In a nutshell, some key references are as follows: (i) consolidated P&L of the financial sector has increased by 12.5% due to the high reduction in losses derived from asset depreciation; (ii) total consolidated assets decreased by 0.5%; (iii) loans and credits to the private sector have decreased by 2.9%; (iv) the NPL rate (tasa de morosidad) has gone down to 3.6% (meaning a decrease from 4.5% compared to 2017), although the impaired assets level is still high (increase default signs in consumption), despite the important reduction in the past years (-60% since 2013); (v) recourse of Spanish banks to the Eurosystem continued at a high level (€168b) but has at least not increased in the last three years (average allocation to Spanish entities was 22%); (vi) private deposits at banks and their patrimony on a consolidated basis increased by 0.6% but in total decreased by 1.3%; (vii) the level of provisions due to asset deterioration has also decreased due to better performance, and impaired assets (dudosos) have been reduced by 26.7% in the last year; and (viii) common equity tier 1 capital ratio (“CET1”) has been reduced slightly to 11.9% and has only increased by 0.3% since 2014. The report also cites evidence that the credit to SMEs in Spain went down 7.2% and that the Spanish banking system is more efficient than comparable systems in the main European jurisdictions and the European average.
Banking Regulation 2019. Global Legal Insights, 6th Edition, 2019.