Spain
Highlights
- Lending growth in the year, with a seasonal decline in the quarter
- Good year-on-year performance of the recurring revenue and outstanding efficiency improvements
- Stability of the NPL ratio and the cost of risk
- Outstanding results, above €1 billion for the second quarter in a row
BUSINESS ACTIVITY (1)
(VARIATION COMPARED TO 31-12-23)
(1) Excluding repos.
NET INTEREST INCOME / AVERAGE TOTAL ASSETS
(PERCENTAGE)
OPERATING INCOME
(MILLIONS OF EUROS)
NET ATTRIBUTABLE PROFIT (LOSS)
(MILLIONS OF EUROS)
| FINANCIAL STATEMENTS AND RELEVANT BUSINESS INDICATORS (MILLIONS OF EUROS AND PERCENTAGE) | |||
|---|---|---|---|
| Income statement | Jan.-Sep.24 | ∆ % | Jan.-Sep.23 (1) |
| Net interest income | 4,831 | 19.2 | 4,053 |
| Net fees and commissions | 1,711 | 6.7 | 1,603 |
| Net trading income | 567 | 83.7 | 309 |
| Other operating income and expenses | (6) | (95.4) | (132) |
| Of which: Insurance activities | 288 | 3.7 | 278 |
| Gross income | 7,103 | 21.8 | 5,833 |
| Operating expenses | (2,461) | 5.2 | (2,339) |
| Personnel expenses | (1,314) | 2.7 | (1,280) |
| Other administrative expenses | (874) | 13.1 | (773) |
| Depreciation | (272) | (4.8) | (286) |
| Operating income | 4,642 | 32.8 | 3,494 |
| Impairment on financial assets not measured at fair value through profit or loss | (506) | 25.0 | (405) |
| Provisions or reversal of provisions and other results | (89) | 19.7 | (74) |
| Profit (loss) before tax | 4,047 | 34.2 | 3,015 |
| Income tax | (1,179) | 26.8 | (930) |
| Profit (loss) for the period | 2,868 | 37.6 | 2,085 |
| Non-controlling interests | (2) | 31.9 | (2) |
| Net attributable profit (loss) | 2,866 | 37.6 | 2,083 |
Balance sheets | 30-09-24 | ∆ % | 31-12-23 |
| Cash, cash balances at central banks and other demand deposits | 26,323 | (41.1) | 44,653 |
| Financial assets designated at fair value | 138,381 | (5.3) | 146,136 |
| Of which: Loans and advances | 56,019 | (20.3) | 70,265 |
| Financial assets at amortized cost | 233,374 | 7.9 | 216,334 |
| Of which: Loans and advances to customers | 176,061 | 1.7 | 173,169 |
| Inter-area positions | 35,869 | (16.3) | 42,869 |
| Tangible assets | 2,792 | (3.2) | 2,884 |
| Other assets | 4,430 | (5.7) | 4,697 |
| Total assets/liabilities and equity | 441,170 | (3.6) | 457,573 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 89,322 | (20.0) | 111,701 |
| Deposits from central banks and credit institutions | 32,506 | (25.6) | 43,694 |
| Deposits from customers | 236,351 | 8.8 | 217,235 |
| Debt certificates | 47,375 | (8.0) | 51,472 |
| Inter-area positions | — | — | — |
| Other liabilities | 20,297 | 9.2 | 18,579 |
| Regulatory capital allocated | 15,319 | 2.9 | 14,892 |
Relevant business indicators | 30-09-24 | ∆ % | 31-12-23 |
| Performing loans and advances to customers under management (2) | 172,818 | 1.8 | 169,712 |
| Non-performing loans | 7,964 | (2.7) | 8,189 |
| Customer deposits under management (2) | 219,128 | 1.4 | 216,005 |
| Off-balance sheet funds (3) | 105,802 | 8.8 | 97,253 |
| Risk-weighted assets | 123,356 | 1.3 | 121,779 |
| Efficiency ratio (%) | 34.6 | 40.5 | |
| NPL ratio (%) | 3.9 | 4.1 | |
| NPL coverage ratio (%) | 56 | 55 | |
| Cost of risk (%) | 0.38 | 0.37 | |
(1) Revised balances. For more information, please refer to the “Business Areas” section.
(2) Excluding repos.
(3) Includes mutual funds, customer portfolios and pension funds.
Macro and industry trends
Recent indicators continue showing a dynamism in economic activity, largely due to services exports, fiscal policy and the increase in the labor force caused by factors such as higher migration flows. In this context, BBVA Research's GDP growth forecasts have been revised upwards to 2.9% in 2024 and 2.4% in 2025, from 2.5% and 2.1%, respectively. On the other hand, annual inflation moderated more than expected, to 1,5% in September, and will probably remain close to 2% in the coming months, contributing to the outlook for economic growth.
As for the banking system, based on data as of the end of August 2024, credit volume to the private sector decreased by 1.1% year-on-year. At the end of August, the household loan portfolio remained stable compared to the volume achieved a year earlier, while the non-financial corporate loan portfolio fell by 1.3% year-on-year. Customer deposits increased by 9.1% year-on-year as of the end of August 2024, due to a 4.0% increase in demand deposits, and a 48.7% increase in time deposits. The NPL ratio stood at 3,44% in August 2024, 12 basis points below the data from August of the previous year. Furthermore, it should be noted that the system maintains comfortable solvency and liquidity levels.
Activity
The most relevant aspects related to the area's activity during the first nine months of 2024 were:
- Loan balances were higher than at the end of December (+1.8%), highlighting the growth in the commercial segment (+2.4%), mortgages (+1.3%) and consumer (+3.0% including credit cards).
- Total customer funds grew between January and September (+3.7%), mainly as a result of the performance of off-balance sheet funds (mutual and pension funds), which increased by 8.8%, favored by net contributions made in the period and a very positive market effect. On the other hand, customer deposits registered an increase of 1.4% during the first nine months of 2024.
The most relevant aspects related to the area's activity during the third quarter of 2024 were:
- Lending activity showed a slight decrease compared to the previous quarter (-1.1%), mainly due to the reduction in activity during the summer months. Loans to the public sector showed a large deleveraging (-16.3%), partially offset by loans to medium-sized companies and mortgages.
- Regarding credit quality, the NPL ratio remained stable compared to the end of the previous quarter, and stood at 3.9%. With respect to the NPL coverage ratio, it increased to 56% at the end of September 2024, helped by the downward trend in the non-performing loan balance, which has been favored by both a good recovery dynamic, especially in the mortgage portfolio and by lower NPL entries, generalized across all portfolios.
- Total customer funds increased 2.3% with respect to the balances at the end of June 2024, due to the demand balances of institutional customers, mainly from public administrations. For its part, off-balance sheet funds grew by 3.1% favored by net contributions and a favorable market effect in the quarter.
Results
Spain generated a net attributable profit of €2,866m in the first nine months of 2024, 37.6% higher than in the same period of the previous year, mainly supported by the favorable evolution of every component of the gross income, especially the net interest income.
The most relevant aspects of the year-on-year changes in the area's income statement at the end of September 2024 were:
- Net interest income increased by 19.2%, mainly supported by the increase in the customer spread in a context of higher benchmark interest rates compared to the same period of the previous year, as well as an effective liability management, which has kept the cost of deposits contained.
- Commissions grew by 6.7% compared to the same period of the previous year. The contribution of asset management fees, insurance and securities fees and those related to CIB operations, with significant transactions in the first quarter of the year, were noteworthy.
- Growth in the NTI contribution (+83.7%), mainly as a result of the performance of Global Markets.
- Good performance of the insurance business, which results are included in the other operating income and expenses line. This line also includes the total annual amount paid for the temporary tax on credit institutions and financial credit institutions for year 2024 of €285m, which is €70m higher than that registered in the same period of the previous year. Finally, the year-on-year comparison is mainly favored by the absence of contribution to the SRF in 2024.
- Operating expenses increased by 5.2%, mainly due to an increase in general expenses, as a result of inflation, especially higher IT expenses, and to a lesser extent, in personnel expenses. This growth is well under the increase of the gross income (+21.8%), which allowed a very significant improvement of the efficiency ratio by 545 basis points in the last twelve months to fall below 35%, specifically in 34.6%.
- Impairment on financial assets increased by 25.0%, in line with expectations, mainly due to higher requirements in the wholesale portfolio, which had a very positive behavior the previous year. As a result of the above, the cumulative cost of risk at the end of September 2024 stood at 0.38%, remained stable compared to the end of the previous quarter.
In the third quarter of 2024, Spain generated a net attributable profit of €1,076m, slightly above the previous quarter (+0.9%) notably due to the favorable performance of net interest income and especially the NTI, together with lower credit provisions in line with the previous quarter.