Spain
Highlights
- Growth in both lending and customer funds during the year
- Relevant efficiency improvement in 2024, supported by the gross margin performance
- Improvement in NPL and NPL coverage ratios both in the quarter and in the year
- Outstanding results
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 | 2024 | ∆ % | 2023 (1) |
| Net interest income | 6,435 | 14.5 | 5,620 |
| Net fees and commissions | 2,329 | 7.7 | 2,164 |
| Net trading income | 675 | 64.9 | 409 |
| Other operating income and expenses | 50 | n.s. | (305) |
| Of which: Insurance activities | 379 | 5.4 | 360 |
| Gross income | 9,490 | 20.3 | 7,888 |
| Operating expenses | (3,349) | 4.8 | (3,195) |
| Personnel expenses | (1,800) | 2.3 | (1,759) |
| Other administrative expenses | (1,183) | 12.4 | (1,053) |
| Depreciation | (366) | (4.4) | (383) |
| Operating income | 6,140 | 30.8 | 4,693 |
| Impairment on financial assets not measured at fair value through profit or loss | (682) | 4.8 | (651) |
| Provisions or reversal of provisions and other results | (150) | 3.2 | (145) |
| Profit (loss) before tax | 5,309 | 36.2 | 3,897 |
| Income tax | (1,522) | 29.5 | (1,175) |
| Profit (loss) for the period | 3,787 | 39.1 | 2,722 |
| Non-controlling interests | (3) | 31.7 | (2) |
| Net attributable profit (loss) | 3,784 | 39.1 | 2,720 |
Balance sheets | 31-12-24 | ∆ % | 31-12-23 (1) |
| Cash, cash balances at central banks and other demand deposits | 12,734 | (71.5) | 44,653 |
| Financial assets designated at fair value | 115,735 | (20.8) | 146,136 |
| Of which: Loans and advances | 36,753 | (47.7) | 70,265 |
| Financial assets at amortized cost | 237,279 | 9.7 | 216,334 |
| Of which: Loans and advances to customers | 179,667 | 3.8 | 173,169 |
| Inter-area positions | 44,433 | 3.6 | 42,869 |
| Tangible assets | 2,781 | (3.6) | 2,884 |
| Other assets | 4,791 | 2.0 | 4,697 |
| Total assets/liabilities and equity | 417,752 | (8.7) | 457,573 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 75,279 | (32.6) | 111,701 |
| Deposits from central banks and credit institutions | 31,819 | (27.2) | 43,694 |
| Deposits from customers | 228,471 | 5.2 | 217,235 |
| Debt certificates | 47,424 | (7.9) | 51,472 |
| Inter-area positions | — | — | — |
| Other liabilities | 19,439 | 4.6 | 18,579 |
| Regulatory capital allocated | 15,320 | 2.9 | 14,892 |
Relevant business indicators | 31-12-24 | ∆ % | 31-12-23 (1) |
| Performing loans and advances to customers under management (2) | 176,720 | 4.1 | 169,712 |
| Non-performing loans | 7,700 | (6.0) | 8,189 |
| Customer deposits under management (2) | 220,907 | 2.3 | 216,005 |
| Off-balance sheet funds (3) | 108,695 | 11.8 | 97,253 |
| Risk-weighted assets | 122,627 | 0.7 | 121,779 |
| Efficiency ratio (%) | 35.3 | 40.5 | |
| NPL ratio (%) | 3.7 | 4.1 | |
| NPL coverage ratio (%) | 59 | 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
Economic activity showed dynamism throughout 2024, largely due to services exports, fiscal policy, private consumption and the increase in the labor force caused by factors such as higher migratory flows. In this context, recent data suggest, according to BBVA Research, that GDP growth has been around 3.1% in 2024, slightly higher than the previous forecast (2.9%). On the other hand, a less favorable external environment, a gradual fiscal consolidation, a possible smoothing of services exports after strong increases in previous years and the economic impact (limited for the country as a whole, but negative) of the recent Isolated High-Level Depression (DANA for its acronym in Spanish) in the Valencia region point to a moderation of growth to around 2.3% in 2025 (10 basis points lower than previously forecast). Annual inflation, which closed 2024 at around 2.8%, is likely to remain slightly below 2.0% in 2025.
Regarding the banking system, with data at the end of November 2024, the volume of credit to the private sector grew by 0.3% year-on-year, with greater growth in the loan portfolio to households (+0.9%, with the mortgage portfolio increasing +0.1% year-on-year at the end of November 2024 compared to the decrease of 3.3% at the end of 2023) than in the loan portfolio to non-financial corporations (+0.2%). It is important to note that since 2009, with the exception of the growth registered in 2020 thanks to COVID support measures, there has been no loan growth in the system. Customer deposits increased by 10.4% year-on-year in November 2024, due to a 7.3% rise in demand deposits and a 31.1% increase in time deposits. The NPL ratio stood at 3.38% in November 2024, 19 basis points lower than in October of the previous year. It should also be noted that the system maintains comfortable levels of solvency and liquidity.
Activity
The most relevant aspects related to the area's activity during 2024 were:
- Loan balances increased by 4.1%, boosted by the dynamism of wholesale portfolios, where the corporate banking and CIB segments grew 7.0% and medium-sized companies 6.3%. Among retail portfolios, the evolution of consumer loans (including credit cards) which stood at 6.8% and of mortgages which was 1.6%, were noteworthy.
- Total customer funds grew by 5.2% during 2024. The performance of off-balance sheet funds (mutual and pension funds and managed portfolios) was notable, increasing by 11.8%, driven by inflows during the year and a very positive market effect. On the other hand, customer deposits registered an increase of 2.3% during 2024, with an increase in the balances of retail banking and institutional customers.
The most relevant aspects related to the area's activity during the fourth quarter of 2024 were:
- Lending activity showed a growth of 2.3%, compared to the previous quarter, with a generalized favorable performance in almost all segments, especially strong in the corporate banking and CIB segment (+4.5%). For its part, lending to medium-sized companies and smaller business increased by 2.4% and 1.1%, respectively.
- Regarding credit quality, the NPL ratio decreased by 19 basis points compared to the end of the previous quarter, and stood at 3.7% due to continued high levels of recoveries together with higher volumes of write-offs and portfolio sales. Inflows remained in line with the third quarter, which were lower than in the first half. The coverage ratio increased 344 basis points to 59% at the end of December 2024, due both to the decline in NPLs and the increase in the loan loss provisions.
- Total customer funds were 1.4% higher than the balances at the end of September 2024, with a more relevant increase in the off-balance sheet funds, which grew by 2.7% favored by inflows and a market effect which was again very favorable in the quarter. On-balance sheet deposits also grew slightly in the quarter (+0.8%).
Results
Spain generated a net attributable profit of €3,784m in 2024, which is 39.1% above the result achieved in 2023. This result is driven by the favorable evolution of the recurring revenues from the banking business, particularly net interest income, although the other components of gross income contributed to a growth of more than 20.3% in this line of the area's income statement.
The most relevant aspects of the year-on-year changes in the area's income statement at the end of December 2024 were:
- Net interest income grew by 14.5%, mainly supported by the increase in customer spread, as a result of higher benchmark interest rates over 2023, which continue to be favorable despite the downward revisions made by the ECB during 2024. This, linked to the growth in activity volumes during the year, largely offset the increase in lending costs.
- Fees and Commissions grew by 7.7% in the year. The contribution of fees from asset management, insurance and securities was especially relevant, as was the fee income from wholesale customers, which had a good performance in the year.
- Growth in the NTI contribution (+64.9%), mainly as a result of the performance of Global Markets.
- The year-on-year evolution of the aggregate other income and operating expenses was positive, mainly due to the absence of contribution to the FUR during 2024 and a significantly lower contribution to the Deposit Guarantee Fund compared to the one registered in 2023 after reaching the minimum coverage level established by the European regulations for covered deposits. This line also includes the annual temporary tax on credit institutions and financial credit institutions for year 2024 of €285m, which is €70m higher than in the same period of the previous year. The contribution from insurance business was higher.
- Operating expenses increased by 4.8%, mainly as a result of the inflation impact on general expenses, and to a lesser extent, the increase in personnel expenses, which includes the wage improvements contained in the XXV banking collective bargaining agreement13. This growth was notably lower than that experienced by the gross income (+20.3%), which allowed an improvement of the efficiency ratio of 521 basis points in the year.
- Impairment on financial assets increased by 4.8%, in line with expectations, mainly due to higher requirements in wholesale after a very positive result in 2023. The cumulative cost of risk at the end of December 2024 stood at 0.38%, in line with the previous quarter and with the end of the previous year.
In the fourth quarter of 2024, Spain generated a net attributable profit of €918m, which represents a decrease of 14.6% compared to the previous quarter. This evolution is mainly explained by the lower contribution of NTI linked to the evolution in Global Markets and the growth in operating expenses, which include the update of the variable retribution to employees, in line with the area's performance in 2024, and higher expenses, mainly in technology.
13 According to the resolution of December, 20 2024 of the Directorate General of Labor and applicable to the period from January, 1 2024 to December, 31 2026.