Low profitability and productivity leads smaller banks to more consolidation, according to A

MADRID, 22 Oct.

Low profitability and productivity leads smaller banks to more consolidation, according to A


The current interest rate cycle, after a decade in which the price of money has been negative, has shown that Spanish banks move at two speeds: large entities, with high profitability and productivity, and smaller ones. , who have a hard time keeping up.

This is clear from the latest edition of the report 'The Pulse of Banking', prepared by the consulting firm Alvarez.

As explained by the managing director of the firm and responsible for Spain and Portugal, Fernando de la Mora, and senior director Eduardo Areilza, the great "challenge" that these small entities are going to face is productivity per branch in the face of low returns. on capital (RoE) that they record.

In the Spanish banking sector as a whole, the RoE reached 10.03% at the end of the second quarter, which represents an increase of more than 1.7 percentage points compared to the first quarter. Likewise, the business volume per branch increased by two million, reaching 184 million euros. However, these average figures mask the differences that exist between entities.

Regarding profitability, the entities that register returns above 10% stand out, such as BBVA (17.9%), Bankinter (16.7%), CaixaBank (12.3%), Abanca (12. 3%), Santander (12.1%) and Ibercaja (11.7%). In the tail group you can see somewhat smaller entities, such as Sabadell (8.3%), Kutxabank (7.9%), Unicaja (4.6%) and Cajamar (3.1%).

Something similar happens with productivity, a metric affected by the freezing of new credit due to the rise in interest rates. The great champions in productivity per branch are Santander and Bakinter, with 292 and 252 million, respectively. BBVA (208 million), Sabadell (195 million) and CaixaBank (177 million) also stand out.

In this case, the tail group is located by the five smallest entities: Abanca (147 million), Kutxabank (141 million), Unicaja (134 million), Cajamar (95 million) and Ibercaja (74 million).

"The reduction in offices has stabilized, but some banks continue to optimize their presence," says the report prepared by the consulting firm.

Another conclusion of the report prepared by the consulting firm's experts is that the customer margin (the difference between what a bank charges for loans and what it pays for deposits) is reaching its peaks for the current interest rate cycle. .

The entities best positioned in this sense, with customer margins above 3%, are CaixaBank (3.2%), BBVA (3.1%) and Santander (3.1%). Behind them are Sabadell (2.9%), Bankinter (2.8%), Ibercaja (2.8%), Cajamar (2.5%) and Unicaja (2.3%).

This margin has been boosted in recent months due to the repricing of credit portfolios, which is already close to its estimated maximum of between 5% and 5.5%, as well as an almost absent remuneration for deposits. .

However, the forecast is that the cost of bank deposits will continue to increase, reaching around 2.20% or 2.50%. In any case, this possible "deposit war" will depend on the commercial capacity of the entities, the interest of clients and whether there is a structural need in the system.

Regarding the 'mix' of deposits, practically all deposits in the Spanish financial system are in demand accounts. This is because the time deposit had practically disappeared in the face of a decade of zero remuneration for liabilities. However, according to calculations made by Areilza, around 6,000 million euros are currently entering time deposits, which could lead to them ending up representing between 35% and 45% of total liabilities.