Banks had a record quarter and achieved historic results thanks to rising rates. Spain’s six largest financial institutions earned a total of €19.761 million as of September. which is 23.5% more than a year ago. This profit is not only a record, but also exceeds the first nine months of the year, which they closed with a profit that was not only record, but also comparable to that achieved for the whole of 2022, when they earned 20.850 million euros.

That is, Six large Spanish banks earned just 1 billion euros less in nine months than in the whole of 2022.. The European Central Bank increased the price of money 10 times in a row, causing banks’ interest margins to skyrocket, leading to these profits.

Despite the rise in profits, bank managers insist they are not extraordinary profits, that they still do not cover capital and that rising rates mean a return to normal. However, they admit that in the coming quarters, thanks to the ECB’s decision to keep the rate at 4.5%, growth will no longer be as strong.

This was stated by Cesar Gonzalez-Bueno, CEO of Banco Sabadell. During the presentation of the company’s results, he noted that after delivering the best profits since 2006 (with different perimeters), they expect profits to continue to grow, but “it does not seem predictable that these amounts will be sustainable over time.” However, he is optimistic about the full year, as well as 2024, but admits that profit growth “will not be that great in the future.”

In these first nine months, it was clear that these two large banks were not showing the most growth. However, the third party in the dispute, which in some respects actually ranks first, demonstrated better behavior, although it did not discredit the other parties.

Banco Santander earned €8.143 million through September, up 11% on the previous year. If you look at interest margin, a metric that looks at the impact of rate increases because it’s the difference between what they charge on loans and what they pay on liabilities, the business earned 13% more, to $32,139 million. Euro. Despite the excellent performance, Santander is the bank that improved the least in relative terms over the last quarter.

In this sense, CaixaBank, which has almost all its business in Spain and Europe, meaning it benefited from the ECB rate hike, recorded a 60.7% increase in its interest margin, reaching 7.364 million euros. It therefore became the organization that improved this metric the most in the first nine months of the year. In terms of profit, CaixaBank earned €3.659 million by September, up 48.2%.

If you look at profits alone, Bankinter showed the biggest growth, up 59% to €685 million. The business also performed well in terms of interest margin, increasing by 53.7% to EUR 1,379 million. Banco Sabadell, in turn, recorded the highest profit in its history in nine months, only compared to 2006, but with different perimeters. In this case, the business earned a total of 1.028 million euros up to September, a figure they expected to achieve during the year and which is 45% more than a year ago. Looking at the percentage margin, the growth was slightly lower, at 29%, but exceeded €3.5 billion.

BBVA was the latest to report quarterly results with a profit of 5.961 million euros and registered an increase of 24.3%. In terms of interest margin, the company grew by 29.3% in this regard to EUR 17,843 million. Finally, Unicaja showed the lowest profit growth: 4.9% to 285 million euros. In terms of margin, growth was 25.36% to €973 million.

The total interest margin of all banks is 63.470 million euros., which is 23.4% more than a year earlier. That is, the results of this line of banking operations increased by 12,074 million euros in one year. Hector Grisi, CEO of Banco Santander, believes there is still room to continue to benefit from portfolio repricings as a result of rising interest rates for several more quarters, so these earnings growth has not yet reached its ceiling. .

BBVA ‘clearly’ expects its profits to be higher in 2024 than those recorded during this year, given the constant revaluation of the loan portfolio and the contained value of deposits. “At the earnings level, we clearly expect better performance than in 2023,” Genc said.

Considering these numbers, CaixaBank CEO Gonzalo Gortazar denies that the banking sector is achieving outstanding results. in the current financial year: “They are not happening, especially in the banking sector.” Gortazar attributes this fundamental improvement to rising interest rates, which he now considers low but preceded by negative rates that “appear to be high.” He insists that current interest rate levels are very reasonable and should be maintained in the long term: “These are normal rates that we will have to get used to.”

Maria Dolores Dancausa, CEO of Bankinter, notes that they expect to finish the fourth quarter well, but clarifies that we must not fall into complacency and that we must be vigilant despite the good results this year.

Advantages in Spain compared to tax

In addition, these results were marked by an emergency tax on banks introduced by the government of Pedro Sánchez. This tax, which was initially temporary, affects the income of Spanish companies. Except, One of the clauses in the PSOE-Sumara pact indicates that the possibility of expanding this tax will be explored.. Faced with this possibility, all banks once again expressed their dissatisfaction with the tax, saying it was discriminatory and created legal uncertainty.

This tax is levied on 4.8% of income, so banks must pay it regardless of final profits. For this reason, bank managers criticize this measure. In 2023, six large enterprises paid 1.123 million euros in this tax. Nevertheless, the profits of these banks in Spainsince only part of your business in the country is taxed, It was just over 9 billion euros..

Managers insist these are not exceptional benefits. Gortasar assured that this tax “shoots itself in the foot.” For his part, the CEO of BBVA commented that the withdrawal of capital from banks means the withdrawal of loans that can be put into circulation, and this could lead to a reduction in investment in Spain. Hector Grisi was outspoken and said: “I want them to abolish the tax.”