From resilience to record: the rate break and pressure on deposits narrows the future of banking results

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The historic rise in interest rates in just one year is behind the no less historic results achieved by the major Spanish banks in the first nine months of the year. The increase in the interest margins of the entities is the clearest reflection of the impact of the monetary policy of the European Central Bank (ECB) in its accounts, and the next measures to get inflation back on track and the increase in pressure to return deposits are precisely two of the focuses that the market mandates to monitor for the future.

The six listed entities of the Ibex 35 accumulated a joint profit of 19,761 million euros until September, almost 24% more than what was obtained in the same period of 2022 and, in fact, almost more than the entire profit accumulated during the last year ( 20.8 billion). “The sector has experienced a period of resilience and growth throughout the first nine months of the year, despite the existing economic and regulatory challenges,” he points out. Javier Molinasenior market analyst for eToro.

For Alberto Valledirector of the specialized consultancy Accuracy, there are two keys to understanding the accounts: the interest margin and cost containment. “With respect to the interest margin, what was expected is consolidated. A greater widening of the jaws due to the rise in rates and its impact on the revaluation of the assets of the entities. Regarding costs, its containment is reflected in the cost of efficiency that the banks have shown,” he points out.

Joaquin Roblesanalyst XTBadds a third key: commissions, which have fallen less than they could have done taking into account the evolution of the business and income in recent months.

But once digested, the banking sector and analysts look to the future with their sights set on Frankfurt. The challenge is to maintain business volumes after the stop in the rise in money prices (and the future lowering of rates). “Growth happens through the inorganic route,” says Robles. “It is the option so that the results of the entities are not so dependent on the evolution of interest rates. Although it is true that the banks now do not seem to be opting for this route, it is very difficult for them not to consider it in the future,” points out the expert.

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