After a long journey through the eight-year desert of official interest rates zeros and negativesAt the end of the dunes, Banks found not the oasis they expected, but something even better to their benefit: what appeared to be an invigorating forest. “It’s like the Low Blows song, but the other way around: good times for banking“, manages to sum up one of the main managers of a large business.
This is because, contrary to what no one expected a few months ago, central banks They enter a cycle of rising money prices to combat inflation, which will blow as collateral effect fresh air comes financial sector at the expense of their own pockets debtor customers. In addition, to maximize impact, businesses plan to implement a strategy similar to: ‘rocket and explosion effect’ fuels.
The phenomenon is known accordingly. fuels they rise rapidly to accompany the rise in oil prices, but fall much more slowly than crude oil when the price of a barrel falls. Similarly, an increase in the price of money already noticed on loanbut organizations intend delay whatever is possible also translates into the first surge of interest in years. pay deposit.
win every week
“Aim beat it every week They confirm in one of the main banks that it is possible to transfer the increase in the ratios already occurring in assets to liabilities. Thus, while interest rates on deposits continue, flat encephalogramThe installments of floating rate housing loans have been rising faster since January due to the rise in Euribor, the index that reflects the interest rates banks apply to each other while lending money and generally predicts the movements of central banks.
Also, your interest new fixed rate mortgagemost contracted in recent years growing because they are linked to the yield on the 10-year Treasury note (which rose from 0.7% to 2.4% since April). At the same time, organizations benefit from the increase in Euribor making room for them. lower the differential variable mortgages due to a commercial strategy (the overall result will still be higher than in recent years despite this decrease): variable mortgages they will be more profitable that you set them up for years to come.
Banks’ rationale is that they have to make up for years in which zero and negative official rates have reduced their profitability. So remember that credit is getting cheaper almost constantly end of 2008even though they have not moved into households via fee for deposit The cost of keeping their money in the European Central Bank since 2014 (currently 0.5%). This, they claim, put there is profitability their ability to finance families for years and with it.
increased profitability
While there’s no denying that the industry’s profitability has been sinking for years, the truth is that their calculations began to reflect notable increases in profitability after they started in 2021. great extraordinary provisions and exceptional registration reductions in 2020 to overcome losses due to the pandemic. Thus, the Spanish banking system, 26,000 million won euro in 2021 8 billion red numbers the previous year’s return on capital (ROE) increased from -3.1% to 10.5%
Even without the aforementioned extraordinary effects (positive in 2021, mainly due to the CaixaBank-Bankia merger), ROE increased from 3% to 9% last year, standing up for the first time in years above your cost demand of investors(8.8% on average in 2021, according to the calculations of the Bank of Spain). And in the first months of this year, the trend was highlighted: first-quarter profitability rose to 11.7%, while cost of capital fell to 7.3% in March and 6.9% in April.