Financial institutions prepare to present record results By 2023 – Bankinter was the first to offer them – but it is likely that they have already reached their ceiling or are very close to doing so. This is the view expressed in Madrid this Friday by European Banking Authority (EBA) president José Manuel Campa, echoing a perspective shared by most analysts and the financial industry.
“Although financial margins are not at their highest, they are probably touching its highest level“Campa said at an informative breakfast organized by Nueva Economía Fórum and introduced by Economy Minister Carlos Body.
According to the head of the EBA and former Secretary of State for the Economy (between 2009 and 2011), what the financial margins of banks will be, Development of monetary policy of the European Central Bank (ECB). However, if current expectations are confirmed (interest rates will not increase and will begin to fall from the summer), it would be logical to consider that banks’ financial margins have already reached their peak or are about to peak. “Margins will tighten not only due to the behavior of interest rates, but also due to the revaluation of assets and liabilities on banks’ balance sheets. withdrawal of extraordinary measures “The reduced liquidity of central banks will mean that institutions will have to provide financing at a higher cost in the market,” Campa said.
The period of rapid and strong increases in official interest rates since July 2022 has resulted in organizations having “very good income statements.” However, the EBA president warned that the increase in interest rates and the resulting slowdown in the economy must show its face at some point. Increase in defaults and deterioration in credit qualityAs the Bank of Spain also warned.
So far, defaults are only showing signs of recovery in some parts of the real estate sector (commercial facilities) and the consumer sector in some parts of Europe, Campa said. But this phenomenon is bound to get worse, and that is why he insisted on “prudent” management of the affairs of financial institutions, as well as the distribution of dividends.
In this context, Campa framed part of his analysis of the banking tax adopted and expanded by the Spanish Government. “It’s a good time to be carefulThe money stays in the sector and does not go to either the public or private sector. “In terms of prudence, it is better for the money to stay in the sector,” he said.
In any case, the EBA president assessed that the tax was implemented “at the right time in the cycle, that is, in terms of increasing profits” and noted that this was done in more than half of the countries in the European Union. Especially in places where variable interest loans dominate the market. “This discussion does not exist in countries where fixed-rate loans dominate“Citting as an example France, where 90% of loans are fixed interest and there are zero arguments,” Campa said.