In recent sessions, the president of the European Central Bank highlighted the unanimous stance of policymakers after the meeting held last Thursday, as they decided to suspend further increases in the key rate, keeping it at 4.5 percent. Looking ahead to the December review, Christine Lagarde aims to gain a clearer view of how the Gaza conflict might influence energy prices. At this moment, speculation about a potential easing of monetary policy is premature. The focus remains on whether inflation will continue to ease and how the economies of the major European nations will chart their paths. The shift in monetary policy is clearly reflected in the financial sector’s accounts. Abanca is joining the ranks of institutions aiming for a record year of profits, reporting 428.6 million in revenue through September, a historical peak and triple the figure for the same period in 2022 (142.5 million).
Galicia’s financial leadership attributes the positive results to the vitality of its retail operations and a solid financial profile that yields a broad range of high-quality outcomes. The interest margin rose by nearly 63%, reaching 874.1 million euros. The average rate on new financing operations stood at 5.14%, compared with 3.8% for the legacy portfolio. The improvement in deposit fees progressed more slowly, moving from 1.59% to 1.98%. The spread between lending and deposit costs, known as the Call radiate, stood at 3.1%, more than doubling from the prior year. In this context, the bank’s earnings power continues to strengthen amid a favorable lending environment.
Increased productivity and profitability
Revenue from service provision rose by about 4%, totaling 220.7 million. Abanca posted a net income of 51 million from financial operations. Regulatory costs, including the new extraordinary tax and contributions to the deposit guarantee fund, reached 110.3 million. According to the team led by Juan Carlos Escotet, operating expenses grew only 4% due to effective cost controls, placing the bank below the overall industry average in Spain. Provisions for potential non-performing loans rose by 49%, surpassing 77 million, while the efficiency ratio improved to 52.3% and the primary profitability indicator, ROTE, stood at 13%.
Having integrated targobank, the Betanzos-based group now manages a business volume of 112 billion euros. Beyond strengthening its footprint in the Mediterranean region and Andalusia, the operation reinforces strategic lines in retail lending and insurance, and creates synergies in payment instruments, off-balance sheet activities, and related strategic ventures. The aim is to sustain a growing and high-quality result, with liberal asset sales of safe products and increasing customer repeatability. This year, Portugal has emerged as a standout market, accounting for 61% of the expansion geographies. A total of 96,000 new customers were added in 2023, with nearly half of them of digital origin.
Deposit and loan portfolio
The formalization of mortgages reached a balance of 1.174 million after a 12.6% year-over-year increase. Market share stood at 93 basis points in Spain and 97 basis points in Portugal. Financing to companies rose by 6.1% to 5,106 million. In total, new operations reached 6,966 million euros, while the overall loan balance of customers hovered around 45.8 billion euros in ordinary conditions and showed a slight decrease to 178 million euros in the current period. Deposits stood near 53.3 billion after an 8.3% rise.
Abanca notes that the balance of suspicious accounts remains stable. By September, the default rate was 2.3%. In particular, the ICO operations rate hovered around 4%, indicating performance well below the system average. Coverage of seized assets reached 64.3%, and 75.3% for all non-payment risk categories. There were 18,760 million in liquid assets, described as equivalent to four times the expected maturity of the issues.
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