Five major Spanish banks, Santander, BBVA, Caixabank, Bankinter and Sabadell, this week presented their 2023 annual results with record profits: 26 billion 088 million euros. increased by 25.96% compared to the previous year.
This rise in earnings is largely driven by the European Central Bank’s policy of higher interest rates, which widens banks’ net interest margins on lending and makes existing loans more valuable. Mortgages and other lending products have benefited as rates climbed. There is also mention of an extraordinary tax imposed by the government on the financial sector, a measure analysts estimate will cost the banks more than $1.1 billion this year. Projections indicate the payment could reach 1.4 billion in 2024.
Executives from these institutions expressed confidence that 2024 could surpass 2023 not as a one-off peak but as the start of a new phase of stronger results and sustained profitability.
In the lead up to Unicaja’s forthcoming results, the sector overall appears buoyant. The 2023 interest margin reached 83,400.1 million, up 19.8% from 2022. Net profits for the period rose to 26,969.1 million, a jump of 44.1%. Deposit costs remained relatively modest, with European banks averaging around 3% on deposits while Spanish banks held deposits at approximately 2.31%.
Despite higher rates, the default rate rose only marginally, by an average of 4 basis points. Banco Sabadell showed the most notable rise in indebtedness, moving from 3.41% to 3.52%, while Bankinter estimates the rate around 2.11%.
Sabadell that increased its profits the most
In terms of earnings growth, Banco Sabadell led the way with a 55.10% rise, reaching 1,332 million euros. Caixabank followed with a 53.9% increase to 4,816 million euros, and Bankinter with a 50.89% rise to 845 million euros. The largest overall profit among the five remained Banco Santander, at 11,076 million euros, up 15.31%. BBVA posted 8,019 million euros in profit, up 26.10%. The five institutions together saw their Spain business surge by 52.8%, totaling 11,428 million and accounting for nearly half of the sector’s profits.
Related news
Investors continue to track earnings per share (EPS), which rose across the five major national financial groups. Banco Sabadell stood out with an EPS increase of 76.9% to 0.23 euros. The same trend is seen in return on tangible equity (ROTE), a metric often critiqued in recent years. While the sector average ROTE rose, Bankinter leads profitability with 18.15%.