January-September 2013



As mentioned at the beginning of this chapter, the full impact of the elimination of the floor clauses in residential mortgage loans and the increase in loan-loss provisions as a result of the application of the recommendations issued by the European regulators on the classification of refinanced loans have had a negative impact on the earnings from banking activity in Spain over the quarter. The area has registered a cumulative net attributable profit through September 2013 of €477m (€1,033m twelve months earlier).

Cumulative net interest income totals €2,910m, down 19.5% in year-on-year terms. This decline is the result of decreased volumes and the environment of low interest rates and reduced spreads. It has also been compounded by the elimination of floor clauses in mortgage loans, which this quarter has had its full impact, unlike the previous one, when it was accounted for 53 days only. The most positive aspect in the period was the lower cost of funding (wholesale and retail), which relieves the pressure on customer spreads and will benefit net interest income in the coming quarters. Income from fees and commissions performed well and increased 2.6% year-on-year to €1,034m, while the figure for NTI was also positive, at €627m. The latter is the result of good management of the structural risks on the balance sheet in an environment marked by low interest rates, which has had a positive effect on capital gains obtained from the rotation of the ALCO portfolios. Also noteworthy is the favorable performance of the Global Markets unit. The above, together with the €155m registered under the other income/expenses heading, has resulted in cumulative gross income of €4,725m for the first nine months of 2013 (down 7.5% year-on-year).

Operating expenses have been kept in check, with the lowest quarterly figure registered this year, and a cumulative total of €2,277m through September, i.e. a year-on-year increase of 8.1%. This increase is affected by the integration of Unnim (carried-out at the end of July of last year). The area’s operating income totals €2,448m (€3,000m twelve months earlier).

Impairment losses on financial assets are up €448m in the quarter and nearly double the figure for the previous quarter. As we mentioned earlier, they have been affected by the adoption of the recommendations issued by the European regulators on the classification of refinanced loans.

Lastly, the provisions (net) and other gains (losses) heading basically includes the gains from the reinsurance operation undertaken in the first quarter of the year. Between January and September 2013, this heading stands at a positive €432m.

Spain. Banking activity. Operating income

(Million euros)

Spain. Banking activity. Net attributable profit

(Million euros)