This exceptional first quarter in banking accounts has brought us two historical reversals in the 'status quo' of the Spanish financial sector. On the one hand, the always questioned Santander, due to its low capital levels, has been ahead in solvency of its eternal rival, BBVA (more by demerit than those of Carlos Torres than by merit of those of Ana Botín). And in Catalonia, Sabadell for the first time beats CaixaBank for profit.
Santander closed the first quarter with a capital ratio (CET1, the highest quality) of 11.58%, slightly lower than the 11.65% in 2019. Meanwhile, BBVA has gone from 11.74% to 10.84% due to a series of factors: the extraordinary provisions of 966 million to anticipate the delinquency derived from the coronavirus (with 0.26 points remaining); the increase in assets on which this ratio is calculated due to the increase in credit, especially to companies (0.50 points); the depreciation of the currencies and the stock and bond portfolios (0.47 points); and the payment of CoCos coupons, the new preferred ones (0.03 points).
These falls are partially offset by the generation of profit before provisions (0.33 points) and "others" (0.03 points), thus reaching the aforementioned 10.84%. Provisions of 2,048 to cover (again) the loss of value of your bank in the US and that cause the losses of 1,792 million in the quarter they are not reflected in capital, according to the bank; if they were subtracted too, their solvency would drop further. Conversely, Torres assures that the capital gains of 300 million from the sale of 50% of the insurance business to Allianz (which would bring the ratio to 11%) and the effect of the suppression of the 2019 dividend, which took to the accounts of that year unlike its competitors (who have reflected it in 2020).
In any case, BBVA maintains its capital objective for this year, which consists of placing it between 2.25 and 2.75 points above the minimum requirement of the ECB. But it has a trick, because that requirement has been reduced (within the measures taken by the supervisor to deal with the crisis): before it was 9.27% and now it is 8.59%, which implies that its new objective it stands at 10.84-11.34.
"We are not the ugly duckling for the capital, we are in the fork that we had marked. Each bank has different requirements and ours is one of the lowest due to our diversified business model, "said Torres in the presentation of the results. Be that as it may, the fact is that it is below the bank that Ana Botín presides over, when the sOlvency has always been Santander's weak point most criticized by analysts. In general, they consider it to be a well-managed, profitable, diversified bank with less risk than its peers, including BBVA, but less solvent. Now those tables have changed.
TIP THE CATALONIA
Another historical turn is that of Catalan banking (now domiciled in the Valencian Community). For the first time, Banco Sabadell earns more than CaixaBank in a quarter: 94 million in the case of the entity chaired by Josep Oliu versus 90 million in Jordi Gual's.
This is explained because CaixaBank has allocated many more provisions before which is looming because of the confinement: 400 million compared to 213. Asked if Sabadell is being reckless, its chief financial officer, Tomás VarelaHe replied that his provisions follow the same model as his colleagues, which increases the expected loss based on forecasts of a drop in GDP, a rise in unemployment and a drop in the price of housing.
One possible reason for this difference lies in the different typology of the clientele of both entities. Thus, that of CaixaBank is mainly retail, which is the one that will be most affected by unemployment, ERTE, salary cuts, the cessation of activity by the self-employed, etc. On the contrary, Sabadell has its great strength in SMEs, which are going to hold up better thanks to ICO loans, which are endorsed by the State and have a grace period of one year; therefore, entries in arrears will not occur until mid-2021.