The banks and savings banks of CECA closed 2022 with good results. These, contrary to the entrenched belief in public opinion, are not so much explained by the rise in interest rates set by the European Central Bank, whose impact has only influenced the banking business in the last months of the year. Rather, the good performance of credit demand (which shot up by 33%) and the greater efficiency of our entities, which is above the European average, are the main reasons. Therefore, these are not extraordinary profits falling from the sky.
However, the goodness of the figures masks a profitability that, while recovering, still needs to improve to be generally above the cost of capital and comparable to the profitability of listed non-financial companies.
Despite this dual reality, headlines have focused on the magnitude of the profits, creating a public controversy that has often overlooked the close and differential link between the profits of financial entities and their social contribution.
In the case of CECA entities, this link is articulated primarily through the Social Work, which is the true foundational distinction of our associates and is developed today by banking foundations thanks to the dividends they receive from their participation in the capital of our banks. This has made it possible that since 2014, with an investment of 6.17 billion euros and 253 million beneficiaries in aggregate terms, the Social Work recurrently stands as the largest private social investor in our country, acting as an indispensable complement to the welfare state.
Secondly, the banking profits are reinvested in society via taxes and their redistribution in the form of public transfers. Here, too, the contribution of banks is differential, with a corporate tax rate of 30%, in addition to specific sector taxes. This tax particularity explains that the fiscal contribution of CECA entities was 48.8% in 2021. In other words, for every 100 euros of profit, 48.8 euros were devoted to paying taxes. Given the improvement in announced results, forecasts point to an even greater contribution in 2022. Moreover, in the European comparison, Spanish banks pay the most taxes alongside the French while significantly more than the German and Italian banks. This figure does not include the recent banking levy, and therefore, it is likely that this differential will widen even further, as there is no similar tax in other jurisdictions in our surroundings.
Finally, the profits from banking not allocated to tax and dividend payments also generate a social return, through the reinforcement of capital, which is essential for expanding the credit capacity of the entities. This is fundamental for a sector that stands out for generating a double impact on our society: as any economic agent through its corporate activity, and specifically, as a dynamizer of the economy through the financing granted. This explains that in the last financial year, the social impact of CECA entities reached 178 billion, equivalent to 16% of GDP, and 3 million jobs, representing 15% of the active population.
In light of the above, it seems clear that the profits generated by financial entities are as desirable as they are necessary. Perhaps recognizing this fact may help combat the deeply rooted habit in our collective imagination of stigmatizing, without basis, corporate profits in general and those of banks in particular.
