The entities associated with CECA achieve an attributed result of 1,753 million in the first half of 2019

Despite the environment of economic growth deceleration, net interest margin increases by 0.6% in the period, thanks to retail business

The entities in the sector maintain a high solvency, with a CET1 ratio of 13.17%

The entities associated with CECA have achieved an attributed result of 1,753 million euros in the first half of 2019, which represents a decrease compared to the same period of the previous year, as a consequence of the extraordinary expenses recorded in this period. Without these non-recurring costs, the sector’s result would have reached 2,436 million, which is 3% lower than that recorded in the first half of 2018.

In any case, the entities of CECA have demonstrated their ability to cope with the prolonged context of low-interest rates. During the first half of the year, they have managed to maintain a positive evolution of the net interest margin, which grows by 0.6% compared to the same period of the previous fiscal year, due to the increase in income associated with retail activity, which has offset the slight increase in financial expenses. On the contrary, net commissions decrease by 1.5%, partly due to lower net inflows of off-balance-sheet products in a context of high volatility in the financial markets.

Additionally, lower income derived from investees and financial operations (ROF) compared to the previous year contribute to a decrease in gross margin of 5.4%.

Also noteworthy is the reduction in the amount allocated to provisions and write-offs, which decreases by 18% compared to the previous year, with a consequent positive impact on the profit and loss account. This figure reflects the gradual improvement in the quality of the balance sheet, with credit delinquency reducing to 5.1% in June, which is 1.3 percentage points less than the figure recorded in June 2018.

Thus, the entities of the sector maintain their high solvency as of June 2019, achieving a CET1 ratio of 13.17%. This figure remains stable compared to that recorded in the same period of the previous year.

On the cost side, the significant increase in operating expenses due to the extraordinary effect of a labor agreement in one entity stands out; without it, operating expenses would have remained at the same levels as June 2018 for the sector as a whole. Return on equity decreases to 5.9% in June, but rises to 8.2% once the aforementioned extraordinary costs are deducted.