CECA entities achieve a net attributed result of 815 million in the first half of the year

The attributed result of CECA sector entities was 52.7% lower than that achieved in the first half of 2019 due to the provisions made for Covid-19

In this context, the associated entities have strengthened their solvency, reaching an average CET 1 ratio of 13.7% in June 2020, positioning the sector better to meet the future needs of its clients

The entities associated with CECA have collectively achieved an attributed result of 815 million euros in the first half of 2020, representing a 52.7% decrease compared to the previous year, due to provisions made to address possible contingencies arising from the coronavirus.

The additional allocation to provisions, amounting to around 2 billion euros, has been made to mitigate the increased credit risk of exposures to households and companies resulting from the economic crisis caused by the pandemic. The ultimate objective of these allocations is to further strengthen the balance sheets and maintain maximum flexibility to meet the future financial needs of clients.

On the revenue side, the interest margin decreased by 2.4% affected by the fall of the Euribor in mortgage credit and changes in the portfolio structure (expansion of loan moratoriums and ICO loans to companies, to the detriment of consumer and fixed-income loans). Specifically, by June 30, CECA entities have granted 394,562 moratoriums amounting to a total of 18,724 million euros and 208,498 loans and credits guaranteed by ICO for a total of 24,679 million euros.

The gross margin remains stable, as the decline in the interest margin, the results from participations, and financial operations is offset by the growth in commission income and higher operating income.

On the expense side, there is a significant reduction in operating expenses (-18%); however, it should be noted that in the first half of 2019, extraordinary expenses (978 million euros) were recorded. This decrease has allowed the sector’s efficiency ratio to improve by 12.3 percentage points, reaching 55.5%.

Nevertheless, the rise in provisions and other losses, exceeding 2,170 million compared to the previous year, causes a decrease in net results and a drop in ROE, which falls to 2.7% in the first half of 2020 (compared to 5.9% the previous year).

In this first half of the year, there was a decrease in the credit delinquency rate in the CECA sector, which stands at 4.0% in June 2020, representing 1.1 percentage points lower than that recorded in June 2019.

Additionally, the associated entities have reinforced their solvency by achieving an average CET 1 ratio of 13.7% in June 2020, which represents an improvement of 6 basis points compared to the ratio reported as of June 2019 and comfortably exceeds the minimum capital requirements set by the European Central Bank (ECB).