The associated entities of CECA increase their result by 17.8% in the first quarter of 2018, reaching 1.32 billion
The growth of recurring income and lower provisions have driven the attributed result of the entities associated with CECA to 1.32 billion, a 17.8% increase compared to the same period in 2017
Despite the context of low rates, the affiliated groups managed to raise the interest margin by 0.8% compared to the same quarter of the previous year
The quality of the credit portfolio has improved, and amounts allocated to provisions have seen a significant reduction of 64%
The savings banks and banks associated with CECA reported an attributed result of 1.32 billion euros during the first quarter of 2018, a 17.8% increase compared to the first three months of 2017. The growth of recurring income (interest margin and commissions), along with a significant decrease in provisions and provisions for asset portfolio write-downs, have been the main drivers of the result increase.
Additionally, in a context of low rates, entities continued to improve the interest margin with a rise of 0.8% in the period. In general, CECA-associated entities show a positive performance of this magnitude throughout the period, demonstrating good margin management in a particularly complex context.
Commission income also recorded a positive evolution in the first quarter of the year. Specifically, net commissions from CECA-associated entities increased by 5% year-on-year during the first three months of 2018.
This positive trend for the business also applied to the amounts allocated to provisions, which fell to less than half compared to the same period in 2017, specifically decreasing by 64%, allowing for a pre-tax result of 1.674 billion euros, a 27% increase.
Furthermore, during the year so far, there has been a significant improvement in credit quality. The latest available data shows a significant drop in doubtful loans in the resident private sector, bringing the rate in March 2018 down to 6.95%, with a coverage level reaching 55% in the same period after growing nearly 5 p.p over the past year.
Thus, the return on equity improved to 9.3% in the first quarter of 2018.
For its part, the CET1 ratio (the primary measure of financial strength used by the banking regulator) of the sector has risen from 12.5% in March 2017 to 13.1% in March 2018; that is, it has increased by 6 p.p. in one year. Following the same trend, the total capital ratio has grown by more than 1 p.p, from 14.4% to 15.6% over the last year.
