The Economic Recovery and the Reduction of Provisions Improve the Results of CECA-Associated Entities in 2021
The economic and commercial recovery, along with the lower provisions made compared to the previous year, when extraordinary allocations were made to address the impact of COVID-19, have allowed for the recovery of profitability in 2021 back to levels prior to the health crisis.
In a context of economic recovery, the entities in the CECA sector have increased their attributed results in 2021 to 7.079 billion euros. Excluding the extraordinary impact arising from the merger processes, the result stands at 3.336 billion euros.
The entities associated with CECA have collectively achieved an attributed result of 7.079 billion euros, compared to the 2.129 billion euros obtained in the previous financial year. The 2021 result accounts for the extraordinary impact arising from sector mergers; without this, it amounts to 3.336 billion euros.
Vaccination and the onset of economic recovery have allowed for a reduction in losses due to financial asset impairment during the year (2.557 billion euros less than in 2020), which has favored an improvement in results and raised the return on equity (ROE without extraordinary adjustments) to 5.7% in 2021, compared to 3.5% in the previous year, recovering ROE levels prior to the health crisis.
On the income side, net interest margin decreased by 5.3% due to the persistence of a Euribor at minimum levels, as well as changes in the portfolio structure, with a greater weight on ICO loans and lower income from consumer loans and fixed income.
The commercial recovery has allowed for an increase in commissions (10.5%), as well as in the results of participating companies (17.2%) and in dividend income (19.8%), although this improvement does not fully offset the decline in the net interest margin, the result of financial operations (ROF), and operating income.
On the expense side, the restructuring effort made by the entities has allowed for a slight reduction in operating expenses (-1.9%), excluding the extraordinary costs associated with merger processes. The efficiency ratio (excluding extraordinary expenses) has slightly increased compared to 2020, standing at 58.5%, due to the decline in gross margin.
Despite the cyclical deterioration that the economy has registered as a consequence of the pandemic, credit risk remains contained, standing at 3.8% in December across the sector, which is 0.4 percentage points lower than the rate recorded at the end of 2019 and 0.4 percentage points lower than that of the aggregate of deposit entities.
Furthermore, regarding solvency, the entities in the sector reached a CET1 ratio of 13.4% in December 2021, a level similar to that prior to the COVID-19 crisis and comfortably exceeding the minimum capital requirements set by the European Central Bank (ECB).
