The entities associated with CECA achieve an attributed result of 2.888 billion in 2016

The pre-tax result of the entities affiliated with CECA grew by 16% year-on-year to 3.651 billion euros

The entities in the sector have reduced non-performing loans to 8.5% and have strengthened their solvency to 12.99% as of December 2016

The low interest rate environment has continued to exert pressure on the interest margin, which fell by 10.8% in 2016 across the sector. Interest income decreased by 21% in 2016, as a consequence of the decrease in interest rates and its impact on the profitability of the credit portfolio and fixed income, and this decline is partially compensated by a reduction in interest expenses, which fell by 35%.

Meanwhile, net commissions decreased by 1.2% year-on-year, and the results from financial operations recorded a year-on-year drop of 22%, due to the realization of lower capital gains in the fixed income portfolio classified as available for sale compared to 2015.

Conversely, the performance of income from the equity portfolio has been very favorable: dividends showed a growth of 6.2% annually, and the results from investments increased by 43%. The performance of the “other operating income” category has also been positive, supported by income from insurance activities. Despite all this, the gross margin fell by 7.7% in 2016 compared to 2015.

The effort made by all the entities associated with CECA in rationalizing costs is reflected in a 7.7% decrease in operating expenses in 2016, as a result of the year-on-year decrease in both personnel expenses (9.7%) and other general expenses (6.4%). The lower operating expenses have allowed for a stable efficiency ratio compared to 2015, at 53.9%.

On the other hand, the improvement in asset quality has contributed to a reduction in losses from impairment of financial assets, which fell by 68% during the year, and has allowed for an increase in other provisions to address potential outflows related to floor clauses.

Nevertheless, the absence of benefits from singular operations compared to the 2015 fiscal year and a higher tax burden resulting from the tax reform approved in December 2016, has led to a 2.1% decrease in the attributed result.

Regarding activity, the credit balance to the private sector moderated its rate of decline across the sector, down to -3.5% as of December 2016, which has been consistent with a rebound in new credit to the retail sector, particularly to SMEs and households for consumption. Furthermore, retail deposits recorded a slight year-on-year increase at the end of the year, of 0.5%, while off-balance sheet resources have maintained growth close to 10.5% annually, primarily driven by the advance of investment funds.

The non-performing loan rate of the entities affiliated with CECA was at 8.5% as of December 2016, compared to 9.4% for the entire deposit-taking sector. Since the end of 2013, the non-performing loan rate in the sector has declined by 4.4 percentage points, and non-performing assets have decreased by 43%.

Finally, the entities in the CECA sector have continued to strengthen their solvency, with a CET1 ratio of 12.99% as of December 2016, which is 2.4 percentage points above the ratio recorded at the end of 2013.