September 2022 " El Pulso" de la banca - Quarter 2, 2022: Industry benchmark and top performers
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September 2022
“El Pulso” de la banca
Quarter 2, 2022: Industry benchmark and top performers
Foreword
Alvarez & Marsal (A&M) is delighted to publish the sixteenth edition of the Spanish Banking Pulse (“The Pulse”) Q2 ’22. In this edition, we share results from
our research examining the 10 biggest Spanish banks (“top 10”) with regard to their activities within Spain and highlight key performance indicators of the
Spanish banking industry. The Pulse aims to help banking executives and board members stay current on industry trends. As trending topics, we include: 1.
status of moratoria and PGS; 2. wave of Cost Inflation; 3. ESG as a business opportunity.
All the data used in this report has been obtained from publicly available sources. The methodology for all the calculations is homogeneous and discussed in
the glossary.
We hope that you will find the Pulse useful and informative.
Disclaimer:
The information contained in this document is of a general nature and has been obtained from publicly available
information plus market insights. The information is not intended to address the specific circumstances of an
individual or institution. There is no guarantee that the information is accurate at the date received by the
recipient or that it will be accurate in the future. All parties should seek appropriate professional advice to analyze
1 their particular situation before acting on any of the information contained herein
Spanish Macroeconomic Overview
Inflation - Interannual Growth (%) GDP (€ billions) EURIBOR 12m (%)
To Date
1.400 10% 2.5 2.3
1.328
30 1.296
1.244 1.259
73-83 1.203 1.205
1.200 1.162 2.0
1.122
25
1.000 4% 1.5
20 7% 5%
4% 3%
3%
2% 1.0
To Date 800
15
10.5
600 0.5
10
0%
-10% 0.0
5 400 -10%
0 200 -0.5
-5 0 -15% -1.0
62 66 70 74 78 82 86 90 94 98 02 06 10 14 18 22 2017 2018 2019 2020 2021 2022e 2023e 2024e 2017 2018 2019 2020 2021 2022
In Spain, inflation has been rising since the end of 2019 and Spanish GDP had been growing since COVID 19 pandemic Inflation is prompting the ECB to increase interest rates with
has broken the 10% levels since June 2022. official rates of the deposit facility standing at 0.75% after the
Bank of Spain expects GDP to increase 4.5% in 2022, 2.9%
Last period of high inflation were 50 years ago during the September review.
in 2023 and 2.5% in 2024, this would lead to pre-pandemic
decade of 1973-1983. levels by the end of the year 2022. Euribor 12 months is already trading at 2.3% signal of future
rate increases ahead.
According to the bank of Spain, three factors, which are not GDP expectations are being reviewed downward during the
entirely independent of each other, can be identified behind last semester
the generalized increase in the rate of change of prices: a
slowdown in the prices of many goods and services,
recovery in economic activity, and the increase in the
price of electricity
Source: Instituto Nacional de Estadística and Bank of Spain, on September 19th, 2022 2
Scoring range from 1 (Best) – 4 (Worst) 1 3 Variation compared to Q1’22:
2 4 Var. > +-5% 0% < Var. < +5%
0% > Var. > -5%
Pulse Scorecard: Quarterly evolution
Score
Metric Q1 '2022 Vs Q2 '2022
2022Q2
Key Trends of Q2’22
Loans and Advances Growth (QoQ) 0.5% 2.5%
Growth 2.2 ✓ Loans and Advances and Deposits grew at a faster pace compared to previous
Deposits Growth (QoQ) 0.2% 3.1% 1 quarter by 2.5% and 3.1% QoQ, respectively
✓ Loan to Deposit Ratio has decreased to 87.0% still on a healthy liquidity zone
Liquidity Loan-to-Deposit Ratio 87.6% 87.0% 1.3
Yield on Credit (YTD) 1.93% 1.94%
✓ Net Interest Margin remains steady at 0.93% with almost no changes in the yield on
Cost of Funds (YTD) 0.14% 0.15% 2
credit and the cost of funds QoQ
Net Interest Margin (YTD) 0.93% 0.93%
Income & Non-Interest Income / Operating Income (YTD) 46.2% 43.5%
Operating 2.5 ✓ Operating Income Margin decreased 10 bps due to the reduction of 5% in the
Efficiency Operating Income (YTD) / Assets 1.7% 1.6% 3
aggregated operating income
Operating Revenue Growth (YoY) -3.6% 2.9%
Cost-to-Income Ratio (T) (YTD) 49.6% 50.9%
✓ Cost-to-Income Ratio worsened by ~1.3% points QoQ to 50.9% in Q2’22, as
4
Business Volume per Branch (€ Mn) 169 179 Operating Income decline by 5% QoQ
NPL ratio 3.73% 3.38%
✓ NPL Ratio slightly decreased, driven by a reduction of 7% in the problem loans
Risk NPL Coverage Ratio 61.3% 61.2% 1.9 5
✓ CoR also shows a slightly decrease to 0.36%
Cost of Risk (YTD) 0.39% 0.36%
RoE (YTD) 8.47% 7.79%
✓ ROE and other profitability ratios showed a decrease due to a reduction of around
Profitability RoA (YTD) 0.41% 0.39% 2.8 6 10% in the aggregated industry net income
RoRWA (YTD) 1.29% 1.22%
CET1 Ratio FL 12.8% 12.5%
✓ CET1 Fully Loaded Ratio decreased 30 bps to 12.5%, mainly driven by dividend
Capital 2.8 7 payments and share buyback programs
Leverage ratio (%) 5.8% 5.3%
Total Score 2.3
Note: QoQ and YTD stand for quarter over quarter and year to date respectively
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022 3
A&M Score 2Q 2022 and Trend
Spanish
average
Top 4 Banks by asset size Bottom 6 Banks by asset size
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022 4Scoring range from 1 (Best) – 4 (Worst) 1 3 Variation compared to Q1’22:
2 4 Var. > +-5%
A&M Scorecard broken down per top 10 Spanish Banks
2022Q2 CABK BBVA SAN SAB BKT ABA UNI KBK IBJ BCC
Loans and Advances
2.8% 2.3% 2.3% 3.2% 3.3% 2.4% 0.8% 1.9% 2.4% 2.4%
Growth (QoQ)
Growth
Deposits Growth (QoQ) 3.5% 2.2% 3.6% 2.2% 2.4% 4.2% 3.1% 3.1% 2.0% 4.5% KEY TAKEAWAYS
Score 2.2 2.3 2.2 2.2 2.2 2.0 2.5 2.3 2.5 2.0
LCR 311.7% 170.0% 161.2% 257.1% 233.3% 241.0% 333.0% 185.6% 423.1% 215.6% KTK, BBVA and BKT are the top
Liquidity
Loan-to-Deposit Ratio
(LDR)
90.5% 85.8% 81.3% 95.5% 93.4% 86.8% 72.4% 99.5% 81.9% 86.7% performers this quarter and SAN, ABA
Score 1.2 1.0 1.0 1.3 1.3 1.2 1.0 1.3 1.0 1.2 and BCC the worst
Net Interest Margin
Income & Operating Efficiency
(NIM)
Operating Income /
0.9% 0.8% 0.8% 1.2% 1.2% 0.9% 0.9% 0.9% 0.8% 1.1%
UNI and KBK showed a significant
1.6% 1.5% 1.6% 1.9% 1.8% 1.3% 1.4% 1.9% 1.6% 2.0%
Assets
Operating Revenue
improvement in their scores QoQ; while
1.5% 0.3% 4.5% 6.6% 3.0% -2.9% 10.0% 6.7% 2.7% -1.9%
Growth (YoY)
Traditional
BBVA, SAN, BKT and ABA worsened
52.7% 46.7% 49.4% 51.2% 44.4% 69.8% 52.9% 48.5% 60.2% 50.5%
Cost-to-Income Ratio
Business Volume per
167 208 294 189 246 152 126 133 79 90
their score. All the rest showed almost
Branch (€ Mn)
Score 2.6 2.3 2.3 2.2 1.9 3.5 2.4 2.2 3.0 2.5
no changes
NPL ratio 3.3% 4.0% 3.8% 3.9% 2.4% 2.1% 3.4% 1.4% 1.9% 3.1%
Risk
Coverage Ratio 65.0% 61.5% 49.4% 59.4% 60.3% 82.9% 65.4% 95.4% 81.6% 74.5%
Score 1.8 1.9 2.2 2.0 1.7 1.4 1.8 1.2 1.2 1.7
Return on Equity (RoE) 8.9% 11.3% 6.7% 6.2% 11.2% 4.7% 5.2% 5.2% 7.1% 2.8%
Profitability
Return on Assets (RoA) 0.4% 0.5% 0.3% 0.4% 0.5% 0.3% 0.3% 0.5% 0.4% 0.2%
Score 2.5 2.0 3.2 3.0 2.0 3.5 3.5 3.2 2.8 3.8
CET1 Ratio FL 12.2% 12.5% 12.1% 12.5% 11.9% 12.0% 12.8% 16.6% 12.4% 13.0%
Capital
Leverage ratio 4.6% 6.2% 4.7% 5.3% 4.1% 5.7% 11.5% 11.5% 4.8% 5.1%
Score 3.1 2.4 2.9 2.8 3.4 2.7 2.0 1.0 2.9 2.8
Total Score 2.2 ➔ 2.0 2.4 2.3 ➔ 2.1 2.4 2.2 1.8 2.2 ➔ 2.4 ➔
Note: LCR for CABK, BBVA, and SAB at group level due to lack of data
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022 5Scores changes from last quarter….
Q1’22 Score
KEY TAKEAWAYS
Only 3 banks improved their score
compared to last quarter: UNI, KBK and
CABK
Only IBJ remain steady
All the rest showed worsening from last
quarter
Q2’22 Score
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022 61
Deposits increased faster than Loans and Advances in the
first half of the year
21'Q3 21'Q4 22'Q1 22'Q2 Q2’22 Av
L&A Growth QoQ (%)
-0.86 0.71 0.54 2.51
KEY TAKEAWAYS
Gained Financing MS Gained Deposits & Financing MS
Overall L&A increased 2.5%
Deposits increased 3.1%
CABK showed above market
improvement in Loans and Deposits
IBJ, BBVA and KBK showed below
market improvement in Loans and
Deposits
SAN, ABA, BCC and UNI showed
above market improvement only in
Deposits
BKT and SAB showed above market
improvement only in Loans
Lost Deposits & Financing MS Gained Deposits MS
21'Q3 21'Q4 22'Q1 22'Q2
1.27 2.75 0.23 3.12
Deposits Growth QoQ (%)
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022 71
Loan to Deposit Ratio decreased marginally across the
board
Loans to Deposits Ratio (%) Q1’22 Q1’21 Av
Q2’22 Q2’22 Av KEY TAKEAWAYS
3 banks (SAB, BKT and IBJ) increased
their LDR, while the others decreased
LDR of the industry is in a very healthy
area at 87% reducing external funding
needs
BCC suffered the sharpest decrease in
LDR, meanwhile SAB experienced the
biggest increase
4 Banks are above average and 6 are
below
UNI is the only bank outside the healthy
liquidity zone, with a LDR of 72.4%
Total Assets (€ Bn)
Note: The green zone is an area of healthy liquidity between 80% and 110%
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022 82
Decrease in Other Operating Income, creating a downswing
in the profitability of the sector
Net Income bridge – € Bn
KEY TAKEAWAYS
Aggregate net income decreased 9.6%
QoQ to 2,058 € Bn but, all Core Drivers
of Net Income have improved:
An increase in Revenue items: Net
Interest Income and Fees and
Commissions grow QoQ
A reduction of Costs Items:
Operating Expenses and cost of risk
improved QoQ
The reduction of the Net Income was
driven by the seasonality payments
to the Deposit Guarantee Funds and
the SRB Funds under Other
Operating Income.
Net Int. Fees & Other Op. Operating Other Other Income
2022Q1 Provisions 2022Q2
Income Commissions Income Expenses Provisions Expenses Tax
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022 92
NIM shows a slight improvement due to rate hikes but is far
from its historical levels
Yield On Credit Net Interest Margin
(%, Quarterly Annualized) (%,Quarterly Annualized)
1.25
KEY TAKEAWAYS
NIM increased 1 bp QoQ to 0.93%
driven by a small change in Credit
Spread
Loan to Deposit Ratio (%) x
Spanish Banks still below EU average
of 1.25%
– Loan to Deposit Ratio continues a
decreasing trend with a reduction of 52
bps QoQ at Q2’22
Cost of Funds Cost of Funds increased 1 bp QoQ,
(%, Quarterly Annualized) similarly, to Yield on Credit
Credit Spread increased 2 bps QoQ
Euribor reappreciation will start to be
seen during the 2H of 2022 and 2023
Credit Spread (%)
21'Q2 21'Q3 21'Q4 22'Q1 22'Q2
1.84 1.83 1.83 1.78 1.80
Note 1: Relation between elements above represents a functionality and not necessarily an exact mathematical formula
Note 2: Figures represent the aggregation of the top 10 banks activities in Spain 10
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022, EBA risk dashboard March 20222
Six out of ten local major banks reported slight NIM
improvements
Improved Stable Worsened
Net Interest Margin (%, Quarterly) KEY TAKEAWAYS
Q1’22 Q2’22 Q1’22 Av Q2’22 Av 6 out of the top 10 witnessed an
increase in NIM
SAN is the most affected with a drop of
nearly 1 bps
BCC, KBK and ABA remain stable
SAB, BKT and BCC show the strongest
NIMs
SAN, IBJ and BBVA show the weakest
NIMs
Note: Some numbers might not add up due to rounding
Source: Financial statements, investor presentations, A&M analysis, SNL data on September 16th, 2022 113
Operating Income witnessed a decrease primarily due to a
strong reduction in Other Operating Income
Improved Stable Worsened
Quarterly Net Interest Income (€ Bn) Quarterly Operating Income
(€ Bn) KEY TAKEAWAYS
NII presents an increase almost
reaching Q2’21 levels
Fee and Commission Income has
increased QoQ, however it has not
recovered its Q4’21 levels yet due to a
Quarterly Fee and Commission Income (€ Bn) drop presented in the first quarter of the
year
+ Decrease in Operating Income was
driven by Other Operating Income that
includes Trading Activities and
seasonal payments to the Deposit and
Resolution Funds
Quarterly Other Operating Income (€ Bn)
YoY Operating Income has increased
from 8.62 € Bn to 8.87 € Bn
Note 1: Relation between elements above represents a functionality and not necessarily an exact mathematical formula
Note 2: Figures represent the aggregation of the top 10 banks activities in Spain 12
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 20223
Operating Income over Assets decreased…
Improved Stable Worsened
Operating Income / Assets (%) KEY TAKEAWAYS
Q1’22 Q2’22 Q1’22 Av Q2’22 Av 7 banks showed a decrease in
Operating Income over Assets and only
3 increase (driven by Other Operating
Income)
BBC, BBVA and ABA suffered the
sharpest downswing
UNI has the highest upturn
Source: Financial statements, Investor presentations , A&M analysis, SNL data on September 16th, 2022. 134
Operating efficiency was deteriorated by 124bps in
comparison to previous quarter
Improved Stable Worsened
Quarterly Operating Expenses (€ Bn) Cost to Income Ratio
(%, Quarterly Annualized) 63.2 KEY TAKEAWAYS
C/I Ratio worsened by 124bps QoQ in
Q2’22, after improving in the previous
quarter
Worsened was driven by a decrease
in Operating income of 5% QoQ
The deterioration of the Operating
Income was smoothened by an
÷ improvement in Operating Expenses
that decreased 0.3% QoQ
Quarterly Operating Income (€ Bn)
YoY Cost to Income has improved from
52.8% to 50.9% both due to an
increase in Operating Income and to a
decrease in Operating Costs.
Spanish Banks below the level of EU
average of 63.2%
Note 1: Some numbers might not add up due to rounding
Note 2: Figures represent the aggregation of the top 10 banks activities in Spain 14
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022, EBA risk dashboard March 20224
Three of the top ten banks report enhanced cost
efficiencies
Improved Stable Worsened
Cost to Income Ratio (%, Quarterly) KEY TAKEAWAYS
Q1’22 Q2’22 Q1’22 Av Q2’22 Av 7 out of 10 banks worsened their C/I
Ratio QoQ
UNI, KBK and CABK experienced the
best improvement in the C/I Ratio
ABA, IBJ and UNI lead the worst
performers
BCC, ABA and BBVA experienced the
highest increase in the C/I ratio QoQ
BKT is below the 45% target of
efficiency level
Note: Some numbers might not add up due to rounding
Source: Financial statements, investor presentations, A&M analysis, SNL data on September 16th, 2022 154
Business Volume per Branch continues its upward trend
Improved Stable Worsened
Gross Customer Loans (€ Tn) Business Volume per Branch
(€ Bn) KEY TAKEAWAYS
Business Volume per Branch continue
increasing pushed by a decrease in
number of branches and increase in
loans and deposits
Customer Deposits (€ Tn) Branches were reduced to 14.2
+ thousand from 14.7 thousand during
the last quarter
÷ Number of Branches continued to
decline YoY fuelled by branch
restructuring post Covid and mergers
Number of Branches (1’000)
Note 1: Some numbers might not add up due to rounding
Note 2: Figures represent the aggregation of the top 10 banks activities in Spain 16
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 20224
All banks increased Business Volume per Branch
Improved Stable Worsened
Business Volume per Branch (€ Mn) KEY TAKEAWAYS
Q1’22 Q2’22 Q1’22 Av Q2’22 Av All banks increased their Business
Volume per Branch
SAN is the best performer in terms of
Business Volume per Branch, while IBJ
and BCC are the worst ones
UNI and CABK carried out the deepest
Branch reduction in relative terms and
CABK is the largest in terms of number
of Branches
CABK BBVA SAN SAB BKT(1) ABA UNI KBK IBJ BCC
Branches: 4,206 1,886 1,921 1,290 597 678 1,098 737 897 868
Var QoQ: -6.2% 0.0% -1.5% 0.1% 0.0% -1.2% -11.3% -0.7% -1.2% -0.2%
Note 1: Bankinter branches includes other business units branches
Source: Financial statements, investor presentations, A&M analysis, SNL data on September 16th, 2022. 175
NPL Ratio continued to decline
Improved Stable Worsened
Problem Loans (€ Bn) NPL Ratio
(%, Quarterly Annualized) 1.9
KEY TAKEAWAYS
NPL Ratio decreased to 3.38% in
Q2’22, continuing the downward trend
Decrease in NPL Ratio was driven by
the decrease in total Problem Loans by
around 3 € Bn driven by sales activity
during 1H2022 in the biggest banks
The increase of Gross Customer Loans
÷ has also contributed positively to the
reduction of the NPL Ratio
Gross Customer Loans (€ Tn)
Note 1: Scaling and some numbers might not add up due to rounding
Note 2: Figures represent the aggregation of the top 10 banks activities in Spain 18
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022, EBA risk dashboard March 20225
NPL and Coverage Ratio remain conservative
NPL Ratio (%) Q2’22 Q2’22 Av
KEY TAKEAWAYS
Overall NPL Ratio is below 3.5% while
coverage is above 60%
ABA, CABK, KBK, BCC and IBJ
outperformed the market in both NPL
and Coverage Ratio
BBVA has the highest NPL Ratio and
SAN has the lowest Coverage Ratio
Coverage level of 61.2% displays
conservative approach of Spanish
banks
Spanish banks still above EU average
levels of 1.9% in NPLs but above in
1.9 Coverage level of 44.9%
44.9
Coverage Ratio (%)
19
Source: Financial statements, investor presentations, A&M analysis, SNL data on September 16th, 2022, EBA risk dashboard March 20225
NPL / Net Loan Ratio improved for all banks
Coverage Ratio, % NPL / Net loans, %
Coverage Ratio and NPL / Net Loans Ratio (%, Quarterly) KEY TAKEAWAYS
On aggregate, asset quality improved
further as NPLs Ratio decreased to
3.4% in Q2’22 compared to 3.7% in
Q1’22
SAN was the bank with the highest
decreased NPL Ratio (64bps) driven by
an increase of 2.3% in total loans and
decreased of 13.6% in Problem Loans
with an active sales activity during
1H2022
The Coverage Ratio remained steady
in 61.2% in comparison to Q1’22
KBK is the bank with the highest
increase QoQ of the Coverage Ratio,
going from 88.3% to 95.4% in Q2’22,
this improvement was mainly driven by
the decrease in NPLs
Note: Scaling and some numbers might not add up due to rounding
Source: Financial statements, investor presentations, A&M analysis, SNL data on September 16th, 2022 205
Cost of Risk continued to decline for the industry
Improved Stable Worsened
Quarterly Net Loan Loss Provisions (€ Bn) Cost of Risk
(%, Quarterly Annualized) 0.51
KEY TAKEAWAYS
Cost of Risk of 36bps at 2Q’22 end
showed reduction of 3bps QoQ
QoQ provisioning efforts show a
gradual decline since the end of 2021
Spanish Banks below the level of EU
average of 0.51%
÷
Average Gross Loans (€ Tn)
Note 1: Scaling and some numbers might not add up due to rounding
Note 2: Figures represent the aggregation of the top 10 banks activities in Spain 21
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022, EBA risk dashboard March 20225
Five of the ten banks reported an improvement in Cost of
Risk
Improved Stable Worsened
Cost of Risk (bps) – Net of Reversals KEY TAKEAWAYS
Q1’22 Q2’22 Q1’22 Av Q2’22 Av BCC, SAN and SAB have the largest
CoR at above 60 bps levels
ABA and KBK have the lowest at below
15 bps level
BCC showed the sharpest reduction of
around 30 bps followed by CABK
BBVA, SAN, BKT and IBJ worsened
their CoR in 1 bps
Note 1: Scaling and some numbers might not add up due to rounding
Note 2: Santander CoR due to Covid was assigned fully at consolidated level in Q1, but figure was reformulated in Q2 22
Source: Financial statements, investor presentations, A&M analysis, SNL data on September 16th, 2022.6
Profitability worsened QoQ…
Improved Stable Worsened
Op. Income / Assets (%) Non-Interest Income/ Yield On Credit (%)
Op. Income (%)
1.71 1.71
KEY TAKEAWAYS
1.65 1.69 1.62 42.4 43.2 41.9 46.2 43.5
2.00 1.98 1.98 1.93 1.94
ROE decreased due to a reduction in
Efficiency and a deterioration in Non-
Q2’21
Q3’21
Q4’21
Q1’22
Q2’22
Q2’21
Q3’21
Q4’21
Q1’22
Q2’22
Q2’21
Q3’21
Q4’21
Q1’22
Q2’22
Interest Income which could not be
6.6 offset by the improvement in the CoR
Return On Equity (%) Return On Assets (%) Expense / Income Ratio Net Interest Margin (%) Cost Of Funds (%)
(%)
7.7 7.4 8.5 7.8 0.38 0.37 0.41 0.39 59.0 61.1 1.00 0.99 0.93 0.16 0.15 0.15 0.14 0.15
6.5 0.32 58.8 0.98 0.93
52.9 54.3
Q2’21
Q3’21
Q4’21
Q1’22
Q2’22
Q2’21
Q3’21
Q4’21
Q1’22
Q2’22
Q2’21
Q3’21
Q4’21
Q1’22
Q2’22
Q2’21
Q3’21
Q4’21
Q1’22
Q2’22
Q2’21
Q3’21
Q4’21
Q1’22
Q2’22
Assets / Equity (x) Cost Of Risk (%) LDR (%)
20.9 20.9 20.8 20.6 21.7 91.0 89.0 87.3 87.6 87.0
0.50
0.48 0.48 0.39 0.36
Q2’21
Q3’21
Q4’21
Q1’22
Q2’22
Q2’21
Q3’21
Q4’21
Q1’22
Q2’22
Q2’21
Q3’21
Q4’21
Q1’22
Q2’22
Note 1: Relation between elements above represents a functionality and not necessarily an exact mathematical formula
Note 2: Figures represent the aggregation of the top 10 banks activities in Spain
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022, EBA risk dashboard 23
March 20226
Net Income decreased QoQ causing a reduction in
profitability indicators
Improved Stable Worsened
Net Income (€ Mn, Last 3 Months) KEY TAKEAWAYS
Q1’22 Q2’22 Q1’22 Av Q2’22 Av 7 out of 10 banks have shown a
decrease in Net Income
Only UNI, CABK and KBK show an
increase in Net income, with UNI
experienced the greatest increase
ABA and BBVA have experienced the
worst decline compared to the last
quarter
Source: Financial statements, Investor presentations , A&M analysis, SNL data on September 16th, 2022. 246
Seven out of ten banks worsened their profitability across
the sector
Improved Stable Worsened
Return of Equity (%) KEY TAKEAWAYS
Q1’22 Q2’22 Q1’22 Av Q2’22 Av 7 out of 10 banks have shown a
decrease in ROE
Only UNI, CABK and KBK show an
increase in ROE, with UNI experienced
the greatest increase
BBVA and ABA have experienced the
worst ROE decline compared to the last
quarter
BCC is the bank with the lowest
indicator in Q2’22
ROE for EU Banks stands at 6.6%
below ROE of Spanish Banks
Source: Financial statements, Investor presentations , A&M analysis, SNL data on September 16th, 2022. 256
RoRWA decreased QoQ…
Improved Stable Worsened
Net Income (€ Bn) RoRWA
(%, Quarterly Annualized) KEY TAKEAWAYS
Net Income for the Spanish banks in
Q2’22 was 9.6% in comparison to last
quarter
RWA increased 0.5% QoQ, reaching
706.42 € Bn
RoRWA decreased 7bps QoQ, going
from 1.29% in Q1’22 to 1.22% in Q2’22
÷
Total Risk Weighted Assets (RWA, € Bn)
Note 1: Scaling and some numbers might not add up due to rounding
Note 2: Figures represent the aggregation of the top 10 banks activities in Spain
Source: Financial statements, investor presentations, A&M analysis, SNL data on September 16th, 2022. 266
Average market RoRWA at 1.2%
Improved Stable Worsened
RoRWA (%, YTD) KEY TAKEAWAYS
Q1’22 Q2’22 Q1’22 Av Q2’22 Av 7 out of 10 banks have shown a
decrease in RoRWA QoQ
BBVA, BKT, CABK and IBJ are above
the market average
ABA has experienced the highest
worsened
BCC is the bank with the lowest
profitability ratio in Q2’22
Note: Scaling and some numbers might not add up due to rounding
Source: Financial statements, investor presentations, A&M analysis, SNL data on September 16th, 2022. 277
CET1 Fully Loaded decreased 2.5% QoQ
Improved Stable Worsened
CET1 Fully Loaded (€ Bn) CET1 Fully Loaded Ratio
(%, Quarterly Annualized) 15.0
KEY TAKEAWAYS
CET1 Fully Loaded Ratio decreased 39
bps to 12.46% QoQ
Decrease in CET1 Fully Loaded Ratio
was driven by a 2.5% QoQ decrease in
CET1 Fully Loaded, being share
buybacks and dividend payments the
main reasons for the decrease
÷ CET1 levels are below European
average of 15.0%
Total Risk Weighted Assets (RWA, € Bn)
Note 1: Scaling and some numbers might not add up due to rounding
Note 2: Figures represent the aggregation of the top 10 banks activities in Spain
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022, EBA risk 28
dashboard March 20227
Solvency shows a slight decrease in its Ratio
Improved Stable Worsened
Industry fully-loaded CET1 Ratio (%, QoQ) KEY TAKEAWAYS
Q1’22 Q2’22 Q1’22 Av Q2’22 Av KBK shows the strongest CET1 Ratio,
even though it had one of the largest
drop in the group
Only BCC has increased their CET1
Ratios during the last quarter
The rest of the banks show declines,
with CABK and KBK showing the
largest drops among them
Share buybacks are the main reason
for the decrease in the CET 1 Ratio of
CABK and BBVA. SAN also set its
shareholder remuneration policy using
share buybacks, but at a lower level
Note: Scaling and some numbers might not add up due to rounding
Source: Financial statements, investor presentations, A&M analysis, SNL data on September 16th, 2022 297
Profitability and Balance Sheet Resilience
Business Profitability
Q4’21 Av
KEY TAKEAWAYS
P/B – 42.71 P/B – 41.81
P2R – 2.35 P2R – 1.83
Banks with a higher Business
Profitability Scores (volume growth and
P/L ratios) show lower supervisory P2R
requirements and higher market P/B
ratios
BBVA outperformed in both Profitability
and Resilience
SAN and SAB are underperformers in
both Profitability and Resilience
CAXB and BKT have to improve its
Resilience while the rest of the Banks
have to improve their Profitability while
keeping their strong resilience profile
P/B – 58.95 P/B – 93.09
P2R – 1.50 P2R – 1.47
Balance Sheet Resilience
Note 1: Business Profitability Scores and Balance Sheet Resilience Score as per page 4 scorecard scoring
Note 2: P/B is price to book; P2R is Pillar 2 requirement from CNMV relevant facts
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022 30And the Q2’22 winners are…
For large banks… For small banks…
1st 1st
Business Profitability
Operating income / Assets (%) Cost to Income (%) Cost of Risk (%) ROE (%)
2nd 3rd 2nd 3rd 2nd 3rd 2nd 3rd
Balance Sheet Resilient
Business Volume Growth (%) LCR (%) NPL Ratio (%) CET 1 FL Ratio (%)
2nd 3rd 2nd 3rd 2nd 3rd 2nd 3rd
Note 1: by asset size.
31Market Performance Q2 2022
2022Q2
Price changes (June 2021 = 100) KEY TAKEAWAYS
The market performance of listed banks
138.4
136.1 from June-2021 to date shows that in
129.9 2022 banks have recovered from a
downward trend, with the winner being
115.4 BKT, followed by CKB and SAB
The worst performers were the largest
100.0
banks, such as SAN and BBVA, which
94.3 are lagging behind recovering their
higher prices shown in early 2022
82.3
Aug-21
Sep-21
Aug-22
Sep-22
Oct-21
Apr-22
Jul-21
May-22
Jul-22
Nov-21
Dec-21
Jun-21
Jan-22
Feb-22
Mar-22
Jun-22
Closing Price € CABK BBVA SAN SAB BKT UNI
June 2021 2.59 5.23 3.22 0.57 4.24 0.87
January 2022 2.88 5.64 3.15 0.68 5.28 0.93
September 2022 3.53 4.93 2.65 0.75 5.87 1.00
Source: Financial statements, investor presentations, A&M analysis, SNL data on September 16th, 2022. 32ANNEX – Trending Topics:
1. Moratoria and PGS
2. Costalypsis
3. ESG as a Business Opportunity1. Moratorias and PGS 2. Costalypsis 3. ESG as a Business Opportunity
Moratoria & Public Guarantee Schemes
Moratoria (% per Stage) Public Guarantee Schemes (% per Stage)
%S2 %S3 NPL Coverage %S2 %S3 NPL Coverage
DE Moratoria ES Moratoria DE PGS ES PGS
32%
31% 29%
29%
26%
23% 24% 24%
6% 7% 8% 5%
5% 3% 4%
7% 9% 2% 3%
5% 7% 2% 2% 15.6% 15.9%
20.7% 2% 14.4%
13.7%
17.8%
16.4% 15.9%
21% 23% 22% 22% 19% 20% 20% 19% 21% 21%
18% 18% 19% 20% 18% 18%
Jun-21 Sep-21 Dec-21 Mar-22 Jun-21 Sep-21 Dec-21 Mar-22 Jun-21 Sep-21 Dec-21 Mar-22 Jun-21 Sep-21 Dec-21 Mar-22
FR Moratoria IT Moratoria FR PGS IT PGS
37% 38%
35% 36%
5%
32% 32% 4% 5%
29% 29% 4% 4% 28.5%
3% 4% 26.0%
3% 21.5%
19.4%
3% 3%
2% 3% 1%
34% 32% 33% 1%
30% 32% 29% 0% 1%
30%
24%
19% 19% 20% 20%
16% 14%
8.7% 8.8% 9.2% 8.9% 13% 12%
Jun-21 Sep-21 Dec-21 Mar-22 Jun-21 Sep-21 Dec-21 Mar-22 Jun-21 Sep-21 Dec-21 Mar-22 Jun-21 Sep-21 Dec-21 Mar-22
Source: EBA Risk Dashboard 341. Moratorias and PGS 2. Costalypsis 3. ESG as a Business Opportunity
Spanish Banks will face 4 Cost Headwinds from 2023 and onwards
INFLATION GOVERMENT LEVY
▪ YoY Inflation Rate in Spain has been constantly rising since 2021 to • In July 2022 the Spanish Government announced an extraordinary levy
levels above 10% as of August 2022 on Banks revenues with a total estimated impact of approx. €3 Bn over
the coming two years
▪ Drivers like the Ukrainian-Russian War, Supply Chain Disruptions and
China are generating a very complex environment in Energy, • Final details of the levy will cost banks 4.8% p.a. on their NIM + Fee
Transportation and Food with no visibility on return to normality Revenues of the coming next 2 years
• Banks will face cost increases from contracts linked to Inflation in • A special prohibition on direct pass-through to clients will mean that
their overheads and wage pressure from employees Banks will face an increased cost base during 2023-2024
• A&M estimates that the cost for the Spanish Banking Industry could be • A&M estimates that the cost for the Spanish Banking Industry could be
€884 MM or 4.7% of the Cost Base €1,574 MM or 8.4% of the Cost Base for 2023
RISK & BACK TO COMPLIANCE DEPOSIT COSTS
• Rising Energy prices and Inflation on Consumer Goods and Services for • Ultra-low interest rates have driven current accounts and deposits to zero
certain Corporate Sectors and Household Segments will deteriorate debt for the last 2 years with customers having no return on their banking
repayment capacity over the coming year savings
• ECB measures of rising rates at an accelerated rate has set Euribor at • With inflation at double digit levels Euribor at 2% and Gov 1Y at 1.4%
1.85% increasing Interest Costs of Corporate Loans and Mortgages client pressure for deposit remuneration is starting to change the
dynamics in savings pricing
• ECB Back to Compliance requirements will mean higher cost of capital
and margin pressure on margins • Deposit pricing strategies will erode partially the additional revenues to
come from the depreciation of the Variable Rate Lending Book.
• A&M has stressed CoR with its Energy-Inflation Tool and results
indicate an impact of €2,985 MM raising the average CoR from 0.42% • A&M estimates that up to 75% of the actual rate raise could be netted
to 0.67%, plus an additional cost of capital cost of €331 MM of by deposit pricing pressures over the coming 2 years
351. Moratorias and PGS 2. Costalypsis 3. ESG as a Business Opportunity
Sector Impact – Costs Delta could erode more than 90% of Repricing benefits from
Interest Rates increase
Profit Waterfall (€ Bn) Spanish Banks
8,408
14,341
884
1,574
3,316
7,340 7,451
48
Net Income Repricing (IR Deposits Inflation Levy CoR and K Tax Net Income
Today Increase) Pro-Forma
361. Moratorias and PGS 2. Costalypsis 3. ESG as a Business Opportunity
Banks’ ROE increases from Repricing are at Risk and could stay at current levels
Impacts in Net Income (€ Bn)
5,000
2,500
CoR+BtoCompliance
Levy
Inflation 0
Deposits
Repricing
-2,500
-5,000
ROE (%)
30% 15.7
16.2
18.5
11.5
11.8 16.6 11.7 13.9
20% 11.9 7.6
ROE Today
ROE (w/ repricing) 10%
ROE Costalypsis
0%
-10%
CABK SAN BBVA SAB BKT UNI KBK ABA IBJ BCC
ROE Today 6.8% 6.1% 11.6% 3.8% 5.4% 0.6% 3.4% 7.1% 4.7% 1.8%
ROE (w/ repricing) 19.5% 22.9% 28.3% 17.6% 25.8% 11.1% 13.3% 20.6% 17.3% 14.9%
ROE Costalypsis 7.8% 4.4% 12.6% 1.0% 9.6% -0.8% 5.7% 9.1% 5.6% 1.0%
ROE Delta -11.8% -18.5% -15.7% -16.6% -16.2% -11.9% -7.6% -11.5% -11.7% -13.9%
371. Moratorias and PGS 2. Costalypsis 3. ESG as a Business Opportunity
Capitalizing on the ESG opportunity will require banks to combine multiple capabilities
to connect supply of bank services with demand for corporate transition solutions
GREEN PACE GREEN Products
The winning formula, Broad and sound sustainable financing + investment offering linked to
decarbonisation KPIs and ambitious 2030 sustainable finance targets
four attributes that will
define the winners in
Alignment to Net Zero
Credible net zero targets across lending portfolios with transparent emission
sustainability reduction metrics using benchmarks and internal tooling
“ Revenue opportunities are Client Orientation and Insights
migrating from product focused to
Transition advice and analytics linking client transition operational solutions
client orientation strategies
bundling bank solutions, insights
with financial offer business case and customised insights
and transition execution. Client win
rate and margin protection are at Execution of Transition Plans
stake. Digital and innovation are
Bank involvement in operational execution through climate tech investing,
key drivers of differentiation.
innovative joint ventures and digital platforms / marketplaces
A&M Perspective
38yment to eligible
Alignment
Bank
cluding$1,000 special
Ranking
to Net
deferral
1. Moratorias
payments
of min Zero
and
for 2 PGS
1 As of April 12, 2020
previously extended
Note: For more information, visit jpmorganchase.com/covid-19
credit facilities
2 $5MM WHO
2.RCostalypsis
Solidarity esponse 3. ESG as a Business50%
Opportunity
1
lleaguesin US payment cycles Fund to help scale up
Based
• Net onzero
publicly available
targetsavailable
across information,
Retail Bank / Small
lending portfolios A&M has developed outside-in view scorecard
$21B of new credit
public health
A&Mwith
ntinue to pay facilities approved
Business: Waivers on 49% infrastructure in
uire Based on publicly
mployees who cannot information,
of GREEN PACE
hastransparent
rk due to COVID-related
es to
Businesses
allenges
attributes
developed emission
an outside-in
CommATM that allows
scorecardusingofto assess bank choices
fees including non-Citi
reduction
viewmetrics
fees and monthly
unities
Facilitated $292Bof
issuance in the investment
49%
grade debt markets in
response to pandemic
$5MMto No Kid
service fees
ployed clinical staff benchmarks HungryCampaign in
nd for GREEN
ently extending credit to
ernally to suppo rt our PACE
Mortgage: Inand
additioninternal tooling.
across 25Leveraging
Focus on areas where we can
top global banks:
1Q 20
the U.S. and support 48%
nesses of all sizes for to extending existing
leverage our core business, digital local feeding
mployees
ing capital and general
gtra cleaningand
orate purposes, e.g.,:
philanthropy and policy
treatment options, capabilities to assist clients
Scorecard
expertise to help the most
with supply by
chainArea Total
Bank programs of America 48%
Cpulient
suspending
ur clients have drawn
Orientation and Insights
vulnerable in the short- and 3 $5MMto support
hat
otective measures t foreclosures for 60 days management and liquidity
0B+ on existing
place at our sites,
volvers, and we approved
nches
5B+ andcredit
of new ATMs, and
long-term, initial commitments
Small Business: 1
include:
participating
$150mm loan
2
optimization
program toin SBA s
3 4 Score
organizations globally to
Opened 1,000 new
1Q20 Financial Results
help address local
needs of severely
47%
ucating
tensions inour staff on
even • Transition advice and analytics linking client
March
tive action
BA Paycheck s
alone
Protection
Paycheck
help underserved
businessesProgram
smallProtection
and nonprofits
65% TTS accounts digitally
in March 2020 alone
impactedcountries 45%
ogram: ~300,000 in some access capital through
Similar programs in place Addi ional in kind
transition
age of the application operational
in International solutions with financial
community partners
GCB, in 55%
contributions include 44%
ocess representing $50mm philanthropic
line with local regulation PPE to health care
ommunities business
36B of loans, with
$8.0B funded to
case
Enhanced digital
and customized
investment to help
address immediate and
insights. workers and meals for
54% food banks
April 15, 2020
40%
sinesses with over capabilities
long-term impacts of andservicing
00,000 employees 1
ommunities
COVID-19 54% 40%
hughCithe Execution of Transition Plans
ed clients raise $380B+
ious i investment-grade
Fo nda ion,
Matching employee
donations to certain COVID-
4
52%
ting
market
those in 1Q20 19 relief efforts dollar-for- 36%
ately impacted by dollar
o
ycluding
e e sand $30MM
co m m u
• Bank involvement in operational execution
n it
ito
es ingo
od an
dba
d t
ime
s. 50% 34%
rt
w related
ithboth erelief
cono m ica ndhe
a lt
h c
ons
equen
ces–
srglobally including:
pe t is
e
MM WHO
,cap italan d
through climate tech investing, innovative
d a
ta t
o h
elp.
joint
50% 31%
lidarityResponse ventures and digital platforms/marketplaces.
50%
“
nd to help scale up 30%
blic health
with 49% 30%
Revenue opportunities are
astructure in
ponse to pandemic
ing 49%
MMto No Kid
ngryCampaign in migrating from product-focused to 29%
U.S. and support 48%
cal feeding
ograms Bank of America
client orientation strategies, 28%
48%
MMto support bundling bank solutions, insights 27%
1Q20
lp addres s local Financial Results
anizations globally to
eds of severely and transition execution. Client 47% Source: A&M analysis.
nt countries NatWest is our winner, yet it has not achieved its
win rate and margin protection45%
pacted
di ional in kind 39
ial
ntributions include 44% full potential. European banks perform better1. Moratorias and PGS 2. Costalypsis 3. ESG as a Business Opportunity
GREEN Products
• Extensive green product offering
€13 Trillion 2030
across corporate, SME and retail
clients including capital markets,
lending and advisory solutions
Bank Sustainable Finance Target
• Disclosed green and sustainability
financing product framework Top 25 European and US banks have committed €13 Trillion of sustainable finance as
targets by 2030. 4 top US banks account for €5.5 Trillion while 17 European banks have
• 2030 sustainable finance targets (total
targets for €7.3 Trillion. 2030 sustainable finance targets represent 37% of total bank
and by asset class) with progress
assets
reported
• Strong ambition in 2030 target levels
(e.g., exceeding 50% of total assets)
• Track record in target delivery (2021
production exceeding target run rate)
€295 Bn
ESG Revenue Opportunity Pool
Leading Banks
ESG revenue pools for the next decade could amount up to €293 Bn for the global banking
1 Industry. A&M estimates the following business line breakdown:
2 • Credit spread on green and sustainable lending products – €215 Bn
• Origination, structuring and execution fees of DCM green and sustainable bonds - €28
3 Bn
4 • Carbon markets trading solutions - €14 Bn
• Advisory services on climate investments -€23 Bn
5
401. Moratorias and PGS 2. Costalypsis 3. ESG as a Business Opportunity
Alignment to Net Zero
• Articulation of net zero targets for
financed emissions across portfolios
• Strong target coverage based on
number of portfolios and % of assets
• Net zero target disclosures include
absolute / relative emissions data,
assumptions, pathways, data
scorecards and client transition
strategies
• Portfolio alignment proprietary tools
(e.g., BlueTrack, Terra,
CarbonCompass)
• Net zero target set at more aggressive
levels than peer average
Leading Banks
1
2
3
4
5
41Our environment al and social Helping Britain transition
1. Moratorias and PGS 2. Costalypsis 3. ESG as aperformance:
Business Opportunity
Progress in 2020 sustainable low-carbon e
Client Orientation and Insights Business continued
• Client access to green Building Tool to evaluate C02 footprint
• CO2 footprint tracking tools provided to Commercial reduction opportunities and identify/optimize retrofit plans and
Real Estate energy efficiency savings
multiple client segments
• Support for clients to measure their carbon footprint, through the
• Transition planning analytics provided UK’s three leading carbon calculator tool providers, access to
Agriculture
to clients (transition playbooks, agriculture transition research, tree and hedge planting and
discounted lending
assessment, benchmarks, cost-benefit
analysis of transition solutions) • Practical five-step guide for SMEs to help them address the risks
SMEs and embrace the opportunities of net zero including access to Partnering with
• Dedicated ESG experts and ESG client business playbooks CFP Green Buildings
advisors • Home Energy Saving Tool / Eco Home Hub to help retail customersBuilt in association with sustainability
consultancy CFP Green Buildings, the
These measures can be filte
understand what energy efficiency improvements they can make to Green Buildings Tool is a free-to-use potential impact on the E
• Extensive internal training Homes their home including personalized action plan with estimates of EPCtool for Commercial Banking clients that
Performance Certificate (
calculates potential investments and investment required
rating, energy costs and CO2 emissions savings by combining benchmark data estimated payback perio
• Dedicated ESG research teams and from CFP’s proprietary system with
potential financial and CO
• Sustainability Curve Policy Tool, and supporting analysis, is used tobest practice related to buildings in
regular ESG insights customised for the areas of technology, operations,
support bespoke engagement with clients to help identify the most maintenance and management.
The tool is designed to be
Electrical measures are implemented
clients Vehicle suitable vehicles to transition to low emission transport, based on An easy-to-navigate dashboard generates
applicable, so that an upda
of the property portfolio is
their fleet and usage a tailored recommendation of over
available to review. The too
50 measures that could be taken to improve
and interactive, providing li
Leading Banks • Supporting innovation in supply chain solutions by joining Coriolis, athe green credentials of a property,
estimates as measures are
lower the running costs or reduce the
Supply consortium of trade and ESG experts, to develop standard ESG carbon footprint. The recommendations
1 Chain scoring, and partnering with Resilinc to support clients in tracing theare estimated based on the information
provided about the building in question,
ESG risks of their supply chain while drawing on the information from
2 CFP’s proprietary system.
3 • HSBC UK has launched a Sustainability Assessment Tool that
provides actionable insights and resources to help businesses
4 transition to net zero. HSBC’s tool helps businesses design the
Corporate
sustainability plan, with recommendations specific to each industry.
and SMEs
The tool assist clients to identify operational efficiencies and reduce
5 costs as well as build knowledge and understand how you they can
contribute to sustainable goals
421. Moratorias and PGS 2. Costalypsis 3. ESG as a Business Opportunity
Execution of Client Transition
• Direct equity investments in climate Climate Tech Venture Capital Marketplaces and Digital Platforms
tech and sustainable venture capital
Capital Capital
• Innovative partnerships with industrial Committed Deployed
partners to accompany clients in 1. €450mn -
execution
2. €425mn €175mn
• Digital platforms / marketplaces to
3. €300mn -
provide scalable client transition
solutions (e.g., real estate transition 4. $250mn $100mn
hubs, carbon marketplaces, etc.,) 5. £175mn £54mn
• Initiatives to promote circular economy
solutions Joint Venture / Partnerships
• Client transition planning progress
monitoring and benchmarking
Leading Banks Circular Economy
1
2
3
4
5
43GLOSSARY
Scope
Bank Assets Q2’22 (€ Bn) Comments
CABK With Bankia Pro-Forma
BBVA Only Spanish Business
Only Spanish Business, since December 2021 countries include CIB business
SAN and MREL costs, therefore a Pro-Forma was included
SAB Only Spanish Business
BKT -
ABA -
UNI Includes Liberbank Pro-Forma
KBK -
IBJ -
BCC -
Source: Financial statements, Investor presentations, A&M analysis, SNL data on September 16th, 2022. 45Glossary
Metric Abbreviation Definition
Loans and Advances Growth QoQ growth in EOP net loans and advances for the top 10
Size
Deposits Growth QoQ growth in EOP customer deposits for the top 10
Liquidity Loan-to-Deposit Ratio LDR (Net EOP loans and advances / EOP customer deposits) for the top 10
Operating Income Growth QoQ growth in aggregate quarterly operating income generated by the top 10
Operating Income / Assets (Annualized quarterly operating income / quarterly average assets) for the top 10
Non-Interest Income /
(Quarterly non-interest income / quarterly operating income) for the top 10
Operating Income
Income &
(Aggregate annualized quarterly net interest income) / (quarterly average earning assets) for the top 10
Operating Net Interest Margin NIM
Earnings assets are defined as total assets excluding goodwill, intangible assets, and property and equipment
Efficiency
Yield on Credit YoC (Annualized quarterly gross interest income / quarterly average loans & advances) for the top 10
(Annualized quarterly interest expense + annualized quarterly capital notes & tier I sukuk interest) / (quarterly average interest
Cost of Funds CoF
bearing liabilities + quarterly average capital notes & tier I sukuk interest) for the top 10
Cost-to-Income Ratio C/I (Quarterly operating expenses / quarterly operating income) for the top 10
Coverage Ratio (Loan loss reserves / non-performing loans) for the top 10
Risk
Cost of Risk CoR (Annualized quarterly provision expenses net of recoveries / quarterly average gross loans) for the top 10
(Annualized quarterly net profit attributable to the equity holders of the banks – annualized quarterly capital notes & tier I sukuk
Return on Equity RoE
interest) / (quarterly average equity excluding capital notes) for the top 10
Profitability
Return on Assets RoA (Annualized quarterly net profit / quarterly average assets) for the top 10
Return on Risk-Weighted Assets RoRWA (Annualized quarterly net profit generated / quarterly average risk-weighted assets) for the top 10
Capital Capital Adequacy Ratio CAR (EOP tier I capital + tier II capital) / (EOP risk-weighted assets) for the top 10
Note: LTM and EOP stand for last twelve months and end of period respectively 46Authors
Q2’22 Issue A&M
Collaborators
Fernando de la Mora Eduardo Areilza Ivonne Cilio
Lead Author Co-Author, Senior Director Co-Author, Associate
Managing Director Financial Financial Services Financial Services
Services
Beatriz Delgado
• 22+ years of experience in • 20+ years of experience in banking • 6+ years of experience in banking
management analysis Collaborator, Analyst
management consulting
Financial Services
• He specializes in providing advice • He specializes in Financial • Her primary areas of expertise are
to financial institutions in the areas Institutions. His primary areas of climate risk management and risk
of capital, stress testing and risk expertise are Financial & Strategic management
management Planning, Restructuring and
• Prior to joining A&M, Ivonne
Performance Improvement
• Has worked in PwC in New York worked at the Ecuadorean Central
where he led the U.S. Financial • Prior to joining A&M, Eduardo was Bank and at the Ecuadorean
Services Risk and Regulatory Head of Planning and Financial Banking Association, providing
Practice Control in Bankia assistance in banking analysis
Soledad Ferreira
fdelamora@alvarezandmarsal.com Collaborator, Intern
eareilza@alvarezandmarsal.com icilio@alvarezandmarsal.com
M: +34 91 781 5521 Financial ServicesYou can also read
