Spain's top banks are rolling in cash after bumper 2022 profits

SPAIN’S biggest banks- Santander, BBVA, CaixaBank, Sabadell, Unicaja Banco and Bankinter- clocked up record profits in 2022 according to a survey from the Noevantas consultancy.

They made an accumulated total of €7.5 billion- a 38.5% year-on-year increase.

Neovantas said the profit rise came from an increase in net interest income, with 12.2% more in the year-on-year rate, due to interest rate increases.

Fees also increased by 6.1%, while operating expenses were reduced by 10.2% due to structural adjustments like branch closures that the banks continued to make in 2022.

The profit rise will mean a dividend bonanza for shareholders over the coming months.

BBVA will distribute a dividend equivalent to €0.50 per share, which represents a pay-out of 47%, while Sabadell announced a new increase in the pay-out from 31.8% to 50%.

CaixaBank will place the percentage allocated to profit between 50% and 60% and is expected to distribute €1,7 billion euros this spring.

Neovantas president, Jose Luis Cortina, said the high profits have translated to increased share values on the Stock Exchange, where the large Spanish banks have seen shares rise on average by 24% in the last twelve months.

“However, these valuations still do not reach the book value of banks, such as the valuations of BBVA and CaixaBank, which are around 80% of their book value,” said Cortina.

Despite what happened last year, Neovantas believes the banks face an uncertain 2023 due to temporary windfall taxes such as the temporary tax on banks and mortgage relief measures.

It expects delinquency to rise and reach levels above 5%, since the last available figure of 3.68% recorded in November 2022.

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