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In Spain, Italy and Portugal, the five largest banking groups recorded, on average and on a consolidated basis, an annualised return on average equity (ROAE) of 15.0%, 15.6% and 18.1%, respectively, in the first three quarters of 2024. These are levels not seen since 2007.
The outstanding amount of loans to households for house purchase fell year-on-year by 0.65% in July 2024. It stood at EUR 1,424 billion, compared to EUR 1,433 billion at its record high in July 2023. This fourth consecutive decline is particularly remarkable, given that the first (-0.06% in April 2024) was already unprecedented for this series of data, which has been recorded since April 1994.
The average time taken to sell new houses to retail buyers (individual houses and flats, excluding renovated or upgraded housing) fell slightly in the first quarter of 2024. This took it to an average of 32 months, from 33.2 months in the fourth quarter of 2024. This downturn marked an end to the uninterrupted rise in sales times since the second quarter of 2022, when it stood at 13.3 months.
Like their number, the economic weight of corporate bankruptcies has increased to an unprecedented extent since March 2022, starting from an all-time low in 2021. This ratio compares the outstanding amount of bank loans to newly bankrupt corporates to the total outstanding amount of bank loans to corporates (in difficulty or not). These developments are mainly due to the continued catch-up of corporate bankruptcies. This concerns more fragile corporates whose would have already gone bankrupt in the absence of the economic and health measures put in place in response to the COVID-19 pandemic. Furthermore, the repayment of State-Guaranteed Loans does not seem to have an excessive impact on the financial situation of the majority of corporates that have benefited from them
On 5 June 2024, Eurobank Ergasias Services and Holdings, National Bank of Greece, Alpha Services and Holdings, and Piraeus Financial Holdings (in that order the first to fourth largest Greek banking groups by CET1 capital) were authorised by the European Central Bank to pay out a weighted average of 24% of their 2023 net income attributable to Equity Holders. This payout, totalling EUR 875 million, 93% of which is in the form of dividends, is the first of its kind since 2008 for these banks, which between them account for some 90% of the Greek banking system’s total assets.
Annual flows of money market fund shares/units held by non-financial corporations (NFCs) in France were positive throughout 2023, having been negative from the second quarter of 2021 to the fourth quarter of 2022. This trend reversal was due most notably to the increase in key ECB interest rates on 27 July 2022, which pushed up money market returns.
Net issues of debt securities, cumulated over 12 months, by non-financial corporations (NFCs) were positive in December 2023 (EUR 8.3 bn) for the fourth consecutive month.
Despite the unprecedented rise in interest rates, in Spain, the non-performing loan ratio for households and corporations remains at an all-time low.
The impact on financial expenses of rising interest rates - the result of the European Central Bank tightening its monetary policy - is very mixed, depending on the euro zone country. The impact depends on the proportion of variable-rate loans in outstanding amounts, and also on levels and changes in the amounts borrowed.
Italian commercial banks have drawn heavily on their reserves with the Eurosystem in order to repay the pending portion of the 28 June 2023 TLTRO III maturity.
The transmission of higher interbank rates to bank deposit rates is still limited in Spain.
The interest rate on new home loans for eurozone households rose by an unprecedented 177 basis points (bps) year-on-year in January 2023. It stood at 3.1% this past January compared with 1.3% in September 2021, its lowest level ever.
Business bankruptcies in the European Union increased significantly in the fourth quarter 2022, reaching their highest level since 2015 according to figures published by Eurostat on Friday 17 February. The overall dynamics conceal large sectoral differences.
In 2021, 28% of housing loans made by French banks to individuals were guaranteed by mortgage. This tangible security consists of assigning the real estate asset financed as collateral to the lender, in order to offset the consequences of default by the borrower where these are not covered by any borrower’s insurance against death, incapacity or invalidity.
In just seven months, the share of floating rates in the total of new loans for house purchase to Italian households has more than tripled, from 15.8% in February 2022 to 60.9% in September 2022. This latest figure has not been seen since February 2015 and, at that time, the share of floating rates was in a period of sharp decline, falling from 81.1% in February 2014 to 37.7% in August 2015. The recent revival in interest in floating-rate loans for house purchase among Italian households is evidently a result of the average increase of 136 basis points (bps) in fixed-rate loans between January 2022 (1.48%) and September 2022 (2.84%). The increase recorded by floating-rate loans for house purchase since the beginning of 2022 has been more modest (55 bps)
The share of new loans to Spanish households for house purchase with a fixed rate remained at a record high level of 80% in July 2022 after peaking at 81% in June 2022. This percentage is the result of a complete reversal of the financing model of residential real estate in Spain in 12 years, driven by the low interest rate environment. Fixed rates used to represent a very small and relatively stable share of total loans for house purchase before 2010 (11% on average between January 2003 and December 2009). The increase in the percentage of fixed-rate loans protects a larger proportion of borrowers against the increase in repayments resulting from interest rate hikes and preserves their creditworthiness, which is likely to curb the rise in the cost of risk for banks
Outstanding amounts of overdrafts, revolving loans, convenience and extended credits granted by banks to Non-Financial Corporations (NFCs) in the euro area stood at EUR 535 bn as of May 2022 after five months of consecutive increases, a level comparable to May 2020. From their low point of EUR 452 bn in August 2021, NFCs' overdrafts have increased by 18.3%, following a fall of 35.6% which began in February 2015.The fall in the outstanding amounts of NFC overdrafts became more marked in 2020, probably as a result of public support measures implemented in response to the emergence of the COVID-19 pandemic
Flows of new non-performing loans of Italian non-financial corporations (NFCs)[1] stood at 2.4% of outstanding amounts of performing loans in the fourth quarter of 2021, from 1.4% in the third. Starting from an historically low level, the significant rise in this ratio[2] is due to the flows of new non-performing loans, which increased by 67% in the fourth quarter of 2021, whilst outstanding amounts of performing loans remained relatively stable. The increase in the ratio of new non-performing loans was more marked in certain sectors (accommodation and food service activities, construction, electricity and gas supply, mining and quarrying)
The outstanding amounts of loans and advances that are still subject to banking support measures, introduced in response to the Covid-19 pandemic[1], continues to decrease in the eurozone. It was EUR444 billion in the fourth quarter of 2021, or 3.1% of total loans, from EUR494 billion, 3.5% of the total, in the third quarter of 2021. This decrease related nearly exclusively to loans subject to moratoria compliant with the European Banking Authority guidelines[2], for which preferential prudential treatment came to an end on 31 December 2021. The outstanding amounts of loans subject to public guarantee schemes and loans subject to forbearance measures almost stabilised in the fourth quarter of 2021, at EUR438 billion
The ratio of non-performing loans (NPLs) at Spanish specialised credit institutions (consumer credit, mortgages, leasing and factoring[1]) hit 6.9% in January 2022, its highest January level since 2016. Conversely, the NPL ratio for commercial banks, savings banks and cooperative banks[2] stabilised at 4.2%, its lowest level since March 2009.The increase in the NPL ratio of specialised credit institutions was due to a faster rise in the outstanding amounts of NPLs than in total loans (8.7% and 2.0% respectively between January 2021 and January 2022). Meanwhile, the fall in the outstanding amounts of NPLs at the banks, that began in 2014, has continued, against a background of stable total loans (-5.5% and -0.2% respectively between January 2021 and January 2022)
The number of contactless card payments[1] increased by 61% in France between 2019 and 2020, according to the latest figures from the Bank for International Settlements (BIS). The Covid-19 pandemic has encouraged the increasing use of this payment method, which respects social distancing measures. In addition, in order to increase the number of transactions eligible for contactless payments, the cap was raised from EUR30 to EUR50 per payment. As a result, nearly 60% of payments at point of sell of less than EUR50 were made by contactless bank cards in 2020, worth a total of EUR71 billion (from EUR38 billion in 2019) according to Groupement des Cartes Bancaires[2]. As a result, the share of total digital payments[3] made by non-contactless bank cards fell sharply
The public and private moratoria granted since the onset of the Covid-19 pandemic to the Portuguese non-financial private sector[1] have, to a very large extent, now expired. The outstanding amount of loans under moratoria stood at EUR3.1 bn in October 2021, from EUR3.6 bn in March 2020 and a peak of EUR46.3 bn in September 2020. Moratoria now cover only 1.5% of outstanding loans to households and non-financial corporations, from 1.9% in March 2020 and 23.5% in September 2020. The expiry of moratoria since September 2021 has not, so far, resulted in a significant increase in non-performing loans[2]. Their outstanding amount (EUR4.0 billion) and ratio (2.0% of loans) have returned to their July 2008 levels
In the Eurozone, gross state-guaranteed loans[1] outstanding amounts[2] issued in response to the Covid-19 pandemic stabilised at EUR 375 bn in Q2 2021. This stabilisation is notably due to the decline in state-guaranteed loans outstanding amounts granted by French and Spanish banks (down EUR 13 bn and EUR 2 bn, respectively), the first decline since the scheme was introduced in Q2 2020. Together, the two countries accounted for 64% of all state-guaranteed loans in the Eurozone in Q1 2021. This decline, combined with the much smaller decline in state-guaranteed loans outstanding amounts by Belgian and Latvian banks, cancelled out the ongoing increase in SGLs in the other Eurozone countries, especially Italy and Germany (EUR 10 bn and EUR 1
In the first quarter of 2021 cumulated amounts of state-guaranteed loans (SGLs) granted by euro area banks reached EUR 376.4 bn, from EUR 184.7 bn in the second quarter of 2020. The proportion of total lending to non-financial corporations (which has remained relatively stable) represented by SGLs thus rose from 3.3% to 6.9% over the same period. French, Spanish and Italian banks have made a particularly substantial contribution to supporting economic activity during the Covid-19 pandemic. They granted 90.6% of all SGLs across the euro area (EUR 131.7 bn, EUR 108.7 bn and EUR 100.5 bn respectively) whilst their share of total lending to NFCs was only 57.7% on average between the second quarter of 2020 and the first quarter of 2021
The Banker’s rankings of the UK’s five largest banking groups by Tier 1 capital – HSBC, Barclays, NatWest (formerly RBS), Lloyds and Standard Chartered – have generally declined since 2013. This trend, which was initially in step with all of the largest European banks, mainly due to differences in growth rates between geographic regions, has been even sharper in the UK since the vote for Brexit in 2016. HSBC almost maintained its ranking, thanks to its geographic diversification. The decline in the rankings of the UK banks can be attributed to the absolute decline in Tier 1 capital (-12.6% between 2013 and 2020), but also to the increase in the Tier 1 capital of the other largest euro area banks (+29.6%)
