C/ Ciutat de Consuegra, 16 Edifici l’Illa, esc. A, 2n pis
AD500 Andorra la Vella Principat d’Andorra
Tel: +376 807 110

Andorra’s banking sector: Facts & Figures

Updated December 2020 – For earlier editions of Facts & Figures click here

The Principality of Andorra is a European micro-State located in the Central Pyrenees between Spain and France with a population of around 80,000 and receives 8 million tourists each year. The Andorran economy is focussed on services, being an important touristic centre for shopping and for winter sports activities.

In 2019, the Andorran economy grew close to 2% with a good progress in the different domestic production sectors, showing consistency, with a prominent touristic and construction sector and with the dynamism of the service sector.

The financial sector is a cornerstone of the Andorran economy due to its significant contribution to the country’s GDP (together with the insurance sector, the financial sector accounts for approximately 20%, while employing 5% of the workforce), with its banking system at the core. It comprises five banking groups, eight financial investment firms, three asset management firms and 29 insurance companies, 15 of which are branches of foreign insurance companies authorized to do business in the Principality.

The banking sector has over 85 years’ experience in the business with a presence in 11 countries and as of today comprises a total of five banks which together manage over €49 billion. Out of the five banks, three are Andorran-owned, one is a subsidiary of a Spanish bank and the other is owned by an American fund.

The banks offer a full range of banking services including loans and credit, asset management and financial consultancy, operations with liabilities, financial analysis and other services (credit cards, transfers, etc.). They also have specialized subsidiaries of financing, insurance and asset management firms.

One of the challenges for the Andorran banks is to continue improving client services, both through face-to-face and remote channels. Since 2014, Andorran banks have spent up to 120 million euros in promoting digital transformation mainly to adapt to changes in their customers’ habits and to deal with the new challenges arising. The increase in the number of digital users in the country’s five financial institutions has soared by 45.7% in the last five years. Also noteworthy is the spectacular growth experienced by users of mobile applications, with an increase of 356.8%. Among the banking transactions that can be carried out over the Internet, those that have grown the most over the last few years are money transfers and transactions in securities.

In the scope of payment services, Andorra transposed the payment services and electronic money directive in 2018 and in 2019 became a SEPA participant, as did the banks.

Over the last years, the Andorran banking industry has aligned itself with the unstoppable trend of sustainability. Its ultimate goal is to safeguard sustainability not only through corporate social responsibility, where banks have devoted up to 6% of their profits, but also through their management of saving and investments. The last major step taken to has brought about a major improvement in Andorran banks has been the launch of in-house investment funds managed exclusively by using Environmental, Social and Governance policies.

Despite the increasingly complex international environment and monetary policies, 2019 was a year of consolidation for the banking industry, in line with previous years. The Andorran banks ended the financial year having improved all their main indicators such as profit, volume of assets under management, global credit investment, return and solvency ratios.

Credit investment increased to €6,059 million, 2.5% more than in 2018, as did customer deposit standing at €10.2 million.

Managed resources reached a total of €49.7bn, a figure that has remained stable over the past three years, but which has almost doubled in the last decade.

Furthermore, the Andorran banking sector achieved a significant consolidated increase of 12.5% in its net attributable profit which amounted to €112 million.

One other important factor that points to the sustainability and reliability of the Andorran banking sector is its financial return (ROE), which stood at 7.70%, above the average of the European banks (5.8% according to data from the EBA).

The CET 1 (phase-in) solvency ratio was 17.48% on 31 December 2019, above the average of European banks (which was 14.8% according to ECB data on 31 December 2019).

Contributor: Ludmilla Lacueva l.lacueva@andorranbanking.ad