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During 2020 Spain’s economy shrank 11%. The brunt of the impact last year was felt by the services sector. The effects of the tourism collapse were compounded by a slowdown in exports, and by a drop in domestic demand fuelled by uncertainty about the future as many workers were laid off.
Government spending was practically the only engine of economic activity, which implied higher public debt and deficit levels. The Spanish government launched a stimulus plan in March to protect households and businesses with the substantial support from the banking industry. This effort helped to kept Spain’s jobless rate for 2020 at 16,3%.
Analysts expect a GDP growth close to 6,5% in 2021 but if Spain can successfully manage and invest the European funds in reconstruction aid pledged by Brussels for 2021-2023, the economy could grow higher than expected in the next three years.
Regarding banking structure, as of December 2020, Spanish banking sector was composed by eleven banking groups -one less than the year before- under direct supervision of the SSM, representing more than 90% of the industry, and 51 private banks, two saving banks and 60 cooperative banks supervised by Banco de España.
Differences in structure respond to the announce, in September 2020, of the merger between Bankia -last public bank- and CaixaBank, which took place in the last quarter of the year.
In terms of capital, the equity-to-assets ratio was, as of December 2020 and on a solo basis, 9%, slightly less than the year before, that was 10%. The consolidated regulatory capital ratio grew up to 11.9% CET1 fully loaded (11.5% in December 2019). In addition, and even with the effects of the pandemic, the NPL ratio continues its downward trend until 2.9% (being 3.2% the year before).
As far as payments concerns, there is an old tradition for the Spanish banks to the payments’ digitalisation process and figures can only confirm that course. Since 2017 more than 97% of the accounts are reachable through the SCTInst SEPA wide SCTInst is already an even alternative for payments, 24% of the total volume of credit transfers processed in the clearing system were SCTInst (additionally all “on-us” transactions are already processed on real time). The instant mobile payment system known as BIZUM, based on a proxy database that obtains clients’ IBANs, has enlarged the use cases and the customer base: e-merchants having adopted BIZUM for e-commerce transactions process around 10% of their online payments with this solution. BIZUM is now being introduced into the physical shops. In parallel, mobile payments have soared during the year (+92%) and they represent 10% of the non-remote card payments. In all, contactless payments come to 80% of the card transactions.
In a still cash-based economy as the Spanish one, the usage of cards for daily payments has still experienced growth despite the Covid-19 impact on the economy, while the ATM transactions have sharply decreased more than 31% during 2020.
Despite the initial doubts on sustainable finance during the first half of last year, we saw an extraordinary revival in the second part of 2020 with a total volume of €33,026 million, which supposed a growth of 45%. Sustainable bond issues (green, social and ethical bonds) concentrate €15,024 million, 54% more than the previous year. By type of bonds, green bonds registered 28 operations which represents 63.2% of the total; there were seven issues of sustainable bond issues (19.2%), and five social bond issues (17.6%). Sustainable loans, on the other hand, contributed with €18,002 million, 38% higher than in 2019. Green bonds recorded a volume of €9,123 million and a growth of 44%, in 28 operations that were carried out by 22 issuers, compared to 20 operations and 14 issuers of the preceding financial year.
The work of the entities adhered to the AEB as a promoter of business activity through financing boosts the Spanish economy by a total of €824.000 million of which AEB entities financed consumption and mortgages loans with about €318.000 million in 2020, while financing for corporate and SMEs was €267.000 million.
The entities adhered to the AEB had 8.367 offices in Spain during 2020, of which 61% were out of the main cities. We held 90.610 employees, with 49,4% occupied by females.
During 2020 AEB’s entities invested €2.339 million in technology and innovation. The main AEB entities, BBVA and Santander, declared that close to 50% of their transactions were operated thorough digital channels.
Finally, we may underline that, since the beginning of the crisis, Spanish banks have been part of the solution supporting their clients’ overcome difficulties. With a very active support, for example, searching for medical supplies, making donations, carrying-out solidarity campaigns, etc. to help alleviate the crisis effects. But, beyond that, the banking system has implemented unprecedented economic and financial measures: mortgage and consumer moratoriums with more than 1,440,000 applications (8% of the loan balance); financing with official guarantees with 1,092,809 operations for 129,568 million (98% SMEs); advance payment of pensions and advance of unemployment benefits.
Contributor: Carmen Rizo email@example.com