BBVA, Spain’s second-largest bank by Tier 1 capital, has claimed the accolade as the country’s overall best-performing bank, having moved up from fourth position last year. It ranks first for growth, profitability and return on risk among a cohort of the 10 largest banks in Spain. BBVA increased its pre-tax profits (PTP) by 27.5% in 2022, and has the highest return on capital (14.2%) and return on assets (0.96%) of the Spanish banks in the Top 1000 World Banks ranking.
The country’s largest bank, Banco Santander, has slipped down three spots to sixth this year in the overall performance table. However, it has topped the table in the liquidity category, which looks at annual improvements in loans-to-assets and loans-to-deposits ratios.
Kutxabank comes in second place in this year’s overall performance table, having moved up six places off the back of a 45% increase in 2022 profits. It ranks first for soundness, as well as second in leverage and profitability.
Banco de Sabadell, which is Spain’s fourth largest bank by Tier 1 capital, has moved up six places to third spot in this year’s overall best-performing table. It performed strongly in the operational efficiency category, which looks at year on year improvements in a bank’s cost-to-income ratio.
It also recorded the biggest jump (87.6%) in PTP out of the 14 domestic banks included in the Top 1000. Additionally, its return on capital improved from 4.32% to 7.41%. According to DBRS Morningstar, Banco Sabadell has sound asset quality despite having a relatively high exposure to small and medium-sized enterprises.
CaixaBank has improved by one spot to fourth position in the overall performance table. It had the highest score among the largest 10 Spanish banks for operational efficiency. Ibercaja Banco comes in fifth, moving up two places, with its best result in asset quality. Ibercaja’s PTP increased by 23.5% in 2022.
But this year’s best-performing rankings has seen some of the biggest winners last year tumble down the table. The biggest faller this year is Bankinter, Spain’s seventh largest bank by Tier 1 capital, which has dropped from first place in 2022’s overall ranking to 10th place this year.
Bankinter’s PTP fell by more than 50% in 2022, the second-biggest drop after Unicaja Banco, which saw its PTP plummet by 67%. The latter has dropped from second spot last year to seventh position in this year’s best-performing table.
Looking ahead this year, Spanish banks are being impacted by an outflow of customer deposits. European Central Bank data showed aggregate domestic customer deposits (including households and non-financial corporations) during the first quarter of 2023 declining by 3.5% quarter on quarter, representing the largest quarterly historical decrease of more than €40bn in deposits.
“The reduction in deposits is explained by a shift toward off-balance sheet products, higher mortgage repayments using deposit balances, and some balance reduction due to higher inflation and interest rate payments,” said DBRS Morningstar. “These dynamics have emerged across the banking sector with most banks experiencing a similar trend.”
