Spanish banks: less profit, more dividends
19 FEB, 2020
By Constanza Ramos
The credit quality of Spanish banks looks solid, despite the pull-back in reported profits. Solvency ratios sitting comfortably above requirements offer greater leeway for capital distribution and will result in higher returns, benefiting investors.
Spanish bank creditors should see the banks’ improved capital-generation capacity as a sign of strength, even if capital ratios have peaked for this cycle. Despite headline declines in net profits for the major groups, full-year results were solid, held down by sizeable goodwill impairments, lower trading gains on ALCO portfolios and integration-related restructuring charges. Against a backdrop of heightened challenges for net interest income, results showed good progress on commissions, costs and asset quality.
Marco Troiano, deputy head of Scope Ratings’ financial institutions team commented:
Marco Troiano continued:
