These are not easy times for banks and even less, for their customers. To get a loan is not only complicated, but also more and more expensive, while the remuneration of savings does not cease to decrease. This has been confirmed by the figure sent by banks to the Bank of Spain on commissions and interest rates applied usually on operations with individuals.
These figures are the best approximation to what banks are charging and how much they are paying for their most usual products. However, it does not allow any comparisons between institutions as each one of them sends the figures they wish: for mortgages, for example, there are banks that provide the figure of the usual mortgage, while others refer to mortgages in order to sell their own properties, which are sensibly cheaper.
Anyhow, in most cases, the evolution of these figures from the last quarter of 2012 and the first one this year show a clear tendency: mortgages are getting more expensive and deposits are less profitable. According to the calculations made by Expansion.com with the figures from the main banks, the equivalent annual fee required for mortgages has increased in more than one tenth in only three months.
In total, out of the 21 institutions examined, eleven have increased the price of their mortgages, three have maintained it and seven have reduced it. The only two savings banks that continue operating in Spain, Caixa Ontinyent and Caixa Pollença, are in this last group. The highest increases have taken place in Bankia and Ibercaja.
The information is more convincing when it comes to deposits. At the beginning of the quarter, the Bank of Spain recommended all institutions to lower the offered profit in order to obtain savings from customers and thus end the liability war that was destroying the badly damaged banking margins. Results can already be seen.
The equivalent annual fee, in average, offered for deposits between three months and one year has decreased in one percentage point, down to 1,62%, while the one for deposits between one and three years has decreased by seven tenths, down to 2,65%. From the 21 examined institutions, fifteen lowered the remuneration on deposits for one year, one maintained it and four increased it. For longer periods, only two institutions-CaixaBank and Bankia-improved the offer to customers.
Experts and even bankers admit that this tendency will continue in the next few quarters, due to the situation within banks. The environment of low interest rates –the official price for money in the Euro zone is in a historic minimum of 0,5%-affects the profit of the institutions, especially those who have most of their balance sheet compromised in mortgages. The credit activity is also stagnated and no one bets on its recovery in the short term.
In this situation, it is normal that banks increase the margins applied on mortgages, so that the new production can compensate the low profitability of the existing portfolio. The only way to find a mortgage nowadays with a differential near 1% is buying the property from the bank. For the rest, it is difficult to imagine a margin below 3%, although there are important variations depending on the risk profile of the customer and the operation.
From the liability side, the wholesale financing is still expensive, although the situation has improved opposite to last year´s.
The recommendation from the Bank of Spain has been received as a blessing for banks: if credits are less profitable, the only way to protect the customer´s spread is to pay less for its savings. In fact, most institutions have showed an improvement in the price of their liability. All declared that they hoped for the descent of costs of deposits to spread in the near future.