According to the Economic and Financial Report for September
The Spanish Banking Association (AEB) believes that the Spanish banking sector will see its business volume slow down due to the "moderation of growth and credit demand" that are occurring as a result of the turbulence shaking global financial markets since the beginning of August.
According to the Economic and Financial Report for September, the AEB specifies that Spanish banks will have to face less abundant liquidity in the coming months and an increase in the cost of both asset and liability operations.
However, these turbulences will have little impact on the Spanish "real" economy, says the report, which then warns that "the high degree of uncertainty prevailing in the markets widens the margin of error" of any prediction.
"There is a broad consensus that the Spanish economy is heading towards a slowdown in growth and domestic demand, less pull from the external sector, a high level of indebtedness to the rest of the world and a reduction in the budget surplus," explains the AEB.
However, monetary disturbances have significantly altered the external environment of our country's economy, which will be affected both by the slowdown in international growth and by the deterioration of credit markets.
At the international level, the AEB explains, the turbulence that has shaken the financial markets "is not yet over," so it is still too early to assess its effects on the global economy and financial markets, although "it seems difficult to avoid a slowdown in global growth and a tightening of credit conditions."
The greatest uncertainty is centered in the country where the crisis originated, the United States, where, according to the AEB, the possibility of a recession is increasingly likely and "everything indicates" that the adjustment in the housing market has not ended and that the situation could worsen if the disruption leads to a reduction in consumption, especially given the low level of savings and the high level of household debt in that country.
In Spain, all these turbulences have occurred at a time of strong growth and with a "particularly solid" financial system based on the good management of the entities and the high quality of the assets, the report says.
Solvency and profitability levels are "especially satisfactory", provisions are "high" and non-performing loans remain "at historic lows", all accompanied and favored by "demanding" supervision and "reduced exposure" to the financial instruments that have been the source of the turbulence, says the AEB.
Regarding the evolution of interest rates in the Eurozone, which the European Central Bank (ECB) has raised eight times since December 2005, bringing them to the current 4%, the AEB believes that the turbulence prevented a further increase and thinks that the upward trend will continue until the end of the year.
In summary, in the opinion of the AEB, the financial turbulence finds the Spanish economy with solid foundations and a diversified banking sector, with an international dimension, healthy and efficient to face this new environment.
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