Bankinter outperforms Spanish banks in ECB stress tests
In the adverse scenario, bank’s CET1 fully-loaded capital ratio at 31 December 2020 may drop by 114 basis points from 11.76% to 10.61%.
Bankinter’s performance compares very favourably with the EBA’s published findings for Spanish banks.
The ECB’s test for the entities it directly supervises covers the same scenarios and includes substantially the same methodology as the analysis conducted by the EBA.
The results from the European Central Bank’s (ECB) stress tests for the banks it directly supervises, carried out in parallel with the tests carried out by the European Banking Authority (EBA), reveal that, on 31 December 2020, in an adverse scenario, Bankinter would maintain a CET1 fully-loaded capital ratio of 10.61%. With new IFRS9 adjustments, this suggests a reduction of 114 basis points in the bank’s capital ratio as recorded at the end of 2017.
Bankinter has chosen not to implement any transitional adjustments in order to mitigate the impact of rising provisions resulting from the implementation of IFRS9 on capital. Thus, its CET1 phase-in capital ratio in the adverse scenario matches its fully-loaded ratio.
When compared to the figures publicly released by the 48 entities analysed by the EBA, this capital depletion by114 basis points would make Bankinter the second bank with the smallest impact on capital adequacy in a stressed scenario, only behind the state-run Polish bank, PKOBP.
Under the base scenario, Bankinter’s CET1 fully loaded capital ratio at the end of the same period would stand at 14.19%.
The ECB’s stress tests included some 60 banks that it directly supervises, including Bankinter. They join another 48 entities analysed by the EBA, whose findings were made public last Friday. In contrast, ECB stress test results have not been released.
Therefore, Bankinter’s results are based on conclusions that were sent to the ECB after they had been settled with the supervisor following several review cycles (even though the ECB did not make them public).
Stress tests of both the ECB and the EBA took into account the same variables to assess the resilience of European banks. In Spain, the most adverse scenario in the tests involved GDP shrinking by 0.3% this year; by 1.5% in 2019; and expanding by 1.1% in 2020, with a four percentage-point increase in the current unemployment rate. Under the tests’ base scenario, Spain’s GDP would grow this year by 2.4% and by 2.1% in the next two years.
Across the European Union, tests simulated decreases in real GDP of 1.2% in 2018 and 2.2% in 2019, with slight growth of 0.7% in 2020.
Ultimately, Bankinter believes the results it obtained from the ECB’s stress testing reflect its strong capital adequacy and resilience in severe stress scenarios. Thus, Bankinter’s results compare very favourably with the EBA’s findings for Spanish banks and the average of European banks.