Annual report
PRESENTATION
Although there was recovery of the world economy in 2010 with a growth of 3.3%, different geographical areas recovered at different rates. While there was considerable growth in emerging economies, the growth rates for developed economies such as the USA and EU were more moderate. This pattern was repeated throughout the Eurozone where there were considerable differences in growth ranging from the 3.6% in Germany to -0.1% in Spain. According to the Basque Government, the Basque economy finally began its path to recovery in 2010 with a 0.3% economic growth rate.
Throughout the year, market instability in the Eurozone continued as a result of the turbulent sovereign debt of various member countries, which rocked the foundations of the Monetary Union and which required the adoption of extraordinary measures such as the European Stabilization Mechanism. It was also necessary for the Spanish economy to undertake further-reaching adjustments for various basic imbalances such as to correct the public deficit, unleverage the private sector (and in particular the property sector) and reinforce the restructuring of the banking sector.
The reform of the legislative framework for saving banks following publication of Royal Decree Law 11/2010 of 9th July implied a profound historic change in credit institutions, and together with the restructuring and consolidation heralded a before and after for our sector.
This adverse climate resulted in lower levels of activity, narrower margins, an increase in non-payment levels and difficulties in obtaining wholesale financing. Nevertheless, it was possible to classify the overall performance of member saving banks as extremely satisfactory.
This assessment was based, on one hand, on the global evolution of business. The financing of productive investments, housing and consumption in general with credit investment totalling 60,704 million euros revealed a year-on-year growth of 0.9% and the joint management of commercial resources administered with a final total of 61,192 million euros represented a -3.5% drop in relation to the previous year.
On the other hand, pre-tax profits totalled 362.6 million euros in 2010, 28% lower than the previous financial year, and represented 0.47 pp on ATA which was higher than the average for the savings banks sector. The net result after tax totalled 397.3 million euros which represented 0.51% of the average balance.
It is also worth mentioning the soundness of the ACBC Savings Banks' assets as demonstrated by the high rate of solvency obtained (17.3%), by the quality of their own resources, with 85% classified as Tier 1, and by the quality of their assets which achieved a non-payment rate of 2.64%, which was much lower than the system average.
The strength of their solvency was confirmed in July with the publication of the stress tests conducted by the Committee of European Banking Supervisors which revealed that the ACBC Savings Banks were in an unbeatable position in view of more adverse economic scenarios.
Central to the Federation Savings Banks' commitment to the socio-economic development of the territories in which they operate was their contribution of 188.6 million euros to social welfare work in 2010, which was equivalent to almost 67 euros per inhabitant and 47% of their net profits. They also continued to be the main financial suppliers for the programmes promoted by the Basque Administration for the different economic subsectors with the allocation of 222.3 million euros.
The Federation also organised a series of reflection activities at the Summer School held at the University of the Basque Country and these included a Seminar on "The Welfare State at the crossroads: new challenges arising from the global crisis", which culminated in the publication of the next edition of the Ekonomi Gerizan series on this subject.
Finally, I am convinced that without losing sight of our foundational ideology, we will adjust to the changing conditions of the current financial and legislative situation and will be able to derive the greatest benefit for the people, companies and institutions served by the Federation Savings Banks.
Mario Fernández Pelaz
CHAIRMAN
