Publications

Financial analysis

From this page you can access thematically grouped Analytical Articles published in the Economic Bulletin from 1999, ordered by date of dissemination within each year.

All documents are available in PDF format PDF File. Opens in a new window

  • 30/11/2017
    Results of non-financial corporations in 2016 and in the first three quarters of 2017 (705 KB) Álvaro Menéndez y Maristela Mulino

    According to the CBA and CBQ surveys, non-financial corporations as a whole continued to create employment in 2016 and in the first nine months of 2017, as did most sectors and most of the firms individually. As regards business activity, the main surpluses grew significantly in 2016, resulting in an increase in aggregate ordinary net profit. The favourable behaviour of extraordinary costs and revenues also contributed to the increase in net profit. By contrast, in the first three quarters of 2017, gross value added and ordinary net profit continued to grow, but at more moderate rates than in the previous year, owing to the adverse effects of the behaviour of some large firms with a high weight in the quarterly sample, which led to a slight decrease in aggregate profitability. Also, during the first nine months of this year, non-recurring items had a negative impact, leading to a sharp contraction in net profit. Lastly, average debt ratios continued to decline in 2016, while in the first three quarters of 2017 they rose slightly. Driven by the lower cost of borrowing, the debt burden declined in both periods. The article includes two boxes, the first of which analyses the performance of SMEs relative to larger firms in 2016, and the second the results and financial position of Spanish consolidated groups in 2016.

  • 23/11/2017
    Contingent convertible bonds and subordinated debt of euro area credit institutions (674 KB) Ignacio Fuentes and Juan Carlos Casado

    The progressive entry into force of the new bank capital accord, known as Basel III, and the approval of the new regulations on the recovery and resolution of credit institutions in the European Union are increasing the need for credit institutions to have a sufficient capital buffer to absorb potential losses. In order to meet these legal requirements, European banks have, in recent years, issued contingent convertible bonds and subordinated debt. This article analyses the main characteristics of these hybrid instruments. It first presents the information available on the volumes and the numbers of issues and issuing institutions, and then analyses issuance costs and market prices of outstanding issues, paying particular attention to Spanish institutions’ issues.

  • 24/10/2017
    The October 2017 Bank Lending Survey in Spain (608 KB) Irene Roibás

    The results of the Bank Lending Survey show that during the third quarter of 2017 credit standards in the households segment eased somewhat in both Spain and the euro area, while they tightened slightly for enterprises in Spain and remained virtually unchanged for enterprises in the euro area. Demand for loans to enterprises remained stable in Spain, whereas it increased across the euro area as a whole, and household demand grew in both areas. Spanish and euro area banks alike generally perceived unchanged or improved wholesale market access conditions, while in the case of retail markets, a slight deterioration in access conditions was perceived in Spain, which was not observed across the euro area as a whole. Meanwhile, the banks in the survey replied that the ECB’s expanded asset purchase programme has generally helped improve the financial situation over the last six months, except in the case of profitability in the euro area, which has been adversely affected. They also reported that the programme is continuing to encourage an easing of lending conditions for the private non-financial sector. Spanish and euro area banks alike reported that the ECB’s negative deposit facility rate caused a reduction in net interest income in the last six months, having a moderately negative impact on interest rates and the mark-ups on loans to households and businesses, and a positive (albeit small) effect on lending volumes.

  • 05/10/2017
    China’s economic imbalances and the role of the financial sector (547 KB) Jacopo Timini

    China’s economic success in recent decades has been associated with a distinctive, highly investment dependent, pattern of growth, which has led to a high level of non-financial private sector debt. The Chinese authorities, recognising that this model has reached its limits, have made “rebalancing” the pattern of growth one of their key economic policy objectives. One feature of this rebalancing is that of promoting an orderly deleveraging process to avoid a sharp adjustment of the economy. In this context, this article discusses the challenges being faced by the Chinese authorities as they seek to reduce non-financial sector debt levels and mitigate the risks associated with the excessive growth of the financial system, and of the shadow banking sector in particular.

     

  • 21/09/2017
    Results of non-financial corporations for 2017 Q1-Q2 (722 KB) Luis Ángel Maza, Álvaro Menéndez and Maristela Mulino

    According to the data from the Banco de España’s Central Balance Sheet Data Office, employment continued to grow in non-financial firms in 2017 H1, at rates exceeding those of the previous year. The gross value added generated by these firms declined somewhat in the same period, highly conditioned by the unfavourable performance of a number of large firms which account for a substantial share of the sample. However, the favourable progress of financial costs and revenue led to a slight increase in ordinary profits, but this was not sufficient to prevent a moderate fall in the aggregate return ratios, although median returns increased in the period. Extraordinary costs and revenue also had a negative impact, as a result of which net profit contracted with respect to the level reached in the same period the preceding the year. Lastly, the variations in the financial position ratios of firms were negligible. This article describes these developments and also analyses, in a separate section, the strong growth of intra-group financing in large Spanish corporate groups since 2005, in a setting in which the organisational structure of these conglomerates has become increasingly complex.

     

  • 25/07/2017
    Private-sector economic developments in the euro area in 2016 (719 KB) Ana del Río and José Antonio Cuenca

    This article describes the economic situation of the non-financial private sector in the euro area during 2016, on the basis of sectoral accounts. In the case of households, employment creation and low inflation provided for an increase in purchasing power which, along with the rise in wealth, was reflected in the strength of consumption, against a background in which the increase in nominal wages continue to be modest. The pace of economic recovery enabled firms to improve their profits and investment, although the investment drive was still moderate, while the sector continued to evidence a net lending capacity. The greater dynamism of lending both for households and firms was compatible with further increases in the ongoing correction of indebtedness, though such increases were uneven from one country to another. In the case of large corporations, the shift in the liabilities mix towards financing based on fixed-income securities continued, driven in 2016 by the Eurosystem’s monetary policy measures.

  • 21/07/2017
    Inflation expectation indicators based on financial instrument prices (1 MB) Alberto Fuertes and Ricardo Gimeno

    This article shows how indicators of agents’ inflation expectations can be derived from the prices of various financial instruments and presents the estimates obtained for the euro area and the United States. The results show that these metrics have reacted to economic and monetary decisions made in recent years, and that, on average, expected inflation is lower and less volatile in the euro area than in the United States.
    Moreover, since end-2016 there has been a marked rise in the probability of observing longterm inflation rates above 2% in the United States, coinciding with the likely change in the country’s economic policy stance. Changes in the indicators for the euro area have been less pronounced over this period, although a marked drop in the probability of low or negative inflation rates has been observed.

  • 18/07/2017
    The July 2017 Bank Lending Survey in Spain (629 KB) Álvaro Menéndez Pujadas

    The results of the Bank Lending Survey show that during 2017 Q2 credit standards for new loans in Spain held stable in all segments, while in the euro area they eased slightly both in loans to enterprises and in loans to households for house purchase, holding virtually unchanged in consumer credit and other lending to households. Enterprises’ demand for credit held stable in Spain and increased in the euro area as a whole, while household demand grew in both areas and in both segments. Spanish and euro area banks alike generally perceived unchanged or improved wholesale market access conditions, while in the case of retail markets in Spain, Spanish banks perceived a slight deterioration in access conditions which was not observed for the euro area as a whole. Regulatory and supervisory actions were conducive, in both areas, to some increase in banks’ total assets and in their capital levels. Finally, targeted longer-term refinancing operations (TLTROs) appear to have contributed, both in Spain and in the euro area, to an improvement in banks’ financial situation, to some easing in credit standards and to a softening of the conditions applied.

  • 04/07/2017
    Spanish deposit-taking institutions’ net interest income and low interest rates (572 KB) Jorge Martínez Pagés

    This article reviews how Spanish deposit-taking institutions’ net interest income has evolved in recent years and explores the main underlying factors, which include the low levels of interest rates. For this purpose, three alternative breakdowns of net interest income are considered. The first shows how the volume of credit and the non-performing loan ratio have been as –or more– significant than net income per unit of assets in explaining the performance of net interest income since the start of the crisis. The second shows the historical importance for Spanish institutions of implicit income from payment services and its loss of significance in the current context of negative short-term market rates. The third illustrates how, since the onset of the crisis, there has been a rise in the yield spread between new lending and interbank rates, which may be partly due to the way in which institutions are responding to low interest rates.

  • 22/06/2017
    Results of non-financial corporations in 2017 Q1 (749 KB) Álvaro Menéndez and Maristela Mulino

    The productive activity of the overall sample of firms reporting to the Central Balance Sheet Data Office Quarterly Survey saw a moderate expansion in 2017 Q1, similar to that recorded a year earlier. This recovery was greatly affected by the poor performance of some larger firms, which account for a large share of the sample, thus dampening the expansionary trend observed in most firms. Employment also continued to grow in the majority of firms. The notable increase in ordinary profits was driven by the favourable progress of financial costs and revenues, leading to a further increase in aggregate levels of ordinary profitability.
    However, extraordinary costs and revenues had a negative impact in this quarter, as a result of which net profit contracted with respect to the level reached in the same period the preceding year. The box included at the end of this article shows that the improved profitability of recent years can be observed across all the percentiles of the distribution, although it was higher in those reflecting the situation of less profitable firms, and therefore the dispersion of this variable in the sample has gradually been reduced. In addition, in 2017 Q1 these values had already returned to the levels achieved before the crisis.

  • 18/05/2017
    Economic and financial performance of Spanish non-financial corporations during the economic crisis and the first years of recovery. A comparative analysis with the euro area (670 KB) Álvaro Menéndez, Anna Gorris and Daniel Dejuán

    This article reports evidence based on firm-level information of the marked deterioration in the economic and financial situation of Spanish companies between 2008 and 2012, which was comparatively sharper in SMEs and in certain sectors such as construction and real estate, and higher than that in other euro area economies.
    However, from 2013 this trend began to reverse and the recovery in activity, stronger on average than in other euro area economies, and the subsequent performance of Spanish firms allowed the previous differences with respect to other euro area countries to diminish.

  • 27/04/2017
    The Balance of Payments and International Investment Position of Spain in 2016 (724 KB) Noelia Jiménez and César Martín

    According to the balance of payments (BoP) statistics, in 2016 the Spanish economy once again became a net lender. The increase in the current account balance mainly reflected the decline in the trade deficit, driven by the decrease in the energy bill and the increase in the services balance surplus.
    The Spanish economy’s net debtor international investment position (IIP), in GDP terms, decreased in 2016 for the second consecutive year, since the nation’s net lending and the growth of GDP counteracted the slight negative impact of valuation effects and other adjustments on this indicator.

  • 06/04/2017
    The cost of interventions in the financial sector since 2008 in the EU countries (526 KB) Antonio Millaruelo and Ana del Río

    Since the start of the financial crisis, the advanced countries have deployed numerous measures in support of the financial system, requiring a sizeable volume of public funds. In the EU, aid has been authorised and subject to the conditionality required by the European Commission, in respect of its accountability for competition-related matters.
    This article explains the broad criteria for recording aid in general government accounts and discusses the different ways of measuring its direct cost. On Eurostat figures for the 2008-2015 period, the impact of interventions on general government accounts in terms of debt, debt net of assets, deficits and contingent liabilities are shown for the EU countries.
    Nevertheless, the final cost will not be fully identified until the restructuring processes outstanding have been concluded and the public sector’s remaining exposure to the banking sector has been removed.

  • 22/03/2017
    Results of non-financial corporations: summary 2016 year-end data (697 KB) Álvaro Menéndez and Maristela Mulino

    Most sectors and companies in the Central Balance Sheet Data Office Quarterly Survey saw an expansion in productive activity and employment in 2016. Buoyant activity, coupled with favourable trends in financial costs and revenues, enabled companies’ ordinary profits to grow rapidly. This meant a further increase in aggregate levels of ordinary profits.
    Lastly, companies’ financial position continued to strengthen, translating into a drop in indebtedness and debt burden ratios.

  • 02/03/2017
    The natural interest rate: concept, determinants and implications for monetary policy (459 KB) Alessandro Galesi, Galo Nuño and Carlos Thomas

    This article defines the natural interest rate, analysing the concept and its role in monetary policy conduct. Estimates of the natural interest rate place it at historically low and even negative levels. Demographics and growth, but also the recent financial crisis with weak aggregate demand, deleveraging, etc., are identified as factors related to this decline. Lastly, the article highlights the difficulties that a natural rate of this type may pose to central banks in achieving their objectives, and it discusses potential monetary policy-related solutions, such as QE and changes in the monetary policy objective.

  • 23/02/2017
    Global funding trends in capital markets in 2016 (943 KB) Alberto Fuertes, José Manuel Marqués and Luis Molina

    Bond issuance increased moderately in the developed markets in 2016, partly due to the ongoing fiscal consolidation in the main economies. Placements by companies with better credit quality and by the banking sector were notably buoyant. Across countries, however, there were significant differences, both in terms of the conditions of supply of bonds by issuers (the cyclical position of each economy, the need for deleveraging by businesses and the public sector, and the regulatory requirements in the financial sector) and in terms of the factors affecting the demand of investors (risk appetite, the search for yield in a context of negative interest rates and the role of central banks in bond purchases). With regard to the emerging economies, they continued to have access to the markets.
    However, the volatility observed in foreign exchange markets led to a certain preference for foreign-currency issuance, especially in US dollars.

  • 09/02/2017
    Towards efficient capital flow management (530 KB) Ángel Estrada, Luis Molina, Paula Sánchez and Francesca Viani

    Financial globalisation has advanced notably in recent decades. In principle, greater integration should raise the degree of economic efficiency. However, the empirical evidence suggests that, for this to occur, countries should have well-designed economic institutions and sufficiently developed local financial markets. Moreover, these flows may jeopardise financial stability in certain circumstances, whereby the economic authorities need to draw on criteria and instruments to withstand such situations. These tools should be used as part of a broader programme of measures that includes the macro and microeconomic adjustments required. Furthermore, international cooperation emerges as a necessary complement to globalisation.

  • 24/01/2017
    Survey of Household Finances (EFF) 2014: methods, results and changes since 2011 (1 MB)

    This article presents the main results of the Survey of Household Finances 2014, which show the financial position of Spanish households at the end of 2014. It also describes the most significant changes observed in the period from end-2011 to end-2014.

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