Author: Marta Garijo

The large Spanish banks have taken stock of the first quarter. Accounts already marked by the impact of the COVID-19 pandemic. Although the stoppage in Europe came at the end of March with the implementation of containment measures, the main entities have already provisioned 3,800 million euros to face the foreseeable deterioration of your business in 2020.

Million-dollar reserves at a time of uncertainty regarding the duration of the crisis and, therefore, what the final blow will be. In the banking business, one of the challenges is whether the drop in mortgage and consumer credit will be offset by the increase in business loans.

This is the situation in a context of movement restriction, where digitization marks a turning point: Digital customers increase, even the most reticent by age, sales by remote channels grow and operations carried out by remote managers increase. A consequence of the pandemic that, according to bank managers, in many cases is here to stay.

Digital customers and remote sales on the rise

In this first quarter, Banco Santander increased its digital clients by 1.5 million, while remote sales accounted for 43%, compared to 36% a year ago. In Spain, the entity already has almost 5 million clients that connect via remote channels, of which 139,000 joined this year.

“We have lived a record in digital management in the quarter,” summarized the CEO of the bank, José Antonio Álvarez, in the presentation of results.

In the state of alarm, bank branches are one of the essential services that they can open. Still, entities have tried to visits to their offices are limited to those strictly necessary.

In the case of CaixaBank, 62.9% of its customers are digital and 1.3 million use the In Touch Clients remote management advisory service, which has seen the percentage of calls increase by 35%.

Gonzálo Gortázar, CEO of CaixaBank, recalled at the telematic press conference presenting the results that since March they advanced the collection of pensions for the elderly with the aim of preventing them from going to the offices and they carried out a proactive campaign of calls so that, if they did, they would do so by appointment. A trend that was followed throughout the sector.

For its part, BBVA said at the results conference that 63% of its sales are already digital and 59% of customers used remote channels in this period.

The president of the entity Carlos Torres highlighted the adaptation of older customers to these digital channels, pointing out that digital users in this segment grew by 48% between the previous and the subsequent period of the state of alarm.

The CEO of Banco Sabadell, Jaime Guardiola, also made reference to the evolution of this type of clients in his entity. Guardiola explained that, in the state of alarm, more than twice as many customers over 65 years of age have registered on digital channels than they usually register. Thus, if among the users in this age group who usually join remote channels, the increase is 10%, at this time the rate has been 20%.

Not only do the channels change, but also the way of working

The digitization of banks in this crisis is not only perceived in their relationship with customers but also in the formulas they use in their day to day. The central services of the entities these days they work almost entirely remotely and branch networks have seen the number of on-site employees reduced, in many cases, by half.

“This crisis will be a catalyst for profound changes in the way of working,” said María Dolores Dancausa, CEO of Bankinter. The board stressed that the exceptional situation has meant that departments such as the treasury or trading desk have started to operate remotely and without lowering performance. A change in trend that may have come to stay.

“We are seeing that digitization is linked to remote management, the two things are going together: both in the way in which customers want to be served and in the way in which we can serve them,” said the entity’s CEO. , José Sevilla.

In this sense, the manager highlighted the service that the digital consultants that they have had for a couple of years within the service Connect with your expert are doing in the entity.

Provisions of € 3.8 billion to curb the impact of the coronavirus

Large banks have made provisions in this first quarter of the year to prepare for the impact that will mean the COVID-19 pandemic in the economy and, therefore, in your business. Although all warn that the situation of uncertainty about the duration and recovery of the crisis will force to review the accounts.

These are the provisions that the banks have made:

Santander: 1,600 million euros.
BBVA: 1,433 million euros.
CaixaBank: 400 million euros.
Bankia: 125 million euros.
Sabadell: 213 million euros.
Bankinter: 107 million euros.
Total: 3,878 million euros

The challenge in 2020: credit to companies goes up but mortgages and consumption go down

The first data on the impact of the paralysis of the economy that have been released by banks in this series of presentations of the first quarter results show how companies have increased their requests for liquidity while mortgage concessions and consumer credit fell. .

Santander in April detected that the new mortgage loan fell 60%; consumer credit did 25%; and that of companies doubled. In the case of BBVA, the data for the same month indicated a drop in the mortgage firm of 55%.

Meanwhile, Bankia’s figures showed that mortgage formalization also fell by 60% and consumer credit did so at rates above 80%.

In the case of business credit, entities have been seeing in general how companies’ request for liquidity increases, a trend that has not only been linked to guarantees from the Official Credit Institute (ICO), but also to operations of large companies outside the State guarantees.

Now, the key to seeing how the business evolves in the future is to observe what the rates of fall of mortgages are finally and consumption to see if the increase in credit to
manages to offset this decline as the year progresses.

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