Years of 'fat cows' for banking are coming.

• A 50-point rise in rates would raise profits by up to 20%
  
  
  

 The position of the European Central Bank (ECB) of bringing forward a possible rise in interest rates to this year to correct inflation leads one to anticipate that times of fat cows will come for banks, as their stock prices already reflect during the last week in a burst of optimism. However, beyond the effect that an improvement in rates will have on your accounts, since between 60% and 70% of your mortgage portfolio is referenced to variable, the sector will have to face the disarmament of the stimuli put in place during the pandemic with its pertinent challenges at the same time. In the balance, positive effects are weighed, such as the impact of the arrival of European funds or the synergies that the adjustments made will leave, but on the negative side there remains the uncertainty about delinquency or the end of cheap liquidity. The experts consulted by elEconomista predict that this will be the year of the last effort towards normality, where the positive points will prevail over the negative ones.

Up to 20% profit improvement The rise in rates has an immediate impact on the interest margin of the banks, and especially of the Spanish ones, where the bulk of their mortgage portfolio is still referenced to variable, boosting income and, with them, profit. UBS analysts forecast that a rise in interest rates of 50 basis points would raise the interest margin of Spanish entities by between 8% and 10% and profit by between 15% and 20%. This impact would be fully reflected in the accounts in two years for loan repricing periods. The improvement in results would consolidate the boom in the sector, which closed a good 2021, with 16,650 million profits without extraordinary items , 23% more than in 2019.