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In 2023, APB members continued to demonstrate firmness and resilience in credit quality, as well as adequate liquidity positions.
The aggregate net profit maintained the upward path of recent years, improving very significantly in 2023 and reaching EUR 4.8 billion (+1.9 billion compared to 2022), which corresponds to a return on equity (ROE) of 15.0% and compares with 9.4% in the previous year. This evolution was mainly due to the increase in net interest income. This increase reflected the significant rise in interest rates, more than offsetting the increase of provisions and impairments for credit and, albeit to a lesser extent, the increase in operating costs.
Financial institutions’ aggregate assets totalled around EUR 362 billion, down 2.1% in 2022. This decline was explained by the fact that the increase in exposure to debt securities was not enough to compensate for the reduction in cash and deposits at Central Banks, loans and advances to credit institutions and loans and advances to customers.
Loans to customers (gross figures) registered an annual decrease of 2.3%, with loans to Companies and Public Administration and Housing showing a marginal reduction of 4.3% and 1.4% respectively, while loans for consumer purchases and other purposes increased by 2.2%. The NPL ratio maintained the downward path initiated in 2016 and stood at 2.9%, which compares to 1.9% for the euro area average. The NPL net of impairments ratio stood at 1.2%. In turn, the impairment coverage ratio rose by 0.8 p.p. to 58.6%.
Customer deposits remained the main source of financing for financial institutions and accounted for 70.7% of total assets in 2023, even though decreasing by 2.4% annually in an environment where net subscriptions of saving certificates, mainly in the first quarter of the year, and repayments of loans increased significantly. In addition, there was a further significant reduction in Eurosystem financing resulting from the early redemption of a significant proportion of the targeted longer-term refinancing operations (TLTRO III). This source of financing decreased from 4.7% of total liabilities in 2022 to 1% in 2023.
In terms of solvency, the Common Equity Tier 1 (CET1) ratio was significantly strengthened, standing at 17.9% (+2.1 p.p. compared to 2022) and surpassed the euro area average. The total solvency ratio also increased to 20.4%, a year-on-year increase of 1.8 p.p..