Page 103 - Economic report 2020

Andorran banks have formed three financial institution Banco de Sabadell, SA, for
large banking groups: Andbank, €68 million, and an offer to buy the shares
MoraBanc and Creand Crèdit Andorrà. of minority shareholders was made in 2022
in order to complete the merger at the end
of 2022. On the other hand, Creand Crèdit
Andorrà formalised its acquisition of 100% of Vall Banc, SA on 11 February 2022.

In this way, the core of the Andorran financial system, which is the banking system, now consists
of three banking groups, Andbank, MoraBanc and Creand Crèdit Andorrà. This concentration of
Andorran Banks and the increased average size of the entities has led to a more efficient, more
internationally competitive system with better customer response capability.

The constant evolution of the banking model in terms of regulations and digital transformation,
to adapt to changes in customer habits, requires the sector to have new professional profiles in
order to remain competitive.

In 2022, the number of employees in Andorran banks as a whole was 2,500, of which 1,229 work
in Andorra (1,337 in 2021), divided between
the 33 bank branches in the Principality. Employment in the banking sector
falls due to the change in business
Speaking of the financial system as a whole,
the number of employees also fell by 2.8% in model and digital transformation.
2022, to 1,716, the lowest figure in the last
decade. The average wage in this sector, which is the highest of all the sectors in the Andorran
economy, is around €5,060. As for the business network, there are 208 establishments, seven 101
more than in the previous year and twelve more than in 2019.

In 2022, the financial sector was impacted by the effects of the war in Ukraine on inflation and
the consequent rise in interest rates. However, the measures taken have allowed for the balance
sheet of the Andorran banking system to remain sound. In fact, it ended the 2022 financial year
with aggregate profits for the three banks of €113.3 million (€97.4 million in 2021), higher than
before the pandemic, and a volume of assets
under management of €63,692 million, 3.6%
AGGREGATE DATA FOR THE higher than in 2021. Consolidated lending
ANDORRAN BANKS Table 12.5 increased by 4%, to €7,314.9 million, due to

Thousands of euros 2021 2022 the Lombard loans granted to private banking
Total assets 16,611,905 17,975,131 clients. Lending in Andorra has remained
Gross lending 7,031,054 7,314,901 stable at about €5,000 million, formalising 702
Assets under management 61,461,234 63,691,957 new mortgages to families for a total of €375
Profit/(loss) 97,419 113,277 million (18% more than in 2021). New loans to
businesses and individuals were €676 million,
ROE 6.04% 7.57%
ROA 0.60% 0.66% 25% more than in 2021.
Efficiency ratio 68.35% 72.31%
(Cost to income ratio) The Andorran banks had higher profits
Default rate 3.74% 3.28% than in 2019 and maintain good Andorran economy: developments in the main sectors | XII. Services
CET 1 solvency ratio
(phase-in) 17.00% 15.76%* solvency and profitability ratios.
Liquidity ratio 206.06% 201.29%**
(Liquidity Coverage Ratio)
Although the interest rate rise allowed for
* European bank average according to EBA data: 15.30%. capitalisation of the traditional activity of
** European bank average according to EBA data: 164.70%.
granting loans and pushed up profits, the
Source: Andorran Banking from the annual reports of banking institutions.
inherent costs in the corporate transactions,