A solid banking sector in the face of adversity

2020 was a year marked by the health crisis and its impact on society and businesses. Andorra was no exception, and we will remember this year for a long time to come. The uncertainties caused by the pandemic have not yet disappeared. In 2021 we will still suffer the consequences, both at a personal and professional level, in businesses and across society at large. However, from Andorran Banking, we want to send an optimistic message.

The results of Andorran banks at the end of 2020 show solidity and resilience in the face of adversity, with stronger solvency, increased assets under management and lending, and an improved NPL ratio, among other things. Moreover, financial institutions have made significant provisions to compensate for the effects of COVID-19 and to be prepared for the future.

One element that I would like to highlight is the role played by banks in Andorra during this difficult period. We have supported local government, companies and families by providing them with loans and moratoria under the recently enacted Law 5/2020 and as part of the sector-wide moratoria promoted by Andorran Banking.

In addition to the exceptional pandemic situation, which has seen Andorran banks increase their provisions twofold compared to 2019, the continued scenario of low interest rates, further compliance with international banking regulations and strong investment in technology has put pressure on the sector’s results and profitability. But we are confident that a recovery will ensue in 2021.

The General Assembly of the Andorran Banking Association has elected its new Chairman and Vice-Chairman. In accordance with the Association’s by-laws, both positions are rotated and renewable annually.

The new appointments for 2021 went to Mr Xavier Cornella Castel, CEO of Crèdit Andorrà, and to Mr José Luis Dorado Ocaña, Executive Director and General Manager of Vall Banc.

Andorran banks have closed the year 2020 with an aggregate result of €84m following the extraordinary provisions of €33m made in line with the recommendations issued by the supervisor and with international guidelines.

Despite the impact of the pandemic, Andorran banks have maintained their strength and attractiveness in terms of securing new customer funds, which increased in volume by 4%, to €51.7bn. Lending jumped by 4.5% and the solvency ratio rose to 17.71%.

During this period of time, soft loans worth €135m and moratoria on loan repayments with an outstanding balance of €122m were granted to companies and businesses.

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THE ROLE OF BANKS IN THE SOCIOECONOMIC GROWTH OF ANDORRA

The Andorran Banking Observatory published its third report “The role of banks in the socioeconomic growth of Andorra”.

 Throughout their history, Andorran banks have played an essential role in driving and supporting the country’s economic development. Andorra’s historical evolution would arguably not have been the same without the financing capacity of banks. This is because Andorran banks have not limited themselves to acting as local institutions with local customers, but have instead developed a private banking business that has brought a large volume of international clients and given them a much greater financing capacity. Having one’s own financial system is essential for the development of a country’s economy.

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Bloomberg, a prestigious US company specialising in financial news, has published an article recommending the Principality of Andorra as a safe destination, along with other countries, for 2021. Andorra, a country that can be crossed on foot, offers plenty in terms of things to do and see, and is renowned for its excellent local gastronomy.

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