Page 102 - economic report 2021

more than in 2020. Credit investment grew In 2021, Andorran banks obtained
10.4% to €7,031 million. This field of business pre-pandemic levels of prof ts
includes 884 new mortgages which amount
to a formalised total of €317.5 million, a figure and maintain good solvency and
that is well above the 2019 levels. Banking prof tability rat os.
activity accelerated thanks to the reactivation
of tourism. The volume and number of transactions using national and International debit and
credit cards reached values in the second half of 2021 that were higher than in 2019.

2021 featured the acquisitions of BancSabadell d’Andorra by MoraBanc and Vall Banc by
Crèdit Andorrà. On the one hand, MoraBanc acquired 50.97% of BancSabadell d’Andorra, now
BSABanc, from Banc Sabadell for €68 million, and made an offer in 2022 to buy the shares of
minority shareholders to complete the merger at the end of 2022. On the other hand, Crèdit
Andorrà formalised the acquisition of 100% of Vall Banc on 11 February 2022. So, the core of
the Andorran financial system, which is the banking system, will finally consist of three banking
groups, Andbank, MoraBanc and Crèdit Andorrà. This concentration of the Andorran banks and
the increase in average size of the entities should lead to a system that is more efficient, more
internationally competitive and with a greater responsiveness to clients.

The sector has always been committed to the business fabric of this country, which became even
more evident at the start of the health crisis, when the sector provided a programme of soft loans
and loan deferments for the amount of €152 million and €122 million, respectively. On 31 July
2022, 30% of the soft loans had already been returned and the loan deferment period ended.

Andorran banks remain sound through the strong capitalisation of the institutions, with a CET1
100
(phase-in) solvency ratio of 17.0% on 31 December 2021, slightly below the previous year, when
it was 18.0%, but above the average for European banks, which is 15.4% according to data from
the EBA (European Banking Authority).

In 2021, the financial profitability of the institutions, measured by return on equity (ROE), recovered
and presented a consolidated figure of 6.04% (5.46% in 2020), despite continued low interest rates.
The liquidity coverage ratio (LCR) is 206%, also higher than the average for European banks, which
was 174.7% at the end of the fourth quarter of 2021, and close to the 223% recorded in Andorra in
2019. Finally, the default rate dropped to 3.74% in 2021, down from 4.49% in 2020.
The Andorran economy: developments in the main sectors | XII. Services

Overall, the figures confirm the strength of the banking sector when faced with the crisis, and
the successful culmination of a highly demanding process of adopting European and international
regulations which require greater provisions, among other matters, within the economic context of
low interest rates and major investments in technology over recent years. This major investment
in ICT was accompanied by increases in users of Andorran digital banking, by 18% in the period
2020-2021, and spectacular growth in users of mobile apps over the same period, by 24%.

The Moneyval reports, which highlight the great advances made by this country in anti-
money laundering, acknowledge Andorra’s commitment to combatting money laundering and
terrorism financing.

San Marino and Hungary sign Also remember that on 12 February 2016, the
agreements with Andorra to avoid Principality of Andorra and the European Union
double taxat on and prevent tax evasion. (EU) signed an agreement for the automatic
exchange of information in tax matters (AEOI),
which came into force on 1 January 2017.
Today, Andorra exchanges information with 95 jurisdictions.