Noteworthy among these fees is the relative increase in fees for selling products such as investment funds, against a backdrop of growing demand for these assets, bolstered by households seeking more profitable investments than deposits given their low returns. These developments have resulted in the ratio of gross income to assets, which includes fees in addition to net interest income, having fallen to a lesser extent than the net interest margin. Banks have also made huge efforts to reduce their operating expenses through branch closures and job cuts, but to date these expenses have declined more moderately than gross income. This was reflected in a continued increase in the ratio between these two magnitudes, that is, the efficiency ratio, until 2017, which underlines the deterioration in their efficiency during this period. This trend seemed to come to a halt in 2018 when this ratio improved slightly. In terms of assets, in 2018 operating expenses were at similar levels to their pre-crisis ones. However, in a setting where the share of credit in assets is currently significantly lower than it was then, these expenses should also be smaller given that the costs associated with the management of non-credit assets are lower. The information in the consolidated statements also shows that the most recent levels of the efficiency ratio are above pre-crisis ones, therefore indicating a situation of lower efficiency.
This has been achieved by sales of large nonperforming and foreclosed asset portfolios, partly as a consequence of regulatory and supervisory pressure. These latest developments have occurred in a favourable macro-financial setting characterised by growing economic activity, falling unemployment and lower interest rates. This has boosted borrowers’ ability to repay their loans, driven up asset values and has also been compatible with substantial deleveraging in the non-financial private sector and with a major consolidation process in the banking sector. 7/13  Spanish banking system earnings are highly cyclical, essentially on account of business in Spain. Banks that are more exposed to business abroad were comparatively less hard hit by the crisis, as they were able to offset the losses on their Spanish business with earnings from their activities in other economies that were less adversely affected by cyclical patterns. Naturally, these international exposures also entail other risks. For example, banks with exposure to the United Kingdom could be affected by the possible negative impact of Brexit and the effects it may have on the UK economy. In addition, the problems facing certain emerging market economies, such as Turkey or Argentina, may affect banks that have exposure to those countries. However, despite these risks, international diversification of the banking business offers important advantages overall and especially, as was apparent in the last crisis, when it is focused on retail banking and is organised on a decentralised basis.