Additionally, impairment losses, which had been falling uninterruptedly since 2013, increased by 10.6%. Net interest income rose by somewhat more than 3%, while net fees and commissions grew by 2.5%. The decline in profit was seen at nearly all banks, albeit to differing extents. As a result, ROE decreased by more than 1.5 percentage points (pp) with respect to the same period a year earlier and stood at 6.2%. This figure is lower than current estimates of the cost of capital, which, subject to their characteristic uncertainty, are somewhat above 7%. 6/29  In any event it should be borne in mind that profitability levels vary considerably across banks, both in Spain and in other European countries. This shows that profitability issues affect the sector unevenly because of the heterogeneity of banks’ business models across countries and within each jurisdiction, and also because of the multiplicity of explanatory factors. Factors explaining low bank profitability To better understand the factors behind the low profitability of Spanish banks compared with pre-crisis levels, I intend to focus on their business in Spain. This is because profitability figures as per the consolidated financial statements are influenced by the growing share of international exposure in recent years, which complicates the interpretation of earnings as they are affected by significant changes in composition. Furthermore, only a small number of banks have significant international exposure, so the performance figures based on consolidated financial statements may not be very representative of the majority of the banking sector.
2/3  BIS central bankers' speeches  Lastly, I would like to underline that the Bank of Albania will make maximum efforts for the cooperation in the framework of this agreement to be concrete and have a direct impact. Concluding, on behalf of the Bank of Albania, allow me to thank once again the Central Bank of the Republic of Turkey for the continuous fruitful cooperation; I would also like to thank, in particular, Governor Çetinkaya, who has honoured us today with his presence at the ceremony of signing the Common Memorandum. Thank You! 3/3  BIS central bankers' speeches