10 May 2018

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Orkestra's economic, financial and credit risk report on Basque firms, elaborated with the support of the Basque Finance Institute, demonstrates that the financial and economic evolution of Basque firms has been positive in recent years. The study indicates that the firms have very diverse situations, according to their size and business activity, which calls for the implementation of strategies or solutions.

The analysis of the firms' accounts showed that Basque businesses have a higher percentage of net assests on their financial statements and lower financial debt burdens than Spanish firms. Nevertheless, they find it difficult to increase their profits and have not recovered the figures prior to 2008. Lower debt levels and lower costs for loans are also remarkable.

The report analyses Basque business's credit risk, which has a credit rating of 6.87. This is higher than the Spanish average of 6.61 (on a scale of 1 to 11). By territories, Gipuzkoa has registered the best figures from the start of the crisis to the present while Biscay is the weakest province, showing an evolution under the average in the Basque Country.

 

Evolution of the credit risk rating

As per the most financially vulnerable firms, i.e. those that may not be able to meet their payment obligations, the Basque Country, together with Navarre, Catalonia, the Balearic and Canary Islands, is in the best position. 30% of its firms are vulnerable in contrast to the Spanish average of 34%. In communities like Castille la Mancha or Andalusia, the percentage is over 38%. 

In order to elaborate the study, which was presented today at the University of Deusto, the account records of over 203, 128 Basque firms were analysed.

During the presentation, Ibon Gil de San Vicente, Deputy Director of Orkestra and co-author of the study, pointed out that "the economic outlook is optimistic and continued growth is expected although it will be slightly slower". Together with the firms' improved financial and economic situation and less exposure to credit risk, Gil de San Vicente considers this "an opportunity to improve business margins" and believes that the "firms' financial situation is well positioned to tackle growth and investment".

The report shows the diverse situations between sectors and firms of different sizes. Orkestra therefore recommends deployment of strategies and solutions that enable firms to move forward in improving their finantial management capacities and competences, strengthen their financing sources by diversifying from traditional debt and continue implementing policies to support business financing according to the different segments or needs.

The report concludes that Basque firms are well positioned to take advantage of the overall positive economic situation, strengthen their positions and continue preparing to tackle a change in the economic cycle with financial solvency.

Business financing: where is the risk?

The economic, financial and credit risk report on Basque firms was presented today at the University of Deusto in an event introduced by Ignacio Mª Echeberría, president of Orkestra. The following speakers took part: the Dean of Deusto Business School, Guillermo Donosorro, the general manager of Elkargi, Pío Aguirre, and the corporate general financial and group manager of Kutxabank Joseba Barrena. The closing address was delivered by Pedro Azpiazu, Basque Government Councillor of the Treasury and the Economy.

Click below to see the full text of the report.

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