i have mentioned on numerous occasions since the onset of the pandemic, the financial vulnerability of some business segments has increased, especially in the activities hit hardest by the crisis and in smaller firms. in the case of households, the increase in the saving rate and the reduction in debt at aggregate level mask the existence of segments that have seen their financial fragility increase. these vulnerabilities could also lead to future rises in default rates. the businesses benefiting from the guarantee programme had a lower equity - to - assets ratio, a higher average cost of debt, a lower level of sales productivity ( measured as sales to employees ) and shorter bank debt maturities ( see box 2. 1, financial stability report, spring 2021 ). see box 2. 2, financial stability report, spring 2021. a second significant aspect is the heterogeneity in the impact of the crisis on the banking sector, stemming from the different starting positions in terms of solvency and balance sheet quality, but also from a heterogeneous exposure to the countries, sectors and firms most affected by the crisis. these differences are reflected in the mixed performance of profitability at banks in 2020. in particular, extraordinary factors aside, the impact of the crisis has widened the dispersion range of profitability among banks. the differences between banks appear to owe less to a differing exposure to the sectors hit hardest by the pandemic, 9 which is relatively homogeneous, than to the dispersion in terms of exposure to smes. smaller firms have been the most vulnerable to the shock and, despite the mitigating measures put in place, are more likely to be affected by solvency problems. naturally, differences in credit risks across sectors of activity ( besides the most directly affected sectors ) and in the geographical distribution of the exposures may also contribute to the possible future heterogeneity of the impact of the crisis on banks. as regards the geographical aspect, the high impact of the pandemic in 2020 h1 in some foreign countries that are material to spanish banks suggests that the benefits of geographical diversification could be lesser in this crisis than during the global financial crisis. however, the contribution of foreign business to spanish banks ’ return on ordinary activities increased in 2020 as a whole, and the growth in impairment allowances was relatively contained in various material countries. in any event, the potential uneven performance of the banking business in the different geographical areas needs to be monitored. moreover, in view of the

and households would largely explain the lower sensitivity of npl rates to changes in activity during this crisis. these measures appear capable of absorbing a significant share of the potential impact of the crisis on banks ’ solvency, thus limiting solvency risks. 2 for instance, according to the flesb stress tests published in the financial stability report ( autumn 2020 ), the volume of public guarantees considered in the exercise could absorb approximately 30 % of the expected credit loss, improving the cet1 capital ratio by between 1. 5 pp and 1. 75 pp in the period 2020 - 2022 under the different scenarios envisaged. it should also be noted that the exercise identified a wide confidence interval around these figures. third, the impact of the pandemic has also squeezed the spanish banking sector ’ s profitability. in 2020, the consolidated net profit of spanish deposit institutions as a whole was negative ( around - €8 billion ). this translated into a return on assets ( roa ) of - 0. 21 % and a return on equity ( roe ) of - 3. 1 %. however, this adverse result was influenced by the negative extraordinary adjustments made during the year at some of the system ’ s main institutions. 3 excluding these adjustments, the sector ’ s profitability would be positive, albeit considerably down on the previous year, with roa standing at 0. 3 % and roe at 4. 3 %. the decline in the sector ’ s return on ordinary activities essentially owed to the reduction in net interest income and fees and, particularly, the increased provisioning in anticipation of credit impairments. meantime, the appreciation of the euro against other currencies, particularly those of some emerging countries, has lessened the contribution made to results by business abroad, whose figures, measured excluding the exchange rate effect, have been more stable. in the year as a whole, losses due to provisions for impairment losses on financial assets amounted to €8. 7 billion, up on the 2019 figure. in any event, the bulk of this increase was recorded in the first half of the year, 4 and slowed significantly from june. the sector ’ s results were positive in 2021 q1, albeit largely conditioned by the positive extraordinary results arising from a merger. 5 these extraordinary elements aside, the in particular, the two largest institutions recorded adjustments to goodwill for an amount in excess of €12 billion, along with other adjustments such as those linked to tax assets ( €2. 5 billion ). as a result