##economic forecasts are confirmed, the adjustment to gdp would be concentrated in the first year of the shock ( 2020 ), to be followed by a recovery whose strength is still uncertain. in addition, the impact will hinge on the size and duration of the measures adopted, which will influence their effectiveness. in any event, the increase in npls is expected to be higher among smaller firms operating in sectors involving greater social interaction ; and, in the case of households, in exposures not secured by mortgages. accordingly, banks are already recording earlier part of the provisions that they might have to set aside in the future. furthermore, my previous remarks about the aggregate situation of the system mask considerable diversity. this is mainly because the starting positions of the various institutions, in terms of own funds and credit quality, are already different. likewise, some segments of households and non - financial corporations are also still in highly fragile financial situations. for example, smaller firms are more vulnerable to a scenario of falling revenues. but, additionally, in a crisis like this, as i have mentioned earlier, the deterioration of banks ’ solvency is expected to hinge on their degree of exposure to the various regions and sectors which are being affected differently by the pandemic. in any event, as in the case of households and non - financial corporations, the public support measures implemented in recent months will help to mitigate the effects on financial stability. in particular, the government loan guarantee scheme and the various measures adopted by the ecb will contribute to smoothing the impact on banks ’ solvency. the restrictions on the payment of dividends by banks also contribute significantly to this objective. and, lastly the moratoria will be useful so that the classification of loans as nonperforming is eased and distributed over time. nevertheless, the impact of the covid - 19 crisis on financial institutions ’ profitability is already clear. the banking industry ’ s already narrow profit margins of recent years – profitability actually stood below the cost of capital in the main european banking systems – were squeezed even further by the outbreak of covid - 19 and the need to record higher provisions to cover adverse developments in banking. specifically, data from the first half of 2020 showed that listed spanish banks had consolidated net losses of €10. 5 billion, compared with profits of a similar order of magnitude in the same period in 2019. higher provisioning and, especially, the non - recurring adjustment to goodwill, both as a result of the expected downturn

for firms, with the aim of establishing pre - emptive, swift and simplified administrative procedures enabling them to pursue their business activity while they are still viable. speed of resolution is paramount in these procedures so as to minimise the losses in asset value that would materialise if they were to drag on, especially in a context in which the economic policy response in the short term means that the liabilities of ailing businesses to general government will foreseeably be much higher than in previous crisis periods. the introduction of more appropriate procedures and incentives would also avoid suboptimal levels of business liquidations and destruction of the productive system that would weaken the longterm economic growth and recovery potential. the impact on the financial situation of households as in the case of firms, after the last global financial crisis, the financial situation of households improved significantly, and mortgage lending standards were far more prudent. however, consumer lending has posted high growth rates in recent years and groups of vulnerable households have continued to exist. in any case, this crisis is also having a significant impact on households. it has led to a reduction in the wage income of individuals who have lost their jobs or been furloughed, and in their wealth, given the adjustment to the valuation of most financial assets. thus, social security registrations, after stripping out workers subject to furlough schemes, that is, the series which might be called “ actual registrations ”, is estimated to have shown a year - on - year decline of 22 % at end - april, with much sharper reductions in some of the services segments hardest hit by the restrictions on movement associated with the state of alert, such as the hospitality sector. in late july, the year - on - year decline in actual registrations had eased, and stood at 9 % lower than the figure observed a year earlier. from the standpoint of financial stability, the evidence available4 shows that the variables with the highest information content to explain the probability of default of households are becoming unemployed and a fall in household income. the same evidence shows that, as a result of the shock triggered by the coronavirus, consumer credit defaults can be expected to occur at an earlier stage than mortgage defaults by households, and that a deterioration in income and employment will adversely affect mortgage lending overall, with a slight time lag. further, there is very notable disparity in the financial situation of the households most affected by the pandemic. according to the banco