Structural and market risks

From the viewpoint of structural and market risks, 2016 was characterised by low inflation in the main economies and by the actions of central banks, which provided liquidity and intervened in the public debt financial markets. In certain markets, the systematic purchases of public debt by central banks caused a reduction in market depth. The US dollar appreciated in the last quarter of the year and the price of raw materials began to recover.

Structural interest rate risk

Structural interest rate risk is defined as the Bank's exposure to potential losses due to fluctuations in market interest rates as a result of the varying maturity and repricing dates of its balance sheet itemsBankinter actively manages this risk with the aim of safeguarding its net interest margin and preserving its economic value.The situation of the Group's interest risk at 2016 year-end is shown in the following graph.Interest rate risk management includes carrying out dynamic analyses of simulated performance that enables the sensitivity of the financial margin to be estimated in various scenarios of interest rate fluctuations. With a more long-term outlook, the Bank studies the sensitivity of its economic value to such fluctuations.The exposure to interest rate risk of the net interest margin for variations of +/-100 basis points with parallel shifts in market interest rates is +10.1%/-9.9% for a time horizon of 12 months, given the current interest rate level and taking into account that a 0% floor is applied to items such as corporate banking investment, EIB bonds subsequent to 2015 and securitisation bonds.At 2016 year-end, the sensitivity of the Group's economic value to parallel shifts of 200 basis points was 7.4% of its own funds.