The "la Caixa" Group obtains profits of 567 million

Autor: Bancherul.ro
2009-04-24 13:26

The "la Caixa" Group obtained an attributed income of 567 million in the first quarter of 2009, thanks to high levels of commercial activity, thus consolidating its financial strength with improved solvency and a high level of liquidity.

Strong improvement in both income and cost containment, with improved efficiency and high levels of profitability

Total income (gross margin) rose to 1,878 million, up by 7.5%, boosted by the more traditional banking business segments (net interest income, fees and the result of financial operations with customers) and by increased income from investments (dividends and income accounted for by the equity method).

Thanks to robust growth in banking business and the appropriate management of operational margins and interest rates, net interest income has risen 5.0% to 969 million.

Net fees increased by 4.9% to 324 million with careful management of service costs. Income from financial operations also showed excellent growth due to high levels of customer operations, following a boost in the contracting of hedging products.

The prudent management of cost containment and rationalisation procedures has kept the rise in operating costs down to just 2.5%.

A strong increase in total income (+7.5%) and robust cost containment (+2.5%) have led to continuing improvements in efficiency, giving an efficiency ratio of 44.6% (-0.7), with net operating income at 1,002 million, a robust rise of 12.2%.

Against the backdrop of an economic downturn, and inline with the Group's traditionally prudent policy, allowance coverage stands at 284 million (+172.1%). The "la Caixa" Group's non-performing loans ratio currently stands at 3.40%, thanks to the high quality of its loans portfolio and its strict management of both risk and allowance coverage, meaning that it remained below the average for the savings banks sector in March (4,65%). The allowance coverage ratio is 51% (117% if mortgage guarantees are taken into account).

The significant levels of income generated by the Group's recurring activities, 1,002 million during the first quarter of 2009, have allowed for a higher level of allowance coverage at 284 million, with net attributed income reaching 567 million and a high level of profitability (ROE of 14.1%). This result represents a fall of 9.3% on the previous year.

High levels of activity in all segments, with increases in banking business and market share

The Group's great commercial strength, with 27,852 employees, 5,392 branches, 7,969 ATMs and a leading position in on-line banking and cards in circulation, mean that the Group now has 10.7 million customers and is showing robust, balanced and high quality growth in its banking and commercial business.

Total banking business totalled 411,589 million, thanks to sustained growth in both loans and deposits. The customer loan portfolio increased in value by 11,057 million (+6.7%) over the last 12 months, reaching a total of 176.742 million, with 1.3 million new operations and 84,768 million worth of risk granted. Customer funds on the balance sheet rose by 4,493 million to 206,459 million (+2.2%), with total customer funds totalling 234,847 million.

These high levels of commercial activity have therefore helped "la Caixa" to strengthen its leading position in the Spanish banking sector during the first quarter of the year.

As far as its core business is concerned (family banking, small businesses and the self-employed), "la Caixa" has also consolidated its leading position, enhancing its market position in all product categories.

"la Caixa" has strengthened its leading position in terms of salaries and pensions managed from its accounts, with continuing increases in both areas. The Nómina multiEstrella campaign has helped to bring a 13.9% increase in salaries paid directly into "la Caixa" accounts, and pension deposits have increased by 12.6%, thus underlining the trust that customers place in "la Caixa" while at the same time providing a privileged channel for maintaining their loyalty via cross-marketing.

Given the current situation, as part of the entity's permanent commitment to society in general, "la Caixa" is offering a package of methods aimed at allowing its customers to manage their mortgages in a more flexible way: Hipoteca con Carencia, Hipoteca con Espera and Hipoteca Flexible. These products allow loans to be deferred when customers with a mortgage on their homes are affected by excessive financial burdens as a result of the general economic situation.

As regards loans, "la Caixa" is the entity that holds the highest share of the mortgage market with 10.9% at the end of 2008, mainly invested in the financing of first and primary residences. "la Caixa" also engages actively in the different ICO (Official Credit Institute) corporate financing lines, with a market share of 13.6% as of 31 March. Its overall share of all ICO lines (both private individuals and companies) stands at 14%.

Consolidation of the "la Caixa" proposal to bring added value to business banking

Business loans managed via the "la Caixa" Group's new specialist centres increased by 39% to 28,435 million. This is an excellent indication of the degree to which the Group's value proposal for business banking has taken root, just 9 months after it was launched.

The corporate banking network has been further strengthened this quarter with the opening of two new centres, bring the current total to 70. Factoring operations are also up (+ 54%), as are confirming operations (+ 49%), documentary credits (+ 13%) and interest rate-linked hedge provision (+ 629%).

The consolidation of the "la Caixa" private banking division, which was further strengthened last year with the acquisition of Morgan Stanley's business in Spain, has led to an increase in managed funds and securities of 14%.

"la Caixa" has continued to implement a specialist model throughout its branch network for both personal customers and business banking (SMEs, the self-employed and traders), and early results confirm the success of this operation.

Consolidation of financial strength: increasingly high levels of solvency with a Core Capital figure of 8.9% and excellent liquidity of 19,818 million

The "la Caixa" Group's Core Capital figure (high-quality shareholder equity) stands at 8.9%, one point higher than at the end of 2008 and one of the highest in the financial system, further evidence of the Group's excellent levels of both capital and solvency. Tier 1 stands at 10.1% while the Group has a BIS II Capital Ratio of 11.7%.

In 2009, "la Caixa" has made a new subordinated debt issue in the amount of 2,500 million aimed at retail customers, in line with the provisions set out in its 2007-2010 Strategic Plan, with a view to strengthening its solvency and financial robustness still further and consolidating its leading market position.

The shareholder equity that can be attributed to the Group amounts to a total of 17,107 million, with a surplus over the minimum regulatory requirement of 5,300 million.

Group liquidity amounts to 19,818 million, 7.7% of total assets, practically all of it immediately accessible. Dependence on the wholesale markets is also extremely low, with institutional borrowings to the value of just 1,850 million maturing before the end of 2009.

Turning to its activities on the institutional markets, "la Caixa" was the first entity to issue bonds underwritten by the state in the amount of 2,000 million, with the aim of strengthening its comfortable liquidity level still further.

"la Caixa" also took part in the various auctions for the Financial Asset Acquisition Fund, organised by the government to boost both business and individual financing, and it became the first financial institution to report to the markets as part of a transparency exercise.

Boost for the 2007-2010 Strategic Plan and Social Projects

The "la Caixa" Group has continued to roll out its 2007-2010 Strategic Plan, and it will be further expanding its branch network outside the country, with the opening of a new branch in Casablanca (Morocco) to add to the branches already in operation in Warsaw and Bucharest. The Group's existing network of 10 agency offices will also be expanded to include new offices in Shanghai (China), Delhi (India), Algiers (Algeria), Istanbul (Turkey) and Dubai (United Arab Emirates).

"la Caixa" continues to strengthen its private banking division and its corporate banking segment with a view to taking a leading position in both areas.

As regards investments in financial institutions, Criteria CaixaCorp, a subsidiary of "la Caixa" has a 20% holding in GFInbursa, 30.1% in BPI Bank, 9.9% in The Bank of East Asia, 4.9% in Erste Bank and 20.9% in Boursorama. As far as its industrial investments are concerned, particularly notable is the investment of 1,313 million in the recent capital increase of Gas Natural for the Unión Fenosa IPO. The market value of the "la Caixa" Group's listed investments totalled 16,351 million, with unrealised capital gains of 741 million (at close of business on 22 April).

Social Projects: Palliative Care and Accessible Housing programmes

Aware of the particular difficulties created by the current economic situation, "la Caixa" will be strengthening its commitment to society during 2009 through its programme of social, cultural, educational, research, environmental and scientific activities. The Group plans to allocate 500 million to its Social Projects, of which 310 million will be earmarked for the development of its social programmes, 79 million for cultural projects, 81 million for the environment and science and 30 for education and research.

One of the most important initiatives in its list of Social Projects is a pioneering Palliative Care programme, which was launched in January 2009 and is intended to help some 10,000 patients and their families through agreements with a network of 60 hospitals. The aim of this programme is to create a new model for the integrated care of seriously ill patients and their families, with a view to improving their quality of life and complementing the system currently in place, with input from 30 multi-disciplinary teams offering emotional and psychological support services.

Another important initiative is the "la Caixa" Accessible Housing programme under which 3,000 flats are being constructed to provide rented accommodation for young people between the ages of 18 and 35 and senior citizens over the age of 65. This has recently been extended to include 1,000 new flats to provide accessible housing for families.

Another important initiative created by "la Caixa" is Microbank, a bank specialising in micro-credits that has so far financed 34,000 projects since it was first launched.

NOTE.- In so far as it relates to income from investments, this financial information from the "la Caixa" Group for the first quarter of 2009 has been prepared mainly on the basis of estimates, and cannot under any circumstances be used to make forecasts regarding the income of Criteria CaixaCorp, a subsidiary of the "la Caixa" Group, for the same period.

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