- Press Releases
Net interest income stands at 1,746 million, following intense management of business volumes, margins and the interest rate curve in an environment experiencing strong pressure on pricing. When fees, which rose by 4.6%, and income from financial operations and investments are factored in, the gross margin totals 3,697 million.
Net operating income rose to 1,995 million, an increase of 1% on the same period last year, driven by strict cost-containment policies (- 4%) and the robust commercial efforts of the Group’s branch network. This cost-reduction policy, combined with increased productivity, has led to an improvement in the efficiency ratio of 0.5 points to 42.4%.
Consistent with the Group’s strategy for extreme prudence, total allowance coverage of 1,201 million has been set aside, mostly against loan insolvencies, with the aim of further reinforcing the strength of the balance sheet. Allowance coverage continued to improve, rising to 64% (129% if mortgage guarantees are taken into account), as did the non-performing loan ratio, which stands at 3.46%.
No use was made during the first six months of the year of the general allowance fund, which has remained at 1,835 million euros since the close of the 2009 financial year, offering great financial robustness against future unfavourable environments.
Consistent with the same policies of prudence, the attributed extraordinary net capital gains of 233 million have been allocated in their entirety to allowance coverage.
Recurring income before tax was 1,078 million, which after tax and minority interests gives the Group an attributed income figure of 902 million.
The intense activities of the branch network in a difficult climate helped business volumes rise to 423,717 million during the first six months of the year (+1.9%), driven by the customer loan portfolio, which increased by 4,646 million to 182,672 (+2.6%), with 1,015,648 operations over the last twelve months and 98,282 million in risk granted.
Total customer funds rose by 3,246 million to 241,045 million (+1.4%), with increases in instant access accounts and pension plans, insurance and investment funds. InverCaixa, the “la Caixa” entity which manages investment funds, showed the highest growth during the first six months of the year, improving its market share to 9.8%.
The Group has strengthened its leading position in the Spanish banking sector with a general increase in its market share of salaries and pensions paid directly into “la Caixa” accounts (15.3% and 12.9% respectively), pension plans (15.8%), investment funds (9.8%), instant access deposits, secured loans (10.2%) and savings plans (14.0%), among others.
With an active eye on the future, the Group has also made a number of issues during 2010 to a value of 5,400 million: subordinated debt in the amount of 3,000 million, mortgage bonds worth 1,400 million and public covered bonds to the value of 1,000 million. Issues maturing during the first six months amounted to 2,510 million, with just 200 million still to mature over the rest of the year.
As regards solvency, the “la Caixa” Group further maintained its robust position, with Core Capital at 8.6%, Tier-1 at 9.8% and a Capital Ratio of 11.6%. “la Caixa” is one of only three Spanish financial groups with a long-term score from ratings agencies in the AA range.
The Group’s liquidity remains among the highest in the Spanish financial system at 17,425 million (6.2% of assets), practically all of it immediately accessible.
The non-performing loan ratio stands at 3.46%, 0.03 points lower than the level recorded during the previous quarter, and it remains lower than the ratio recorded in the rest of the sector (5.50% average for the financial sector in May), following strict risk management and robust recovery procedures.
Barcelona, 22 July 2010.- In an environment experiencing strong pressure on pricing, the “la Caixa” Group obtained attributed net income of 902 million euros during the first six months of 2010 (-7.5%), with an increase of 1% in net operating income, thanks to high levels of commercial activity. The Group has maintained its robust financial strength, reduced its non-performing loans ratio and increasing allowance coverage, without making use of the general allowance fund.
Net interest income stands at 1,746 million, down 13.5%, following careful management of business volumes, margins and the interest rate curve. This figure to a great extent reflects the effects of the fall in rates applied by the Group to customer mortgage repayments.
Net fees increased by 4.6% to 679 million, due to the increase in banking business, particularly in the business banking segment, with appropriate management of the services offered to customers. Charges for the maintenance and administration of instant access accounts remain among the lowest in the marketplace, particularly with regard to savings accounts.
Total income (gross margin) stands at 3,697 million, down by 1.4%, after positive developments in income from investments and the results of financial operations.
The strict management of cost-containment and rationalisation procedures has led to a fall in operating costs of 4%. This has combined with the strong commercial capacity of the branch network to give continuing improvements in efficiency, with an efficiency ratio of 42.4% (-0.5), bringing net operating income to 1,995 million, a rise of 1%.
The “la Caixa” Group’s non-performing loans ratio stands at 3.46%, 0.03 percentage points lower than it was last quarter, thanks to the high quality of its loans portfolio, strict risk management and robust recovery procedures, meaning that this figure remained below the 5.5% average for the financial sector in May. The allowance coverage ratio rose to 64% (129% if mortgage guarantees are taken into account).
The general allowance fund for insolvencies was not used during the first half of the year, meaning that it remains the same as at the end of 2009, 1,835 million euros, and at 100% of the α factor, affording “la Caixa” great financial strength to deal with adverse future circumstances.
Extraordinary capital gains resulting from active management of the investment portfolio amounted to an attributed net total of 233 million, all of which has been allocated to allowance coverage to further increase the strength of the balance sheet.
The significant income generated by the Group’s recurring activities, 1,995 million, has allowed for a higher level of total allowance coverage at 1,201 million. Net attributed income was 902 million, with a high level of profitability (ROE of 10,5%).
Continuing financial strength
The “la Caixa” Group maintains its leading position in the sector, with a Core Capital figure (high-quality shareholder equity) of 8.6%, evidence of the Group’s excellent levels of solvency. Tier 1 stands at 9.8% while the Group has a BIS II Capital Ratio of 11.6%.
The shareholder equity that can be attributed to the Group amounts to a total of 18,732 million, with a surplus over the minimum regulatory requirement of 5,830 million.
Group liquidity amounts to 17,425 million, 6.2% of total assets, practically all of it immediately accessible. Dependence on the wholesale markets is also extremely low: borrowings to the value of 2,510 million matured during the first six months of the year, with just 200 million still to mature over the rest of the year. This provides high levels of stability and underlines the Group’s forward-looking approach.
“la Caixa” has made various issues on the institutional markets: a mortgage bond issue for 1,400 million and another public covered bonds issue in April for a further 1,000 million.
Increase in banking business
Under the chairmanship of Isidro Fainé and the management of Juan María Nin, “la Caixa” continues to pursue its mission to lead the Spanish banking sector through the use of a specialist management model to attend to its 10.5 million clients.
The “la Caixa” Group has strengthened its leading position in the Spanish banking sector, with a general increase in market share in salaries and pensions paid directly into “la Caixa” accounts (15.3% and 12.9% respectively), pension plans (15.8%), investment funds (9.8%), instant access deposits, secured loans (10.2%) and savings plans (14.0%), among others.
The Group’s great commercial strength, with 27,288 employees, 5,232 branches (the largest network in the Spanish financial system), 7,913 ATMs and a leading position in on-line banking through Línea Abierta (more than 6.2 million customers), mobile phone banking (more than 1.7 million customers) and electronic banking (10.3 million cards in circulation), means that the Group is showing robust, balanced and high quality growth in its banking and commercial business.
“la Caixa” is the number one financial institution in mobile phone banking, as 49% of clients who operate with their financial institution via the mobile network in Spain do so with “la Caixa”, according to data from Nielsen Netratings for the first three months of 2010. This market share is the highest enjoyed by any financial institution in the world. In addition, the AQMetrix study, which examines and rates the quality of financial Internet channels, further reinforces the Group’s position as the leader in the Spanish on-line financial sector. “la Caixa” has its own mobile “store”, offering more than 25 different applications which are regularly added to and updated.
Total banking business amounted to 423,717 million, thanks to sustained growth in both loans and deposits. The customer loan portfolio increased in value by 4,646 million over the last six months (+2.6%), reaching a total of 182,672 million, with 1,015,648 operations over 12 months and 98,282 million in risk granted. At the present time, more than 383,000 businesses are clients of “la Caixa”. Customer funds totalled 241,045 million, with a significant increase in current accounts and careful price management, in addition to the strong increase in pension plans, insurance and investment funds.
“la Caixa” has strengthened its leading position in terms of salaries managed from its accounts and has further increased its market share to 15.3%.
InverCaixa, the “la Caixa” investment fund manager, has also continued to perform well, attaining a market share of 9.8%, with managed investment assets of 14,462 million. Invercaixa, which is one of the largest investment fund managers, has also seen one of the highest levels of growth during the first six months of the year, showing an increase of 15.44% thanks to strong inflows of funds, at a time when the market has contracted by 9.25%.
The 2007-2010 Strategic Plan consolidates the specialised business model
“la Caixa”, whose core business is personal banking, has continued its successful implementation of a specialised model for personal customers, private banking, SME business banking and corporate banking, with more than 2,400 specialist managers.
“la Caixa” has further strengthened its leading position in Individual Banking, achieving particularly successful results with its MultiEstrella Programme, which it launched in April and which is aimed at attracting and retaining the management of salaries, pensions and self-employed operations through its accounts. During the first three months of the campaign, more than 244,000 transactions have been ordered, representing more than 12.5 per employee, an increase of more than 150% on the results from 2009. It should be mentioned that this campaign has had a notable impact among non-customers, as 34% of salaries, 30% of pensions and 15% of self-employed operations have come from new customers.
“la Caixa” has completed the organisation of its Personal Banking business throughout its commercial network of more than 5,200 branches, with the implementation of a management model and action protocol, and the introduction of 946 managers specialising in this particular market segment. By the end of June 2010, this business was managing more than 56,000 million euros worth of assets and securities. A total of 668 million euros of structured deposits were contracted during the second quarter, and the investment fund balance increased by 6.3% as the result of the issue of new guaranteed funds, the Fondos Elección range and the launch, in June of an investment fund campaign.
The consolidation of the “la Caixa” Private Banking division has resulted in its managed funds and securities increasing in value to 36,000 million euros, with the number of customers reaching 33,300. This increase has been brought about by the high levels of commercial activity generated by around 322 private banking managers, with support from the Group’s network of 32 specialist centres and its entire branch network, with the result that “la Caixa” now occupies second position in this sector.
“la Caixa” Private Banking also signed an exclusive agreement in April with Asociación de Creadores de Moda de España (Association of Fashion Designers in Spain, ACME) to develop a loyalty plan for its customers based on an innovative strategy including exclusive benefits and events. This is the first time that a financial entity, acting through its private banking segment, and the fashion industry have signed an agreement of this kind.
The SME Banking Service provides assistance to SMEs through 868 specialist managers spread among the Group’s network of more than 5,200 branches. By the end of June 2010, this service was managing around 28,500 million euros in loan investments and almost 11,000 million in customer funds.
The services offered at the 80 specialist centres belonging to the Business Banking operation, which has a specialist workforce of 842 people, have led to an increase of 13% in loan investment and a rise of 25% in customer funds as compared with June 2009. As far as products and services are concerned, there has been strong growth in both factoring and confirming operations, with market shares rising to 12.4%, an increase of 24% over the last twelve months.
Operations carried out through the two Corporate Banking centres have resulted in a total of 18,500 million euros in investments, a rise of 10% on the figure for June 2009.
MicroBank, the social banking institution created by “la Caixa”, continued to consolidate its banking model in Spain. Created in 2007, it has already financed more than 74,759 projects to a value of 476 million euros, making it the financial institution that devotes the greatest resources to the promotion of projects through the use of micro-credits. During the first half of the year, MicroBank increased its investments by 7.8% as compared with the same period in 2009.
Internationalisation and portfolio of listed investments
As part of its international expansion plan, "la Caixa" has agency offices in London (United Kingdom), Paris (France), Milan (Italy), Stuttgart and Frankfurt (Germany), Istanbul (Turkey), Beijing and Shanghai (China), Delhi (India) and Dubai (UAE). It also has branches in Warsaw (Poland), Bucharest (Romania) and Casablanca (Morocco), where it was the first Spanish banking institution to open a branch.
As regards investment in financial institutions, Criteria CaixaCorp, a subsidiary of “la Caixa” has a 20% holding in GFInbursa, 30.1% in BPI Bank, 15% in The Bank of East Asia, 10.1% in Erste Bank and 20.8% in Boursorama.
The market value of the “la Caixa” Group’s portfolio of listed investments, held through Criteria, totals 16,493 million euros with unrealised capital gains of 2,041 million, as of 21st July.
The “la Caixa” Social Projects show the Group’s continuing commitment to people
The development of social programmes forms the focus for much of the work being done by the “la Caixa” Social Projects in 2010. The two priority projects are combating child poverty in Spain, a programme to which “la Caixa” has already devoted more than 25 million euros this year, benefiting more than 46,000 children, and care for the terminally ill, through a programme that has provided services for 4,190 patients and more than 7,000 family members this year.
In addition, more than 32,000 people with difficulties have found jobs with the 11,845 companies that have signed up to the “la Caixa” Incorpora Programme since this initiative was first introduced.
As well as consolidating the projects that it has already begun, the "la Caixa" Social Projects programme has introduced a number of new initiatives during the first six months of the year, a notable example being the creation of Barcelona Global Health Institute (ISGlobal). A “la Caixa” initiative, this research centre was created with the aim of improving the health of some of the world’s most vulnerable people in a global context, breaking the vicious circle of poverty and disease in which they are so often trapped.
In a similar vein, “la Caixa” has further strengthened its commitment to the advancement of research and knowledge with the inauguration in June of the new “la Caixa” Molecular Cancer Treatment Research Unit, led by oncologist Josep Baselga, at Barcelona’s Vall d’Hebron Hospital, a project in which “la Caixa” has invested 7 million euros.
Another new initiative introduced under the “la Caixa” Social Projects is the “Interculturality and Social Cohesion” programme, which will support community intervention teams whose main duty will be to develop strategies to assist co-existence between cultures.
Along with these projects, the “la Caixa” Social Projects initiative has continued its work in the following areas: prevention of dependence (19,040 people have taken part in 1,272 organised stimulation workshops); active and healthy ageing for the elderly (337,000 beneficiaries during the first six months); university education through postgraduate grants (272 grants awarded); preventing drug use; child vaccination in developing countries (800,000 children vaccinated to date); and environmental conservation, among other projects.
In the cultural arena, the Social Projects’ CaixaForum centres in Madrid and Barcelona have respectively inaugurated two important exhibitions, one focusing on the work of Miquel Barceló, one of Spain’s most widely respected living artists, and the other dedicated to the work of Federico Fellini, commemorating the 90th anniversary of his birth. These are just some of the Social Project initiatives to bring culture to people of all ages and educational levels through programmes covering the humanities, music and travelling exhibitions.
In short, during the first half of 2010 “la Caixa” has further strengthened its commitment to individual welfare and to providing for the most important social needs. “la Caixa” has once again this year allocated 500 million euros to the promotion of social, educational, cultural and environmental programmes during financially difficult times.
Of this 500 million figure, 356 million is earmarked for social programmes, 27 million will go to educational and training programmes, 62 million will be devoted to research, science and the environment, while 55 million will be spent on cultural programmes.
NOTE.- In so far as it relates to income from investments, this financial information from the “la Caixa” Group for the first six months of 2010 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.