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Consistent with the “la Caixa” Group’s strategy for extreme prudence, total allowance coverage of 371 million has been set aside to further reinforce the strength of the balance sheet. Allowance coverage stands at 65% (137% if mortgage guarantees are taken into account), while the non-performing loan ratio stands at 4.03%.
Net interest income remains stable in comparison with the final quarter of 2010, and the gross margin rose by 14% to 1,656 million euros.
Fees showed a year-on-year rise of 15.8% as a result of the rise in business levels and the high number of transactions, particularly in the business banking sector, investment banking, funds and insurance, in addition to a number of one-off transactions.
No use was made during the first quarter of the year of the general allowance fund, which remains at 1,835 million euros, thanks to the capacity to generate income, which offers great financial robustness against future unfavourable environments.
Operating costs have remained stable (+0.2%). This has combined with the Group’s strong commercial capacity to give a net operating income figure of 805 million euros, with an efficiency ratio of 44.2%.
The intense activities of the branch network in a difficult climate helped business volumes rise to 439,207 million (+5.3%), driven by the customer loan portfolio, which increased by 5.8%, and total customer funds, which rose by 4.9%. The Group continues to strengthen its position as a leading institution in the Spanish banking sector, increasing its market share in key areas, with notable gains in its share of investment funds (12.1%), savings plans (14.8%) and pensions plans (16.2%).
In an environment experiencing strong pressure on pricing, the “la Caixa” Group obtained recurring net income of 336 million euros during the first quarter of 2011 (-15.4%). The Group increased its business volumes and continued to make robust write-downs, thus allowing it once again to increase its solvency and liquidity levels and contain its non-performing loans ratio, without making use of the general allowance fund, which has remained at 1,835 million euros since the end of 2009, thanks to the institution’s capacity to generate income.
The “la Caixa” Group’s net interest income remains stable in comparison with the last quarter of 2010, due in great measure to the entity passing on the fall in interest rates to its own customers’ mortgage payments. Income stands at 701 million, down 21.5% in comparison with the first quarter of 2010 following the management of business volumes, operational margins and the interest rate curve.
Net fees increased by 15.8% year-on-year to 383 million, due to the increase in banking business and the high number of transactions, particularly in the business banking, investment banking and insurance segments, in addition to a number of one-off transactions, with appropriate management of the services offered to customers.
Total income (gross margin) stands at 1,656 million, up by 14% on the last quarter of 2010 though down by 4% on the first three months of that year. The strict management of cost-containment and rationalisation procedures has meant that operating costs have remained stable (+0.2%), despite the integration of Caixa Girona. This has combined with the strong commercial capacity of the branch network to give an efficiency ratio of 44.2%, bringing net operating income to 805 million, down by 8% on the first quarter of last year but up on the last quarter by 34.4%.
The “la Caixa” Group’s non-performing loans ratio stands at 4.03%, only 0.32 percentage points higher than in December, thanks to the high quality of its loans portfolio, strict risk management and robust recovery procedures, meaning that this figure remained below the 6.2% average for the financial sector in February. The allowance coverage ratio remained at 65% (137% if mortgage guarantees are taken into account).
The general allowance fund for insolvencies remains the same as at the end of 2009, 1,835 million euros, and at approximately 100% of the α factor, affording “la Caixa” great financial strength to deal with adverse future circumstances.
The significant income generated by the Group’s recurring activities, 805 million, has allowed for a higher level of total allowance coverage at 371 million. Net attributed income was 336 million (-33%), due to the fact that extraordinary income of 104 million was recorded in the first quarter of 2010 and subsequently allocated to extraordinary write-downs in the second quarter of the year. ROE stands at 8.8%.
Further consolidation of financial strength
The “la Caixa” Group maintains its leading position in the sector, with a Core Capital figure (high-quality shareholder equity) of 9.3% (up by 0.7 points on the close of the last financial year), providing continuing evidence of the Group’s excellent levels of solvency. Tier 1 stands at 10.5% (+0.6 points) while the Group has a BIS II Capital Ratio of 12.2% (+0.4 points).
The shareholder equity that can be attributed to the Group amounts to a total of 20,209 million, with a surplus over the minimum regulatory requirement of 7,004 million, up by 874 million since the end of the last financial year.
Group liquidity stands at 19,572 million, 7% of total assets, practically all of it immediately accessible. In addition, dependence on the wholesale markets totals only 4,723 million to the end of the year, with issues of mortgage and other bonds to the value of 5,344 million up to the month of April, providing high levels of stability and underlining the Group’s forward-looking approach.
Increase in banking business
Under the chairmanship of Isidro Fainé and the management of Juan María Nin, “la Caixa” continues to pursue its mission, set out in the new 2011-2014 Strategic plan for the “la Caixa” Group, to strengthen its traditional position as a leader in the individual banking sector, using a model especially designed to attend to its 10.5 million customers in the personal banking, private banking, business banking and corporate banking segments.
The “la Caixa” Group has increased its market share in the following areas: salaries and pensions paid directly into “la Caixa” accounts (15.5% and 13.5% respectively), pension plans (16.2%), savings plans (14.8%), investment funds (12.1%), resident private sector deposits (10%), loans (10.6%), factoring (12.5%) and confirming (14,1%) operations, among others.
The Group’s great commercial strength, with 28,603 employees, 5,277 branches (the largest network in the Spanish financial system), 8,010 ATMs and a leading position in on-line banking through Línea Abierta (more than 6.63 million customers), mobile phone banking (more than 1.9 million customers, the highest number of financial service users in Spain) and electronic banking (10.34 million cards in circulation), means that the Group is showing balanced and high quality growth in its banking and commercial business.
Total banking business amounted to 439,207 million (+5.3%), thanks to sustained growth in deposits and the maintenance of loan levels. Customer funds totalled 250,512 million (+4.9% on the first quarter of 2010), with careful price management, in addition to the strong increase in pension plans, insurance and investment funds.
The customer loan portfolio stands at 188,695 million (+5.8%), with more than 912,100 operations over the last 12 months and more than 100,400 million in risk granted. At the present time, more than 381,200 businesses are customers of “la Caixa”.
InverCaixa, the “la Caixa” investment fund manager, has also continued to perform well, attaining a market share of 12.13%, with managed investment assets of 16,902 million. InverCaixa, which is one of the largest investment fund managers, has also seen one of the highest levels of growth during the first quarter of this year, showing an increase of 15.5% thanks to strong inflows of funds, at a time when the market has grown by only 0.94%. At the beginning of this year InverCaixa launched two new guaranteed funds, FonCaixa Asegurado and FonCaixa Estabilidad, which have attracted an excellent level of interest with more than 3,500 million euros in net contributions.
The 2011-2014 strategic plan consolidates the specialised business model
The objectives set out in the “la Caixa” Group’s new 2011-2014 Strategic Plan include consolidating the Group’s leading position in the Spanish retail banking sector, diversifying its business, strengthening its internationalisation, maintaining its commitment to the business community (which includes maintaining a distinctive investment portfolio) and reaffirming its commitment to society.
In Individual Banking, “la Caixa” has mainly focussed its efforts on attracting customers and retaining their loyalty. The MultiEstrella loyalty programme is particularly important in this regard, as it offers customers both financial and non-financial benefits depending on their loyalty to “la Caixa”. This programme has helped to improve market shares in both salaries and pensions managed from “la Caixa” accounts. The institution has also strengthened its campaigns relating to insurance (more than 210,000 new policies taken out) and investment funds.
The volume of funds and securities managed by Personal Banking totals more than 61,900 million euros, due to the strong evolution of investment fund balances and the value policy pursued by “la Caixa”, based on personalisation, proximity and the development of custom-made products and services.
For its part, the “la Caixa” Private Banking division, aimed at customers with managed assets of more than 500,000 euros, continues its consolidation process and now manages funds and securities worth 34,900 million. The favourable evolution of this business segment is due to a consulting philosophy known as “Time”, in which the customer is treated as the key element and offered value solutions that are in tune with his or her own requirements.
The SME Banking Service provides assistance to SMEs through the branch network and an extended team of specialist advisers, and currently has a customer penetration share in the small businesses segment of 39%. ”la Caixa” has recently signed a collaboration agreement with the Spanish Institute for Foreign Trade (ICEX) to introduce a financing facility of up to 65 million euros under preferential conditions for projects by small and medium-sized enterprises outside Spain.
The Business Banking service, which offers a network of 83 specialist centres and more than 853 people specially trained to attend to the requirements of this sector, has seen its loans business rise to 17,250 million, up 11% on the same period last year, while customer funds have risen 9% to 9,059 million.
“la Caixa” has also improved its market share in factoring and confirming operations, taking it to 13.3%, along with its share in overseas business (15.1%), thanks to its efforts in extending the range of products and services designed to meet the international requirements of its business customers.
The Corporate Banking division, which has a team of 127 highly specialised personnel, attends to almost 4,000 companies in 570 corporate groups, with an annual turnover of more than 200 million euros, through the “la Caixa” offices in Madrid and Barcelona. Average levels of investment and customer funds have both risen by 12% in comparison with the same month last year.
MicroBank, the social banking institution created by “la Caixa”, continues to grow and consolidate its banking model in Spain. Created in 2007, it has already financed more than 104,353 projects to a value of 656.6 million euros, making it the financial institution that devotes the greatest resources to the promotion of projects and self-employment through the use of micro-credits. During the first three months of the year, MicroBank awarded 10,454 loans totalling 67.7 million euros, increasing its investments by 45.6% as compared with the same period in 2010.
Internationalisation: Cairo and Singapore
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.
“la Caixa” is also planning to open further agency offices this year in Cairo (Egypt) and Singapore (Singapore).
As regards investment in financial institutions, Criteria CaixaCorp, a subsidiary of “la Caixa” has a 20% holding in GFInbursa, 30.1% in BPI Bank, 15.5% in The Bank of East Asia, 10.1% in ErsteBank and 20.8% in Boursorama. It also has holdings in Gas Natural Fenosa (36.64%), Repsol YPF (12.81%), Abertis (24.61%), Telefónica (5.02%), BME (5.01%), Agbar (24.03%) and Port Aventura.
The market value of the “la Caixa” Group’s portfolio of listed investments, held through Criteria, totals 20,134 million euros with unrealised capital gains of 3,252 million.
Reorganisation of the “la Caixa” Group
These results further reinforce the entity’s robustness within the framework of the “la Caixa” Group’s reorganisation, a measure that was given final approval on 24 February by the Boards of Directors of both “la Caixa” and Criteria CaixaCorp. Yesterday, the “la Caixa” General Assembly also approved the Group’s reorganisation, and the process is therefore on course for completion, as planned, in July 2011.
This reorganisation will allow the “la Caixa” Group to remain in all the business sectors in which it is currently active while at the same time retaining its firm commitment to its Social Projects.
“la Caixa” will transfer its banking business to Criteria CaixaCorp, which will become a banking group to be known as CaixaBank, and Criteria will transfer some of its industrial shareholdings to a new entity that will be run by “la Caixa”.
“la Caixa” maintains its Social Projects budget for 2011
“la Caixa” has maintained its Social Projects budget for 2011 at 500 million euros, the same amount as last year, despite the unfavourable economic climate, once again confirming its commitment to people and the advancement of the society in which its income is generated.
The amounts invested in each individual area break down as follows: 335 million euros is earmarked for the development of social programmes (67% of the total investment); 68 million goes to scientific and environmental initiatives (13.6%); 64 million is allocated to cultural activities (12.8%); and 33 million will be spent on educational and research projects (6.6%).
The strategic objectives that “la Caixa” will continue to pursue as part of its social programme for 2011 include combating poverty and exclusion in Spain, creating jobs among disadvantaged groups, psychological and social assistance for the terminally ill and their families, and participation by the elderly and active ageing programmes.
During the first quarter of 2011, the Social Projects programme has allocated 12.6 million euros in assistance for 25,565 children, with the aim of helping to break the cycle of poverty in their families. Since its introduction in 2006, the Incorpora Programme has found employment opportunities for 41,075 people at around 14,858 businesses. In addition, 18,179 patients have received comprehensive care under the Social Project programme offering assistance for the terminally ill.
The Social Projects programme has also introduced “People 3.0”, a new project which is intended to become a launchpad for the new generation of older people who no longer want to be seen as mere beneficiaries but instead see themselves as active players, participating and sharing their knowledge and experience with the rest of society.
Other areas in which the Social Projects programme has been active include the construction of 1,100 residential properties on the site of real estate developments that had been halted as a result of the recession, to be rented as affordable housing for families, young people and the elderly, care for people with disabilities, through a strategic collaborative alliance between “la Caixa” and ONCE, the Spanish organisation for the blind, and the grant of social and financial microloans through MicroBank.
In the education sector, on 1 March the King and Queen of Spain chaired the ceremony for the award of 116 grants at CaixaForum Madrid. These grants help Spanish university students to broaden their studies at some of the most important centres of academic learning around the world. The programme’s commitment to research was also in evidence at the ceremony at which 20 projects supported by Catalan public universities and individually selected for their excellence were awarded RecerCaixa grants amounting to a total of 1.4 million euros.
In the environmental arena, the Social Projects programme continues to support the conservation and improvement of natural spaces throughout Spain, along with the CosmoCaixa Science Museums in Barcelona and Madrid, which in 2010 received a total of 1,069,000 visitors and updated their respective exhibition spaces with the shows “Dinosaurs. Treasures of the Gobi Desert” and “Abracadabra. Magic”.
The promotion of culture as a driving force for social advancement is the inspiration behind the Classic Library Collection, a compilation of the 111 finest works of literature in the Spanish language, supported jointly by the Social Projects programme and the Spanish Royal Academy. In addition, the Fundación Arte y Mecenazgo, a Foundation supported by “la Caixa” with the aim of promoting the recognition of sponsorship and support for artistic creativity, handed out its first Awards on 2 March.
During 2010, a total of 1.8 million visitors enjoyed the cultural offerings on show at the CaixaForums in Madrid and Barcelona. During the first quarter of 2011, the opening of two exhibitions, one of Aztec art entitled “Teotihuacann. City of the Gods” and the other entitled “Building the Revolution. Art and Architecture in Russia 1915-1935”, aroused the interest of visitors to CaixaForum Barcelona, while the CaixaForum Madrid has been playing host to an exhibition of photographs by Jacques Henry Lartigue and visual effects in the cinema world.
At the same time, the Social Projects programme has maintained its commitment to the promotion of knowledge all around Spain. One example of this is the exhibition entitled “Romanorum vita”, a recreation of life in a Roman town during the imperial age, which has attracted 30,000 visitors in its 4-week stay in Zaragoza.
NOTE.- In so far as it relates to income from investments, this financial information from the “la Caixa” Group for the first quarter of 2011 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.