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Net interest income rose by 12.1% to 3,932 million, due to solid growth in banking business. Fees and income accounted for by the equity method lifted the gross margin to 7,187 million, up by 6.4%.
Net operating income grew by 12.3% to 3,622 million, due to a strong increase in income (+6.4%) and the strict management of costs (+1%), with a 4.7% reduction in general costs.
The rationalisation of Group costs, combined with increased productivity, meant that the efficiency ratio continued to show significant improvements, increasing to 42.9% (-2.3).
Consistent with the Group’s strategy for extreme prudence, allowance coverage totalling 2,821 million was set aside in 2009, mostly against insolvencies. The general allowance fund totalled 1,835 million, in line with the levels set aside at the end of 2008, offering great financial robustness against future unfavourable environments.
Income after tax totalled 2,004 million, which after the application of minority interest gives a recurring income figure for the Group of 1,710 million.
Extraordinary capital gains (net of tax) totalled 249 million. An equivalent amount was set aside in the form of additional allowance coverage, voluntarily and in advance of the investment portfolio. In addition, with an eye on the future, additional allowance coverage (net of tax) amounting to 200 million has been set aside for the future management of the business. Attributed income amounted to 1,510 million.
Business volumes rose to 415,825 million (+0.4%), driven by the customer loan portfolio which increased by 1,603 million to 178,026 (+0.9%), with 1,084,168 new operations and 104,045 million in risk granted, as a result of the strong growth in loans awarded for business investment through the Group’s 80 specialist business centres (+14%) and its entire branch network. Particularly notable is the strong growth in factoring and confirming operations, which increased in market share by 3.0 and 1.2 points respectively, rising to 8.9% and 13.2%. “la Caixa” has renewed several lines of credit with a number of business organisations in order to finance operating capital.
Customer funds totalled 237,799 million, with increases in current accounts and careful management of both prices and volumes, in addition to strong growth in pension plans, insurance and investment funds, with InverCaixa, the “la Caixa” entity which manages investment funds, showing the highest growth in 2009, with a market share of 8.5%. The Group has strengthened its leading position in the Spanish banking sector with a general increase in market share in card business (17.7%), commercial invoicing (20.9%), salaries and pensions paid directly into “la Caixa” accounts (15,1% and 12.8% respectively), pension plans (15.6%) and savings plans (13,4%), among others.
The Group made a number of issues in the institutional market amounting to a total of 5,605 million during 2009: an issue underwritten by the Spanish government for 2,000 million, a mortgage bond issue for a further 2,000 million, a Criteria bond issue to the value of 1,000 million, mortgage bonds for the European Investment Bank (EIB) and the Financial Assets Acquisition Fund in the amount of 450 million and an ordinary bond issue in the amount of 155 million. Issues maturing in 2009 amounted to 3,170 million, and in 2010 they will total 2,810 million.
In accordance with the Group’s 2007–2010 Strategic Plan, “la Caixa” completed its implementation of a specialised model for both personal customers and business banking (SMEs, the self-employed and traders), with around 1,800 specialist managers, and has successfully continued the expansion of its private banking and corporate business divisions.
As regards solvency, the “la Caixa” Group remains robust, with Core Capital at 8.7%, Tier-1 at 10.4% and a Capital Ratio of 11%. “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 21,208 million (7.8% of assets), practically all of it immediately accessible.
The non-performing loan ratio stands at 3.42%, 0.11 points below the level recorded during the previous quarter, and it remains lower than the ratio recorded in the rest of the sector (5.05% average for the financial sector in November). Allowance coverage stands at 62% (127% if mortgage guarantees are taken into account).
As part of its international expansion plan, in 2009 "la Caixa" opened the first operational branch of a Spanish bank in Morocco (Casablanca), as well as opening its first agency office in Turkey (Istanbul) and its second in China (Shanghai). “la Caixa” has broadened its foreign trading business, increasing its share of export credits by 3.7 points and import credits by 2.4 points, to 9.4% and 12.7% respectively.
“la Caixa” and Criteria have also signed strategic investment and collaboration agreements with The Bank of East Asia (in which they hold a 14.99% stake as of January) and Erste Bank (in which they hold 10.10%). Holdings in both these entities have increased over the last twelve months. In addition, Criteria has agreed to acquire Adeslas in order to strengthen its leading position in the insurance sector, while also agreeing to sell part of its holding in Agbar, remaining in the company as a minority shareholder. It has also continued its support for the industrial sector, subscribing a capital increase in Gas Natural in the amount of 1,313 million.
Barcelona, 5 February 2010. The “la Caixa” Group obtained recurring net profits of 1,710 million euros during 2009 (-16.7%), thanks to high levels of commercial activity, thus consolidating its financial strength with high levels of both solvency and liquidity. Attributed income totalled 1,510 million, a fall of 16.2% against a background of economic recession.
Total income (gross margin) rose to 7,187 million, up by 6.4%, boosted by the more traditional banking business segments (net interest income and fees) 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 rose by 12.1% to 3,932 million.
Net fees increased by 4.2% to 1,303 million, with careful 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, and these only account for 9% of the fees received by “la Caixa”.
The strict management of cost containment and rationalisation procedures has kept the rise in operating costs down to just 1%. This has combined with the strong increase in total income provided by the extensive commercial capacity of the branch network (+6.4%) to give continuing improvements in efficiency, with an efficiency ratio of 42.9% (-2.3), bringing net operating income to 3,622 million, a robust rise of 12.3%.
The “la Caixa” Group’s non-performing loans ratio stands at 3.42%, 0.11 points lower than it was at the close of the third quarter, thanks to the high quality of its loans portfolio and its strict risk management, meaning that this figure remained significantly below the 5.05% average for the financial sector in November. The allowance coverage ratio is 62% (127% if mortgage guarantees are taken into account). General allowance coverage rose to 1,835 million euros, affording “la Caixa” great financial strength to deal with adverse future circumstances.
The “la Caixa” real estate portfolio as of 31 December 2009 came to a total value of 3,097 million euros with coverage of 20%, derived from the management of credit portfolio. The sale of properties has increased significantly in the last quarter, thanks to the active management of Servihabitat, real estate subsidiary of the "la Caixa".
The significant income generated by the Group’s recurring activities, 3,622 million, has allowed for a higher level of allowance coverage at 2,821 million, of which 2,092 million were set aside during 2009 (1,401 million from recurring income and 691 million from extraordinary income). Net recurring profits totalled 1,710 million, 16.7% down, while net attributed income was 1,510 million, 16.2% down, with a high level of profitability (ROE of 11.3%).
Extraordinary net capital gains totalled 249 million euros. The same amount was set aside in the form of additional allowance coverage, voluntarily and in advance of the investment portfolio. In addition, with an eye on the future, additional net allowance coverage amounting to 200 million has been set aside for the future management of the business.
Consolidation of financial strength: solvency and liquidity
The “la Caixa” Group maintains its leading position in the sector, with a Core Capital figure (high-quality shareholder equity) of 8.7%, evidence of the Group’s excellent levels of both capital and solvency. Tier 1 stands at 10.4% while the Group has a BIS II Capital Ratio of 11%.
In 2009, “la Caixa” made a new subordinated debt issue in the amount of 2,500 million euros and a preference share issue in the amount of 1,898 million, 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 17,251 million, with a surplus over the minimum regulatory requirement of 4,667 million.
Group liquidity amounts to 21,208 million, 7.8% 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 2,810 million maturing before the end of 2010, thus offering firm stability.
“la Caixa” made a mortgage bond issue in the amount of 1,250 million in May which was subsequently extended to 2,000 million in August. It was also the first financial institution to make an issue underwritten by the government in the amount of 2,000 million. Staying with the institutional markets, it also issued Criteria bonds in the amount of 1,000 million, mortgage bonds for the European Investment Bank (EIB) and the Financial Assets Acquisition Fund in the amount of 450 million and ordinary bonds in the amount of 155 million.
Robust commercial capacity with increases in banking business and market share
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 by using a specialist management model to attend to its 10.5 million clients. “la Caixa” is a market leader in personal banking in Spain, with a penetration rating of 21.6%, 60 base points higher than the previous year, according to the FRS Inmark study of individual financial habits in 2009. “la Caixa” is also a market leader in all age groups.
For the seventh year running, “la Caixa” has been named the most valuable financial brand among consumers, according to the Merco Marca Financieras league table. “la Caixa” is also regarded as the best company to work for, according to Merco Personas.
In 2009 The “la Caixa” Group strengthened its leading position in the Spanish banking sector, with a general increase in market share in card business (17.7%), commercial invoicing (20.9%), salaries and pensions paid directly into “la Caixa” accounts (15.1% and 12.8% respectively), pension plans (15.6%) and savings plans (13,4%), among others.
The Group’s great commercial strength, with 27,505 employees, 5,326 branches (the largest network in the Spanish financial system), 7,951 ATMs and a leading position in on-line banking (more than 6 million clients using Línea Abierta), mobile phone banking (more than 1.4 million clients) and electronic banking (10.3 million cards in circulation) mean 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 52% 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. 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.
Total banking business amounted to 415,825 million, thanks to sustained growth in both loans and deposits. The customer loan portfolio increased in value by 1,603 million (+0.9%), reaching a total of 178,026 million, with 1,084,168 new operations and 104,045 million in risk granted. At the present time, more than 378,000 businesses are clients of “la Caixa”. Customer funds totalled 237,799 million, with a significant increase in current accounts and careful price management.
“la Caixa” has strengthened its leading position in terms of salaries managed from its accounts, continuing to increase its market share to 15.1%, helped by the Nómina multiEstrella campaign which has resulted in 423,824 salaries being paid directly into “la Caixa” accounts. There has also been a 10% increase in pensions newly managed or transferred to “la Caixa” accounts, bringing market share up to 15.6%, helped by strong take-up of the Pensión multiEstrella campaign.
In addition, against the current economic background and as part of its permanent commitment to society in general, “la Caixa” has launched its Hipoteca con Carencia, Hipoteca con Espera and Hipoteca Flexible products, all aimed at offering a flexible way for its clients to manage their mortgages, provided that basic guarantees are in place.
InverCaixa, the “la Caixa” investment fund manager, has also notably increased its share, rising from 6.9% in December 2008 to 8.5% at present, with managed investment assets of 13,805 million. Invercaixa is one of the largest investment fund managers, and has also seen one of the highest levels of growth in 2009, showing an increase from both new positions and its existing portfolio of 19.14%, while the market contracted by 3.03%.
As regards quality of service, “la Caixa” once again received the lowest number of complaints relating to financial activity, as noted in the Report by the Bank of Spain’s Complaints Service for 2008, and it maintains an average score of very good. Other studies, such as one by FRS Inmark, show “la Caixa” as one of the best entities in its sector in terms of quality, and a benchmark for both personal banking clients and businesses.
The 2007-2010 Strategic Plan consolidates the specialised business model
“la Caixa”, whose core business is personal banking, is successfully continuing to grow its private banking (more than 300 managers) and business banking (a further 1,600 specialist employees) lines, with the aim of achieving a leading market position in these segments. “la Caixa” has also completed the implementation of a specialised model for both personal and business banking (SMEs, the self-employed and traders), with around 1,800 specialist managers.
In the Business banking segment as a whole, "la Caixa" has increased its loans portfolio to more than 69,000 million euros. Business loans managed via the “la Caixa” Group’s 80 specialist centres has increased by 14%. “la Caixa” has more than 730 specialist employees available at its business centres to attend to the specific needs of this segment.
The service provided to businesses by “la Caixa” has been further reinforced by the strategic agreement signed with BPI. This alliance offers the highest quality financial services to businesses operating on the Iberian Peninsular, with two new specialist centres to add to the 80 operated by “la Caixa” in Spain and the 53 offered by BPI in Portugal. “la Caixa” has also reached commercial agreements with The Bank of East Asia and Erste Bank to provide its clients with improved services in Asia and Central Europe.
“la Caixa” has also increased its foreign trade business, increasing its share of export credits by 3.7 points and import credits by 2.4 points, to 9.4% and 12.7% respectively.
“la Caixa” has also completed implementation of its specialist SME Banking model, with the creation of a business manager (SMEs, the self-employed and traders). At the present time, the Group employs 852 business SME managers.
Elsewhere, “la Caixa” has renewed its agreement with CEOE and CEPYME to provide businesses with 6,000 million in loans. In 2008, "la Caixa" was the first Spanish financing institution to establish an agreement with these business organisations. It has also renewed an agreement with the ICO to support and finance the needs of businesses and the self-employed in 2010.
As regards products and services, “la Caixa” has seen strong growth in its factoring and confirming business, obtaining market shares of 8.9% and 13.2% respectively, a rise of 3 and 1.2 points over the twelve months.
The consolidation of the “la Caixa” Private Banking division has resulted in an increase of 21.5% in managed funds and securities, to a total value of 41,000 million, with a 13% rise in the number of clients. This increase has been brought about by the high levels of commercial activity generated by around 300 private banking managers, with support from the Group’s network of 31 specialist centres and its entire branch network, resulting in “la Caixa” moving up to second position in this sector.
“la Caixa” has continued to implement a specialist Personal Banking model throughout its branch network. It has now completed the organisation of its personal banking business with the introduction of 842 offices with specialist managers, aimed at offering services to a potential 500,000 customers, with funds and securities worth 57,703 million euros.
Another of the Group’s important initiatives is the consolidation of MicroBank, the social banking institution created by “la Caixa” in 2007, which has already financed more than 57,044 projects to a value of 377 million euros since its introduction. This makes it the financial institution that devotes the greatest resources to the promotion of projects through the use of micro-credits. It has also contributed to the creation of more than 16,000 jobs.
Boost for internationalisation under the 2007-2010 Strategic Plan
As part of its international expansion plan, in July "la Caixa" opened the first branch of a Spanish banking institution in Casablanca (Morocco), and it has now opened its agency offices in Shanghai (China) and Istanbul (Turkey), to add to the “la Caixa” branches already in operation in London (United Kingdom), Paris (France), Brussels (Belgium), Milan (Italy), Stuttgart and Frankfurt (Germany) and Beijing (China). “la Caixa” also has branches in Warsaw (Poland) and Bucharest (Romania), and plans to open new agency offices in Delhi (India), Algiers (Algeria) and Dubai (United Arab Emirates).
As regards investment in financial institutions, Criteria CaixaCorp, a subsidiary of “la Caixa” has a 20% holding in GFInbursa, 30.1% in BPI Bank, 14.99% in The Bank of East Asia (in January), 10.1% in Erste Bank and 20.9% in Boursorama. “la Caixa” and Criteria have also signed strategic investment and collaboration agreements with The Bank of East Asia and Erste Bank.
Criteria has also agreed to acquire Adeslas, the number one insurance institution in the Spanish health sector, at a cost of 1,178 million. This will strengthen Criteria’s leading position in the insurance sector, and bring Adeslas within the structure of SegurCaixa Holding. Criteria has also reached an agreement to sell part of its holding in Agbar to Suez Environnement, while remaining a shareholder in the company with a holding of between 15% and 25%, depending on acceptance of the takeover bid, practically the same position that it held at the end of 2006 (23.5%).
Criteria also reached an agreement to take on Investindustrial as a partner, with a 50% share, in the company that operates the Port Aventura theme park. Criteria has retained the other 50%, and still owns 100% of the company that owns the land for residential and commercial use, the golf courses and the Beach Club, among others.
It has also continued to support the industrial sector, subscribing the Gas Natural share capital increase in the amount of 1,313 million.
The market value of the “la Caixa” Group’s portfolio of listed investments totals 20,118 million, with unrealised capital gains of 3,945 million.
“la Caixa” maintains its Social Projects budget
Following a similar line to the one taken for the 2009 financial year, “la Caixa” will propose to the General Assembly that the Social Projects be assigned a budget of 500 million euros in 2010, the same as last year, thus maintaining its commitment to society despite the current unfavourable economic climate.
During 2009, the priority of the “la Caixa” Social Projects remained that of developing programmes with a social bias. Some particularly notable examples were: CaixaProinfancia, for the eradication of child poverty; the programme aimed at the elderly and the prevention of dependence; the Incorpora programme, which aims to find employment for people with differing degrees of disability and people at risk of exclusion; and the most innovative project, the palliative care programme, aimed at providing integrated assistance for people without financial means suffering from advanced illnesses.
The promotion of accessible housing for families, young people and the elderly (which will receive a further boost in 2010), along with lines of action in international cooperation programmes, have been other areas in which priority work has been carried out, and these will be further expanded this year to include a programme devoted to immigration.
The different post-graduate grant programmes have provided assistance for university students at some of the best academic institutions in Spain and abroad, as well as helping advances in biomedical research. There is also a programme to provide grants for professional training for prisoners, aimed at assisting their subsequent reintegration into the community.
The CosmoCaixa science museums in Barcelona and Madrid, which in 2009 attracted more than a million visitors, continued to offer a wide-ranging contribution to scientific learning, with permanent displays, temporary exhibitions, conference seasons and school and family workshops. The Social Projects also increased support for scientific research by contributing to institutions such as irsiCaixa, devoted to research into retroviral treatments for AIDS; the Wider centre in Barcelona, a pioneer in endoscopic surgery; the National Centre for Cardiovascular Research (CNIC) in Madrid; and the Institute for Oncological Research at Vall d’Hebron Hospital (VHIO). In this same connection, the Social Projects have recently signed an agreement with the Catalan Association of Public Universities (ACUP) to create RecerCaixa, a new project created with the dual aim of providing support for specialists engaging in research at universities and research centres, and attracting researchers from around the world.
The environment, conservation of natural spaces and social reintegration programmes, which prioritise the employment of people at risk of exclusion to carry out environmental work, and la “Caixa” a favor del mar, which is engaged in the preservation of coastal ecosystems, are two examples of the Social Projects’ work in the environmental sphere, an area that is of growing concern to society at large.
The cultural programmes, including events organised at the different CaixaForum premises (Barcelona, Madrid, Palma de Mallorca, Tarragona, Lleida, Girona) and travelling exhibitions organised throughout Spain, the agreements to restore items of artistic heritage (Romanesque art) and the participative concerts, all follow a common theme: the dissemination of culture as a social stimulus, the promotion of cultural consumer behaviour in society that will lead to an improvement in the quality of life of ordinary people.
In 2010, “la Caixa” plans to distribute the 500 million euro Social Projects budget as follows: 71% to social programmes; 12.5% to the environment and science; 11% to culture; and 5.5% to educational and research programmes.
NOTE.- In so far as it relates to income from investments, this financial information from the “la Caixa” Group for the 2009 financial year 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.