€503 million profits for CaixaBank in 2013, ending a 4-year-long downward trend

Barcelona (ACN).- Barcelona-based CaixaBank, Spain’s largest bank, has earned €503 million in 2013, representing a 118 % increase on 2012 as it announced on Friday. The private bank mostly owned by La Caixa has left behind a 4-year-long downward trend in profits which can be traced back to December 2009, towards the start of the economic crisis. This result was successfully reached by trying to maintain a similar provision volume than in 2012, which resulted in consuming €7.5 billion, meaning 4.81 % less than what was spent last year. The integration of Banca Cívica and Banc de València have enabled the company chaired by Isidre Fainé to consolidate its position as a market leader in Spain with 13.6 million customers, assets of €340.19 billion and a turnover of €510.83 billion, also allowing the bank to cover a market share of 27.4%. The bank’s core capital, which is the main solvency indicator, stood at 12.9% according to Basel II regulations and at 11.7 % according to Basel III regulations.

An increase in profits had not happened since 2008, when the financial entity was a savings bank and was named ‘La Caixa’. Back then, it had earned 2% more than the previous year. From that year onwards, the crisis and Spain’s double recession had affected CaixaBank, which, like all the other companies in the Spanish financial system, had entered a period of decline in profits. In 2013, such a trend was broken for the first time since 2009, with the bank earning more money than the previous year. Last year, the Catalan bank increased profits by 118%.

The Board of Directors of CaixaBank believe that 2013 was marked by the final integration of its subsidiaries, Banca Cívica and Banc de València. This has enabled the company to consolidate its position as a market leader in Spain with 13.6 million customers, assets of €340.19 billion and a turnover of €510.83 billion, also allowing the company to cover a market share of 27.4 %.

Less loans

The total amount of the customers’ resources has reached €303.60 billion, up 4.4% on 2012. On the other hand, the number of investment loans reached €207.23 billion, 7.1 % less than in 2012. According to CaixaBank, this decrease is due to widespread deleveraging processes, especially in the real estate sector, where the credit portfolio was reduced by 26 % and also to the large companies which have frequently chosen the option to replace loan demands by debt financing.

One of the most significant figures for 2013 is the evolution of the interest margins which generated €3.95 billion. This represents a 2.1 % increase for the whole year, but a 4.3 % increase for the last quarter of the year, which indicates a “positive” change in trends between the first and the second half of the year.

Gross margin, the difference between revenue and financial costs, stood at €6.63 billion, 1.6% less than the previous year while the operating margin closed with €2.69 billion, 16.6 % less than in 2012. It was burdened by operating expenses resulting from the extraordinary impact of 839 million arising from the adjustment of CaixaBank’s workforce.

The losses from the deterioration of financial assets totalled €4.33 billion, 9.8% more than the previous year. This amount includes €375 million of additional provisions recorded in June for the application of the Bank of Spain’s new criteria on refinancing, and the €902 million necessary to cover 100% of the provisions required by the Spanish Government’s Royal Decree 18/2012, provisions that covered the first quarter.

The effort offered for provisions and writedowns remain at similar levels to 2012, with a budget of €7.50 billion (against €7.88 billion in 2012). This figure includes €2.51 billion to cover the fair value adjustments of the integration of Banca Cívica and Banc de València.

Fee and commission incomes rose by 3.5 % to €1.76 billion. CaixaBank explains this growth by a significant increase in commercial activity, a greater number of operations, and the growth resulting from the management of special resources.

The balance of debt falls in the fourth quarter

The non-performing-loans ratio stood at 11.66 %, below the average in the sector which reached 13.08% in November. The coverage ratio amounted to 61 % and reached 140% if mortgage guarantees were included. An important fact is that the balance of doubtful debtors was reduced by €338 million in the fourth quarter.

Arrear payments have been negatively influenced by the application of the new criteria on operation refinancing. The overall defaulting rate has thus increased by 151 basis points. Besides, the increase in deleveraging also contributed to the growth in the delayed loan payment rate.

 A strong core capital

CaixaBank maintains a strong core capital, which is the main solvency indicator. It was set at 12.9% in 2013, 1.9 points more than in 2012, following the merging of Banc de València, the prepayment of public aid of the Spanish Fund for Orderly Bank Restructuring (FROB) to Banca Cívica, revenues from sales, and the efforts to cover inherent losses in the portfolio.

While the core capital of 12.9 % is based on the Basel II regulations, with the new and more demanding rules of Basel III, CaixaBank obtains a core capital of 11.7%.

€500 million allocated to ‘La Caixa’ Foundation for the 7^th consecutive year

CaixaBank has given €500 million to ‘la Caixa’ Foundation for 2014, which means that despite the unfavourable economic environment and the continued reduction of benefits, the provisions have held hold for the past six years. With such a budget, ‘la Caixa’ foundation remains the first in Spain in terms of volume of financial resources. 67% of the budget will be allocated to social programs, 13.2% to science, environment and research, 12.9% to cultural activities, and 6.9 % to education and training programs.