CaixaBank meets all the new provision requirements and earns €48 million in just one term

Barcelona (ACN).- Spain’s largest bank, Barcelona-based CaixaBank, presented its results corresponding to the first quarter of 2012 in the Catalan capital on Thursday. CaixaBank has decided to drastically reduce its profit this last term in order to fulfil in only a few weeks all the Spanish Government’s new financial requirements, approved in February. Therefore, CaixaBank has reduced its quarterly profit by 84% compared to the same period in 2011, earning €48 million but allocating €2.436 billion in provisions in order to strengthen its core capital once again, which now represents 12.4%. Furthermore, the Catalan bank has a liquidity of €29.436 billion, 10.6% of its total assets. Joan Maria Nin, CaixaBank’s Vice-president and CEO, explained they wanted to fulfil the new financial requirements as soon as possible; therefore, since they had the strength to do so, they decided to adapt by the end of March to the requirements approved in February, concentrating the efforts over this first term and drastically reducing profit. Nin used a Catalan idiom to explain the effort, which could translate into English as “now that we’re calm, from this moment on, we will find glory”. CaixaBank’s President, Isidre Fainé, said “there is no other country in the world that has made such an important reorganisation effort” than Spain. Besides, Fainé stressed their intention to continue expanding CaixaBank’s banking and industrial business in the Americas, despite YPF’s expropriation by Argentina. CaixaBank owns 12.8% of Repsol’s shares. In fact, Fainé asked to find “a fair price for YPF”, and underlined that an episode like that cannot be solved in only a few days. He added that “a match does not end when a goal is scored. It lasts many minutes, and it is still very early to tell how this match will end”. Furthermore, Fainé stated that CaixaBank, which is mainly owned by the savings bank La Caixa, will open new branches in Chile, Colombia and the United States. In addition, he emphasised the agreement the Catalan bank has with the Mexican billionaire Carlos Slim, President of the financial group Inbursa. Fainé said that Slim is the “ideal partner” to carry on with CaixaBank’s expansion in both Americas.

On Thursday CaixaBank released a note presenting its results for the first quarter of 2012. Later on, a formal presentation at one of Fira de Barcelona’s pavilions was held, with the presence of the Catalan bank’s main managers. In their press release, CaixaBank stated they have improved their margins. The exploitation margin has increased by 25.3% compared to the previous year, interest margin by 10.2%, and gross margin by 8.3%, reaching €1.672 billion.

€2.44 billion in provisions this last quarter

Nin explained during the presentation the structure of the €2.436 billion in provisions, allocated in order to meet in just one quarter with all the new financial requirements. €1.835 billion come from CaixaBank’s generic provision. €359 million come from an additional provision of funds and the remaining €601 million have been added to cover a hypothetical devaluation of the real estate assets.

CaixaBank’s President, Isidre Fainé, explained the state of their real estate assets, representing €1.574 billion: €1.227 billion correspond to already-built apartments, €54 million to apartments under construction and €262 million to plots of land. Fainé explained the criteria that the provision for their real estate business have followed: provisions covering land plots correspond to 86% of their valuation price; those for apartments under construction represent 76% of their valuation price; finally, provisions for already-built apartments correspond to 55% of their valuation price. Joan Maria Nin added that, if the sales and rentals continue to last year’s levels, CaixaBank could place all the apartments it owns by 2014 on the market, since they are placing 10,000 housing units per year.