CaixaBank Group posted an attributable net profit of €2.14 billion during “the first half of 2023, up 35.8% compared to the same period of the previous year (€1.57 billion).”
CaixaBank CEO, Gonzalo Gortazar, emphasized the strong performance of CaixaBank during the first half of the year “comes off the back of very positive commercial dynamics, the full consolidation of the synergies arising from the integration with Bankia, and the reduction of NPLs.”
The Group’s CEO said:
“In the context of interest rates normalization, our margins showed good progress, with an attributable net profit of over €2.1 billion, a 36% increase. This solid result is a consequence of our strong commercial performance, and our prudent credit risk management, placing our ROE at over 10% after a long period of sub-par profitability.”
Gortazar also highlighted that “the financial strength and reasonable profitability allow us to maintain a generous shareholder distribution policy, which will be reinforced after the announcement of our intention to carry out a new share buyback program for a total of €500 million. But above all, this allows us to do something even more important: to keep supporting businesses and families, and to continue developing our positive societal impact.”
Positive performance of the income statement main line items
During the first half of the year, core revenues “increased by 31.3% year-on-year, to €7.11 billion.”
Net interest income, which “stood at €4.62 billion, was up by 55.2% year-on-year.”
Net interest income growth, “together with the improvement in insurance service result (+18.5%) and in income from bancassurance stakes (+59.2%) more than offset lower fees (-4.2%).” Specifically, recurring banking fees “dropped by 7.6% year-on-year, mainly reflecting the removal of deposit custody fees for large companies.”
Dividend income stood “at €145 million for the six-month period, which includes the Telefónica dividend of €61 million during the first quarter of the year and the BFA dividend of €73 million during the second quarter.” Furthermore, equity-accounted “attributable earnings amounted to €145 million, up 30.5% year-on-year.”
Trading income stood at €143 million in 2023, “compared to €244 million the previous year (-41.5%).”
Gross income between January and June “stood at €6.67 billion, up 23.1% compared to the same period the previous year.”
With all these factors in mind, the Group’s positive performance “during the first half of the year drove ROE up to 10.2%.” The recurring cost-to-income ratio (excluding extraordinary expenses) “fell to 45.7%.”
During the first half of the year, CaixaBank achieved “an increase in customer funds, which stood at €627.82 billion as of 30 June (+2.7% year-to-date), thanks to the strong performance of long-term saving products complemented by the positive seasonality in demand deposits typically seen at the end of the second quarter.”
Assets under management stood “at €156.11 billion (+5.5% year-to-date) thanks to net inflows and the positive performance of markets.” Specifically, assets under management “in mutual funds, portfolios and SICAVs totalled €111.34 billion (+6.4%) and pension plans €44.77 billion (+3.4%).”
During the first six months of the year, net inflows “into mutual funds, pension plan and savings insurance totalled €5.1 billion.” The combined market share of deposits and long-term savings stands “at 26.5%.”
Furthermore, growth in protection insurance continues, “with year-on-year increases of 3.4% in life-risk new production and of 13.6% in non-life.”
With regards to CaixaBank’s performing loans portfolio, it “ended the first half of the year at €354.2 billion, up by 0.8% in the year.” Sustained growth in the businesses lending portfolio (+2.2%) and good performance of consumer loans (+1.2%) “have offset continued deleveraging in residential mortgage loans (-2.6%).”
In terms of new production, during the first half of the year, €21.03 billion “in new businesses loans were granted, in addition to €5.17 billion in consumer loans and €4.65 billion in mortgages.”
The bank’s NPL ratio was “reduced further, to stand at 2.6% as of 30 June, the best figure recorded over the past 15 years (compared to 2.7% in the previous quarter and 3.2% one year ago).” Non-performing loans fell by €373 million “down to €10.32 billion following the strong performance of asset quality indicators and the active management of non-performing loans.”
Total provision funds for insolvency risk “stood at €7.88 billion at the end of June 2023 and the NPL coverage ratio increased to 76% (€7.87 billion and 74% at the end of 2022, respectively).” The cost of risk remains “broadly stable at low levels, at 0.27% (trailing 12 months).”
CaixaBank has “an unassigned collective provision fund totaling €874 million as of 30 June.”
This fund has been reduced by €264 million, mainly due to the semi-annual recalibration process of IFRS 9 models “carried out in the second quarter, and the resulting allocation of provisions at a specific level, without therefore changing the overall coverage (the fund’s balance stood at €1.14 billion at the end of 2022).”
At the end of the first half of the year, CaixaBank maintained “a solid liquidity and capital position.” Total liquid assets amounted “to €146.65 billion as of 30 June 2023, up by €7.64 billion in the year.” As of 30 June, there are “a total of €8.48 billion outstanding in TLTRO III financing, after having completed an ordinary repayment of €7.14 billion during the second quarter of the year.”
The Group’s Liquidity Coverage Ratio (LCR) “on 30 June stood at 207%, indicative of a comfortable liquidity position.”
In terms of capital, the CET1 ratio stood “at 12.5% (12.4% without applying the IFRS 9 transitional adjustments), following the extraordinary impact from the first application of IFRS 17 (-20 basis points).” Organic capital increase of +91 basis points “in the first half of the year underscores the bank´s capacity to generate capital.”
CaixaBank has made good progress “during the past six months with regards to the objectives established in its 2022-2024 Strategic Plan, including the generation of approximately €9 billion of capital and an attractive shareholder remuneration.”
The bank has announced its intention of “carrying out a new share buyback programme for the total amount of €500 million, which is expected to begin before the end of 2023, subject to the necessary regulatory approval.”
This would be the second share buyback program “executed as part of CaixaBank’s Strategic Plan.” The first share buyback program totaling €1.8 billion “was completed between May and December 2022.”
CaixaBank remains fully “committed to the environment, as it reflects, for example, the issuance of a €1 billion ESG bond.”
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