• The bank has been fully operational since the declaration of the state of alarm, with 90% of the network open and the priority of offering essential financial services while protecting the health of employees and customers. 50% of network professionals are in a telework situation, as well as practically all employees of central services and territorial divisions.
• The entity is prepared to contribute to recovery. CaixaBank has activated a comprehensive package of measures with the aim of supporting the needs of companies and individuals. As of April 23, more than 147,000 clients have requested a moratorium. The entity has managed a total of 220,000 requests: 95,000 for a mortgage moratorium and 125,000 for consumption, which affect a portfolio with an amount of 8,500 million. In addition, the unemployment or pension benefit has been advanced to 2.4 million clients.
• Support for the self-employed and companies through the ICO COVID-19 lines. Until April 28, CaixaBank has handled 128,700 requests from its clients for a total amount of 11,140 million euros, well above the assigned quota. CaixaBank has already paid € 3.7 billion of these requests.
• Gross customer credit reached 231,367 million euros, with growth of 1.7% in the quarter. From the start of the state of alarm and until April 23, a total of 14,000 million euros in loans have been granted to the business community, outside the ICO lines, to mitigate the impact of this health crisis.
• High levels of liquidity and solvency. Total liquid assets stood at 96,227 million euros, with growth of 6,800 million euros in the quarter. Likewise, capital levels (12% CET1) are consolidated at high levels, well above what is required, to meet the new demand for credit in the best position.
• Efficient management of late payments. The non-performing loans ratio remains at very low levels at 3.6% and the coverage ratio increases to 58% (+3 percentage points since December).
• Core revenue growth, which stood at 2,045 million (+ 0.9%, year-on-year), after a solid evolution until February, as it grew at a rate of 3.7%.
• There has been a provision of 109 million associated with early retirement agreed at the end of February and that will generate additional savings from the second quarter of the year. CaixaBank had already planned to carry out this measure since last year.
The CaixaBank Group, chaired by Jordi Gual and whose CEO is Gonzalo Gortázar, obtained in the first quarter of the year a attributable profit of 90 million euros, 83.2% less compared to the same period of the previous year, after the risk coverage effort that includes an extraordinary provision of 400 million in a prudent exercise due to the impact that COVID-19 could have on the future results of the entity. As a consequence of the impacts of the pandemic, the entity has canceled the financial objectives set for 2021.
Since the first day of the alarm state, the bank has been operating at full capacity as an essential service provider. Approximately 90% of the CaixaBank network has been open since March 16. Each office has had various measures, such as teleworking shifts or time flexibility measures, to establish its own organization, and a strict protocol of security measures has been applied to protect clients and employees.
Currently, 50% of network professionals are in a teleworking situation, as well as practically all employees of central services and territorial divisions. In addition, digital services and capabilities have been strengthened so that customers can carry out operations and queries online and also the operations of the more than 9,000 ATMs available to the entity.
CaixaBank, committed to recovery and customer support
As of April 23, more than 147,000 clients have requested a moratorium. The entity has managed a total of 220,000 requests: 95,000 for a mortgage moratorium and 125,000 for consumption, which affect a portfolio with an amount of 8,500 million. As an entity associated with the CECA, it has assumed the commitment to temporarily extend the deferment of the payment of the principal, both for the most vulnerable groups that are included in the Royal Decree-law and for clients who have been affected by the crisis.
The gross credit to customers reached 231,367 million euros with a growth of 1.7% in the quarter, as a consequence of the increase in credit to companies. Since the start of the state of alarm and until April 23, CaixaBank has granted 14,000 million euros to the business sector, outside the ICO lines, aimed at facilitating the financing of large companies, SMEs, the self-employed and entrepreneurs, helping the recovery of the productive fabric.
Furthermore, from the beginning of the commercialization of the ICO COVID-19 lines and until April 28, CaixaBank has managed 128,700 requests from its clients for a total amount of 11,140 million euros. CaixaBank has already paid € 3.7 billion of these requests.
Loans to individuals -other purposes- decreased 1.6% in the quarter, although consumer credit was positive (+ 1%) due to the good commercial activity in the first two months of the quarter. On the other hand, credit for the purchase of housing (-0.9% in the quarter) continues to be marked by the deleveraging of families in line with the trend of previous quarters, with a slight impact derived from the lower mortgage production in the second fortnight of March.
On the other hand, customer funds stood at 376,560 million euros (-2.0% in the quarter), essentially impacted by the negative evolution of the markets, which affects assets under management, which decreased to the 92,343 million euros. Without this effect, the evolution of resources would have been positive (+ 1%).
Savings at sight also grew to 192,904 million euros (+ 1.8% in the quarter), despite the positive seasonality at the end of the year, thanks to the entity’s strength and the liquidity of large clients.
Quarter with good recurring commercial performance until mid-March
CaixaBank is the main bank for one out of every four retail clients in Spain. The penetration share of individuals stands at 27.8%, 24.4% as the leading entity and consolidates solid market shares in the main products and services. Likewise, the entity reinforces its leadership in digital banking with 6.5 million digital customers, with a firm commitment to digital transformation and commitment to accompanying innovative companies with growth potential.
Regarding business activity, the result for the quarter reflects the good commercial performance until mid-March. The growth in core revenues in the year-on-year evolution stands out, standing at 2,045 million euros (+ 0.9%), after a solid evolution until February, as they grew at a rate of 3.7%. The interest margin amounts to 1,200 million euros (-3% compared to the same period in 2019), mainly impacted by the lower contribution of the credit and fixed income portfolio, in an environment of negative interest rates.
The evolution of the gross margin is influenced by the reduction in the result of financial operations, due to the evolution of the markets and the lower contribution of the investees, since lower attributed results have been registered in anticipation of the current economic context. On the other hand, a good evolution of the income and expenses covered by insurance contracts and commissions is reflected. Commission income stands at 658 million euros, + 7.6% compared to the same period in 2019 and -5.1% compared to the previous quarter.
In addition, administrative and amortization expenses decreased 1.3% year-on-year after managing the cost base. Personnel expenses decreased by 3.3%, materializing the savings associated with the 2019 labor agreement, which offset the vegetative increase. On the other hand, general expenses decrease by 1%.
The evolution of the heading of impairment losses on financial assets and other provisions is impacted by prudence, since the provisions for credit risk in the new economic scenario are reinforced, for an amount of 400 million euros, which will be updated on next months with new information available.
To calculate this provision, scenarios with internal economic forecasts have been used, with different levels of severity, which incorporate the effects on the economy of the health crisis caused by COVID-19, also giving some weight to alternative macroeconomic projections with a bias less cyclical.
The combination of scenarios allows mitigating the uncertainty in the projections in the current context and the procyclicality of the credit risk models in line with the recommendations of the supervisory agencies.
Also included in this item is the recording in other provisions provisions of 109 million euros associated with early retirements agreed at the end of February for 229 employees and that will generate additional savings from the second quarter of the year. CaixaBank had already planned to carry out this measure since last year, since the negotiation commitment was included in the labor agreement signed with union representatives in May 2019.
Optimal solvency and liquidity management that will support credit demand
Total liquid assets stood at 96,227 million euros, with growth of 6,800 million euros in the quarter, mainly due to the contribution of collaterals in the ECB policy.
On the other hand, the Group’s Liquidity Coverage Ratio (LCR) at March 31 is 234%, which shows a comfortable liquidity position (185% LCR average over the last 12 months), well above the required minimum of 100%.
The balance drawn on the ECB policy as of March 31, 2020 stands at 33,759 million, of which 1,409 million corresponds to TLTRO II, 9,025 million to TLTRO III and 23,325 million to LTRO. In the first quarter of 2020, 2.5 billion TLTRO II were repaid in advance and an extraordinary LTRO was taken from the ECB for an amount of € 21.5 billion and $ 2,000 million (equivalent to € 1,825 million).
Regarding the capital position, the Common Equity Tier 1 ratio stands at 12%. In the first quarter, +32 basis points are collected due to the impact of the expected dividend reduction charged to 2019. In an exercise of prudence and social responsibility, the 2019 dividend was reduced and the dividend policy was modified for the fiscal year 2020 moving to the distribution of a cash dividend not exceeding 30% of the reported net profit.
The application of the transitional period of IFRS9 regulations (+13 basis points) has also influenced the evolution of the CET 1 ratio. On the other hand, the organic evolution of capital in the quarter was -10 basis points, mainly due to the increase in risk-weighted assets derived from credit growth and -37 basis points due to the evolution of markets and other impacts .
Likewise, the Tier 1 ratio stands at 13.5%, the Total Capital ratio at 15.8% and the leverage ratio at 5.4%. In relation to the MREL requirement (22.5% of APRs as of January 1, 2021) as of March 31, CaixaBank has a ratio of 22.6% to APRs considering all the liabilities currently eligible for the Single Resolution Board.
After considering new regulatory and supervisory aspects, the Board of Directors agreed to reduce the objective of the CET1 solvency ratio established in the 2019-2021 Strategic Plan to 11.5%, voiding the objective of a CET1 ratio of 12% plus a additional 1% margin that was intended to absorb the impacts of Basel IV implementation and other regulatory impacts, the implementation of which will be delayed.
Efficient risk and default management in the new economic context
The non-performing loans ratio remains stable and at very low levels in the quarter (3.6%) and the coverage ratio increases to 58% (+3 percentage points since December).
The net foreclosed portfolio available for sale in Spain is 961 million euros (+3 million euros in the first quarter) with a coverage ratio of 40%. Likewise, the rental portfolio in Spain stands at 2,029 million euros (-65 million euros in the quarter). Total property sales in 2020 stood at 95 million euros.
Support measures to revive the economy
Since the COVID-19 crisis began, CaixaBank has activated a comprehensive package of measures with the aim of mitigating the economic effects of the coronavirus and supporting the needs of companies and individuals. In addition to all the financing lines established by the entity, CaixaBank has implemented measures focused on private customers and society, among others:
CaixaBank pensioner clients have seen progress on the day of payment of the pension (ten days earlier in April) and how a care plan was implemented as a priority for the elderly. On the other hand, all CaixaBank clients entitled to unemployment benefit and who received it last month have been able to use these funds since April 3, seven days earlier than usual. The unemployment benefit or pension has been advanced to 2.4 million clients.
The CaixaBank Group insurance company, VidaCaixa, with 7.3 million euros, has led contributions to the collective initiative of the insurance company Unespa to promote collective life insurance that will cover all Spanish healthcare providers for six months in the event of death or hospitalization from COVID-19.
In the area of housing, in addition to adhering to the mortgage moratorium raised by the Government, CaixaBank has condoned, since April, the rents to the tenants of homes owned by its real estate subsidiary BuildingCenter, if they meet the established conditions. This measure will be in force until the month in which the end of the alarm period is decreed.
CaixaBank has launched a plan to support small businesses, in the context of the current crisis that has led to the closure of a large part of commercial establishments. The measures taken include specific financing, the POS commission bonus and the launch of a new e-commerce technology solution that CaixaBank makes available to small merchants to help them boost online sales.
To facilitate customer operations and avoid trips to ATMs away from home, CaixaBank does not pass on the cost of using ATMs from another Spanish financial institution for debit withdrawals.
The entity has activated online volunteering through its Volunteer Association. In this way, more than 500 volunteers are organizing, hand in hand with social entities spread throughout Spain, digital initiatives aimed at various groups.
Likewise, CaixaBank has reinforced its line of collaboration with public administrations and social entities to urgently issue more than 200,000 social aid cards during the state of alarm by COVID-19.
Together with the “la Caixa” Foundation, the solidarity campaign “No home without food” has been launched to respond, exceptionally, to the social emergency arising from the current health and social crisis. The objective is to raise as much food and funds as possible to cover the usual demands, which have been affected by the current situation.