October 29, 2020

Caixabank cuts its profit 67% to 205 million, after provisioning 1,155 million for Covid | Companies



Caixabank recorded an attributable result in the first half of 205 million euros, representing a 67% drop compared to 2019. The result for 2020 includes the recording of an extraordinary provision for future impacts associated with Covid-19 for 1,155 million euros and the cost associated with early retirement (109 million euros).

The group has carried out a provision of 755 million in the second quarter, which is in addition to the 400 million it provided in the first. In addition, the comparison of results compared to last year is also affected because the 2019 accounts included the agreed labor adjustment that had an impact of 978 million euros.

In the second quarter alone, profit was 115 million, up 30.6%, and the interest margin from March to June was 1,225 million, 1.3% less. The result falls short of analysts’ forecasts, which pointed to a net result of 191 million euros in the second quarter, with an interest margin of 1,210 million, according to data compiled by Bloomberg.

As for the results of the semester, the interest margin amounted to 2,425 million, 2.1% less. Caixabank explains the decrease in loan income due to a decrease in the interest rate applied, linked to the granting of ICO loans. Also due to the reduction in income from consumer credit and the decrease in the interest rate curve. The growth in commissions (+ 1.5%) and the income and expenses covered by insurance contracts (+ 10.5%) stand out.

Gross customer credit reached 242,956 million euros, with a growth of 6.8% in the year, essentially as a consequence of the increase in credit to companies (increase of 15.9%). The entity explains that the positive seasonal effect derived from the advance of double pay to pensioners influences in the second quarter. Without considering this effect, gross credit grows 6% in the year.

Caixabank has made an effort to reduce recurring administration and amortization expenses, which fell by 2.6%. The cost cut plan will mean by 2021 a saving of more than 300 million euros with respect to that foreseen in the Strategic Plan.

The entity’s liquidity exceeds 100,000 million euros for the first time, with growth of 17,182 million euros in the year due to the generation and contribution of collateral to the ECB policy.

Regarding solvency, the Common Equity Tier 1 (CET1) ratio stands at 12.3%. In the first semester, an increase of 32 basis points is collected due to the extraordinary impact of the reduction of the dividend expected from 2019, as one of the measures adopted by the council following Covid-19.

The non-performing loans ratio stands at 3.5% (falls 6 basis points in the year), and the coverage ratio increases to 63% (increases 8 points in the year) after the reinforcement of provisions.

Caixabank indicates that until June 30, the entity has approved 357,488 requests for a moratorium on its clients in Spain, which affect a portfolio of 9,848 million. In addition, since the start of the state of alarm, CaixaBank has granted 32,500 million euros to companies, outside the ICO lines, and has managed loans linked to the ICO Covid lines for a total amount of 13,726 million euros.

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