June 22, 2021

CaixaBank earns 4,786 million euros in full negotiation of the ERE after absorbing Bankia

CaixaBank presented its results for the first quarter of the year this Thursday. They are the first in which the absorbed Bankia is already included, after completing the merger last Easter. The operation leaves a profit of 4,786 million euros, compared to 90 in the same period a year earlier. The bank attributes it to an extraordinary impact of an accounting adjustment during the merger of both entities. Without this impact, the profit would also have grown to 514 million euros.

The new CaixaBank, owned by the State, will start with only two women on the management committee

The new CaixaBank, owned by the State, will start with only two women on the management committee

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The group explains that, after the incorporation of Bankia’s equity, the CaixaBank Group account reflects an extraordinary note associated with the merger (known as negative goodwill or badwill) of € 4,300 million, which together with the extraordinary expenses of the integration and the ordinary result give rise to an accounting attributable profit in the first quarter of 4,786 million. The negative goodwill is the result of discounting from Bankia’s equity (13,088 million euros) the acquisition price paid by CaixaBank (5,314 million euros) and a series of accounting adjustments when putting different assets and liabilities at fair value (3,474 millions of euros).

The bank has published its first results after the merger but does not yet include the Bankia accounts on the balance sheet. Revenues reach 2,000 million euros, with a growth of 4% compared to the same period of the previous year. Interest income fell 0.7%, compared to a 0.2% rise in fees.

CaixaBank’s results come at a time when negotiations for the largest ERE in the history of Spanish banking have begun, affecting around 8,000 workers. The negotiation began two weeks ago and the agreement with the unions is still far away, as they reject the proposed conditions, which also affect the remuneration of those who stay in the entity. In the last meeting, the bank offered a plan of repositioning for those laid off who want to continue working.

If the sum of the CaixaBank and Bankia income statements is made, the estimated result without extraordinary items associated with the merger would be 580 million euros, compared to 184 million in the first quarter of last year. Net interest income would stand at 1,639 million euros, which is 1.3% less than in the same period of the previous year, while the income of both entities would increase by 0.7% in the interannual rate, to 2,808 million euros. Specifically, commission income would reach 941 million, an increase of 1.6%. For its part, the proforma gross margin would stand at 2,774 million euros (+ 0.5%) and recurring administration and amortization expenses would be reduced by 2.6%, to 1,593 million.

The bank recovers its pre-pandemic results

CaixaBank is the last bank that remained to present its accounts for the first quarter of the year. A period in which practically all the large Spanish banks, which no longer include Bankia, have recovered their profit levels prior to the pandemic. Specifically, the five entities listed on the Ibex 35 (CaixaBank, Santander, BBVA, Sabadell and Bankinter) have recorded a result of 7,825 million euros.

The level is affected by the extraordinary data from CaixaBank, although by eliminating this effect, the combined data of these five banks has recovered the situation prior to the pandemic. In the first quarter of 2020, large banks entered losses due to the adjustment for the millionaire provisions they had to take to face the impact of the pandemic on their loans. Those results were affected, mainly by the results of BBVA, which had recorded losses of almost 1,800 million euros. A year later, they are all in profits and multiplying them by three or four, as in the case of CaixaBank and Santander. Only Sabadell has cut its result.


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