Key business metrics show strong growth, with targets comfortably met. Solvency, asset quality and recurring efficiency have all improved.
The decline in gross income is due to a drop in extraordinary income and financial operations.
Consolidated earnings presentation Q1 2019
In the first quarter of this year, Grupo Cooperativo Cajamar, the leader in cooperative banking in Spain, increased its lending to businesses and the agri-food sector and expanded its sales of retail savings and investment products, while improving its solvency and the quality of its balance sheet.
Business growth
Grupo Cajamar ranks eleventh in the Spanish financial sector in business volume and gross income. Total assets are up 6% year-on-year at 44,358 million euros and the total volume of managed business has reached 76,325 million euros.Customers’ retail funds are up 10.6%, at 29,184 million euros, with sight deposits up 14.4% and off-balance sheet funds (investment funds, insurance and pension plans and fixed income and equity products) up 1.6%.
Performing loans to customers are up 3.1% year-on-year, at 29,022 million euros, driven by lending to the strategic segments (businesses and the agri-food sector), which already account for 43.1% of the total. The group’s market share in Spain of loans to the agri-food sector has risen to 14.63%, backed by its wide and growing range of specialised products and services and the knowledge and experience of its managers and its Agri-food Innovation team.
Results
In the first quarter of 2019, Grupo Cooperativo Cajamar achieved a consolidated net profit of 24.63 million euros, 21.7% less than in the first quarter of the previous year. This result is attributable to the 6.2% year-on-year decline in gross income, partly offset by a 5.9%year-on-year decrease in total expenses and lower provisioning (down 280.9% year-on-year). A substantial part of the quarter’s earnings have been used to reinforce credit risk coverage.
Despite the adverse interest rate environment, net interest income has been maintained at 148.12 million euros for the quarter, slightly down (1.4%) compared to the previous quarterdue to improved financing conditions.
Gross income has also been affected by the sharp decrease in extraordinary trading income compared to thefirst quarter of the previous year, down 30.4%.
The purely banking business performed well, with double-digit growth in on-balance sheet customer funds and a 26.5% year-on-year increase in income from strategic alliances for insurance and pension plans, investment funds and consumer finance. The agreement with Generali to drive growth in the insurance and pension plan business has produced increases in premiums for life insurance (up 15.4%), non-life insurance (up 14.3%) and contributions to pension plans (up 2.6%). At the same time, the volume of assets managed in investment funds is up 2.7% at 2,466 million euros and new consumer loans, channelled through Cajamar Consumo, are up 3.6% year-on-year.
The 5.9% year-on-year decline in total expenses is due to optimisation of commercial network resources and the digital transformation, allowing the recurring cost-to-income ratio to improve to 60.36%.
Balance sheet quality improves and solvency increases
The quality of the balance sheet continues to improve, with a further decline in non-performing assets compared to the first quarter of the previous year. The decrease in non-performing loans (NPLs) is 25.3% year-on-year, bringing the NPL ratio to 7.31%, 2.53 percentage points less than one year ago, and lifting the NPA coverage ratio to 48.61%, including debt forgiveness in foreclosures. Gross foreclosed assets have also fallen 10.5%, thanks to the 40.3% year-on-year decrease in additions to foreclosed assets and increased sales activity, which delivered 117 million euros of foreclosed asset sales.
Grupo Cajamar’s total capital ratio is 14.33% while the CET1 ratio is 12.6% on a phase-in basis and 11.88% fully loaded, comfortably above all of the single supervisor’s SREP requirements, with eligible capital up 6% and risk-weighted assets (RWAs) down 3.8%.
The group also maintains a comfortable level of wholesale funding and free access to the wholesale markets, as well as a comfortable liquidity position. With 5,795 million euros of available liquid assets, 93.05% of which are high quality liquid assets, it meets the requirements set by the European Banking Authority and has debt maturities covered for the next few years. The liquidity coverage ratio (LCR) is 211.06 % and the net stable funding ratio (NSFR), 120.64 %, well above the regulatory minimum of 100%.
Customers more loyal and more digital
The group continues to increase customer loyalty and the level of digitisation. Thus, 41.06% of its 3.41 million customers have acquired multiple products. The number of digital customers is up 12.2% compared to the first quarter of the previous year, at 758,000; and the number of mobile banking customers has reached 393,000, an increase of 12.4%. The number of Wefferent account holders has reached 193,000, an increase of 47% year-on-year, with a 40% increase in business volume. The 360º account remains one of the customers’ most highly valued products, with 332,000 account holders (up 76% year-on-year) and a 6% increase in business volume.
Customer experience positions Grupo Cajamar above the industry average in the customer recommendation index. According to Stiga’s customer satisfaction study for the first quarter of 2019, Cajamar ranks third among financial institutions in Spain in customers’ satisfaction with their account manager and eighth in terms of their satisfaction with the telephone banking service. Cajamar also recently earned second place in EMO Insights International’s 2019 Emotions in the banking sector study, on account of having more “fans”.
During the first quarter of 2019, Grupo Cajamar opened a new branch in Puente Genil (Córdoba), bringing the number of branches to 975 and the number of staff to 5,492. It also continues to combat financial exclusion by delivering services to 30 or more small towns and villages in Almeria, Alicante, Valencia and Castellón through mobile branches. These branches attended to more than 21,500 people during the year and travelled more than 61,200 kilometres.
Social investment
Given the singular nature of its cooperative banking model, Grupo Cooperativo Cajamar remains committed to the development of the sustainable, socially responsible productive economy based on knowledge and innovation. During the first quarter it continued to promote and carry out knowledge transfer activities and research projects, in which it partners with public bodies and research centres, technology firms and agri-food companies. It also continued to organise different types of business gatherings throughout Spain to help foster an entrepreneurial culture, while also conducting its own financial education and responsible finance programmes and participating in dialogue spaces for development and other cultural and sporting activities.
BCC General Meeting
This morning, Banco de Crédito Social Cooperativo, the parent of Grupo Cooperativo Cajamar, held its Ordinary General Meeting of Shareholders for 2019, at which the individual and consolidated financial statements and management report for 2018 were approved. During the meeting, the following were re-elected as directors for a further four-year term: Amparo Ribera Mataix (independent), María Teresa Vázquez Calo (independent) and Bernabé Sánchez-Minguet Martínez (proprietary executive). The following new directors were appointed: Rafael García Cruz (proprietary executive) and Antonio José Carranceja López de Ochoa (independent).