Turnover growth and a reduction in non-performing assets and foreclosed assets, and lower operating expenses combine to drive up the bottom line, boost efficiency and bolster solvency in the third quarter of the year.
Total assets on-balance sheet have increased by 6.8% YOY to €45.621 billion and the total managed turnover stands at €77.168 billion, up3.6%.
Retail funds on-balance sheet have grown by 8.7%, thanks especially to a 13% upsurge in demand accounts. Higher mutual fund, pension plan and savings insurance sales have also bolstered off-balance sheet funds by 3.7%. Consequently, managed retail funds are €2.587 higher having grown 8% YOY.
Grupo Cajamar continues to finance Spain’s productive system and households, with the volume of performing loans growing by 1.4% YOY to €29.123 billion (44.1% of which has been granted to businesses and the agri-food sector).
By business volume, Grupo Cooperativo Cajamar sits eleventh in the rankingof significant institutions in Spain, and seventh in terms of gross income. It also continues to be a go-to bank for the agricultural sector, boasting a domestic market share of 14.45%, thanks to its close relations with all agents in the sector, its extensive and specialised offering of products and services for the entire agri-food chain, and its important work transferring knowledge to businesses, cooperatives and producers.
Relative to the third quarter of the previous year, Grupo Cajamar gained market shares in the Spanish financial system both in investments (2.89%) and deposits (2.27%); fruit of the commercial efforts of its 5,486 members of staff across 962 branches, 1,546 ATMs, as well as its mobile branches to avoid financial exclusion in small rural areas, and its digital banking services, app and mobile banking.
Progress with digitalisation
Grupo Cooperativo Cajamar’s commercial strategy puts the customer at the heart of its business, with the group offering value-added products and services to upwards of 3.4 million customers,1.5 million of whom are loyal. It is also forging ahead with its digitalisation strategy, now boasting 792,000 digital customers (13% more YOY), 497,000 mobile banking customers (+18%) and 252,000 customers with Wefferent accounts who prefer to bank directly through zero-commission digital channels and with a free card (+43%).
Turnover growth and lower operating expenses among others have combined to drive up profit before tax to €111.9 million, 39.9% higher than in the third quarter of the year before, while net consolidated income has climbed 17.2% to €82.06 million.
Despite the lingering unfavourable interest rates, Grupo Cooperativo Cajamar boosted its net interest income by 1.3% due to an increase in performing loans and receivables and containment of finance costs.
Gross income is 29.0% higher YOY fuelled by net trading income and the YOY 11.4% increase in the results of strategic partners.
Revenue growth and a curbing of operating expenses have contributed to push up operating income by 67.6%; thus boosting the cost-to-income ratio by 12.29 pp to 46.7%.
Grupo Cajamar continues to forge ahead with cleaning up its balance sheet, bolstering credit risk hedges and thereby enhancing its credit quality, allocating a large part of its gains to write down impairment losses.As a result, the NPL coverage ratio has improved and stands at 47.55%.
Further improvements in the management of doubtful loans, which have decreased by 19.7% versus the third quarter of the previous year (€518.8 million less), has reduced the NPL ratio by 1.61 pp to 6.63%. On the other hand, the volume of gross foreclosed assets continues to shrink gradually, falling by 7.1% YOY. This has led to the coverage ratio of foreclosed assets rising to 53.04%, factoring in debt forgiveness in the foreclosure procedure.
Solvency and liquidity
During the first nine months of 2019, Grupo Cooperativo Cajamar continued to shore up its solvency and liquidity. The phased-in capital adequacy ratiohas improved to 14.83%, with a high quality of eligible capital; while the phased-in CET1 ratiostands at 13.14% and the fully-loaded CET1 ratio at 12.41%. This easily surpasses the levels required by the supervisor, with surpluses over and above the (phased-in) requirements of €833 million for CET1, €490 million for T1, and €420 million for Total Capital.
The group also boasts a decent level of wholesale funding and comfortable liquidity positionwith available liquid assets totalling €7.670 billion, a liquidity coverage ratio (LCR) of 216.96 % and a net stable funding ratio (NSFR) of 127.60 %, thereby complying with the limits imposed by the European Banking Authority. It also has maturities covered over the coming years and unfettered access to markets, and is well equipped to generate liquid assets with a mortgage-backed bond issuance capacity of €3.361 billion.
Forging ahead incorporating sustainability into its management and business model
Grupo Cajamar remains staunchly committed to the sustainable economy and local productive sectors, focusing on innovation, research and knowledge transfer. Its approach to cooperative social banking goes beyond just its financial activity because its business and social initiatives are linked to building a fairer and more balanced society in both towns and cities and the countryside.
As a founding signatory, it has ratified its support for the Principles for Responsible Banking developed by the United Nations Environment Programme, demonstrating its commitment to align its business with the Sustainable Development Goals and Paris Agreement on Climate Change.
It is also involved in other international sustainability-related initiatives: it is a signatory of the United Nations Global Compact; a member of the Spanish Network of the Global Compact and the United Nations Environment Programme Finance Initiative; and reports its carbon footprint annually to the international authority in this field, Carbon Disclosure Project.
It sells products that drive sustainability such as Grupo Cajamar green loans for sustainable (electric, gas and hybrid) vehicles; to install solar PV panels; to buy, build or refurbish energy efficient homes; and to finance ecological farming and irrigation systems. It also hosts and sponsors business forums across Spain to contribute to fostering entrepreneurship, responsible finance, financial education, dialogue for development, and other social, cultural and sporting activities. In total, it has been involved in over 200 events so far this year, attended by around 35,000 people in rural and urban areas.
Grupo Cajamar’s agri-food experiment centres were also visited by 1.804 professionals between January and September, 73knowledge transfer events were run with 4.188 participants, and 5 new publications were edited.
In September, a new volume of the Mediterráneo Económico collection of works entitled “The social economy in the Mediterranean” was also published, coordinated by the chairman of the Spanish Social Economy Employers’ Confederation (CEPES), Juan Antonio Pedreño, in which representatives and experts from across the European Union and North Africa share their knowledge and outlook for this sector. The social economy Grupo Cajamar is a part of comprises 3.2 million businesses and other organisations employing over 15 million people. It is a business sector that creates quality jobs and is a conduit for sustainable and inclusive economic growth, helping to notably reduce inequalities and drive economic and social convergence.