The cooperative bank Cajamar has improved its margins, pared back non-performing assets, maintained its solvency and further cleaned up its balance sheet in light of the prevailing uncertainty.
From the moment the coronavirus pandemic hit, Cajamar has put economic and social measures in place to help businesses, the self-employed, households and the elderly survive the crisis.
Total on-balance sheet assets have increased by 8.6% YOY to €48,183 million and the total volume of funds under management stands at €80,422 million – up5.4%.
The increase in on-balance sheet retail funds, which are up 8.4%, is driving significant growth in customer funds under management to €36,142 million, also underpinned by decent growth in demand deposits of 14.5% and in off-balance sheet funds of 1.9%.
Grupo Cajamar has continued to achieve balanced growth of its business, lending more to productive sectors and households, with a 2.2% YOY rise in performing loans and receivables to €30,014 million, and 7.8% growth in lending to strategic sectors – agri-food and businesses, which make up 45.6% of performing loans to retail banking customers.
In the first quarter, Grupo Cajamar gained market shares across the Spanish financial system, both in investments (2.92%) and deposits (2.28%), sitting eleventh in the ranking of significant institutions in Spain by turnover and seventh by gross income.
It also remained the go-to bank for the agricultural sector growing its domestic market share to 15.08% thanks to its sector knowledge and the close relationship its staff have with all agents in the entire agri-food chain, enabling it to offer an extensive range of specialised products for the sector as well as high-value services, such as the knowledge transfer campaigns it promotes and runs for businesses, cooperatives and producers.
Ramping up commercial activity
Grupo Cooperativo Cajamar’ commercial efforts have enhanced the offering of value-added products and services available to the Group’s 3.4 million-plus customers, 1.5 million of whom are loyal. It has also forged ahead with its digitalisation strategy and now has 842,000 digital customers – 11.1% more YOY, 585,000 mobile banking users (up 49%), and 294,000 customers with Wefferent accounts who prefer to bank directly through digital channels(50% higher than in the same period of 2019).
All this has been achieved thanks to the excellent work of the group’s 5,450 members of staff across 933 branches, 136 agencies, 1,552 ATMs and its digital banking channels, app and mobile banking.
Given the current uncertainty sparked by COVID-19, the group has opted to bolster its credit risk hedges which, along with the reduction in non-recurring gains because of the pandemic’s effect on the financial markets, has driven up consolidated net profit by 29.9% YOY to €17.26 million.
Net interest income remains at a similar level to the previous year despite the continuing unfavourable interest rate environment. Grupo Cooperativo Cajamar saw a 0.3% decline in its net interest income due to a combination of organic growth of on-balance sheet retail funds (up 8.4 % YOY), the weight of demand deposits as a percentage of total customer deposits (79.5%), and an increase in performing loans and receivables (2.2%).
The recurring cost-income ratio has improved by 4 percentage points (pp) to 56.34%, based on growing of recurring gross margins (+8% yoy).
Grupo Cajamar is making further headway cleaning up its balance sheet, channelling part of its revenue into writing off asset impairment losses, increasing the NPL coverage ratio to 49.80% – 5.8 points higher than in the same quarter last year, and bolstering by 3.37 pp YOY the non-performing asset (NPA) coverage ratio to 52.02%, factoring in debt forgiveness in the foreclosure procedure.
Further improvements have also been made in the management of total non-performing assets, which have decreased by 19.9% versus the same quarter in 2019 (€472 million less), while also paring back the NPL ratio by 1.49 pp to 5.82%. Additionally, the volume of gross foreclosed assets has fallen once again, with a YOY decrease of 5.7%, while the foreclosed assets coverage ratio now stands at 53.42%, factoring in debt forgiveness in the foreclosure process.
The phased-in capital adequacy ratiostands at 14.40% and the group has high quality eligible capital. The phased-in CET 1 ratiostands at 12.75% and the fully-loaded ratiois at 12.16%, even further exceeding the levels required by the supervisor following the new measures taken in light of COVID-19, with surpluses over and above thephased-in requirements of €1,345 million for CET1, €994 million for T1, and €914 million for Total Capital.
Cajamar enjoys a decent level of wholesale funding and comfortable liquidity positionwith available liquid assets totalling €6,404 million, a liquidity coverage ratio (LCR) of 242.21%, and a net stable funding ratio (NSFR) of 132.68%, thereby complying with the limits imposed by the European Banking Authority. It also has maturities covered over the coming years and unbridled access to markets and is well placed to generate liquid assets as it can tap up to €3,803 million of additional finance from the ECB through TLTRO III.
Support for those affected by the COVID-19 crisis
The cooperative bank Cajamar is working hard to manage the COVID-19 crisis, helping to finance and provide liquidity to corporations, SMEs, the self-employed and households in line with the mission, principles and values of the credit cooperatives in its financial group.
In this regard, after the state of alarm was declared and as a result of the consequences of the lockdown, restrictions on movement and halting of business, retail and professional activities, Grupo Cajamar rolled out special lines of personal loans to meet its customers’ needs. This finance is enabling them to manage their finances and ensure bills and wages can be paid and working capital and other liquidity requirements met, including those deriving from loan repayments and tax debts falling due. The finance is being provided with a one-year grace period and is repayable over five years.
It is presently handling over 30,000 debt moratoria and arrangements for corporations, SMEs and sole traders who have applied for credit from both Spain’s Official Credit Institute (ICO) and the bank, thereby offering solutions to those facing difficulties because of manufacturing and commerce grinding to a halt.
It is also offering short-term loan repayment deferrals and bridging loan solutions, tailoring fees for returns of cheques and promissory notes to individual needs, eliminating and cutting fees and commissions on POS terminals, and extending export and import finance among others.
Moreover, Cajamar is helping the most vulnerable individuals and workers to deal with the consequences of this crisis as best they can. In this respect, it is offering mortgage payment holidays for families and workers finding it hard to repay their mortgage, zero-cost rent deferrals for lessors of foreclosed assets, advances on unemployment benefit payments to enable beneficiaries to receive the money in advance, and charge-free advances of unemployment benefits for furloughed customers over the two months it normally takes to process applications. It is also bringing forward pension collections to help stagger necessary cash payouts. With the same aim, it has also issued charge-free cards, made it possible to make commission-free withdraws from ATMs not in the Cajamar network, and raised the limit for contactlesspayments without the need to enter PINs to €50, among other measures.
Grupo Cooperativo Cajamar companies have also made a big effort to keep 90% of the group’s branch and agency network open so as to provide the public with the normal essential service it has to offer in accordance with the state of alarm declaration. This is especially true in the small localities where it is the only bank providing this service.
However, Grupo Cajamar has continuously recommended to its customers that they do not visit branches in person and instead, call or use online banking to speak to their personal manager. It has therefore bolstered its digital channels including online banking, mobile banking and telephone banking. Through Cajamar’s electronic banking channel specifically, customers can access the “Connect with my manager” service to securely and instantly share information and documentation.
In any event, if customers do need to visit a branch, Cajamar has implemented the measures recommended by the health authorities to protect its customers and staff. Before visiting a branch, Cajamar also encourages customers to call to arrange an appointment to avoid queues and waiting times, and help it to serve them in the most orderly and safest way possible.
Grupo Cajamar companies have also supported and boosted several social initiatives along with other institutions and organisations such as the Red Crossto directly attend to those who are especially vulnerable to coronavirus and Plataforma SICNOVAthrough which 105,000 face shields have been donated to medical and care staff, and they have also helped produce and distribute over 3,000 waterproof gowns per week for health workers.Cajamar’s Las Palmerillas Agri-food Experimental Station is also distributing around 1,000 kilos of the fruit and vegetables it produces from various crops and plantations to five soup kitchens and shelters in Almería, El Ejido and Roquetas de Mar.
During the first quarter and prior to the state of alarm being declared, Grupo Cajamar continued to host and sponsor business forums across Spain, helping to foster entrepreneurship, boost responsible finance and financial education, and encourage dialogue for development, as well as other campaigns and events such as its involvement in Fruit Logistica in Berlin, the International Tourism Fair (FITUR) in Madrid, its Lidera Castilla y León programmes, and Incyde School in Murcia, among others.
Grupo Cajamar also continued to work to transfer the knowledge gleaned through research, studies and tests at its two agri-food laboratories in Almeria and Valencia, which were visited by 800 professionals during the year, organising 13knowledge transfer events attended by 1,113 people. It is currently running onlinecourses for its Agro DNA community.
Lastly, it has published new reports including: the “Second-quarter 2019 ANICE-Cajamar Barometer on the Spanish meat industry and forecasts for the first half of 2020”; “Irrigation in the Spanish Mediterranean. A multidimensional approach”; “2019 comparative synthetic analysis of the agri-food sector in Spain’s various autonomous communities”; and several so-called “Agronotas” or analysis of the key economic variables in the agri-food sector.