Given the economic and social context brought about by the Covid-19 pandemic, Grupo Cooperativo Cajamar is pursuing a prudent strategy, allocating the lion’s share of income obtained by its solid business performance and its gains on financial assets and liabilities to strengthening coverage, provisions and write-downs of intangible assets to bolster the Group's capital adequacy. Specifically, €454.5 million was earmarked to bolster financial and non-financial asset coverage, which is 86.5% more than during the same period in 2020. This had enabled the Group to drive down its NPL ratio to 4.15%, which is below the sector average, at the same time has raising the NPL coverage ratio by 16.6 pp versus the same period a year earlier to 72.3%.
This prudent management approach has led the Group to report a pre-tax profit of €94.8 million and raise its consolidated net profit to €57.1 million, which is an impressive 213.2% more than in the same period of the previous year.
Net interest income recorded a notable gain of 20.8%, mainly by the income generated with the financing granted to companies and families and the saving of interest expenses. This combined with the decent results posted by investees and gains on financial assets and liabilities helped lift gross income to €943 million – 53.6% higher than the same six-month period a year earlier.
The cost-income ratio likewise improved to 29.9% thanks to gains on financial assets and liabilities, while the cost-income ratio not including gains on financial assets and liabilities moved to 59.7% due to higher gross income and a 1.6% decrease in administrative expenses.
The business’s success is reflected in the 6.9% YOY growth in total assets to €56,380 million and a 7% increase in total volume under management, which is now €91,733 million.
Customer funds under management rose 13.8% compared to the same period in the previous year and now stand at €43,236 million buoyed by a 19.3% increase in demand deposits and 37.2% advance in mutual funds.
Performing loans to retail customers grew 7.7% to €32,981 million, with a 6% increase in loans to the agri-food sector and corporates versus the same period a year earlier.
Grupo Cajamar continues to work to offer its customers a comprehensive range of solutions, as part of the drive to further establish itself as a lender to the real economy and offer more flexible payment terms to customers who run into temporary difficulties caused by the pandemic. It has thus moratoria granted totalling €1,030 million, primarily to households, of which only €170 million remains outstanding. Only 0.5% of this amount is doubtful. Guarantee loans from the Spanish Official Credit Institute (ICO) total €1,906 million – 70% of which are to small and medium enterprises and 8.8% to households. State-backed credit makes up 5.5% of gross loans and advances to retail customers.
Thanks to its successful commercial activity, Grupo Cooperativo Cajamar still ranks ninth among Spanish significant institutions by turnover and eight by gross income.
It also continues to broaden its offering of value-added products and services to its more than 3.5 million customers and pushing ahead with its digitalisation strategy, as borne out by its more than 997,000 digital customers (up 13.9% YOY), 799,000 of whom are mobile banking users (26.7% higher than in the same period a year before).
This has all been made possible thanks to its 5,332 professionals, working in 908 branches (following the opening of a new office in Vigo (Pontevedra) during the first quarter of this year), 148 agencies, 1,552 ATMs and its digital banking, app and mobile banking channels.
Grupo Cooperativo Cajamar continues to clean up its balance sheet, setting aside a large part of its income to boost the NPL coverage ratio to 72.3% – a full 16.6 pp higher than the same six-month period a year ago, and to improving the NPA coverage ratio, which now stands at 65.4% after factoring in debt forgiveness in foreclosure procedures (10.6 pp higher YOY).
The Group’s management of total non-performing assets also continues to bear fruit, with an 18% decrease from the same period in 2020 (€327 million lower), producing a new drop of 1.2 pp in the NPL ratio, which closed the half-year at 4.15%. This lies below the sector average.
The net volume of foreclosed assets continued to shrink with a YOY drop of 24.3%, still not factoring in the agreement to sell off the Jaguar portfolio, with a gross book value of €581 million. Meanwhile, the foreclosed assets coverage ratio, after considering debt forgiveness in foreclosure procedures, has improved to 61.7%.
The capital adequacy ratio increased significantly by 1.4 points to 16%, with a high quality of eligible own funds, while the phased-in CET 1 ratio rose to 13.6% and the fully loaded ratio to 12.9%, comfortably exceeding the regulatory requirements, all the more after the measures implemented by the ECB in response to the Covid-19 crisis. The buffer over the supervisor’s requirements stands at €1,595 million for phased-in CET 1, at €1,231 million for T1 and €1,346 million for total capital.
Spanish and international investors remain confident about the institution’s performance. Indeed, in the second quarter of this year BCC-Grupo Cajamar placed a subordinated debt issue of €600 million with a coupon of 5.25% and expiring in November 2031, which was 3.6 times oversubscribed after attracting orders of more than €1,800 million. This corporate action has reinforced the Group’s capital structure, widened its investor base (specifically Tier 2 capital) and further contributed to meeting the MREL targets set by the supervisor for 1 January 2025.
Customer deposits continued to grow, once again improving the loan-to-deposit ratio to 86.6%, 4.4 pp below the figure for the same period in the previous year.
Grupo Cooperativo Cajamar enjoys a comfortable level of wholesale funding and a healthy liquidity position with available liquid assets of €12,255 million, including both high quality liquid assets (HQLA) and other discountable liquid assets and deposits in central banks. In addition, the Group has a further €3,629 million in mortgage-backed bond issuance capacity.
All of this results in the Group easily complying with the limits set by the European Banking Authority, with a liquidity coverage ratio (LCR) of 227.8% and a net stable funding ratio (NSFR) of 133%.
Cajamar is still the go-to bank in the primary sector (arable and livestock farming and fisheries), having increased its market share to 15.2%. Its knowledge of the agri-food sector enables it to offer a wide and specialised range of products and services, as well as technical and specialist advice and transfer of know-how to companies, cooperatives and producers.
Key milestones over the year have been the launch of Plataforma Tierra,www.plataformatierra.es, an initiative championed by Grupo Cajamar to contribute to the transformation and digitalisation of the agri-food sector, and facilitate and accelerate the creation of new solutions for its partners and customers. July also saw the signing of a partnership agreement with the Spanish Ministry of Farming, Fisheries and Food to carry out projects to boost the competitiveness of, financing to and information management by the farming, fisheries and agri-food industry in Spain. This agreement also aims to provide lines of finance for projects financed using European funds, encourage the uptake of farming insurance and support trade bodies and other associations in the sector.
Cajamar also continues to drive innovation and sustainability in the agri-food sector through research, studies and testing at its experimental centres in Almeria and Valencia, which hosted 48 professional visits in the first six months of this year despite pandemic-imposed restrictions. In addition, it organised 62 virtual workshops and meetings for its Agro DNA community, which attracted 6,255 participants.
In the first half of the year, it also published new sector-specific publications such as: ‘Sustainable and innovative wine tourism. Success models around the world’; ‘Observatory of the Spanish agri-food sector in the European context: 2020 report’; ‘Observatory of the agri-food sector in Spanish regions. 2019 report’ and ‘Analysis of agri-food exports. 2020 report’, along with the regular reports on the status of the various markets.
The first round of Cajamar Innova’s call for applications also drew to a close in July. This an incubator of high-tech enterprises specialising in technological innovation and sustainable management in the water industry selected 12 of the 26 applicants to receive support developing their technological innovations and projects related to water use and management. The aim: to contribute to building a more efficient and sustainable future.
In June, volume 34 of the Mediterráneo Económico collection of works entitled ‘The future of pensions in Spain’, coordinated by the chair of Foundations of Economic Analysis at the Complutense University of Madrid and deputy director of Fedea José Ignacio Conde-Ruiz, was also published.
During the first half of this year, Grupo Cooperativo Cajamar joined the Spanish Sustainable Development Business Council (CEEDS), which has become a leader in sustainability in Spain’s business community by devising a joint strategic response to the major environmental, social and governance challenges currently faced. The Group also joined the CEOs for Diversity partnership to further innovation in diversity, equality and inclusion strategies.
Moreover, it is paving the way in the sector in the management of environmental, social and governance risks according to the Sustainalytics ESG risk rating report, and has also signed up to the Science Based Targets (SBTi) aligned with the Paris Agreement and the pledge to achieve net zero emissions by 2050.
In addition, Grupo Cooperativo Cajamar is a leading company in climate change management, as demonstrated by the score given to it by the Carbon Disclosure Project (CDP). The CDP has acknowledged the Group’s commitment to championing and pursuing actions relating to the challenges and opportunities of a low-carbon economy. In particular, the CDP has applauded Grupo Cajamar for launching financial initiatives to measure and manage risks deriving from climate change, their impact on the loan book and other steps to transparently disclose and manage the business's carbon footprint, and in doing so fulfil the new requirements on scoring methodologies and reporting.