The CaixaBank Group posted a net adjusted profit without extraordinary items relating to the Bankia merger of €2.36 billion in 2021, compared with €1.38 billion in the previous year, which was affected by heavy provisioning to anticipate the potential impacts of the pandemic, the financial entity announced in a press release.
Meanwhile, attributable net profit in 2021 totalled €5.23 billion, including the extraordinary impacts arising from the merger (accounting recognition of €4.3 billion in negative goodwill, and a net cost of €1.43 billion, mainly on account of the labour restructuring process and other expenses associated with the integration).
In this context, profitability (ROTE on a trailing 12 months basis excluding extraordinary merger items) rose to 7.6% at the end of 2021, while the cost-to-income ratio ended the year at 57.7%.
In 2021, the year marked by the completion of the Bankia integration - the largest in the history of the Spanish banking sector -, CaixaBank maintained strong commercial momentum and achieved its goals in terms of business activity, financial strength and income statement.
José Ignacio Goirigolzarri, Chairman of CaixaBank, highlighted: “It has been a year in which not only have we completed the largest integration process in the Spanish banking sector, but we have also reinforced our commercial position. In terms of the merger process, we have successfully achieved our goals, integrating our teams, our technological platforms and also our distribution models.”
Goirigolzarri explained that the Bank’s profits and strong capital position “will allow us to return more than €1.1 billion in dividends to our shareholders over the coming months, which represents a 50% payout. And moving forward, we are planning to set our payout at between 50% and 60%. What is more, our shareholders will also benefit from CaixaBank’s intention, subject to the appropriate regulatory approval, to implement an open-market share buy-back programme during 2022 fiscal year, in order to bring our CET1 capital ratio closer to our target level.”
“We continue to support families and businesses during the ongoing recovery from the pandemic. We are confident that this is the best contribution that we, as CaixaBank, can make to our country’s social and economic recovery,” added the Bank’s Chairman.
Gonzalo Gortázar, CEO of CaixaBank, stated that “We have successfully completed the integration of CaixaBank and Bankia while at the same time concluding a very positive year, especially in the management of long-term savings.”
Gortázar also remarked that “In 2021 we have also managed to further improve our already excellent financial position. This has allowed us to not only support families and business in an effective way in terms of helping them overcome the ongoing crisis, but to also lead the economic recovery.”
“We begin a new financial year in which we will focus not only on delivering the announced cost and revenue synergies arising from the merger, but also on establishing the Bank’s strategic pillars for the coming years. We will be doing so in a complex macro environment, but our robust starting position makes us confident that we are on the right path,” added the Bank’s CEO.
Core revenues down 1%
The Group’s pro-forma recurring profit for the year was €2.42 billion, compared with €1.61 billion in 2020, which saw high provisioning activity due to Covid-19. This profit is compiled by aggregating (for comparison purposes only) Bankia’s pre-merger figures for 2020 and the first quarter of 2021, and excluding the extraordinary effects related to the integration.
Core revenues came to €11.34 billion in 2021, down 1% year on year. This performance was partly due to the decline in net interest income and to the bancassurance JV earnings, factors which were partially offset by the growth in fees and commissions and in income and expenses under insurance contracts.
However, core revenues in the fourth quarter grew 2.8% quarter on quarter to reach €2.89 billion, thanks to the Bank’s strong commercial activity and the positive performance of the business amid the process of the technological integration with Bankia (successfully completed in mid-November).
Net interest income in the year amounted to €6.42 billion (down 5.8% on 2020) against a backdrop of negative interest rates.
Fee and commission income climbed to €3.99 billion, up 6.7% year on year and also performing strongly in the fourth quarter (+14.1% on the third quarter following an increase in business activity).
More precisely, banking fees and commissions remained stable while fees on the sale of insurance products were up on 2020 levels, mainly due to an increase in business activity and the achievement of commercial targets.
Fees and commissions from the management of long-term savings products (mutual funds, pension plans and unit-linked products) came to €1.39 billion in 2021 (+17.9%), thanks to an increase in assets under management following the positive sales performance and the favourable market effect during the year.
Dividend income (€192 million) was up in 2021, mainly due to a higher dividend received from BFA (€98 million, which includes an extraordinary dividend of €54.5 million) and also including the dividend received from Telefónica in both years (€90 million in 2021 versus €100 million in 2020).
Meanwhile, attributable earnings from entities accounted for using the equity method (€436 million) recovered amid the ongoing economic recovery context (+19.1% on the previous year).
Recurring administrative expenses, depreciation and amortisation was up 1% in the year, but down 1.9% in the fourth quarter when compared with the previous quarter due to the reduction in staff expenses (-3.2%), following the initial departure of employees under the labour agreement framework.
Business volumes at all-time highs
Business volumes (customer funds, and gross loans and advances to customers) at the CaixaBank Group amounted to €972.92 billion in the period. Customer funds totalled €619.97 billion at 31 December 2021, up 49.2% in the year. Excluding the contribution made by Bankia, customer funds showed organic growth of 10.5% in the year.
Assets under management came to €158.02 billion. The annual growth here (48.2%; and +16.5% in organic terms) was due to positive performance of net sales and the favourable market effect. Long-term savings market share ended the year at 29.4%. Assets under management in mutual funds, portfolios and SICAVs amounted to €110.09 billion, while pension plans came to €47.93 billion, both showing a positive performance in the year and also in the last quarter.
Gross loans and advances to customers stood at €352.95 billion, up 44.7% in the year (-4.9% excluding the balances transferred from Bankia as part of the merger). Credit to private sector remained stable in the fourth quarter when compared with the previous quarter. Across segments, consumer loans and lending to companies stood out in the fourth quarter, and grew 1% and 1.9%, respectively, showcasing the gradual recovery in economic activity and credit demand.
Mortgages balance dropped 1.5% as repayments outpaced new mortgage loan production. However, new mortgage production was up 8% in the fourth quarter when compared to the third quarter.
Capital and liquidity management
CaixaBank ended 2021 with high levels of liquidity and capital adequacy. Total liquid assets amounted to €168.35 billion at 31 December, up €53.9 billion in the year, mainly due to the integration of Bankia. Moreover, the Group’s average Liquidity Coverage Ratio (LCR) was 320% at the end of the year, revealing a comfortable liquidity position, well clear of the minimum requirement of 100%.
In terms of capital, the Common Equity Tier 1 (CET1) ratio closed the year at 13.2%, up from 13% in September and slightly down from 13.6% in December 2020. Various extraordinary items affected the annual performance, most notably the impact of the integration of Bankia, the recognition of restructuring costs and provisions, and the sale of the stake in Erste Group Bank. For the year as a whole, the Bank generated 106 basis points of organic growth capital.
CaixaBank managed to keep the non-performing loans (NPL) portfolio and the NPL ratio contained throughout 2021, aside from the increase registered due to the incorporation of Bankia.
Non-performing loans totalled €13.63 billion at the end of 2021, compared with €8.6 billion at the end of 2020, although in organic terms they were down €394 million. The reduction came to €322 million in the fourth quarter, partly due to portfolio sales, among other causes.
This brought the NPL ratio to 3.6% at 31 December 2021, which has therefore remained stable following the integration of Bankia. Moreover, the NPL coverage ratio ended the year at 63%, while the cost of risk (last 12 months) was 0.23%.
Provisions for COVID-19 insolvency risk totalled €1.39 billion at 31 December, thus remaining stable in the quarter.
CaixaBank’s solid post-merger position has allowed it to resume its traditional dividend policy. The Board of Directors has agreed to submit the distribution of a gross cash dividend of €0.1463 per share against 2021 earnings, payable in the second quarter of 2022, for approval by shareholders at the next Annual General Meeting.
Payment of this dividend will bring shareholder remuneration for 2021 to €1.18 billion, which is equivalent to 50% of consolidated net profit adjusted to reflect the extraordinary impacts arising from the merger with Bankia.
Moreover, the Board of Directors has also approved the 2022 Dividend Policy, which envisions the distribution of a cash dividend of between 50% and 60% of consolidated net profit in a single payment in 2023, subject to final approval at the Annual General Shareholders Meeting.
It also announced CaixaBank’s plan to implement an open-market share buy-back programme during 2022 fiscal year, subject to the appropiate regulatory approval, with the aim of bringing the CET1 capital ratio closer to the internal target.