CaixaBank Closes Its Best Quarter Ever, Coinciding With Moving Its HQ Due To The Catalan Crisis

CaixaBank's record results to September 2017CaixaBank's record results to September 2017

CaixaBank is one of the two Catalan banks which recently moved its headquarters and its fiscal centre from Barcelona to Valencia, due to the political crisis in Catalonia. In the first nine months of 2017, the lender obtained net attributable profit of 1.488 billion euros (up 53.4% from September last year), and its largest quarterly profit, with 649 million euros.

In the first few days after it transferred its HQ, the bank saw a “moderate” withdrawal of deposits, which it was not possible to account for in these quarterly results. But Caixabank has confirmed that this stopped after the announcement was made about its HQ move.  Meanwhile, the consolidation after the global integration of BPI’s results since February has been the main highlight of the bank’s results in the nine months to September. This factor has had an impact on the main lines of the income statement, as well the bank’s intense commercial activity. This has allowed the bank to be able to generate more income, with a gross margin of 6.491  billion euros.

Its year-on-year performance (+9.3%) reflets the incorporation of BPI and increased basic revenues from the banking business (interest margin, commissions and insurance business revenues), which rose 19.4% in the group and 10% in CaixaBank, and which was able to offset the lower results from financial assets and liabilities.

The interest margin grew 15.2%, to 3.550 billion euros (+6.5% without BPI): commissions stood at 1.867 billion (+20.8%, +8.2% without BPI); revenues and costs covered by insurance or reinsurance contracts rose 65.9% to 354 million euros.

The gross margin stood at 6.491 billion euros. The 9.3% rise compared to the same period last year reflects the incorporation of BPI and higher revenues from the banking and insurance businesses.

The NPLs ratio stood at 6.4%, very much lower than the sector average, and the coverage rate improved to 50% (47% at end-2016).

Total liquid assets were 71.581 billion euros. During the year, the group’s liquidity position has been strengthened, with a Liquidity Coverage Ratio (LCR) of 213%, much higher than the minimum required of 80%.

Grupo CaixaBank’s ROTE improved to 8% (+235 basis points over the year), thanks to the good performance from the banking and insurance business of CaixaBank, which saw a yield of 10.5%.

The group had a Common Equity Tier 1 (CET1) fully loaded ratio of 11.7%, in line with the range established in its Strategic Plan, of between 11% and 12%, and almost 3 percentage points above the 8.75% requirement set down by the supervisor.

Caixabank’s decision to move its HQ to Valencia because of the crisis in Catalonia has overhung the results. The bank has confirmed that the move is definitive. Its CEO, Gonzalo Gortázar, said “if the board had wanted to say the move was temporary, it would have said so. And it didn’t.”

“Headquarters don’t have any timeframes. Our HQ is currently in Valencia and we have not wanted to attribute any kind of temporary element to the matter,” he said from that city. Asked if the decision was reversible, he was quite clear: “The transfer has been made and we have not said at any time it’s temporary.”

Having its HQ in Valencia means that CaixaBank will hold its ordinary board meetings there, as well as its AGMs and results’ presentations. Gortázar defended the move as “a logistics issue.” In any event, he ruled out transferring personnel or business units out of Catalonia.