1H2022 Results

29 Jul 2022

Caixa Geral de Depósitos releases its 1H2022 consolidated results

(unaudited accounts)

Caixa recorded a net income of €486 million, supported by the improvement in the cost of risk and in the international area.

Highlights

In the first half of 2022, Group Caixa Geral de Depósitos generated a consolidated net income of €486 million, an increase of 65% compared to the same period of 2021.

This evolution reflects an improvement in the evolution of net interest income and a lower cost of credit risk in the period after the most acute phase of the Covid-19 pandemic and the sale of some non-core assets, as well as the contribution of the international activity to the Group’s net income of €109 million, around 22% of the total, an increase of 77% compared to the first half of 2021.

Deducting non-recurring effects, a return on equity (ROE) of 10.6% was achieved.
Business volume was up €3.2 billion (+2%) compared to the end of 2021, recording an evolution both in credit (+€1,226 million, +2.3%) and in resources (+€1,993 millions), driven by international activity, which grew by 7.4%.

In the corporate segment, the production of credit stands out in the first half of the year, in particular, the 5% rise in the stock of loans to SME (Small and Medium-sized Enterprises). Reference should also be made to the growth in the sale of core products to corporates, including medium-long term financing (up 46%), non-financial insurance (up 35%), bank guarantees (up 48%) and factoring and confirming (up 24%). Credit transactions through the Flexcash platform were up 21% over the first half 2021, highlighting the growing importance of the digital channels.

In the individuals segment in Portugal, the production of mortgage loans grew by 10.1% in the half-year period, reaching €1,731 million. Consumer credit benefited from initiatives to reduce the approval period and disbursement of funds, with an increase in production of 47.1% compared with the same period last year.

Customer deposits were up 3.8% by €2,604 million across the semester in Portugal, particularly in the corporate segment (up 4.2%) and customers (3.8%), continuing to have a negative impact on bank accounts by around 26b.p..

The 2021-2024 Strategic Plan continued to be pursued, with the effect of improving business in areas such as credit to SME, consumer credit and the number of digital customers.

The number of active customers using digital banking reached 2.14 million at the end of June 2022, with a 19% growth in mobile users. The number of financial operations on digital channels in the first half increased by 11% over the same period last year.

The steady decline in recurrent cost-to-income to 43.4% was indicative of high levels of efficiency gains and improved returns.

Asset quality improved with NPL ratio decreasing to 2.6% while NPL ratio net of impairment remained at 0%. Foreclosed assets was down 15% to €339 million, its lowest since 2008.

The evolution recorded in the loan portfolio since the end of the moratoriums within the scope of the pandemic, has a relevant impact on the result, allowing the partial reversal of impairments constituted preventively in previous years, concretely in 2020 and 2021. Recovery activity also continued to deliver good results. Overall, the evolution of the portfolio and recovery activity resulted in a credit risk cost of -0.58% reflecting the favourable evolution compared to initial expectations in the context of a pandemic.

CGD continues to enjoy a robust capital status, higher than the average for Portuguese and European banks. The Tier 1 and Total ratios stood at 18.5% and 20.0% respectively, even after the payment of dividends approved at the General Meeting.

During the first half of 2022, an issue of €300 million of senior preferred debt was carried out - the first carried out with the investment grade category by the 3 rating agencies and the first "green" issue by a Portuguese bank - continuing the constitution of eligible emissions to comply with the MREL requirements with application from 2024.

DISCLAIMER

The financial statements have been prepared on the basis of the International Financial Reporting Standards (IFRS) as adopted in the European Union in accordance with Regulation (EC) No. 1606/2002 of the European Council and of the Parliament of July 19 and provisions of Decree-Law No. 35/2005 of February 17. The financial information reported is unaudited.
In December 2021, the shareholding in Banco Comercial do Atlântico (BCA) was no longer classified as “Non-current assets held for sale”. For this reason and in accordance with the provisions of IFRS 5 “Non-Current Assets Held for Sale and Discontinued Operating Units” the consolidated income statement as of 30 June 2021 has been restated.
The financial metrics in this presentation refer to June 30, 2022, unless otherwise stated. These may be estimates subject to revision. Solvency ratios include net income for the period, unless where otherwise noted.
Global economic activity decelerated in the first half of 2022, due to the impact of the new wave of the pandemic and the invasion of Ukraine by Russia at the end of February, which implied a deterioration in the growth prospects of the global economy in the short term and greater inflationary pressures. The prospects of growth of the Portuguese economy in the period 2022-2024 have been revised downwards by the Bank of Portugal and inflation will be substantially higher.

Geopolitical instability implies that the magnitude of the economic impact of the conflict is uncertain, involving the risk of materialization of more adverse scenarios.
In light of this framework, with reference to the information available at the time, CGD estimated and reflected in its financial statements, for the period that ended in 30 June 2022, its best estimate of the financial effects arising from these events, including with regard to the valuation of its assets and the measurement of expected losses in the loan portfolio, which will be subject to continuous monitoring and review.
This document is only intended to provide general information and does not constitute investment advice or professional advice, nor can it be interpreted as such.
This document is an English translation of the Portuguese language document “Resultados Consolidados 1S2022”. In the event of any inconsistency, the original version prevails.

Press Release - Read or Download here the full version.
Presentation - Read or Download CGD Consolidated Results presentation.

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1H2022 Results

Caixa Geral de Depósitos releases its 1H2022 consolidated results

(unaudited accounts)