1st Quarter 2023

2 Mar 2023

Caixa Geral de Depósitos releases its 1st Quarter 2023 Results

(unaudited accounts)

CGD reported net income of €285M with a ROE of 13.1%, confirming a dividend distribution of more than €352M for 2022. International area net income up 41%. Liquidity and capital ratios maintained high levels in the European context.

In an unstable economic context, Caixa Geral de Depósitos group generated a consolidated net profit of €285 million. This enabled it to achieve a 3.3 percentage points increase in return on equity (ROE) from 9.8% over the same period 2022 to 13.1% in first quarter 2023. International activity’s global contribution to the group’s net profit was up 41% over the same period 2022 to €53 million.

Continued good results made it possible to formalise a proposal for the appropriation of profit, under a resolution of the general meeting, for the payment of a dividend of €352 million, with regard to 2022. This was the largest in Caixa’s history and was defined according to the dividend policy in force. Additionally, Caixa intends to propose the transfer of ownership of the current headquarters building to its sole shareholder, in the form of a dividend in kind. Its payment will contribute to higher returns on invested capital and continued to reward taxpayers for their endeavours as part of the recapitalisation process.

Customer deposits on a consolidated basis amounted to €80 billion and €69 billion for domestic activity in which Caixa succeeded in retaining its leading market share of 23%, as well as in the personal customers segment with a 32% market share.

Caixa has a total amount of €53 billion in loans and advances to customers, on a consolidated basis, of which €45 billion in Portugal, whose amounts have stabilised in comparison to the same period last year. This volume represents a domestic market share of 18%, preserving its lead which extends to loans and advances to personal customers (19%), particularly mortgage lending with 24%.

Caixa also consolidated its lead of the equipment leasing sector with a market share of 24%. Consumer credit was up over the same period of the previous year, boosted by the Crédito Expresso offer, which was developed as part of its strategic plan 2021-2024.

Caixa continues to lead the means of payment business in which purchases made by Caixa credit cards in the quarter were up 18% over 2022 and 59% over 2021.

The number of active digital banking customers, split between personal and corporate customers, totalled 2.3 million and was up 8% over the same period last year. The mobile channel registered growth of 17% in user numbers to 1.6 million with sales made on digital channels comprising 82% of the total number of personal customers in Portugal.

Corporate business on the Flexcash digital payment management platform was up 49% with expressive growth having been recorded in trade finance products.

The investment solutions component benefited from nearly €300 million in European Investment Fund lines of credit to improve SMEs’ access to financing. Continuity was also given to the supply of products and services for sustainability-related investment.

The current cost-to-income ratio was once again down to 29.2%, sustained by high levels of efficiency and improved income levels.

Caixa posted an NPL ratio of 2.5% in first quarter 2023, with a total NPL ratio, net of impairment, remaining at 0% (zero). The evolution of the credit portfolio and recovery activity resulted in a cost of credit risk of 0.30%, reflecting a preventive and conservative approach.

During the quarter, Caixa transferred all of its pension fund liabilities to Caixa Geral de Aposentações, extinguished and liquidated the fund and paid financial compensation for the liabilities transferred to this latter entity. This operation makes it possible to reduce the levels of risk deriving from the volatility that the size of the pension fund, nature of its assets and liabilities and the accounting and prudential treatment would have on the bank’s profit and loss account and balance sheet. It is also an important step towards bringing Caixa’s operating conditions more into line with other banks in the context of the European market.

In the first 3 months of 2023, there was a gain of 80 million euros in results from financial operations from the disposal of assets from the extinct Pension Fund, an amount still lower than the 246 million euros in costs inherent to this operation registered in 2022.

Caixa continues to enjoy a strong capital position that is above the average for Portuguese and European banks. Its tier 1 and total ratios stood at 19.5% and 20.9%, respectively, including profit, net of the maximumdistributable amount in accordance with its dividend policy.

For the second consecutive year, the supervisor reducedits Pillar 2 capital requirements for 2023 from 2.0% to 1.9%based on an improvement in the perception of risk attached to Caixa.

The MREL ratio of 28.23% totalled the amount of own funds and equivalent eligible liabilities, having exceeded the requirement applicable from 2024 which, according to the March 2023 notification, was set at 26.44 % of total risk-weighted assets.

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.

The shareholding in Banco Comercial do Atlântico (BCA) was, in December 2022, classified under “Non-current assets held for sale”, therefore, and for comparative purposes only, figures from the consolidated balance sheet as of March 31, 2022 disclosed in this document were restated, as IFRS 5 “NonCurrent Assets Held for Sale and Discontinued Operations” only requires the restatement of the income statement.

The financial metrics in this presentation refer to March 31, 2023, unless otherwise stated. These may be estimates subject to revision. Solvency ratios include net income for the period, excluding the maximum distributable amount according to dividend policy, unless where otherwise noted.

The forecast for world trade and economic activity improved for the period 2023-25, compared to December 2022 expectations, but growth remains lower than the pre-pandemic period. After signs of weakness that resurfaced at the end of 2022, the world economy regained momentum in the short term, the effects of the decrease in price of raw materials in energy, the reopening of China, fewer disruptions in supply and production chains, and increased confidence among economic agents are felt. GDP and world trade growth at the end of the period is around 3%, a low figure in historical terms. Inflation in the euro area has been declining in recent months, with the fading of pressures on the prices of raw materials, especially energy. However, there are still pressures on production chains and the effects of reopening the economy. Total inflation dropped to 8.5% in February, but excluding food and energy goods continued to rise, reaching 5.6%. The expectation of a tighter monetary policy is reflected in higher short-term interest rates in 2023–25. The ECB's recent decisions have heightened the expectation that key interest rates will have to reach restrictive levels for inflation to converge to the medium-term target of 2%. The rise in ECB interest rates has been passed on to rates on new loans and, to a lesser extent, on term deposits of households and companies.

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 1T2023”. 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.

Caixadirecta

Caixadirecta

1st Quarter 2023

Caixa Geral de Depósitos releases its 1st Quarter 2023 Results

(unaudited accounts)