9M2022 Results

10 Nov 2022

Caixa Geral de Depósitos releases its 9M2022 consolidated results

(unaudited accounts)

Caixa recorded net income of €692 million with a reduction in impairment, based on the favourable evolution of the quality of the credit portfolio, and a strong contribution from the international area, with the prospect of distributing its highest ever dividend to taxpayers

Highlights

In the first 9 months of 2022, Caixa Geral de Depósitos group generated consolidated net profit of €692 million, up 61% over the same period 2021.

Net of non-recurring effects, these results, together with Caixa's strong capital position, place the return on equity (ROE) of 10.1% in line with European benchmarks and exceeding the cost of capital for the first time in the last 14 years.

This evolution reflects a reduction of the cost of credit risk in the period following the most acute phase of the pandemic, one of the lowest ever, and the disposal of several non-core assets, in addition to the €155 million contribution from international activity to the group’s net income, a growth of 58% over the 9 months period in 2021.

The net income of €692M, and in accordance with the dividend policy, corresponds, until now, to a maximum distributable amount of €286M referring to the activity of the first 9 months of 2022. The largest dividend in Caixa's history is projected, referring to the entire activity of the year, and with no domestic impact arising from the evolution of the international situation, to be paid in 2023, with a positive impact on the State Budget, continuing to return taxpayers for the effort made within the scope of the recapitalization process.

There was a 56% increase of around €117.5 million in the tax burden in September 2022 in comparison to the period ended September 2021. Extraordinary ontributions on the banking sector, up to September 2022, rose by 29% to 37.1 million euros.

The evolution of the credit portfolio since the end of the moratoria, in the context of the pandemic, had a relevant impact on CGD’s results, in allowing a partial reversal of impairment previously declared in 2020 and 2021. Recovery activity also continued to produce good results, with a reduction of €138 million in recovering stock. Globally, the evolution of the portfolio and recovery activity resulted in a cost of credit risk of -0.25%.

Business revenue was up 2% by €3.4 billion over the end of 2021. This evolution occurred in both credit (up 3% by €1,743 million) and resources (up 2% by €1,639 million) fuelled by an 11% growth of international activity.

In the corporate segment, credit production stands out, with growth of more than 3% in all segments.

Mortgage lending in the personal customers business sector in Portugal, was slightly up by 1.5% in the first 9 months of the year in comparison to the same period last year, to €2,443 million.

Three million customers now have a Caixa debit card.

Customer deposits in Portugal in the first 9 months of 2022 were up 3.8% by €2,591 million. Particular reference should be made to the personal customers segments (up 4.6%), confirming customers' trust in Caixa.

Net interest income was up 25% by €185 million with a strong increase of 28% in the contribution from international activity and treasury operations (including the ECB's TLTRO programme) and portfolio management which contributed €60 million.

In Portugal, the effects of the rise in the ECB's reference rates have gradually been reflected in the retail net interest income (individuals and corporates), which increased in the first 9 months of the year by around €18 million compared to the same period in 2021.

Caixa’s continued implementation of its 2021-2024 Strategic Plan had the effect of improving such business areas as lending to SME, with a 6% increase in stock, consumer credit and the number of digital customers in particular.

Consumer Credit showed, between January and September 2022, a growth in production of 49% compared to the same period in the previous year, and an increase in the balance of 133 million euros. The new Express Credit offer, based on simplicity and rapid approval, remains the main precursor of this strong growth.

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 September 2021 has been restated.

The financial metrics in this presentation refer to September 30, 2022, 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.

Global economic activity decelerated in the first nine months of 2022, due to the impact of the pandemic in some geographies and the invasion of Ukraine by Russia at the beginning of the year, 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 the recorded inflation was substantially higher than anticipated in the end of the previous year. Current 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 currently available, CGD estimated and reflected in its financial statements, for the period that ended in 30 September 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 9M2022”. 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

9M2022 Results

Caixa Geral de Depósitos releases its 9M2022 consolidated results

(unaudited accounts)