01Q 2021 Results

13 May 2021

Caixa Geral de Depósitos releases its 2021 1st quarter consolidated results

(unaudited accounts)

Net income for the quarter, in spite of the pandemic, amounted to €80.7 million. DG Comp notifies CGD of the successful completion of the 2017-2020 strategic plan.

Highlights

With its activity still conditioned by the restrictive measures resulting from Covid-19 pandemic and in a challenging and, as yet, uncertain context, Caixa Geral de Depósitos Group earned consolidated net income of €80.7 million in the first three months of 2021 (down 6.5% over the same period 2020). This is equivalent to a return on equity (ROE) of 4.2%.

This result already includes the accounting of all regulatory costs and specific contributions on the banking sector for the year 2021, which has been a consistent practice at CGD, which had an impact on the net result of €52.7 million (an increase of 5.8 million compared to the same period of the previous year). This impact, annualised is translated into a return on equity of around 6.2% in the first quarter.

Credit impairment, net of recoveries totaled €35.9 million, an increase of €26.5 million over the same quarter of the preceding year, translating into a cost of credit risk indicator of 29 bps in comparison to 7 bps, in the first three months of 2020. This reinforcement of credit impairments is a preventive measure for the economic impacts on the quality of the credit portfolio (namely with the end of the moratorium), taking into account that so far, there are no signs of deterioration. Thus, and considering the reinforcement already made in 2020, CGD has on its balance sheet approximately €370 million of preventive impairments to face the potential impacts on the quality of the credit portfolio.

Operating costs were down 14.8%, compared to the first three months of 2020 to 231.2 million. In recurring terms, the reduction in these costs was 6.2%, which reflected into a recurring cost-to-income ratio of 50.6%, stabilized over the first quarter 2020 ratio.

Customer deposits were up €6.5 billion compared to the first quarter of 2020.This was essentially on account of the resources taken by CGD Portugal, fuelled by higher levels of household savings and showing customers’ loyalty to Caixa.

The 4.4% growth of corporate credit stock in Portugal (excluding the construction and real estate sectors in which the reduction of NPLs is concentrated) strengthened support for companies.

CGD’s mortgage lending agreements continued to outpace the sector’s average growth and were accompanied by an increase in market share. In comparison to first quarter 2020, growth of new mortgage lending agreements was up 34.8% by number and 42.9% by value of operations, resulting in market leadership with a market share of 25.0% share in new production.

A continued improvement in asset quality, with a reduction of the non-performing loans ratio to 3.6%, in conjunction with the preventive higher levels of impairment represent an NPL ratio of 0% (considering all impaired credit).

The ratios of 18.0% for core capital (CET1) and 20.6% for the total ratio, excluding the dividend on the 2020 result complied comfortably with the capital requirements in force for CGD. These capital ratios, which were higher than the Portuguese and European averages, are indicative of CGD’s robust capitalisation.

In April 2021 DG Comp notified CGD of its closure of the monitoring process of the Strategic Plan 2017-2020, which was agreed between the Portuguese State and the European Commission in 2017. Thus, it can be concluded that the implementation of the assumed commitments was carried out successfully. This monitoring by DG Comp was initiated in June of 2012 with the issuance by CGD and underwriting by the Portuguese State of Capital Contingent Bonds (CoCo’s) and the succeeding state aid process which led to the Restructuring Plan 2013-2017, followed by the recapitalization process in 2017 with its Strategic Plan 2017-2020. This notification concludes a long period of monitoring of CGD’s activity by the European authorities.

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 financial metrics in this presentation refer to March 31, 2021, unless otherwise stated. These may be estimates subject to revision. Solvency ratios include net income for the period, unless where otherwise noted.

This document is intended for general information only and does not constitute investment recommendation or professional guidance and may not be construed as such.

This document is an English translation of the Portuguese language document “Press Release - Resultados Consolidados 1T2021”. 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

01Q 2021 Results

Caixa Geral de Depósitos releases its 2021 1st quarter consolidated results

(unaudited accounts)