01H 2021 Results

30 Jul 2021

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

(unaudited accounts)

CGD made a net profit of €294.2 million in first half 2021 and returned to an investment grade rating from Moody’s. Net assets of more than €100 billion.

In a half year characterised by some recovery in economic activity, in a still adverse background for banking activity, Caixa Geral de Depósitos group’s consolidated net profit of €294.2 million was up 18.3% over the same period 2020 and equivalent to a return on equity (ROE) of 7.2%.

This evolution is mainly a result of the good performance of the net trading income, as the level of core income remained with a negative trend, impacted by a €44 million decrease in net interest income, only partially offset by the increase in commissions.

The net income also includes an extraordinary income of €44.3 million (after tax) deriving from a revaluation of liabilities for post-employment benefits and from provisions for the pre-retirement programme. Current net income of €250 million was therefore up 26.2% over current income in first half 2020.

Impaired credit at the end of the half year stood at €90.2 million, as opposed to the €59.7 million recorded in the previous quarter which, net of recoveries, resulted in a cost of credit risk of 19 bps.

Operating costs on a recurring basis were down 1.5% over the same period 2020 to €400 million. This translated into a recurring cost-to-income ratio of 45.3%, as opposed to 49% in first half 2020.

Customer deposits were up 6.3% by €4.5 billion in first half 2021. This essentially derived from resources taken by CGD Portugal, fuelled by higher levels of household savings and customers’ trust in and loyalty to Caixa.

Credit to companies in Portugal (excluding the construction and real estate sectors, in which the reduction of NPLs is concentrated) was up 5.4%, reflecting greater support for companies.

The amount of new mortgage loans was up 65% over first half 2020. This resulted in a leading market position with a new sales share of 24.4% up to May 2021. Notwithstanding the fact that the increase was influenced by lower sales in second quarter 2020 due to the beginning of the lockdown, CGD continued to trend to higher than sector growth and strengthened its market share in comparison to 2020.

Asset quality continued to improve. The non-performing loans ratio was down to 3.2% and, together with a preventive increase of impairment, made it possible to achieve an NPL ratio net of impairment of 0% (taking all impaired credit into account). This has been the case since the first quarter. Considering only specific impairments, CGD's net ratio already compares favorably with the average for European banks.

Capital ratios were strengthened and reached 18.9% for core capital (CET1) and 21.5% for total capital, even after the payment of the dividend on 2020 profit and comfortably complying with the capital requirements in force for CGD. These capital ratios, higher than the Portuguese and European averages, are indicative of CGD’s robust capitalisation.

In July 2021, Moody’s Investor Service upgraded its rating on CGD’s long term senior debt from Ba1 to Baa3. This upgrade of CGD’s long and short term senior debt marks a return to Moody’s investment grade category rating after a period of ten years and is an important milestone in Caixa’s evolution and market status. With this change, CGD is now rated at investment grade by two of the main international rating agencies.

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 February17. The financial information reported is unaudited.

The financial metrics in this presentation refer to June 30, 2021, unless otherwise stated. These may be estimates subject to revision. Solvency ratios include net income for the period, unless where otherwise noted.

In the first half 2021, economic activity in Portugal and worldwide was significantly affected by the new variants of the Covid 19 pandemic and by the imposed containment efforts, conditioning a series of economic activities. Despite the fact that the second quarter 2021 witnessed a gradual lifting of restrictions, the economic outlook remains surrounded by high uncertainty, being highly dependent on the evolution of the disease, the speed of vaccination on a large scale and the emergence of new variants.
Banco de Portugal is now projecting a stronger recovery than previously anticipated. The more optimistic outlook derives, on one hand, from the improvement in economic agents' confidence and the assumption that the restrictions on activity that began to be lifted from March onwards will continue to be eased and, on the other hand, from the expectation of further improvement of external demand directed at the Portuguese economy.

In light of these uncertainties, and based on the information available at this time, CGD estimated and recognized in its financial statements for the period ending on June 30, 2021 its best estimate of the financial effects of this pandemic, including the valuation of financial assets and the measurement of expected losses in the loan portfolio, which will be subject to continuous monitoring and reassessment.

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 1S 2021”. 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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01H 2021 Results

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

(unaudited accounts)