FY 2020 Results

11 Feb 2021

Caixa Geral de Depósitos releases its Full Year 2020 consolidated results

(unaudited accounts)

CGD releases 1st quarter consolidated results

Consolidated net income totals €492 million. In the last year of the Strategic Plan and, despite the impact of the pandemic crisis, CGD fulfills the vast majority of the agreed commitments.

Highlights

Response to the Covid-19 pandemic impacts the 2020 results by €309 million from preventive impairments and reinforcement of provisions. CGD renews support to families and companies with growth in new mortgage loan and an increase in the corporate loan portfolio.

Consolidated net income for 2020 was down 37% over 2019 to €492 million, equivalent to a ROE of 6.1%.

This amount includes an extraordinary gain of €51 million (after tax) arising from actuarial gains in liabilities with post-employment benefits (pension fund and medical plan). Excluding this result and the restructuring costs incurred with staff reduction and the closure of the Spain Branch, the recurring net income reaches €450 million, a reduction of 29% over the current result of 2019 and a ROE of 5.6%, above the portuguese and european banking average;

The cost of credit risk totalled 33 bp, owing to a €309 million preventative increase of impairments and provisions in anticipation of the potential effects of the Covid-19 pandemic on credit quality;

Recurring operating costs, down 8% over 2019, reflected improved efficiency levels as shown by the recurring cost-to-income ratio of 49.8%⁽¹⁾ in terms of domestic activity;

Customer deposits were up €6.8 billion in 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 corporate credit book in Portugal (excluding the construction and real estate sectors, where NPL reduction is concentrated) grew 2.7% across 2020, strengthening the support for corporates.

CGD maintained the trend of increasing its share of new mortgage loans, which reached 22.4% in 2020 and reaching 24.5% in the last quarter. The annual growth in origination reached 12% over 2019;

Asset quality continued to improve, with the non-performing loans (NPL) ratio decreasing to 3.9% which, together with impairment increases resulted in an NPL ratio net of impairment of only 0.1% (considering all credit impairments);

Capital ratios reached 18.3% in core capital (CET1) and 20.9% in total capital. Following the ECB's recommendation, the general meeting will decide on a dividend over the 2020 net income corresponding to a reduction of 20 basis points in the CET1 ratio, which is equivalent to around €85 million. Capital ratios after deduction of projected dividend are 18.1% in core capital (CET1) and 20.7% in total capital, standing significantly above the average for eurozone banques.

DISCLAIMER

– The financial statements have been prepared on the basis of the International Financial Reporting Standards (IFRS) as adopted in the European Union inaccordance 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 December 31, 2020, unless otherwise stated. These may be estimates subject to revision. Solvency ratios include net income for the period, unless where otherwise noted.

– In 2020, economic activity in Portugal and worldwide was significantly affected by the Covid 19 pandemic and by the imposed containment efforts, in particular mobility restrictions, closing of national borders and limitations of a series of economic activities. Despite the fact that the third quarter witnessed a gradual lifting of restrictions and a rapid and pronounced economic recovery over the first half, that trend changed in the last quarter of 2020 with the need for renewed containment measures in Portugal and in most countries.

Economic perspectives are thus surrounded by a high level of uncertainty and are dependent on the progression of the virus and the speed at which large scale vaccination can be achieved. Projections by the Bank of Portugal assume that restrictions are gradually lifted from the first quarter of 2021 with economic activity conditioned until the start of 2022 when an effective medical response is expected to be fully implemented.

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 December 31, 2020 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 2020”. 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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⁽¹⁾ Excluding non-recurring costs and gains.

Caixadirecta

Caixadirecta

FY 2020 Results

Caixa Geral de Depósitos releases its Full Year 2020 consolidated results

(unaudited accounts)