CGD Group Consolidated Operations

27 Oct 2017

3rd Quarter 2017^(*) (unaudited accounts)

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Caixa Geral de Depósitos, SA (CGD) successfully executes its Strategic Plan following the recapitalisation, increasing its net core operating income by 80%

Highlights

The CGD 2020 Strategic Plan continued to be successfully implemented in third quarter 2017, strengthening the confidence over achieving the objectives set for this year.
In spite of a negative net result of €47 million in the first nine months of the year, the positive performance of CGD’s activity allowed an effective implementation of the Strategic Plan. It was therefore possible until September to make provisions in an amount of €595 million for non-recurring costs⁽¹⁾ leading to a net income from current activity of €473 million.

The following made decisive contributions to this net result:

The 18% increase of €149 million in net interest income to €983 million, positively influenced by the 25% reduction of €293 million in funding costs over September 2016.
The €301 million in net trading income, up €345 million over the preceding year.
The 2% growth registered in net fees and commissions, year-on-year 2016.

(EUR Million)

CGD Consolidated Results
CONSOLIDATED ACTIVITY	2016-09	2017-09	Y-o-Y Change
Net interest income	833	933	18%
Net fees & commissions	333	342	2%
Net trading income	-44	301	-
Total operating income	1,150	1,668	45%
Recurrent operating costs⁽¹⁾	903	847	-6%
Net core operating inc. before imp.⁽¹⁾	266	478	80%
Credit impairment (net)	406	81	-80%
Provisions & other impairments (net)	5	328	-
Net income	-189	-47	-
Net income from current activity⁽¹⁾	-175	473	-

Other core components included:
- The 6% reduction of €56 million in recurring operating costs, deriving from lower employee costs and a lower level of general administrative expenditure.
- The low credit risk cost of €81 million recognised in these nine months of 2017 (0.16% of the credit stock).
The net core operating income before impairments⁽²⁾ up to September 2017, fuelled by the growth of net interest income and reduction of recurring operating costs was up 80% to €478 million.
Cost-to-income (excluding non-recurring costs) was reduced to 50.1% in September as a consequence of the referred to positive performance of recurring operating costs and income. The cost-to-core income ratio, which also excludes net trading income, was 63.9%.
Positive evolution of CGD’s asset quality in the first nine months of 2017, with NPE⁽³⁾ and NPL⁽⁴⁾ ratios of 10.1% and 13.3%, respectively (12.1% and 15.8% last December). In both cases the impairment coverage is 53.4%.
The loans-to-deposits ratio of 87.9%, in CGD’s balance sheet, in September 2017, reflects the major resilience of CGD’s customer base, even in an environment of very low interest rates on deposits.
Total customer resources from domestic operations, influenced by the favourable evolution of €557 million in customer deposits and the €1,105 million increase in the placement volume of PGB - Floating Rate Bonds (OTRV), were up 3% by €2,073 million over December 2016, to €69,351 million.
CGD accordingly retained its leading position in the domestic market with a 27% share of total deposits in August 2017.
Individual customers’ deposits market share accounted for 31%.
CGD continued to enjoy a highly comfortable liquidity position with an LCR (Liquidity Coverage Ratio) of 204% and a stable total amount of financing from the ECB of €3,397 million or around 3.6% of total assets.
The phased-in and fully implemented CET1 ratios in September were 13.0% and 12.8% with a phased-in Tier 1 and Total ratios of 14.1% and 14.8%, respectively.
CGD had ADI (Available Distributable Items) of €1.7 billion at this date (around 31 times the annual cost of its current AT1 issuance) with a 3.0% surplus on the level of its MDA (Maximum Distributable Amount) restrictions considering the current gaps of Tier 1 and Tier 2 and with a 4.8% surplus if considering those gaps fulfilled with future issuance.

Press Release - Read or Download here the full version.
Presentation - Read or Download CGD Consolidated Results presentation.

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⁽¹⁾ Non recurrent costs related to staff reduction programmes and also to international operations restructuring and sale provisions, as applicable to each P&L item, in a total gross amount of 20 M€ and 595 M€ in September 2016 and September 2017 respectively. The total net amount was 15 M€ and 520 M€ in the same periods
⁽²⁾ Net interest income + Net fees and commissions – Recurrent operating costs
⁽³⁾ NPE - Non performing exposure (as defined by EBA)
⁽⁴⁾ NPL - Non performing loans (as defined by EBA)

^(*) The September 2016 values have been restated, considering Mercantile Bank Holdings, Ltd. as a non-current asset held for sale.

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