FY 2022 Results

2 Mar 2023

Caixa Geral de Depósitos releases its 2022 full year results

(unaudited accounts)

CGD’s €3.6 billion growth in business volume and return on equity (ROE) of 9.8% allows it to pay taxpayers a historical dividend of more than €350 million. The earnings of CGD’s international entities were the largest ever.

Caixa Geral de Depósitos group’s consolidated net income was up 44.5% over 2021 to €843 million, comprising a return on equity (ROE) of 9.8%, which, compared to the average of ROE for the period 2011-2022 of -1.3%, evidences the recovery initiated in recent years.

The overall contribution of international activity to the group’s net income was up 44% over 2021 to €193 million, being the highest result ever of the international entities held.

According to the dividends policy, this result of €352 million was the largest dividend ever paid by CGD and continued to contribute to a better return on invested capital and to repaying the endeavours of taxpayers under the recapitalisation process.

Caixa's result also made it possible to continue to ensure the principle of adequate remuneration for workers and the safeguarding of conditions within the context of the pension fund, with total employee costs reaching €816 million.

Business volume was up 2% by €3.6 billion over the end of 2021, evolving both in terms of credit (up €1 billion) and customer resources (up €2.5 billion), driven by both domestic and international operations.

Customer deposits in Portugal were up 6% by €3.9 billion in 2022. Particular reference should be made to the corporate segment (up 10%), confirming customers’ confidence in CGD. CGD also strengthened its lead of the unit trust investment funds segment, with a 2 p.p. increase in its market share to 37%.

CGD made a decisive contribution to digital inclusion in the means of payment business, with more than 3 million customers having debit cards. There were 2.2 million active digital banking customers at the end of December 2022, up 18% in terms of mobile users to 1.5 million. Sales on digital channels in terms of CGD’s activity in Portugal totalled €80 million.

CGD led the market with more than €3 billion in mortgage agreements in terms of personal customer business in Portugal. Consumer credit, in 2020, was up 14% by €128 million. CGD’s new Crédito Expresso offer, based on simplicity and rapid approval, continues to be the main driver of such strong growth.

Reference should be made to credit agreements in the corporate segment, with a market share of 16.5%. This particularly included loans to SMEs, which contributed to credit portfolio growth of 10% in this segment.

In addition to the growth of credit portfolios, the evolution of the ECB’s key reference rates fuelled a 44% increase of €429 million in net interest income, a large proportion of which comprised treasury operations in Portugal (up €172 million, including the ECB’s TLTRO programme) and international activity (up €119 million).

Business was further improved by CGD’s continued implementation of its 2021-2024 strategic plan.

The current cost-to-income ratio continued to decline steadily to 39.1%, with sustained efficiency levels and improved earnings.

CGD continued to improve asset quality in 2022 with declines in its NPL ratio and good performance in terms of the recovery and reduction of assets for disposal. The NPL ratio was down to 2.4%, while the NPL ratio, net of total impairment, remained at 0% (zero).

Non-performing assets decreased by €624 million, as a result of the reduction in exposure to restructuring funds, the sale of properties held for sale (which reached the lowest value since 2008) and the recovery of defaulted loans.

The recovery activity continued to show good results, with a €283 million decrease in stock in recovery. Portfolio evolution and recovery activity resulted in a negative 0.01% cost of credit risk. Reference should also be made to the 27% reduction in properties held-for-sale to €291 million in addition to a 53% decrease in exposure to restructuring funds to €205 million.

CGD transferred all pension fund liabilities to Caixa Geral de Aposentações in 2023, having extinguished and liquidated the fund and paid financial compensation for the liabilities transferred to it. This operation makes it possible to reduce the risks resulting from the volatility deriving from the size of the pension fund, nature of its assets and liabilities and the accounting and prudential treatment in the bank’s profit and loss statement and balance sheet. It also represents a major step towards bringing CGD’s operating conditions more into line with those of other banks in the context of the European market.

CGD continues to enjoy a strong capital position that is above the average of Portuguese and European banks. Its tier 1 and total ratios stood at 18.7% and 20.2%, respectively, including net profit, net of the maximum distributable amount under the dividend policy.

The supervisor reduced capital requirements (Pillar 2) from 2.0% to 1.9% at the beginning of 2023 and for the second consecutive year. This reflected an improvement in the perception of risk attached to CGD.

The MREL ratio of 27.82% exceeded the requirement applicable starting 2024, resulting from the positive evolution of shareholders’ equity and the two senior preferred debt issuances of €800 million in 2022 on international markets. These two operations may be characterised as "green" issuances that, together with the "sustainable" issuance of 2021, bring total ESG issuances to €1.3 billion as part of a continuous commitment to achieving sustainable financing objectives.

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 shareholding in Banco Comercial do Atlântico (BCA) was, in December 2022, classified under “Non-current assets held for sale”, therefore, and for comparative purposes only, the consolidated balance sheet as of December 31, 2021 was restated, since IFRS 5 “Non-Current Assets Held for Sale and Discontinued Operations” only requires the restatement of the income statement.

The financial metrics in this presentation refer to December 31, 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 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. 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. 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. Despite this, the year 2022 was marked by the recovery of GDP to pre-pandemic levels. This context of high uncertainty, combined with the increase in interest rates and the slowdown in growth, contributed to an unfavourable evolution of the capital markets in 2022.

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 31 December 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 2022”. 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

FY 2022 Results

Caixa Geral de Depósitos releases its 2022 full year results

(unaudited accounts)