Grupo Cooperativo Cajamar posts improved key business, capital, efficiency and asset quality figures

• Customer funds under management are 6.9% higher thanks to growth in sight deposits (11%) and mutual fund sales (29.3%).

• Its market share of the agri-food sector continues to grow, now standing at 14%.

• The cost-income ratio has improved 3.3 pp to 58.99%, assisted by the reduction in operating expenses as a result of optimising the commercial network, the digital transformation and the write-down of intangible assets.

• Consolidated net profit climbs to 70.02 million euros for the first nine months of the year – 3.9% higher than in the same period of the previous year.

• The NPL ratio is down 3.3 pp at 8.24%, off the back of a 28.8% reduction in non-performing assets. There has also been a 10.2% decrease in foreclosed assets, with foreclose asset sales up 37.1% yoy.
• The total capital ratio is 1.39 pp higher at 14.13% after applying IFRS 9, thanks to the 7.1% YTD increase in eligible capital and the decrease in risk-weighted assets (RWAs).

Business performance

Total on-balance sheet assets are up 7% yoy at 42,718 million euros.On-balance sheet retail funds have risen by 5.6% primarily due to an 11.9% increase in sight deposits. Off-balance sheet funds are up 15.5% thanks to buoyant mutual fund sales, which have grown 29.3%. Customer funds under management have thus risen by 6.9% and the total volume of funds under management stands at 73,225 million euros.

Performing loans and advances to customers are up 4.2 % yoy at 28,432 million, while there has been a 10.4% rise in new loans to companies, small enterprises and the agri-food sector. This demonstrates Grupo Cooperativo Cajamar’s commitment to support the economic and manufacturing activities in the regions it serves. Its efforts have positioned the Group as a go-to bank in Spain’s agri-food sector, boasting a 14% share of the domestic market, thanks to its sector track record, knowledge of the needs of businesses and producers, and the close ties it has with all agents in the sector.

In addition to offering specialised financial products and services, Cajamar conducts a wide range of research and knowledge transfer projects through its experimental centres and technical agri-food service. Through this work, it contributes innovations, improvements and technological developments that benefit the sector. Just this year for instance, it has organised over 70 knowledge and technology transfer activities including seminars, workshops, courses, trade fairs and exhibitions across 20 provinces attended by over 6,500 technicians and professionals related to the sector. Upwards of 3,000 researchers, technicians, farmers, professionals and students have also visited its two experimental centres in Almeria and Valencia.

Meanwhile, in the third quarter of the year, a Cutting-edge Water Technology Business Incubator was unveiled at Cajamar’s Las Palmerillas Experimental Centre. The incubator will help entrepreneurs dedicated to developing new technological innovation and sustainable management projects in the water industry. The project is part funded by the ERDF.

These initiatives and activities have set Grupo Cooperativo Cajamar apart in the Spanish financial system, positioning it as the leading social cooperative bank in the country and ranking it among the top banks (11th by turnover and 8th in terms of gross income).

Results

Grupo Cooperativo Cajamar posted a consolidated net profit of 70.02 million euros for the first nine months of the year – 3.9% higher than in the same period of the previous year. In spite of the current rock-bottom interest rates, this has been achieved through a 2.3% increase in net interest income, underpinned by a prolonged rise in performing loans, successful asset and liability management, and controls on operating expenses (which are down 6.9%). This has been possible thanks to the optimisation of the commercial network, the digital transformation and more efficient assignment of resources, and the allocation of direct transaction costs to net interest income, as well as lower provisioning requirements. All this has driven up the cost-to-income ratio by 3.3 pp to 58.99%.

Recurring gross income is 0.7% higher, boosted by the increase in net interest income, 4.2% rise in performing loans to customers, and disintermediation fees from the consumer finance, pension plans, insurance and mutual funds business. These are up 12.02%, offsetting the decrease in fees and commissions for the more common products and services. Lastly, net income before provisions and recurring net income before provisions rose by 6.6% and 17.3%, respectively.

The return on equity is also continuing to improve, standing at 3.3%, driven up by the reduction in non-performing assets that has cut the cost of risk and provisioning requirements, despite the intangible asset write-downs during the quarter.

Risk management

The NPL ratio has improved yet again, decreasing yoy by 3.3 pp to 8.24% thanks to a 28.8% reduction in non-performing assets – a drop of 1,063 million euros. There was also a 10.2% decrease in foreclosed assets off the back of a 37.1% rise in foreclosed asset sales, which totalled 562 million euros between January and September. Mover, factoring in debt forgiveness in the foreclosure procedure, the NPA coverage ratio stands at 48.3%, up 1.33 pp on the same period a year earlier.

Solvency and liquidity

At 30 September, Grupo Cooperativo Cajamar’s solvency and liquidity position was stronger yet again. The total capital ratio was up 1.39 pp at 14.13% compared to 1 January 2018 after applying IFRS 9, due to a 7.1% increase in eligible capital and a reduction in risk-weighted assets (RWAs). The CET1 ratio – which reflects the highest quality capital – was also better at 12.40% (phased in) and 11.45% (fully loaded), both in compliance with the ECB’s requirements.

Moreover, the Group has a comfortable level of wholesale funding and unfettered access to the wholesale markets, considerable capacity to generate liquid assets and a healthy liquidity position. It complies with the limits imposed by the European Banking Authority. The liquidity coverage ratio (LCR) stands at 207.24% and the net stable funding ratio (NSFR), at 116.69%, with regulatory limits sitting above 100%.

Commercial network

Grupo Cooperativo Cajamar continues to push ahead with its strategy of boosting value propositions for companies, the self-employed and individuals and putting the experience of its 3.6 million customers at the centre of its business. The 5,540-strong workforce is driving this, managing the product and service offering through the Group’s 1,029 branches and 1,526 ATMs, as well as through its online banking, telephone banking and mobile banking channels. The number of digital banking customers has risen to 701,000, while some 165,836 digital users make use of the Wefferent app, designed for customers who prefer to bank remotely with zero fees and commissions and a free card (up 38.2% on the first quarter).