July 30, 2010
Caixa Galicia makes profit of about 59 million in first half year.
Solvency increased by 6.5% and NPLs decreased to 4.7%
• Own resources surplus reached 1.1 billion
• Global liquidity rose to 7.1 billion
• Customer deposits grew 5.7% to reach 30 billion
• 4.46 billion in new loans to companies and families - 10% increase
Caixa Galicia Group Profit Before Tax rose to EUR 59 million over the first half year following provisioning and write-offs of 178 million, which means a 12% y-on-y decrease of consolidated results.
The Caixa Galicia Group maintains a maxim prudence strategy that gives priority to advances in key parameters given the current context of economic fragility and financial instability: Solvency, Liquidity and NPLs.
• Solvency increased 6.4% taking Tier 1 to 8.4 % and maintaining the own resources surplus over a billion euros.
• Global liquidity remains comfortable at 7,1 million euros, following the 5.7% increase in customer deposits and the 10.5% reduction of wholesale funding.
• The Non-Performing Loan rate is at 4.7%, following a reduction of 47 basis points in the second quarter of the year, demonstrating the progress achieved in the pro-active management of this variable.
Business
- Customer deposits reached approximately EUR 30 billion following 5.7% growth, with the highlights of 11% growth in term deposits and 636M y-on-y increase in sight deposits.
The favorable evolution in retail funding allowed a 11% reduction in recourse to wholesale funding with a 47% reduction in short term funding, thus minimizing exposure to the tension manifest in these markets.
The institution's funding strategy has increased liquidity to 7.1 billion euros.
- Customer credit is 36 billion euros, following the formalization of 4.5 billion euros in new transactions over the first half year, a y-on-y increase of 10%. 75% of said transactions involved credit to companies, although the line that has evolved best is family mortgages, which shows a clear recovery with the formalization of 820 million euros - a y-on-y increase of 22%, with a 12% increase in Caixa Galicia's market share.
- Investment in the securities portfolio decreased to 275 million to take the balance to 4.6 billion euros - with reductions in both the equity portfolio, which terminated the half year with a balance of 1.106 billion and the fixed income portfolio, which fell to 3.5 billion euros.
- The Non-Performing Loan rate of investment fell to 4.7%, following the sharp reduction in the second quarter, in which the doubtful balance fell by EUR 130 million the Non-Performing Loan rate by 47 basis points. The half year terminated with an insolvency fund of 905 million, of which 235 million correspond to provisions for the coverage of future risks.
Results
- The interest margin generated over the period rose to 250 million euros, depressed by interest rates at an historical minimum, although the trend in the second quarter with respect to the first was upward, with an increase of 5.0%.
- The generation of income for the provision of services reached 77 million euros, with 12% growth to take the basic margin to 330 million euros.
- The contribution of the equity portfolio, either in the form of dividends, equity method or capital gains and financial transaction results amount to 168 M€, to take the gross margin, which has been used to reinforce the institution's levels of provisioning and solvency, to 488.2 million euros.
- The 4.5% reduction in operating costs combined with the generation of income takes the net margin to 237.8 million euros.
- The strict prudence policy used the results generated to make provisions and write-offs worth 178.2 million euros.
- Profit Before Tax (PBT) reached EUR 59 million, which after tax will leave annual consolidated results of 50.5 million euros - a y-on-y decrease of 12%.
- This generation of profit has allowed the increase of Solvency and 6.5% growth in Tier 1 - now at 8.4%, while the own resources surplus over legal requirements stands at EUR 1.08 billion.
- At the end of September, Caixa Galicia had approximately 830 branches, 370 outside Galicia and 18 abroad.