Grupo Unicaja recorded a net profit of 111 million euros in the first quarter of 2024, a period in which the temporary banking tax has been fully registered. Excluding this last impact, which amounts to 78.6 million euros, net profit would have been 189 million, an increase of 93.2% compared to the same period of 2023. All the margins on the income statement show double-digit growth, which boosts the final result. Thus, the bank tripled its net profit compared to the first quarter of 2023 (111 million euros compared to 34 million euros).
The Group's result was underpinned by the increase in ordinary revenues (with a year-on-year growth in net interest income of 32.3%) and a 39.5% year-on-year decrease in provisions and other results. The latter was due to the good performance of the quarterly cost of risk (25 bps) and to real estate write-offs, maintaining coverage among the highest in the sector (69.7% in NPAs, 66.1% in NPLs, and 73.9% in foreclosed assets).
Customer spread increased 17 bps to 2.91% in the quarter. The banking margin increased by 36% due to the aforementioned improvement in net interest income, the stability in net fee income and contained operating expenses. The cost to income ratio improved by 8 percentage points (pp) over the last twelve months to 48.6%.
The balance of performing loans stood at 47,528 million. In the case of private individuals, it fell by 1% in the first quarter, with a balance of 32,706 million, while consumer financing increased by 0.5% year-on-year. This decrease is at a slower pace than in previous quarters.
In this period, 1,757 million in new loans and credits were granted, of which 520 million were in mortgages to individuals, with a market share in formalizations that amounted to 5.2% of the national total, being higher in the regions with greater economic dynamism, such as Malaga, Seville or Madrid.
Customer funds show a stable evolution. Specifically, retail customer funds fell by 0.8% in the first quarter of the year and by 0.7% in the last twelve months. This performance is due, on the one hand, to the decrease, both in the quarter and year-on-year, in deposits from public administrations, and, on the other, to the increase of 0.8% year-on-year in corporate and household deposits (0.5% in the first quarter). The latter increase was contributed to by the evolution of off-balance-sheet funds and insurance, which rose by 1.6% in the quarter to 21,424 million.
The results obtained have been accompanied by the maintenance of balance sheet quality. The volume of non-performing assets (NPAs) continued its favorable downward trend, with a year-on-year fall of 28%, due to the decrease in the stock of foreclosed assets (down 32.9%) and non-performing assets (down 23.5%).
The reduction of NPAs has been accompanied by the maintenance of high coverage levels, which are among the highest in the sector, in keeping with Unicaja's usual policy of prudence. The coverage ratio of non-performing assets reached 69.7%, that of non-performing loans stood at 66.1%, and that of foreclosed assets at 73.9%. The sharp reduction in NPAs and the increase in coverage brought the year-on-year fall, in terms of net NPAs, to 37%. The NPL ratio fell by 0.58 pp over the last twelve months to 2.98%, and the quarterly cost of risk remained contained at 25 bps.
Unicaja maintains high and sound solvency levels (the highest quality capital, CET 1 fully loaded, stood at 14.5%), with an excess of capital over regulatory requirements of 6.8 pp in total capital and 6.3 pp in CET1. Liquidity levels remain high, with an LTD ratio of 73.5% and an LCR of 294%.
Balance sheet
Total funds under management grew by 1.4% in the quarter
Customer funds, including wholesale funds, increased by 1.4% in the first quarter to 100,151 million euros, with a substantial weight of very stable and highly granular individual customer funds (77% of which corresponds to individual customers).
Within on-balance sheet funds, which grew by 1.4% in the period, term deposits were particularly noteworthy, increasing by 4.2% in the quarter and by 51.5% in the last twelve months. Off-balance sheet funds increased by 1.6% in the quarter, with mutual funds growing 3.7%, driven by the increase of net asset values and positive net subscriptions. Accumulated mutual funds reached 11,823 million, after growing by 3.7% in the quarter; and pension funds reached 3,664 million, with a quarterly increase of 1.4%.
In terms of lending activity, performing loans to individuals fell by 1% in the first quarter of the year. Consumer finance grew by 1.6% in the quarter.
Performing loans amounted to 47,528 million, down 1.6% in the quarter, taking into account that this item has been affected by early repayments and moderate demand for new credit. The outstanding balance of the corporate loan portfolio, 12% of which is covered by ICO guarantees, fell by 2.4% in the quarter.
New lending amounted to 1,757 million, of which 520 million corresponded to mortgage loans for individuals, representing 29.6% of the total. The market share in new mortgage formalizations stands at 5.2% of the national total (according to data as of February 2024, accumulated over the last 12 months), being higher in regions with greater economic dynamism, such as Malaga, Seville or Madrid.
Unicaja's performing loan portfolio maintains a low risk profile and is highly diversified: 62.6% corresponds to mortgage loans, 21.5% to companies, 9.6% to public administrations and 6.2% to consumer and other purposes.
Maintenance of balance sheet quality and high coverages
Unicaja maintains its traditional policy of prudent risk management. At the end of the first quarter, the NPL ratio fell to 2.98%, and the cost of risk was contained at 25 bps.
The balance of NPLs was down 23.5% compared to March 2023. More than 60% of the entries in NPLs in the year were on a subjective marking, representing 34% of the NPL portfolio. During the period, foreclosed real estate asset sales performed well, with positive results. The reduction in the stock of gross foreclosed real estate assets was 32.9% year-on-year. Non-performing assets as a whole continued their downward trend, falling by 28.0% year-on-year.
At the same time, Unicaja has maintained its high coverage levels, among the highest in the sector, standing at 66.1% for NPLs and 73.9% for foreclosed assets, with the objective of continuing to accelerate the reduction of this type of assets.
Coverage of total NPAs (NPLs and foreclosed) stood at 69.7%.
Income statement
All income statement margins show double digit growth
Net interest income increased by 32.3% year-on-year to 390 million, with a greater contribution from the retail business (due to the repricing of the variable-rate loan portfolio and higher interest rates on new production) and from the wholesale business (related to the improved liquidity position). The commercial or customer spread increased by 17 bps in the first quarter and 90 bps year-on-year to 2.91%.
Net fee income remained above 130 million euros. They fell by 3.5% year-on-year, mainly in the collection and payment line, where the strengthening of Fee-Free plans, which include improvements in the commission exemption plans for individual and professional customers, are aimed at facilitating the attraction and strengthening customer satisfaction, loyalty and retention.
Gross margin amounted to 462 million, 23.9% higher than in March 2023, as a result of the above-mentioned growth in net interest income.
The cost to income ratio stood at 48.6%, a year-on-year improvement of 8.3 pp.
The ROTE profitability ratio improved by 1.4 pp compared to March 2023, to 5.4%. This ratio rises to 6.0% when adjusted for the excess capital over CET1 fully loaded 12.5%.
Pre-provision profit amounted to 237 million. Loan-loss provisions fell by 13.3%, bringing the quarterly cost of risk to a contained level of 25 bps. Net operating income amounted to 188 million. Consolidated pre-tax profit amounted to 184 million euros, and net income reached 111 million euros, 77 million euros higher than in the same period of the previous year.
Solvency and liquidity
CET 1 fully loaded at 14.5% and sound liquidity position
Unicaja maintains high and sound solvency levels[1] . At the end of the first quarter of 2024, it had a CET 1 (Common Equity Tier 1) of 14.5%, a Tier 1 capital ratio of 16.4% and a total capital ratio of 19.6%. These ratios comfortably exceed the levels required of the bank by 6.3 pp in CET 1 and 6.8 pp in total capital.
On a fully loaded basis, the bank had a CET 1 level of 14.5%, a Tier 1 capital ratio of 16.4% and a total capital ratio of 19.5%. CET 1 fully loaded increased by 103 bps over the last twelve months, thanks to the organic generation of earnings and the reduction in risk-weighted assets. As a result, at the end of the quarter, the bank had 1,800 million in excess of regulatory requirements.
On the other hand, the Texas ratio stood at 31.6%, an improvement of 10.7 pp points over the last year.
The bank maintains a sound liquidity position, reflected in the Loan to Deposit ratio, which stood at 73.5%, a short-term liquidity ratio (LCR) of 294%, and a stable funding availability ratio (NSFR) of 157%.
Digital business and commercial performance
Boosting the Digital Plan, with 70% of active digital clients
In the first quarter of 2024, the Digital Plan, included in the 2022-2024 Strategic Plan, continued to be implemented.
The sustained momentum consolidates the improvement achieved in digital adoption, acquisition and sales ratios. At the end of the first quarter, 70% of customers are digital.
The contribution of digital channels to the subscription of new consumer loans accounts for 43% of the total and 30% for subscriptions in investment funds/delegated portfolio management.
During this quarter, the bank has made bizum digital identification available to its customers, a feature that allows them to register and access different e-commerce platforms securely and easily, in addition to knowing and managing their consent to the processing of their data.
Other highlights
General Meeting of Shareholders and payment of dividend for 132.0 million
Unicaja's Annual General Meeting of Shareholders, held on 5 April, approved, among other matters, the annual accounts and the management of the Board of Directors during the past year, as well as the payment of a dividend of 132 million euros with a charge to the profit for the year 2023, which represents nearly 50% of the ordinary consolidated net profit for that year.
This dividend, paid on 19 April, is equivalent to 0.0499 euros gross per share.
Likewise, with the ratification of the appointment of José Sevilla as independent director and his subsequent appointment as non-executive chairman by the Board of Directors, the process of renewal of this body culminates, in accordance with the highest standards of corporate governance, in terms of structure and diversity of knowledge, experience and gender.
New corporate identity
Last February, the bank unveiled its new corporate identity as a result of a thorough analysis and repositioning of its brand, carried out in the context of the cultural transformation and modernization of the institution.
The evolution reflects the adaptation of the bank to the needs of today's society, but without losing its traditional values, with a focus on proximity to customers (current and future) and their regions of origin.
The result is a fresher image, better adapted to digital channels, which aims to reinforce Unicaja's positioning as a solid institution, close and open to society.
Within this framework, the purpose ('Ayudar a las personas a prosperar') and the new corporate values (people, professionalism, team and evolution) have been redefined.
Sustainability
In the area of Sustainability, the following actions were carried out in the first quarter of the year:
- The reinforcement of the commitment to sustainability management, through the inclusion in the 'Corporate policy for the integration of sustainability factors in credit risk management' of the criteria for exclusion from financing due to environmental and social risks.
- Obtaining a C rating in the CDP (Carbon Disclosure Project) climate questionnaire, which demonstrates the company's commitment to climate change management.
- Participation of Edufinet, a project promoted by Unicaja and Fundación Unicaja, in the Global Money Week, a worldwide initiative promoted by the Organization for Economic Cooperation and Development (OECD), which celebrated its twelfth edition under the slogan 'Protect your money, secure your future'.
[1] Capital ratios include net income, net of accrued dividends, computability pending approval by the European Central Bank.
