Grupo Cajamar boosts earnings to €127 million euros, lifted by recurring revenue

In 2023, Grupo Cooperativo Cajamar increased its income statement, reflecting the solid advances seen in financial activity, which contributed to the rise in core banking business revenue and improved its credit quality.

• All banking business margins posted double-digit growth, buoyed by rising interest rates and sound management of the commercial activity, led by net interest income, which recorded a year-on-year gain of 51.3 % to €1,064 million euros thanks to improvement in the customers' spread.

• Cajamar was the sector growth leader in customer funds under management and off-balance sheet resources, which were up 10,8 % and 27.8 %, respectively.

• Performing loans grew 1.2 % to €36,982 million. Business lending has recorded an increase of 5.6 %.

• The phased-in capital adequacy ratio stands at 16 %, recording 2.7 % year-on-year growth in eligible own funds. Meanwhile, the phased-in CET1 ratio rose to 13.6 %, meeting regulatory requirements by a wide margin, with a capital surplus of €763 million.

Results

In 2023, Grupo Cooperativo Cajamar increased its income statement, reflecting the solid advances seen in financial activity, which contributed to the rise in core banking business revenue and improved its credit quality. At year-end, it had completed the cleanup of non-performing assets, bringing the NPL ratio down to 2 %, one of the lowest amongst major banks, while strengthening coverage levels and provisions, and enhancing its solvency.

Sound management of non-performing assets allowed it to enhance the quality of its asset. The €235 million reduction non-performing total risks (-23.1 %) and €283 million year-on-year drop in net foreclosed assets (-46.5 %) drove the NPL ratio down by 0.6pp to 2 %, well below the 3.6 % sector average. At the same time, the NPL coverage ratio rose 5.6pp to 74 %, while the foreclosed assets coverage ratio was increasing 19.39pp to 57.8 %.

Stepped-up commercial activity, together with the normalisation of the interest rates fixed by the European Central Bank, lifted Grupo Cajamar's core banking business revenue, with solid gains in the main profit and loss components and double-digit growth in margins. Net interest income posted a year-on-year increase of 51.3 % to €1,064 million. In addition, the 2.8 % gain in net fee commission income, bringing the total to €271 million —thanks to greater brokerage activity, aided by stronger customer relationships— contributed to lift gross income to €1,331 million, 24.4 % higher than the previous year.

That strong gain in gross income of 24.4 % helped offset the 8.3 % rise in operating expenses and allowed Cajamar to improve its cost-income ratio to 49 % and to post pre-provision profit of €679 million, 45.3 % more than in 2022. Net operating income (operating income less operating expenses) rose to 728 million euros, 78.9 % higher than the previous year.

In all, after setting aside €536 million in provisions, impairment allowances and writedowns of financial and non-financial assets, consolidated net profit came in at €127 million, 67.6 % higher than the figure recorded for the previous year.

Commercial Activity

Grupo Cajamar's strong commercial activity allowed it to end 2023 as growth leader in customer funds under management and off-balance sheet resources, which were up 10,8 % and 27.8 %, respectively. Customer funds under management rose €5,030 million to reach €51,725 million, mainly driven by the 119.6 % increase in term deposits and 29 % rise in investment funds. These gains widened Cajamar's market share in deposits to 2.7 % in Spain.

Performing loans, meanwhile, grew 1.2 % to reach €36,982 million. Business lending posted a notable 5.6 % increase over the previous year. At the same time, the group maintained a broadly diversified loan book in which lending to households’ accounts for 32.9 % of the total, business lending for 28.7 % and lending to the agri-food sector 17.4 %. Of note in 2023 was that 46.3 % of Grupo Cajamar's new business lending went to the primary sector and related activities, making Cajamar, for yet another year, a sector leader with a national market share of 15.9 %. At the same time, its national market share of loans rose to 3 %.

Over the course of 2023, the number of members who believe in Cajamar's cooperative banking model rose 2.8 % to reach 1.7 million, while the number of customers was growing to close to 3.8 million. In turn, the digital banking, electronic banking and mobile banking channels now serve more than 1.1 million digital customers, 5.8 % more than in the same period of the previous year. Some 652,000 of those customers are Bizum users, 12.8 % higher than one year ago. Grupo Cajamar also serves its customers and users with a network of more than 1,000 points of sale, after opening three new branches in Teruel, Huesca and Tàrrega (Lleida) during 2023.

The group also has six mobile offices that provide financial services in 43 small towns in rural areas. These travelling offices, combined with the more than a third of the rural offices and ATMS that are located in towns with populations of less than 5,000 residents, contribute to avoiding the emergence of new situations of financial exclusion in rural communities.

Solvency and Liquidity

The total capital ratio now stands at 16 %, after improving 0.1pp, highlighted by the strength of own funds, with year-on-year growth in eligible own funds of 2.7 %. The phased-in CET1 ratio rose to 13.6 % and thus meets supervisory solvency requirements by a wide margin, with a buffer of €763 million over the current regulatory requirement. The MREL ratio, in turn, rose to 23 %, surpassing the final requirement of 22.75 % set by regulatory authorities for January of 2025.

And Grupo Cajamar likewise maintains a comfortable liquidity position, with available liquid assets of €15,956 million, equivalent to 26.5 % of its total assets and spread out over a broad, growing and stable base of retail deposits and diversified funding sources. With these funds it easily meets the requirements set by the European Banking Authority, with a liquidity coverage ratio (LCR) of 197.3% and a net stable funding ratio (NSFR) of 149.6%. In addition, it has mortgage covered bond issuance capacity of €2,345 million.

Wholesale funding sources, in turn, now stand at €8,370 million (-39.1 % year-on-year), reflecting the decreased reliance on funding from the ECB (-85.4 % year-on-year), which offset the €1,100 million obtained from the two mortgage covered bond issues carried out during the year and the €750 million raised in the issue of public sector covered bonds to be held on-balance sheet.

Also, pursuant to its commitment to sustainable development, in September Grupo Cajamar carried out a green senior preferred debt issue, which brought in €650 million to finance environmentally respectful projects. This was on top of the 2022 issue of social senior preferred debt of €500 million to finance enterprises engaged in the social economy and projects to promote economic and social development, as mandated by the Sustainable Bond Framework of Grupo Cooperativo Cajamar.

Sustainable Finance

In its commitment to sustainability, the cooperative bank Cajamar continues advancing toward its 2050 target of zero net emissions of greenhouse gases, both in its operational footprint, through the Ecoefficiency Plan, and in its financed footprint. Toward this end, the Net Zero Banking Alliance (NZBA) initiative, of which Cajamar is a found signatory, has drawn up a roadmap for decarbonisation of the sectors with the largest greenhouse gas emissions and set emissions reductions targets to be attained by the businesses in its loan book by 2030. Energy companies are due to cut their emissions by 38 %, oil and gas enterprises by 19 % and steelmakers by 11 %.

Another sustainability-related initiative is the high-tech water business incubator Cajamar Innova, set up to support innovative businesses and startups and render viable projects that deliver solutions for efficient and sustainable water management. This programme was distinguished with the ‘Gold Star’ award at the ‘Europa Se Siente 2023’ closing gala, and with the 'Europa se siente competitiva' distinction granted by the Directorate General for European Funds of the Spanish Ministry of Finance and Public Function.

As part of its mission and vision, Grupo Cajamar supports the agri-food sector with specialised financial products and services, as well as through specialised technical advising, training and knowledge transfer programmes to contribute to the development of sustainable agri-food products and activities. These initiatives are pursued through two agricultural experimental centres in Almería and Valencia that engage in research, studies and testing and in the design and transfer of knowledge to professionals in the sector. In 2023, 87 actions were carried out, in person and online, with the participation of upwards of 6,325 persons. Cajamar also promotes actions aimed at supporting innovation, digitisation, and sustainability in the agri-food sector through its  Plataforma Tierra knowledge community, as well as with new publications and by organising business forums and conferences. It participates in international and national trade fairs such as Fruit Logistica, Fruit Attraction, Alimentaria, Fima and Agroexpo, and works with enterprises in the sector to promote their businesses and their national and international expansion, helping them to know and explore the funding opportunities that are available and to raise funds for the modernisation, innovation and sustainability of the Spanish agri-food sector.