PASTOR INCREASES RECURRENT EARNINGS BY 18.7%, EXCLUDING FENOSA CAPITAL GAINS
- Income of Euros 45 million in the first quarter.
- In the second quarter Euros 400 million in capital gains to strengthen provisions.
- Solvency ratio (TIER 1) reaches 8.1%, efficiency ratio 36.3% and liquidity ratio 72.2%.
A Coruña, 30th April 2009. - "The positive gross margin, the tight cost control and the recurrent operating activity results growing at 18.7%, are the values that back Banco Pastor global management in the first quarter of a year to be remembered as the "Annus Horribilis" for the world economy“ affirmed José María Arias, president of Banco Pastor.
Banco Pastor’s attributable profit stood at Euros 45.1 million while in the previous year it reached Euros 141.1 million. The difference is due to the absence of capital gains from Union Fenosa.
Had Euros 200 million from capital gains after the recent sale of the 1.8% stake in Fenosa been taken into account, profit would have advanced 31%, even after provisions.
José María Arias, president of Banco Pastor, indicated that "these capital gains, already materialized in April, will fund provisions in the second quarter, like we have done in the same period of the previous year, as a cautionary measure in view of the increase in delinquency rates” and he added “Pastor will have accumulated between April and May around Euros 400 million in capital gains, 200 million from the stake in Fenosa and a similar amount from a variety of operations, like the repurchase of subordinated debt, the asset sale, the agreement in the insurance business, etc. I would like to point out that the whole of these gains will be allocated to generic provisions, in order to cover non performing loans and return coverage ratio to the levels of 2007, just before the crisis began”.
In crisis times, like the current ones, Banco Pastor has intensified efforts to proactively manage expenses and to continue to be one of the most efficient banks. As a result, general and administrative expenses were cut by 1.3% compared with those of March 2008. Therefore, efficiency ratio (the lower, the better) was reduced to 36.31%, 103 basic points lower than the recurrent one for previous year.
Jorge Gost, CEO of Banco Pastor, pointed out that "Keeping in mind the worsening and depth reached by the economic crisis since the end of 2007, we can be very satisfied with our achievements. On the one hand, we have improved the solvency and the liquidity, two specially outstanding strategic variables in an economic environment like the one we are living. On the other hand, the intense commercial activity has allowed, among others, a growth in deposits from clients, and very remarkably, in term deposits, those which better reflect the confidence of our clients, which have increased at a rate of 13.5% ".
CAPITAL RATIOS
Banco Pastor has improved significantly its solvency levels. BIS ratio stood at 10.8% from 10.6%, Core Capital at 6.9% from 6.3% and TIER1 at 8.1% from 7.5%, all of them well above the minimum required levels. The recent issue of Euros 250 million in preferred shares in April, not yet recorded in these ratios, is also aimed to reinforce these variables.
Liquidity ratio rose to 72.2% at the end of the first quarter, 255 basic points higher than at the end of 2008, and 59 basic points above the one showed one year earlier. Gost added that “Regarding liquidity, and as a proof of the precaution of Banco Pastor, it is important to remark again that in 2009 we do not have any debt maturity and, moreover, the one maturing in 2010 is already covered".
Returning to liquidity, deposits grew Euros 83 million reaching Euros 14,364 million, in spite of the decrease in the ones from Public Sector, which diminished Euros 394 million from March 2008.
65% of deposits in Banco Pastor are term deposits, which hit Euros 9,229 million, growing in one year Euros 1,099 million, at a rate of 13.5%.
Asset-backed lending grew 2.2% while non-backed loans decreased by 13.7%. Banco Pastor continued to display an intense activity to support individuals and small and medium enterprise clients, reaching the 12th position in ICO new lending. Banco Pastor has launched a Euros 1 billion pre-granted loans line, a Euros 2 billion mortgage credit line and a new mortgage campaign at Euribor +0.49%, with neither commissions nor floor.
"Non performing loans ratio has improved compared with the forecasts at the end of 2008. In March 09, NPL net entries have slowed its growth in relation to previous quarters, placing us in the average of the sector at the end of February, at 4.1% “asserted the CEO of Banco Pastor.
RESULTS
Net interest income grew 0.5% yoy to Euros 136.3 million underpinned by a significant increase in spreads (21 basic points for clients spread) and reversing the declining trend observed among entities in the last two quarters of 2008. Compared to the last quarter of 2008, net interest income advanced Euros 15.0 million from Euros 121.3 million.
Operating income increased Euros 5.4 million, or a 4.4%. On a recurrent basis, that is, without capital gains from Fenosa, provisions and losses for impairment of financial assets, net operating income reaches Euros 101.8 million, with an annual growth rate of 18.7%.
BANCO PASTOR REINFORCES ITS SOLVENCY AND SHIELDS FROM CRISIS
- Highest capital ratios among Spanish domestic banks
- Generic provision at its maximum regulatory level
- Profit of 82M€, after 75M€ in voluntary provisions
- Recurrent earnings, ex voluntary provisions, grows 8% compared with 2008
A Coruña, 30th July 2009.- Spanish Banks show the best capital ratios among European counterparts. And Banco Pastor has the highest ratios in the public domestic banking industry. This represents an ironclad protection from actual and future economic turbulences.
"Banco Pastor is already working for the post crisis times, setting the pillars on which post mergers entities will stand. I have always remarked that there are three key issues: solvency, liquidity and risk management. Banco Pastor enjoys an exceptionally good position regarding solvency and liquidity and we are slowing down the advance of non performing loans” indicated José María Arias, President of Banco Pastor. He added “moreover, we have an excellent cost management, which led to an efficiency ratio of 23.76%, a new historical minimum”.
Banco Pastor’s solvency ratios are at the top of Spanish domestic banks. Core capital reached 7.41%, BIS ratio 11.93% and TIER 1 at 10%, a significant increase over the previous year: 6.33%, 10.56% and 7.46%, respectively.
Banco Pastor decided to replenish provisions at its maximum regulatory level, 125%, to keep future coverage untouched. Loan loss reserves reach 738M€, more than four times 2008 profit, and above the pre-crisis level.
June 2009 net income decreases 34% annually to 82M€ due to the reinforcement of provisions. Should this impact be isolated, Banco Pastor’s results would have grown by 8%.
Liquidity has been another outstanding feature of Banco Pastor since the beginning of the crisis. Banco Pastor enjoys a strong liquidity position. With a first line of liquidity of more than 2,000M€, there is no need for wholesale funding within the next 15 months.
Due to its comfortable liquidity position, Banco Pastor has reduced commercial paper, that is, short-term financing. As a result, the average maturity of wholesale financing has increased, strengthening the balance sheet structure. There are no wholesale maturities in 2009, neither in 2011 nor in 2012. 2010 maturities are already covered.
Banco Pastor’s good management shows in its efficiency ratio which stands at 23.76%. Excluding capital gains from Fenosa, recurrent efficiency ratio would also reach an all time record low: 33.93%.
Gross margin advances to 672M€ in the first semester, a 24.4% growth when compared with the same period last year. Operating profit reaches 491M€, a 36.8% increase, due to the 1.2% reduction in general expenses generated by the closure of 32 branches.
Coverage, including real estate guarantees, reaches 110%. Non performing loans ratio has lowered its growth, standing at 4.64%, below the sector’s average.
COMMERCIAL DYNAMISM
At the same time, Banco Pastor, has shown a strong commercial dynamism.
Jorge Gost, CEO and Vicepresident of Banco Pastor, said “despite all the turbulences due to the economic crisis, we are fully committed to the commercial activity. In SME we are following a microsurgery approach” continued Gost. “We have picked the sectors we expect will increase in the next months and carried an individual analysis for more than 30,000 companies. All of them will have a personalised offer. Transportation, renewable energies, food industry, R&D, and healthcare are among those for which we foresee a brighter future. We are convinced that this microsurgery approach will allow us to set the foundations of a commercial activity that will help the bank to emerge with greater strength after the crisis”.
The fast pace of mortgage originations since the launch of Hipotecal49 is also a proof of commercial activity. Since May mortgages increased in Banco Pastor by 3,000.
Deposits from clients reached 13,915M€, of which nearly 65% are term deposits which grew 464M€ in one year. Deposits, together with commercial paper, have led liquidity ratio to 71.6%, 64 basis points higher than first semester of 2008.
Banco Pastor has launched in May a new global value offer for individuals, which includes payroll accounts, mortgages and deposits. We are not just focused on capturing clients but on attracting profitable clients by offering them a mutual value proposition.
Banco Pastor also has 1 billion pre-granted loans, positioning as one of the most proactive Spanish entities in ICO loans, which have increased by 12.3% since the end of 2008.
BANCO PASTOR FURTHER STRENGTHENS ITS CAPITAL AND RESERVES FOR A CHALLENGING 2010
-Pre-provision or operating profit reached €616.8 Mn., and even isolating capital gains from Unión Fenosa, increased by 28%.
-Income before taxes amounted to €164.7 Mn., whilst net income rose to €120 Mn. after the allocation of €135 Mn. to voluntary provisions.
A Coruña, 30 October 2009.- The earnings generated by Banco Pastor in 3Q09 show a similar evolution to that of 1H09, combining recurrence and capital gains and giving priority to precaution and voluntary provisions over results.
Pastor has thus prepared itself to face 2010 by allocating a total amount of €508 Mn. in provisions between January and September 2009. As a result, accumulated reserves have reached €791 Mn., of which €422 Mn. are generic. Growth in provisions is explained by generic charge-offs, that, after a 248% increase, will act as a cushion to face 2010; in the meanwhile, specific charge-offs, directly linked to credit risk, decreased by 15%.
Banco Pastor closed the first nine months of 2009 with €165 Mn. of profit before taxes and €120 Mn. of income attributed to the Group, 29% below last year, as a result of the €135 Mn. allocated to voluntary provisions throughout the year.
"In Banco Pastor we are looking ahead at 2013, but we are well aware of the fact that 2010 will be the worst year of the crisis. This obviously offers a double interpretation: on one hand, we will see the long-expected end of the tunnel, with GNP growing in the second half of the year; but on the other hand, we will be facing the hardest phase of the crisis. Banco Pastor has done its homework regarding solvency, liquidity, efficiency and profitability, and since 2Q09 we are making remarkable improvements in the matter which affects all financial institutions equally: NPL´s" pointed out Mr. José María Arias, Chairman of Banco Pastor. Arias remarked that two out of every three euros of growth in provisions in 2009 correspond to generic, "which ensures us an overly comfortable cushion to face 2010".
Banco Pastor is also seeing a slowdown in its npl ratio: it reports a slight increase over the last quarter, from 4.64% at the end of 1H09 to 4.88% as of September, below the sector´s average. In the meanwhile, global coverage reached 114%.
Once again, Banco Pastor´s solvency ratios stand at the highest levels of the Spanish banking system: Core Capital rose to 8.27%, BIS ratio stood at 12.59% and TIER 1 reached 10.68%, thus widely outperforming the levels of December 2008 (6.33%, 10.56% and 7.46% respectively).
Liquidity management was already a most relevant issue at Banco Pastor before the crisis began. In fact, its commercial gap stands at 71%, and it is the best among commercial Banks isolating Repos. Moreover, the first line of liquidity exceeds €2,800 Mn. As a result of its diversification and anticipation policies, Banco Pastor has rolled its institutional funding maturities through 2012.
Gross margin boosted at a 25.7% rate, which, together with tight cost management balancing long and short term, positions Banco Pastor as one of the most efficient banks in Spain and Europe, as reflected in its cost to income ratio: 27.55%. Even isolating capital gains from Unión Fenosa in the denominator, the recurrent ratio would reach 35.58%.
Jorge Gost, CEO of Banco Pastor, pointed out that "the improvement in the financial statements relies on fully commercial factors such as customer caption, with nearly 50,000 individuals and more than 7,000 companies, and the launching of new products, essentially payroll accounts and mortgages to individuals, such as Hipotecal 049, which has allowed Banco Pastor to rise its market share in new production of mortgages from 1% in April to 2.5% in August, after granting more than 5,000 operations".
All in all, the net interest margin keeps growing and reaches the highest quarterly level ever, in spite of the 7% contraction in volumes caused by the fall in demand, especially in the real estate sector.
On the other hand, customer funds on balance sheet report a slight decrease, 0.9%, driven by the significant fall in Public Sector deposits. Nevertheless, customer deposits grow €141 Yoy, 1.1% in relative terms.
The CEO also reminded that the streamlining of 56 branches of the commercial network since the beginning of the year is ought to the profitability of each branch and the proximity of another one which will keep providing the service and attention customers demand.
BANCO PASTOR LEADS THE SECTOR IN SOLVENCY AND SHIELDS ITSELF WITH €829 MILLION IN PROVISIONS
- Pre-provision profit, that is, net operating income, reached €710.7 million, a 34.3% yoy growth.
- Banco Pastor is leader in solvency.
- NPL´s came to a standstill during the last quarter, below the sector´s average.
- Income before taxes posted €130.5 million, and income attributed to the Group amounted to €101.1 million, after the allocation of €122.9 million to extraordinary provisions.
A Coruña, February 12th 2010.- Banco Pastor considers prudence should be maintained as its main priority in 2010. Therefore, it has made the necessary effort to accumulate a total amount of €829 million in provisions, the highest level ever, thus shielding itself against any contingency throughout 2010 and the following years. These funds have grown €336 million year on year.
In the meanwhile, pre-provision profit reflected commercial margins growing on a continuous basis. Gross operating income showed a 21.6% yoy increase, and net operating income rose by 34.3%. Nevertheless, Banco Pastor, following its cautious and conservative policies under the current circumstances, has decided to sacrifice bottom-line profit. Income attributed to the Group stood at €101.1 million, 38.4% below last year´s. Isolating the allocation of €122.9 million to extraordinary provisions, income attributed to the Group would have reached €187.1 million, thus growing €23 million above 2008, that is, 14% yoy.
“Solvency and risk management should be our top priorities now and during the coming months. Strengthening our balance sheet is as important, or even more so, than profits. We must not think of 2010, which will undoubtedly be a complicated year, but of 2011 and 2012, as they will actually mark the future financial map and the way out of the crisis for Spain” pointed out Mr. José María Arias, Chairman of Banco Pastor. Arias remarked that Banco Pastor has achieved its goals for 2009: “to fill up its tanks with provisions and to activate its commercial gears in order to promote customer caption and linkage”.
CAPITAL BASE, NPL´s AND LIQUIDITY
In 2009 Banco Pastor led the banking sector in solvency, showing the best combination between Core Capital and Tier 1 within the banking system. Core Capital stood at 8.26%, Tier 1 at 10.55 and BIS Ratio posted 12.47%, widely outperforming the ratios reported in 2008: 6.33%, 7.46% and 10.56%.
“I can´t be but satisfied with our results, though I don´t think we should deceive ourselves regarding 2010 and even 2011. They will be hard years, and any financial institution unable to activate the commercial gears of its branch network at its maximum level will find itself in serious difficulties. Moreover, risk management will be another key issue. Banco Pastor has restrained NPL growth, which is another motive for satisfaction” pointed out Jorge Gost, CEO of Banco Pastor.
Opposing market trends, Banco Pastor has been able to maintain its NPL ratio at 2009 year end at the same level of the third quarter, that is, 4.88%, below the sector´s average, which stands above 5%.
Loan loss reserves amounted to €829 million in absolute terms, almost 70% above the previous year, of which 304 is generic fund and 126 is substandard. As a result, the coverage ratio stood at 53.28% - 118.7% including asset backed guarantees.
At the same time, Banco Pastor still maintains an enviable leading position in liquidity, summarized by a 71.7% coverage ratio of loans to customers by customer deposits, a first line of liquidity above €2,500 million and institutional funding maturities already rolled over through 2012.
EFFICIENCY AND COMMERCIAL ACTIVITY
Since administrative expenses only grew by 4.4%, the efficiency ratio stood at 31.11%, among the best in the sector. Recurrent efficiency, that is, excluding capital gains from the sale of Unión Fenosa, posted 38.20%, much below the sector´s average and our peers, and thus maintaining Pastor´s position in the ranking.
Regarding commercial activity, customer funds on balance sheet amounted to €14,416 million, €664 million above December 2008, 4.8% in relative terms. Resident sector deposits, which stand for 86% of total deposits, grew 7.2%, a significant increase over the 1.8% rate of Q3; this improvement has brought about important advances in our market share, both in individuals and corporates. The increase in sight deposits during the last quarter was especially relevant, driven by the success of our campaign “Triplete payroll account”, launched in September.
The evolution of total off-balance sheet funds has also been very satisfying: the stock of pension funds increased by 12.5% yoy, and mutual funds rose 3.7%; this rate is especially relevant considering that the sector as a whole fell by -3.0% yoy.
However, this is no coincidence: our fund “Fonpastor 70” has been awarded as the best in its 10-year category, and our fund manager, “Gespastor”, ranks ninth in profitability among the 88 Spanish fund managers.
As a result of the acceleration of 4Q, the yoy growth rate of loans to customers nears zero at the end of 2009. Nevertheless, it is worth pointing out the remarkable increase in mortgages to individuals: €878 million, 21.8% yoy.
On the other hand, the increase in loans to SME´s is also considerable, both regarding ICO (Spanish Official Credit Institute) loans, where Pastor is a significant reference within the sector, and other products. The stock of ICO loans grew 13.5% yoy, but the number of operations increased by more than 50% and the amount granted, by 41.3%. In the meanwhile, the number of loans granted with personal guarantees was 13.7% higher than the previous year´s, and this percentage rose to 29.0% for asset backed loans (excluding loans to developers).
It is also worth pointing out that the stock of commercial paper grew €172 million in the last quarter. This sustains the fact that, even under the current crisis, we provide reliable support to SME´s and professionals and attend their financial needs.
