BANCO PASTOR EARNS €48 MILLION AND STRENGTHENS ITS BALANCE SHEET
- Pastor restrains NPL growth, leaving the ratio at 4.94%, almost the same as the 4.88% posted in September and December 2009
- Sound growth rates, both in deposits and in loans to customers
- “Podium” among domestic banks in solvency, efficiency and liquidity
A Coruña, April 30th 2010.- Banco Pastor approaches 2010 maintaining its 2009 policies of capital base and liquidity reinforcement and active risk management, given the persistent weakness of the macro scenario. Pastor earned €48.1 Mn before taxes in 1Q10, and €34.4 Mn after taxes, well above market consensus.
“Banco Pastor´s top priority this year is to keep reinforcing its financial strength, as I have pointed out frequently. We are the only domestic bank whose coverage ratio has improved in this quarter, and, according to our forecasts, generic provisions would provide enough coverage to face the persistent weakness of the economy, even beyond 2011” said José María Arias, Chairman of Banco Pastor. “At the same time, we have sharply restrained NPL growth. In fact, net entries have been decreasing for six quarters in a row, dropping 79% quarter on quarter, thus maintaining the NPL ratio almost unchanged in comparison to that reported in September and December 2009”, the Chairman of Banco Pastor remarked.
BALANCE SHEET REINFORCEMENT
Maintaining its traditional caution policy, Banco Pastor has judged convenient to keep reinforcing its provisions, thus building up a coverage ratio of 56.14% - 117.9% including asset backed guarantees associated to NPL´s-, and loan loss reserves of €884 Mn – 92% above March 2009-, of which €266 Mn correspond to Generic Fund and €122 to substandard risk. Among the Spanish banking sector, Banco Pastor shows the highest volume of generic fund in correlation with the size of its loan book.
“We go on securing our position in the “podium” of the Spanish banking sector in solvency, efficiency and liquidity. All these accompanied by recurrence in earnings driven by commercial dynamism, with relevant growth in our core business volume, both in deposits and in credits” pointed out Jorge Gost, CEO.
Banco Pastor´s solvency ratios rank among the highest of the Spanish banking sector; Core Capital stood at 8.3%, BIS ratio 12.2%, both of them after a 142 basis points year on year increase. TIER 1 posted 10.5%, 236 basis points above 1Q09. “This is a proof of Banco Pastor´s ability to generate capital above the European requirements” reminded the Chairman of Pastor.
At the same time, Pastor keeps strengthening its liquidity position, summarized in a coverage ratio of loans to customers with traditional deposits of 73.4%, record high to be maintained, since all our institutional funding maturities have been rolled over through 2012. Besides, Pastor´s first line of liquidity exceeds €2,100 Mn. Besides the first line of liquidity is above €2,100 Mn., and additional liquidity exceeds €5,600 Mn.
RECURRENT EARNINGS
Pastor´s P&L account shows year on year growth in every margin: Net Interest Income grew by 0.5%, Gross Operating Income increased 5.5% and Net Operating Income, 7.2%; and, remarkably, the income before taxes and after provisions allows further solvency reinforcement.
As administrative expenses grew only 4.5%, the efficiency ratio stood at 35.93%, showing a year on year improvement of 38 basis points and placing Pastor once again among the best of the sector.
COMMERCIAL BUSINESS
New added value customers and the margins of the P&L account clearly prove Pastor´s determined bet for commercial activity, in spite of the unfavourable economic scenario, with pressure on margins, deposit war and consolidation movements within the new financial map.
On-balance sheet customer deposits excluding Repos amounted to €14,727 Mn, €865 Mn above March 2009, 6.2% in relative terms; 65% of this growth, that is, €562 Mn, materialized in 1Q10. 82% of the global growth corresponds to resident sector time deposits, which rose €711 Mn year on year, 9.1% in relative terms, of which €576 Mn were arisen in 1Q10.
The key of our success in this segment lies in the wide, attractive and competitive range of products we offer, such as “depósito bonificado” and “depósito creciente”.
Nevertheless, our effort in deposit gathering did not only focus on on-balance sheet funds. In fact, mutual funds increased 11.2% year on year, and pension funds increased 15.1%.
Regarding customer loans, Pastor showed a remarkable dynamism: 4.3% year on year growth in gross loans. One of the main contributors to this favourable performance is undoubtedly our mortgage to individuals “Hipotecal”. Our on-balance sheet mortgage stock increased €1,282 Mn year on year, 31.9% above March 2009. In this regard, Jorge Gost pointed out that it is “an evident proof of the fact that Banco Pastor continues to finance households, even under the current crisis. The growth accumulated in this first quarter 2010 reaches already €407 Mn”.
And no less remarkable is the increase in our loans to SME´s, both regarding ICO (Spanish Official Credit Institute) loans, where we rank among the ten most active financial institutions in Spain, and other credit options associated to different sector agreements. Our stock of ICO loans rose by 16.8% year on year, and almost half the total growth materialized in 1Q10. And new production of loans granted under sector agreements in this 1Q10 exceeded that of 1Q09 by 31.8%.
BANCO PASTOR GROWS BOTH IN LOANS AS IN DEPOSITS, AND EARNS €61.5 Mn
- Customer funds increased 11.7% yoy.
- Loans to customers grew by 6.2% yoy.
- 36,000 new individual customers and 6,200 new companies.
A Coruña, July 30th 2010.- This set of results reflects the commercial activity of Banco Pastor and the growth it has managed to achieve both in deposits and loans, despite the fact that 2010 is revealing itself as the worst year of the crisis. Income attributed to the Group reached €61.5 Mn, 25% below 1H2009, because of the capital gains booked in 2009.
Regarding solvency, a major issue after the stress tests carried out by European supervisors, Pastor´s ratios have improved; Tier 1 stood at 10.43 % as of June, and Core Capital reached 8.31%, after 43 and 90 bps advances respectively over June 2009.
The Chairman of Banco Pastor, José María Arias, agreed with his counterparts when pointing out the relevance and timeliness of Europe´s bank stress tests, which “should not be criticized, even though –he said- I am convinced, as most people, that the third scenario is extremely unlikely, since its macroeconomic hypotheses are those of a cataclysm for Spain. However, we have managed to pass all the assumptions posed by European supervisors”.
Jorge Gost, CEO of Banco Pastor, believes that “the worst part will be over by the end of this year, though the situation will still be difficult in 2011; at least, until we see a solid recovery of domestic demand and exports gain momentum”. As for Pastor, he pointed out that “we are making our contribution, and our 21% growth rate in mortgages and 59% in ICO loans to SMEs clearly prove this end”. Moreover, Banco Pastor captured more than 36,000 new individual customers and 6,200 new companies.
NPLs in Pastor show the same nearly flat trend of the latest quarters. The NPL ratio thus posted 5.04% as of June, under the sector´s average, only 40 bps above June 2009 and 16 b.p. above December 2009. Coverage ratio maintains similar levels to those of the previous year, 113% or 51% respectively, whether guarantees associated to NPLs are considered or not. On the other hand, loan loss reserves increased by €99 Mn, thus rising from €738 Mn as of June 2009 to €837 Mn in June 2010, of which more than 125 are prudential reserves and more than 180 are generic reserves.
Besides, “Banco Pastor has beaten again its record high in liquidity”, Gost assured. “As of June 2010, 74.5% of our loan book was already covered by customer deposits, well above the 71.6% of June 2009, granting us a sound competitive advantage within the sector. Banco Pastor´s first line of liquidity reaches €1.7 Bn.
COMMERCIAL DYNAMISM: DEPOSITS AND LOANS
As stated earlier, commercial business improves significantly in Pastor. Customer funds on balance sheet, excluding repos, reached €15,267 Mn, €1,601 Mn above June 2009 and 11.7% in relative terms. 69% of this growth, that is, €1,101 Mn, was generated during the first half of this year.
Alongside this sound performance in deposits, loans to customers also evolved remarkably well, especially some specific products. Net loans and advances to customers grew at a 6.2% yoy rate.
Under unpredictably adverse circumstances, net interest income drops by only 4.2%, “something to be expected –Gost pointed out- given the turn the Spanish economy took and the low interest rate scenario; nevertheless, we are not concerned, because we have reached sound growth rates both in deposits and loans, which demonstrates our commitment with customers and constitutes our main long-term target”.
Pastor managed to almost refrain structural cost growth in the first half of the year; despite the addition of the renting costs associated to branches sold under the 2009 sale & lease back operation, they increased by only 4.8%.
The efficiency ratio reached 41.54%, among the leading institutions in Europe, whose average ratio posted 57%.
Regarding product structure, resident sector time deposit growth is remarkable: they account for 57% of total customer deposits and explain 71% of total growth, after a €1.135 Mn yoy, 14.9% in relative terms. €818 Mn of that figure were generated in 1H10.
Customer savings were also channeled to off-balance sheet products; mutual funds have thus reached a significant yoy increase of 8.4%, whilst pension funds grew by 7.7% yoy.
Mortgages to individuals showed a €1,334 Mn increase. The CEO of Pastor was very satisfied with this evolution, and pointed out that the number of loans granted is even more remarkable; “in fact, in only these six months of 2010, 6,759 loans have been granted. This figure more than doubles that of the same period of 2009; it is 3,987 loans above 1H2009, and implies a further acceleration of the rhythm of 2H2009”.
Even though domestic demand has not recovered yet, the number of consumer loans granted in 1H2010 reached 7,739, that is, 32.2% above the same period of 2009.
Income before taxes reached €88.2 Mn until September
Banco Pastor reinforces its solvency anticipating 2011 needs, and gains market share through credit and deposit growth
- Core capital reached 8.35%, whilst Tier I stood at 10.49%
- Net loans and advances to customers increased by 9.2%, up to €21,364 Mn
- NPL growth decelerated and remained below the sector average
A Coruña, October 29th 2010.- Banco Pastor 3Q2010 results show a positive commercial evolution and a strategy based on caution and financial strength, thus maintaining the guidelines followed in previous quarters, even in the most complicated year of the crisis so far.
In this way, Pastor consolidates its position among the six top Spanish banks in solvency, one of the “Achilles´ heels” for the sector. Core Capital stood at 8.35%, while Tier I posted 10.49%, thereby improving the ratios of the previous quarter by 5 and 7 basis points respectively.
This reinforcement has been achieved in spite of the adverse financial scenario and the so-called “deposit war” that Banco Pastor has not fought; one which, however, is drastically intensifying the already strong competition currently dominating the sector, and is expected to last through next year.
2011 outlook: efficiency and caution
These are the reasons why the bank maintains caution as its strategic guideline to face the difficulties the economy and financial markets may suffer next year. In fact, according to the explanations given by José María Arias, Chairman of Banco Pastor, the economic scenario expected for next year “will be complicated, since, with a GDP increase of only 0.7% at the most, employment will not be generated; this will not solve the problem of unemployment in Spain, which will continue to increase. Debt maturities through the end of 2011 should also be taken into account: they reach €216 Bn for the sector, though Banco Pastor has rolled over its maturities”.
As a matter of fact, Pastor is one of the few Spanish financial institutions that have proved able to issue bonds in the international markets after the summer, “thus allowing us to maintain our active policy of reducing ECB reliance” Arias concluded.
Banco Pastor, allocated €161 Mn to provisions and maintains a “provision buffer” of almost €700 Mn. Despite these widening buffers, the bank delivered an income before taxes of €88.2 Mn, whilst income attributable to the Group stood at €61.8 Mn.
Besides, this P&L account does not include capital gains generated by the latest corporate deals with Espirito Santo Gestión, S.A. and Companhia de Seguros Tranquilidade, S.A., which include the sale of the subsidiary company Gespastor, S.A., and 50% of Pastor Vida, S.A. This extraordinary income will be allocated to further reinforcing our provisioning base.
This positive evolution in the middle of the “financial storm” was partly due to the fact that Pastor has managed to keep its NPL ratio under control; it grew by only 21 b.p. during the last 12 months, to reach 5.09%, comparing very favourably with the 75 b.p. increase in the sector average.
This slowing growth in the NPL ratio is explained by the drop in net entries: 62% below the same period last year. Regulatory coverage ratio thus reached 84% after the new legal requirements recently announced by Bank of Spain, while total coverage ratio stood at 116.4%. At the same time, Pastor continues to lead the sector in liquidity, with an ex-repos deposit to loan ratio of 70.7%.
The CEO of Banco Pastor, Jorge Gost, pointed out that “even though 2010 is proving to be the hardest year since the beginning of the crisis, we will continue to grow in 2011 despite the increasing competitiveness in the sector, always maintaining caution as our main guideline. This is the reason why we have accumulated a broad provisioning buffer, while still being loyal to our commitment to customers: they continue to rely on us to invest their savings, and we continue to increase their lending to them”.
In this regard, Banco Pastor proved that its commercial machinery is well-oiled, since “we have grown both in deposits and number of customers, gaining market share”, Gost added.
More deposits
Indeed, the outstanding dynamism of commercial activity produced a 12.4% increase in deposits year to date, equivalent to €1,717 Mn more than in September 2009, thus reaching a total of €15,613 Mn by the end of 3Q2010.
Resident sector time deposits were the main driver of this improvement: during the first nine months of 2010 they grew at a rate of 14%, i.e., €1,077 Mn. It is also worth pointing out the favourable trend in of sight deposits, whose cost is much lower than that of time deposits; they have increased by 7.4% yoy.
The upward trend shown by on-balance sheet deposits despite the adverse market conditions has also been followed by off-balance sheet funds; in fact, mutual and pension funds jointly grew by 2.3% yoy, even though the average trend in the sector is clearly downward.
More loans and linkage
Alongside with deposit growth, Banco Pastor continues to grow at an increasing pace in loan production, in an especially difficult moment for lending, with net loans and advances to customers increasing by a significant 9.2%, thus amounting to €21,364 Mn.
Product-wise, mortgage loans showed the highest increase, €1,452 Mn since September 2009, or 33% in relative terms. We must highlight the success of “Hipotecal49”, launched in April 2009, which drove the number of mortgage loans granted to a 51% above the same period last year.
The sale of this kind of products has brought Pastor closer to its clients and favoured customer linkage, contributing not only to loan portfolio growth, but also to credit quality improvement.
SMEs and other products
This intense commercial activity also extends to SME finance, where loans granted under agreements with the Spanish Official Credit Institute (ICO) are still the main link between the bank and the SME sector. In fact, Banco Pastor is the eighth Spanish financial institution in ICO loans granted, after climbing one position recently. Besides, the balance of ICO loans granted multiplies by more than three times that of September 2009, whilst commercial bills increased by 21.9% yoy.
Turning to cross-selling products, life insurance rose by 29.3%, while home insurance almost doubled since September 2009, after a 93% increase. And in the middle of the deposit war and the competition for customers, the number of payroll and pension accounts is 5,000 above that of last year.
Commercial dynamism has strengthened Pastor´s presence within the banking sector with a significant increase in the number of customers acquired, which grew by 14% yoy.
Consolidated P&L Account
Income attributed to the Group reached 62.1 Mn€, after the allocation of 103 Mn€ to generic fund
Banco Pastor continues to reinforce its solvency and has already covered 100% of its NPLs
The Bank releases a strategic plan that, in spite of the crisis, includes the opening of new corporate branches and doubling net profit in a three-year period.
Core capital reached 8.46%, while Tier I rose to 10.63%
Net loans increased by 6.2% yoy, and customer deposits, 6.4%
A Coruña, February 11th 2011.- Banco Pastor is willing to avoid future surprises in 2011, a year expected to be complicated for the Spanish economy as a whole. This is the reason why it continued to reinforce its solvency during 4Q10; Core Capital thus rose to 8.46% and Tier 1, to 10.63%, vs. 8.35% and 10.49% as of September. These improvements have consolidated Pastor as the top Spanish domestic bank by Tier 1, and the second one by Core Capital.
Banco Pastor posted a net income attributed to the Group of 62.1 Mn€, after allocating 103 Mn€ to generic provisions to face the year ahead, that, in spite of the emerging signs of recovery, will still be tough; and, as José María Arias, Chairman of Banco Pastor, thus pointed out “will require cautious measures to further reinforce financial solidity and provision buffers”.
Cautious provisioning policies combined with high-quality risk collaterals have allowed Banco Pastor to reach a regulatory coverage ratio of nearly 100% (99.7%) at the end of 2010.
NPL ratio is “under control” in Banco Pastor, stated Arias. An adequate management has achieved a further deceleration in NPL ratio growth; it stood at 5.14% at the end of 2010, after an increase of only 5 bps in 4Q10 and 25 bps in 2010 as a whole, thus widening the gap with the sector average and well below its 60 bps rise of 2010. Net entries fell by 70% in 2010, and, in absolute terms, amounted to less than one third of those of 2009.
Pastor closed 2010 with a total exposure to construction and real estate sector of 4,813 Mn€, which stands for 19.7% of the total loan book. The NPL ratio of these specific sectors stood at 15.9%, below sector average.
“Prospects are not bad and, having anticipating our homework, we are already witnessing the first positive effects. But there is still a long way to go, and we must not relax” –stated the Chairman of Banco Pastor. “2012 and 2013 will be recovery years, although this recovery will be slow and timid. Nevertheless, we will continue to attract customers and deposits and to grant loans; and this has encouraged us to design and present a new Strategic Growth Plan, supported by our strength in solvency and liquidity. And this, without giving up either on the opportunities arisen by the restructuring process in the sector, or on growth in Spain.”
Customer deposits increased by 6.4% yoy and net loans and advances to customers rose by 6.2% yoy. As a result of this evolution, liquidity ratio stood at 71.9% by 2010 year end, comparing favourably with the rest of the sector. Besides, Pastor hardly has any maturities in 2011, and the lion´s share will take place from 2013 onwards. Moreover, Banco Pastor´s first line of liquidity amounted to 1.4 Bn€.
Strategic Plan
Although unusual in recession periods, Banco Pastor has decided to launch a 2011-2013 Strategic Plan called “Smart Growth”.
“This plan –pointed out Jorge Gost, CEO of Banco Pastor- is based on high-quality growth and focused on value creation, continuous improvement of our ability to generate recurrent earnings and profitability advances via customer linkage. All this structured through a new commercial distribution model”.
Under this plan, Banco Pastor will implement differentiated commercial strategies for each territorial area, suited to each customer type and competitive position.
Arias stated that, thanks to this plan, in 2013, “Banco Pastor will reach a 9.8% Core capital and will double net profit, whilst reducing funding by 20%, thus improving our commercial gap even further”.
Regarding the distribution model, Jorge Gost said that “the plan comprises the opening of new branches specialized in SMEs, a segment where Pastor aims to become a benchmark. 11 of these new corporate branches are to be opened in 2011. And, of course, 80% of our branch network should generate profits”.
Business
Banco Pastor has displayed an outstanding commercial dynamism throughout 2010. In the midst of the deposit war, customer deposits rose to 15,519 Mn€, 931 Mn€ above December 2009, 6.4% up in relative terms vs. 2.3% for the sector.
On a breakdown by product, the growth in resident sector time deposits is worth highlighting: they increased 5.1% yoy, 403 Mn€ in relative terms. Galicia remains a priority market for Banco Pastor: more than half of the new time deposits captured in 2010 come from this Autonomous Community.
Net loans and advances to customers rose by 6.2 %, thus reaching 21,652 Mn€, outperforming the sector by far, since resident sector loans grew by only 0.5% yoy.
Figures speak for the strong commercial dynamism, as well as linkage and cross selling efforts:
The number of personal customer captions increased by 7.4% yoy, whilst linked customer captions, main target of our commercial policies, rose by 36%.
The number of mortgage loans granted to personal customers has grown by 18% during the last 12 months.
New life insurance contracts increased by 10.5%, and home insurance, by 68.8%.
The number of new payroll accounts and pensions was 12.6% above 2009.
This intense commercial activity also applies to the SME segment. The number of new linked corporate customers rose by 36.5% yoy.
Besides, the number of new commercial paper and foreign business grantors increased by 58% yoy, and the number of new business insurance contracts was 163% above that of 2009.
ICO (Spanish Official Credit Institute) loans remain a reliable proof of the relationship Pastor maintains with the SME World; in fact, Pastor ranks 9th among Spanish financial institutions by ICO loans granted, and 1st among Galician institutions. 524 Mn€ have been granted through this channel in 2010, multiplying the figure of 2009 by four times.
