CaixaBank: 120 years of history

CaixaBank, S.A., also previously known as Criteria CaixaCorp, is a Spanish multinational financial services company. CaixaBank is headquartered in Valencia, and has operative offices in Barcelona and Madrid. It is Spain’s third-largest lender by market value, after Banco Santander and BBVA.

2023 performance of CaixaBank

In a Global Finance interview with CaixaBank’s CEO Gonzalo Gortázar on 6 May 2024, Gortázar spoke about the bank’s achievement of Best Bank in Western Europe and provided insights about CaixaBank’s strategic direction in 2023. The bank’s performance has been quite efficient, due to its focus on the clients and its reasonable financial health. For their sustainability efforts, they have developed new industry standards and their digital initiatives have enriched the customer experience.

What drove CaixaBank’s performance in 2023?

Gonzalo Gortázar explained that CaixaBank had great results in 2023 due to the particular emphasis on the clients and in meeting their bancassurance needs. This performance was supported by the best ever financials in over a decade, driven by rate normalisation, good risk and capital management leading to good credit quality, adequate liquidity and decent solvency levels.

Despite global challenges, net profit has risen to 4.8 billion euros ($5.1 billion), an increase of 54% when compared to the previous year, and allowed the bank to post a 13.2% return on equity. As Gortázar said, customer funds increased during the year by €19 billion, 3.1% up, with market share in long-term savings now sitting at 29.3%.

Furthermore, another factor that showed the bank’s healthy balance sheet was the NPL ratio which was 2.7%. The bank also ended the year with good liquidity and solvency which demonstrates the solidity of the Group’s balance sheet. This strength has supported and allowed CaixaBank to meet their clients’ financial requirements. For instance, they disbursed more than 280,000 credit services to enterprises in Spain and 80,000 new home loans to families.

Sustainability milestones in 2023

The bank met several of its sustainability goals by 2023. CaixaBank’s Sustainable Banking Plan 2022-2024 led to the mobilisation of €64 billion in sustainable finance. This plan has three priorities: being ahead in terms of the social impact of their activities, encouraging a transformation towards sustainability for enterprises and people, and valuing responsibility and good governance.

Gortázar noted that in 2022 and 2023 the bank had achieved great progress and accomplished 79% of their target. Using the biggest microfinance institution in Europe, Microbank, CaixaBank managed to provide 145,000 microcredits to families and SMEs throughout 2023. Moreover, they agreed to phase down financing for firms connected with thermal coal over time and phase out the financing by 2030 entirely. They also set specific decarbonisation goals for the automotive and iron and steel categories alongside the oil and gas and electricity ones set in 2022.

On the European level, CaixaBank is the leader in sustainable financing, which is confirmed by data from Refinitiv LSEG. The bank had 120 deals with a total value of $18.74 billion. The bank is committed to continue on this path and set a precedent in the sphere of finance. According to the European Commission, and within the EU’s policy context, sustainable finance refers to finance aimed at supporting economic growth while reducing environmental pressures and to help reach the climate and environmental objectives of the European Green Deal.

Digitalisation efforts to improve client experience

Regarding the main change priorities, in 2023, CaixaBank focused on customer experience as a key component of its strategy. It consisted of improving the clients’ experience through personalisation, the rising role of financial consultants, shifting client engagement towards mobile devices, and other trends.

Gortázar also added that CaixaBank is on top among Spanish digital banks with a 43.4% market share as estimated by GfK DAM, an organisation that has the authority of providing the digital consumption data in Spain. The bank has more than 11.5 million digital clients who are normally provided with facilities such as loans.  Imagin, CaixaBank’s mobile bank for young customers, serves more than 3.2 million customers.

In 2023, CaixaBank started the Smartphone TPV to simplify the card’s mobile payments for customers. It also signed a deal with Google Cloud that focuses on cloud, data, artificial intelligence, and analytics for the purpose of creating new solutions for the customers and to rapidly advance the bank’s digitalisation.

CaixaBank’s development of instant payments through partnership with the European Central Bank, to experiment on digital euro, as well as integrating Bizum for simple bill splitting through the application CaixaBankNow, was a major advance in digital payments. Building on this commitment to digital transformation, CaixaBank assembled over 100 employees with a cross-functional title of ‘AI Ambassadors’ with the brief of identifying and implementing generative AI into specific domains. This will enable them to improve organisation, operation effectiveness and customer care services.

Financial results

On Monday (15 July), Berenberg increased its price target for CaixaBank SA to €6.20 per share, compared with the previous amount of €5.75, and has retained a buy rating for the stock ahead of the group’s second-quarter financial statement which is set to be released on 31 July 2024.

The firm believes that CaixaBank will show operational efficiency in the second quarter of 2024 and expects that the net interest income will stabilise while the fee income will start recovering.

The analysts at Berenberg also proposed the idea that the bank may declare interim capital distributions with the second quarter results.

Berenberg forecasts a €0.13 interim dividend per share (DPS) for CaixaBank. The above figures imply that currently the shares of the bank are trading at 7.3 times the estimated earnings per share (EPS) for 2025, which is just above the average of the sector. At the current trading share price levels, this new target implies a potential move of around 20% up.

This view about the position of CaixaBank is based on the bank’s previous performance as well as the anticipated stable earnings of the bank. In the near term, the bank’s shareholders will focus on upcoming financial releases and any news concerning the distribution of capital.

CaixaBank participates in €3.5 billion credit facility

In the meantime, another interesting piece of information regarding CaixaBank is its participation  in the Ferrovie dello Stato Italiane S.p.A. (FS)’s new revolving credit facility which has been signed with a syndicate of nine banks and financial institutions for up to €3.5 billion with a three-year term.

This facility agreement is the largest financial transaction ever signed by FS in terms of size. The other banks include: Banca Popolare di Sondrio, BNL-BNP Paribas, BPER, CaixaBank, Cassa Depositi e Prestiti, Crédit Agricole CIB, ING, Intesa Sanpaolo – Divisione IMI/CIB and UniCredit.

The credit facility is a Sustainability Linked product and is the result of the contractual delivery of mechanisms for reviewing the margin and commitment fee and relates to three Key Performance Indicators (KPIs) which exemplify the FS’s dedication to ESG issues. These KPIs refer to the

percentage of capital expenditure in line with the EU taxonomy, the proportion of energy consumption in relation to the FS Group’s operating revenues and the increase in the percentage of female employees compared to the overall number of employees.

Since 2021, CaixaBank has also signed three more loans for a total amount of €400 million. The bank is also a dealer of the €12bn EMTN Program of FS.

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