Caixa Geral de Depósitos (CGD) posted a profit of € 641 million in the first nine months of the year, an increase of € 272 million over the same period last year.
The state-owned bank, led by Paulo Macedo, explained, however, that consolidated net income was € 481.4 million, a 30% year-on-year increase.
"This growth is very sustainable," said João de Brito, CEO of CGD.
Due to the conclusion of the sale of Banco Caixa Geral (BCG) in Spain and the sale of Mercantile, which was concluded this Thursday, in line with the goals set out in the Strategic Plan, CGD canceled € 159 million of impairment losses. which explains the difference between net income and current income.
"These developments have led to the cancellation of EUR 159 million of impairment resulting from the sale price achieved in the negotiation process," the public bank said. Despite this, September accounts are still part of BCG and Mercantile because deconsolidation only happens after the sale date.
"Recurring core operating income reached EUR 564 million, up 1.6% year-on-year," CGD explained. That development is explained by a decrease in operating expenses combined with an increase in service and commission income (+ 2%) offsetting a fall in strict net interest income, Caixa said.
Strict net interest income declined 2.2% in the first nine months of the year from the same period last year to EUR 851.5 million due to the "interest rate environment and its impact on the loan portfolio and financial assets," the public explained bank. "It's mostly about indexes, namely Euribor," explained João de Brito. "It reflects on credit operations because they have an indexed rate."
"This trend of net interest income is expected to continue in the fourth and first quarters of next year, as credit changes are typically made every six months," the CGD executive said.
Commissions increased 1.4% in domestic activity to EUR 307 million (up 2% in consolidated activity to EUR 374 million). João de Brito explained that "the total volume of commissions remains below what it was in 2015."
Costs fell 4% annually to EUR 662 million. The number of employees decreased from 7,675 employees in December 2018 to 7,421 in September this year, a difference of 254. Also, the number of branches decreased from 522 in December last year to 510 in September 2019, a difference of 12 agencies.
Loans to customers totaled € 41.4 billion, up 0.4% (€ 144 million) compared to December 2018. Consumer and home loans totaled about € 24 billion, representing approximately 58% of the total volume of loans granted.
The corporate loan segment amounted to EUR 13.6 billion, which is approximately one third of the total approved loan. However, with the exception of the construction and real estate sectors, corporate loans amounted to EUR 8.7 billion, an increase of 5.5% compared to December 2018.
In asset quality, CGD reduced credit risk costs this year, and dropped to 0.01% in September 2019. The NPL ratio decreased from 8.5% in December 2018 to 6.6% in September 2019. Note that the NPL ratio is less than 90 days less than 5%. Impairment insurance was 68.2% above the European average (44.9%).
CGD has reduced bad debt by 6.6 billion euros since December 2016. In September 2019, the villain was worth four billion euros.
The number of holdings decreased, down to 690, compared to the 766 CGDs that were on the balance sheet in December 2018. The impairment ratio was 48% in September this year.
In terms of capital, CGD says it is "comfortable (…) even without the full impact of the affiliate's sales." According to SREP requirements, CET1 was 9.75% and Tier1 was 11.25%.