Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CaixaBank SA (CAIXY) reported a strong performance in 2024 with a 20% increase in net income, reaching close to 5.8 billion.
• The bank achieved a return on tangible equity of 18.1%, surpassing expectations.
• Customer funds grew by 11.7%, with significant contributions from wealth management and deposits.
• The bank announced a sixth share buyback program worth 500 million, indicating strong capital management.
• CaixaBank SA (CAIXY) maintained a solid liquidity position with a liquidity coverage ratio of 207% and a net stable funding ratio of 146%.

Negative Points

• Net interest income for the fourth quarter was down by 1.9%, reflecting challenges in the current rate environment.
• The bank anticipates a banking tax of approximately 600 million for 2025, which could impact profitability.
• There is ongoing pressure on maintenance fees, with expectations of further declines in 2025.
• The mortgage segment continues to lag in loan growth compared to other segments.
• CaixaBank SA (CAIXY) faces potential regulatory changes that could impact risk-weighted assets and provisioning strategies.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with CAIXY.

Q: Can you walk us through what you expect in terms of NI quarterly trajectory, particularly regarding deposit growth and rate assumptions? A: (Javier Pano, CFO) We are assuming a good tone in lending, getting closer to our long-term target of 4% growth. For deposits, we expect growth over 3%, with the percentage of interest-bearing deposits stabilizing soon. The cost of deposits is expected to average in the low 60s basis points for the year. The trough in NI should be later this year, not extending into 2026.

Q: What measures are you taking to retain payroll clients amidst competition, and at what cost? A: (Gonzalo Gortazar, CEO) We have been successful in gaining payrolls and expect to continue. We have a 36% market share and aim to grow it. Marketing costs for gaining payrolls are included in our expenses, and we do not expect to incur additional costs to maintain our competitive edge.

Q: Could you provide your estimate of the Spanish banking tax for 2025? A: (Gonzalo Gortazar, CEO) Our estimate for the banking tax in 2025 is around 600 million, which should not be far from the actual number.

Q: What are your thoughts on M&A opportunities and bank consolidation in Europe? A: (Gonzalo Gortazar, CEO) We focus on organic growth in Spain and Portugal, where we see value creation. We don't see synergies in cross-border deals due to complexity and lack of scale benefits. The focus should be on deepening the integration of the single market and capital markets in Europe.

Q: How do you anticipate the ECB's potential new regulation on historical credit data affecting your bank's risk-weighted assets and provisioning strategy? A: (Gonzalo Gortazar, CEO) It's early to evaluate, but we have a conservative approach to modeling, including bad years of the cycle. We expect no material impact on provisions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.