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Spanish banking giant CaixaBank SA (OTC:CAIXY) (BMAD:CABK) reported a strong start to its 2025-2027 Strategic Plan with first quarter results showing substantial profit growth despite headwinds in net interest income. The bank’s shares were down 3.66% to €6.97 during the April 30 trading session following the presentation.
Quarterly Performance Highlights
CaixaBank delivered net income of €1,470 million in Q1 2025, representing a 46.2% increase year-over-year. When adjusting for the banking levy accrual timing differences, profit growth was still robust at 6.9% compared to Q1 2024.
The bank achieved this performance while maintaining solid profitability metrics, with return on tangible equity (ROTE) reaching 19.4% on a trailing twelve-month basis and cost-to-income ratio improving to 37.7%.
As shown in the following comprehensive overview of key results, CaixaBank’s performance exceeded initial strategic plan projections across multiple dimensions:
Asset quality continued to strengthen with the non-performing loan (NPL) ratio decreasing to a new historical low of 2.5%, while the cost of risk remained well-controlled at 0.25%. The bank maintained ample liquidity with a Liquidity Coverage Ratio (LCR) of 197% and a solid capital position with a CET1 ratio of 12.5%.
Market Context and Economic Environment
CaixaBank’s performance comes against a backdrop of economic resilience in its core markets of Spain and Portugal, which continue to outperform the broader Eurozone. According to the presentation, Spain’s economy is projected to grow by 3.2% in 2024 compared to just 0.9% for the Eurozone, while Portugal is expected to grow by 1.9%.
The following chart illustrates the economic strength of CaixaBank’s home markets:
The bank highlighted that Spain is the only major economy for which the IMF has upgraded its 2025-26 GDP growth projections. This favorable economic environment provides a solid foundation for CaixaBank’s continued growth trajectory.
Business Growth & Transformation
CaixaBank reported strong business volume growth of 6.5% year-over-year, with client numbers increasing by approximately 340,000 to reach 18.6 million in Spain. The bank’s market share by business volume stood at 25.2%.
Digital transformation continues to accelerate, with digital clients in Spain increasing by approximately 600,000 to reach 12.2 million. Digital onboarding grew by 38% year-over-year, while digital sales increased by 22%. The bank has hired approximately 400 new technology professionals in the last six months and has already implemented five generative AI projects in production.
Loan growth remained solid across all segments, with total performing loans increasing by 2.9% year-over-year to €355 billion. Consumer lending showed particularly strong growth at 8.2% year-over-year.
The following chart details loan growth across different segments:
New lending origination showed robust momentum, increasing by 15% year-over-year to €18.9 billion. Residential mortgage origination was particularly strong, growing by 62% to €4.5 billion, with 93% of new mortgages at fixed rates.
Customer funds grew by 8.5% year-over-year to €691 billion, with wealth management assets increasing by 7.5% and deposits growing by 9.1%. The bank continues to maintain leading market positions in Spain, with a 29.2% share in wealth management and 24.7% in deposits.
The wealth management business delivered particularly strong results, with net inflows excluding market effects reaching €3.7 billion in Q1 2025. CaixaBank maintains dominant market positions across wealth management products in Spain, including mutual funds (23.5% market share), pension plans (34.1%), and savings insurance (37.5%).
Detailed Financial Analysis
Despite the strong overall performance, CaixaBank’s net interest income (NII) declined by 4.9% year-over-year to €2,646 million, reflecting pressure from lower interest rates and day-count effects. This was partially offset by volume growth, lower funding costs, and the bank’s hedging strategy.
Revenues from services showed solid growth of 6.8% year-over-year to €1,278 million, with particularly strong performance in wealth management fees (+16.5%). Total (EPA:TTEF) revenues increased by 14.7% to €4,011 million, while operating expenses rose by a more modest 4.8% to €1,580 million.
The following income statement provides a comprehensive view of CaixaBank’s financial performance:
Loan loss provisions decreased significantly by 27.3% year-over-year to €195 million, reflecting the improved asset quality and economic environment. Other provisions also decreased by 52.9% to €43 million.
The bank’s net interest income performance, while down year-over-year, showed resilience to lower rates through volume growth and hedging strategies:
CaixaBank has increased its structural deposit hedges and ALCO portfolio to help mitigate the impact of interest rate changes on future margins:
Forward-Looking Statements
CaixaBank’s management expressed confidence that the 2025-2027 Strategic Plan is off to a stronger start than initially projected. The bank expects to continue leveraging its market-leading positions in Spain and Portugal to drive growth across lending, deposits, wealth management, and insurance.
The presentation highlighted ongoing investments in digital transformation, with cloud adoption reaching 34% and multiple AI initiatives underway. These investments are expected to further enhance operational efficiency and customer experience.
While the bank faces headwinds from lower interest rates impacting net interest income, the strong performance in fee-generating businesses and continued cost discipline are expected to support overall profitability. The favorable economic outlook for Spain and Portugal provides additional tailwinds for the bank’s growth strategy.
The current stock price decline of 3.66% suggests investors may be focusing on the NII pressure rather than the overall strong performance and positive outlook. However, with a ROTE of 19.4% and continued business momentum, CaixaBank appears well-positioned to deliver on its strategic objectives for 2025 and beyond.
Full presentation:
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