Earnings call transcript: CaixaBank Q1 2025 sees stock dip amid mixed results

Published 30/04/2025, 12:36
Earnings call transcript: CaixaBank Q1 2025 sees stock dip amid mixed results

CaixaBank’s stock fell by 4.45% on April 30, 2025, following the company’s earnings call for the first quarter. Despite a notable increase in net income and strong performance in wealth management, the market reacted negatively, possibly due to a decline in net interest income and concerns about the impact of banking taxes. According to InvestingPro data, the bank maintains a strong market position with a market capitalization of €53.9 billion and an attractive P/E ratio of 8.78, suggesting potential value for investors.

Key Takeaways

  • CaixaBank’s net income increased by 46%.
  • Return on tangible equity was close to 20%.
  • Net interest income fell by 3.5% quarter-on-quarter.
  • The stock price dropped by 4.45% following the earnings call.

Company Performance

CaixaBank reported a strong increase in net income, up by 46%, with a return on tangible equity nearing 20%. Despite these positive metrics, the company faced a decline in net interest income, which fell by 3.5% from the previous quarter. The bank’s wealth management sector showed robust growth, increasing by 16.5% year-on-year, highlighting its competitive position in the market. InvestingPro analysis reveals the bank has maintained dividend payments for 18 consecutive years, with a current impressive dividend yield of 9.61%. The stock has also demonstrated strong momentum, with a year-to-date return of 37.91%.

Financial Highlights

  • Revenue from services increased by 7% year-on-year.
  • Net client gain of 340,000, with performing loans up 3%.
  • Customer funds grew by 8.5% year-on-year.

Market Reaction

CaixaBank’s stock experienced a significant drop of 4.45% following the earnings release. This decline brought the stock closer to its 52-week low of 4.53, moving away from the 52-week high of 7.534. The market’s response suggests concerns over the decline in net interest income and potential impacts of banking taxes on future earnings.

Outlook & Guidance

Looking forward, CaixaBank expects net interest income in 2026 to be at or above 2025 levels. The cost of risk guidance remains below 30 basis points, and the bank plans to continue its capital distribution strategy. Significant IT investments, totaling over 1 billion euros, are planned for the next three years to bolster digital transformation efforts. For deeper insights into CaixaBank’s valuation and growth prospects, InvestingPro subscribers can access comprehensive financial health scores and 10+ additional ProTips that provide valuable context for investment decisions.

Executive Commentary

CEO Gonzalo Bortazar noted, "Quarter has been much stronger than what we expected," emphasizing the positive aspects of the company’s performance. He also highlighted client acquisition and loan performance, stating, "We are gaining clients, performing loans up 3%."

Risks and Challenges

  • Decline in net interest income poses a risk to future profitability.
  • Potential impacts of banking tax on financial results.
  • Macroeconomic uncertainties, including GDP growth rates and consumer sentiment.
  • Competition in the financial sector, particularly in digital services and wealth management.

Q&A

During the earnings call, analysts inquired about the impact of potential tariffs on business lending and the conservative approach to cost of risk guidance. The company also addressed questions regarding ALCO hedging strategies and the timing of banking tax payments.

Full transcript - Caixabank SA (CABK) Q1 2025:

Marta, Moderator/Presenter, CaixaBank: Good morning and welcome to Casa Bank results presentation for the first quarter of twenty twenty five. We are joined today by our CEO, Gonzalo Bortazar and our CFO, Javier Pano. In terms of logistics, we plan to spend about thirty minutes with the presentation and forty five minutes to an hour with the Q and A. The Q and A is live and you should have received instructions by e mail on how to participate. Let me end by saying that my team and I will be at your full disposal after the call.

And without further ado, Gonzalo, the floor is yours.

Gonzalo Bortazar, CEO, CaixaBank: Thank you, Marta, and good morning, everybody. Quarter has been much stronger than what we expected, I have to say. It’s a great start for us into this new three year plan. And some of the highlights or the key highlights are here on this slide. Activity, in particular, as you will see through the presentation, is accelerating from a fairly good fourth quarter last year.

First quarter is confirming that trend. Gaining clients, a net gain of 340,000, performing loans up 3% after so many years of deleveraging, not yet catching up with nominal GDP, but getting closer to customer funds, continue to do very well and our protection business is again double digit growth. So activity, very positive, better than expected. The second area where we are beating expectations is asset quality. Non performing loans are down and the cost of risk is lower than what we were expecting.

Very good news. What we’re seeing today is actually an improvement of trends rather than any worsening at this point despite all the noise in terms of tariffs, etcetera. The expectations and the reality currently is as positive as it could be. Liquidity and capital, very strong capital in particular Javier will comment with a positive impact from Basel IV and that’s leading to an increase in net income. Revenues, particularly revenues from services up 7%.

NII evolved as expected. In fact, the trends are actually better than expected. And provisions, as I said, had a very good performance. Net income is up 46%. Then there is, as you probably have all seen, different accounting for the banking tax, which means that if you harmonize for that, it’s really 6.9% the growth in net income.

Return on tangible equity close to 20%, cost income below 38 great numbers. Brief comment on the macro. We have an expectation of 2.5% growth for GDP in Spain this year, very similar level in Portugal. This number already considered some impact from tariffs, actually 0.2%. Obviously, the tariff discussion could end up worse than what we had expected at the beginning of the year.

We’ll see. So there is some but limited downside from those 2.5% growth. Obviously, the fact that we have one of the lowest exposure worldwide to The U. S. Is a key factor, 1.1% of our exports of goods and some percentage of GDP could be affected.

Sentiment continues very well. Consumer data is actually very strong in including in April. And obviously, we continue to have now these lower leverage levels than the Eurozone and much lower than we used to have historically. So I have to say it’s obviously not good to face uncertainty in terms of tariffs and trade globally. But certainly, if there is one position of strength to be had to face those, this is would be the case of Spain and also the case for CaixaBank.

So we are actually quite confident that we’ll be able to deliver in a good number of scenarios. As you know, in our plan, we talk about growth and transformation. Few data and growth, client growth is very important. Business volume, up 6.5%. Our market share, strong.

We’re defending it well. And in terms of transformation, we continue to develop a number of initiatives, which are already yielding some results like changes to our new app architecture, where digital onboarding, digital sales are growing strongly and continue to hire people very successfully in areas where talent is scarce, like tech. We have added 400 developers in the last six months. We continue to obviously make progress also with the generative AI implementation in the group, particularly in areas of customer service. We have had significant improvements in this quarter already, and there’s much more to come.

Loan growth is at 2.9% year on year and even positive quarter on quarter 0.9%. And this has to be sort of considering in the context of first quarter being seasonally weak for generally, business and including lending. So it’s a very good result, and you can see these kind of steps going upwards in consumer lending, in residential mortgages, the trend is very satisfying. And actually, on the business loan growth, which was the one when we presented our plan, we only had figures up until September. And obviously, we had some discussion with investors and analysts and the market in general, whether it was logical to think that business growth will sort of turn positive in Spain or not.

We thought that it was about time. So far, so good. What we’re seeing is very, very encouraging in terms of what’s happening in Spain. Obviously, we need to see confirmation further confirmation in the future. But certainly, it feels pretty good.

On the new lending production, numbers are up 15% across the board, particularly high on on new residential mortgages because the first quarter last year was a bit weaker, not as high when you look at the rest of the 2024. Growth in 2025 is more reasonable than, let’s say, 62%. Continue to do the business we want to do. We’re not doing anything extraordinary. We’re doing well across the board, residential, consumer, new business.

So thinking about the short term, but particularly about the long term, making sure we take the right credit decisions both in terms of asset quality and of pricing in a very competitive market as you know. The customer funds year on year, we have a huge growth, 8.5%. But we also have good growth quarter on quarter, again, in a quarter that is seasonally weaker, a positive development is quite good in our opinion, certainly better than what we were expecting. Obviously, the market has in the month of March has been more negative. So actually, on quarter, it has detracted 0.3% to the evolution.

But despite that market effect, we have clear improvement clear increase in the total customer funds. And when you take away the market impact, you can see in the middle of this slide how that acceleration trend continues. And the reality is that sort of savings rate continues to be very high in Spain compared to historical levels, close to 14%. And there’s good growth in disposable income as well. So barring sort of impact from markets, which I think most of them have already been felt, the situation is a positive one.

Wealth management, in particular, increase in net inflows. And obviously, I think a position that is absolutely differential. Again, you can see on the right hand side that 29.2 market share, how it compares to our two immediate competitors. The two of them together are not of the size that we are. And with performance track record, which you can see in number of periods on the bottom of the page, we are expecting to continue to attract clients, just because we are offering better market performance, but also because our distribution and our advisory model is allowing us to do so on a consistent basis.

Insurance protection insurance, 12% growth, as I said, balanced between life risk and non life. And in non life between health, home, auto and others gaining market share. The quarter has been particularly strong in life risk associated also to strong mortgage production, but also to life risk not necessarily tied to lending my boxes having continues to have a great success. And we are increasing the product range and adding new functionalities we have in the past developed in MyBox Care, MyBox Retirement for the self employed, the tranquility, my box tranquilidad, senior tranquilidad, etcetera, etcetera. So good across the board.

BPI, good quarter, 20% return on tangible, 38% cost income, very similar to the group, lower in terms of nonperforming loans and obviously better on the sector and gaining market share, very pleasing performance from BPI, again, in another quarter. Finally, net income, there is this adjustment to the banking levy. So we would have made EUR $370,000,000 more last year if we had accrued the banking levy like we’re doing this year. So that’s why we have that pro form a to guide you through what is more, let’s say, the trend of net income growth, that’s 6.9%, and that includes a slight increase in revenues, offsetting offset slightly more than fully by costs and then a significant improvement in particularly in impairments. Read some of the comments early this morning.

When you look at impairments line, you tend to think that maybe this is a one off. This is clearly reflecting established good and improving trend in asset quality. So I wouldn’t take it as lower quality than other parts of English, certainly, at least not in this particular quarter because it reflects a clear improvement of the trend that has been undergoing for some time, as you know. So I think with that, it’s time for Javier to continue. Thank

Javier Pano, CFO, CaixaBank: Okay. Yes. Thank you, Gonzalo. And well, as usual from my side, additional comments on the P and L and the balance sheet. Starting with the consolidated income statement, that net income, as you may see, approaching €1,500,000,000 Obviously, as you know very well comparing with last year, last year we had in full the impact of the banking tax, remember, close to 500,000,000.

That is now being quarterly accrued. And for this purpose, here in dark blue, we are showing that net income pro form a for 2024 with banking tax linearized, hence net income for comparison purposes up by close to 7% year on year. Moving to revenues, NII down by 3.5% quarter on quarter, fully in line with our expectations. And you know also that the first quarter is impacted by the impact of the day count that this year has been higher than last year. Last year February had twenty nine days.

What we can elaborate on all that in the Q and A for sure. Then revenues from service are really strong quarter. In this case, we’ll focus on the year on year evolution because quarter on quarter you know that the fourth quarter has plenty of seasonality. Year on year as you may see up by 6.8%, basically on the back of really strong contribution from wealth management up by 16.5%. We have had over EUR 1,000,000,000 of inflows per month, which has been actually record high in recent times.

Then protection insurance with this really strong commercial activity that will filter into the P and L going forward for sure. And then banking fees with real strong quarter in CIB and everything related to markets, strong performance on securities, on foreign exchange, etcetera. Other revenues, I would highlight here that we are registering the dividend from BFA close to 50,000,000. That is usually or at least last year was recorded on the second quarter. And then on other operating income and expenses, no longer the impact from the banking tax that is from now on as I say quarterly accrued on the tax line.

And then also operating expenses in line with the plan with growing year on year 4.8%. Remember, are starting to deploy our IT plans and as Juan Carlos was commenting really lower loan loss charges and other provisions something that is we think that is here to stay. Also, would like to remark that on the tax line this quarter, but also as we will comment on the Q and A session for sure, we are incorporating a DTA write up. Let’s move with that to NII. Here on the left, we have the usual quarterly NII bridge.

You may see the day count clearly having a negative impact, minus EUR 22,000,000. Then client yields, well, index resets on floating loans, not fully compensated with lower deposit costs, but then we are already starting to have tailwind from business volumes and then quite a significant counterbalancing effect from the ALCO, plus EUR89 million in a quarter, basically driven by lower cost from wholesale funding and deposit hedges that we have been implementing for several quarters. On the right, margins with that customer spread at three twenty basis points, down by 11 basis points in the quarter. Also further to the right, the back book yield of the loan book, four zero three basis points and quite a significant reduction of our cost of deposits here ex foreign exchange and hedges down to 68 basis points from 80 basis points. Then below bottom right, you have plenty of details on our deposit balances, the composition and basically the message is that this quarter we have grown in deposits, let’s say, beating this kind of negative seasonality that we usually have in the first quarter.

But it’s not only that, it’s that actually growth has been coming on basically non interest bearing deposits and those are average balances. You may see that this is the average for every month for every quarter, sorry. And we are up by EUR 3,000,000,000 on non interest bearing deposits, a trend that we are expecting is going to continue. We keep our interest bearing deposit balances stable in the quarter. And on the right, you may see the precisely the evolution of the cost of those interest bearing deposits sharply down this quarter to 228% from 263% and the wave remaining pretty much unchanged at circa 27%.

Some additional comments on the yield curve and our ALCO activities. Here on the chart on the left on the upper chart, you may see in blue the current deposit facility rate as of a couple of days ago, so this is really recent. And then in DACH, that’s the deposit facility rate as of September 24, which was the yield curve used as base case for our strategic plan, three year plan projections when we presented our Capital Markets Day back in November. As you may see, current yields are a little bit below the levels used for the strategic plan in 2026, early ’20 ’20 ’7, but from late twenty twenty seven and beyond 2028 are clearly higher. This is resulting into this steepening of the yield curve.

Everyone is talking about below you have this additional chart here for disclosure purposes. We show here the European Union ten year bond versus twelve month arrival. You may see that the spread is already one percentage point. So while this together with widening of sovereign spreads versus swap yields offer really value and really plenty of opportunities for ALCO management, something that actually during this first quarter we have started to implement. And as you may see, we have added EUR 3,500,000,000.0 of additional structural deposit hedges.

Now the total amount outstanding is €53,500,000,000 And also after several quarters with subdued activity, we have also increased basically during the month of March, the increase in yields to add to the fixed income portfolio, adding over EUR 4,500,000,000.0. You have plenty of details on the appendix about our ALCO positioning. Let’s move now to revenues from services. As I said at the beginning, really a strong quarter in general, up by 6.8% year on year with improvement across the three main segments. We have had strong inflows and as Juan Carlos was saying already some negative impact from mark to market and we can update on that also on the Q and A session, but really strong momentum on that part of the business.

Protection insurance with continued support from high activity, premium over 12% vis a vis last year, although the evolution in the P and L year on year and quarter on quarter is impacted by some positive non recurring factors we had in the first half last year. And also we are changing a little bit the product mix as we have been commenting. On banking fees, high contribution from CIB, everything related to markets in general, more than compensating this kind of underlying pressure on more recurring basic service fees, although I have to say that this year we expect less pressure than last year on that front. Costs, not much to say, 4.8% up year on year. We are starting to implement our IT plans.

Remember that we are stepping up our IT cash out for the next three years by more than EUR 1,000,000,000. And so everything is doing according to plan. On the right, you have the evolution of the cost to income. You know that with the change in the accounting of the banking tax, cost to income has automatically an improvement now at 37.7%. And for comparison purposes, we are, let’s say, on a pro form a basis restating here the cost to income as if it would have been accrued and in the tax line every quarter.

As you may see, we have been hovering between 37%, thirty eight % already for several quarters. And this is a level for cost to income that compares extremely well with our peer average. Loan loss charges, really low this quarter, less than EUR 200,000,000 for the quarter. That could be an annualized cost of risk of just 20 basis points, the way we reported, as you know, on a twelve month trailing basis, 25 basis points. We keep holding extremely high NPL coverage, 70%.

And this quarter, we have kept unchanged the unassigned collective provisions that stand at €341,000,000 Moving to the balance sheet. Some comments on NPLs. You can see here the really positive evolution, record low for NPL ratio to 54%, NPLs €10,100,000,000 more than €100,000,000 less organically in the quarter. That compares very well with the average in the industry. And on the right hand side, as you may see, by segments, is not any single corner of our loan exposures credit exposures that is showing any sign of deterioration.

Liquidity, a sample as always, our liquidity coverage ratio hovering circa 200%, very comfortably, net stable funding ratio of 148, liquidity sources two twenty two billion euros really strong, very well positioned to seize opportunity from the expected re leveraging of core economies. Now we have a lot of worry about tariffs, but remember that there is a plan on defense, there is a plan on infrastructure in Germany. For sure, this will result into business opportunities. And as you may see, we compare in terms of liquidity really well vis a vis our peers. Although you have all the MREL information and funding information on the appendix, I would like to highlight here, we have had rating upgrades from S and P to senior nonprefers Tier 2s and AT1s one notch for every asset class.

Finally, capital, we have the final impact from Basel IV with the final balance sheet for the year, it has been positive by 20 bps. Then from there and here, remember that this is the day one impact, but going forward, we are not expecting any other material negative impact from Basel IV. Then for the quarter, as I was saying, we have a positive 51 basis points organic capital generation, minus 40 basis points from dividends and AT1s, a small negative of four basis points from markets and other that results into a CET1 ratio at 12.46%, which is an ample MDA and is 21 basis points surplus above our threshold for additional distributions. Remember that remains unchanged at 12.25%. And well, we keep creating shareholder value.

Our book value per share, obviously, considering the dividend up by close to 9% in year on year basis. And our capital evolution plans remain ongoing with this €500,000,000 share buyback completed in March, the final dividend paid in April just a few days ago and the six share buyback, 500,000,000 to be executed. And well, the final slide, which is exactly the same than last quarter as we are fully reiterating our guidance, capital targets and KPIs. So thank you very much. And I’m sure we have a few questions.

Thank you.

Marta, Moderator/Presenter, CaixaBank: Thank you, Gonzalo and Javier. Operator, we are ready for Q and A, so you can let the first question in please.

Operator: Thank you. First question is from Marta Sanchez Romero, Citi. Please go ahead.

Analyst: Good morning. Thank you very much. My first question is on NII. It has come a bit softer than expected in Q1. I would just like to understand the drivers going forward.

What do you expect in terms of volume growth for loans and deposits and then the contribution from the ALCO portfolio? And anything, any guidance around 2026 and beyond based on the current forward curve would be also very useful. And then my second question is on capital. Could you please provide an update on the current volume of balance sheet DTAs? You’ve brought back €67,000,000 this quarter.

Is that the run rate we should expect going forward? And how does it play out in terms of capital? You were benefiting, more or less generating 15 to 20 bps of capital from consuming the DTCs you had in your balance sheet. How this new dynamic plays out in terms of capital generation? Thank you.

Gonzalo Bortazar, CEO, CaixaBank: It looks like it’s you, Javier.

Javier Pano, CFO, CaixaBank: Okay, Marta. You have to deal with me now. Well, on NII, we are fully reiterating our guidance for 2025. And more broadly, we are also reiterating all the messages we gave at the Capital Markets Day back in November in terms of sensitivities, etcetera, although there are some positives that I will comment in a minute. So basically, the yield curve, as you say, what I try to explain on the slide, is a little bit lower, like ten, fifteen basis points in the very short term, but then it’s higher.

So this has positive consequences because basically we lend long and borrow short. And the maximum testimony of that is that we have 50% of our interest bearing balances that are fully indexed to the overnight rate. So this is as short as it can be on the liability side. So that is providing support going forward, and I can elaborate on that in a minute, as I say. We are doing very well on volumes.

I would remark this quarter, the evolution on deposits that we usually have quite a negative first quarter in terms of seasonality and then quite a very positive second quarter. So the first quarter has been clearly more positive than initially expected, not only in volume but also in composition. And I tried to make this clear on that slide showing average noninterest bearing balances. We are progressing very well on that front. So we are gaining clients.

There are well, we have more payrolls. Employment is growing in Spain. We have a large market share in payrolls, as you know. So that results into more transactional balances in general. It’s not only retail, also from SMEs and corporates, we retain a decent amount of non interest bearing balances.

And we are growing on that. So we are good on transactionality and we think that once we have, let’s say, this new trend in rates, I think that is showing up. And on the other hand, on interest bearing deposits, we are being able to pass on the lower rate environment really well, so with no tensions, no loss of balances, I would say. So I think that we are doing very well on that front to the extent that now we think that the average cost for our client deposits is going to be more in the mid- to high 50s. Remember, I was checking my notes and last quarter we guided for low 60s and so now we are improving our view on that front.

In terms of volumes, we think that we should grow by circa 4% in terms of deposits. That’s our view. In terms of lending, moving to lending, well, the evolution has been really good one. We’re happy to see also that looking at the GDP composition that was released yesterday or the day before yesterday, don’t remember, it was quite strong also in terms of capital formation, in terms of investment. So this is actually what we are starting to see.

And as Gonzalo was commenting already with Spanish SMEs joining, remember that all the improvement in terms of volumes started with retail, households, mortgages, consumer lending and SMEs were a little bit more hesitant, at least during the first quarter, they have started to join. So being more precise about long term prospects, well, we expect that well, first thing, 2025 is a solid guidance, what we are giving. I would like to emphasize that for the NII for the first quarter beyond the, let’s say, day count, which probably not all the consensus had it properly considered, I don’t know, but it’s our take. Take into account that if you isolate the NII from BPI, that obviously is a more sensitive balance sheet and has had a more negative impact this quarter, and you isolate the NII from coming from Bidacacha, our NII would have come down by less than 2.5%. So I think that also probably this when comparing with other Spanish peers is probably the proper comparison.

So it’s a solid forecast for the year. We expect that the on a quarter on quarter basis, the negative impact will gradually fade that the trough should be later this year, the second half. It’s hard now to say it’s going to be the third quarter or the fourth quarter, but should be in one of those. And looking beyond 2025, basically, what we expect for 2026 is NII to be at or above 2025 levels. So within that 2025 NII, when thinking about the three year cycle, is going to be the lower one, so 2026 looks better.

And 2027 looks even better. So remember that we guided for flattish NII, ’26 vis a vis sorry, ’27 vis a vis EUR 20 4. And according to the latest projections we have internally, considering the current yield curve, we should be in 2027 above €11,500,000,000 NII. So that’s the latest internal forecasts we are managing. Moving to DTAs.

Yes, we have this write back. The total amount we have off balance is 3,200,000,000.0. The major part of those are tax losses carried forward. Well, basically on that front, we have always been managing different scenarios and obviously, the better the profitability and the better it looks going forward, the more the highest probability we have to be able to write back. And it’s something that we have started to do.

Basically, here, the plan is to write back the same amount of tax losses carried forward, the same volume that is going to be consumed. So this quarter, it has been EUR 67,000,000. I think that for this year, you can consider that this may be the run rate for every quarter. So this is not just a one off for this quarter. And for 2026 and beyond, I cannot recommend now to a specific figure, but it’s something that should continue as the profitability of the bank is being confirmed.

We guided for this 50 to 20 positive basis points coming from DTA consumption. This guidance is maintained with the it was already including to some extent when we guided for that, that write back could happen. And well, and that’s it. So that would be my messages. Thank you, Marta.

Marta, Moderator/Presenter, CaixaBank: Thank you, Marta. Operator, next question please.

Operator: Next question is from Sophie Petersen, JPMorgan. Please go ahead.

Analyst: Yes, thanks a lot for taking my question. So my first question would be on fees. The fee progression was strong this quarter, but I was just thinking like how should we think about the fee income in coming quarters given the volatility that we have seen in equity markets now, especially in April? And then my second question is on mortgage competition in Spain. It seems that there is quite intense competition in Spain.

Are you participating in this price competition? And kind of what’s your view on the Spanish mortgage market? Thank

Gonzalo Bortazar, CEO, CaixaBank: you, Sophie. I’ll make some comments, and then Javier, you can add as you wish. In terms of mortgage competition, it’s very intense indeed. This is something we’ve been saying for some time. And the market in Spain generally on the asset side is very competitive and mortgage is a very good example of that.

We obviously are in the market. We’re the largest player. We need to compete in the market in which we are. We obviously make sure that we have positive return on those clients that have a mortgage that obviously has to be ahead above of cost of capital and it is. But obviously, those clients do not just have a mortgage, but have many other business many other businesses and products with us.

This is the reality on the mortgage per se is not beating cost of capital in the Spanish market. The mortgage, including all the revenues that it brings, means that the clients that have a mortgage are obviously clients with positive returns for us. And I think this is probably a structural feature of the market. We obviously have, as I mentioned before, a market share in the new production of mortgages that is aligned slightly below, but aligned with our back book, 25% back book market share versus 24% in new production, similar, but again, very competitive, absolutely. On fees, we completely agree, it’s been a very strong quarter and a quarter that would clearly leave upside for us in the future.

And maybe Javier, you can elaborate on that.

Javier Pano, CFO, CaixaBank: Yes. Well, we really had a strong quarter. And it’s true that the market’s correction has had an impact. I can update on you I can update you on that front. We estimated that since the March, the balances of our AUMs are down minus 2%, two point five %, that’s from a few days ago.

So markets have performed a little bit better since a few days. So well, basically here the message is clients stay calm, so we are not having outflows at all. Inflows were really strong, they had a really strong positive momentum. April is going to be a little bit more subdued, but not going to be a negative month in our view in terms of inflows. And well, honestly, if were it not for the market’s corrections, probably we have would have taken the step to update upgrade our guidance for services.

Remember that we have this low to mid single digit guidance. What we have not done so, we wait for more visibility to normalize things in order to reconsider a potential upgrade going forward. Now let’s see how things evolve. For the rest of the fee pool on insurance protection, you see quite a strong commercial activity. I think that this is basically supported this year by life protection, really strong on the back also by coming from mortgage origination.

And we are expecting the P and L impact of all that to show up soon in coming quarters with a clear progression. Remember that our long term view for protection was a positive growth in P and L terms circa 5% CAGR. And fees, we had a really strong quarter on CIB, foreign exchange, securities, everything related more with markets, although CIB is more related also to loan origination. And maintenance fees, although I commented at the presentation, we have this like structural pressure on everything related to maintenance, but we expect this year to be less intense than the past year. So all in all, were not for the turmoil in early April, probably we would have taken the step to upgrade our guidance.

Marta, Moderator/Presenter, CaixaBank: Okay. Thank you, Sofie.

Analyst: Thank you.

Marta, Moderator/Presenter, CaixaBank: Thank you. Operator, next question please.

Operator: Next question is from Max Mission, JB Capital. Please go ahead.

Analyst: Hi, good morning. Thanks very much for the presentation and taking our questions. I have three. The first one is on corporate lending. Could you walk us through the trends you see in the corporate loan book?

Any additional color on demand by sector maturity and company size would be most welcome. And also, you see any slowdown in demand or any signs of cautiousness whatsoever due to macroeconomic uncertainty? The second question is on the cost of risk. You booked 20 bps in the first quarter. Your guidance is below 30 bps.

And my question is why not become more positive on this line already? And then the last one is on capital. Have you included any optimization efforts in the first quarter? And are you currently working on any? And how much do you aim to generate this way in 2025?

Thanks.

Gonzalo Bortazar, CEO, CaixaBank: Thank you very much, Max. On business lending, your first question, I would say, are seeing good dynamics across the board. SMEs are again doing well and with good growth there. We expect to see loan demand to continue growing in this part of the book. Obviously, there’s some uncertainty associated to the current tariff and market discussion, yes.

But I think given where we’re coming from, given obviously also the need to increase investment associated particularly to defense sector, We the dynamics in Spain, see good trends. I would, at this stage, say that actually the defense sector is not yet part of these numbers, so that’s all potential upside. And the rest is actually very broad. Bear in mind that we’re talking about still growth that is below nominal GDP. So it’s just looking at that inflection point what is making us optimistic.

Investment in equipment generally is accelerating in Spain and hence, the opportunity for us to help in that growth is very much there. The cost of risk, you’re right, and I mentioned it in my presentation, we have numbers that are better than what we expected. And clearly, we have a guidance of below 30 basis points. So to some extent, how far below we are those 30 basis points is something to be seen. But at this stage, looking at the first quarter, there’s going to be some gap between the 30 basis points and the cost of risk figure.

And as Javier said, for fees, in normal circumstances, I think even at this very early stage of the year, we will have upgraded guidance and cost of risk. There’s an element that is somehow in our hearts that you know it from history, we tend to be quite conservative. And given the current sort of global scenario, we thought it was not the time to provide sort of a revised positive guidance on cost of risk at this stage. But clearly, all what we see today leads in that direction. So let’s keep at this stage the fact that there’s clear upside to be further below than from those 30 basis points.

And let’s be clear, we’re not seeing any particular threat or any question in the loan book that makes us conservative other than what everyone generally sees, the potential for some turmoil associated to whatever is the final outcome of the tariff negotiation. Expectation is positive, but obviously, I’m not a decision maker here. I think there will be a new equilibrium, which will not be so bad, but obviously, a lot of volatility between now and the moment in which that destination is clear. So we’ll generally take a conservative approach as always to guidance, leave it as clear upside at this moment in time. And Javier, maybe you want to take the one on

Javier Pano, CFO, CaixaBank: Yes, there was question on capital optimization. Yes, we are working on projects. We already commented our Capital Markets Day that we were planning to be more active. And that is the case. So but in this quarter in particular, there is not any positive impact from any capital optimization.

We guided for those EUR 3,000,000,000, 4 billion of risk weighted assets optimization during the next three years. And I think that this is probably not linear, probably faster into 2026 and beyond. But you can expect already as we are working on several projects, some impacts in coming quarters.

Gonzalo Bortazar, CEO, CaixaBank: Thank you.

Marta, Moderator/Presenter, CaixaBank: Thank you, Max. Operator, next question please.

Operator: Next question is from Francisco Riquel, Alantra. Please go ahead.

Francisco Riquel, Analyst, Alantra: Yes. Thank you. So my first question is about the profitability of the new business. I see in the slide of the NII bridge that the business volumes, loans and deposits NII contributing €10,000,000 in the quarter with volumes I see is they are up €3,000,000,000 So it seems to me that the customer spread of the new business is lower than the customer spread of the stock. So you can please comment on what’s the overall profitability of the new business.

And then my second question is on BFA. I saw some announcements in terms of potential IPO. You could be looking to participate or not? And what impact shall we expect? Thank you.

Javier Pano, CFO, CaixaBank: What’s the second question? BFA.

Gonzalo Bortazar, CEO, CaixaBank: BFA, yes. Why don’t you start with the first one and I’ll take Hi,

Javier Pano, CFO, CaixaBank: Paco. Well, you have also we are providing you the front book yield of the new production for the quarter has been a little bit below 4%, three ninety two basis points. And the average twelve month arrival for the quarter has been 2.4 something. So it’s like 150 basis points margin, more or less. So this is another way to look at it.

Well, it’s in line with the margins that we have been having and the margins that we are planning in the future. So it continues to be as always. So you have stream competition, as Gonzalo was saying, on mortgages. Actually, there is no margin unless you consider all the cross selling that is attached to a mortgage. That is significant and that probably in our case is larger than in other peers because we have more cross selling capabilities in terms of insurance, in terms of our capability to retain cash balances, etcetera.

So but if you look only at NII, you may this may distort a little bit the numbers, but it’s as always. So there are no changes, unfortunately, on mortgages as competitive as ever.

Gonzalo Bortazar, CEO, CaixaBank: BFA, Juan Fernando? JUAN just to confirm that obviously, the business we’re writing is adding to our profitability. And obviously, it’s across the board. We look at it not on the contribution of one given line, but obviously, the P and L coming from that. And Javier mentioned the EUR 3,000,000,000 increase in, for instance, in non remunerated deposits in the quarter is obviously a very profitable increase in remunerated deposits is less profitable, but it is what we’re seeing off balance sheet.

And obviously, on the asset side, we’ve mentioned it as well. BFA is obviously, at this moment, in an IPO process. The government in Angola has actually announced that intention. And the intention from BPI is to sell along with the government a 15 stake. That’s what the government is planning to sell.

And basically, we’ll sell some a stake that is very similar circa 15%. This is obviously process that is not yet completed and has, like any IPO, certain execution risk. But all the things look going in the right direction. We are obviously working together with the government through Unital, the shareholder of the other shareholder of BFA and with BFA. And this is something that, at this stage, looks like a distinct real possibility for later this year with all the caveats that, like every IPO, is subject to market conditions, and it will depend, obviously, on final conditions to see if there’s a price that is attractive enough for the sellers in this process.

Marta, Moderator/Presenter, CaixaBank: Okay. Thank you, Paco. Operator, next question please.

Operator: Next question is from Ignacio Ulargui, BNP Paribas Exane. Please go ahead.

Ignacio Ulargui, Analyst, BNP Paribas Exane: Thanks very much for the presentation and for taking my questions. I have two questions. One is coming back a bit to credit quality. If I just look to the NPL formation, inflows were very low in the quarter, but outflows were also quite low. I mean, was it something special in the quarter?

Should we expect this formation going forward, providing no material change in the economic environment? And the second one is on capital. Mean, I just look to the CET1 ratio, you’re already 21 basis points ahead of the target that you set up at 12.25 for this year. How should we think forward about distributions? And just if one small follow-up on the NII in Portugal.

I mean, the performance of the customer spread was a bit weak in the quarter. How should we think about the repricing in Portugal? Is it faster? Should we expect this progression? You said, Javier, the trough, will be somewhat in the second half.

Should we see the trough in Portugal to be earlier? Thank

Gonzalo Bortazar, CEO, CaixaBank: you, Natso. I would say on NPL, sometimes the gross entries and particularly exits are influenced by portfolio disposals, which you don’t see this quarter. And that is that may be part of what you’re seeing. But I think what is more important here is that the actual entries into nonperforming loans in the first quarter have been very low. And the entrance into sort of past due but not up to ninety days are also at historical lows.

And hence, we have a true trend here. It’s associated to the fact that the economy continues to do very well and that interest rates are coming down. Remember that last year, well, we had some noise in NPL evolution last year because we have this new definition of default and some sort of accounting reclassifications, which we completed in full last year to be to apply the most conservative criteria. But beyond that, there was some pressure much less than what we expected, but some pressure on the mortgage book and generally associated to higher interest rates. Now this year, we’re having the opposite.

So in fact, what we were seeing is trends that are improving and even some of the sort of problem loans that were reclassified from an accounting point of view in 2023 and early twenty twenty four, we’re going to see probably them coming back cure in the next quarters. So pretty good trends. If we have the opportunity, we will do NPL disposals as we have done in other years, which again maybe cloud the numbers of entries and exits from that category, but clearly are again, improving our asset quality levels without any other sort of cost of risk implication. So very good, again, in terms of trends. The rest, Javier.

Javier Pano, CFO, CaixaBank: Well, you had a question on capital, no, about capital evolution, if I understood well. That’s when the plan remains the same. So we have that threshold, no? And from there, it’s for shareholders, and it’s 12.25% for this year, 12.5% for next. That’s it.

I don’t know if probably I missed part of the question. I don’t know, Marta, if there was something else on that topic.

Marta, Moderator/Presenter, CaixaBank: Also asked about the repricing in Portugal.

Javier Pano, CFO, CaixaBank: Yes, on that one that I follow that. Well, the point in Portugal is that the cost of interest bearing deposits is by chance or not is the same than in Spain, is in the 220s. The difference is that the percentage of interest bearing deposits is larger, that is close to 45%. And in Spain, it’s little bit below 30%. But we in Portugal, we are being able to pass on lower rates for the interest bearing part at the same pace as in Spain.

So the difference in Portugal is that it’s not common to have current account indexed for corporates or public sector. And the system is working with time deposits, which makes the rollover process a little bit intense. And on top of that, you there has been a natural tendency in recent times to have shorter maturities on deposits. So and when the yield curve became inverted, depositors instead of making a twelve month deposit made a three month deposit or even a one month deposit. So it’s a different dynamic compared to Spain.

That’s on the deposit front. On the asset front, the difference with Spain is that BPI has a larger percentage of floating assets. Right? So when if you think about both sides, at the end of the day, the end result is not that different, right? So thinking about the trough in Portugal, it’s a little bit harder to assess because there is a little bit more margin of error, but should not be far from the consolidated trough in terms of NII.

Okay?

Marta, Moderator/Presenter, CaixaBank: Javier, on the question, it was basically about future distributions considering that we already have a surplus of 21 bps.

Javier Pano, CFO, CaixaBank: Yes. Well, that was the message was is that we are aiming for frequent and regular distributions. And in that sense, we have just ended the fifth share buyback in March, paid €2,000,000,000 dividend in April. There is six year buyback to be executed. And we already have excess capital above 12.25%.

So there is even room for more. So and eventually, we’ll be more specific on the topic, but the plan remains the same.

Marta, Moderator/Presenter, CaixaBank: Okay. Thank you. Thank you, Nacho. Next question, please.

Operator: Next question is from Andrea Filtri, Mediobanca. Please go ahead.

Andrea Filtri, Analyst, Mediobanca: Hi. I wanted to ask you if you’re happy with your current ALCO level or where do you plan to go to and when? The second question is when do you expect to fully utilize the remaining overlay provisions? And then if it’s possible for you to minimize the bank levy via higher tax deductions, what would be the guided tax rate from you? Finally, just a very broad question.

We have read that a task force for regulation simplification is going on. If they ask you what would be your wish list, what would you like to see there? Thank you.

Gonzalo Bortazar, CEO, CaixaBank: Thank you, Andrea. Quite a few. You may want to start with the ALCO certainly for you. Javier, you want to start?

Javier Pano, CFO, CaixaBank: Okay. I’ll start from with the ALCO. Well, basically, we have two tools to manage our NII sensitivity, which are, as you know well, deposit hedges and fixed income securities. Lately, we have been more keen and it’s something that we have, as you could see, already started to do this quarter, is to use also fixed income securities because the spread between the sovereign in general and the swaps has widened significantly, and this was the case particularly since the rearm Europe program and the infrastructure program in Germany was announced, which makes sovereign spreads now more attractive compared to swaps. So you can get like depending on the maturity, but on average for Eurozone sovereign basket, you can get between fifty, sixty, 70 up to 80 basis points margin above the deposit facility rate, which is nice to have.

So there has been a widening of between thirty, forty basis points depending on the country and the maturity. So we are now more keen to use fixed income, although we will not abandon swaps. You can expect us adding in order to manage our sensitivity. As you can see, we the balances noninterest bearing balances have grown by EUR 3,000,000,000 in a single quarter. So basically, this is what drives the need for further hedging because you have 0% cost deposits unless you hedge.

Obviously, that increases accordingly the sensitivity. So when well, this is, to some extent, market dependent, but to some extent because, obviously, we need to keep looking at our sensitivities, and we don’t want to deviate materially from what we are guiding that 5% NII sensitivity twelve, twenty four months. Overlays, Overlays, okay. On overlays, well, we are comfortable. Part of those overlays honestly were planned to be used for the floods in Valencia, a large chunk of those.

You know that we have been reclassifying the purpose of those overlays over time. It started with COVID and now we are a large chunk of those for the floods in Valencia. Actually, the performance of our great exposures on the area are doing massively better than initial expectations. So we are comfortable. So the base case is that will be used eventually And probably the base case is that maybe used to a large extent this year.

But as you know, I have said that several times and then we keep holding part of those overlays. So it may be the case also this year. So it’s too early to say. And as Gonzalo was commenting before talking about cost of risk, let’s see, the environment and the uncertainty additional uncertainty we have how this ends up. You had a question on the bank levy, if you want me to elaborate on that.

We are already incorporating all the, let’s say, tax deductions that we can incorporate. So that 25% that can be deducted. Keep in mind here that this is 25% on the effective tax rate, which is not the nominal tax rate. And the effective tax rate is lower because we are usually incorporating DTAs. So basically, we don’t settle all our corporate taxes in cash, part of those are settled with DTAs.

And this is why the effective tax rate is lower. Hence, we cannot benefit in full of the 25% deduction, although the part that is being able to be deducted is already deducted. About the tax rate, well, as you could see, I was checking, this quarter it has been 34% incorporating the banking tax and also the write back of DTAs as we expect that well, now that the banking tax is accrued quarterly, so you can expect that this tax rate can be, to some extent, around those levels.

Gonzalo Bortazar, CEO, CaixaBank: Very good. And if I may, Andrea, on the regulatory simplification is obviously, there’s plenty of work ahead. Would say in the first thing is to stop the trend of more and more regulation coming on. Coming in the last five years in our accounts, there’s been 1.3 rules per day that are applicable to the financial sector. So obviously, that creates a lot of complexity, a lot of resources to follow them, make sure that we are compliant with new regulations.

And sometimes, the new regulations make limited sense and make things just too complex. So to stop the flow of new regulation or not, you want to stop it completely because by definition, there will always be things to be regulated, but to slow it down is quite significant, particularly what is second and third level legislation, which is sort of the bulk of the new rules coming on to us is something that is very important and that it creates very often sort of unintended consequences because there is some gold plating on those, in my view, in certain cases. You’ve already seen some discussion around sustainability, particular sustainability, particularly with disclosure rules and sort of the current obligation for disclosure on that front, which has been, I think, put in the fast lane by the European Commission, which is obviously welcome. And I think on that front, while we strongly support sustainability, we need to make sure that we continue to sort of follow an approach that is mostly based on obviously avoiding doing the wrong things, but then a lot of disclosure and explanation on what people do for those very large financial institutions, but not over regulating exactly what they need to say because it becomes impossible.

Retail investment strategy, that’s something that has been discussed with the commission in the past and that creates, I think, again, potential for unintended consequences through overregulation and then limiting the ability of retail customers to get proper advice. So I think that needs to be very well considered and certainly to a large extent, we directed, and that’s my expectation. On the supervisory front, we still have potential. And I would highlight, obviously, we have different layers of supervisors on the same topics and asset sorry, anti money laundering is one with, again, different levels of supervision, which being very important is not always ideal because there are sometimes different priorities and different views. We have the risk of these being repeated in AI, where there is also quite a few potential or not potential, but actual bodies that are looking at how they will supervise what financial institutions do on this front.

And it would be a clear stopper for the rapid development of AI. So there’s quite a long list. Think it’s great to have an understanding that something needs to be done. And obviously, we have been and we continue to offer to participate in anybody looking at what is what needs to be done, which is obviously including all these subjects, but I’m sure there will be others that are also relevant.

Marta, Moderator/Presenter, CaixaBank: Thank you, Andrea. Operator, next question please.

Operator: Next question is from Britta Schmidt, Autonomous Research. Please go ahead.

Britta Schmidt, Analyst, Autonomous Research: Yes, thank you for taking my questions. I’d like to come back to the deposit cost guidance that you gave. You seem a bit more optimistic about the deposit cost by year end. Could you perhaps split that by Spain and Portugal just because, as we just discussed, the deposit cost in Portugal are still quite high and only came down 10 basis points Q on Q. The second question is on the cost of risk.

I mean, Spain is more isolated from tariffs. You have a decent amount of overlays. And as you highlighted, there’s much better underlying asset quality as well. So can you be a bit more specific as to where you are cautious and why you’re not really changing your cost of risk guidance now? Also, maybe you can give us a heads up as to whether we should expect any IFRS nine potential impacts in Q2.

And then lastly, on the share buyback that’s still pending, could you give us an update as to when you intend to execute that? And with regards to the decision of any further extraordinary distributions, is that a year end decision? Or would you also consider communicating something during the year? Thank you,

Gonzalo Bortazar, CEO, CaixaBank: Britta. And cost of risk, I’ll start, but Javier, you should also comment on that because I haven’t been able to explain myself enough. It’s there is no particular information that we have that makes us cautious. It’s the general view on what is the turmoil associated to a potential outcome of the tariffs. And this is something that, again, we are optimistic.

But we have thought that these being the first quarter and our cost of risk being our cost of risk guidance being less than 30 basis points, we were not in a rush to say exactly at what point the cost of risk or below what level the cost of risk is going to be. But there is no other reason to be cautious other than the fact that we you know us tend to be cautious, particularly on cost of risk that it has a bit more volatility than maybe the cost line or some others. Think we, at this stage do not see a need to top up provisions even with we typically update our IFRS nine model in the second quarter. But the reality is, as you say, there are so many other positives, including the fact that we haven’t unused overlays, but the macro scenario, our internal experience in terms of NPLs, both sort of NPL and pre NPL situations that it’s something that I think it’s likely to come during the year. Certainly, at this point, I can say we’re extremely comfortable with our guidance.

Javier Pano, CFO, CaixaBank: Britta, on the rest of the questions. On deposits costs in Portugal, well, know that we have the view that the wave of interest bearing deposits in will actually not will not come down significantly. So in this environment of rates, let’s say, between now 1.52, we don’t expect that many of those balances will suddenly move to, let’s say, non interest bearing deposits. We’ll remain even at lower yields, but will remain as interest bearing deposits. And the starting point in Portugal is that those interest bearing deposit weighs more than in Spain.

It’s 45% currently versus 27%, twenty eight in Spain. And we expect that trend to continue. Eventually, obviously, we’ll do our best to try to reduce the percentage of interest bearing deposits, but I honestly, I don’t think that this will happen in the current environment of rates. So for the consolidated level, I have just guided for our cost of deposits on average for this year to be mid- to high 50s. In Portugal, as the weight of those deposits is going to be higher, There will be it’s going to be a little bit higher, but not, I would say, deviating materially from the overall evolution that we are having at group level.

You had a question also on the additional distributions, etcetera, and if we have to wait until year end, but the answer is no. So we have been announcing in the past additional distributions whenever we thought that we had a buffer over the capital evolution threshold that was wider enough and this will continue to be the case. So you should not per se think that we should wait until year end. And regarding the share buyback execution, it’s I just gave an answer on the topic. So we are aiming for frequent and recurring distributions.

And we just had in March the end of the fifth share buyback. We have had 2,000,000,000 dividend in April and now this is to be executed. So it’s and we retain discretion on the timing of that, as it has been the case always. Thank you, Britta.

Marta, Moderator/Presenter, CaixaBank: Thank you, Britta. Just to clarify, the guidance for deposit cost is average for the year, annual average, not year end.

Javier Pano, CFO, CaixaBank: If I said that, I was wrong.

Marta, Moderator/Presenter, CaixaBank: No, no, I think you didn’t say it, but just to make clear because she asked about year end. Operator, next question please.

Operator: Next question is from Alvaro Serrano, Morgan Stanley. Please go ahead.

Alvaro Serrano, Analyst, Morgan Stanley: Hi, good morning. I just wanted to follow-up on the deposits, some of the deposit comments. I think, Javier, you said that there was unusual seasonality. I wonder why you think that’s happening. And in particular, I’m focused on the interest bearing mix that has improved a touch, but is it the beginning of the trend?

Because I think in previous quarters, you were a bit more hesitant that the actual mix could improve. And related to that, if it does improve, does that give you more scope to increase the alco or the hedges beyond just managing that 5%? Well, presumably, you would have to increase it more to manage that 5% increase. But I mean, increasing more than just the volume growth of deposits to reflect that message, does that give you? And related to that, last one is what term are you now investing the swaps and the ten year and the current bonds?

Gonzalo Bortazar, CEO, CaixaBank: You, Alvaro. I’ll just make an introduction on the unusual seasonality. I think we have here two trends. One is the typical seasonality year on year, which has not changed and then the other is structural. And the structural is associated to higher growth in disposable income and a higher savings rate that is certainly at higher levels than that we had seen in the past.

And this is sort of building on year after year. So what we’re seeing this quarter is the structural part is actually more than offsetting the seasonal weakness and or that we’re doing extremely better than our competitors. I think we are maybe doing a bit better than our competitors, I’d like to think. But that a lot of these is to do with the actual sort of macro dynamics of savings in Spain. And obviously, that is a very positive development.

Javier Pano, CFO, CaixaBank: Yes. Actually, I tried to highlight that on the slide on the ALCO, no sorry, not on the ALCO, NII, a detail of what is interest bearing and non interest bearing and the evolution. So and it’s a nice trend, nice trend to have. You know that we call it internally the JWEL of the crown, no? Those non interest bearing deposits, I’m happy to see that we are being able to deliver, commercially speaking, on that front because it’s extremely important.

And as you say, it results into more ALCO opportunities, more liquidity, more, let’s say, long term liabilities that offer the potential to be hedged and taking advantage of a more positive yield curve. As of today, on ALCO hedges on derivatives, we are, let’s say, between four, five years usually. I would like, if I may, I will take the opportunity here to elaborate on that, taking advantage of my background as fixed income manager. We are hedging that basically what you do is you receive a fixed rate and you pay a floating rate. The way we’re instrumenting the hedges is that as floating rate, we pay the overnight rate, okay?

And depending on the tenure of the floating rate, then you have a different fixed rate or another. So I think that this is so important also because you are not subject this way to like lack in terms of repricing as you are indexed to the overnight rate. On fixed income, we are taking advantage to go a little bit longer than that. We are going as long as ten years, although the bulk is more seven, eight, so and we are basically investing into a basket of EU sovereign bonds and also EU sovereign bonds themselves. So that’s basically what we are doing.

You are right, the more noninterest bearing deposits, the more opportunities in terms of carry and taking advantage of the steepness of the yield curve.

Gonzalo Bortazar, CEO, CaixaBank: Alvaro, just another point. Obviously, we have gained three forty thousand clients on your first question, which wasn’t the case last year. So this is obviously having an impact. The fact that the group is now in a clear growth mode is starts with capturing clients. And obviously, that has an immediate implication for non remunerated deposits in particular.

Marta, Moderator/Presenter, CaixaBank: Thank you, Alvaro.

Alvaro Serrano, Analyst, Morgan Stanley: Thank you.

Marta, Moderator/Presenter, CaixaBank: Next question please.

Operator: Next question is from Cecilia Romero Reyes, Barclays. Please go ahead. Thank you for taking my questions. My first one is first one is on NII. For next year, you expect NII results at or above this year level.

What is the deposit rate assumption on the FinFET outlook? Is that a 1.5% terminal rate? And I’m not sure if you have mentioned in your answer to Andrea, but has your NII sensitivity changed this quarter following the increase in the ALCO portfolio? And then my second one is from the bank tax for 2024. Do you have now visibility on what is the expected timing of payment?

And given that you have already or you are already accruing the one for 2025, is there a risk of two payments in the same year? Thank you.

Gonzalo Bortazar, CEO, CaixaBank: Thank you, Cecilia. I would say on the second question, we do not see a real risk because the willingness of all parties is to avoid double counting or double taxation in one given year. So it’s still up in the year exactly how things are going to be landing, but I do not think that’s going to be the outcome. On

Javier Pano, CFO, CaixaBank: On NII, well, my comments today are according to the current year curve that as we speak is pricing the terminal rate of the low, better than the terminal rate to be at 1.6. And so and then as you could see the yield curve and on the chart I was disclosing very readily going up back again. So all my comments are valid according to that yield curve. Thank you, Stefano.

Marta, Moderator/Presenter, CaixaBank: And NII sensitivity, Javier.

Javier Pano, CFO, CaixaBank: Sorry. With With ALCO. No. Well, ALCO actually is we take the action, I answered to a previous question, basically, to keep that sensitivity in place, so in line with our targeted sensitivity. So it’s not being reduced.

It’s just being maintained.

Marta, Moderator/Presenter, CaixaBank: Thank you, Cecilia. And operator, next question, please.

Operator: Next question is from Pablo de la Torre Cuevas, RBC Capital Markets. Please go ahead.

Gonzalo Bortazar, CEO, CaixaBank0: Thank you for taking my questions. I just had a couple of follow ups really. The first one, I’m afraid, again, asset quality. Given the uncertainty around tariffs that you have discussed at length already, I was wondering if you could just share with us some more color on the lending exposure to those sectors that could potentially be more exposed in this context, and whether you could tell us again as well if the coverage levels in these portfolios are in line or above those of the group? As related to that as well, it would be very helpful for us if you could provide some sensitivity to how your cost of risk guidance could change under a significantly more negative macro scenario as well, if you have those numbers?

And lastly, just a quick follow-up on the timing of capital distributions and related also to the uncertainty around the payment of the 2024 banking tax. Would you wait to announce the new buyback program, the seventh one, until there is more clarity in that regard? Thank you.

Gonzalo Bortazar, CEO, CaixaBank: Thank you, Pablo. Let me start with the third question. Those two things are not related. So no, that’s not the reason, as Javier explained it. The second, in terms of sensitivity to cost of risk, I would say we’re very comfortable with our guidance even if there is a significant deterioration or, let’s say, a bad outcome on the tariff discussion.

So that is also the other way to look at the fact that we see potential to our cost of risk guidance if based on what we have seen so far. It means that even if there’s a deterioration, we do not necessarily think that cost of risk is going to be impacted, and we have quite some caution on that. The range of scenarios is obviously infinite and very complex to predict, but we have quite a few of worst scenarios, which will would still fit in our existing cost of risk guidance. And maybe Javier, you can provide some detail on cost and on the asset quality and exposed

Javier Pano, CFO, CaixaBank: Yes. Well, obviously, when there is additional uncertainty, we always reassess our exposures, etcetera. And the conclusion is that in any sector that what you may consider that could be more exposed to the new uncertainty about tariffs, etcetera, we’ll reach the conclusion that actually our exposures are to the industry champions. And honestly, in a major part of those cases being investment grade names with very large market shares on the industry. So honestly, we don’t expect to have any kind of material impact in any of the scenarios we have been working on.

Marta, Moderator/Presenter, CaixaBank: Thank you, Pablo. Operator, next question please.

Operator: Next question is from Fernando Gil de Santivans in Tesa Sanpaolo. Please go ahead.

Andrea Filtri, Analyst, Mediobanca: Thank you. Can you hear me okay?

Analyst: Hello? Can you hear me okay? Yes.

Javier Pano, CFO, CaixaBank: Yes, we do.

Andrea Filtri, Analyst, Mediobanca: Okay. Thank you. Two quick questions, please. First one, can you please provide an update on the Mufasa situation and the potential changes? And how can these impact the Ukaisadeslas?

And second one is very generic about the blackout that we had a couple of days ago. Do you anticipate any negative impact except from the delay in effect from the blackout? Thank you very much.

Gonzalo Bortazar, CEO, CaixaBank: Thank you, Fernando. In terms of the blackout, we were surprised, but also positively surprised by the quick recovery of everything. So I think there was impact that the macro level is going to be very limited. So I think what is most important is to make sure that we understand the ultimate causes and make sure that whatever actions are needed are put in place so that this does not happen again. Obviously, there is still a clear advantage for Spain on having a significant share of renewals in the product mix, and we’ve become very competitive vis a vis most countries in the Eurozone precisely for that reason, but we need to make sure that’s obviously stable and resilient.

There would be some insurance claims in the market. It’s too early to have a precise estimate, and it will need to be done by our affiliate, Segurkais Adeslas. But we need to be clear on the causes and look at that. Certainly, there’s not going to be any material impact for our results at the CaixaBank level. So it’s not something I would be worried about.

On the other hand, as you correctly said, the outcome of the agreement with Mufase is a positive development for Adesla. It’s very good news. Basically, what we had is a contract that was loss making for Adeslas. They estimated somewhere around EUR $270,000,000 of losses in a three year period, which actually were growing. So if you do a basic rule of thumb and say, okay, one ethree of that per year is not going to be now seen in the accounts of 2025, you probably see somewhere around 90,000,000 of pretax profits at the Other Tesla’s once you tax them, it’s going to be close to 60,000,000 and obviously half of that would accrue to us.

This is not the sole impact on Segurcaisadeslas as a company that has many other factors affecting the profitability. But clearly, the Mufasa is removing a loss contract a loss making contract is going to have a positive impact of those kind of levels.

Marta, Moderator/Presenter, CaixaBank: Okay. Thank you, Fernando. Operator, is there any other question or that did?

Operator: We have one more question.

Marta, Moderator/Presenter, CaixaBank: Okay. So please

Operator: Next question is from Marta Sanchez Romero, Citi. Please go ahead.

Analyst: Hi, thank you. Sorry, a quick follow-up on Britta’s question. Why are you dragging your feet on the €500,000,000 buyback that has already been approved? Is it a matter of price? Are you thinking about M and A?

Or is it the ECB asking for caution? I would like to understand why it’s taking so long.

Javier Pano, CFO, CaixaBank: Well, think it’s the third time I have answered to this question, but I will try again. So our aim is for frequent and recurring distributions. And we had a share buyback in March. We had a dividend in April. So and we have this to be implemented, no?

So to be executed. So it’s and we’ll retain discretion. So there is no why, there is no nothing else. So that’s it.

Marta, Moderator/Presenter, CaixaBank: Recurgency and frequency, Marta. Thank you. So that’s all for today. Thank you all for joining us, and talk to you later.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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