Caixa profits fall 6% to €81 million in Q1

Profits at state bank Caixa Geral de Depósitos (CGD) suffered a fall of 6% to €81 million in the first quarter of 2021.

Money to offset credit impairments were reinforced at the start of the year with almost €60 million sets aside “in preparedness for the effects of the pandemic”.
According to CGD financial director José de Brito, the €5 million fall in profits “may be entirely explained by accounting for regulatory costs. “This year (the results of the first quarter) incorporates the additional tax that was introduced in the State Budget and which last year only occurred in June in the Supplementary Budget,” de Brito said in the bank’s results presentation.
José de Brito added that regulatory costs had an impact of €52.7 million on the net result for the first months of the year.
The financial margin (difference between the interest received and interest paid) continued under pressure, having fallen 11.5% to €223 million because of interest rate levels and spreads that are impacting the entire banking sector.
In turn, the results of services and commissions rose by 2.2% to €125 million. José de Brito believes that these revenues could increase more on the back of economic recovery after the lockdown.
The bank’s CEO Paulo Macedo expects good news in the commissioning of insurance products and investment funds off balance. The CGD CEO dismisses any increase in charges this year after this month’s adjustments.
Despite pressure on bank product margins, CGD refers to a “stabilisation” of the cost-to-income ratio at around 50.6% at the end of March.
The NPL ratio fell 0.3 percentage points to 3.6% in March in relation to the end of the year.
CGD also emphasises capital ratios which are “above the average of Portuguese and European banks,” presenting CET1, Tier 1 and Total of 18.0%, 19.1% and 20.6%, respectively. This is evidence of a “robust and adequate capital position,” at the bank.