In the first nine months of 2024, Grupo Unicaja recorded a net profit of 451 million euros, compared to 285 million euros in the same period of 2023, an increase of 58%. All P&L statement margins showed double-digit growth.
The Group's result is mainly based on the increase in net interest income -with a year-on-year growth of 19%- and on the decrease (22.8% year-on-year) in loan-loss provisions. The latter was due to the good performance of the cost of risk (24 basis points -bps- in the year), and of provisions for real estate and other results, maintaining coverage among the highest in the sector (69.8% in NPAs, 66.3% in NPLs and 74.3% in foreclosed assets).
Core result increased by 17.8% due to the aforementioned improvement in net interest income, the stability of net fee income and the containment of operating expenses. The cost to income ratio improved 3.6 percentage points over the last twelve months to 44%. Customer spread increased 14 bps year-on-year to 2.75%.
The balance of performing loans stands at 46,944 million. In the case of private individuals, it fell seasonally by 2.9% in the third quarter and by 2% for the year, with a balance of 32,366 million. In the first nine months of the year, 6,104 million new loans and credits were granted. The market share in mortgage formalization amounted to 4.4% of the national total.
Customer funds, on the other hand, performed favorably. Specifically, retail deposits increased by 1.9% in the third quarter of the year and by 4.3% year-on-year. Excluding the impact of public administration deposits, due to their more volatile nature, the performance of customer funds from other resident sectors was more positive, with year-on-year growth of 4.6% (0.6% in the third quarter). Off-balance-sheet funds and insurance increase by 6.9% in the last twelve months to 22,185 million.
The results obtained have been accompanied by an improvement in the quality of the balance sheet. The volume of non-performing assets (NPAs) continues its downward trend, with a year-on-year fall of 28.7%, due to a 35.5% decline in the stock of foreclosed assets (567 million) and a 22.4% drop in NPLs.
The reduction of NPAs has been accompanied by the maintenance of high coverage levels, among the highest in the sector, continuing the traditional policy of prudence followed by Unicaja. The coverage ratio of non-performing assets reached 69.8%, that of NPLs 66.3% and that of foreclosed assets 74.3%. The sharp reduction in NPAs and the increase in coverage set the year-on-year fall, in net terms, at 36.3%. The NPL ratio fell to 2.79%, and the cost of risk remained contained at 23 bps in the third quarter and at 24 bps for the year.
Unicaja maintains high and solid solvency levels (the CET 1 fully loaded stood at 15.4% at the end of September), with an excess of capital over regulatory requirements of 7.6 percentage points (p.p.) in total capital and 7.2 p.p. in CET1. Liquidity levels remain high, with an LtD ratio of 69.8% and LCR of 314%.
Balance sheet
Total funds under management grew 2.1% year-on-year
Funds under management, including wholesale funds, increase by 2.1% year-on-year, reaching 100,524 million, characterized by a substantial weight of retail customer funds, which are very stable and highly granular (74% of retail customer funds correspond to individual customers).
Retail customer funds increase by 1.9% in the third quarter of the year, and by 4.3% in the last twelve months, mainly driven by private-sector customer funds (up 4.6% year-on-year).
In the third quarter, savings were channeled mainly into mutual funds, which grew by 6.3% in the fourth quarter. In the first nine months of the year, gross subscriptions have doubled, exceeding 1,119 million euros in net subscriptions (499 million euros in the third quarter), with an 8% share of net subscriptions at the end of September, according to Inverco data. The accumulated assets of mutual funds reach 12,941 million euros and those of pension funds 3,729 million euros, an increase of 1.4% over the year.
In relation to lending, the outstanding balance of the corporate lending portfolio increased by 0.8% in the third quarter, reversing the downward trend of the last twelve months (-9.2%). Lending to sustainable companies increased by 32.7% in the last 12 months.
New lending reaches 6,104 million in the first nine months. In the third quarter, new mortgages grew by 34.7% compared to the same period of 2023.
Improved balance sheet quality and high coverage
Unicaja maintains its traditional policy of prudent risk management. At the end of the third quarter, the NPL ratio fell to 2.79%, and the cost of risk remains contained, at 23 bps in the third quarter and 24 bps for the year as a whole. The balance of non-performing loans fell by 22.4% compared to September 2023, with a 13% year-on-year drop in new entries.
Foreclosed real estate asset sales performed well, with positive results. The gross stock fell by 35.5% year-on-year. Non-performing assets as a whole continued their downward trend this quarter, falling by 28.7% year-on-year.
At the same time, Unicaja has maintained its high coverage levels, among the highest in the sector, standing at 66.3% for NPLs and 74.3% for foreclosed assets, with the goal of continuing to accelerate the reduction of this type of assets. Coverage of total NPAs (non-performing and foreclosed) stands at 69.8%.
P&L statement
Net interest income up 19% year-on-year
Net interest income increases by 19% year-on-year to 1,158 million euros, with a higher contribution from both the retail and wholesale businesses. Despite the reduction in interest rates in the third quarter, net interest income at September remains stable at over 380 million euros. Customer spread improved 14 basis points year-on-year to 2.75%.
Net fees amount to 381 million euros. They fell by 4.9% year-on-year, mainly due to lower income from collections and payments, derived from the strengthening of customer loyalty to the Fee-Free plans, which include improvements with the exemption of commissions for individuals and professionals.
Gross income reaches 1,520 million, 14% higher than in September 2023, as a result of growth in net interest income. The cost to income ratio stands at 44%, a year-on-year improvement of 4 p.p., while the adjusted ROTE ratio, which measures profitability adjusted to a CET1 of 12.5%, improved by 2 p.p. compared with September 2023, to 8%.
Pre-provision profit amounts to 844 million euros, and loan-loss provisions fall by 22.8%. Consolidated income before taxes amounted to 653 million euros, and net income for the first nine months comes to 451 million euros, 165 million euros higher than in the same period of the previous year.
Solvency and liquidity
CET 1 fully loaded at 15,4% and sound liquidity position
Unicaja maintains high and sound solvency levels. At the end of the third quarter, it reaches a CET1 fully loaded ratio of 15.4%, a tier 1 capital ratio of 17.3% and a total capital ratio of 20.3%. CET1 fully loaded increases by 123 bps over the last twelve months, thanks to the organic generation of earnings and the reduction in risk-weighted assets. These ratios comfortably exceed the required levels of 7.2 p.p. in CET 1 and 7.6 p.p. in total capital.
As a result, the entity has an excess of 2,090 million over regulatory requirements.
The Texas ratio stands at 27.9%, with an improvement of 10.2 p.p. in the last year.
The bank maintains a sound liquidity position, reflected in the Loan to Deposit ratio of 69.8%, the short-term liquidity ratio (LCR) of 314% and the net stable funding ratio (NSFR) of 157%.
Innovation
As part of the corporate innovation strategy, once the laboratory focused on the development and piloting of a conversational banking prototype, which has allowed a limited number of users to use their own natural language to perform basic operations with the bank (check balance, activate/deactivate cards, use bizum, check pension payments, contact a human agent), the bank is working on scaling its extension, in the short and medium term, to digital channels (Web and App).
Sustainability
In the area of sustainable and responsible banking, the following actions are to be mentioned:
- MSCI “ESG Rating” of A. The agency has upgraded Unicaja's rating in its 2024 review, from BBB to A, based on the improvement of its governance model, as well as the progress in incorporating ESG risks in daily management and its supervision. In addition, MSCI has highlighted the bank’s progress in adopting measures to mitigate cybersecurity-related risks.
- Issuance of a 300 million euros five-year senior preferred green bond maturing in September 2029. This is the fourth green bond issued by the bank since 2022 to finance renewable energy and green building projects. These purposes are aligned with SDG 7 (Affordable and clean energy), 11 (Sustainable cities and communities) and 13 (Climate action). Unicaja has issued four green bonds for a total of 1,600 million euros since 2022.
- During the third quarter, the CREA Project was presented, promoted by Unicaja and the Junta de Andalucía, in collaboration with Harvard University and Oliver Wyman. The main goal of this project is to promote sustained and sustainable economic growth in the region.
- In the area of financial education, the Edufinet Project - promoted by Unicaja and Fundación Unicaja - was recognized with the Finance for All 2024 Award, granted by the Financial Education Plan (promoted by the Bank of Spain, the CNMV and the Ministry of Economy, Trade and Enterprise), in the category of best financial education initiative developed by non-collaborators, for its Financial Education Ambassadors Project for Senior Citizens.
- In the first nine months of this year, there have been 13,800 beneficiaries of the financial education programs carried out.
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