Q: CaixaBank reported robust results at the end of 2022, including a net profit of more than $3bn. What were the highlights in terms of its performance?
A: What’s most striking is the fact that the results were achieved while integrating two very large franchises: CaixaBank and Bankia. Our income grew by 5.5%, while our costs reduced by the same percentage. This is the outcome of the synergies that we achieved in the integration and, as a consequence, our operating result increased by 20%. Plus, we gained market share in several areas of the business.
In the meantime, we consolidated 1500 branches and moved almost 10 million clients, as well as managed around 6000 staff departures and many other internal changes. This proves our ability to execute a fast integration.
Q: The authorities approved the merger – the biggest in Spanish history – in March 2021 and a year later, 90% of the integration, including the IT integration, was complete. What were the lessons learned during that process?
A: The main reason this project was successful was that it was well designed from the outset, with carefully thought-out plans. Even before the transaction was finalised, we knew what the strategy would be and had defined the integration priorities. And once we had a fairly detailed plan agreed, we then moved on to the execution phase.
As indicated, the execution needed to be very fast, considering the overlap that exists between two large banks operating in the same market. Given that it was going to be difficult, our view was that we had to make it as quick as possible. We had the enabler of the IT integration and our IT teams worked diligently to make it work. We also had the management piece in place: the top 400 executives were appointed from day one.
the top 400 executives were appointed from day one
Above all, we had this view of being one team from the beginning. How did it happen? The tone from the top was important. And as CaixaBank and Bankia have similar histories and values, we were able to come together as a single management team from the outset.
Q: CaixaBank’s strategic plan has been in place since May 2022. What impact has the 2023 macroeconomic and rising interest rate environment had on it?
A: To some extent, many of the things that we’re seeing today were already embedded in our outlook, such as our focus on sustainability. We also wanted to ensure that our client-centricity resulted in a renewed thirst for growing the business. These things have not changed.
But, as you point out, some elements of the operating environment have changed. Fortunately, we held a conservative view when defining the plan and we started this phase with a solid balance sheet, including liquidity, solvency and asset quality. This means that we are not too distracted by the recent uncertainties because we feel that the downside is well protected.
However, the fact that rates have gone higher and for longer than we had thought has made a difference, particularly for our deposit-taking business. As a result, we need to invest even more than in our original plans on the traditional banking business and on serving our customers with a renewed focus.
Q: The bank recently opened its first Italian branch in Milan with a full banking licence. How does this fit into its growth plans?
A: Our international strategy is focused on developing our institutional business, the wholesale corporate and institutional banking division. CaixaBank is a retail bank in Spain and Portugal, but we want to work with our corporate clients where they are active, that is, across Europe and beyond. The Italian branch is the most recent of several steps we’ve taken over the past seven years, including opening branches in London, Frankfurt and Paris. We want to be close to our customers on the corporate side.
Q: Back in your home market, there is an economic slowdown looming in Spain. How will CaixaBank support its retail, small and medium-sized and corporate clients in a downturn?
A: If we have a negative economic environment in Spain, we will stay close to our clients as always. This means being ready to help them in their needs, particularly on the lending front, be it families with mortgages or companies with additional working capital needs. We need to be able to fund them appropriately and renegotiate terms if they are going through a difficult situation.
CaixaBank has a long history of social initiatives aimed at helping our clients, such as microfinance, financial inclusion programmes and extending insurance to a critical mass in Spain. In addition, 30% of our dividends go to “la Caixa” Foundation, our main shareholder, which in turn reverts these profits – more than €500m per annum – to Spanish society through social welfare programmes. There are plenty of ways for us to help our clients in tough times.
