CaixaBank obtains a net attributed profit of 833 million euros, up by 11%, with high levels of both commercial business and allowance coverage

High levels of solvency (Core Capital at 11.3%) and liquidity (21,633 million) further strengthened

•  CaixaBank was listed on 1 July, following the successful completion, in record time, of the reorganisation of the "la Caixa" Group. The bank will have 630,000 shareholders following conversion of the June issue of mandatorily convertible subordinated bonds into shares to the value of 1,500 million.  In a highly complex business environment, the institution further strengthened its solvency, with Core Capital at 11.3%, 2.4 points higher than in December, consolidating its differentiating financial robustness in the Spanish financial markets.  Liquidity was also further consolidated and remains among the highest in the Spanish financial system at 21,633 million, practically all of it immediately accessible. In addition, against a backdrop of notable tensions in the marketplace, CaixaBank has acted strongly and early to attract liquidity, with issues worth 5,874 million during the first six months of the year.  The non-performing loans ratio stands at 4.3%, well below the sector average in May (6.5%), while allowance coverage rose to 67%, 139% if mortgage guarantees are taken into account.  The gross margin stands at 3,417 million, up by 0.2%, due to the high capacity to generate recurring income. Prudent cost-management policy has led to a 1% reduction in operating costs which, combined with the institution's robust commercial strength, resulted in a 1.3% increase in net operating income to 1,759 million.  The strength of the net operating income figure has allowed for high levels of allowance coverage to be set aside at a time when risk is being managed very conservatively. In addition, the extraordinary capital gains resulting from the sale of 50% of SegurCaixa Adeslas was, for the most part, allocated to extraordinary writedowns in order to increase the strength of the balance sheet.  The generic allowance fund again remained untouched at 1,835 million during the last quarter, which not only demonstrates the quality of the recurrent income generated but also offers the institution robust financial strength against future risk.  Despite the difficult climate, high levels of commercial strength in the branch network, with 5,247 branches and 28,284 employees, helped business volumes rise by 5.3% to 436,974 million, further strengthened by customer funds (+6.8%) and customer loans (+3.4%). CaixaBank continues to strengthen its leading position, with a sustained increase in market share in key areas.

CaixaBank, the bank through which Caja de Ahorros y Pensiones de Barcelona now indirectly operates its financial business following the successful culmination, in record time, of the "la Caixa" Group reorganisation, obtained a net profit of 833 million euros during the first six months of 2011 (+11%), in a complex economic environment with strong pressures on pricing.

CaixaBank, with Isidro Fainé as Chairman and Juan María Nin as Deputy Chairman and CEO, was listed on 1 July, and will have 630,000 shareholders following conversion of the June issue of mandatorily convertible subordinated bonds into shares to the value of 1,500 million. The bank increased its business volumes (+5.3%) and further strengthened its high levels of solvency (Core Capital at 11.3%) and liquidity (21,633 million), maintaining robust allowance coverage without making use of the general allowance fund, which has remained at 1,835 million euros since the end of 2009, thanks to the institution's capacity to generate income.

CaixaBank's net interest income stands at 1,543 million, down 17% on the first six months of 2010, in an environment marked by a gradual rise in market interest rates, containment of the growth of managed business volumes, strong competition to attract retail deposits and the increased cost of issues on the wholesale markets.

Income from investments (dividends and income accounted for by the equity method) rose to 686 million, up by 35.1%, demonstrating CaixaBank's strong capacity to generate recurring income from its portfolio and its diversification in the international banking and services areas.

Net fees increased by 13.7% year-on-year to 772 million, due to the increase in banking business and the high number of transactions, particularly in the business banking, investment banking and insurance segments, with appropriate management of the services offered to customers.

Total income (gross margin) stands at 3,147 million, up by 0.2% on the first six months of 2010.

The strict management of cost-containment and rationalisation procedures has brought a 1% reduction in operating costs, following the absorption of the higher costs resulting from the integration of Caixa Girona during the last quarter of 2010, and the efficiency ratio was up on the previous quarter at 45.7%.

Net operating income rose by 1.3% to 1,759 million, thanks to both the strong commercial capacity of the branch network, which offers the sustained generation of recurrent income, and robust action to reduce costs.

In addition, the first six months of this year saw extraordinary net capital gains of 463 million, mainly from the sale to Mutua Madrileña of 50% of SegurCaixa Adeslas, the Group's non-life insurance company, which includes the Adeslas health business, and extraordinary writedowns of 332 million were made, with allowance coverage against insolvencies made in addition to those scheduled by the current regulations and the entry of the costs resulting from the reorganisation process.

The significant income generated by Caixabank's recurring activities, combined with the generation of extraordinary income, means that total allowance coverage for the first six months of the year stood at 1,390 million, following the application of conservative criteria when reviewing the loans portfolio and the setting aside of coverage in addition to the amounts scheduled.

Recurring income thus totalled 702 million euros, down by 7.4%, and the net profit attributed to CaixaBank stands at 833 million, an increase of 11% on the same period for the previous year.

Active management of risk and increased financial strength

CaixaBank's non-performing loans ration stands at 4.3%, and continued to compare favourably with the average figure for the financial sector as a whole in May (6.5%), thanks to the high quality of its loans portfolio, strict risk management and robust recovery procedures. The allowance coverage ratio stood at 67% (139% if mortgage guarantees are taken into consideration).

The general allowance fund for insolvencies remains at 1,835 million euros, the same as at the end of 2009, and at approximately 100% of the α factor, affording CaixaBank great financial strength to deal with any adverse future circumstances.

CaixaBank maintains its leading position as regards solvency, with a Core Capital figure (high-quality shareholder equity) of 11.3%, compared with 8.9% on 31 December 2010. In addition to the sustained organic generation of capital in each quarter, this robust increase includes the operations relating to the Group's organisation, including the issue of mandatorily convertible subordinated bonds worth 1,500 million.

The Group's attributable own funds total 16,643 million, with a surplus of 4,836 million over and above the legally required minimum.

CaixaBank's liquidity figure stands at 21,633 million, 7.9% of total assets, practically all of it immediately accessible.

In addition, CaixaBank has anticipated issues on the wholesale market and made issues to the value of 5,874 million during the first six months of the year, with 4,065 million in maturing issues over the same period. As far as liquidity levels and the timetable for issues maturing in the future are concerned, dependence on the wholesale markets is very low. This offers the Group a high level of stability and demonstrates its robust capacity for anticipation.

More extensive commercial business and increased market shares

The Group's great commercial strength, with 28,284 employees, 5,247 branches (the largest network in the Spanish financial system), 7,993 ATMs and a leading position in on-line banking through Línea Abierta (with 6.8 million customers), mobile phone banking (more than 2.1 million customers, the highest number of financial service users in Spain) and electronic banking (10.4 million cards in circulation), means that the Group is showing balanced and high quality growth in its banking and commercial business.

The "la Caixa" Group has increased its main market share in the following areas: pension plans (16.2%), mortgage guarantees (11%), savings plans (15.3%), investment funds (12.2%), private loans (10.7%), factoring and confirming (14.8%) operations and foreign business (14.9%), among others.

Total banking business amounted to 436,974 million (+5.3%), thanks to sustained growth in loans and customer funds. Total customer funds reached 248,058 million (+6.8 on the first six months of 2010), with careful price management, in addition to the strong increase in pension plans, insurance and investment funds.

InverCaixa, the "la Caixa" investment fund manager, has also continued to perform well, attaining a market share of 12.2%, with managed investment assets of 16,421 million. InverCaixa, which is one of the largest investment fund managers, has also seen one of the highest levels of growth during the first six months of this year, showing an increase of 12.21% at a time when the overall market has shrunk by 1.98%. InverCaixa continues to grow its business in guaranteed fixed-income funds, and during the second quarter has been marketing FonCaixa Estabilidad, in two different categories. This has attracted an excellent level of interest among customers with more than 485 million euros in contributions.

The customer loan portfolio stands at 188,916 million (+3.4%), further demonstrating the Group's willingness to show support for its customers' personal and business projects.

Consolidation of the specialised business model

CaixaBank retains its goal of consolidating its leading position in the Spanish retail banking sector with the implementation of a specialised model for personal banking, private banking, SME banking, business banking and corporate banking that offers services to all of its 10.5 million customers.

In Individual Banking, "la Caixa" has mainly focused its efforts on attracting customers and retaining their loyalty. The MultiEstrella loyalty programme is particularly important in this regard, as it offers customers both financial and non-financial benefits depending on their loyalty to "la Caixa". This programme, which has seen its customer base rise by 31%, has helped to improve market shares in both salaries and pensions managed from "la Caixa" accounts, with managed salaries growing by 16% and managed pensions up by 13.7%, figures that continue to rise year on year. The institution has also strengthened its campaigns relating to insurance and investment funds.

The volume of funds and securities managed by Personal Banking has risen as a result of the strong evolution of investment fund balances and the value policy pursued by "la Caixa", based on personalisation, proximity and the development of custom-made products and services. A highlight of this first half of the year was the launch of a new range of Premium insurance products.

For its part, the "la Caixa" Private Banking division, aimed at customers with managed assets of more than 500,000 euros, continues its consolidation process and has seen an increase of 3.1% in funds and 19.2% in securities managed. Particularly notable during the first half of the year was the increased marketing of pension plans and investment funds.

The SME Banking Service provides assistance to SMEs through the branch network and an extended team of specialist advisers, and currently has a customer penetration share in the small businesses segment of 40%. "la Caixa" has focused on supporting companies in their foreign trade business, through international transfers and their subsequent financing, the management of the risk cover granted, the offer of services and payment methods with greater competitive advantages and the provision of financing for businesses through ICO loans.

The Business Banking service, which offers a network of 83 specialist centres and more than 850 people specially trained to attend to the requirements of this sector, has seen its loans business rise by 11% on the same period last year, while customer funds have risen 12%.

The Corporate Banking division, which has a team of 127 highly specialised personnel, attends to businesses with an annual turnover of more than 200 million euros, through the "la Caixa" offices in Madrid and Barcelona. Average levels of investment and have risen by 4% over the last twelve months, due to the marked increase in customer loans and credits, which is proof of the support offered by "la Caixa" for the financing requirements of its larger customers. Customer funds have risen by 15% due to greater links with operational transactions.

The Investment Banking service provides services for the Group's Business and Corporate Banking clients, mainly in the areas of syndicated financing and project financing, and in the offer of consultancy services for corporate acquisition operations. The first six months of 2011 saw particularly strong growth in the company loans segment, which showed a 20% increase, and there was also notable support for Corporate Banking customers on relation to the financing of renewable energy projects (+7%) and infrastructure (+6%), both in Spain and abroad (Poland, Romania, Italy, Mexico and the USA).

Since its creation in 2007, MicroBank has financed 113,308 projects worth a total of 715.9 million euros making, it the financial institution that devotes the greatest resources to the promotion of self-employment through the use of micro-credits. This figure confirms the sustained growth of the "la Caixa" social banking institution and the consolidation of its social banking model in Spain. During the first six months of the year, MicroBank awarded 19,405 loans totalling 127.7 million euros, thus increasing its investments by 28.2% as compared with the same period in 2010.

As part of its international expansion plan, "la Caixa" has agency offices in London (United Kingdom), Paris (France), Milan (Italy), Stuttgart and Frankfurt (Germany), Istanbul (Turkey), Beijing and Shanghai (China), Delhi (India) and Dubai (UAE). It also has branches in Warsaw (Poland), Bucharest (Romania) and Casablanca (Morocco), where it was the first Spanish banking institution to open a branch.

CaixaBank has a 5.4% holding in Telefónica, 12.8% in Repsol YPF, 5% in BME, 20% in GFInbursa, 30.1% in Banco BPI, 15.7% in The Bank of East Asia, 10.1% in Erste Bank and 20.7% in Boursorama.

The market value of Caixabank's portfolio of listed investments totals 13,088 million euros with unrealised capital gains of 2,077 million.

Reorganisation of the "la Caixa" Group

30 June saw the culmination of the process for reorganisation of the "la Caixa" Group. This process began on 27 January, when an agreement was reached with the majority shareholder of CaixaBank (formerly Criteria), under which "la Caixa" would transfer its banking business to CaixaBank, and in return, CaixaBank would transfer some of its industrial shareholdings (Abertis, Gas Natural Fenosa, Aguas de Barcelona, Port Aventura and Mediterránea), along with newly issued shares in CaixaBank, resulting from a share capital increase, to "la Caixa". It should be pointed out that the shareholding held by "la Caixa" in Servihabitat and other real estate businesses was excluded from the banking business transferred. "la Caixa" is the majority shareholder in CaixaBank, holding approximately 81.5% of its share capital.

With the reorganisation of the Group, "la Caixa" has strengthened and guaranteed its founding values, preserving its legal status and maintaining its attributes of leadership, trust and social commitment. Its sustained dividends policy ensures the continuity of the "la Caixa" business model and its commitment to Social Projects.

On 1 July, CaixaBank was listed on the main Spanish stock markets and the continuous market. This operation will allow the "la Caixa" Group to continue operating in all the business segments in which it currently has a presence (banking and industrial group) while continuing with its firm commitment to Social Projects.

The "la Caixa" brand has been maintained as the commercial identifier on its entire network of branches, ATMs, on-line banking services, mobile phone banking and its range of financial services.

"la Caixa" confirms its commitment to its Social Projects

On 28 April, the "la Caixa" General Assembly agreed to maintain the Social Projects budget for 2011 at 500 million euros. Thus, and more than ever in the current circumstances, "la Caixa" has confirmed its commitment to society.

The amounts invested in each individual area break down as follows: 335 million euros is earmarked for the development of social assistance programmes (67% of the total investment); 68 million goes to scientific and environmental initiatives (13.6%); 64 million is allocated to cultural activities (12.8%); and 33 million will be spent on educational and research projects (6.6%).

Excluded families and unemployed people, along with the elderly, have been three of the groups that have received preferential attention during the last six months. 4,474 people have found jobs through the Incorpora programme during the first half of 2011, bringing to 43,295 the number of job opportunities generated at 16,123 companies by the Social Projects, since this programme was launched in 2006. 66% of the beneficiaries of this initiative are people at risk of exclusion, while the remaining 34% arte people who suffer from some form of disability.

In this connection, the "la Caixa" Foundation and the Ministry of the Interior signed an agreement on 3 May aimed at promoting the training and social and professional insertion of 1,000 prisoners who are currently completing the final part of their jail sentences. This agreement comes on top of the strategic alliance signed during the first quarter of this year by "la Caixa" and ONCE, the Spanish organisation for the blind, to encourage the integration of people with disabilities.

As part of the programme to assist children in circumstances of poverty and social exclusion, CaixaProinfancia, "la Caixa" has awarded grants to families in difficulty totalling 26.68 million euros during the first half of the year. Since 2007, the Social Projects programme has been working to break the cycle of hereditary poverty in Spain. More than 178,000 children and their families have received help under this initiative, to which "la Caixa" has already devoted 173.3 million euros. One of the fundamental objectives of CaixaProinfancia is that of contributing to the social and educational advancement of children, through resources aimed at providing help with schoolwork, psychological support, attention in the home and assistance during free time through activity centres, children's camps and summer schools.

The elderly have always been given priority attention by "la Caixa", from the moment the institution was founded. As an example of this, the Social Projects programme recently introduced "People 3.0", a new project which is intended to become a launchpad for the new generation of older people who no longer want to be seen as mere beneficiaries but instead see themselves as active players, participating and sharing their knowledge and experience with the rest of society.

The development of affordable housing for young people, the elderly and families in difficulty, the prevention of drug use, the promotion of inter-cultural co-existence, support for volunteers and assistance for the terminally ill are other areas in which the Social Projects initiative is active. As part of the last programme mentioned, 5,188 patients and more than 8,000 family members have received support from the Social Projects during the last six months. In response to a recent events, "la Caixa" has implemented a series of actions aimed at assisting the people of Lorca, Murcia, and helping to restore some form of normality after the earthquake that caused so much damage in the city on 11 May this year.

Outside Spain, "la Caixa" has continued its efforts to assist child vaccinations in developing countries (1.4 million children immunised). It is also working for sustainable economic development through 77 projects currently underway in 33 countries, and is particularly active in the reconstruction of Haiti.

In the sphere of academic reflection, the Social Projects programme presented a report entitled "Immigration and the Welfare State in Spain" on 4 May in Madrid. Prepared by Professor Francisco Javier Moreno (CSIC) and Professor María Bruquetas (University of Amsterdam), this study found that despite the fact that more than half of all Spaniards perceive immigrants as competitors as regards access to services and social benefits, they in fact contribute more than they receive from the welfare state.

The award of grants to pursue post-graduate courses at universities in both Spain (100 grants awarded) and abroad (116) once again underlined the "la Caixa" Group's commitment to education. The King and Queen of Spain joined Education Minister Ángel Gabilondo to chair the ceremony for the award of these 216 grants to Spanish students under this year's programme.

Staying with education, "la Caixa" is currently assisting the training of 1,200 4th and 5th year secondary school students at with its Summer Scientific Campus, organised at 20 leading university campuses during the holidays with a view to encouraging interest in research.

In the environmental field, the Social Projects programme has redoubled its efforts in relation to the conservation and improvement of natural spaces throughout Spain, as part of a programme that has offered support for more than 2,000 projects. In the area of research, the Social Projects programme has continued its support for the advancement of knowledge in universities (the RecerCaixa programme), and for work on AIDS (irsiCaixa), Cancer (the "la Caixa" Molecular Therapy Unit at Vall d'Hebron Hospital), neurodegenerative diseases (the BarcelonaBeta Project) and cardiovascular disorders (CNIC), among others.

The use of culture as a stimulant for personal growth is another basic them of the Social Projects. The inauguration of exhibitions on Coptic art (Lleida), Portraits from the Belle Epoque (Valencia), Aztec civilisation and special effects from the world of cinema (CaixaForum Barcelona) and photography and Soviet art in the early days of the Russian Revolution (CaixaForum Madrid) have been just some of the highlights of the past six months. Other events, such as the participative performances of Mozart's Requiem (Barcelona Auditorium) and Opera Choirs (the National Auditorium of Madrid), the presentation of the first volumes of the Classic Library Collection, with the support of the Spanish Royal Academy (El Cantar del Mío Cid, Nebrija's Gramática, La Vida de El Buscón and Los Milagros de Nuestra Señora), and the entry of "la Caixa" as a member of the Círculo de Amigos del Instituto Cervantes have further reinforced the institution's commitment to culture.

On a regional level, particular mention should be made of the presentation organised on 6 April to demonstrate the "la Caixa" Group's global commitment to the individual counties of the province of Girona following the merger between "la Caixa" and Caixa Girona. During 2011, "la Caixa" will devote 16 million euros to Social Projects in the province, a 15% increase on the total Social Projects budget allocated in 2010 by both "la Caixa" (10 million euros) and the Caixa Girona Foundation (4 million euros). The opening of both CaixaForum Girona in the La Fontana D'Or building and EspaiCaixa, a pioneering centre for the promotion of active ageing and participation by the elderly, offer further evidence of this commitment.

In short, the first half of this year has seen "la Caixa" once again clearly demonstrate its true raison d'être: a commitment to people and the well-being of the society in which it operates its business.