CaixaBank obtains an attributed net profit of 845 million euros following robust allowance coverage, lifting solvency to 11.8% of Core Capital

Continuing high levels of liquidity at 20,152 million euros

 Robust generation of recurring income. Profit attributed to the CaixaBank Group during the first nine months of 2011 totalled 845 million euros, 16.6% down on the same period in 2010, after making allowance coverage against insolvencies totalling 1,953 million euros. CaixaBank Group recurring income, excluding extraordinary operations, totalled 921 million (-10.2%).

 Further increased levels of solvency. In a highly complex business environment, CaixaBank further strengthened its solvency with a Core Capital figure of 11.8%, 2.9 points higher than December 2010.

 Continuing high levels of liquidity. Liquidity was further strengthened, placing it among the highest in the Spanish banking system at 20,152 million euros, practically all of it immediately accessible.

 Margins maintained despite the macroeconomic environment. The recurring gross margin stands at 4,802 million euros, due to CaixaBank's high capacity to generate recurring income, while recurring net operating income totalled 2,352 million euros, a small drop of 1.2 % which, when extraordinary income is taken into account, increases to 7.2%. Net interest income showed an increase of 4.7% on the second quarter of 2011, thanks to strict management of the cost of resources.

 Active risk management. With a non-performing loans ration of 4.65%, CaixaBank further improved its position in comparison with the sector average (which stood at 7.15% in August), thanks to the high quality of its loans portfolio, while allowance coverage stood at 65%, 139% if mortgage guarantees are taken into account.

 Robust commercial strength of the Group. CaixaBank continues to maintain its leading position in personal banking in Spain, with a market penetration of 21% and the largest branch network in the country, with 5,192 branches. Business volumes rose by 3.8%, further strengthened by customer funds (+4.4%) and customer loans (+3.1%).

Barcelona, 4 November 2011. CaixaBank, the bank through which Caja de Ahorros y Pensiones de Barcelona now indirectly operates its financial business, obtained an attributed net profit of 845 million euros during the third quarter of 2011 (-16.6%), after making high levels of allowance coverage in a complex economic environment with strong pressures on pricing.

CaixaBank, with Isidro Fainé as Chairman and Juan María Nin as Executive Deputy Chairman and Managing Director, increased its business volumes (+3.8%) and further strengthened its already high levels of solvency (Core Capital of 11.8%) and liquidity (20,152 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 2,320 million, down 11.9% on the first six months of 2010, though up 4.7% on the net interest income figure for the second quarter, 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 834 million, up by 43.9%, 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 7.9% year-on-year to 1,137 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 4,802 million, down by 2.1% on the first nine months of 2010, and down by 2.9% if extraordinary income is taken into account.

The strict management of cost-containment and rationalisation procedures has brought a 3% reduction in operating costs, despite the absorption of the higher costs resulting from the integration of Caixa Girona during the last quarter of 2010, and the efficiency ratio stands at 46.2%, with an amortization ratio of 52.4%.

The strong commercial capacity of the branch network, which allows for the recurring and sustained generation of income, combined with a reduction in costs, resulted in a net operating income figure of 2,352 million euros, 1.2% down on the same period for the previous year, or 7.2% down if extraordinary income is taken into account.

In addition, the first nine months of this year saw extraordinary net capital gains of 557 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.

The same period saw net extraordinary writedowns of 633 million, of which 400 million was accounted for by allowance coverage against insolvencies made in addition to those scheduled by the current regulations, 159 million represented the institution's 10.1% share of the extraordinary writedowns made by Erste Group Bank, and 74 million resulted from the cost of the reorganisation process, which has now been completely covered.

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 1,953 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 921 million euros, down by 10.2%, and the net profit attributed to CaixaBank stands at 845 million, a fall of 16.6% on the same period for the previous year.

Active management of risk and increased financial strength

CaixaBank's non-performing loans ratio stands at 4.65%, and continues to compare favourably with the average figure for the financial sector as a whole in August (7.15%), thanks to the high quality of its loans portfolio, strict risk management and robust recovery procedures. The allowance coverage ratio stands at 65% (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 98% 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 11.8%, 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 solid generation of income, the management of the risk portfolio and 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 16,618 million, with a surplus of 4,958 million over and above the legally required minimum.

CaixaBank's liquidity figure stands at 20,152 million, 7.5% of total assets, practically all of it immediately accessible. This figure has increased by 514 million euros during the first nine months of 2011.

In addition, CaixaBank has anticipated issues on the wholesale market and made issues to the value of 5,874 million up to the third quarter of the year. As far as liquidity levels and the timetable for issues maturing in the future are concerned (785 million euros in 2011 and 2,561 million euros in 2012), dependence on the wholesale markets is very low. This offers the Group a high level of stability and demonstrates its robust capacity for anticipation.

The "la Caixa" Group passes the European Banking Authority (EBA) exercise

The capital requirement for the "la Caixa" Group is 602 million euros, representing 2.3% of the total figure of 26 billion required for financial institutions in the Spanish system, according to calculations made by the European Banking Authority (EBA). "la Caixa" will cover these requirements with the organic generation of capital before the June 2012 deadline.

The Core Tier 1 solvency ratio for the "la Caixa" Group as of 30 June 2011, estimated by the EBA in accordance with its own methodology, was 8.9%, just one tenth of a point below the 9.0% required in the exercise carried out by the EBA.
 
The corporate reorganisation completed during the course of this financial year and the strong capacity for the organic generation of capital meant that the "la Caixa" Group was able to raise its Core Tier 1 ratio from 6.8% on 31 December 2010 to the aforementioned figure of 8.9% by 30 June 2011 (11.0% of Core Capital under current solvency regulations and 12.4% Principal Capital under Spanish Royal Decree / Act 2/2011).

The data published by the EBA is further evidence of CaixaBank's high levels of financial robustness, based on the institution's prudent and efficient management and sense of anticipation.

More extensive commercial business and increased market shares

The Group's great commercial strength, with 27,339 employees, 5,192 branches (the largest network in the Spanish financial system), 7,902 ATMs and a leading position in on-line banking through Línea Abierta (with 6.9 million customers), mobile phone banking (more than 2.2 million customers, the highest number of financial service users in Spain) and electronic banking (10.5 million cards in circulation), means that CaixaBank is showing balanced and high-quality growth in its banking and commercial business, with a market penetration figure of 21% in the personal banking segment.

The "la Caixa" Group has increased its main market share in the following areas: individual pension and insurance plans (15.5%), mortgage guarantees (11.1%), savings plans (15.5%), investment funds (12.2%), private loans (11.6%), deposits (9.6%), and factoring and confirming (14.8%) operations, among others.

Total banking business amounted to 48,196 million (+3.8%), thanks to sustained growth in loans and customer funds. Total customer funds reached 240,668 million (+4.4 on the first six months of 2010), with careful price management, in addition to the strong increase in pension plans, insurance and investment funds.

Investment funds are also continuing to perform well, attaining a market share of 12.2%, with managed investment assets of 15,721 million. InverCaixa, which is one of the largest investment fund managers, has also seen one of the highest levels of growth during the first nine months of this year, showing an increase of 7.43% at a time when the overall market has shrunk by 6.40%.
 
The customer loan portfolio stands at 187,528 million (+3.1%), further demonstrating the Group's willingness to show support for its customers' personal and business projects.
 
In addition, at the end of the quarter CaixaBank announced that it was buying Bankpime's banking and fund management business for 16 million euros. This operation will mean the incorporation into CaixaBank, by 1 December under the current timetable, of business worth approximately 1,200 million euros, including 400 million euros of off-balance-sheet investment funds, with good liquidity, high levels of net interest income and little impact on solvency.

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, corporate banking and investment banking that offers services to all of its 10.5 million customers.

In Individual Banking, CaixaBank continues to focus on attracting customers and retaining their loyalty, with specific activities aimed at professionals, trading businesses and individuals. Campaigns have been launched during the last quarter to facilitate access to consumer credit, both through loans and through the Visa Gold revolving credit card. These campaigns have been well received, and more than 80,000 credit operations have already been completed, bringing the institution's market share to 11.57%. September saw the start of an insurance campaign that offers customers the opportunity to consolidate their premiums with the offer of a gift card of up to €600.

The number of Personal Banking customers has grown by 3.5% to around 600,000 over the last 12 months. The funds managed in this business segment have increased by 3.2% to 60,634 million euros over this period, due to the strong take-up of fixed-term issues and investment securities.

In Private Banking, the number of customers has grown by 12.5% over the last 12 months, and it now totals 440,000. Funds managed in this business segment rose by 8.9% over the same period, reaching a total of 33,259 million euros.

In SME Banking, although we have obtained a penetration share of 40%, we have continued to make progress in attracting new business over the past 12 months and now have more than 200,000 customers in this segment, an increase of 1.3%. It is worth mentioning that despite adverse market conditions, ordinary income from this business segment has increased by 4.8%, the result of the maintenance of active margins and an increase in income from fees.

The Business Banking service, which offers a network of 83 specialist centres and 871 people specially trained to attend to the requirements of this sector, has seen strong growth in all business areas. The number of managed customers has risen to 31,101, up by 15% as compared with September 2010, and managed funds total 28,000 million euros, the result of a 9% increase in loan investment and an 8% rise in managed funds.

The Corporate Banking division has also performed particularly well over the last 12 months, with managed investments rising 19% to a total of 20,000 million euros by the end of September. This offers further proof of CaixaBank's support for its customers' financing requirements, with its loans and credits portfolio currently worth 4,834 million euros, an increase of 8%.

As regards the offer of specialist products and services for SMEs, businesses and corporations, particular mention should be made of the Transactional Banking service, which offers solutions for the recurring management of customer business, with 10% growth in foreign trade, 51% growth in factoring agreements and 14% growth in confirming services. In addition, the Investment Banking service, which offers financing solutions for investment projects, saw an increase of 30% in its SME operations portfolio, 15% in energy projects and 10% in corporate financing and acquisitions.

Since its creation in 2007, MicroBank, the "la Caixa" social banking institution, has financed 121,722 projects worth a total of 767.8 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 institution's sustained growth and its consolidation as a social banking model in Spain. To the end of the third quarter, MicroBank had awarded 27,825 loans totalling 178.9 million euros, thus increasing its investments by 21.4% 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 as of 30 September 2011 totalled 10,358 million euros.

Potential revaluation of CaixaBank by 37%

The 20 firms offering an analysis of CaixaBank have suggested that it may potentially be revalued by 37%, one of the highest revaluation figures for any financial institution. The analysts made particular mention of its leading position in the retail banking sector, the quality of its assets, its excellent liquidity and solvency and its reduced exposure to real estate assets.

Although the evolution of CaixaBank's share price was highly satisfactory during the first six months of the year, during which it experienced a revaluation of 20.9%, its value has been affected over the last three months, along with all the other shares listed on the Ibex 35 (particularly in the financial sector) by the peripheral debt crisis and negative growth data for the global economy. The share price therefore closed 16.6% down on 30 September 2011, though if the dividends paid out are taken into account this fall is reduced to 7%.

As regards dividends policy, the CaixaBank Board agreed the terms of the second "Dividend/Share Programme" for the first dividend on account during 2011. On this occasion, 98% of shareholders opted to receive shares, a figure that underlines the shareholders' trust in the institution.

Social Projects: More committed to society than ever

The "la Caixa" Group's commitment to disadvantaged people, one of its most characteristic identifying features, takes on even greater importance in the current situation. In spite of the adverse global environment, the institution has maintained a total Social Projects budget of 500 million euros for 2011. This makes the "la Caixa" Social Projects Programme the number one private foundation in Spain and one of the most important in the world.

The main priority remains that of attending to the principal needs of private individuals. 67% of total investment (335 million euros) is allocated to social and support programmes. Job creation and the fight against poverty and social exclusion are currently the two most strategic areas in the Social Projects programme.

8,459 people have gained access to jobs under the Incorpora programme during the first nine months of the year, bringing to 47,280 the number of job opportunities generated at 16,123 companies by the Social Projects, since this programme was launched in 2006.

CaixaProinfancia, the programme that offers assistance to children in circumstances of poverty and social exclusion, has awarded grants to families in difficulty totalling 33.8 million euros during the first nine months of this year. Since 2007, the Social Projects programme has been working to break the cycle of hereditary poverty in Spain under this initiative, to which "la Caixa" has already devoted 179 million euros and which has benefited 180,737 children and their families.

The development of affordable rental housing to guarantee access to a proper home for people in difficulties (the programme already manages some 400,000 flats), the promotion of active ageing and the full involvement of the elderly in society (through the new People 3.0 programme), the social and professional rehabilitation of prisoners in the final stages of their sentences and the prevention of drug use are some of the other areas in which important action has been taken during the last quarter.

To underline the institution's commitment to scientific training and knowledge, the Chairman of "la Caixa" and its Social Projects Programme, Isidro Fainé, signed an agreement on 2 July with the Minister for Science and Innovation, Cristina Garmendia, and the Minister for Education, Ángel Gabilondo, for the joint promotion of Science Summer Camps. The interest that "la Caixa" takes in this particular area was further underlined some days later with the annual award to 40 researchers from around the world of diplomas for the completion of an international doctorate in Biomedicine.

Over the summer, Isidro Fainé made a visit to one of the centres in Hong Kong that has implemented the Social Projects programme for assistance for people with terminal illnesses in China, as a result of the institution's shareholding in The Bank of East Asia. In Spain, the project has so far provided assistance to 22,700 patients and 36,400 of their relatives.

Staying in the international arena, "la Caixa" opened up a current account with an initial donation of 100,000 euros to provide aid for the famine in the Horn of Africa. It also made a promise to donate a further one euro for every ten euros paid in by the general public. The balance currently held in the account is 430,000 euros.

Turning to environmental issues, efforts were further intensified in the Social Projects programme this summer in support of the conservation and improvement of natural spaces throughout Spain. 275 different projects have so far been implemented this year, with priority given to the engagement of people at risk of exclusion to assist in conservation work. 1,173 beneficiaries have taken part in these projects.

In the cultural arena, maintaining its policy of forming grand alliances with some of the world's most important institutions, on 20 June "la Caixa" became a Benefactor of the Prado Museum, with which it has collaborated on an educational programme entitled "The Art of Educating". Other important cultural landmarks during the course of the third quarter have included the opening of the exhibitions "Teotihuacán. City of the Gods" and "Haiti. 34 seconds later" at CaixaForum Madrid, and "Portraits from the Belle Epoque" and "Sagnier's City" at CaixaForum Barcelona.

In the academic sphere, the Social Projects Programme presented the report "Individualisation and Family Solidarity" on 14 September in Madrid. Prepared by Gerardo Meil, Professor of Sociology at Madrid's Universidad Autónoma, the report underlines how the financial crisis has strengthened intergenerational cooperation between family members in Spain.