CaixaBank has shielded the customer margin and the financial margin to navigate the new scenario of falling interest rates. Its forecast is that profitability per client – the difference between the cost of liabilities and income from credit yields – will remain stable at around 3% during the three years that its recently announced new strategic plan will last, when it is confident that the financial margin will be maintained. also in the record 11,000 million euros planned for the current fiscal year 2024.
With interest rates at a peak of 4.5%, this parameter reached a ceiling of 3.64% at the bank last March but in September it had fallen to 3.55% after the European Central Bank ( BCE) began the reverse process, of lowering the price of money.
The roadmap presented by CaixaBank to navigate the new scenario during the 2025-2027 three-year period projects that the Euribor will end this year at 2.7% and will drop to 2.1% at the end of 2025, setting a floor for the following years , when it expects its margin per client to be around the aforementioned 3%, even with a small rebound in the last section of the plan.
This parameter and the financial margin are the most sensitive of the banking sector to the variation in rates because the customer margin narrows with the natural drop in the yield of loans and, although it will also make deposits cheaper, large banks have less margin there. by avoiding going to war over liabilities. In the case of CaixaBank, half of its deposits already have low sensitivity to variations in the price of money and it has protected part of the other 50% with coverage (it has 52,000 million in deposit coverage and wholesale financing).
On the credit yield side, the proportion of the portfolio that will not be affected by being already granted with fixed rates has increased to 35%, leaving the portfolio sensitive to new adjustments by the ECB at 65%. The entity, like the sector as a whole, has been progressively increasing the weight of the secured portfolio thanks to the high number of fixed-rate mortgages in recent years. At CaixaBank, up to 75% of new concessions had, in fact, chosen this modality in recent months, according to data revealed by the bank at the end of September.
Its plan until 2027 also includes maintaining the financial margin in the record income of 11,000 million that it expects to reap in 2024, thanks to the protection of the customer margin, its expectation of increasing business volume and because it has “immunized” part of the income. with greater investments in debt. In 2021, when the Euribor set historic lows, this margin contributed 6,000 million to the account and in 2022, when the first rate increases arrived, it generated 6,600 million.
The entity has strengthened its fixed income portfolio to protect margins with greater volume and improving its profitability. Its debt portfolio stood at 83,704 million euros at the end of September. The so-called Coap or Alco portfolio are positions that entities maintain in bonds, mainly sovereign debt and those of the different countries where they operate, as a tool to manage liquidity risks and variations in balance sheet rates, as is the case now. The result is that now its interest margin barely falls 5% for every 100 basis points of rate reduction when in 2021 it would have fallen by 30% and it plans to compensate for the adjustment with more business: it aims to grow 4% in loans.
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