INTEGRATED CORPORATE REPORT [2012]

Transcription

1 INTEGRATED CORPORATE REPORT 2012]

2 CaixaBank Group - Key Indicators] million Results Change Net interest income 3,872 3, % Gross income 6,737 6, % Pre-impairment income 3,171 3, % Profit attributable to the Group 230 1,053 (78.2%) Efficiency and Profitability Cost-to-income ratio (Total operating expenses / Gross income) 52.9% 51.3% 1.6 ROE (Attributable profit / Average equity) 1.0% 5.2% (4.2) Balance Total assets 348, , % Book value 22,793 20, % Total banking business volume 512, , % Total customer funds 288, , % Customer loans and advances, gross 223, , % Risk management Non-performing loans (NPL) ratio 8.62% 4.90% 3.72 Allowances for non-performing loans 12,071 5,745 6,326 NPL coverage ratio 60% 60% 0 NPL coverage ratio including collateral 142% 137% 5 Liquidity 53,092 20,948 32,144 Solvency Core Capital - BIS II 11.0% 12.5% (1.5) Tier total 11.6% 12.8% (1.2) Eligible equity 18,641 17,581 1,060 Surplus capital 5,745 6,592 (847) Core Tier 1 - EBA 10.4% 10.9% (0.5)

3 2012, a year of intense management and growth] Excellent commercial capacity] 12.9 million customers 22% penetration as number-one bank +19.8% increase in business volume 32,625 employees 6,342 branches. The largest commercial network Leading multi-channel service model] Market share by business volume] 9,696 ATMs +14.5% transactions in the course of the year 4,824 million transactions >90% electronically 12.8 million cards in circulation Mobile phones already account for 12% 14.7% market share by business volume > 10% share > 7% share 7% share 6.6% 8.3% 7.8% 5.9% 37.6% 11.7% 9.6% 32.3% 7.0% 8.4% 7.0% 9.1% 11.7% 18.9% 16.5% 9.9% 27.3% Business activity] Customer funds + 47,365 million Change +19.6% Sector* -3.9% Deposits + 26,138 million Change +21.8% Sector* -5% Loans + 37,400 million Change +20.1% Sector* -9.5% *Source: Bank of Spain

4 INtegrateD Corporate Report 2012]

5 Summary] 04] Letter from the Chairman 05] Letter from the Deputy Chairman and C.E.o. 06] about us 09] Corporate Governance 13] Key strategies 16] 2012 financial reporting and results 20] Shared value creation

6 integrated Corporate Report 2012] Letter from the Chairman] During 2012, CaixaBank bolstered its leadership of the Spanish banking sector through the integration of Banca Cívica. It now boasts near 13 million customers and has achieved the growth targets established in the Group s Strategic Plan ahead of schedule. It has also announced the acquisition of Banco de Valencia, enabling the Group to boost its presence and accelerate growth in the Levante region of Spain. CaixaBank s commercial strength and cost controls have enabled it to maintain solid operating results. This has allowed for sizeable allowances and writedowns of over 10.2 billion to be made and the balance sheet shored up, enabling CaixaBank to maintain its position as one of the top banks in terms of solvency. We continue to boast a very high level of liquidity, providing a larger safety net. Dividends received by la Caixa from its subsidiary Criteria CaixaHolding and CaixaBank s activity once again allow it to set aside a budget of 500 million for la Caixa Foundation in 2013, making it the leading private foundation in Spain and one of the most important in the world. The Foundation s aim is to open up opportunities to the most disadvantaged groups in society during what are challenging times from both an economic and social perspective. For yet another year, we have also ratified our commitment to the United Nations Global Compact. We have been working harder than ever to demonstrate to our customers, employees, shareholders and partners that CaixaBank is moving forward in difficult circumstances, thanks to the responsibility of all those involved and our commitment to the welfare projects, which has been our constant hallmark. We face the future with optimism despite prevailing difficulties; continuously adapting and innovating our business, safe in the knowledge that we have much more solid foundations and that our human resources are far stronger and more committed to a common project and goal. Isidro Fainé Casas I wish to express my most sincere gratitude to everyone who has placed their trust in CaixaBank, and hope that this report gives them a better understanding of our entity. 4

7 Letter from the Deputy Chairman and C.E.O.] Against a complicated backdrop of major changes in the Spanish banking sector geared towards restoring the health of balance sheets, bolstering capital capital and liquidity, and seeking greater efficiency, CaixaBank had a good year in terms of both organic and inorganic growth. In addition to recurring commercial business across the CaixaBank network, we integrated Banca Cívica into our Group (effective as of July 1) and drew up an agreement for the acquisition of Banco de Valencia. This enabled us to move forward on the growth targets set out in the la Caixa Group Strategic Plan and consolidate CaixaBank as market leader with assets totaling 348,294 million, 26% penetration of retail banking and a general increase in market shares. The Group s impressive commercial strength with its 32,625 employees, based on the continuous task of innovation, is built around a multi-channel distribution model: 6,342 branches and 9,696 ATMs, and a top-ranking online, mobile and electronic banking service. This, along with careful proactive risk management, has produced a balanced quality increase in our volume of business (+19.8%) and maintained CaixaBank s financial strength: liquidity has increased to 53,092 million to make our bank one of Spain s most solvent, with Core Capital (BIS II) standing at 11% and a NPL coverage ratio of 60% (142% including collateral). The Group has also demonstrated its capacity to generate earnings: preimpairment income stood at 3,171 million, enabling us to allocate major provisions and write-downs. The combination of all these factors growth, innovation, commercial and financial strength and ability to generate income is certainly the best way of guaranteeing our future and ongoing sustainability. Juan María Nin Génova 5

8 integrated Corporate Report 2012] About us] CaixaBank leads Spain s retail banking sector as a financial group which also has insurance business, holdings in international banks and interests in solvent companies within the services sector. The bank s financial strength is based on careful risk management and the ability to generate recurring income. Along with its majority shareholder la Caixa, it is committed to people and social progress. In 2012 the bank completed the Banca Cívica integration process and drew up an agreement to acquire Banco de Valencia. Banking and insurance Group International banking investees Industrial stakes Leaders on the Spanish market 12.9 million customers, number-one entity for retail customers Leading bank in terms of asset volume: 348,294 million business model based on individual banking, personal banking, private banking, SME banking, business banking and corporate banking Volume of business: 512,017 million (+19.8% on 2011) EFQM European Excellence Award (+500) Innovation, proximity and extensive commercial capacity 32,625 employees the largest commercial network (6,342 branches), with 9,696 ATMs market leaders in online, mobile and electronic banking the world s most innovative bank in 2011, according to the Bank Administration Institute and Finacle (BAI) A benchmark in terms of liquidity and capital adequacy Core Capital (BIS II) 11% Liquidity of 53,092 million (15.2% of assets) Extensive capacity to generate earnings 2012 pre-impairment income of 3,171 million Investee earnings of 809 million (+22.8%) Strict cost control system Committed and sustainable a la Caixa Group entity, whose Foundation has a budget of 500 million a year A social bank specializing in microcredits, MicroBank ranked on the world s major sustainability indexes: DJSI, FTSE4Good and ASPI 6

9 Shareholder structure The number of shares in circulation at January 4, 2013 was 4,489 million. The controlling shareholder is Caja de Ahorros y Pensiones de Barcelona, la Caixa, which holds 72.76% of equity. At December 31, 2012 CaixaBank held a total of 38,836,812 treasury shares, representing 0.8% of its share capital. The bank s free float (not held by the majority shareholder, the other shareholders of Banca Cívica or as treasury shares) stands at 22%, and is held by more than 750,000 shareholders, almost twice the number for Non-controlling interests (including employees) hold 73% of the free float (16% of share capital). The rest is held by institutional investors. Shareholder returns and share price CaixaBank shares closed 2012 at per share, down by 30.5%, down by 24.5% taking into account the dividends paid out. CaixaBank s average daily trading volume, excluding special operations, was 3 million shares. Shareholder returns remain one of the bank s priorities. Quarterly payments were maintained in 2012 in an amount similar to previous years, 0.23 per share, a return of 8.7% based on the 2012 closing price*. Shareholder structure] Data per share] Dividend paid out in dividend yield 8.7% Non-controlling interests, employees 73% Institutional investors 27% la Caixa, other shareholder savings banks of Banca Cívica and treasury shares 78% Free float 22% Dividend yield 8.7% (*) Dividend yield of 7.9% based on the average share price in

10 º º integrated Corporate Report 2012] la Caixa, controlling shareholder Since June 30, 2011 CaixaBank has been the vehicle through which la Caixa carries on its financial business indirectly. Through Criteria CaixaHolding, la Caixa also conducts its investment strategy with shareholdings in a number of economic sectors that are essential to the community. By the end of 2012 it was Spain s largest savings bank. la Caixa Foundation The main distinguishing factor of the la Caixa Group is its involvement and firm commitment to society through the la Caixa Foundation. For the fifth year running, 500 million were allocated to welfare projects in la Caixa Group 72.76% Book value 22,793 million 100% º Book value 9,190 million Industrial portfolio Real estate activity This generous budget allocation, coupled with a wide range of social, scientific, educational and cultural programs, makes the la Caixa Foundation the largest foundation in Spain and one of the largest worldwide. CaixaBank plays a proactive role on these programs through its extensive branch network and employees. la Caixa Foundation, with a budget allocation of 500 million la Caixa Foundation, a firm commitment in line with the new challenges and needs facing communities] million Social projects Environment and science Total Total Cultural projects Education and research Total 500 8

11 Corporate Governance] One of CaixaBank s main objectives is to guarantee the transparency, independence and good governance of the bank, with a view to maintaining the confidence of national and international investors and safeguarding the interests of all stakeholders. To meet these objectives, corporate governance must comply with the bank s Code of Ethics and the recommendations of the Unified Good Governance Code. Management and control of CaixaBank are divided between the Annual General Meeting, the Board of Directors and the Board Committees: the Executive Committee, the Audit and Control Committee and the Appointments and Remuneration Committee. The Annual General Meeting is CaixaBank s governing body and the Board of Directors takes the major decisions, which are carried out on its behalf by the Committees. Since June 2012 all shareholders have been able to exercise remote voting rights irrespective of the number of shares they hold. Business ethics All CaixaBank employees should base their conduct on good faith, integrity and common sense, as required by the Code of Ethics. The bank is also a signatory to the United Nations Global Compact and strives to promote its ten principles based on human and labor rights, respect for the environment and combating corruption. In this regard, CaixaBank is a proactive participant in the fight against money laundering and prevention of terrorism. In 2012, 73.4% of CaixaBank employees attended courses on the prevention of money laundering and corruption. 9

12 integrated Corporate Report 2012] Board of Directors At December 31, 2012 Isidro Fainé Casas Chairman CajaNavarra. represented by José Antonio Asiáin Ayala* Isabel Estapé Tous Director Juan María Nin Génova Deputy Chairman and C.E.O. Eva Aurín Pardo Director Salvador Gabarró Serra Director Maria Teresa Bassons Boncompte Director Susana Gallardo Torrededia Director * on January 23, 2013, Caja de Ahorros y Monte de Piedad de Navarra agreed to withdraw the appointment of José Antonio Asiáin Ayala as the natural-person representative of Caja Navarra, appointing Juan Franco Pueyo as its new representative on CaixaBank s Board of Directors. 10

13 Javier Godó Muntañola Director Maria Dolors Llobet Maria Director John S. Reed Director Alejandro García-Bragado Dalmau General Secretary and to the Board of Directors (non-director) Javier Ibarz Alegría Director Alain Minc Director Cajasol. represented by Guillermo Sierra Molina Óscar Calderón de Oya First Deputy Secretary (non-director) David K,P, Li Director Leopoldo Rodés Castañé Director Xavier Vives Torrents Director Adolfo Feijóo Rey Second Deputy Secretary (non-director) Juan José López Burniol Director Juan Rosell Lastortras Director 11

14 integrated Corporate Report 2012] Management Committee At December 31, 2012 Isidro Fainé Casas Chairman Juan María Nin Génova Deputy Chairman and C.E.O. General Managers Deputy General Managers Antonio Massanell Lavilla Resources Tomás Muniesa Arantegui Insurance and Asset Management Marcelino Armenter Vidal Risks Joaquim Vilar Barrabeig Audit, Internal Control and Compliance Xavier Coll Escursell Human Resources Jaume Giró Ribas Communication, Institutional Relations, Brand and CSR Juan Antonio Alcaraz García Business Gonzalo Gortázar Rotaeche Finance Ignacio Álvarez- Rendueles Villar International Division Pablo Forero Calderón Capital Markets and Treasury 12 Alejandro García-Bragado Dalmau General Secretary and to the Board of Directors Jaime Lanaspa Gatnau C.E.O. of la Caixa Foundation* * (guest committee member)

15 Key strategies] Thanks to careful management, the workforce s ongoing efforts and the Banca Cívica merger, CaixaBank has achieved many of its strategic goals for the period: it is currently culminating the Group s restructuring process, making acquisitions and ramping up its commercial activity. In a challenging environment, and against a backdrop of restructuring of the Spanish banking system and severe competitive pressure, the bank has made a great effort to clean up its balance sheet while maintaining high levels of solvency and liquidity. The second phase of the Strategic Plan is due to commence in 2013, adjusting its main areas of action to changes in the prevailing economic and financial environment. CaixaBank has maintained the major challenges ahead that constitute its raison d être: n meeting customers expectations. n securing returns for shareholders. n encouraging the team s motivation and professional development. n remaining close to people and their problems. The bank will also gear its efforts towards prioritizing its service quality and reputation, maintaining its market leadership with profitable organic growth. 13

16 integrated Corporate Report 2012] Key strategies 1 Providing the highest quality customer service possible Amid a highly challenging economic and financial climate, CaixaBank remains faithful to its vision of leadership and growth, which above all constitutes a commitment to providing excellent customer service. The pursuit of service excellence is the bank s top priority, and CaixaBank views banking as a long-term relationship with customers that creates shared value will be the Year of Quality. 2 Conducting business in accordance with the highest ethical standards and good governance CaixaBank strives to secure exemplary corporate governance and to be a stellar example of transparency and external communication. Another of its corporate values is social commitment, the basis of all its business and social programs. 3 Maintaining status as Spain s leading retail bank CaixaBank is focused on cementing its role as leader of the Spanish banking market and continuing to boost its large market shares through a comprehensive range of products, services and banking channels, a service model tailored to each customer and a commitment to innovation and service quality. 4 Prioritizing financial strength The bank works to maintain suitable management systems and secure a good position from which to react to future challenges and opportunities, anticipating changes to regulations and focusing on: n Constant reinforcement of solvency and liquidity. n Constant improvements to risk management systems. n Active management of NPLs and real estate assets. 5 Diversifying by supporting businesses The CaixaBank service model is based on forging long-term relationships with customers, with services specifically tailored to each customer segment. Assisting businesses as they grow is one of the bank s utmost concerns, while helping to develop the country s business fabric. 14

17 6 Developing managerial leadership Within a context that is constantly changing, the bank gives priority to maintaining its organizational culture, based on team work and consolidated through internal communication. CaixaBank also encourages employees to develop their skills, and is working to bolster its recognition of their achievements. 7 Improving riskadjusted return By ensuring that all entity business and processes add value, the bank is able to enhance its efficiency and flexibility while meeting customer needs more effectively. With that aim in mind, CaixaBank strives to improve its risk-adjusted return and to reduce complexity and costs by streamlining processes and reinforcing a culture of constant improvement and rising productivity. 8 Being innovation leaders CaixaBank prizes creativity and innovation, which are geared at all times towards offering a better service to customers and making processes more efficient. Being the first to adopt new technologies also enables the bank to develop new business opportunities to diversify its earnings base. 9 Moving forward in terms of international expansion On the international front, the Group s work focuses on three main areas: assisting customers in their international business, generating new business opportunities through alliances with investee banks, and strengthening internal capacities in order to step up international expansion. 15

18 integrated Corporate Report 2012] 2012 financial reporting and results] The bank has bolstered its leadership of the Spanish banking sector with the integration of Banca Cívica, with 12.9 million customers and assets worth 348,294 million (+28.8% in 2012). In a complex and demanding environment, CaixaBank s solid business format enabled it to report gross income of 6,737 million and preimpairment income of 3,171 million. Cementing its leadership of the Spanish market CaixaBank s leadership is chiefly based on retail customers, the main focus of its strategy. This is borne out by its 26% market share of retail customers, or 22% considering those whose number-one bank is CaixaBank. Against a complicated economic backdrop, CaixaBank is maintaining its intense commercial activity and finalizing the integration of Banca Cívica. This makes CaixaBank the Spanish banking sector s leading entity with a business volume of 512,017 million (+19.8%), total customer funds of 288,568 million (+19.6%) and a lending portfolio of 223,449 million (+20.1%). It has also considerably enlarged its market shares for the main retail banking products and services. Its market share of total lending within the sector stands at 14.1%, and accounts for 12.5% of total deposits, up more than 300 basis points on the same figures for December 31, CaixaBank main bank for 22% of retail banking customers in Spain 16

19 A solid capital structure CaixaBank has excellent capital adequacy. At December 31, 2012 its Basel II Core Capital was 11.0%, with a surplus of 5,745 million. In addition, Core Tier 1 as defined by the European Banking Authority (EBA) stood at 10.4%. n eligible equity totaled 18,641 million, 1,060 million more than in December 2011 (+6.0%). 11% Core Capital (Basel II) Excellent solvency n risk Weighted Assets (RWA) totaled 161,200 million, including Banca Cívica s assets. The results of the stress tests carried out on the Spanish banking system, supervised by the Spanish authorities and the main EU institutions, confirm the Group s solid assets position and make it one of the most solvent institutions, with surplus capital over the minimum requirement of 5,720 million in the adverse scenario (December, 2014). Excellent liquidity Liquidity, a key factor in the bank s strategy, stood at 53,092 million (15.2% of total assets). It increased by 32,144 million with respect to 2011, thanks to careful proactive management of sources of finance geared towards optimizing liquid assets on the balance sheet to improve the borrowing structuring and reduce reliance on wholesale markets. Excellent liquidity] million 60,000 50,000 53,092 40,000 30,000 20,000 10,000 19,638 20, With diversified sources of finance] Pending maturities on wholesale markets for the coming financial year stood at 7,334 million. Thanks to its strong liquidity position the Group is in a position to easily deal with these maturities, ushering in great stability and illustrating the Group s forward-looking vision. Customer deposits 66% Institutional issues 19% Net interbank 15% Total financing 244,281 million 17

20 integrated Corporate Report 2012] Results Profit attributable to the Group amounted to 230 million, down 78.2%, substantially affected by sizeable provisions and writedowns to bolster the balance sheet. The most significant aspects of trends in results (considering final integration of Banca Cívica as of July 1) were as follows: n Continuing growth in recurring banking income, thanks to CaixaBank s solid retail business. n Net interest income rose by 22.2% to 3,872 million, largely due to the integration of Banca Cívica, repricing of the mortgage portfolio and careful management of the bank s financing sources. n gross income rose by 3.5% to 6,737 million with respect to 2011 (up by 8.8% after stripping out non-recurring income from insurance-related transactions in 2011). This high level of income was underpinned by the incorporation of Banca Cívica, solid net interest income, higher fees (+8.9%), gains on financial transactions (+32.4%) and profits contributed by investees (+22.8%). n total operating expenses rose by 6.7% on the strength of a larger group structure following the integration of Banca Cívica. These expenses were partially offset by greater synergies ( 104 million in 2012). Expenses fell by 0.1%, assuming the same consolidation scope, thanks to the strict cost containment policy and budget streamlining. n pre-impairment income stood at 3,171 million (up by 0.1%), an 11.3% increase after stripping out the non-recurring release of insurancerelated funds in The cost-to-income ratio stood at 52.9%. n Impairment losses on financial assets rose by 54.2%, to 3,942 million. Total NPL provisions amounted to 5,606 million. Utilization of the 1,807 million general loan-loss provision set aside by CaixaBank at December 31, 2011 was also recognized. n gains/(losses) on the disposal of assets and other items included, inter alia, gains on non-recurring transactions carried out during the year (sale and lease-back of branch offices, reinsurance agreement on VidaCaixa s individual life-risk portfolio and sale of the depository business). Recurring banking revenue increased, underpinned by CaixaBank s solid retail business 18

21 A unique approach to risk management n CaixaBank s sustained ability to generate earnings allowed it to recognize write-downs and provisions totaling 10,299 million in Total provisions stood at 5,749 million. This included 3,636 million in connection with the measures introduced by the Spanish government to rectify banks real-estate developer loan and foreclosed asset portfolio. The remaining 2,113 million relate to NPL and other provisions. CaixaBank also made valuation adjustments of 4,550 million (up to 10,299 million) against equity, to bring Banca Cívica s loan and property portfolios into line with their fair value. Ratings CaixaBank s credit ratings from the four main rating agencies are as follows: Agency Long-term Short-term Standard&Poor s BBB- A-3 Fitch BBB F2 Moody s Baa3 P-3 Dbrs A (low) R-1 (low) Outlook: negative for all four agencies (March 2013) This major effort has enabled the bank to meet 87% of the requirements of Royal Decrees 2/2012 and 18/2012. n the NPL ratio (8.62%) is below the sector average (10.44%, subsequent to the transfer of the toxic assets of nationalised banks to the Sareb). n NPL provisions stand at 12,071 million, while the NPL coverage ratio stands at 60% (142% with collateral). n the net value of foreclosed real estate for sale was 5,088 million at December 31, 2012, with a coverage ratio of 45%. The coverage ratio for foreclosed land stood at 61%. 19

22 integrated Corporate Report 2012] Shared value creation] CaixaBank strives to make its operations sustainable in the long run, creating value for its stakeholders through a specialized proximity-focused business model and its values of leadership, trust and social commitment. Value proposition CaixaBank s universal banking model is based on personalized, proximity-based quality services tailored to the needs of its 12.9 million customers. To carry out its task it deploys a team of 32,625 professionals, the Spanish banking system s most extensive network, with 6,342 branches and 9,696 ATMs, and a leading multi-channel customer service model. In 2012 the bank consolidated its leadership of almost all specialist segments thanks to intense commercial business and the addition of Banca Cívica s business, securing market shares in the region of 15% and ranking first in terms of major retail products. CaixaBank channels its insurance and pension business through VidaCaixa Group, whose insurance and pension fund manager, VidaCaixa, leads the Spanish life insurance and pensions market, with 3 million individual customers and more than 43,000 million in assets under management. Since 2009, VidaCaixa makes all its investments in accordance with the United Nation s Principles for Responsible Investment (UNPRI). Making the difference: clear leadership in the majority of retail products] Market shares and ranking* Direct paycheck deposits Direct pension deposits Card turnover POS terminal turnover Life-savings insurance Demand deposits Demand + term deposits (private resident sector) SNCE (National electronic settlement system) Mortgages Loans to the private resident sector Pension plans (individual and guaranteed) Commercial loans Mutual funds Factoring + reverse factoring (*) Data to December st 2nd 3rd 20.3% 19.6% 20.9% 23.8% 19.1% 14.4% 13.5% 15.2% 14.9% 14.5% 16.9% 14.6% 14.0% 18.2% 20

23 CaixaBank offers customized value proposals across every segment. In each line of business, highly-trained specialized professionals provide customers with a portfolio of financial and non-financial solutions tailored to their needs. Some CaixaBank branches, moreover, specialize in particular business areas. Individual Banking With almost 12.1 million customers and almost 200,000 million in assets under management, this segment accounts for 43% of CaixaBank s activities. Personal Banking In 2012 CaixaBank consolidated its position as Spain s leading bank in this segment, with funds and securities worth almost 83,400 million. Private Banking CaixaBank has also cemented its position as market leader in terms of wealth management, with a market share in the region of 12.5%. A highly specialized team of 350 managers provides personalized solutions for each customer. Banking for SMEs To assist the main driver of Spanish business, CaixaBank deploys 682 managers at 466 specialist branches, securing a market share of 45.1% and a business volume of more than 18,000 million. Business Banking With its own network of 84 business centers and 604 specialist advisors, the bank has 38,826 company customers, accounting for 56.4% of this market segment. Specialized business model] Individuals Range of assets under management High Net Worth 10 Personal 0.1 Private 0.5 Total: 12.9 million customers Individual Banking (foundations) Ranges in million Corporate 200 Business 9 SME 1 The renowed publication Euromoney named CaixaBank Best Bank in Spain 2012 Companies Range of turnover Corporate Banking For major corporations CaixaBank has three large specialist centers working with firms in Spain and other countries, catering for 70% of the potential market. 21

24 integrated Corporate Report 2012] Globalization and new opportunities CaixaBank maintains strategic holdings in five major banking groups operating in Central and Eastern Europe, China and Mexico. These holdings allow it to offer shareholders and investors preferential access to new business opportunities in highgrowth regions with balanced risk profiles. specialized support for customers with trade dealings outside Spain. It intends to open a further two branches in Algiers (Algeria) and Bogotá (Colombia) in The Bank of East Asia (16.4%) Banco BPI (46.2%) n Boursorama (20.7%) n Grupo Inbursa (20.0%) n Erste Group Bank (9.9%) CaixaBank holds significant stakes in in Repsol (12.5%) and Telefónica (5.6%), two of Spain s leading corporations in terms of market capitalization and ability to generate profits. Diversification of earnings n n Both companies, leaders of their respective sectors, are very active on the international stage. They boast strong growth and value-generation capacity, and are firmly committed to maintaining an attractive shareholder remuneration policy as part of its management approach. The stakes in Repsol and Telefónica allow CaixaBank to diversify its earnings. These financial groups, with combined assets of over 350,000 million, also help CaixaBank customers conduct their commercial business abroad. Moreover, CaixaBank maintains a proprietary network of 16 branches in different countries, through which it assists and provides United Kingdom Germany Spain Portugal Poland Central and Eastern Europe France Romania Italy Morocco China Turkey Egypt Mexico Arab Emirates India Hong Kong / China Singapore Angola International Branches Representative Offices Soon: Algeria and Colombia Banking Investees Chile Mexico Portugal United Kingdom Angola Germany France Spain 22 Central and Eastern Europe Hong Kong / China

25 Innovation and technology CaixaBank operates a multi-channel model and is leader of the online banking market with its Línea Abierta system (8.1 million customers), and also of the electronic banking market (12.8 million cards). CaixaBank s Internet and mobile, social networks and ATM network make up a 24/7 banking system. Given the gloomy economic outlook and fierce competition, CaixaBank s sustainable growth calls for continuous investment in technology to provide a top-quality service. In 2012 it invested 150 million in technology development, 31 million of which were invested in R&D and innovation. The bank is also working hard to quickly and efficiently integrate the technological systems of Banca Cívica, ensuring that customer transactions remain unaffected at all times. Internet, mobile and social networks n In 2012, CaixaBank was once again the Spanish leader in online banking services in terms of both national and international market shares (33.7%, Nielsen Net Ratings) and the quality of its web and mobile services (AQMetrix). Up to 4.2 million customers regularly use Línea Abierta web. Business customers now carry out around 80% of their transactions electronically. n the mobile phone banking service, Línea Abierta móvil, was consolidated in This is the second most popular channel in terms of transactions carried out at more than 548 million, for the first time they now exceed ATM transactions. n CaixaBank customers may also use the CaixaMóvil Store, the first banking App Store, with up to 60 free applications. A total of 4.7 million mobile applications were downloaded in n the bank is spearheading the creation of communities of financial service users, an area of business which is set to expand rapidly in the coming years. PremiaT was introduced in 2012 as a virtual business promotion community, joining the business social network Online Community CaixaEmpresa and the Club Ahora for the elderly. Multi-channel operations] Million transactions Transactions by channels ] 5,000 4,500 4,000 3,500 3,000 4,214 4, Branches 9% ATMs 11% Internet and mobile 50% Automatic transactions 30% Transactions during the year +14.5% Through electronic channels >90% By mobile phone 12% 23

26 integrated Corporate Report 2012] Methods of payment CaixaBank has a wide range of payment methods. With 12.8 million cards in circulation, the Group is the Spanish banking system s largest issuer, and also leads the market in terms of turnover with a share of 20.9%. In 2012, cards generated a total of 718 million transactions and turnover of 44,229 million, a 23.4% increase on the previous year was the year of consolidation of CaixaWallet, a virtual wallet enabling customers to make online purchases with no need to supply account or card details: 30,000 virtual wallets are now in circulation. It also leads the acquiring business market, with more than 200,000 point of sale terminals (POS) fitted at customer premises, of which 13,331 are e-commerce POS (+19% year-on-year). Spain s leading self-service terminal network CaixaBank has more than 9,600 user-friendly ATMs enabling customers to carry out more than 200 different financial transactions, in 15 languages. The contactless system CaixaBank is a genuine exponent of contactless technology for easy secure payments by simply bringing up a mobile phone or card to an ATM or point of sale terminal. In 2012 CaixaBank installed the world s first contactless ATMs, 700, in Barcelona and Madrid. The contactless system, deployed in the Balearic Islands the previous year, has now been extended to the city and province of Barcelona, Madrid and Navarra. The 1.2 million-plus contactless cards, which do not have to be inserted in an ATM or point of sale terminal, account for over 1.65 million transactions, a 30% time-saver with respect to the usual method. 525 million transactions were carried out in The bank is also ensuring that customers have easy access to its services. A new ATM model was rolled out in It is accessible to all and is equipped with cutting-edge (contactless) technology. Over 95% of CaixaBank s ATMs boast full accessibility. CaixaBank installs the world s first contactless ATMs 24

27 Global risk management CaixaBank adopts a global, proactive and cautious approach to managing business risk, boasts internal supervision and control systems that conform to the best international practices, and secures the best possible risk/return ratio, with the best possible customer service quality. This means risks are taken into account at all times in its business decisions. In particular: Risk management is essential to secure a balance between risks and returns n Credit risk (in banking operations and in the investee portfolio), with procedures for approval, monitoring, measurement and valuation of risk, composed of: n a system of powers for approving transactions to ensure effective delegation of risks. n prevention and early management of NPLs. n utilization of advanced internal rating and scoring models (77% of total exposure stripping out the Banca Cívica portfolio). n Daily monitoring and follow-up of investee assets. n Market risk, which includes balance sheet structural interest rate risk, managed proactively using numerous interest rate scenarios. This also includes the price or interest rate risk associated with cash positions and currency risk. CaixaBank measures and controls risk on the basis of a daily risk estimate, contrasting the quality of estimates and monitoring and controlling risk thresholds. n Liquidity risk, maintaining diversified sources of finance, little reliance on wholesale markets and major stability through customer deposits. n Operational risk, based on an expert workforce, procedures, systems and controls. Operational risk is inherent to banking business it is managed, mitigated, and occasionally protected through insurance. n Reputation risk, with exhaustive monitoring of potential risks that could damage the bank s reputation, establishing preventive measures and assessing their effectiveness. Reputation itself is regularly measured. n Compliance risk, deploying a policy based on the principles of integrity and ethics. 25

28 integrated Corporate Report 2012] Creating value for stakeholders and society The CaixaBank strategy is based on leadership, trust and social commitment, striving to create value for its stakeholders customers, shareholders and employees while contributing towards local social and economic development. To this end it deploys a management system that is both efficient and sustainable from an economic, environmental and social viewpoint. Shareholders CaixaBank shareholder relations] Shareholder Office Shareholding Knowledge- Building Unit Shareholder Magazine One of CaixaBank s major commitments is to create value for shareholders through attractive returns ( 0.23 per share, above the average for the sector) and full transparency in its relations with shareholders. CaixaBank has a Shareholder Advisory Committee, composed of 17 members representing a cross-section of its shareholders. The Committee met on two occasions in The bank operates a policy of permanent dialog with its shareholders, replying to 2,204 direct queries through its Shareholder Information Service. Shareholder Information Service Shareholder Advisory Committee Advantages for Shareholders and SMS Information Service Shareholder Bulletin Reports As part of the Learn with CaixaBank program, 13 courses on the financial market were run in 2012, attended by 790 people. The bank provides up-to-date information of interest to shareholders on a specific section of the corporate website and in the Shareholder Magazine. CaixaBank award - Entity supplying the best information to shareholders and the It also has an information alert service which sent out more than market from the Barcelona Chamber of 1.4 million communications, and also operates a program of advantages and discounts for shareholders, among other Commerce initiatives. 26

29 Customers In 2012 CaixaBank won the top EFQM Excellence Award (+500), a European award recognizing the best performing businesses, reflecting the bank s unfaltering dedication to service excellence, among other virtues. The bank strives to offer a top-quality service based on personal attention and a wide range of products and services. To this end, it demands a high level of commitment based on trust, proximity, efficiency and continuous improvement. For the purposes of monitoring and improving quality, the bank conducts more than 20,000 monthly surveys of individual customers and 3,900 annual corporate surveys. Once again, the results of these surveys in 2012 showed that customers are highly satisfied with the service. Branch service quality is also assessed using tools such as mystery shopper, and continuous improvement plans have been drawn up. CaixaBank provides customers with several channels of communication, all managed through the Customer Care Service. All communications received, are analyzed and dealt with by branch managers, central services or the Group s subsidiaries. In 2012, unlike the previous year, due to the widespread economic and financial situation and specific circumstances during the year, the volume of customer claims rose to 25,927. In this regard the bank has stepped up efforts to deal with each claim individually, and offer tailored solutions for customers. The timeframes established are four days for telephone complaints, seven days for letters and three days for s. Responsible sales and communication The bank has a commercial communication policy based on respect for society, customers and corporate values. It also has a Financial Instrument Transparency Committee to approve new products and services. Customer satisfaction index (on a scale of 1 to 10) Individuals 2011: : Businesses 2011: :

30 integrated Corporate Report 2012] Our professionals CaixaBank Group now has 32,625 employees. This includes 6,000 Banca Cívica employees taken on in a plan focusing on operational training and organizational culture. Professional development and training CaixaBank fosters a culture of incentives and motivation based on constant improvement. This entails regular assessment of its employees (more than 6,200 employees in 2012). It also has many programs to detect and develop internal talent: n the Managerial Development Center, to seek out the organization s best management talent, whose programs are now being extended. n progresa, a preparatory pre-managerial program. 51.6% of those on the initial programs subsequently took up posts of greater responsibility. The focus on training was maintained in 2012, with an investment package of 11.4 million (+41%) and more than 1.6 million hours of courses taught either directly or online. Recognition The pay system combines a fixed salary and a variable component. In 2012 the variable remuneration model was extended to the retail banking network and is pegged to results, sales targets, customer portfolio management and service quality. Internal communication and innovation Fluid communication channels and forums are essential to achieve the objectives of the bank s teams and to share major messages concerning its corporate environment and strategy. In 2012: n employees may also avail themselves of the internal portals Valora and Innova, while another space, Imagina, allows them to submit ideas for improvement and join debates. n two opinion polls were conducted among employees. Also, a Cultural Reinforcement Program was implemented to focus on people, teams and innovation. Commitment to equal opportunities and work-life balance CaixaBank has an Equality Plan geared towards increasing the number of women in positions of responsibility by applying a strict equal opportunities policy. By year-end 20% of female employees had been promoted internally. A team that believes in solidarity CaixaBank encourages its employees to take part in the corporate volunteer program operated by the la Caixa Foundation since In 2012 more than 4,500 employees were actively involved as volunteers, while the Solidarity Space program collected over 60,000 from more than 1,000 people for social solidarity initiatives. CaixaBank was awarded the Equality Seal of the Spanish Ministry of Health, Social Services and Equality in

31 Assistance for entrepreneurs In an unfavorable economic situation, CaixaBank is striving more than ever to assist entrepreneurs with viable proposals. Through its social bank MicroBank, CaixaBank offers a range of products and services for microentrepreneurs, individuals and families to encourage productivity, job creation, self-employment, personal and family development and financial inclusion. n In 2012, MicroBank awarded 40,784 microcredits (+18%) totaling million. n the volume of microcredits for entrepreneurs, more than million, showed a 15% increase against n Caixa Innvierte Industria SCR (SMEs specializing in technology and globalization) CaixaBank assists entrepreneurship from universities through a range of business start-up programs to provide business incentives for researchers, in life sciences (BioemprendedorXXI), clean technologies (EcoEmprendedorXXI) and digital technology (EmprendedorXXIDigital). The sixth EmprendedorXXI Prize was awarded in 2012 in recognition of innovative enterprises with solid growth potential in Spain. 805 firms submitted candidatures, 33% more than the previous year. MicroBank, created in 2007, is Spain s only bank specializing in micro-finance. Over the years it has granted 169,282 microcredits totaling 1,045 million, and by 2011 it had assisted in creating or maintaining more than 78,400 jobs. Caixa Capital Risc, the bank s private equity management company, has four specialist investment vehicles and a budget of 73 million for investment in innovative Spanish companies with considerable growth upside in emerging markets: n Caixa Capital Micro SCR (micro-business start-ups with registered offices in Spain) n CaixaCapital BioMed SCR (life sciences) n Caixa Capital TIC SCR (digital technology) Changes in microcredits approved] 45,000 40,000 40, ,845 35,000 34, ,000 25, Number million

32 integrated Corporate Report 2012] Sustainable financing CaixaBank s financing operations combine social and environmental criteria. The bank has been a signatory to the Equator Principles since 2007, and in 2012 it evaluated 15 financing projects in this capacity, with a total volume of 1,732 million. It has an in-house procedure to analyze syndicated operations. The 36 operations evaluated in 2012 amounted to over 7,885 million. It also finances renewable energies, with total lending of over 611 million to generate 378 MWh of power. CaixaBank extended its commercial offer in 2012 with ecopréstamos, or ecoloans, and also ecomicrocréditos, or ecomicrocredits, through MicroBank, for businesses and families. More than 2.35 million are provided to fund sustainable businesses and investment schemes which improve the energy efficiency of resources or reduce their impact on the environment. CaixaBank and the la Caixa Foundation CaixaBank provides support to the la Caixa Foundation and promotes and applies its programs and schemes. It is involved in the Integration into Work program to help people who have specific difficulties in entering the job market and risk social exclusion to find work. CaixaBank s branch network identifies job opportunities for these people. A total of 53,133 jobs have been found since 2006 with the assistance of 22,036 companies. CaixaBank business managers are involved in a child vaccination program in the world s most underprivileged countries. The la Caixa Group has been supporting this initiative together with GAVI Alliance. In 2012 the program took up more than 265,000 from Spanish companies and individual customers, and almost 50,000 from the bank s own employees. These donations and the 2 million provided by the la Caixa Foundation were used to vaccinate more than 254,000 children against pneumonia. Over 2 million children have been vaccinated since The Integration into Work program People assisted 44, : 9, : 36,519 30

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