Letter from the CEO

In 2017, CaixaBank continued on its path of growth and consolidation in its leadership of retail banking, ending the year in a very satisfactory position in terms of our results and business outlook.

Our intensive commercial efforts enabled us to once again increase our market share in the core products for our customers, where we already enjoyed strong leadership. For example, in the Spanish market we have a 26.3% share of the market for direct deposits of salaries, a 26.4% share of savings insurance, and a 23.5% share of pension plans. We ended the year with substantial increases in our customer base and satisfaction indexes, showing that we are improving the service we offer our customers and increasing their loyalty.

One of the most significant projects in the year was the acquisition of 84.5% of the Portuguese bank BPI in February, following the 2016 takeover bid. Through this integration, we are incorporating the best banking franchise in Portugal, with an excellent management team, which can now take advantage of the scale, financial robustness and experience of the CaixaBank Group in segments where we have demonstrated that we are highly competitive. The first year of this new relationship has been very positive. BPI contributed 10% to the CaixaBank Group’s total profits, having also increased its turnover and customer base, laying the foundations for delivering the announced operational synergies of €120 million.

The CaixaBank Group experienced a 15% increase in customer funds and a 9.3% increase in its loan portfolio in the year. The strong performance of recurring revenues and ongoing tight cost control enabled a 60.9% increase in net profit, to €1,684 million, the highest since the creation of the CaixaBank Group. We have also improved the quality of our assets, with a very significant reduction in non-performing loans, whilst, of course, continuing to maintain our traditional financial robustness. As a result, we ended the year with exceptional levels of liquidity - more than €72,000 million - and a fully loaded CET1 capital ratio of 11.7%, one of the highest in the sector.

This performance is based on a robust business model that combines wide-reaching distribution of financial services with a high degree of business specialisation. Our reach facilitates proximity to our customers, and our specialisation ensures we can meet their needs with tailored proposals that add real value. Our commitment to digitalisation of our operating processes and facilities is enabling us to roll out a model of effective, personalised advice through our branches and electronic channels. Digitalisation also enables us to simplify our operational workload and free up time for tasks that add greater value, and increases our capacity to respond to new regulatory and social requirements.

We are also very pleased with the degree of progress with our Strategic Plan: our customer-centric approach has improved our quality and reputation, and our profitability is recovering well, while we are meeting our people-management and digitalisation challenges. And I must repeat yet again that this would not be possible without the CaixaBank Group’s extraordinary team. Developing our human capital remains the key to success. We are therefore continuing to invest heavily in training programmes, implementing responsible marketing policies and programmes that foster transparency, diversity and our meritocratic culture. There will be no let up in this over the coming years. We are looking forward to the new year with confidence and optimism.

We are ready to continue our leadership of the financial sector in Iberia, convinced that the traditional values of our Group – quality, trust and social commitment – remain as relevant as ever, and are the best way of meeting the challenges of the future.