Additional pro forma information: Corporate & Investment Banking
Highlights
- Increase in lending activity supported by Investment Banking & Finance and Global Transaction Banking
- Favorable evolution of recurring income and NTI continues
- Gross margin strength in all businesses and reporting areas
- Increase of net attributable profit in the quarter
BUSINESS ACTIVITY (1)
(VARIATION AT CONSTANT EXCHANGE RATES COMPARED TO 31-12-23)
(1) Excluding repos.
GROSS INCOME / AVERAGE TOTAL ASSETS
(PERCENTAGE AT CONSTANT EXCHANGE RATES)
OPERATING INCOME
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +13.5%.
NET ATTRIBUTABLE PROFIT (LOSS)
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +16.5%.
The pro forma information of CIB does not include the application of hyperinflation accounting nor the wholesale business of the Group in Venezuela.
| FINANCIAL STATEMENTS AND RELEVANT BUSINESS INDICATORS (MILLIONS OF EUROS AND PERCENTAGE) | ||||
|---|---|---|---|---|
| Income statement | 1H24 | ∆ % | ∆ % (2) | 1H23 (1) |
| Net interest income | 1,241 | 26.2 | 35.8 | 983 |
| Net fees and commissions | 613 | 14.1 | 16.9 | 537 |
| Net trading income | 1,049 | 2.4 | 12.3 | 1,025 |
| Other operating income and expenses | (31) | (23.4) | (13.8) | (41) |
| Gross income | 2,872 | 14.7 | 22.9 | 2,505 |
| Operating expenses | (721) | 18.3 | 21.3 | (610) |
| Personnel expenses | (343) | 21.0 | 22.3 | (284) |
| Other administrative expenses | (322) | 17.2 | 23.1 | (275) |
| Depreciation | (56) | 8.5 | 7.3 | (52) |
| Operating income | 2,151 | 13.5 | 23.5 | 1,895 |
| Impairment on financial assets not measured at fair value through profit or loss | 33 | n.s. | n.s. | (19) |
| Provisions or reversal of provisions and other results | 12 | (9.4) | (8.1) | 13 |
| Profit (loss) before tax | 2,196 | 16.2 | 26.1 | 1,889 |
| Income tax | (641) | 16.7 | 27.9 | (549) |
| Profit (loss) for the period | 1,555 | 16.0 | 25.4 | 1,340 |
| Non-controlling interests | (159) | 12.0 | 40.1 | (142) |
| Net attributable profit (loss) | 1,396 | 16.5 | 23.9 | 1,199 |
Balance sheets | 30-06-24 | ∆ % | ∆ % (2) | 31-12-23 |
| Cash, cash balances at central banks and other demand deposits | 5,666 | 15.5 | 12.4 | 4,905 |
| Financial assets designated at fair value | 137,134 | (14.0) | (13.7) | 159,372 |
| Of which: Loans and advances | 58,195 | (30.8) | (31.1) | 84,126 |
| Financial assets at amortized cost | 101,776 | 4.6 | 5.7 | 97,302 |
| Of which: Loans and advances to customers | 82,328 | 5.1 | 6.2 | 78,354 |
| Inter-area positions | — | — | — | — |
| Tangible assets | 151 | 7.1 | 6.0 | 141 |
| Other assets | 14,787 | 38.9 | 42.7 | 10,646 |
| Total assets/liabilities and equity | 259,513 | (4.7) | (4.1) | 272,366 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 91,002 | (30.0) | (30.2) | 130,081 |
| Deposits from central banks and credit institutions | 42,107 | 47.7 | 48.2 | 28,502 |
| Deposits from customers | 60,556 | 0.9 | 2.9 | 60,031 |
| Debt certificates | 5,977 | (1.6) | (1.3) | 6,076 |
| Inter-area positions | 43,971 | 50.0 | 52.0 | 29,315 |
| Other liabilities | 3,825 | (47.7) | (47.4) | 7,310 |
| Regulatory capital allocated | 12,077 | 9.3 | 11.2 | 11,050 |
Relevant business indicators | 30-06-24 | ∆ % | ∆ % (2) | 31-12-23 |
| Performing loans and advances to customers under management (3) | 82,171 | 6.0 | 7.1 | 77,510 |
| Non-performing loans | 884 | (2.3) | 3.1 | 905 |
| Customer deposits under management (3) | 53,710 | (1.4) | 0.4 | 54,483 |
| Off-balance sheet funds (4) | 4,033 | (3.7) | 1.1 | 4,189 |
| Efficiency ratio (%) | 25.1 | 26.5 | ||
General note: For the translation of the income statement in those countries where hyperinflation accounting is applied, the punctual exchange rate as of June 30, 2024 is used.
(1) Revised balances. For more information, please refer to the “Business Areas” section.
(2) At constant exchange rates.
(3) Excluding repos.
(4) Includes mutual funds, customer portfolios and other off-balance sheet funds.
Unless expressly stated otherwise, all the comments below on rates of change, for both activity and results, will be given at constant exchange rates. For the conversion of these figures in those countries in which accounting for hyperinflation is applied, the end of period exchange rate as of June 30, 2024 is used. These rates, together with changes at current exchange rates, can be found in the attached tables of financial statements and relevant business indicators.
Activity
The most relevant aspects related to the area's activity in the first half of 2024 were:
- Growth of credit investment balances, which were above the end of 2023 (+7.1%) highlighting the favorable evolution of Investment Banking & Finance, especially in Europe branch, with relevant Project Finance and Corporate Lending, Corporate Lending and Global Transaction Banking, where the factoring campaigns carried out in the second quarter of the year stand out.
- Customer funds slightly increased (+0.5%) in the first half of the year, due to the increase in volumes in an environment of competitive prices, originating from Rest of Business thanks to the evolution of Europe and New York branches.
The most relevant aspects related to the area's activity in the second quarter of 2024 were:
- Rebound in lending activity, which was higher than at the end of March 2024 (+2.9%), highlighting the growth of Mexico and, to a lesser extent, of the New York branch.
- Customer funds reduced by 4.6% in the quarter, driven by due to the customer spread differential management in an environment of the price competition in Spain.
Results
CIB generated a net attributable profit of €1,396m the first half of 2024. These results represent an increase of 23.9% on a year-on-year basis and reflect the contribution of the diversification of products and geographical areas, as well as the progress of the Group's wholesale businesses in its strategy, leveraged on globality and sustainability, with the purpose of being relevant to its clients.17
All divisions have achieved good results, particularly highlighting the performance of Global Transaction Banking (GTB), particularly in Mexico and Spain, the contribution of Global Markets supported the reactivation of commercial activity and of Investment Banking & Finance (IB&F), with excellent performance in Project Finance in the Americas.
The most relevant aspects of the year-on-year evolution in the income statement of this aggregate as of end of June 2024 are summarized below:
- Net interest income for the quarter was 35.8% higher than in the same period of the previous year, partly due to the good performance of the business, which benefited from higher volumes and, in certain geographic areas, improved operating margins.
- Net fees and commissions increased 16.9%, with positive evolution in all businesses. The primary market debt issuance activity, the liquidity management in South America and relevant operations in Project Finance and Corporate Lending are noteworthy.
- Excellent NTI evolution (+12.3%), mainly due to the performance of the Global Markets unit. Commercial activity showed significant growth in all areas, with Spain, México and Rest of Business standing out while growth in foreign currency activity in emerging markets moderated compared to the previous year.
- Operating expenses increased by 21.3% due to new personnel hires carried out during 2023. On the other hand, general expenses continue to be affected by inflation and higher technology expenses linked to the execution of strategic projects for the area. Despite this, the efficiency ratio stood at 25.1% at the end of June 2024, which represents an improvement of 33 basis points compared to the figure registered at the end of the first half of 2023.
- Provisions for impairment on financial assets line recorded a net release of €33m, which compares favorably with provisions in the first half of 2023, partly due to the releases in Mexico and Turkey.
In the second quarter of 2024 and excluding the effect of the variation in exchange rates, the Group's wholesale businesses generated a net attributable profit of €731m (+9.8% compared to the previous quarter). This performance was mainly due to the good performance of net interest income together with NTI, due to the results generated by the Global Markets unit, which offset the growth in expenses and loan-loss provisions.
17 CIB results do not include the application of hyperinflation accounting.