How can Bankinter's trajectory be summarised during an exceptional year such as 20200?
It is not easy to summarise, because it was indeed an extraordinary year, which broke our plans and demanded the best of ourselves. But I would say that it was, above all, the year of commitments. The year of commitment to our customers, our employees, our shareholders, the economy and society as a whole. It was a very difficult year, but we are satisfied with what has been achieved.
What did the Bank do to face the health and economic crisis?
Our first reaction after the state of emergency was declared was to reorganise so as to continue to serve our customers under conditions of tremendous uncertainty, and to protect our customers and employees from the virus. Banks were considered an essential service. As such, we had to keep a part of our infrastructure open and put our human teams at the disposal of citizens, in difficult sanitary conditions, to provide the face-toface help they needed, in addition to using remote channels to handle collections, payments and normal transactions. After those first decisions, we focused on helping our customers cope with the crisis with different kinds of measures.
What were the most important measures?
In the case of private customers, we implemented moratoriums for mortgages and consumer loans, both those approved by the government and those adopted by the Bank on a voluntary basis, which were much more ambitious. I believe that this enabled us to contribute to building a first containment dam to prevent the health crisis from being transferred in all its harshness to the economy of families and having unpredictable effects on society as a whole. We also brought forward the payment of unemployment benefits and pensions. And we softened the conditions of mortgages linked to other products and of the salary account, as well as the business account of self-employed workers, so that no customer could be penalised for breaching contractual obligations associated with these products.
And what decisions were made to help companies deal with the crisis?
Our greatest efforts were focused on facilitating the access of companies to loans with public guarantees from the ICO, which have been an essential liquidity network for the survival of many companies, especially SMEs. We also adhered to a specific line of ICO loans aimed at companies in the tourism sector and their related activities, which have been particularly hit by the crisis. And we provided facilities to customers with reverse factoring and leasing operations. We also worked intensively to help the business community to maintain its presence abroad. This has been recognised by the Asociación de Financieros de Empresas. It presented our International Banking with the award for the best financing project of 2020 for its management of the COVID-19 line of liquidity backed by the insurance company CESCE. We attended to the needs of our suppliers by advancing payments to all companies and professionals who are suppliers of goods and services to the Bank.
To what extent have these decisions also served to contribute to the recovery of the economy?
Our measures to support customers are the best proof of our commitment to economic growth, because helping families and businesses stay afloat in such difficult and uncertain times is the best contribution we can make to move the economy forward. But I would like to stress that in global terms, during the 2020 financial year, Bankinter's loans and receivables amounted to 64.384.3 billion euros. This means that not only did we not restrict our credit activity, as would be logical given an increase in the risks associated with our loan portfolio, but we also increased it by 6.6% compared to 2019. This increase demonstrates our commitment and our confidence in the resilience of the Spanish economy, which we are sure will quickly recover as soon as the health threat lessens or disappears. I say this cautiously, because the current economic scenario is very unstable and is conditioned by exogenous factors, but I believe that we are in a position to contribute to leaving the crisis behind.
What impact has the crisis had on the Bank's results?
Obviously, the impact has been significant. Against a setting such as 2020, marked by the spread of the disease and the economic recession, Bankinter Group achieved a net profit of 317.1 million euros, 42.4% lower YoY due to higher provisions (242.5 million euros) made as a result of the sharp decline in economic forecasts, and the absence of the extraordinary results generated in 2019 with the purchase of EVO and Avantcard. If we remove both exceptional headings, the result of recurring banking business is 473 million, only 13.2% lower than the previous year. All the margins of the income statement performed positively, indicating that the Bank's management, advisory and marketing machinery worked at full capacity. I believe that, under the circumstances, we can be happy.
What other aspects can be highlighted in the year?
It was also a positive year in terms of asset quality, capital adequacy and liquidity. The non-performing loan ratio fell to 2.37%, 14 basis points less than in 2019, and remains the lowest in the sector. Also, the Bank strengthened its CET1 capital ratio, the main capital adequacy indicator, to 12.3%. It is one of the highest ratios of Spanish banks and far exceeds regulatory requirements, demonstrating our resilience in stressful situations. With regard to liquidity, we should note that for the first time the Bank has more deposits than credits. Profitability naturally suffered, especially as a result of extraordinary provisions, but with an RoE of 7% we continue to lead the sector's profitability. I therefore believe that in 2020 Bankinter Group consolidated its strategic strengths to continue growing consistently in the future.
Going into details, how did the different products and business areas perform?
Despite the crisis, the Bank maintained an intense commercial activity, which favoured the behaviour of salary accounts and mortgages, two of our main financial products. The portfolio of salary accounts grew by 22%. And the portfolio of mortgages also increased, albeit to a lesser extent, a noteworthy fact in an environment of economic paralysis. Within the Corporate business, key to the Bank's strategy, loans and receivables grew by 11%, with the investment banking and international business areas as the main engines of gross operating income growth. In Commercial Retail Banking, the assets under management between Private Banking and Personal Banking customers maintained a slight growth, despite the strong ups and downs in market performance. The Bankinter Consumer Finance business was where we felt the crisis the most, affected by the reduction in household consumption. New business fell by 25%, although loans and receivables were similar to 2019. In the case of Bankinter Portugal, recurring business performed at a good pace, with growth in all margins, although provisions reduced their result by around 31%.
EVO Banco notably increased its customer portfolio and strengthened its mortgage activity. As for Línea Directa Aseguradora, it maintained solidity in all its ratios and business figures and reached a net profit of 135 million euros, up by 26%.
There is some controversy about the allowance for provisions that the banks are making to face the probable increases in non-performing loans in the coming months. Are they adequate?
This is very difficult to determine right now. There are no known precedents for this crisis. We have never encountered a situation like this, and therefore we do not have references on which to rely to make well-founded projections. The nonperforming loan ratio will depend on the extent and depth of the crisis, which in turn are impacted by the pandemic's progress, and by its repercussions on the business community and employment. All of these factors are unpredictable and we cannot influence them. But we can guarantee that the calculations of our allocation for provisions are made based on criteria of maximum prudence. At Bankinter, we are facing the uncertainty of the coming months with the tranquility and confidence derived from having a rigorous risk control system, which has enabled us to be the institution with the lowest NPL ratio of Spanish banks, in recent years.
Has society recognised the efforts of banks to cushion the impact of the crisis?
To a certain extent. It is true that we come from a time when the sector's reputation was deeply affected, and it is not easy to regain people's trust. But I believe that, in the complex situation caused by the pandemic, we have shown our support for families and companies. And we would like our efforts, which went as far as working in precarious sanitary conditions and lending our strength to facilitate economic recovery, to have more of an impact on public opinion.
The coronavirus crisis has generated various concentration deals in the sector, partly encouraged by the European supervisor. How do these corporate transactions affect Bankinter and its position in the market?
We follow them closely, but they do not alter our strategy. We are not considering any merger. We are an independent bank, we have proven it in our more than 55 years of existence, and we will continue to be so because we have done very well this way. Our business model is based on organic growth, and we believe that we have the capacity to continue growing in a healthy and profitable manner without resorting to consolidation deals, for the benefit of our employees and shareholders
Given the circumstances, expectations for the coming months are more uncertain than ever. What can we expect from 2021?
Indeed, 2021 is marked, more than ever, by uncertainty. On the one hand, the unfavourable effects on the economic system are far from disappearing. The arrival of successive waves of the disease raises concerns that the economic crisis has not reached bottom and it will be necessary to see how companies and families react when aid runs out. On the other hand, the news about the distribution of vaccines gives us hope that in a relatively short time we will be able to avert the most serious threats of the pandemic. We can also trust that the European Funds will provide an additional boost to the Spanish economy. Faced with the uncertainty of 2021, we are prepared to react quickly since we have, above all, an exceptional team of professionals. And we have a solid structure, with an efficient risk control mechanism, advanced technology and a clear business model. But I insist that, above all, we have a human team that has repeatedly demonstrated what it is capable of.
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