The results of the Corporate Banking business were excellent in 2023. Gross operating income grew significantly (+46.15%), reinforcing the area's leadership in contributing to the Group's income, and customer deposits also increased at an excellent pace (+19.28%), driven by a strategy of selective remuneration. Fee and commission income performed very positively, increasing by 10% compared to 2022. Lending increased by less than expected, as higher interest rates weakened the appetite of companies to invest. However, the results outperformed the market and the objective of increasing market share was, therefore, achieved.
These positive developments are explained by exogenous and endogenous factors. The increase in interest rates by the European Central Bank helped improve the main indicators for the business, favouring an increase in net interest income from business financing, in particular.
At the same time, intense marketing activity and the excellent results of the projects launched in previous years also made a significant contribution to the satisfactory figures for the year. Transactional business (such as factoring, reverse factoring and tax payments) made a strong contribution, reaping the rewards of investment in recent years, as did international business, particularly in lending.
The effort to acquire business - which grew by around 9% - merits special mention. The acquisition of eligible companies (those with turnover of over one million euros) was outstanding, increasing by 41% compared to 2022. These growth rates are partly due to the 'Business Networks' programme, which has enabled the entity to learn more about its customers and potential customers, manage available public information more efficiently and detect business opportunities over the last two years.
The Corporate Plan - an automatic tool that differentiates between customers based on their relationship with the bank (the greater the connection, the lower the fees and commission) - became more established in 2023, further reinforcing the customer acquisition policy.
Another very significant feature in the year was the notable improvement in the quality perceived by our customers in Corporate Banking, Mid-corporate Banking and SMEs. This is particularly significant given the backdrop last year, with increasing interest rates and the resulting increase in financing costs for companies. In this difficult environment, our increase in customer satisfaction is the result of our strategy of always working closely with customers on what concerns them.
Four projects from 2023 that are at different stages of maturity are also worth mentioning:
The period was very satisfactory in terms of non-performing loans. The balance of non-performing loans increased but by less than forecast. This was good news considering the unfavourable circumstances for companies due to the higher cost of their financing. The bank remains on the alert due to the uncertainty about the path of interest rates.
By business segments, Corporate Banking played the leading role during the year, in terms of both lending and customer deposits. Its results in terms of risk were also excellent, with the credit rating of new customers being higher than that of the portfolio as a whole. The Mid-corporate Banking business stood out in terms of commercial activity, fees and commission and profitability, although lending was lower than expected. The least positive aspect in the SME segment was also the lack of growth in lending. However, it was a good year from the point of view of customer acquisition, fees and commission, and, above all, quality. The quality indexes for the SME business fell in 2022, but the previous levels were more than recovered in 2023.
The results for Partner Banking - a unique business model in the sector based on agreements with large companies to offer financial services to their employees - also stood out. Partner Banking celebrated its thirtieth birthday in 2023, consolidating its position as a profitable service that makes a difference.Its gross operating income increased significantly and customer acquisition increased by 20%. By product, mortgages performed reasonably considering the difficulties in the market due to the increase in the cost of money.
Expectations about what might happen in 2024 depend on interest rates and are, therefore, rather uncertain. It is possible to project that results will be similar to those for 2023, and the bank is confident there will be an improvement in fees and commission due to its commitment to transactional and international business lines. The outlook for lending is that there will be greater growth, especially if interest rates do come down. European funds can also help in this regard.Another promising aspect is activity related to ESG principles. Ultimately, the objective of Corporate Banking is to offer products and services that enable us to win market share with high risk quality, as has happened over recent years.
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