Other information: Corporate & Investment Banking
Highlights
- Recovery of lending activity, which was above pre-pandemic levels, and reduction of customer funds
- Growth of recurring income and good performance of NTI
- Efficiency ratio remains at low levels thanks to the good performance of revenue items and management of discretionary expenses
- Significant reduction in the impairment on financial assets line, compared to 2020 which was strongly affected by the effects of the pandemic
Business activity (1)
(VARIATION AT CONSTANT EXCHANGE RATES COMPARED TO 31-12-20)
(1) Excluding repos.
Gross income/ATAs
(Percentage. Constant exchange rates)
Operating income
(Millions of euros at constant exchange rates)
(1) At current exchange rates: +11.8%
Net attributable profit (LOSS)
(Millions of euros at constant exchange rates)
(1) At current exchange rates: +40.4%
Financial statements and relevant business indicators (Millions of euros and percentage)
| Income statement | 2021 | ∆% | ∆% (1) | 2020 |
|---|---|---|---|---|
| Net interest income | 1,576 | 6.3 | 12.2 | 1,482 |
| Net fees and commissions | 794 | 5.7 | 11.1 | 751 |
| Net trading income | 905 | 22.5 | 31.2 | 739 |
| Other operating income and expenses | (40) | 5.6 | 7.6 | (38) |
| Gross income | 3,235 | 10.3 | 16.7 | 2,934 |
| Operating expenses | (987) | 7.0 | 8.7 | (922) |
| Personnel expenses | (474) | 15.9 | 17.1 | (409) |
| Other administrative expenses | (405) | 1.8 | 4.4 | (398) |
| Depreciation | (107) | (6.7) | (6.6) | (115) |
| Operating income | 2,248 | 11.8 | 20.6 | 2,011 |
| Impairment on financial assets not measured at fair value through profit or loss | (69) | (84.9) | (82.5) | (454) |
| Provisions or reversal of provisions and other results | (12) | (78.4) | (78.4) | (54) |
| Profit (loss) before tax | 2,168 | 44.2 | 52.9 | 1,504 |
| Income tax | (593) | 50.4 | 59.0 | (394) |
| Profit (loss) for the year | 1,575 | 42.0 | 50.7 | 1,109 |
| Non-controlling interests | (327) | 48.3 | 75.7 | (220) |
| Net attributable profit (loss) | 1,248 | 40.4 | 45.3 | 889 |
- (1) At constant exchange rates.
| Balance sheets | 31-12-21 | ∆% | ∆% (1) | 31-12-20 |
|---|---|---|---|---|
| Cash, cash balances at central banks and other demand deposits | 5,125 | (31.6) | (35.5) | 7,491 |
| Financial assets designated at fair value | 131,711 | 22.1 | 21.7 | 107,838 |
| Of which Loans and advances | 55,232 | 91.8 | 92.8 | 28.804 |
| Financial assets at amortized cost | 72,363 | 1.9 | 5.6 | 71,031 |
| Of which loans and advances to customers | 62,042 | 4.8 | 9.3 | 59,225 |
| Inter-area positions | - | - | - | - |
| Tangible assets | 43 | (13.3) | (10.9) | 50 |
| Other assets | 110 | (87.0) | (85.5) | 843 |
| Total assets/liabilities and equity | 209,352 | 11.8 | 12.8 | 187,253 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 95,283 | 11.9 | 11.0 | 85,129 |
| Deposits from central banks and credit institutions | 12,884 | (19.3) | (19.5) | 15,958 |
| Deposits from customers | 38,360 | (10.7) | (9.1) | 42,966 |
| Debt certificates | 5,746 | 174.2 | 190.9 | 2,096 |
| Inter-area positions | 44,184 | 46.2 | 54.1 | 30,218 |
| Other liabilities | 2,913 | 38.1 | 14.2 | 2,108 |
| Regulatory capital allocated | 9,983 | 13.7 | 20.4 | 8,778 |
- (1) At constant exchange rates.
| Relevant business indicators | 31-12-21 | ∆% | ∆% (1) | 31-12-20 |
|---|---|---|---|---|
| Performing loans and advances to customers under management (2) | 61,588 | 6.7 | 11.3 | 57,704 |
| Non-performing loans | 1,417 | 11.2 | 63.8 | 1,275 |
| Customer deposits under management (2) | 37,445 | (11.5) | (9.9) | 42,313 |
| Off-balance sheet funds (3) | 1,249 | 21.3 | 28.1 | 1,030 |
| Efficiency ratio (%) | 30.5 | 31.4 |
- (1) At constant exchange rates.
- (2) Excluding repos.
- (3) Includes mutual funds, pension funds 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. 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 2021 were:
- Lending activity (performing loans under management) recorded a growth of (11.3%) in the year, standing at the end of December 2021 well above the level prior to the outbreak of the pandemic in March 2020, showing clear signs of recovery, especially in the second half of 2021, which has proved to be a complex year in terms of activity due to the competitive environment, excess liquidity and difficulties in renewing financing lines pre-approved in 2020. By geographical areas, Turkey, Asia and, to a lesser extent, South America showed a positive evolution.
- Customer funds fell by 9.0% in 2021, due to some transactions originated in the last months of 2020 that had not been renewed in 2021, being this trend widespread in all business areas, except for Mexico and Turkey, which recorded a growth of 22.7% and 44.3%, respectively, in 2021.
The most significant aspects of the evolution in the area's activity in the fourth quarter of 2021 were:
- Lending activity (performing loans under management) increased significantly in the quarter (+10.6%), mainly due to the good performance in Spain, Turkey and the New York branch.
- Customer funds increased in the last quarter of the year (+5.2%), with a positive evolution in demand deposits (+16.3%) and off-balance sheet funds (+5.4%) and a reduction in time deposits (-13.9%).
Results
CIB generated a net attributable profit of €1,248m in 2021, which represents an increase of 45.3% on a year-on-year basis, thanks to the growth in recurring income and NTI as well as lower provisions for impairment on financial assets, which increased significantly in 2020 due to the COVID-19 pandemic. It should also be noted that all business lines of the CIB area recorded growth, both in income and at the level of net attributable profit, compared to 2020.
The most relevant aspects of the year-on-year evolution in the income statement of Corporate & Investment Banking are summarized below:
- Net interest income registered double-digit growth (+12.2%), supported by the evolution in Spain and Turkey. In addition to the performance of lending activity mentioned above, it is worth noting the commercial effort to adjust the price of certain transactions, one of the strategic focuses of the area in 2021, which has led to an improvement in profitability per transaction. The performance of the Global Markets unit in Spain and Mexico was also relevant.
- Increase in net fees and commissions (+11.1%), mainly due to the performance of investment and transactional banking, the latter benefiting from the reactivation of business in 2021, with relevant agreements in Spain, Asia and Mexico. On the contrary, Global Markets' primary market operations have been slowed down due to lower liquidity needs of the customers. By geographical areas, double-digit growth in Spain, Mexico, South America and Turkey stood out.
- NTI showed a good evolution (+31.2%), mainly due to the performance of the Global Markets unit, due to income from foreign exchange positions in emerging markets, where the macro situation and political uncertainty in many of them favored volatility, boosting business with customers and trading operations, and to the recovery of dividends after the payment restrictions in force in 2020.
- Operating expenses increased by 8.7% in 2021. The year-on-year comparison is affected by the cost containment plans implemented by CIB in 2020 which did not re-occur in 2021 after the return to normality, although the area continues to focus its efforts on vacancy management and discretionary expenses.
- Provisions for impairment on financial assets were significantly lower than in the previous year, driven by the improved outlook, compared to 2020 which was severely affected by provisions related to COVID-19, as well as by lower impacts on individual clients.
In the fourth quarter of 2021 and excluding the exchange rate effect, the Group’s wholesale businesses as a whole generated a net attributable profit of €302m (-3.2% compared to the previous quarter). This development is mainly explained by the recovery in NTI compared to the previous quarter, together with the good performance in net interest income and commissions, and is impacted by the provisions for impairment on financial assets, compared to the reversals recorded in the previous quarter.