Covered Bond Update 2016

CAJA RURAL DE NAVARRA. COOP – Covered Bond Update 2016
1
Contents
Caja Rural de Navarra, Credit Cooperative
3
• Company profile
4
• Financial highlights
6
• Main financial data
9
• Strategy
14
Operative Environment
15
Liquidity Management
19
Cover Pool
22
The Caja Rural Group
30
Contacts
34
1.-CAJA RURAL DE NAVARRA
Lapazarra – Pyrenean
mountains
Caja Rural de Navarra – Company profile
•
•
•
•
Established in 1910 as the central institution of the local co-operatives of
the region and evolving from 1946 as a regional co-op bank.
Its origins were rooted in the rural and agribusiness environment of that
time, but the bank’s activities have developed in line with the strong
industrialisation of its home region.
Founding member of AECR (Asociación Española de Cajas Rurales), and its
central institutions (BCE, RSI and RGA). It is the 1st Caja Rural of the AECR
by assets and by equity.
Caja Rural Group (through BCE) is a member of Unico Banking Group and
belongs to the European Association of Cooperative Banks (EACB).
See Caja Rural Group Section
4
Caja Rural de Navarra – Company profile
• Banking culture firmly based on austerity, local focus, risk control,
accountability and transparency, in line with the cooperative tradition.
• Strategy of stable growth in its region. No country-wide expansion
plans, no aggressive development in any other business apart from
retail banking. This strategy remains within the overall strategy of
the Caja Rural Group and most co-operative banking groups
in Europe.
• Retail business is focused on serving the needs of individuals and
SMEs in our regions.
• More than 145,000 co-op members (shareholders), with a wide
representation of different sectors of our economy and society.
• 249 branches, distributed all over the regions of Navarre, Basque
Country and Rioja. Navarre and Basque Country account for 90% of
the loan book.
See Caja Rural Group Section
5
Caja Rural de Navarra – Financial highlights*
Dec 15
Dec 14
% 15/14
Total Assets
9,733
9,517
2.3%
Average Total Assets
9,944
9,815
1.3%
Risk Weighted Assets (RWA)
5,451
5,088
4.5%
944
865
9.1%
867
792
2.3%
Gross Loans
6,582
6,348
3.7%
Deposits
6,494
6,138
5.8%
Employees
918
902
1.8%
Branches
247
244
0.8%
Net Interest Income
155.8
148.5
4.9%
Pre-impairment Profit
126.3
129.2
-2.2%
Pre-tax Profit
76.4
59.6
28.2%
Net Income
62.3
50.7
22.9%
Total Equity
of which Tier 1
6
Caja Rural de Navarra – Financial highlights*
FINANCIAL RATIOS
Dec 15
Dec 14
CAPITALIZATION
15.91%
15.57%
9.71%
9.09%
Growth of gross loans
3.69%
-0.48%
Impaired loans (IL) / gross loans
3.44%
4.44%
112.17%
93.98%
1.60%
1.56%
28.90%
50.15%
Pre-tax profit / Average total assets
0.77%
0.61%
Net income / Total equity
6.61%
5.86%
101.36%
103.42%
Core Tier 1 Regulatory Capital Ratio
Equity / Total assets
ASSET QUALITY INDICATORS
IL Coverage ratio
PROFITABILITY RATIOS
Net interest income / Total assets
Loans and securities impairments charges/pre-impariment profit
FUNDING
Gross loans / customer deposits
RATINGS
June 2016
Issuer rating (FITCH / Moodys)
BBB+ (stable)/ Baa2 (stable)
Covered Bond rating (Moodys)
Aa2
7
Caja Rural de Navarra – Financial highlights*
•
•
Solid asset quality (NPL ratio of 3.44%) and a cautious coverage policy
(ratio of 112.17%)
CRN has high solvency ratios (CET1: 15.23%) owing to its high level of
earnings retention, as co-operative by-laws require the yearly surplus to
become part of undistributable reserves
•
The bank´s ratings reflect this situation, keeping a level of BBB+ (stable)
by Fitch and Baa3 (outlook positive) by Moody’s. Only four Spanish banks
(BBVA, Santander, Caixabank and Caja Rural de Navarra) are rated as
investment grade by both agencies.
•
Low exposure to Real Estate (5.07% of Total Loans), in regions with a
much more stable housing market due to regional economic conditions and
the absence of a tourism-related building boom.
•
Strong local franchise: 26.04% market share in deposits and 22.33% credit
at December 2015 in Navarra. More than half the population over 18
years-old in Navarre is a customer of CRN.
CRN is committed to further increasing its profitability by achieving a
balance between growth and sustained margins, controlled expansion and
increased fee generation. However, return on equity (RoE) is somewhat
limited by the Bank's policy of maintaining a high solvency margin.
•
8
Caja Rural de Navarra – Main financial data
Deposit taking and loan book (€ thousands)
7.000.000
6.000.000
5.000.000
4.000.000
3.000.000
2.000.000
1.000.000
0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Loan book
2008
2009
2010
2011
2012
2013
2014
2015
2010
2011
2012
2013
2014
2015
Deposit taking
NIMS + fees (€ thousands)
250,000
200,000
150,000
100,000
50,000
0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
9
Caja Rural de Navarra – Main financial data
Solvency Ratio Common Equity Tier 1 (%)
17%
15%
13%
11%
9%
7%
dic
-
00
jun
-01
dic
-01
jun
-02
dic
-02
jun
-03
dic
-03
jun
-04
dic
-04
jun
-05
dic
-05
jun
-06
dic
-06
jun
-07
dic
-07
jun
-08
dic
-08
jun
-09
dic
-09
jun
-10
dic
-10
jun
-11
dic
-11
jun
-12
dic
-12
jun
-13
dic
-13
jun
-14
dic
-14
jun
-15
dic
-15
5%
Market share (deposits in Navarre)
26%
24%
22%
20%
18%
16%
2007
2008
2009
2010
2011
2012
2013
2014
2015
10
Caja Rural de Navarra – Main financial data
Spanish banking CET
ENTITY
CAJA RURAL DE NAVARRA*
CET min
CET (Sept 15)
SURPLUS
9.50%
15.23%
5.73%
9.05%
14.13%
5.08%
10.25%
14.04%
3.79%
CAIXABANK
9.31%
12.80%
3.49%
LIBERBANK
10.25%
13.70%
3.45%
BANKINTER
8.75%
11.85%
3.10%
10.31%
13.20%
2.89%
ABANCA HOLDING FINANCIERO
9.75%
12.47%
2.72%
UNICAJA BANCO
9.25%
11.90%
2.65%
BANCO SANTANDER
9.75%
12.39%
2.64%
10.00%
12.53%
2.53%
9.25%
11.70%
2.45%
BANCO POPULAR
10.25%
12.65%
2.40%
BANCO SABADELL
9.25%
11.60%
2.35%
BBVA
9.75%
11.70%
1.95%
CAJAMAR
10.25%
10.97%
0.72%
BANCO MARE NOSTRUM
10.25%
10.68%
0.43%
KUTXABANK
CAJA LABORAL POPULAR
BANKIA
CAJA RURAL DE CASTILLA LA MANCHA
IBERCAJA
Source: CNMV web page
*Caja Rural de Navarra’s CET does not include 2015 retained earnings
11
Caja Rural de Navarra – Main financial data
Spanish FI Impaired Loans Coverage Ratio
120
100
80
60
Average*
40
20
0
Abanca
Ibercaja
Liberbank*
BMN
Unicaja
Kutxabank
Bankinter
Sabadell
ex TSV*
Popular
Bankia
Caixabank
BBVA
Santander
Caja Rural
De Navarra
Source: CRN, public disclosures
*Selected FI not including CRN. Average Non-Asset Weighted.
12
Caja Rural de Navarra – Main financial data
Eurozone non-performing bank loans
16%
14%
12%
10%
Spain
Italy
8%
Eurozone
France
6%
Germany
Caja Rural de Navarra
4%
2%
Source: Ernst&Young Eurozone Forecast Winter edition 2014 and CRN
4
di
c1
4
ju
n1
3
di
c1
3
ju
n1
2
di
c1
2
ju
n1
1
di
c1
1
ju
n1
0
di
c1
0
ju
n1
9
di
c0
9
ju
n0
8
di
c0
8
ju
n0
di
c0
7
0%
13
Caja Rural de Navarra - Strategy
•
Caja Rural de Navarra -as it is the case of
many co-operative banks- has recently
become the only local financial institution
in its home market.
Deposit market share (Navarre)
26%
24%
•
This position offers – despite a subdued
economic environment - a huge historical
opportunity in light of the dismantling of
many savings banks. Concentration
towards ‘national champions’ is an
opportunity for co-operative banks.
22%
20%
•
Caja Rural de Navarra’s business model is
underpinned by the Caja Rural Group
model, which allows economies of scale
and the provision of quality products and
services to the clients of all the regional
co-op banks members (see Caja Rural
Group section).
18%
16%
2007 2008 2009 2010 2011 2012 2013 2014 2015
14
2.-OPERATIVE ENVIRONMENT
15
Operative environment
Region
GDP
Zuid-Holland
Oberösterreich
Trøndelag
Prov. Brabant Wallon
Comunidad de Madrid
Provincia Autonoma di Trento
Prov. Vlaams-Brabant
País Vasco
Nordrhein-Westfalen
Övre Norrland
Nord-Norge
Emilia Romagna
Västsverige
Iceland
Lazio
Cheshire
Comunidad Foral de Navarra
Saarland
Steiermark
Surrey, East and West Sussex
Prov. West-Vlaanderen
Gloucestershire, Wiltshire
and Bristol/Bath area
Midtjylland
Berlin
130.4
129.7
129.4
128.9
128.1
126.7
126.2
122.4
121.4
121.0
120.6
120.4
119.9
119.4
117.6
116.4
116.1
115.7
115.5
114.6
114.0
113.6
113.2
112.8
GDP per capita comparable to other developed European regions and
underpinning a much more stable economic environment
Source: Eurostat. 2013 data
16
Operative environment
R&D/GDP (4Q14)
Spain: Unemployment by regions (3Q15)
Spain: Export and Import by regions (4Q14)
50%
2,50%
Exports
30%
Imports
40%
Spain 1.23%
1,00%
20%
% PIB
1,50%
% Workforce
2,00%
30%
20%
10%
10%
0,50%
0%
NAV
MUR
PV
GAL
CAT
ARA
VAL
CYL
CANT
RIO
AND
AST
MAD
CLM
EXT
NAV
RIO
PV
BAL
ARA
CANT
MAD
CYL
AST
CAT
GAL
ESP
VAL
MUR
CLM
EXT
Source: EPA
CAN
CEU
MEL
AND
CEU
MEL
BAL
CAN
CLM
EXT
AST
CANT
MUR
GAL
ARA
RIO
CYL
VAL
AND
CAT
MAD
NAV
PV
Source: INE
CAN
0%
BAL
0,00%
Source: Expansión
•
Navarre and the Basque Country are the most industrialised and exportoriented regions in Spain.
•
They also are among those with a highest rate of investment in R&D.
•
Unemployment is much lower and this pattern is historically stable.
Regional unemployment for Navarre and Basque Country stands at around
60% of the Spanish average.
•
Such an economic environment positively impacts banking performance.
17
Operative environment
Standard and Poor’s rates the regions of Navarre and Basque Country two
notches higher than Spain (A vs. BBB+), citing for Navarre:
“Our long-term rating on Navarre is two notches higher than the long-term rating on Spain
(BBB+/Stable/A-2). According to our criteria for rating above the sovereign, a local and
regional government (LRG) can be rated up to two notches higher than its sovereign if the
LRG can maintain credit characteristics that are more resilient than the sovereign's ….”
”We believe Navarre meets the above-mentioned conditions and therefore we apply
a two-notch differential to the ratings, reflecting our view of: The region's exportoriented and competitive industry, focused on internationally diverse markets, which
partly mitigates its high concentration on Spain's economy. Its special constitutional status,
which isolates the region from negative intervention by the sovereign. Its financing system,
with high fiscal autonomy that does not rely on transfers from the central government to
any meaningful degree. As a result, we estimate that the impact of a sovereign stress
scenario would come from a fall in GDP and tax collection. A track record of sound
financial management and our view that the region's management shows a strong
credit culture.”
18
3.- LIQUIDITY MANAGEMENT
19
Liquidity Management
•
Retail focus: Loan book growth financed by deposit taking (and SMEs mediation finance by
ICO).
•
CRN maintains a high volume of liquid assets, most of them eligible for monetary
operations with ECB.
•
Despite this strategy, CRN has been active in wholesale markets since 2001:
•
Domestic Commercial Paper Program – yearly renewed
•
Schuldscheindarlehen issues (private placements, all matured)
•
Senior FRN Caja Rural de Navarra 2006 (matured 2011)
•
Several SME ABS and RMBSs programs (developed through the Caja Rural Group since
2000)
•
EIB specific issuance
•
Public Issued Covered Bonds
• 2013 inaugural Issue (maturing 2018)
• 2015 Issue (maturing 2022)
•
Retained Covered Bond
• 2014 Issue (maturing 2020)
• 2016 Issue (maturing 2023)
•
Covered Bond Private Placement in 2014 (maturing 2029)
20
Liquidity Management
•
The strategy has focused on diversifying liquidity sources and getting to
know and test different options, but this has never led to a change in a very
conservative liquidity profile, which remains firmly based on a very stable
deposit base. with no wholesale market dependence.
•
“Stable retail deposit base and low reliance on wholesale funding”
(Moody’s Credit Opinion Dec 2015)
•
CRN aims at issuing Covered Bonds in order to follow its strategy of
diversifying its funding base and tapping growth opportunities in its retail
banking business.
•
CRN’s Cédulas Hipotecarias (Mortgage Covered Bonds) are now rated Aa2 by
Moody’s.
•
CRN´s Covered Bonds in the secondary market have shown a solid trend
consistent with its credit quality.
21
4.- COVER POOL
22
Cover Pool - Mortgage portfolio overview
Total mortgage cover pool
€4.23bn
Outstanding covered bonds
1,850m
Total overcollateralization
(%)
128.49%
Central Bank eligible covered bonds
1,850m
Fixed rate covered bonds (%)
100.0%
Number of loans
38,538
Number of debtors
56,136
Average loan size
€109,685
Average LTV
59.89%
(%)
Average seasoning
Average remaining maturity
Average rate
66.92
(months)
(years)
20.30
(%)
1.78%
90+ days arrears (cover pool)
2.16%
90+ days arrears (residential cover pool)
1.03%
Floating rate loans (%)
99.97%
Loans in Euros (%)
100.00%
Cut-off date: 30th June 2016
23
Cover Pool – Outstanding Covered Bonds
Covered Bonds
ES0415306002
500M
Public issue
Fixed rate
11-06-2018
EUR
ES0415306010
600M
Retained
Fixed rate
27-11-2020
EUR
ES0415306036
500M
Public issue
Fixed rate
16-03-2022
EUR
ES0415306044
200M
Retained
Fixed rate
15-04-2023
EUR
ES0415306028
50M
Private placement
Fixed rate
07-02-2029
EUR
Maturity Structure (%)
Cut-off date: 30th June 2016
Cover Assets maturity calculated on a final maturity basis
24
Cover Pool - Total mortgage portfolio
Total Portfolio
Total amount
(Million of euro)
€4,227
Number of loans
38.538
Number of borrowers
56,136
Average loan balance
€109,685
Interest only loans
WA LTV*
1.56%
59.89%
(%)
WA Seasoning
66.92
(months)
WA Remaining Maturity
WA Rate
Floating Rate loans
(%)
99.97%
2.16%
(%)
10 largest exposures
Cut-off date: 30th June 2016
20.30
1.78%
(%)
Arrears >90 days
(years)
(%)
1.77%
25
Cover Pool - Total mortgage portfolio
Breakdown by current loan balance*
Geographical Distribution
Cut-off date: 30th June 2016
*Current Loan Balance calculated on a WA basis
Breakdown by loan seasoning
Reference rate
26
Cover Pool – Residential and Commercial mortgage portfolio
Residential
Total amount (Million of euro)
Number of loans
Number of borrowers
Average loan balance
Interest only loans
WA LTV* (%)
WA Seasoning (months)
WA Remaining Maturity (years)
WA Rate (%)
Floating Rate loans (%)
Arrears >90 days (%)
10 largest exposures (%)
Commercial
€3,145
32,878
51,232
€95,674
0.38%
61.17%
70.93
23.51
1.53%
99.96%
1.03%
0.29%
Total amount (Million of euro)
Number of loans
Number of borrowers
Average loan balance
Interest only loans
WA LTV* (%)
WA Seasoning (months)
WA Remaining Maturity (years)
WA Rate (%)
Floating Rate loans (%)
Arrears >90 days (%)
10 largest exposures (%)
Geographical Distribution
€1,082
5,660
4,904
€191,074
5.00%
55.93%
55.23
10.96
2.52%
99.99 %
5.44%
6.93%
Geographical Distribution
Navarre
50.80%
Navarre
53.21%
Basque Country
38.93%
Basque Country
31.43%
La Rioja
7.45%
La Rioja
8.82%
Other spanish regions
2.81%
Other spanish regions
6.54%
Cut-off date: 30th June 2016
27
Cover Pool - Residential mortgage portfolio
Residential-Breakdown by loan size
Residential-Breakdown by property type
Residential-Breakdown by LTV
Cut-off date: 30th June 2016
*Current Loan Balance calculated on a WA basis
28
Cover Pool - Commercial mortgage portfolio
Commercial-Breakdown by loan size
Commercial-Breakdown by property type
Commercial-Breakdown by LTV
Cut-off date: 30th June 2016
*Current Loan Balance calculated on a WA basis
29
5.-CAJA RURAL GROUP
30
Caja Rural Group – main features
•
The Group is the result of the will of the Spanish regional co-operative
banks to join forces and obtain synergies and economies of scales.
•
Different business strategy to that developed in the past by other Spanish
financial institutions: local focused, no capital markets dependence, no
aggressive expansion.
•
All members enjoy a relevant market share in their home regions and
develop a similar business model adapted to the diverse features of each
area.
•
Total assets of €56.8 billion and €4.7 billion of equity.
•
+8,000 employees. +2,250 branches and a wide presence in the different
Spanish regions. More than €6 million clients and €1.1 million co-operative
members.
31
Caja Rural Group – Group Institutions
GRUPO
100%
70%
Spanish co-operative banks
88%
30%
12%
32
Caja Rural Group – Group Institutions
•
•
•
•
•
Banco Cooperativo Español
Central treasurer for Group members. Access point to markets:
Interbank. Fixed Income, Derivatives, RMBS issues,...
Custody and payment services
Asset manager and Private Banking
Syndicated loans
Leasing / Renting
International relations (UNICO banking group)
Asset and Liabilities analysis and management tools
ECB Collateral management
Rural Servicios Informáticos (RSI) – IT service provider.
Rural Grupo Asegurador (RGA) – Insurance, Pension funds, ...
Espiga Capital – Private equity.
Asociación Española de Cajas Rurales (AECR) – Strategic Decision and
management of the Caja Rural Group.
33
Contacts
Headquarters
Caja Rural de Navarra
Plaza de los Fueros.1
31003 Pamplona
Navarre
Spain
Tel: +34 948 168100
www.cajaruraldenavarra.com
E-mail:
invrel.crnavarra@cajarural.com
Miguel García de Eulate Martín-Moro
Leire Trojaola Crucelaegui
Head of Treasury and Capital Markets department
Investor Relations
Tel: +34 948 168198
Fax: +34 948 240867
E-mail: mgarcia.crnavarra@cajarural.com
Tel: +34 948 168281
Fax: +34 948 240867
E-mail:ltrojaol.crnavarra@cajarural.com
34
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sharing or transmission of such information.
Caja Rural de Navarra Sdad. Coop. de Crédito is not nor can it be held responsible for the usage, valuations, opinions, expectations or
decisions which might be adopted by third parties following the publication of this information.
This presentation is exlusively for general information purposes. It does not represent an offer to conclude an agreement on the provision of
investment advisory services or the purchase of securities. Where this presentation cites information not originating from Caja Rural de
Navarra Sdad. Coop. de Crédito or not produced a its request, such information has been compiled from sources deem trustworthy without
being verified. For this reason, Caja Rural de Navarra Sdad. Coop. de Crédito assumes no guaranteee that such information is complete or
correct. Caja Rural de Navarra Sdad. Coop. de Crédito assumes no responsibility or liability whatsoever for expenses, losses or damage from or
in connection with the use of all or part of the information contained in this presentation.
Caja Rural de Navarra Sdad. Coop. de Crédito cautions that this presentation may contain forward looking statements with respect to the
business financial condition results of operations, strategy, plans and objectives of the Caja Rural de Navarra Sdad. Coop. de Crédito. While
these forward looking statements represent our judgement and future expectations concerning the development of our business, a certain
number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our
expectations. These factors include, but are not limited to: (1) general market, Macroeconomic, governmental, political and regulatory
trends; (2) movements in local and international securities markets. currency exchange rate and interest rates; (3) competitive pressures; (4)
technical developments; (5) changes in the financial position or credit worthiness of our customers, obligors and counterparts. These risk
factors could adversely affect our business and financial performance published in our past and future filings and reports. including those with
the Spanish Securities and Exchange Commission (Comisión Nacional del Mercado de Valores).
35