Caixabank wants Portuguese bank to converge on the group's targets over next three years: double profitability to 12% and improve efficiency.
Five years after acquiring BPI, the Spaniards of Caixabank assess the performance of the Portuguese bank, but they want more. They want revenues to grow 9% a year over the next three years, period during which profitability and efficiency indicators should converge towards group-wide targets.
“Maintain the virtuous circle of growth and profitability” is what the Spaniards are asking of the Portuguese bank led by João Pedro Oliveira e Costa in Caixabank’s strategic plan 2022-2024, disclosed this Tuesday morning to the market and which will be presented further by the group’s chief executive officer, Gonzalo Gortázar, in Madrid.
At no point in the plan does the Spanish group talk about possible acquisitions in Spain (where it has just taken over the intervened Bankia) or Portugal (when it is pointed out as one of the potential candidates to buy Novobanco) to continue to grow its business in Iberia.
Rather, the objective both here and there is to reinforce the service to families and companies and to take advantage of the next cycle of higher interest rates from the European Central Bank (ECB) and the entry of PRR funds to increase revenues and improve the group’s profitability, which should reach the end of the plan with a ROTE above 12%, compared to the current 6%, and above the cost of capital to be able to adequately remunerate shareholders, and an efficiency ratio below 48%.
For BPI this is also the plan. The Portuguese bank closed 2021 with a ROTE of 6.8% and an efficiency ratio of 57%, starting points that recount the work that Oliveira e Costa’s team will face in the coming years to converge towards group-wide targets.
The Spaniards consider that BPI already has a good deposit base (€29 billion) to handle its activity until 2024 (at least, the plan foresees zero growth in on-balance sheet resources). However, they want to increase long-term savings (off-balance sheet resources) at an annual rate of 9% by increasing applications in other financial products. On the other hand, the Portuguese bank will have to have the capacity to lend more money to the economy: they want “healthy credit” to grow 3% per year.
It will be from these business volumes that the bank should be able to increase revenues, on average, by 9 percent per year, according to the plan.
Caixabank revealed in a statement that, besides developing the offer of products and services, complemented by strengthening digital sales, BPI will have to “improve profitability management by risk and segment and strengthen cost control.”
The Portuguese bank posted profits of €49 million in the first quarter of the year, down 18% compared to the same period in 2021.