H1 Results 2023
04 October 2023 Category: Results
Banca March earns 185 million euros, up 204% this year to June, thanks to customer growth
- Consolidated profit includes a capital gain of 90.4 million euros from the sale of insurance broker March RS to Howden Iberia. On a like-for-like basis (excluding one-offs), profit was 94 million euros, 95% higher than in June 2022.
- The results for the first half of the year were driven by growth in banking and customer acquisition in the specialised areas (Private Banking, Wealth Management and Corporate Advisory Services).
- Banca March's leadership in terms of capital adequacy, mainly in terms of risk quality and profitability, underpinned Moody's decision to upgrade Banca March's rating for its long-term deposits to A2.
The results reflect the soundness of Banca March's prudent and long-term business model, with an 18% increase in the number of customers with assets of more than 500,000 euros compared to June 2022. The volume of business of the Private Banking and Wealth Management areas, which include these customers, rose 21% year-on-year to 25 billion euros at the end of June, while assets under management increased 31%. Also noteworthy was the growth of Personal Banking, a segment that has been progressing dynamically since its creation in 2020, with a 16% increase in the number of customers. In the Balearic Islands, the business volume of the Retail and Private Banking area, which makes up the bulk of the business in the Islands, grew by 4%. This growth comes after the integration of BNP Paribas' private banking business in Spain was completed in mid-2022, reflecting Banca March's strong capacity for organic growth..
In Business Banking, where Banca March has consolidated its specialisation in advisory services, with a special focus on family businesses, the number of customers grew by 5%. Of note in Corporate Banking was the capital markets business, where Banca March remained at the top of the ranking of registered advisors/arrangers and underwriters of short-term debt for Spanish corporate issuers, having participated at the end of June 2023 in a total of 60 programmes (MARF promissory notes and ECP on the Irish Stock Exchange). In terms of Spain's MARF, Banca March advised on 51 out of the 84 programmes currently trading on the market; in terms of volume, 4 billion euros (47% of the outstanding market balance) were distributed by the bank.
Leadership in advisory technology
Customer growth has been driven by the strategic development of digital and remote banking, which has seen record activity: March Broker's revenues increased 43% in the first half, while 32% of new customers in Personal Banking have already been captured by the Avantio investment platform. Banca March consolidates its leadership in advisory technology with a complete omnichannel service, where Avantio is the main lever for providing a quality service to customers with a digital profile. For these customers who are familiar with new technological advances, Banca March offers a range of services and products that are recognised for their quality.
Banca March's commitment to technology and digitalisation is reflected in an average annual expenditure and investment volume of 50 million euros over the last five years, equivalent to 10.3% of gross income (compared to a sector average of 9.47%, according to data from Accenture). The investment effort in technology translates into solid customer growth, thanks to the security of the Banca March platform and an excellent user experience.
Generation of own resources
The bank continued to show a high capacity to generate capital, with the CET1 capital adequacy ratio standing at 19.61% as at 30 June, the highest in the Spanish banking sector. Credit rating agency Moody's has upgraded Banca March's rating for its term deposits to A2 with a "stable" outlook, making it one of the best-rated entities in the Spanish financial system. The firm highlights in a statement that the rating upgrade is due to "the improvement in capital adequacy, mainly in terms of risk quality and profitability".
Banca March continues to boast the lowest NPL ratio in the Spanish financial sector, without having resorted to large-scale discounted NPL portfolio sales: 1.27%, versus a sector average of 3.5% (latest Bank of Spain data). The liquidity ratios – LCR (256.19%) and DTL (137.93%) – and NPL coverage (74.92%) are among the highest in the sector.
The profitability of the business, with an ROE of 11.27% at 30 June, was boosted by growth in activity and by the normalisation of interest rates which, in contrast, in recent years meant a high cost of the bank's surplus liquidity, given its specialisation in advisory services for savers and investors.
Banca March, the best manager training facility
People are at the centre of Banca March's strategy, consolidating its position as one of the best places to work in Spain, with a talent management model based on specialisation and training, and an investment of almost 1,000 euros per employee, almost four times higher than the sector average. Banca March has been recognised by the leading international HR consultancies. In 2023, Banca March ranked as the fifth best workplace in Spain and, for the third year running, the only Spanish bank in the Best Workplaces ranking compiled by the independent consultant Great Place to Work®, both in Spain and in Europe. Banca March also secured Top Employer certification – awarded by the independent consultancy firm Top Employers Institute – for the fifth year running in 2023.
At Banca March, almost 13% of the workforce now comes from its Talent Programme, which began in 2013. The bank incorporates its future managers from the University to develop a unique model, where the customer is always at the centre, with a long-term career plan in line with the bank's business philosophy. Through the Talent Programme, the bank seeks to nurture the development of its professionals in the culture, specialisation and connection with the values of Banca March.
This people management model also translates into high standards of service quality. Banca March is the bank whose managers are the most highly rated by Spanish banking customers, according to the benchmarking report on customer satisfaction in the financial sector, compiled by STIGA, from among the main banks. In June, Banca March ranked first in the sector in terms of satisfaction with managers, solidity and solvency (brand intangibles), trust and personalisation of the service received (relationship intangibles), as well as satisfaction with the branch.
Banca March CEO José Luis Acea said: "After the end of the 2020-2022 three-year period, marked by unusual and disruptive circumstances such as the COVID-19 pandemic and the war in Ukraine, which triggered an inflationary spiral and an environment of rising interest rates, Banca March closed the first half of its new 2023-2025 three-year plan with strong profit growth. Although the figures include the exceptional result of the sale of the insurance brokerage March RS, the solidity of Banca March's business model underpins the growth that continues to be seen in banking results. These results are thanks to our specialisation in advisory services for wealth, savers and companies, and backed by the highest CET1 capital adequacy ratio in Spanish banks and a profitability of banking activity in terms of ROE of 11.27%. On this foundation, the bank faces the challenges of the next three years with confidence, faithful to its commitment to continue offering the highest levels of excellence in our products and services that support our vocation to be the leading Spanish institution in private banking and corporate advisory services."
BANCA MARCH - CONSOLIDATED GROUP
| INCOME STATEMENT | 30/06/2023 | 30/06/2023 | Change | |
|---|---|---|---|---|
| Amount* | % | |||
| Net interest income | 170,8 | 62,3 | 108,5 | 174,2% |
| Gross income | 315,5 | 235,9 | 79,6 | 33,7% |
| Operating income | 128,5 | 69,1 | 59,4 | 86,0% |
| Results of ordinary activities | 94,1 | 48,2 | 45,9 | 95,2% |
| Attributable profit (**) | 184,6 | 60,7 | 123,9 | 204,1% |
* In €m
** It includes a capital gain of €90.4 million from the sale of March Risk Solutions.
| KEY FIGURES | 30/06/2023 | 30/06/2022 | Change | |
|---|---|---|---|---|
| Amount* | % | |||
| Loans and advances | 8.487,6 | 8.623,4 | -135,8 | -1,6% |
| Assets under management | 19.379,7 | 15.678,6 | 3.701,1 | 23,6% |
| Customer deposits | 10.122,3 | 10.800,1 | -677,8 | -6,3% |
| Equity | 2.211,1 | 1.938,5 | 272,6 | 14,1% |
| Total assets | 18.270,1 | 20.573,2 | -2.303,1 | -11,2% |
KEY RATIOS
| NPL | 30/06/2023 | 30/06/2022 |
|---|---|---|
| NPL ratio | 1,27% | 1,47% |
| NPL coverage ratio | 74,92% | 76,36% |
| Capital | 30/06/2023 | 30/06/2022 |
|---|---|---|
| Capital adequacy ratio | 19,61% | 17,30% |
| Tier 1 | 19,61% | 17,30% |
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