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Banca March - Crecemos con valores, crecemos juntosNews

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At Banca March, we want to keep you always informed, and this section gives you the opportunity to find out whatever you want to know about.

06/19/2019

FIRST QUARTER 2019 RESULTS

 
  • In the first quarter of 2019, Banca March generated attributable profit of 26.4 million euros, reflecting an increase of 13.8% versus the profit posted in Q1 2018 on a like-for-like basis, and secured growth in all income streams: Net interest income (+4.5%), gross income (+3.6%) and operating income (+3.6%).
  • Consolidated profit for the first quarter of 2019 was calculated using the equity method, following the sale of 5% of Corporación Financiera Alba (CFA) late last year, which positioned Banca March's stake in CFA at 15%. The new accounting method shows Banca March's results with greater clarity.
  • Banca March's business model continues to be underpinned by robust financial and capital ratios: the bank has the lowest NPL ratio (2.39%) and among the highest solvency ratios (15.63%) and LCRs (367%) in the Spanish financial sector.
  • In the Corporate area, Banca March has cemented its leadership position in banking services for family businesses and entrepreneurial families, specialising particularly in alternative financing, direct lending, customised treasury solutions and risk hedging. Lending in the Corporate Banking area also grew by 21.5% over the quarter.
  • The bank's figures for the Balearic Islands reflect sustained growth, thanks to Banca March's profound understanding of the market and the competitive advantage enjoyed by the bank. The NPL ratio in the Balearic Islands stood at 1.01%.
  • The Private Banking and Wealth Management business continued to enjoy growth in both number of customers (+5.8%) and business volume (+1.1%).
  • Once again, Banca March's managers secured the strongest ratings in the Spanish banking sector. According to the Financial Sector Customer Satisfaction Benchmarking by the independent firm STIGA, Banca March was at the forefront of the Spanish financial sector in overall satisfaction and identification with managers, scoring 8.65 out of 10.

Banca March's consolidated attributable profit in the first quarter of 2019 stood at 26.4 million euros. This reflects an increase of 13.4% versus Q1 2018 when calculated on a like-for-like basis, using the equity method of consolidation and with a 15% stake in Corporación Financiera Alba (CFA), as opposed to using the fully integrated model in place last year, with a holding of 20% in CFA.

All of the income streams on the bank's financial statement registered significant growth over the year based on a like-for-like comparison with 2018: net interest income was up 4.5%, gross income by 3.6% and operating income by 3.6%.

Banca March CEO José Luis Acea said: “The figures for the first quarter of this year continue to reflect the robustness of Banca March's unparalleled, inimitable business model and the consolidation of its specialisation in private banking and advisory services for companies and family businesses, with a particular focus on enterprises and entrepreneurs. Against the increasingly complex current economic backdrop, which poses a whole host of challenges, Banca March stands out both for its value proposition for customers and for its strategy, which is based on long-term relationships and prudent, responsible management, seeking shared growth for customers, employees, shareholders and society as a whole. With these principles in mind, we continue to make successful progress in meeting the exacting demands of our 2017-2019 Strategic Plan.”

MORE TRANSPARENT CONSOLIDATED ACCOUNTS

The consolidated profit for the first quarter of 2019 was calculated using the equity method, following the sale of 5% of Corporación Financiera Alba (CFA) late last year, which positioned Banca March's stake in CFA at 15%. This change in accounting criteria was the final step in the transformation and professionalisation process launched by Banca March in 2016, ahead of the 2017-2019 Strategic Plan. The new accounting technique used – the equity method of consolidation – reflects the results of the two companies involved, Banca March and CFA, with greater clarity and independence. These two companies have always been managed independently, but the fully integrated accounting method used until now generated a certain interdependence.

To allow for a year-on-year comparison on a like-for-like basis, the consolidated profit for Q1 2018 is also presented pro forma recalculated under the equity method and based on a 15% holding in CFA, as opposed to under the fully integrated method used last year, with a 20% holding in CFA.

SOLVENCY

In line with its philosophy of prudent, long-term management, Banca March's business model continues to be underpinned by robust financial ratios. The solvency ratio, following the change of accounting method for CFA, stood at 15.63% at the end of March, which is one of the highest in the sector. The bank's NPL ratio was 2.39%, the lowest in Spain and less than half of the sector average, which stands at 5.73%. The liquidity coverage ratio (LCR) stood at 367%.

LEADERS IN FINANCING FAMILY BUSINESSES

Banca March continues to cement its position as a leader in the Spanish financial sector in the area of Corporate Banking, specialising particularly in businesses, family businesses and entrepreneurial families. In the first three months of 2019, lending in the Corporate Banking area increased by 21.5%.

As well as its traditional banking services (financing, payment services and foreign trade, among others), the bank also offers a series of value-added consultancy products, such as alternative financing (short, medium and long-term), M&A, direct lending, customised treasury solutions and risk hedging. This highly-specialised range of products is unparalleled in the Spanish market, and is underpinned by the bank's unwavering commitment to affording companies access to the best possible financing options through a family bank with zero conflicts of interest.

In the Capital Markets area, Banca March continues to be the most active financial institution in the market in short-term issuances for Spanish companies, including both unrated companies and those with investment grade or high yield ratings. Banca March has a MARF market share of over 50% in terms of issuance volumes, making it Spain's leading financial institution in this activity. In the first quarter of 2019, the volume of short-term issuances brokered increased by 68% versus the first quarter of last year.

The M&A unit continues to offer strategic and financial consultancy to family businesses and entrepreneurial families, with transactions in the pipeline in the food, hotel and technology sectors, among others.

Last year, Banca March reinforced its Corporate Banking and Markets area by creating the Equity Capital Markets (ECM) unit. This business unit will offer the bank's customers solutions to obtain equity and also afford them the opportunity to adjust their shareholder base by transferring blocks of shares. Our ECM unit has already secured its first mandates to execute trades of blocks of shares and is expected to further consolidate its activity with additional mandates going forward.

SUSTAINED GROWTH IN THE BALEARIC ISLANDS

Banca March, which was founded in 1926 in Palma de Mallorca, continues to enjoy robust activity in its market of origin, where the bank's figures evidence its extensive knowledge of the market and the competitive advantage it enjoys as a result. The bank's NPL ratio in the Balearic Islands stood at 1.01% at the end of March. The bank has shored up its resources and customer service model in the region, as well as offering greater added value, with a highly-specialised service for the hotel sector.

UNIQUE JOINT INVESTMENT PRODUCTS

 Banca March's joint investment products are unique and inimitable in the Spanish financial sector and virtually unparalleled at the European and global levels. These products, which allow our customers to invest in the same products as the bank does, are exclusive to Banca March and come in two possible formats.

Firstly, the three institutional SICAVs managed by March Asset Management (March A.M) are an excellent example of joint investment products, one of the hallmarks of Banca March. Torrenova is Spain's largest SICAV, with 1.15 billion euros under management at March 2019. It was created over 20 years ago as an investment vehicle for the bank's shareholders; today, more than 5,290 customers hold investments in the fund. Bellver (476 million in AUM and 3,508 shareholders) and Lluc (228 million in AUM and 1,811 shareholders) complete this trio of products. All three products offer a unique SICAV model which is available to any of the bank's customers with a minimum investment of just one share, allowing them to benefit equally from the returns generated by these financial instruments.

Secondly, the fact that Banca March is 100% family-owned means it can undertake real economy investment projects that require a medium- to long-term investment commitment. These investment are undertaken through three operations: Banca March, the Juan March Foundation and Corporación Financiera Alba, one of Spain's largest independent financial holding companies.

This joint investment format at Banca March has given rise to a total of over 1.45 billion euros – of which 38% has been contributed by the Group – invested over the last 10 years in real economy projects. In 2018, the bank worked intensely on identifying new investment opportunities, which served to lay the groundwork both for projects undertaken over the course of last year and for others which are being launched in 2019.

Of the 163 projects studied last year, only eight were approved, with a total investment of 450 million euros. These projects will all continue to be implemented in 2019. Around a third of the transactions studied had a real estate component, one fifth were lending or private financing transactions and another fifth were in the private equity area. Half of the projects were based in Spain, and the remainder had an international component. 

We have stepped up our investment in private equity – the asset class that has historically been the most heavily weighted in our joint investment products – particularly in the international segment, by investing in Carlyle's fifth European private equity fund: Carlyle Europe Partners V. This is the first joint investment initiative in the share capital of unlisted companies outside Spain and Portugal, and will be rolled out over the coming years through additional funds and regions.

We continue to invest in niche financing and (unlisted) corporate debt strategies, with an investment committed to the third investment vehicle managed by Oquendo, which will finance growth projects for Spanish companies via mezzanine debt.

 In the real estate sector, we are making strong inroads in the field of logistics real estate, working with Pavasal on projects for the development of a dozen logistics warehouses of substantial size to respond to existing logistics operators' latest needs. These logistics projects, located in Madrid, Barcelona and Valencia, include additional improvements to the access roads and the logistics assets' surroundings, and will create over 500 permanent jobs.

LEADER IN PRIVATE BANKING AND WEALTH MANAGEMENT

Banca March's strategic Private Banking and Wealth Management business, a segment in which the bank is seeking to position itself as the Spanish market leader, continued to grow vs Q1 2018 in both number of customers (+5.8%) and business volume (+1.1%).

The Group's asset manager, March Asset Management (March AM), ranks third in the Spanish market by volume of assets under management in SICAVs, with a total of 2.78 billion euros under management in these vehicles at the end of March.

 March A.M., which had total assets under management of 6.05 billion at the end of March, is a crucial component of the Group's strategy. The outstanding returns generated over the quarter are a reflection of the excellent performance of the teams managing the investment products. Lluc stood out among the institutional SICAVs, posting gains of 9.36% year to March. Among the equity funds, March Global gained 13.5%, March Europa gained 12%, and March Intl. Valores Iberian Equity gained 8.45%. Our themed funds also put in a positive performance: the Family Businesses Fund gained 10.05% and the Vini Catena was up by 8.43%. The return generated by the pension plan March Acciones was up by 13.98%.

Back in April, March AM received the award for Best Equity Manager 2018 in the XXX edition of the Expansión-Allfunds Awards, organised by the financial daily Expansión and Allfunds Bank.

 Within the framework of MiFID II, offering its own range of products and affording its customers the opportunity to invest alongside the bank in joint investment initiatives is a core component of Banca March's identity. However, Banca March already operates, de facto, as an independent company; it offers a full catalogue of investment services, applies an open architecture approach (selling its own products and third-party products) and its interests are clearly aligned with those of its clients (through joint investment). The fees collected by the financial institution are therefore twofold: implicit (or indirect fees) on execution services and specific advisory services, and explicit (or direct) fees in the case of Discretionary Portfolio Management (DPM). For ongoing advisory services, fees are both explicit and implicit.

One of the cornerstones of Banca March's philosophy is the constant search for innovative products for its customers. In response to that goal, in 2018 the institution launched a high added-value DPM offer which has generated outstanding take-up levels among its customers, with a total of 1,060 contracts at the end of March.

THE BEST CUSTOMER SATISFACTION RATINGS IN THE SECTOR

Banca March's managers continue to spearhead the Spanish banking sector in terms of overall satisfaction and customer identification with managers, scoring 8.65 in the first quarter of 2019. This leadership position is reflected in the Financial Sector Customer Satisfaction Benchmark Report prepared by the independent firm STIGA, in which the bank has taken part since 2017.

Banca March's customers also rated the bank's team highly in the areas of transparency, trust and personalisation, known as relationship intangibles; the bank secured a score of 7.72 for these factors, outperforming the sector average by almost a whole percentage point. It also ranked among the top spots for brand intangibles, which measures the bank's solidity and solvency, modernity and social commitment, obtaining a score of slightly over 8 points, six tenths of a percentage point higher than the overall market average. In addition to these strong results, Banca March customers also expressed excellent satisfaction levels with the bank's branches. In this category, once again, Banca March tops the ranking with a score of 8.92 out of 10, versus a sector average of 7.98.

The STIGA report positions Banca March second in terms of promotor customers; the proportion of customers that would recommend the bank's services stands at 50.3%, versus a sector average of 37.1%. In addition, the customer recommendation index, measured using the Net Promoter Score (NPS), stood at 25.2% in the first quarter of the year, versus a global average of just 2.4%.

EXCELLENT PROFESSIONALS FOR THE STRATEGIC PLAN 2017-2019

The excellent technical quality of Banca March's managers is partly thanks to a Human Resources policy based on ensuring a meritocracy and prioritising the professional development of the workforce. Banca March invests the most in training per employee in the Spanish financial sector – 900 euros versus a sector average of 340, according to the latest figures put out by GREF – which translates to exceptional customer service.

In an industry where jobs are being lost – an estimated 80,000 finance positions have disappeared over the last five years – Banca March has continued to create new professional opportunities. With a view to ensuring we have the best teams in place to roll out the Strategic Plan 2017-2019, which has been approved by the Board of Directors, the bank is currently undertaking an intense renewal process of the professional profiles in the Wealth Management and Corporate Banking areas. In net terms, the Banca March workforce increased by almost 100 people in 2018.

All Banca March employees participate in a training course on financial advice and information, so the bank complies more than comfortably with the MiFID II guidelines published by the European Securities and Markets Authority (ESMA). Thanks to this plan, the bank provides training not only for those employees who provide advice directly to customers, but also those who provide information and marketing services, as well as those in the bank's technical and administrative areas. The rate of professional certifications continues to increase, with an 84.2% pass rate for EFPA Spain’s EFA (European Financial Advisor) and EIP (European Investment Practitioner) qualifications.

Banca March's value proposition is underpinned by four key pillars: shareholder commitment, exclusive products, outstanding service quality and excellent professionals. In 2013, Banca March launched its Talent Programme for new graduates with strong professional skills and language proficiency. The young professionals who join the team through this programme rotate through the bank's various areas for two years, gaining a broad understanding of the entire organisation. They are also assigned a personal mentor and given specific training in line with their professional profile. The bank now has over 100 young professionals who have successfully completed the programme and joined the Banca March workforce.

Whilst all of the bank's areas have participated in this recruitment drive, the main focus are the areas that work most closely with the bank's customers, in which Banca March is a sector leader (Retail and Private Banking, Corporate Banking and Wealth Management); 62% of the participants in the Programme joined these areas. The bank also maintains its internal promotion policy.

COMMITMENT TO TECHNOLOGY

Banca March continues to roll out its Digital Transformation Plan, which will carry a total investment of 75 million euros over the 2018-2020 period.

The bank's digital strategy, which is overseen directly by Banca March Deputy Chair, Rita Rodríguez Arrojo, responds to three broad objectives: enhance customer experience, expand the range of digital tools available to managers and improve the efficiency of internal processes. Banca March's digital strategy also involves the transformation of its branches into business centres offering multichannel advisory services, which is already making it easier for customers to access the banking processes they require. Almost 50% of all Banca March customers use the bank's digital channels, and that figure jumps to 62% in the core segments of Private Banking, Wealth Management and Corporate Banking.

Banca March has updated its mobile app and launched a new investment website. Using the website, customers can access information on the financial markets which is relevant to their investment portfolios. They can also view the details of their contracts and products, and can carry out transactions.

In 2018, Banca March expanded the digital payment services available to its customers to include Google Pay and Apple Pay. The bank's latest innovation was the launch of the first ever voice assistant with Smart Display for use in private banking.

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