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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.

04/15/2019

Results for the 2018 financial year

  • Profit from Banca March’s banking business in 2018 has risen to a new record, with growth for all ratios: brokerage (+8.3%), ordinary revenue (+3.3%) and operating profit (+17.4%).
  • Banca March’s business model has been strengthened by solid financial and capital ratios: the institution has the lowest default ratio in the Spanish banking industry (2.60%) and some of the highest solvency (16.02%) and liquidity (LCR) (293.6%) ratios.
  • In Corporate Banking, Banca March is now among the leaders for family businesses and business families: the number of customers rose by 10% and lending increased by 12%. Earnings Before Tax (EBT) for this business area have grown 35% since 2016.
  • Turnover in the Balearic Islands shows sustained growth, the result of Banca March's in-depth knowledge of this market and its competitive advantage of the same. Lending in the Balearic Islands Autonomous Community grew 7.3% and the default ratio was around 1.03%.
  • Private Banking and Wealth Management continued to acquire more customers (+2.4%), which allowed them to make good progress towards meeting their objectives under the 2017-2019 Strategic Plan, in a financial year characterised by negative movement of financial markets.
  • Banca March's account managers were the best rated by customers in 2018 among Spanish banks. According to the report Benchmarking of Customer Satisfaction in the Financial Sector from independent firm STIGA, the Bank led the industry in overall customer satisfaction and identification with account managers, with a score of 8.69, against an industry average of 8.35.

The results attributable to the banking business continues its solid upward progress: during financial 2018, profit rose to €111.3 million, growth of 9.5% over the previous year, taking the Bank to a new record level of profit. Profit from the banking business of Banca March has almost doubled since 2016. All the key figures in the profit and loss account saw significant improvements over the year: for brokerage an increase of 8.3%, ordinary revenue up by 3.3% and operating profit up by 17.4%.

José Luis Acea, CEO of Banca March, said: “In 2016 we began a programme of transformation of the organisation to meet our ambition of making Banca March the leader in private banking and advice to business in Spain. We are creating the bank not only of today but of the future. We have ambitious projects in digitisation, efficiency, improved governance, which will allow us to develop further our model of specialisation based on shareholder commitment, exclusive products, high quality service provided by outstanding staff and solid finances. The figures for last financial year, which ended in a record profit in the banking activity, continue to endorse this unique and non-replicable business model and allow us to shore up our progress in meeting the demanding goals set by the 2017-2019 Strategic Plan.”

The consolidated profit for the 2018 financial year reached €105.2 million, against €177.8 million for the same period in the previous year. However, the extraordinary profits recorded between January and September 2017 mean that the figures are not comparable. More specifically, the consolidated profit for 2017 included pre-tax capital gains of €352.7 million made by Corporación Financiera (CFA) – in which Banca March has a 15.02% stake – from the sale of 7.52% of ACS. As would be expected, that distortion can be seen in CFA's own figures, where the consolidated net profit was €154.4 million in 2018 against €474.1 million in the preceding year (-67.4%). In addition, it should be considered that in December 2018, the method used to consolidate Banca March’s holding in CFA was changed, which unit then was made global integration and, from then on, was carried out using the equity method.

SOLVENCY

In line with its philosophy of prudent long-term management, Banca March’s business model continues to rest on strong financial foundations: its solvency ratio, following the change to the basis of consolidation of Corporación Financiera (CFA), reached 16.02% at the end of 2018, one of the highest in the industry (on the same basis the ratio for the 2017 financial year would have been 21.02%); its default rate stood at only 2.60%, the lowest in Spain and less than half the industry average; and its LCR (liquidity coverage ratio) stood at 293.6%.

LEADER IN FINANCING FOR FAMILY BUSINESSES

Banca March continues to consolidate its leading position in Corporate Banking, specialising in businesses, family businesses and business families. In 2018 the number of customers rose by 10% and credit investment in the area increased by 12%. The growth of this business has accelerated since 2016, with an increase in its Earnings Before Tax (EBT) of 35% since over the period since then.

As well as traditional banking services (financing, collection and payment settlement, international trade, etc.), the Bank offers a broad range of value-added consultancy products, such as balance sheet disintermediation, mergers and acquisitions, direct lending, , customised treasury management, and risk hedging. This highly specialised offering is unique in Spain and is backed by a commitment to offering businesses the best and most suitable forms of alternative financing, supported by a family bank, with drive but without conflicts of interest.

In Capital Markets, Banca March is a leader in key business areas. Banca March continued in 2018 to be the most active participant in the short-term issuance market for Spanish businesses, whether withoutrating and with rating investment grade o high yield.. More specifically, in terms of amounts issued, Banca March has a market share of over 50% on the MARF (Alternative Fixed Income Market) and is the leader in the industry for this type of product. In 2018 Banca March issued nearly €3.4 billion of short-term financing on the capital markets, exceeding the amount issued in 2017 by some 54%.

In the course of 2018, Banca March decided to take another step in the development of its Corporate Banking and Markets business with the creation of an Equity Capital Market (ECM) Department to offer customers equity financing solutions and give them the opportunity to adjust their shareholder base through the transfer of blocks of shares. The Department also offers customer-investors variable income investment opportunities through the acquisition of significant blocks of shares already in the market.

SUSTAINED GROWTH IN THE BALEARIC ISLANDS

Banca March, founded in 1926 in Palma de Mallorca, keeps up the pace in its original market. The level of business reflects the Bank's deep knowledge of this market and the competitive advantage it derives from that knowledge: credit investment grew by 7.3%, with a default ratio of 1.03% at the close of 2018. The Bank has strengthened its resources, customer service model and value offering in this market with a highly specialised service for the hotel industry.

UNIQUE COINVESTMENT OFFERING

At Banca March, Coinvestment is a feature that cannot be reproduced in the Spanish financial system and which cannot readily be compared to anything on offer across Europe and the wider world. These products, which allow our customers to invest in the same products as the Bank, are exclusive to Banca March and come in two kinds.

under management in December 2018. It was established more than 20 years ago as an investment vehicle for the Bank’s shareholders and today has 5,532 customers. Bellver (€495 million of managed assets and 3,688 investors) and Lluc (€228 million and 1,886 investors) complete this group of products. All three are examples of a unique SICAV model, open to any customer with a minimum investment of just one share, providing proportionate access to the yield from these financial instruments.

In addition, the 100% family ownership of Banca March allows it to undertake investments in the real economy that demand medium to long-term commitment. The March Group has three investing branches: Banca March, the Fundación Juan March and Corporación Financiera Alba, one of the largest independent financial holdingcompanies in Spain.

The history of this type of Coinvestment at Banca March is expressed in the more than €1.45 billion – of which 38% have been contributed by the Group – committed over the last ten years to projects in the real economy. 2018 saw intense activity in the search for investment opportunities, which laid down the foundations not only for projects completed in the year but also for others which have begun to be executed during 2019.

Of the 163 projects assessed over the last year, only eight were approved, with a total amount of €450 million. Completion will extend into 2019. Around a third of the transactions assessed included land and buildings: a fifth involved lending or private financing and another fifth involved risk capital. Half of the projects assessed were based in Spain and the rest had an international element.

A LEADER IN PRIVATE BANKING AND WEALTH MANAGEMENT

Private Banking and Wealth Management, a strategic focus for Banca March in which it aims to become the leader in the Spanish market, retained its trajectory in 2018 despite market volatility. The number of customers in this business area grew 2.4% relative to 2017.

A sign of customers’ confidence in the Banca March Group’s Private Banking and Wealth Management services is the growth in total SICAV assets managed by the Group's asset manager, March Asset Management, which reached €2.777 billion at the close of 2018. A figure that places the Bank in third place on the Spanish market by SICAV volume.

March A.M., with global assets of €6.27 billion at the close of 2018, is a key part of the Group’s strategy. The excellent long-term returns achieved by the fund management team lie behind the confidence investors place each day in March A.M.’s products.

Wealth Management has undergone a profound transformation which has seen the formation of new teams. In addition, the product range has been bolstered by the arrival of specialists in Products and Coinvestment.

Within the framework of MiFID II, Banca March does not want to lose its essence, which is providing its own products, offering customers the opportunity to invest alongside the Bank (coinvestment). But Banca March is in fact, an independent company as it offers a complete range of investment services, the use of an open architecture (own and third-party products) and alignment of its own interests with its customers’ interests (through coinvestment). Therefore, the Bank offers the possibility of dual collection, either through implicit fees in execution and advisory services, and explicit fees in the case of Discretionary Portfolio Management (DPM). With recurrent advice, the fees are both implicit and explicit.

One of Banca March's main pillars is the constant search for innovative products to offer its customers. In that line, in April 2018 the Bank launched its high-added-value GDC offering which has been very well received by customers.

LEADERS IN CUSTOMER SATISFACTION

Banca March's account managers have been rated as the best among Spanish banks by its customers in 2018. This was reflected in the report Benchmarking of Customer Satisfaction in the Financial Sector prepared by the independent firm STIGA, according to the report, the Bank leads the Spanish banking industry in terms of overall customer satisfaction and identification with account managers among customers, with a score of 8.69 in 2018 as a whole, compared to the industry average of 8.35.

The Bank is also in the vanguard of the industry in terms of intangible relationships, which customers assess by taking into consideration the perceived levels of transparency, trust and personalisation. The Bank scored 7.79 compared to the market average of 6.78. This leading position is the result of the high level of professionalism of the Banca March team and its high levels of excellence. The Bank also ranks first in brand intangibles (8.07 compared to a industry average of 7.41), a measure based on the Bank's solidity, solvency, ability to stay up-to-date and social engagement. The Bank is also the market leader in terms of customer satisfaction with branches (8.81 compared to the industry average of 8.02).

All these factors have contributed to strengthening Banca March's position as one of the banks with the best results in the global satisfaction ranking, where it ranks among the top positions, with a score of 8.03, compared to an industry average of 7.45 points. Similarly, the Bank is one of the highest scorers on the willingness of its customers to recommend it, assessed by the Net Promoter Score (NPS) method, with 23.9% in the whole of 2018, compared to a market average of 2.5%, which puts Banca March in the Excellent band. This established method counts from -100% (no survey respondents would recommend) to 100% (all survey respondents would recommend).

EXCELLENT STAFF FOR THE 2017-2019 STRATEGIC PLAN

The technical skills of account managers at Banca March is partially the result of a Human Resources policy based on meritocracy and the professional development of the workforce. Banca March is the bank which has invested most per employee in training in the entire industry (€900, compared to an industry average of €340): that translates into exceptional client 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 positions. In order to have the best teams to implement the 2017-2019 Strategic Plan approved by the Bank’s Board of Directors, the Bank is undertaking an intense process of renewal of profiles in Wealth Management and Corporate Banking. In net terms, the workforce at Banca March grew by about one hundred in 2018.

100% of Banca March’s staff go through a training program on financial advice and information, meaning the institution exceeds the MiFID II guidelines published by the European Securities and Markets Authority (ESMA). Thanks to the training plan, the Bank offers training not only to those who directly advise customers, but also to those who provide information and marketing services and to staff working in the Bank’s technical and administrative areas. The penetration of professional qualifications continues to increase, with an 80% pass rate in the most recent exams for EFA (European Financial Advisor) and EIP (European Investment Practitioner) qualifications from EFPA Spain.

Banca March's value proposition is based on four pillars: shareholder commitment, exclusive products, superior service quality and outstanding staff. In 2013, the Talent Programme was launched for recent graduates with high professional skills and language proficiency. The young people who joined the Bank under the programme rotate through the different areas of the Bank over two years to gain a global understanding of the business They each have a personal mentor and are receive specific training to match their profile. As of today, more than 100 young professionals have successfully completed the programme and are now part of the Banca March staff.

Even though the recruitment plan covered all areas of the Bank, priority was given to the areas with greatest customer contact, where the Bank leads the market (Business Banking, and Private Banking, Wealth Management and Corporate Banking) which have absorbed 62% of graduates of the Plan. The Bank has maintained its internal promotion policy. 

COMMITMENT TO TECHNOLOGY

Over recent years, Banca March has significantly strengthened its Technology, Digitisation, Information Systems and Operations and Processes Departments within the framework of the 2017-2019 Strategic Plan. As a part of that, it has launched an ambitious digital transformation plan that will be implemented over three years and involve an investment of €75 million and the hiring of 50 members of staff.

In line with the Bank's commitment to be at in the vanguard of digital payments, it expanded its offering in 2018 with Google Pay and Apple Pay, services that enrich and facilitate relationships with customers to offer them the best advice and product range. The Bank's customers rated its efforts to adapt its services to the latest technology demands, as reflected in the STIGA survey: for the whole of 2018, Banca March's score in mobile banking was 8.21, above the industry average (8.19).

 

 BANCA MARCH – BANKING BUSINESS

FIGURES FOR BANKING BUSINESS 31/12/2018 31/12/2017 Change
Amount* %
Brokerage margin 132,1 122,0 10,1 8,3
Income from services 267,7 267,3 0,4 0,2
Profit or loss 111,3 101,7 9,6 9,5

*Amount in € millions

CONSOLIDATED GROUP - PROFIT OR LOSS OF CFA PLUS PROFIT OR LOSS FROM BANKING BUSINESS

INFORMATION FROM PROFIT AND LOSS ACCOUNT 31/12/2018 31/12/2017 Change
Amount* %
Interest margin 144,8 146,6 -1,8 -1,2
Income from services 208,9 231,7 -22,8 -9,9
Attributed profit or loss 105,2 177,8 -72,6 -40,8

*Amount in € millions

KEY RATIOS

DEFAULT 31/12//2018 31/12/2017
Default ratio 2,60% 3,31%
Coverage ratio 53,19% 52,36%
Capital 31/12/2018
Solvency ratio 16,02%
Tier 1 16,02%

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