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Banca March - Crecemos con valores, crecemos juntosNews

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04/15/2020

YEAR END RESULTS 2019

Banca March’s consolidated net profit grows by 18.8% to 125.1 million euros

 The financial institution completed its three-year strategic plan for 2017 to 2019 with stronger financial ratios, positioning it as one of Europe's most solvent banks, boasting the lowest NPL ratio in Spain, the strongest liquidity levels and a robust, long-standing equity base. Underpinned by these solid foundations, Banca March will tackle the challenges of the Covid-19 crisis with determination and commitment.

  • In 2019, Banca March posted attributable profit of €125.1 million euros, up 18.8% versus 2018.
  • The 2019 accounts reflect strong performances across all income streams – net interest income (+6.4%), gross income (+3.9%) and operating income (+6.7%) – as well as a substantial investment in technology and digitalisation, which will total 75 million euros upon completion of the 2018-2020 Digital Transformation Plan.
  • The strength of the banking business is reflected by the growth secured in off-balance sheet assets (+11.2%), loans (+2.0%), deposits (+2.5%), equity (+7.7%) and total (+5.8%).
  • The Private Banking and Wealth Management business posted double-digit growth in business volume (+13.8%), customers (+17.9%), off-balance sheet AUM (+10.1%) and customer funds (+13.6%).
  • Banca March's business model continues to be underpinned by robust financial and capital ratios: the bank boasts the lowest NPL ratio in the Spanish financial sector – 1.82%, versus a sector average of 4.80%, according to the Bank of Spain – even without having resorted to discounted portfolio sales. The bank's capital adequacy ratio (16.15%), LCR (528.26%), DTL (130.7%) and NPL coverage ratio (54.87%) are also among the strongest in the sector.
  • In the Corporate Banking area, Banca March has cemented its strategy as a leader in banking services for family businesses and entrepreneurial families, specialising particularly in alternative financing, direct lending, customised treasury solutions and risk hedging. In Corporate Banking, lending grew by 8.2%, business volume by 8.6% and customer numbers by 10.5%.
  • In 2019, Banca March placed over 5.6 billion euros in short-term securities in capital markets, an increase of 63% versus the issuances managed in 2018. Specifically, Banca March dominated commercial paper issuances on the MARF, with a market share of around 50% of the total outstanding balance of securities issued.
  • The figures for the Balearic Islands business reflect sustained growth, thanks to the bank's in-depth understanding of the market and its competitive advantage in the region. The NPL ratio in the Balearic Islands stood at 0.88%, and business volume grew by 6.4% in 2019.
  • The Banca March Group is a pioneer in the market, offering the sector's most comprehensive range of private banking solutions with compelling returns for all investor profiles: co-investment, value-added Discretionary Portfolio Management (DPM), alternative funds and themed funds.
  • The bank launched six new real economy co-investment projects in 2019. At the end of the year, co-investment projects worth a total of 770 million euros were underway, encompassing a range of fields including logistics, startups, care homes for the elderly and security
  • At December 2019, 2,236 Banca March customers had signed up to the added-value Discretionary Portfolio Management (DPM) service, accounting for total investments of 877.4 million euros. This is a reflection of the excellent uptake levels enjoyed by the service, particularly by Next Generation, which offers discretionary portfolio management based on megatrends for 700 customers, with 91.9 million euros under management.
  • March AM, the Group's asset management business, has consolidated its leadership position in themed funds with the launch of Mediterranean Fund, an environmental impact fund that invests in companies with exposure to the oceans economy, as well as water use and treatment. The fund allocates 10% of its management fee to projects for the recovery and conservation of marine resources. At December 2019, less than three months after its launch, the fund had 57.7 million euros under management.
  • In an industry where employment is falling, Banca March has continued to create new professional opportunities this year; to ensure it has the very best teams in place to support its tailored wealth management strategy and roll out the 2017-2019 Strategic Plan, the bank hired 120 professionals in 2019.

Banca March's consolidated attributable profit for 2019 stood at 125.1 million euros, up 18.8% versus 2018. The bank's 2019 accounts reflect growth across all income streams; net interest income grew by 6.4%, gross income by 3.9% and operating income by 6.7%, evidencing the strong performance of Banca March’s banking activity.

For the bank as a whole, the strength of the business is underscored by the growth secured in off-balance sheet assets (+11.2%), loans (+2.0%), deposits (+2.5%), equity (+7.7%) and total assets (+5.8%).

Banca March's specialist businesses consolidated its position as a leading provider of private banking and advisory services for companies, family businesses and entrepreneurial families. The Private Banking and Wealth Management areas posted double-digit growth over the year in business volume (+13.8%), customers (+17.9%), off-balance sheet AUM (+10.1%) and customer funds (+13.6%).

In the Corporate area, Banca March has cemented its strategy as a leader in banking services for family businesses and entrepreneurial families, specialising particularly in alternative financing, direct lending, customised treasury solutions and risk hedging. In Corporate Banking, lending was up by 8.2% last year, business volume grew by 8.6% and customer numbers increased 10.5%.

The bank has also continued to roll out its ambitious 2018-2020 Digital Transformation Plan, with technology and digitalisation investments worth 75 million euros forecast over the period. Banca March's digital strategy responds to three broad objectives, which are to enhance customer experience, expand the range of digital tools available to managers and improve the efficiency of internal processes.

THE CHALLENGES POSED BY THE COVID-19 CRISIS

Our primary concern throughout the public health crisis triggered by Covid-19 has been to put in place the necessary measures to protect the health both of our professionals in Spain and in Luxembourg and of our customers, whilst guaranteeing business continuity.

We have rolled out remote working across all areas in both central services and the retail distribution network, meaning that 97% of our professionals are able to work from home. We have improved all our digital tools and stepped up efforts to remain engaged with our customers, enhancing customer communications and offering unfettered access to our managers and market experts.

One of Banca March's core priorities is to protect its customers' assets. The nature of our business model, which always prioritises a long-term approach, means we offer prudent advice across all portfolios, from the most conservative to the most aggressive. This has helped to cushion the impact of current volatility levels, which have not been seen since 1929.

However, the best possible protection in turbulent times is the proven resilience of Banca March and its business model. This resilience is evidenced by financial ratios that make Banca March one of Europe's most solvent banks, with a robust, long-standing equity base, the lowest NPL ratio in Spain and the strongest liquidity ratios in the sector. Underpinned by these robust foundations, we are tackling this period of uncertainty, inextricably linked to the unfolding of the Covid-19 crisis, with great determination and commitment. We are acutely aware of the importance of remaining engaged and in contact with our customers, and we are working hard to do so, fulfilling our unwavering promise of shared growth.

THE 2017-2019 THREE-YEAR PLAN: BUSINESS MODEL CONSOLIDATION

The bank outperformed the goals set out in its 2017-2019 three-year plan in relation to business model, results and people development. Banca March's business model, specialising in private banking and corporate advisory services, has been successfully consolidated with a range of exclusive products and outstanding quality service, as demonstrated by independent surveys by Stiga which rank Banca March's professionals among the best-rated managers in the sector.

Over the period, profit from banking activity has multiplied by 1.6x, buoyed by the Private Banking & Wealth Management and Corporate Advisory areas, as the weighting of income from services as a proportion of ordinary income (66.8%) outstripped the weighting of net interest income.

Banca March's business model is underpinned by shared growth with its customers, shareholders and outstanding team of professionals. We can only fulfil our commitment to excellence if we have the best team of professionals, which is why over the last three years, the bank has enhanced its people development model, building a talent pool comprising young graduates and prioritising internal promotions. Banca March has completely eliminated broker-like networks to help build a robust corporate culture, and now has one of the lowest employee turnover rates in the sector, at just 2.04%.

Banca March CEO José Luis Acea said: “The bank's 2019 results are the culmination of the three-year plan for 2017-2019, during which time Banca March has successfully consolidated its business model, focused on private banking and advisory services for companies, entrepreneurial families and family businesses. Driven by the unwavering philosophy and strategy of shared growth with customers, employees and shareholders that has inspired the bank since its inception in 1926, Banca March has closed this period as one of Europe's most solvent banks – with record levels of shareholders' equity and liquidity as well as the lowest NPL ratio in Spain – generating sustainable growth and results. The results for Q2 2020 will naturally be affected by the Covid-19 crisis, but Banca March's solid financial ratios and effective business model, and its commitment to harnessing these drivers to benefit its customers, all afford the bank a firm footing to allow it to tackle the challenges posed by these uncertain times.”

SOLVENCY AND MOODY’S RATING

In line with its philosophy of prudent, long-term management, Banca March's business model continues to be supported by robust financial and capital ratios. The bank boasts the lowest NPL ratio in the Spanish financial sector – 1.82%, versus a sector average of 4.80%, according to the Bank of Spain – even without having resorted to discounted portfolio sales. The bank's capital adequacy ratio (16.15%), LCR (528.26%), DTL (130.7%) and NPL coverage ratio (54.87%) are also among the strongest in the sector.

Banca March's robust value proposition has also been recognised by the rating agency Moody’s, which has affirmed the bank's A3 long-term deposit rating. The bank continues to be among the best-rated Spanish financial institutions, enjoying a stronger rating than Spanish sovereign debt, which is currently rated Baa1. Moody's has also affirmed the bank's short-term deposit ratings at Prime-2.

This affirmation by Moody’s recognises the bank's robustness and capacity to generate profitable growth, even against a complex backdrop, for its business model, which is geared towards private banking, wealth management and corporate advisory services. At the same time, the bank is rolling out an intensive investment process, mainly in the area of digitalisation, to ensure that current and future customers can continue to enjoy the excellent service and products that set Banca March apart from the rest, whilst adhering faithfully to the philosophy of prudence, a long-term approach and shared growth with customers, employees, shareholders and society as a whole that has inspired the bank since its foundation.

BANCA MARCH – CONSOLIDATED GROUP

INCOME STATEMENT 31/12/2019 31/12/2018 CHANGE
AMOUNT* %
Net interest income 154,08 144,83 9,25 6,4
Gross income 424,08 408,02 16,06 3,9
Operating income 146,43 137,19 9,24 6,7
Attributable profit 125,06 105,24 19,81 18,8

*Expressed in €m

BALANCE SHEET 31/12/2019 31/12/2018 CHANGE
AMOUNT* %
Loans and advances 7.928,97 7.771,95 157,02 2,0
Customer deposits 10.728,31 10.464,70 263,61 2,5
Equity 1.947,30 1.807,77 139,53 7,7
Total assets 16.435,59 15.532,92 902,67 5,8

*Expressed in €m

Principales ratios

MAIN RATIOS 31/12/2019 31/12/2018
NPL ratio 1,82% 2,60%
NPL ratio 54,87% 53,19%
Capital 31/12/2019
Capital adequacy ratio 16,15%
Tier 1 16,15%

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