Laboral Kutxa has endured well the onslaught of Covid, because in the face of a financial market in which other entities have been in the red, it remains in profits. In the case of the credit cooperative associated with Corporación Mondragón, it managed to exceed 2020 with a consolidated net result of 87.4 million. which represents a decrease of 36.5% compared to the previous year.
In summary, these results have been possible at a increased savings, attached to a higher demand for credit, parallel to a reduction of delinquency and to dynamism of the insurance business, which contributes 46.2 million to the entity.
Given the economic situation generated by the pandemic, the credit cooperative has carried out some extraordinary provisions that reach up to 74.5 million, much higher than the 10.6 million a year earlier. This item includes both ordinary provisions of 8.8 million, plus another extraordinary by Covid for 65.7 million, as explained “with the aim of anticipating the foreseeable negative effects of the pandemic”
Laboral Kutxa’s loan portfolio is in good health, since the default rate it has continued to decline in 2020 to stand at 3.31%, well below the 4.5% average for the financial sector. Despite this, the entity insists on the prudence of making extraordinary provisions “to be extremely prudent.”
What also stands out in the entity’s income statement is that despite the prolongation of negative interest rates – the Euribor has been at negative rates since 2016- has made the typical banking business evolve favorably, as evidenced by the growth of all business margins -M. Interest + 1.89%, Basic M. + 1.26% and Gross M. + 1.25% – while it has managed to reduce administration expenses by 3.43%.
In this context, the entity itself indicates that it has managed to “close a 2020 financial year with notable positive elements in business terms, combined with efficient cost control, where the growth in business loans, the increases in mortgage formalizations and the contribution of the insurance business stand out.
The good evolution of recurring business margins has managed to offset the significant contribution of Laboral Kutxa to the stability of the financial system as a whole, where the contributions to the Deposit Guarantee Fund (FGD) and the Single Entity Resolution Fund (FUR) have assumed € 32.8 million, and the amount of the deposit tax has amounted to € 6.5 million.
Greater savings and prudence for customers
The total of intermediated resources by the entity at the end of 2020 amounted to 26,146 million euros, an increase of 10.8% compared to the year 2019. The entity attributes this increase in customer savings to the fact that the pandemic has reduced the possibilities of mobility and expenses, along with greater prudence for the future. A) Yes, deposits grew 13.4%, where the increase in balances in sight accounts, which have increased by 21.2% in its year-on-year comparison.
Regarding the set of off-balance sheet figures, savings in other financial products, total balances have increased by 1.4%. The balances of investment funds show a growth of 0.9% and the balances of Provident and pension plans have increased by 3.2%.
The investment of families and companies
In the financial year 2020 there has been a turning point with regard to the evolution of credit investment. The new formalizations of both individuals and companies have managed to exceed the volume of amortizations. As a whole, the outstanding credit balance shows an increase of 4% and stands at 14,382 million euros.
At the household level, for the first time in a decade they have increased mortgage loan balances, which grew 1.2%. And with regard to the contracts registered in the year, the entity has comfortably exceeded its most optimistic forecasts and has concluded the year with a year-on-year increase of 16.8% in the volume of mortgage formalizations.
As for consumer loans, the moderation of customers is noticeable here, as they fell by 16.1% in hiring.
In the business section, new credit has increased by 80% in its inter-annual comparison, and the outstanding balance of total loans to companies increased 15% in the year. In this area, the instruments enabled by the institutions to alleviate liquidity problems caused by the pandemic (ICO, ELKARGI, SODENA and EIF) have played a leading role in the interaction of the commercial network.
Insurance on the rise
The pandemic has also affected the insurance business, which on the one hand experiences a reduction in compensation for less traffic and less accidents on the road On the contrary, products such as home have registered a greater number of claims due to the greater use of the home.
Conclusion, the insurance business as a whole has contributed results of 46.2 million euros in 2020, which represents an increase of 17.1% compared to 2019.
Regarding commercial activity for the year, it is worth highlighting the evolution of home premiums, which grew 3.5%, and life risk premiums, which increased 5.5%.
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