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Malaga-headquartered Unicaja bank has announced a 573-million euro-profit during 2024, which is more than double (up 115%) those of 2023 at 267 million euros. This was reported to Spain's national securities market commission (CNMV) on Tuesday by the financial group based in the city. Along the same lines the financial institution noted that all parts of the overall income statement had recorded double-digit growth and that its profitability had also doubled that recorded in 2023, hence the board's declaration that there will be a "significant increase" in shareholder remuneration.
Therefore the board of directors at Unicaja will propose at the next shareholders' meeting the distribution of 344 million euros in dividends, a figure that represents 60% of net profit for the year. Going into more detail, the dividend per share assigned to 2024 will amount to 13.4 cents, of which six cents were already paid in December as the first ever interim dividend to be paid by the bank. To this will be added the 7.4 cents of the final dividend expected to be paid, if shareholders agree.
Compared to these figures the total cash dividend paid out in 2023 amounted to 132 million euros. To the shareholder remuneration recorded for 2024 must be added another 100 million euros paid out through a share buyback scheme operating during the year. In total, the amount distributed to shareholders last year amounted to 444 million euros, from which a total return of 14% was derived, according to the bank's figures.
As Unicaja's CEO, Isidro Rubiales, and non-executive chairman, José Sevilla, pointed out at a press conference in Madrid, this is "a sustainable leap forward in shareholder remuneration."
14% total profitability
for Unicaja in 2024 when adding the cash dividend to the share buyback scheme run last year
This, in any case, has been "a good year", according to Rubiales, for a financial institution that had previously suffered the "difficulties" involved in any merger, this bank's merger being with Liberbank. Now, he confirmed, "credibility and enthusiasm have been recovered." "This has been a very important year, the beginning of a new stage," said Sevilla, who reviewed the renewal of the board of directors that culminated in 2024.
Turning to the analysis of the bank's accounts, the group attributes the increase in profits to the rise in net interest income, which grew by 13.7% to nearly 1.54 billion euros, thereby exceeding the group's forecasts, which had estimated growth of more than 10%. On this point, the bank explains that the progress made in liquidity and the repricing of wholesale liabilities have offset the reduction in the profitability of credit. This, in turn, counteracted the fact that fee income fell 4% during the year to 512 million euros due to the strengthening of customer linkage to the 'zero commission' plans. Nevertheless, by the fourth quarter the bank was able to cushion this fall thanks to improved activity in payments, asset management and insurance. Gross income, the funds generated by pure banking activity, exceeded two billion euros, an increase of over 14% than a year earlier.
Meanwhile, costs were in line with the bank's forecasts: staffing costs rose 13.1% year-on-year to 550 million euros, which increased total administrative expenses by 5.5% to 906 millions. Provision for lending losses fell by 24.3% to 111 million euros, despite which risk coverage remained among the highest in the sector at year-end: between 67.9% in doubtful assets and levels above 75% in the case of foreclosed assets. Unicaja also highlights the reduction in the stock of gross foreclosed real estate assets, which fell by 27.8% last year.
After deducting the income margins for interest and fee and commission incomes from gross income, running costs and bad-debt provisions, the result is a net profit before tax of 573 million euros last year, compared with a profit of 267 million euros in 2023, a year in which Unicaja set aside 546 millions in write-offs, a decision that laid a good foundation for a favourable performance in the following year.
10.4% return on tangible capital
for Unicaja at the end of 2024, a figure that contrasts well against the 4.7% at which it ended 2023.
As a result, the efficiency ratio improved last year by four percentage points to 44.4%. Meanwhile, ROTE (return on tangible equity) improved from 4.7% in 2023 to 10.4% at the end of 2024, meeting the financial group's target.
Customer funds performed favourably in the second quarter. Retail deposits increased 2.4% in the fourth quarter and 5.3% for the year as a whole to just over 93.51 billion euros. Demand deposits amounted to almost 54.43 billion euros by December 2024 (2.6% more than 12 months earlier), while term deposits exceeded 10.6 billions (+4.7%) and off-balance sheet funds (mutual funds, pension plans and savings insurance) amounted to over 22.5 billion euros, up 7.1% year-on-year, mainly driven by mutual funds, whose assets increased 18.6% in the year.
The non-doubtful loan portfolio as a whole closed the year at over 46.35 billion euros, down 4.1% year-on-year, a fall that was cushioned in the case of individual lending (the decline was 2.2% year-on-year to nearly 32.29 billion euros), but amplified in the case of business lending (the fall was 8.6% to 9.6 billion).
2.7% NPL ratio
for year end 2024, compared with 3.1% a year earlier.
A total of nearly 8.5 billion euros in new loans and credit agreements were granted in 2024, of which 2.37 billions were mortgages to individuals (27.9% of the total). In the fourth quarter of the year mortgages deals amounted to 608 million euros, a growth of 43.1% compared to the same period a year earlier.
The quality of the loan portfolio also improved, as the NPL ratio (the total value of non-performing loans to total loans) closed 2024 at 2.7% compared to 3.1% a year earlier. As regards capital, the benchmark ratio was 15.1%, 6.5% higher.
Unicaja has also approved a new strategic plan for the period 2025-2027. In quantitative terms, it projects an accumulated profit for the period of more than 1.6 billion euros - at a rate of more than 500 million each year - with a profitability of more than 13% over the three years of the plan, as well as a net interest income of more than 1.4 billion euros in each year and an efficiency ratio of less than 50%.
The bank has also made another commitment for the coming years: the ordinary dividend will be 60% of net income plus, from 2026 onwards, an additional remuneration in excess of 25% of the cumulative profit for the three financial years, bringing total remuneration for the period of the plan to over 85%.
85% will be the future payout to shareholders
The ordinary dividend will be set at 60% of net profit plus, from 2026 onwards, an additional remuneration in excess of 25% of the cumulative profit for the three financial years.
In more qualitative terms, the objective is to transform retail banking, strengthening the customer's brand experience, while in the area of business, the aim is to grow that side of the business, leveraging mainly on the existing customer base, also to improve the customer experience and expand the product catalogue. To meet these objectives, Unicaja plans to make an additional investment of around 250 million euros in technology and artificial intelligence, a reengineering of business processes to become more agile, delivering operational excellence, and the deployment of certain measures to enhance the attraction of talent and create a sense of 'belonging' to Unicaja.
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