CaixaBank SA : CaixaBank reports a recurring net profit of €1,185 million following prudent provisions, raising its Core Capital (BIS II) to 12.5%

> Reorganisation of "la Caixa" Group. The process for the Group's reorganisation was successfully completed during the 2011 financial year, with the listing of CaixaBank on the stock market. This allowed CaixaBank to maintain its leading position in the Spanish financial sector.

> Robust generation of recurrent income. Net operating income (before impairments) totalled €3,040 million, up 0.9% from FY2010, despite a volatile and complex economic environment. Following significant provisions and impairments, the recurrent income was €1,185 million (-12.8% from FY2010), or €1,053 million (-13.1% from FY2010), excluding extraordinary items.

> Extraordinary efforts with regards to provisions and impairments. In order to increase further the strength of the balance sheet, €2,413 million has been set aside in provisions. CaixaBank also recorded a further €706 million in extraordinary impairments. Furthermore, the generic provisions for insolvencies remain untouched at €1,835 million.

> Strengthened levels of solvency and increased liquidity. CaixaBank improved its solvency with a Core Capital ratio (Basel II) of 12.5%, 3.6 points higher compared with December 2010. It also increased its liquidity level by €1,310 million to €20,948 million, one of the highest figures in the Spanish financial system.

> Rigorous risk management and quality assets. With a non-performing loans ration of 4.9%, CaixaBank further improved its position in comparison with the sector average of 7.5% in November, with provisions at 60%, 137% if mortgage guarantees are included.

> A leader in personal banking with high levels of commercial activity. CaixaBank continues to maintain its volume of business and increased its market share. It hasa leading position in retail banking in Spain, with a market penetration of 21% and the largest retail network in the country, with 5,196 branches.

Barcelona, 27 January 2012. In a complex and volatile economic environment, and after making prudent provisions, CaixaBank, the listed bank through which Caja de Ahorros y Pensiones de Barcelona ("la Caixa") now indirectly operates its financial business, reported a recurrent net profit of €1,185 million during the 2011 financial year (-12.8% from FY2010).

Active management of operational margins, business volumes and profitability, combined with a strict cost rationalisation policy, has allowed CaixaBank to maintain a strong operational capacity to generate recurrent income. Despite high levels of provisions, net operating income was €3,040 million, up 0.9% from FY2010.

CaixaBank, of which Isidro Fainé is Chairman and Juan María Nin is Executive Deputy Chairman and Chief Executive Officer, maintained resilient business volumes, down 0.2% from FY2010. It further strengthened its already high levels of solvency (Core Capital ratio of 12.5%) and liquidity(€20,948 million). It also maintained prudent provisions without using the generic provision fund, which has remained at €1,835 million since the end of 2009, thanks to CaixaBank's capacity to generate recurrent income.

The fourth quarter continued the upward trend in net interest income recorded since June 2011, with an increase of 9.4% on the third quarter. This brought the total for the year to €3,170 million, down 7.3% from FY2010. This was in an environment marked by instability in the financial markets, limited growth of business volumes, strong competition to attract deposits and the increased cost of funding on wholesale markets.

Recurring income from investments (dividends and income accounted for by the equity method) rose to €913 million, up by 25.3%. This demonstrates the strong capacity for CaixaBank's diversified portfolio of investments in international financial institutions and services companies to generate recurring income.

Net fees increased by 11.1% year-on-year to €1,562 million, due to the increase in the volume of business and the higher number of transactions, particularly in the business banking, investment banking and insurance segments, with appropriate management of the services offered to customers.

Total income (gross margin) stands at €6,272 million, down by 1.7% on 2010, and down by 1.2% if extraordinary items are included.

Strict cost management and rationalisation procedures have reduced recurring operating costs by 4%, even after the absorption of Caixa Girona and Bankpime. Therefore, the efficiency ratio is 51.5%.

The strong commercial capacity of the branch network, which allows for the sustainable generation of recurring income, combined with a reduction in costs, resulted in net operating income of €3,040 million, 0.9% up from the previous year, or 1.8% down if extraordinary items are taken into account.

In addition, the extraordinary net capital gains generated in 2011 amounted to €907 million net of taxes. This is mainly accounted for by profits from the sale of 50% of SegurCaixa Adeslas (€450 million net), the release of funds set aside in previous years in connection with the liability adequacy test in the insurance business and now no longer required (€224 million net), and capital gains from the sale of assets (€233 million net).

2011 also saw net extraordinary writedowns of €1,039 million, of which €374 million was accounted for by provisions against insolvencies made in addition to those scheduled by the current regulations, €360 million related to the portfolio of international banking investments, and €117 million resulted from the cost of the Group's reorganisation process.

The significant income generated by CaixaBank's recurring activities, combined with extraordinary income, enables CaixaBank to apply conservative criteria when reviewing the loans portfolio and setting aside provisions in addition to the amounts already scheduled.. As a result, CaixaBank made total provisions of €2,413 million during the course of 2011, and took €706 million in extraordinary writedowns.

Recurrent income thus totalled €1,185 million, down by 12.8% year on year, and the net profit attributed to CaixaBank was €1,053 million, a fall of 13.1% on the same period for the previous year.

Active risk management and increased financial strength

CaixaBank's non-performing loans ("NPL") ratio stands at 4.9%, and it continued to compare favourably with the average figure for the financial sector as a whole in November (7.5%). This is thanks to the high quality of its loans portfolio, strict risk management and robust recovery procedures. CaixaBank's NPL coverage ratio stands at 60% (137% if mortgage guarantees are taken into consideration), compared with a sector average of 55%.

The generic provision fund for insolvencies remains at €1,835 million, untouched since the end of 2009, and at 100% of the a factor, providing CaixaBank greater financial capacity to deal with any adverse future circumstances.

CaixaBank´s property portfolio, the result of its management of real estate assets from its non-performing loans portfolio, had a total net value on 31 December 2011 of €1,140 million , with a coverage ratio of 36%. Only 14% of the portfolio relates to land, with a coverage ratio of 62%.

CaixaBank maintains its leading position as regards solvency, with a Core Capital ratio of 12.5% under Basel II, compared with 8.9% on 31 December 2010. This strong increase can be explained by organic growth each quarter, and also includes risk-weighted assets,  extraordianry items related to the Group's reorganisation, as well as the issuance of including the issue of mandatory convertible bonds worth €1,500 million.

Shareholders´ equity was €17,581 million, with a surplus of €6,592 million in excess of the requiredminimum.

CaixaBank's liquidity figure stands at €20,948 million, 7.7% of total assets, practically all of it immediately accessible. This figure has increased by €1,310 million during the financial year.

In addition, CaixaBank anticipated its financing requirements on the wholesale market and issued bonds to the value of €6,324 million during 2011. As far as liquidity levels and the timetable for financing maturities in the future are concerned (€2,327 million matures in 2012), dependence on the wholesale markets is low. This offers the Group a high level of stability and demonstrates its capacity for forward planning.

The "la Caixa" Group's robust capital position according to the EBA

CaixaBank's robust solvency is reflected by the high capital adequacy of the "la Caixa" Group itself, as evidenced in the results of the European Banking Authority (EBA)'s assessment of recapitalization needs of banks systemically important in the euro area.

In that regard, at September 30, 2011, the EBA established that the "la Caixa" Group required only an additional €630 million in capital. The ability of the "la Caixa" Group to generate capital organically makes it possible to already meet the EBA capital requirements.

More extensive commercial business and increased market shares

CaixaBank´s great commercial strength, with 24,915 employees, 5,196 branches (the largest network in the Spanish financial system), 8,011 ATMs and a leading position in on-line banking through Línea Abierta (with 6.9 million customers), mobile phone banking (more than 2.3 million customers, the highest number of financial service users in Spain) and electronic banking (10.5 million cards in circulation), means it is showing balanced and high-quality growth in its banking and commercial business, with market penetration of 21% in the personal banking segment.

CaixaBank has increased its main market share in the following areas: individual pension and insurance plans (15.7%), mortgage guarantees (11.1%), savings plans (15.7%), investment funds (12.5%), private loans (11.5%), deposits (10.3%), and factoring and confirming (14.9%) operations, among others.

Total banking business amounted to €427,263 million (-0.2% from 2010), thanks to sustained growth in customer funds and a slight reduction in loans. Total customer funds reached €241,203 million (+1.1%), with prudent price policy, in addition to the strong increase in pension funds, insurance and investment funds.

Investment funds continue to perform well, attaining a market share of 12.5%, with assets under management of €15,594 million. InverCaixa, which is one of the largest investment fund managers, also saw one of the highest levels of growth during the course of the year, showing an increase of 6.56% at a time when the overall market has shrunk by 7.47%.

During the last three years it has shown the largest growth in assets of all the main Spanish investment fund managers, and between December 2008 and December 2011 its market share rose from 6.9% to 12.2%.

The customer loan portfolio stands at €186,049 million, a slight fall of 1.8%, further demonstrating the Group's willingness to show support for its customers' personal and business projects.

In addition, 1 December 2011 saw the transfer of Bankpime's banking and fund management business to CaixaBank. The managed banking business acquired totals €1,162 million, including €335 million of loans, €398 million in customer funds on the balance sheet and €409 million of off-balance-sheet funds (€345 million in investment funds).

Specialised customer management by business segment

CaixaBank retains its goal of consolidating its leading position in the Spanish retail banking sector with the implementation of a specialised model for personal banking, private banking, SME banking, business banking, corporate banking and investment banking that offers services to all of its 10.4 million customers.

In Retail Banking, high levels of commercial activity and the institution's commitment to maintaining customer loyalty meant that it closed the year with 9.6 million customers and managed banking business volumes of more than €163,000 million. A total of 801,000 new customers have been attracted by five main campaigns focusing particularly on insurance, consumer loans and pension plans.

As regards liabilities, growth has centred on the individual banking sector, with strong increases in long-term products such as pension plans (+8.9%), savings plans (+12.3%) and investment funds (+6.3%).

In Personal Banking and Private Banking, managed funds in these segments increased in 2011 by 3% and 15% respectively to approximately €62,000 million in personal banking and €40,000 million in private banking, with positive growth in the arrangement of savings and pension plans.

In SME Banking, CaixaBank's commitment to offer services to small and medium-sized enterprises, with leading market penetration of 34.7%, meant that it ended the financial year with business volumes exceeding €22,600 million.

The Business Banking service, which offers a network of 83 specialist centres and 873 specially trained members of staff, has seen strong growth in all business areas. The number of managed customers has risen to 34,000, up by 17% as compared with December 2010, and funds under management totalling €28,000 million, an increase of 4%.

The growth in financial products has been particularly notable in the business banking segment, with growth rates of around 7% in basic products in this segment. Commercial loans, for example, have risen by 7.8%, while syndicated loans are up by 7%.

The Corporate Banking division has also performed particularly well over the last 12 months, and investments managed through the institution's three specialist centres rose by 18%, reaching almost €21,700 million by the end of 2011, offering further proof of CaixaBank's support for its business customers' financing requirements.

Regarding specialist products and services for SMEs, businesses and corporations, particular mention should be made of the Transactional Banking service, which offers solutions for the recurring management of customer business, with growth in factoring agreements and in confirming services bringing CaixaBank´s market share to 14.9%, an increase of 243 basis points over the last 12 months. In addition, the Investment Banking service, which offers financing solutions for investment projects, saw an increase of 28% in its SME operations portfolio, 16% in energy projects, 15% in infrastructure projects and 7% in corporate financing and acquisitions.

Since its creation in 2007, MicroBank has financed 128,511 projects worth a total of €810 million. Despite the current economic climate, MicroBank remains the largest supporter of self-employment through the use of micro-credits. According to the study entitled Informe sobre el Impacto Social de los Microcréditos (Report on the Social Impact of Microloans) carried out by the Esade business school, it is estimated that MicroBank has contributed to the creation or consolidation of more than 42,000 jobs since it opened for business. During 2011 it awarded 34,307 loans totalling €217.9 million, thus increasing its portfolio of microloans by 16.7% over the same period in 2010.

As part of its international expansion plan, CaixaBank has representation offices in London (United Kingdom), Paris (France), Milan (Italy), Stuttgart and Frankfurt (Germany), Istanbul (Turkey), Beijing and Shanghai (China), Delhi (India) and Dubai (UAE). It also operates branches in Warsaw (Poland), Bucharest (Romania) and Casablanca (Morocco), where it was the first Spanish banking institution to open a branch.

CaixaBank has a 5.4% holding in Telefónica, 12.8% in Repsol YPF, 5% in BME, 20% in GFInbursa, 30.1% in Banco BPI, 17% in The Bank of East Asia, 9.8% in Erste Bank and 20.7% in Boursorama.

Great uptake of the CaixaBank Dividend/Share Programme

The introduction of the CaixaBank Dividend/Share Programme approved by the Ordinary General Meeting of Shareholders in May 2011 has seen a high level of uptake at 95%, a further sign of the trust that shareholders place in the institution. Uptake in the second CaixaBank Dividend/Share Programme in September was 98%.

Regarding the evolution of the CaixaBank share price during 2011, it remained ahead of the main reference indices, a fact that is even more notable if one looks at it from the perspective of the market sector, which fell by 4.7%. If return from dividends is included, the share price ended the year positively with a return of 3.1%.

Social Projects: Even more committed to society

"la Caixa" Group will maintain its Social Projects budget at €500 million for 2012, the same amount it has allocated over the last 4 years. This makes the "la Caixa" Social Projects Programme the number one private foundation in Spain and one of the most important in the world.

Once again, the priority will be attending to the principal needs of private individuals with the development of social and support programmes, to which 66.3% of the budget (€331.5 million) will be allocated. Cultural funding will account for 13.8% of the investment (€69 million). Science, Research and the Environment will account for 13.5% (€67.6 million).Support for education and training will account for the remaining 6.4% (€31.9 million).

Job creation, the fight against poverty and social exclusion, access to proper housing for people in difficulties, active and healthy ageing for the elderly, the reintroduction of prisoners into society and the jobs market during the closing stages of their sentences, and combatting drug use will continue to be just some of the strategic lines of action taken by the "la Caixa" Social Project Programme.

In the area of job creation, the Incorpora programme helped find 9,889 jobs for people at risk of exclusion over the last 12 months. The number of professional opportunities generated at around 18,000 companies by the Social Projects since this programme was launched in 2006 has now reached 42,629.

CaixaProinfancia, the programme that offers assistance to children in circumstances of poverty and social exclusion, awarded €48 million during 2011 in the form of grants to assist families in difficulty. Since 2007, the Social Projects programme has been working to break the cycle of hereditary poverty in Spain under this initiative, to which "la Caixa" has already devoted around €250 million and which has benefited 185,000 children and their families.

With the aim of guaranteeing access to housing, the Social Projects Programme has strengthened its commitment to the Accessible Homes programme, which in 2012 will complete the construction of the 4,100 properties planned back in 2004 when the project began. 3,000 of these are intended for young people and people over the age of 65, while the remaining 1,100 will go to families.

The development of the Social Project's own programmes is supplemented with its support, through the Calls for Social Assistance, for 1,198 initiatives promoted by NGOs to help vulnerable groups throughout Spain. The branch network has also supported 21,285 activities to attend to the needs of people in their immediate areas.

"la Caixa" continues to devote efforts towards child vaccination in developing countries (1.8 million children vaccinated), as well as working for sustainable economic growth through 80 projects currently underway in 35 countries. It is particularly active in the reconstruction of Haiti and combatting famine in Africa.

The institution's strong commitment to education was underlined in 2011 with the launch of eduCaixa, a new platform aimed at students aged between 3 and 18, teachers and student parent associations. The project is founded on the experience and commitment that "la Caixa" has invested in educational projects over a period of more than 35 years.

The award of grants to assist postgraduate studies at universities both in Spain (100 grants) and abroad (125), along with Doctorates in Biomedicine at four of the top research centres in Spain have further underlined this commitment to education and to the future of the new generation of students.

Turning to environmental issues, efforts were further intensified in the Social Projects programme this summer in support of the conservation and improvement of natural spaces throughout Spain. 316 different projects were implemented during 2011, with priority given to the engagement of people at risk of exclusion to assist in conservation work. Over the course of the year, these projects have provided 2,080 jobs, bringing the total since 2005 to 8,151.

Regarding research, the Social Projects programme has continued its support for the advancement of learning in universities (the RecerCaixa programme), along with research into AIDS (irsiCaixa), cancer (the "la Caixa" Molecular Therapy Unit at Vall d'Hebron Hospital), neurodegenerative diseases (the BarcelonaBeta Project) and cardiovascular disease (CNIC), among others.

The spreading of culture as an instrument for personal growth is another of the principal themes of the Social Projects programme. In this connection, as part of its policy for forming broad alliances with some of the world's leading institutions, "la Caixa" has become one of the Benefactors of the Prado Museum, with which it is currently developing the educational programme "The Art of Educating".

The opening of the exhibitions "Delacroix", "Portraits from the Belle Époque" and "Impressionists. Masterpieces from the Clark Collection" were three of the highlights during 2011. Participative concert performances that included the Messiah and Carmina Burana, the humanities programme, support for the Classical Library Collection published by the Spanish Royal Academy and assistance for cultural projects with a social impact further underlined the Social Project programme's commitment to the arts.

Once again, the general public have shown their enthusiasm for the exhibitions at the CosmoCaixa Science Museum and the CaixaForum centres, which aim to offer a learning experience to people of all ages and a wide variety of educational backgrounds. Visitor numbers exceeded 3.5 million over the course of the year.

In short, 2011 was a year in which "la Caixa" once again showed its true raison d'être: a commitment to people and to the welfare of the community in which it operates its banking business.