The decrease is owed to the extraordinary rise in reserves for bad debt resulting from the problems of some real estate companies, a sector where in any case Caja Laboral has limited exposure.
Given the context where market pressures intensify the climate of mistrust regarding economic operations, and result in a general slow down of banking activity, Caja Laboral's business growth has been satisfactory, with a year over year increase of 16%, exceeding 4,500 million euros.
In the case of business with Private Customers, housing mortgages continue driving the growth of Caja Laboral credit activity with an 11.6% increase in balances, even though the market has seen a drop in demand.
Even though the market is clearly signalling deceleration, especially in the construction and related activities sector, business with corporate customers grew at a rate of 12%.
With regards to capturing savings, the sales effort has primarily targeted the acquisition of on-balance-sheet assets before investment funds. Within this context, the total private sector amount managed by Caja Laboral increased 6.1% as compared to the same month last year, totalling 13,984.6 million euros at the June closing.
This growth has been sustained primarily with various kinds of Fixed Term Savings whose balances have increased 30%, and with Cuenta MAX, a high return savings account having complete availability of funds without commissions.
In this slowing environment, the typical operating margin shows a gain of 2.4% over the same period last year. The inclusion of dividends and financial operations earnings, which saw contributions increase slightly this year, results in the ordinary margin reaching 215.8 million euros, some 7.2% more than last year.
The intense adjustment process being experienced by the real estate sector was also felt at Caja Laboral. The impact this semester was seen primarily in the requirements for reserves of 38.4 million euros, an amount greatly superior to the prior year. With regards to this situation, it should be pointed out that Caja Laboral has balanced exposure in the real estate sector, permitting it to face the new economic scenario from a solid position.
The growth of doubtful assets and the reduced growth of credit operations have provoked an increase in defaults reaching a rate of 1.65%, a rise of 0.72 percent for the year. In any case, the reserve volume accumulated by the company covers 108% of the doubtful debts.
The 39.78% efficiency ratio, the percentage administrative expenses contribute to the ordinary margin, is very favourable as compared to the sector.
At the end of June, the Caja Laboral network reached 394 offices. In the first six months 5 offices were opened continuing the expansion strategy. By June of 2008 there were 138 offices located outside of the company's traditional environment, representing 35% of the Network.
Finally, Caja Laboral holds second place at a national level according to the latest STIGA report, an independent audit of European activity, which evaluated the service quality of more than 100 finance sector enterprises through an exhaustive study in more than 5,500 offices.
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