Collective investment in 2015 was faced with two key circumstances. On the one hand, the volatility of the markets, which alternated between sharp rises and falls, the latter during the summer and in December. Furthermore, investment in fixed income, with yields close to zero, scarcely attractive for investors, was used to reduce risk as an asset haven until uncertainties dissipated.
All this meant that, for the whole sector, investment and pension funds behaved irregularly but still very positively in the majority of funds. Likewise, investment companies with variable capital also maintained their progress from previous years (SICAVS) as well as delegated portfolios, that is, those which are managed by professionals with a client's generic authorisation.
Bankinter Gestión de Activos – the Group's business in charge of collective investment – moved around in this complex environment with the clear objective of, so to speak, tailoring suits for its customers which were always becoming more made-to-measure, with dynamic products able to adapt to the markets' changing circumstances. The detailed results were:
Investment funds. At the end of 2015 managed assets closed at 7,417 million euros, rising by 2.5%. Currently the Managing body sits in ninth position nationally for managed assets, representing 3.4% of the total. The figure for assets rises to 13,605 million if all marketed investment funds are added together, as much as for the bank's managing body as for its other international managing bodies, which means a growth of 23.2%.
Pension funds. The wide range of products offered by Bankinter which are aimed at the retired segement led to the bank managing assets of 2.086 million euros in 2015. That is equivalent to an improvement of 7.7% over the 1,936 million euros from the previous year.
Sicavs. At the end of 2015, there were 461 being managed, 20% up on 2014. Thanks to this, the bank held second place in the national ranking for that item, with a market share of 13.5%.
Delegated Management. Investment via Delegated Management products constitutes one of the bank's clear commitments. Whether it is in portfolios or in funds of funds, Bankinter Asset Management offers specialised management in keeping with the risk profile of each client. In addition, this service is offered not only to the highest Private segment, but also to the customers of Personal or Private retail banking customers, which is not very comun in the domestic market. The results obtained in these products guarantee an annual growth of over 70% in these products, ranking, in December 2015, managed assets of 3,320 million.
To address this growth, it was necessary to expand and improve the management team and support staff. Its work was recognised with the award for best national manager of the year for the second consecutive year, awarded by Expansión-Allfunds.
The future, predictably, will continue to be highly volatilie in the markets and interest rates will be meagre, which will compel us to carry out a more specific style of management, emphasising the quality of the service rendered. At the same time, it will be necessary to continue expanding the range of products likely to satisfy investment needs, as much for the benefit of customters of Private Banking as for those of Personal Banking.
During 2015 there was a correction of the growth trend initiated by equities in late 2012 and it reached maximum speed in 2013 and 2014. That reduction generated an increase in market volatility, which made it necessary to professionalise investment decisions to cope with clent demand which had doubled: further advice and increasingly accurate management tools.
Bankinter addressed this situation by working along two lines, information and training for customers:
Information. 22 Master Class and Stock Exchange Forum sessions were organised, both in main provincial capitals and in some large municipalities. More than 2,200 customers attended, they could get to know first-hand the opinion of professionals on share incomes and about the most advisable behaviour to adopt at all times.
Training. Bankinter professionals from this area gave training sessions on tools for direct investment in markets and on related products such as custom-made investments, or delegated investments, exclusive to Bankinter.
From a commercial point of view, Bankinter maintained its flat rate for customers with equities, improved its commercial offer for new customers, but also for the former. Throughout 2015 periodic offers were launched to attract investors, be they completely new ones or ones who had previously had their portfolio with other companies. Additionally the range of quoted funds was perfected (ETFs) and a new version of the Broker Plus management platform got started, it improved its operational speed. Furthermore, the improvement process of its broker app was continued.
In 2015, the bank's business in equities earnt it a profit of 53 million euros, up 14.2% with respect to the previous year, emphasising the contribution of Private Banking. Cash deposits increased even more: by 16%. The evolution of ETFs improved by 44% compared to 2014 thanks to their flexibility, which allows both the more conservative customers to invest in them and those with less risk aversion, generating a greater contribution in the contracting of international markets, the result of diversification.
All of this contributed to reasserting the bank's leadership in the business of equities, which has a wide range of products and services. Customers can carry out spot transactions in domestic and international markets, including investments in derivatives (warrants and futures); they can do it with credit, making good use of bullish and bearish opportunities, or contract ETFs. If they prefer, they have tools to manage risk for themselves, through stop orders, dynamic, indexed and related orders, and those with conditions and restrictions, etc.
One of the objectives for 2016 is to favour a radical change in that range of tools, in order to differentiate between the uses that the least sophisiticated customers demand and those that the most sophisticated investors require. New tools will bring unknown advantages to the market.
With the improvement in the economy, consumer credit recovered in Spain during 2015, although still rather timidly. Similarly, indexes of non-performing loans decreased, the growth of which had been very high at the start of the crisis.
In this context, last year Bankinter Consumer Finance – the Group's business which is specialised in credit cards and consumer loans – decided to implement an area for new businesses, with the aim of attending to, in the best possible way, it's customers' demand for financing.
This newly created area is, amongst other things, meant to offer crossed loans to Obsidiana credit card holders, who already enjoy the most flexible conditions in the market, they can adjust the loan payments they have made to their income stream by using plastic, without needing to accumulate them at the end of the month.
Within new businesses, Bankinter Consumer Finance also designed a loans format with a prescriptor, in order to finance purchases in certain establishments with which the bank maintains corresponding agreements. Those loans will be launched on the market throughout 2016.
In addition, Bankinter Consumer Finance, with a young and highly qualified team continued to develop in 2015 the two traditional pillars of its business:
Thanks to all of this, in 2015, Bankinter Consumer Finance managed to increase its client base by 51%. The number of customers reached 728,000, as against 484,000 in 2014. The average investment per customer was 987 euros, which represented an increase of 14% compared to the previous year.
For 2016, the company's intention is to continue making good use of the opportunities that the economy's recovery has generated and, specifically:
Bankinter's insurance business contributed some income in fees, 29.9 million euros in 2015, a similar figure to that of the previous year. It is therefore a year of consolidation, in which the fruits of previously taken strategic decisions were collected.
One was the launch during 2014, with Mapfre, of Bankinter Seguros Generales, which distributes multiple risk insurance for companies, shops and offices as well as various types of funeral insurance. Mapfre and Bankinter jointly carry out the technical design of the products so that they more closely fit the needs of the bank's customers. The management of the policies is carried out by Mapfre as it is a job for an insurer and the marketing is carried out exclusively via the bank's branch network.
Within the field that is not life insurance, in 2015, Bankinter also started to offer liability insurance and that of individual health, in a mediatory role, in order to cover the increasing demand for this kind of product. This mediatory role means that customers are advised about all the options they have in front of them, although they do not form part of Bankinter Seguros Generales' catalogue, and later on they have a free choice regarding the one which would better suit their needs.
As for pension fund marketing commissions, they experienced a sharp rise in 2015, thanks to outstanding commercial activity in these products rising from 10.3 million euros in 2014 to 11.7 million, representing an increase of 11%. Because of these products, the assets managed by Bankinter increased 7.7%, reaching 2.086 million euros, due to their intensive commercial collection and asset management.
Bankinter currently markets a total of 22 funds: 19 individual pension funds, two connected with employment systems and one with a voluntary social security company (EPSV). Its portfolio was well balanced, 30% equity, 28% short term fixed income, 17% fixed and guaranteed income and the remaining 25% invested in balanced and fixed long term income funds.
During 2015 Bankinter in Luxembourg has established itself as the solution for all those Private Banking customers that look for geographical diversification in their financial assets. The fact that Bankinter remains the only Spanish bank with its own banking licence in Luxembourg gives the Bankinter Group a differential element when compared to other domestic banks, allowing it to provide its customers with a complete, comprehensive offer according to their needs.
At the end of 2015, Bankinter's resources in Luxembourg and its SICAV rose to 1,312,000,000 euros, which represents a 68% growth with respect to the end of the previous year. Beyond this significant growth, discretionary asset management, where the Luxembourg subsidiary has particularly stood out, has experienced a growth of 107% with respect to the close of the previous year.
The prospects for 2016 are promising, not only due to customers' increasing awareness of the need to geographically diversify their assets, but also due to the opening of a new market after the Bankinter Groups' recent acquisition of Barclays Portugal.
In 2015 Bankinter's operating technology and services company had its fifth anniversary for providing services both to the bank and to external customers. During that period, its professionals learnt how to improve and evolve, often comparing internal developments to outside competitors in key services such as information security and quality, control processes and the specialisation of operational services.
Throughout that period, the operating technology and service subsidiary classified and catalogued all the services it provided to the bank, and monitored and measured its indicators. Thus and with complete transparency, the bank had knowledge of its cost of services, its quality level and its business volume, as a step prior to optimising them.
In 2015, Bankinter decided to change the company name (the former Gneis became Bankinter Global Services) to strengthen the brand image and, most significantly, reoriented its strategy in order to focus exclusively on the internal function. The company's organic growth and its growing needs for operational and technological transformation advised this change in approach. The subsequent acquisition of the Barclays retail business in Portugal, which necessitated additional work for this merger in 2015, which will continue into 2016, simply confirmed the advisability of Bankinter Global Services working exclusively to provide its services within the organisation of the bank.
The Portugal project is the company's biggest challenge for 2016. Bankinter Global Services plays an extremely important role in establishing the company on the international market --as proven by the opening of the office in Luxembourg-- and the Barclays operation requires the development of a programme to integrate its lines of business with the bank's platform. Furthermore, Bankinter Overall Services is investigating a plan to transform the present technological and operational structure and to adapt its operation to the most advanced tendencies of the financial sector, on both a national and international level.
Línea Directa Aseguradora, wholly-owned by Bankinter, is the leading company in terms of direct insurance sales in Spain, with a market share of almost 60% among companies that operate over the telephone and online. Besides maintaining one of the highest growth rates in the sector, it also boasts one of the best Customer Satisfaction Ratings (CSAT 80.25), consolidating its position as a benchmark for quality, profitability and job creation, with a workforce of nearly 2,000 professionals and a portfolio of more than 2.2 million policies at the end of 2014.
Línea Directa operates in the Motor and Home branches, and is special in that its products are only distributed over the phone or over the Internet, enabling it to offer its customers high-end services at very competitive prices. In this respect, its business model, direct and without intermediaries, is based on direct contact with customers, prudence in selecting risks and sales strength, making it very flexible from an operational standpoint in what is a very complex economic setting.
Excellent results. During 2015, the company recorded a net increase of about 144,000 policies, representing a growth of 6.4% with respect to the previous year. In this regard, the total volume of the portfolio has exceeded 2.3 million customers, which is a particularly impressive figure when considering that the number of insured vehicles in Spain only rose 1.1% last year.
With respect to the volume of premium issued, Línea Directa reached 679.7 million euros, 4.5% more than in 2014. This is thanks to the recovery of Motor branch (+2.8%), and to the strong growth experienced by the Home branch (+20.5%), much higher than overall increase in the sector, which only equated to 1.7% for vehicles and at 2.1% for home insurance.
Furthermore, Earnings before Taxes (EBT) was 139 million euros, corresponding with +4%, which, in turn, has increased net profit by 6%, reaching 99.4 million euros, the best in the company's history. Furthermore, in 2015 Línea Directa achieved a ROE of 29.8%, a technical provisions coverage of 148% and a capital adequacy ratio of 204%, consolidating it as one of the most profitable and stable insurers in the sector.
These results have been possible thanks to a strategy based on quality, flexibility and specialisation, in which, during recent years, various business proposals have been developed and adapted to each client. Following on from this, Penélope Seguros, a product designed for women, and Nuez, a brand that is revolutionising the sale of insurance through the Internet and social networks, have consolidated their positions as two of the most innovative brands in the industry.
The best Combined Ratio in the sector. Another of Línea Directa's great results of 2015 has been its Combined Ratio, which ahs decreased to 86.7%, one of the lowest in the insurance sector. This indicator, which is key for any insurance company, measures the profitability of insurance activity by relating the claims cost and the running cost with the volume of premiums issued.
The result in 2015 has been possible thanks to great operational efficiency and excellent risk selection, which drastically reduced the loss ratio to 67.7%, an alltime low for Línea Directa.
The value of reputation. After having been included in MERCO Business and MERCO People rankings for several years, in 2015, Línea Directa was entered in MERCO CSR (Corporate Social Responsibility) rankings for the first time, consolidating it not only as one of the most responsible companies in the country, but also as having some of the best Corporate Governance standards. The report, which takes the opinions of managers, CSR experts, NGOs, consumer associations, journalists and financial analysts into account, ranks Línea Directa at number 4 in terms of its reputation in the sector and 85 in the whole country.
The Línea Directa Foundation was created in 2014 with the aim of fighting against traffic accidents, promoting values such as safe driving and responsible behaviour behind the wheel. That is why, using the slogan ‘Road Safety. Here and Now’, the Foundation centres its activity around four areas: Dissemination, Research, Training and Social Action, always with the common denominator of fighting in favour of the Road Safety.
Three powerful reports were written in 2015 and were widely discussed in the media, thus making drivers aware of the need to maintain safe driving standards. This year the Línea Directa Foundation presented three studies: ‘Traffic fines, penalties or lessons?’, ‘The Influence that having older cars on the road has on traffic accidents (2008-2013)’ and ‘Passengers and their influence in preventing traffic accidents. A gender perspective ’.
Furthermore, the Foundation held the Journalistic Prize of Road Safety once again, which has been recognising the importance of the media's work in the prevention of traffic accidents for over a decade, stimulating the publication of reports and the promotion of road safety.
Another action that had a large impact was the 'Not a drop of alcohol behind the wheel this Christmas' campaign, in which the Línea Directa foundation, in collaboration with CEPSA and the Association for the Study of Spinal Injuries (AESLEME), distributed 5,000 breathalysers across various petrol stations in Madrid, Barcelona, Valencia and Seville.
2015 also saw the first edition of the Entrepreneurs and Road Safety Prize, a unique competition in Spain, with a 20,000 euro prize as an investment, including training, mentoring and access to rounds of financing. The first edition received more than 60 candidates focused on preventing traffic accidents.
In 2015, Bankinter underwent a commercial repositioning of its securities broker, with the primary objective of expanding its field of activity to the main international stock markets. To this end, the company (previously called Mercavalor) changed its name to Bankinter Securities, a more familiar name for national and foreign investors. Additionally, the brand has since realigned its image with the Group's corporate identity and that of its affiliates.
In parallel with these changes, the company strengthened its staff, that is now composed of 20 professionals, including a new sales team focused on new international markets. Traditional activity based on the brokerage of national variable income markets and fixed rates will also benefit from these incorporations and technological investments, which will also support investment banking.
The reorientation of the securities business during 2015 finalises the process initiated in December 2013 with the rest of the shareholders acquiring 74.99% of the share capital of Mercavalor, of which Bankinter already held 25.01%. The full integration of this company was the first step to complement its service offering towards a more overall format, with a greater focus on assets management and specialised advice, in accordance with the pre-existing quality standards and efficiency of the Group.
The challenge that Bankinter has set is to place itself among the five great Spanish operators in the sector in the medium term.
In 2015, fee income increased by 36% with respect to the previous year, reaching an EBT of 6.7 million euros, corresponding with an increase of 62% compared to 2014. The traded business volume reached 34,352 million euros, representing a market share of 1.8%, after applications.
As for markets, it should be highlighted that the national market still represents 78% of income, with an increase of 6% with respect to the previous year; and the international market already represents 22%, with a growth of 64% with respect to 2014.