CaixaBank S.A. (OTCPK:CAIXY) Q4 2021 Earnings Conference Call January 28, 2022 3:00 AM ET
Edward O’Loghlen – Director, Investor Relations
Gonzalo Gortazar – Chief Executive Officer & Executive Director
Javier Pano – Chief Financial Officer
Conference Call Participants
Maksym Mishyn – JB Capital Markets
Sofie Peterzens – JPMorgan
Britta Schmidt – Autonomous Research
Francisco Riquel – Alantra Equities
Ignacio Ulargui – BNP Paribas Exane
Mario Ropero – Bestinver Securities
Alvaro Serrano – Morgan Stanley
Carlos Cobo – Societe Generale
Fernando Gil – Barclays
Borja Ramirez – Citigroup
Marta Sánchez Romero – Bank of America
Good morning, and welcome to CaixaBank’s financial results presentation for the fourth quarter of 2021. I hope you and your loved ones are well. For today’s presentation, we are joined by our CEO, Mr. Gonzalo Gortazar; and the CFO, Javier Pano. Please note that reported figures are affected by M&A impacts and do not include Q1 ’21 of CaixaBank. However, to facilitate comparisons, we have also provided pro forma figures.
Moving on, just a reminder that we aim to spend around 20 minutes — 30 minutes, sorry, for the presentation and 45 to 60 minutes available for Q&A after that. To participate in which you should have received instructions via e-mail. Let me just end by saying that my team and I are available to take any calls after this presentation. And without further ado, let me hand it over to our CEO, Mr. Gortazar.
Well, good morning. Thank you, Eddie, and thank you, everybody, for joining us today. I’ll get directly into the highlights of the quarter and the year. It’s a quarter where we concluded a year of integration, which has been obviously our main duty during 2021. But it’s also a quarter where we find some very positive data, I had to say, in terms of our business.
First of all, core revenues. Core revenues the whole year has been contrast between NII, a significant pressure associated to lower rates and very strong performance in fees and insurance revenues. And the quarter has been extreme, you see that 14% pickup quarter-on-quarter on our fee level. The fourth quarter being always a positive quarter from a seasonal point of view, but certainly not to the extent that we have seen this year. So very satisfied with that performance.
Our year has also been a year of success in all what has to do with one of our key business and long-term savings with insurance, mutual pension funds. Year-on-year, we have an increase in 12.7% on comparable figures. Obviously, excluding the impact of Banca, we include the impact, it will be much, much higher.
And in the fourth quarter, we’ve seen our lending book in consumer and business growing 1.8% quarter-on-quarter. The training mortgages continues downward than abated, but we’ve seen an inflection in consumer and business lending, which is quite notable, particularly in consumer business lending, I would have expected it also for seasonal reasons. Consumer was quite positive, I have to say.
Cost of risk, very low. We have been improving our guidance on cost of risk during the year. And actually, we haven’t used the 1.4 COVID reserve during the second half. So over 25 basis points of cost of risk for this year is quite notable.
Our NPL stays at the same level, but total amount of nonperforming loans actually come down. The ratio is at 3.6% because obviously, we’ve seen deleveraging this year, so that’s stable. Capital has been also a positive factor throughout the year and also in this fourth quarter. We end the year with this 12.8% on a fully loaded basis, 13.2% if we include the IFRS 9 transitional adjustment, almost 500 basis points of MDA buffer, and all this is allowing us to return to what we think is a generous capital return policy. We have fixed the payout for 2022 at a range of 50% to 60%. We have proposed the exact dividend of €0.14 and 63 for 2021, which will be decided by the general meeting in April. And we have also announced our intention to implement a share buyback program.
We are at the beginning of the process, and we expect to complete the details of this program when we present our 3-year plan during the second quarter. All in all, adjusted net income is close to €2.4 billion. Obviously, a much higher figure than last year, particularly because of the reduction of provisions.
The merger is ongoing. Obviously, we have, after the fourth quarter, completed the majority of the various significant steps that we had to take. And I would highlight 3. One is the 3 news, the IT integration you’ve seen the details already. It went very well. The departure of people are taking place according to schedule. By the end of this quarter, we would have had 70% of the people that are going to leave will be gone.
And in fact, already now, the figure is 60%. So we’re fairly well advanced in the program. And can confirm we’ll continue to expect to deliver on the cost savings that we have announced the integration of branches, we’ve done almost half of the program before the year-end and during this quarter and next quarter, we expect it to be mostly done. So still work to do, but a lot that we have left behind at this stage. And news of the quarter, including the news that we announced yesterday with respect to the agreement we reached with Mutua Madrilena to extend the joint venture on Non-Life to distribute through the Banca branches, where we have agreed to an upfront payment or to receive from payment of €650 million.
But also, we agreed at the end of the year on the terms with which we’ll be acquiring Banca Vida, the life insurance company where MAPFRE used to own 51%, which is already 100% owned by us. So a very active quarter and very significant steps at this stage completed. We keep very large market shares. You know those details around and closer to 30%, when we look at the business of long-term savings and basically leadership positions in almost every business that has to do with financial services.
I wanted to say a few words on BPI because it’s now 5 years since we took control of BPI. And we haven’t spoken that much about BPI in the last year, we’ve been focused on integration. But BPI has had yet another extraordinary year. And when you look at the 5-year history, I think the figures speak by themselves in terms of the loan and client funds development with this 4.5 to 5.4 compounded annual growth rate, very significant increase in market share, approximately 2 points of market share gains in 5 years, which is quite notable.
And you see the impact having in core revenues, core operating income and most notable, core cost-income ratio from the 65% area to the 54% of 2021 continued and progressive decrease, a fantastic job that has been done by our people at BPI, obviously, with very positive indicators also of asset quality and capital.
I have to say we are very confident on what we’re doing here. I think it also shows in the long term what the integration in the group can deliver for a large financial services company like BPI. And when we look at the integration of Bankia, although we’re not going to be able to track the numbers on a separate basis as we’re doing with Portugal, for obvious reasons, because we have consolidated CaixaBank and Bankia, I think we have to be confident that the combined force of the group is going to deliver a very sound, very promising story. But my congratulations are not to BPI.
On the economy, we feel fairly positive, expecting 5.5% GDP growth for 2023. We’re actually seeing the consumption being very resilient even during this wave of Omicron. January figures of domestic debit card spending ATM withdrawals at 6%, very much in line with what we have seen in the previous months. So actual resilience here.
And obviously, there’s a different interest rate outlook now, which is very familiar to you. In this context, we’re looking to the future with confidence. We are stepping up commercial initiatives as we progress. If we leave integration work behind, you’ve seen or may have seen a strong campaign on the home ecosystem called by Home, which we’re conducting currently, and it’s going to stay for the whole year. And I have the expectation that it will help us, obviously, in terms of new business, particularly on the mortgage side, but all sort of lending and other products associated to the home ecosystem.
We’re going to continue pushing our long-term savings strategy, which is doing extremely well. As you know, the MyBox product, you’ll see a few figures in the next pages, focus on business, payments and consumer. And obviously, it’s a year where we want to start delivering on revenue synergies with Bankia. And you still have the figures there of different penetration of health insurance, 7:1 life risk insurance, 2:1 and the difference in long-term savings between 24% and 18%, and there’s more than that. But those are probably the figures that are more easily understood.
I said the fourth quarter is positive in consumer and business lending. You have new lending production here. The consumer evolution is quite, I would say, remarkable, 25% growth quarter-on-quarter. And obviously also, if you look at last year, 11% higher. This is a different trend than what we have seen. Obviously, it’s just a quarter. We need to see how this develops. But given the macro environment, I would be hopeful that this is something that can be sustained in the future, maybe with some ups and downs but can be sustained. And business lending has been a very positive quarter here.
There is again a bit more of seasonal impact in every single year, but we’ve done actually very well. Just to remind you that we integrated the business side. CIB business very early in the process. They’ve been now working completely as 1 single entity since the summer. And I think we’re seeing some of that already in the results in the fourth quarter.
Obviously, going forward, we have NGU, which hopefully would also provide some tailwinds. Long-term savings, the total Star inflows double the level of last year, market share increasing, again, it’s quite remarkable to see our market share increase when we have been so busy integrating the businesses. And hopefully, it’s an indication of what we can deliver as we go forward and we’ll leave the integration behind and obviously very significant pickup in revenues.
We were up to €620 billion in terms of customer funds. And as I said, that’s 12 — sorry, 10.5% organic. But if we look at the long-term services, 12.7% organic growth. Obviously, markets have helped this year. But you see with over €9 billion of net inflows, we’ve been very active on this front.
MyBox working very well. You see pickup in premia, 76% if it’s life risk and 95% if then you look at non-life, it’s a product that has a lot of traction within our commercial network and with our clients. So expect continued success from this strategy.
Look at the P&L, big numbers. Obviously, contrast between NII, down 5.8%; and noninterest income, which is up by higher percentages. But obviously, as those base effect given that these are still lower numbers means that core revenues are slightly down 1%, as you can see. Again, good trends certainly in the fourth quarter, I would say, very remarkable.
The other piece of news in the P&L, so the big picture costs under control, in line with our guidance and the significant reduction of loan loss charges. And I think here, we have 2 effects. One is we’ve been very prudent in the past in terms of provision building. The actual management of the NPL during 2021, the inflows, the monitoring of asset quality has been spectacular. That’s been an area of focus. And we continue to see actually the lowest numbers ever on the range of 1 to 90 days default, which is usually not considered yet as a nonperforming loan water still seen the lowest numbers that we have seen in the history, including now actually in January, which tends to be a bad month.
So very strong performance on that front. Obviously, this year has been including a lot of extraordinary one-offs. We’ve tried to separate those so that we have a clean net income with pro forma €2.4 billion, and then the real net income as reported is €5.2 million, mainly up by the bad will and reduced by the restructuring charges.
To conclude the very strong balance sheet, nonperforming assets, as I said, stable in terms of ratio down in terms of absolute numbers. Coverage is high. Cost of risk is low. Capital is high and increasing. We’ve done completely with Ambrell. We have a significant headroom and liquidity numbers speak by themselves. So with all this in mind, we’ve fixed the dividend to be proposed to the general meeting with a payout as we communicated to the market. It’s €0.1463. We proposed a range of 50 to 60. And we are also, as I said, starting the process of our share buyback program. We have announced today the intention, which was approved yesterday by the Board to bring our core equity Tier 1 closer to the target level.
And this is obviously going to be subject to the approval of the ECB once we’re done and we have the details of all this, we will announce those to the market, most likely, again, during our Capital Markets Day in the second quarter. And thank you very much. With that, I will leave the floor to Javier.
Okay. Thank you, and good morning. Well, I will start making some brief comments on the balance sheet initially, on the loan book, the ALCO and also on our customer funds.
On the loan book, well, better dynamics, as commented in terms of new production on consumer lending and corporates and SMEs. This has resulted into an increase of our loan book in those segments, still leveraging or mortgages on that front. I would say that looking into 2022, I would say aiming to reduce the gap between the market share of the front book and the back book.
Also note that we have had some maturities in the public sector portfolio, originated short-term lending originated during last year. Finally, on this front, just to fully confirm that we have met the metrics for the TLTRO benchmark.
Moving to the ALCO. We have increased the size this quarter — last quarter. In October, we took advantage of a spike in yields to purchase some medium-term securities. As a consequence, you may see that the metrics, average life and duration grow slightly, but the maturity profile and the breakdown of the sovereign exposure, I would say that remains broadly unchanged.
Wholesale funding on news, 85 basis points over 6 months of rival is what we are paying for our wholesale funding costs. Remember that is swapped into floating. And on customer funds, I would rather focus on the central chart. It’s already known, but I think it’s remarkable in terms of long-term savings. Very positive market impacts, also inflows, €9 billion in the year every single quarter with positive inflows, €2 billion in the fourth quarter.
And in terms of deposits, charging to approximately €37 billion. And well, you know that we think that we still have some room to expand that figure, although this is clearly a measure that prevents further deposit growth.
And on the right-hand side, the most remarkable in my view is that the fact that the end-of-period AUM balances are approximately up by 5% and compared to the average of 2021. So this obviously offers some support to fee revenues on this business into 2022.
And with this, let’s move to the P&L. I would make some remarks on the quarter-on-quarter evolution what has been commented, a very good performance in fees and insurance that has allowed us to have a positive quarter-on-quarter core revenue evolution, up by 2.8%. And on NII pressure still affected by lower asset yields and average volumes. On fees, very good performance. I would call it seasonal, not extraordinary. We had a positive impact from success fees but also on Non-life, we had a very strong fourth quarter on life insurance progressing as I would say, in line with our initial expectations, and it has been a record high quarter, actually, in terms of revenues on this business.
On costs, we are down by 1.9%, as we have already having the benefits of the cost savings from the restructuring plan. And on provisions, in general, we have taken a prudent year-end approach, and we have added some extra provisions or other provisions.
And in terms of loan loss charges, at the end of the day, we end the year with this cost of risk at 25 basis points. That is below our initial guidance. On M&A impacts, well, you know that this is already ending, but this fourth quarter, we still have some impacts on the positive side, mostly related to the disposal of the former payment business of Bankia to Comercia. And on the negative side, some restructurings related to the branch network. So the net impact of those M&A one-offs is €88 million.
Excluding those, the fourth quarter pro forma net income has been €337 million. Now BPI, well, the long-term trends have already been commented by the CEO. But here, looking into 2021, you see that this is continuing. Core revenues up by 8%. Costs very well contained at just over 1%. As a consequence, the operating leverage keeps improving with core operating income up by more than 19%. Loan growth across all segments with NPLs very well contained with an NPL ratio of 2.3% and with the bulk of the moratoria already behind us.
With this, the attributable profit in Portugal this year, €170 million. Going into the detail, NII, down 1.9% quarter-on-quarter. As you may see in the central chart, it’s still everything related to clients that is driving it downwards, impacted by lower average loan yields and also lower loan volumes.
But this time, the algo is starting to provide some support after the increase of the size of the portfolio, as you may see. And on the right-hand side, you see the evolution of our back book yield that is down by 2 basis points to 161, still suffering the latest leg of rivalry pricings. And on the front book, I would say you should not read too much into it this quarter as approximately 50% of the front book has been — is coming from CIB, obviously, at lower yields.
On fees, very good performance, 6.7% up for the year, 14% this quarter even excluding the more volatile wholesale banking fees, up by more than 8% for the year. And you may see the breakdown. We are doing well across, I would say, all segments on recurring banking fees with the support from corporate deposit charges.
On asset management, success fees have contributed this quarter. As I say, I don’t call them extraordinary, I call them seasonal. So obviously, we’ll do our best to repeat it. And on insurance distribution, strong focus during the quarter from the commercial point of view, also some revenue recognition during this fourth quarter. So all in all, a very set of results on that part of the business.
And we think that it’s a trend that, in our view, may continue. On life risk, on this front on the central chart, what I was commenting initially, record high in terms of life risk revenues, €172 million. You may see that this is a clear uptrend, and you may see that there is some volatility or some seasonality that I said during the year. But anyhow, clear uptrend that, in our view, is set to continue.
And on the right, you have the breakdown of the different impacts of the consolidation of Bankia EBITDA. In the first column, what you may see is the P&L breakdown as it was in 2021 with 49% ownership of Bankia Avida. This results into a pretax income of €109 million. And on the second column for the restoration purposes, you can see the situation that would have — we have had — we had owned 100% of Bankia EBITDA, resulting into an extra pretax income and obviously, a different P&L breakdown.
We wanted to disclose all this information because I think may help you in order to project into 2022 and beyond. Costs, not much news here. We — as I said, we have reduced costs by close to 2% this quarter with the tailwind of the restructuring that implemented that is affecting personnel costs. Already 60% of the staff involved in the lay of has already left the bank, close to 4,000 people out of 6,500. We are planning to reach 80% of cumulative cost synergies by 2022. And you may see some increase in depreciation as we continue with a strong CapEx program mainly related to IT.
Finally, on the P&L, cost of risk, slightly higher end of the year, loan loss charges, but this cost of risk at 25 basis points, as commented. And you may see the breakdown of the loan book by stages. On Stage 2, a reduction of approximately €3 billion, which is related to lower overlays that has no longer needed mainly for the moratoria exposures.
Moving to the balance sheet. On the — our NPL exposures, you may see that the NPL ratio is pretty much stable at 3.6%, well below our initial guidance. The breakdown across the different segments, no major news, as you may see. In absolute numbers, €3.6 billion of NPLs, €400 million less. And what we have been active in the market with some NPL disposals. And we are happy to see that our MACs are correct as we can dispose with any major P&L impacts.
As also commented, we keep our €1.4 billion copies reserve and used. And in terms of credit quality on our moratoria portfolio or ex moratoria portfolio, I would say that no major changes. So this is clearly doing better than our very initial expectations.
And on ICOS, we have 38% of those already pay in principle. And the major milestone here being May, June, when the major part of them will start paying principle. The cover ratio pretty much stable at 63% by the end of the year.
On liquidity, not much to say, a very ample liquidity position you have here all the metrics. I would only remark the net stable funding ratio at 154%, which is quite a remarkable figure. On MREL, we have an ample buffer. Our ratio stands by the end of the year at 26.2% with over 400 basis points. We have been very active during the year in terms of funding across, as you may see, all asset classes.
And going forward, the plan is to focus on the rollover of maturities and also on diversifying the investor base also issuing into foreign currencies. Well, you know well about our engagement with ESG principles. And this is now being reflected in a strong sustainability ratings. You have here very detailed inventory, good qualifications in all those and the commitment of the management team to keep those improving.
But obviously, this is facilitating ESG issuances. And as you may see, we are the #1 bank by ESG issuance for the second consecutive year. And this is obviously to our plan going forward. And finally, capital. We have further reinforced our solvency. This quarter, no major capital impacts from M&A organic capital generation of 25 basis points, dividend 81, minus 10. This results into a CET1 extent transitional IFRS 9 of 12.8%. And when adding IFRS 9 transitional, 13%, 17%, and this is an MDA buffer that is almost at 500 basis points.
The tangible book value per share has improved by 6% during the year, adding €0.22. And well, as commented, the dividend per share that is going to be proposed to the general meeting of €14.63. This meeting probably in the month of April.
And that’s it. I think that with this, we are done and we may be ready for questions. Thank you very much.
Okay. Thank you, Javier, and thank you, Gonzalo. As Javier said, it’s now time to proceed to Q&A. So operator, please proceed with the first question, including the name and company of the caller. We have a rather long queue. So just a reminder to everyone to keep your questions as brief as possible. Thank you.
[Operator Instructions]. And the first question comes from the line of Mak Mishyn from JB Capital.
And for allowing us to make questions. I have 3, if I may. The first one is on capital. I was just wondering if you could add more color on what the internal target for capital is. You’ve previously been guiding for 11% to 11.5% range, and I was wondering whether it has changed after the merger.
The second is on NII. Now that you’ve rebuilt some ALCO and there are promising signs in loan book growth, do you still expect first quarter of ’22 to be the bottom of the NII or perhaps the dynamics are somewhat better? And then the last 1 is a clarification on Segula ads. Thank you for the details on the extension of the agreement with Bankia. But we also heard from the press that Mutua has reached an agreement with El Corte in Glass, and I was wondering whether this will have any impact whatsoever on your P&L?
Thank you very much, Max. I will start with capital. We have not changed our target for core equity Tier 1. Ex IFRS 9, it is 11% to 11.5%. So our intention is to bring down the 12.8% towards our range.
We haven’t tested fix exactly at which point we will take it is the beginning of the process, but clearly, there is very significant headroom here. And I would also like to briefly mention that the agreement with — between Mutual and cosines, obviously, I only know the public information around it. It’s a good agreement for both parties.
And for SegurCaixa Tesla is going to mean that they will be able to increase its sales on the health side because all the health business of Mutual Group is not we say, we guess, that should be positive but I cannot quantify it. I think in the sort of broader picture for CaixaBank is not going to have a material impact. But if any, there should be positive for Adeslas. With respect to NII, Javier, you may want to address that one.
Okay, Maks. Thank you. Let me elaborate. I think that probably this answers plenty of questions. Well, now it looks increasingly likely that the TLTRO funding benefit is ending by June. So DCB didn’t give clear signs that this will be rolled over. On the other hand, it’s true that they suggested that potentially the amount of balances subject to tiding could be revised upwards. And I think that it’s important also to know which may be the impact from this.
Now the tiering is 6x the minimum reserve requirement, and there is some market talk that this can be increased by 2x, so doubled. In this case, the impact for CaixaBank will be approximately €100 million a year just to have this number. So that part is uncertain, what may happen.
Then you have, as we gave the breakdown of the different impacts now from Bankia, you saw that in 2021, we would have had a positive impact on NII of €88 million. So you — when making forecast for NII, you need to take this into consideration.
So setting aside the, all the CV noise, not because it’s difficult to predict what may end happening, I can now confirm that the trough on NII is going to be in the first quarter. So we may have some negative delta in the first quarter from the fourth quarter, but it’s going to be lower than the negative delta we have had in the fourth quarter from the third quarter. And this has to do with lower day count.
There’s still some negative rival resets that still are filtering into the first quarter. But from there, in our view, setting aside I insist everything that may happen from DCB. Organically, I would say we should see the trough in the first quarter. It’s about, as you said, our loan book that is improving gradually. And I already mentioned, but it’s our aim to reduce the gap on mortgages between the market share of the front book and the back book. And obviously, this is going to be a gradual process, but this may help and the positive dynamics that we are seeing also in terms of consumer lending and corporate and SME lending also will help to have, in our view, at least a flattish loan book into next year. And this obviously will help.
On the ALCOs, where we have upside, we I made comments sometime ago that the size of the portfolio could reach a level of up to 15% of our assets, and this is quite a large amount. It’s approximately €90 million. Obviously, we are not going to be there in one go. It will be very market dependent, depending on the pace of increase in yields, long-term yields, the shape of the yield curve, we’ll see. So we don’t have a present view on this. We are going to diversify the portfolio also other than on the Spanish government bonds.
And obviously, this offers plenty of upside because we have plenty of liquidity to deploy. And if markets help, which it looks increasingly likely that this is the trend obviously, this offers subset. And finally, I would like to mention our sensitivity to higher rates.
Now obviously, the market is already discounting that 12-month arrival is going to be at 0 by the end of this year. Who knows? But it’s clear what in the other side of the Atlantic, which is the approach, I don’t know what DCV will decide, but I think that at least is the first time that things are moving for real. And you know that our sensitivity is quite high in that sense and an upward move of 100 basis points in yields would result into improvement of NII between 20% and 25%, depending on the different assumptions you make because you need to make plenty of assumptions to this in terms of shift of deposits, site accounts into deposits, et cetera. Hope this helps. We are not giving today a specific guidance because, as you know, we are working on our long-term strategic plan and obviously, in due time, and this spring when we reconvene for the Investor Day, we’ll give you detailed figures, not only for ’22 2, but also for longer term
Thank you, Max. I hope that answers your question. Let’s move on to the next question, please, operator.
Next question comes from the line of Sofie Peterzens from JPMorgan.
It’s Sofie from JPMorgan. So just a follow-up on net interest income. In terms of the TLTRO, could you just remind us how much you have maturing in 2022 and confirm that it’s accrued at 100 basis points and kind of what NII headwind do you expect from this?
And then my second question would be kind of on the cost inflation. You’re doing role on the restructuring, but how should we think about kind of underlying cost inflation for 2022? Should we expect kind of to see some higher wages? And could you just remind us when you do the wage negotiations in Spain? And then just the final question on fee income. How sustainable are the gross in fees that we saw in the fourth quarter? I know you mentioned that it’s not a one-off, but it was exceptionally high this quarter. How should we think about the growth going forward?
Thank you, Sofie. I leave TLTRO for Javier is favorite. Well, it’s so relevant for all of us. cost inflation. Obviously, cost is something we can have a higher definition at this stage as we control more variables on cost.
I would say, first, we are on track with respect to the synergies that we announced for 2022, €645 million. I think this is fairly safe. It’s mostly related to staff departures. So at this stage, that’s something that you need to incorporate. You need to incorporate some accounting impact basically from the acquisition of Bankia. You’ve seen those numbers in the presentation. Javier explained it’s approximately €30 million, €31 million from consolidating Banca Vida. That’s obviously going to have significant and positive impact on revenues, but it also has an impact on costs.
And then there’s — with respect to the comparison between ’22 and ’21, not necessarily for the future. And obviously, we’re going to work hard on making sure that the cost inflation is contained over the 3-year period that we will be discussing in our Capital Markets Day. But for ’21 to ’22, we’re going to have the reversal of some savings that are related to the lower level of activity in 2021 associated to the various calid waves. And that is something that is going to impact our cost base, the comparison between 2022 and 2021.
Keeping all this in mind, what we expect is that we will have a cost base this year 2022 somewhere between €5.9 billion and €6 billion. So that is what I would say at this stage that is going to also depend on a number of variables, including the evolution of that dynamic. But I would say, on the cost side, that estimate of being between €5.9 billion and €6 billion is what I would like to share with you.
Now beyond the TLTRO fees, and Javier will complement. But obviously, fees and insurance are key towards that. The way we’ve been working this year gives me a lot of confidence that we have a significant potential here. We have had an extraordinary fourth quarter with some performance fees and a very good sort of also on the non-life levels of commercialization.
I have to say, to be honest, my expectation, but certainly my aspiration is that we keep repeating very strong fourth quarter this year, next year because the strategy we’re following should lead to that structurally. Obviously, there will be ups and downs market is going to be the major factor. But obviously, we’re going to go back to a lower level as we exclude some of these performance and special incentives that we achieved in the fourth quarter. But why not our aspiration has to be to repeat those quarter of next year and the fourth quarter of 2023 and onwards. And Javier, maybe you can also complement me on this and discuss the TLTRO.
Yes. On fees, just to complement, no, it’s already — we made the comment on the presentation. But what we can call seasonal for this fourth quarter, I mean, this excess in terms of AUM fees due to success fees and also out-performance in terms of non-life is approximately €65 million.
But I insist this is not an extraordinary. It’s seasonality. And as the CEO was commenting, our aim is to be able to repeat. On TLTRO, just to be more specific, TLTRO is not ending. What is ending is the funding benefit of minus 1%. So we have basically funding at minus 1%, and we are depositing those proceeds at minus 50.
So we are making a 50 basis points carry, and this is affecting €80 billion, €80 billion at the group level. So the maths are simple. This is €400 million per year. So this is ending in June theoretically unless is the contrary. So for the year, the impact is half this, which is €200 million, rough numbers, it’s probably a little bit less.
But well, that’s it. And as I say, clearly, this hinted that they could — I would not like to use the word but compensate not rolling over this facility with an increase of the balances affected to tearing, deposited at 0. And we’ll see, we have an ECB meeting next week. So we probably will have further information. Thank you, Sofie.
Okay. Sofie, thank you very much. Let’s move on to the next question, please.
Next question from the line of Britta Schmidt from Autonomous.
I’ve got a few questions. One is just a clarification on the net interest income. You’re essentially guiding to a less than 2% decline Q-on-Q and Q1. But does that include consolidation of the insurance business of around €20-or-so million? Another question I have is on the cost of risk outlook for 2020. Is there any idea that you can give us relative to 2021 in terms of credit cost of risk performance? And maybe a clarification. There were quite a few asset write-downs linked to the commercial networks scattered across several lines in Q4. Is there anything more that we should expect in these lines?
Thank you, Britta. And I just mentioned on the cost of risk, we have had a very positive 2021 and actually expect 2022 to be equally positive. So at this stage, we tend to be very conservative on these things, as you know. I would say loan loss charges, our expectation is for them to be in line with this year around 25 basis points.
And again, I will emphasize that we tend to be conservative on this on these matters. We have €1.4 billion of unused, call it, reserve. And at this stage, when I look at the state of the economy, what I mentioned in terms of sort of late payments that we’re seeing, the status of the market expectations. GDP actually came just an hour ago above our expectations. I think we have upside here, clearly. Javier, maybe you can take home again, NII and on the risk.
On NII, well, to be more specific, what I said is that the trough is ex-TLTRO. To be clear, all the ECB actions is expected to be in the first quarter with delta, negative delta lower than the delta, negative delta we have had in the fourth quarter. But that’s probably — this may be less than this minus 2% quarter-on-quarter you mentioned.
And yes, Bankia Vida NII will be included because it’s already consolidating since the 1st of January. On restructuring charges, I would say that, in general, on restructuring charges, we are almost done. We may have still some, I would say, no material M&A impacts on the P&L this year. So it’s still — it’s difficult still to see if we are at the end. But as I say, clearly, not material, and that’s it. So in terms of restructuring, you know that we have early providing for what is coming in the following quarters. So we think that on that front, we are almost done.
Okay, Britta. I hope that does answer your questions. And with that, let’s move on to the next one, please.
Next question from Francisco Riquel, please, from Alantra.
Two questions for me. First one on you can give more color on in terms of loan growth in Spain in particular. You mentioned flattish, I guess, for the group. And so if you can update on your mortgage strategy recently launched — I saw a new commercial offer in MyHome, what would it bring if you still see deleverage, I guess, the front book you mentioned closing the cap would still be negative. The seasonal pickup, the pickup we have seen in consumer and corporate lending, whether it is seasonal, what you see this is a change in trend. The next-generation funds seems to be a slow process. So a bit more color on loan growth by category, if possible.
And second on capital. You can update on the outlook for the buildup, if any, in ’22, any type of risk-weighted asset inflation, regulatory headwinds left, M&A impacts the organization of insurance, operations or any other impact you may highlight.
Thank you very much, Paco. And let me start maybe giving you some color on what we see on the credit side, and Javier can take it on RWA and capital, I anticipate. We expect to have another positive, clearly positive year in 2022 in terms of buildup of capital. But Javier, I’m sure will elaborate on that.
On the lending side, we feel it’s going to be a reasonable year for the sector and a good year for us. Taking sort of category by category, housing. Housing has been slightly positive. It seems with the figures I have for this year for the sector and should, I think, continue that trend for 2022, we’re expecting a slight growth just below 2% for the sector and the housing credit.
On our side, we are clearly going to try to increase our share of new production. We have seen a significant reduction during 2022 with, I think, strategy that we felt good about it being selective, disciplined in terms of price. And certainly, I think, very conservative from sort of asset quality point of view and making sure that the mortgages that we give today continue to be good for their total life.
We have launched this campaign, MyHome, at the beginning of the year. Again, this campaign is not just about mortgages, but it includes mortgages. It’s my home. It’s the ecosystem. And we are offering quite a lot of things for this ecosystem. We’re offering obviously protection within our MyBox strategy. We are offering funding of rebireforms. We’re offering funding of electronics associated to the home, which, as you know, we also distribute through our rebuy sort of marketplace.
We are including in this also some mobility elements going to and from your home. So it’s a whole pack. But we think that we have the mortgage product, Caixa Facil, which we have commercialized with a lot of success. But we are clearly putting incentives and the attention of our people in the branch that were given the growth that we’re seeing in this part of the business to be more active.
Obviously, pricing is part of that, and we’re going to be slightly more aggressive on that front because the market is going to levels that are very competitive. But it’s not just about changing our pricing strategy changing or focusing on that ecosystem, where we think we can play a volatile role. We still have 26% of market share in mortgages.
But in terms of our client penetration in Spain with our 19 million clients, we have a big, big reach, and we want to build a whole ecosystem. And again, this is not going to be a one-off campaign that we have for a month or 1.5 months. This is going to be a permanent push during the whole year, one of our main targets. As a result of that, we expect that new lending is going to increase significantly from the levels of 2022.
We’ve seen that in the fourth quarter. And actually, the fourth quarter has been particularly difficult because of the integration. We’re starting to see the success and the growth during the month of January on the mortgage side. So again, a significant increase for us. Does that mean we’re going to increase our market share of stock, I would say unlikely. I would expect to see because our book is very mature, very seasoned, and we’re going to have higher amortization than the average of the market. I would still expect a slight reduction of market share, but certainly very different from what we have seen in 2021 and before.
On consumption, we’re fairly optimistic. I think this is going to be growing gradually during the year. We have had a fantastic fourth quarter. I think there, even though it’s difficult and too early to look at the proper comparison to know that we compare apples with the rest of the market. But my feeling is that we’ve done clearly better on the market in the fourth quarter. And my expectation is that we can continue to do so. But we’ll have to see how the year evolves.
The sense is pent-up demand and the normalization of life, hopefully, post at least intensive phases of Comet should be very helpful. And on the business front, again, we’re in pretty good shape. And I — the same way we expect businesses to be aided by next-generation EU funds, but still with plenty of liquidity.
I think we’re in good shape, and we should be at least maintaining our market share, but certainly our end would be to increase their market share. In EU fund, it is true that they haven’t yet made an impact to the business. But as something that is coming, it’s coming gradually, but it’s getting closer. And obviously, we see that during this year, it is going to have an impact.
We actually were saying for a while that it was going to be backloaded in 2021. In fact, it’s not being backloaded. It’s been moved to 2022. But we’re going to see that impact this year. So when we look at that, that’s why Javier had comments that make us pretty positive on that inflection point on the overall loan book because I can see why we’re going to be doing better across the 3 categories in 2021. Javier?
Paco, on capital, yes, on, let’s say, pending M&A and regulatory impacts, I would say that the net is going to be neutral. On M&A, we will have some still pending positives and negatives, but that are going to be broadly compensated each other. .
On the regulatory front, we have also positives and negatives. We have the convergences of internal models of Bankia to, let’s say, the — let’s say, the CaixaBank models. We have also some limitations in place in some portfolios in terms of risk-weighted assets due to some internal inspections that are going to be released during the year. These are positive.
Then we have the — potentially, it’s not clear still fully if the rollout of the IRB models in Portugal is going to be this year or next. But anyhow, as you see, positives and negatives. It’s not clear to me every single quarter when we will have the positives and the negatives, but not that large in any case.
So the end result for the year are pretty much neutral. We are having now the view that risk weighted asset inflation due to rating migration is going to be very moderate, and this is not going to be a material issue. So according to our comments about the positive evolution in general about credit quality. And that’s it. So a year where we think that we will continue generating capital organically despite having raised the payout ratio to 50% to 60%, and you know that what will be accrued will be the upper bound, the 60. This is what the regulation requires.
So in our view, still a year with a strong capital generation, so this bodes well for our capital return policies.
Okay. Paco, thank you very much for your questions. Let’s move on to the next one, please.
It comes from the line of Ignacio Ulargui from BNP Paribas Exane.
Just have 2 questions. One is on NPL management. The strategy that you are having in terms of portfolio disposals? And what should we expect into 2022? And also, if you could also give us a bit of a sense when do you think NPLs will peak because we have been just waiting deterioration from the ICO being postponed. So just a bit of color on NPLs.
And linked to that, the 63% coverage for across the cycle period looks high. So to what level do you think that the coverage could go down? And one question on the integration of the franchise with Bankia. I mean, when do you think — do you think that the second half of ’22 will be just sort of like all completed in a way we could see the real strength of the franchise in terms of commercial at all speed or we are already there now?
Thank you, Ignacio, and let me address the questions. So I would say, first of all, on NPL management. We’re having, I think, fairly good trends, but we face a bump in the road, which is the eco loan, the finalization of the moratoria or sort of deferral of principal in — mostly in the second quarter of this year.
So we’re going to be very prudent until that happens. And hence, I wouldn’t expect news of us moving in the sense of being less conservative until at least the end of the second quarter, maybe the end of the third quarter, depending on how the whole thing evolves. But we have a big concentration in the second quarter. That’s the first point.
Second is all the information we have today, which is a lot is fairly positive, fairly positive. We have indeed reclassified into S3 a few or significant number of eco loans that are still paying, but for sort of internal rating sectors they operate, we think they may move into NPL. So not every single nonpayment that we have next year is going to mean because we already have recognized quite a few. But I don’t think there is any upside if we’re not prudent until this happens.
And I also take comfort from the fact that when we look at the moratory in the past, we thought that we’re going to have a significant impact on asset quality. And we manage, I wouldn’t say pretty, I would say, extraordinarily well. So let’s see how that goes. But I think we have to be positive.
The peak for NPLs should be reached this year. I am not going to be able to tell you in which quarter from our point of view because it’s going to depend obviously on what happens with colon, so that may suggest third quarter of this year, but it also is going to depend on what do we do on the disposal of portfolios. We have been fairly successful in that generally.
But when we look at, for instance, this fourth quarter, we sold a large portfolio. And again, we had a very positive results in terms of the level at which we saw clearly above the marks we had. So my expectation during 2022 is that we can be fairly successful with that strategy. And hence, we’re not only going to try and contain the new entries, but we have, I think, opportunities to reduce nonperforming loans in a significant manner.
And as opposed to what we might have felt, I don’t know, 10 years ago after the big crisis, what we are seeing now is our markets are very conservative, and that leads into the 63% coverage ratio, completely agree. It’s not a normal level. And that is the result, among other things, of our COVID €1.4 billion reserves and our PPA, particularly associated to the Bankia transaction, which is around €400 million.
But anyhow, we can confirm that to you later. So yes, we have a very large coverage in sort of normal ordinary cost of business, none of these will be there because it will have runoff. That doesn’t mean we’re going to release all this in a very short term, clearly not. But certainly, we are, as you say, very well provided.
Second point in terms of where we are. I think if you look at the business, we have some business in which we are at 100% shape, and that includes private banking. It includes CIB. It includes business. Certainly, the product factories, I think they have 0 impact at this stage from the integration, generally speaking. And then we have the retail network, which is obviously the best majority of the business, where a lot of things have happened. And the business has been now integrated, but we still have to integrate 50 branches. And so is there some impact from one of this process? Obviously, yes. We can try and do a good execution and integration.
But when we moved 10 million clients from branches and we changed 6,000 people that actually were managing client relationships, we change a different phase, this is a process which takes time. And the time that it takes, making sure we provide the right service, the right quality to our clients, is obviously lower time than we had for other things. So I would say we are almost there. But during the first half of the year, we’re still going to have the retail network, I wouldn’t say distracted, but focused on service quality issues, making sure that with on those clients, under the business stays with us for the long term.
Throughout the year, I would expect that this is going to mean that sort of by the summer or turn of the summer, we are really 100%, absolute 100% all engines of the bank. But again, a good number of them are already there, and that’s what I would emphasize when we look at the business or the private bank, et cetera. And that’s a very large part of our business, even if it’s retail, that is done with the integration or where the integration is not very significant because as you know, the geographical presence of overlap of Bankia and CaixaBank is focused on certain regions, Madrid, Valencia, the Islands, some other places and others have very limited impact.
For instance, the North of Spain or Western and Laroia or Catalonia, et cetera. So we’re going to have a very significant part of the bank at 100%. It is being 100% from the 1st of January, and the rest of the retail is going to gradually get there during the first half of the year.
Okay. Ignacio, thank you very much. Let’s move on to the next question, please.
It comes from the line of Mario Ropero from Bestinver Securities.
Two quick questions. The first one is on the distribution — well, the share buyback to bring down the capital to the target level. Would you bring it down right to the target level? Or would you consider keeping some sort of cushion? If so, what kind of cushion should we have in mind?
And the second question is, I know you’re not giving any guidance for 2022. But well, I mean, it’s obvious that the outlook for NII, it’s hard for fees and issuance, maybe better. So could you give us at least some sort of indication of how you see the net of these 3 in 2022, positive or negative?
Thank you, Mario. In terms of capital, clearly, we’re not going to bring it down to the target. We’re saying closer to the target, not down to the target. And I think there is no decision taken on this, but I would say it is a reasonable assumption to think that around 12% would be the endpoint.
But this is only an assumption. Again, no decision has been taken. And on NII fees, et cetera, I am afraid it’s going to be difficult to answer because we have decided that we need to give guidance for a 3-year period, and we’re going to do that in May. And at this stage, we’re trying to be as helpful as we can in every single category. We’re being fairly more specific on cost because there, I think it’s fair to you to say where we see things.
But beyond the comments that we have made, Javier, I would say, let’s wait for the Investor Day in the second quarter and apologize for that, Mario.
Okay, Mario. Thanks for that. And let’s move on to the next one, please.
From the line of Alvaro Serrano from Morgan Stanley.
They’re kind of a follow-up to — thanks very much for the detail on the moving parts on the NII. I don’t know if you can maybe sort of give some color on the sustainability of fees because we’ve seen you had a very strong Q4. I noted the comments from Javier saying that some of it is, I think it was €64 million some time that seasonal. But obviously, ’21 was a very good year also in general banking.
And then if you can share some thoughts, if you don’t want to share a number, but at least some thoughts on should be sort of accelerating sort of slow down. The comps is tough, so maybe it has to slow down. But some thoughts there.
And obviously, with the IT integration now done, you’ve touched on it. Maybe some of the cross-selling can start coming through. And the second question is on the buyback. Is it fair to assume that the limitation ultimately will be can’t go above 40%. Is that — would that be the limit?
Thank you. I’ll refer to Javier to give you detail on fees. On the second point, I will not relate the limitation of the share buyback to the ownership of any particular sort of shareholder being large or small.
Now the limitation is going to be our capital position and our views on not just on the short term, but mid long-term. That’s what is going to be driving the decision. Again, as I see, Javier explained 2022 is fairly positive in terms of capital creation as well. I am optimistic on that front. But there’s nothing to do with the particular position of shareholders. On fees, Javier, do you want to elaborate?
Yes. Some color. Alvaro, hello. Well, you know that what is clearly supporting fees is asset management. It’s a €1.4 billion revenue pool. This is a structurally growing business. We have done well. Obviously, market has helped. It has been an exceptional year on that front.
But in terms of inflows, we don’t think that we should have lower inflows than in any reason why we should be having lower inflows than in 2021. So I think that we are quite a bit on the evolution of this business. We are — we think it’s — we are good at it. So we have really a very good franchise on the distribution of AUMs, and we are quite a bit, as I said. So the pace of inflows, in our view, will continue.
On Non-life, on that front, we had a very strong end of the year. There is a very strong focus, as you know. You know that, well, our commercial strategy there, the MyBox commercial offer, is doing extremely well. Now obviously, gradually rolling out into former Bankia clients. So our view is very positive.
So I think that — I mentioned that we had some seasonality in the fourth quarter also in this business, but we should at least be able to try to repeat. So I think that it’s a growing business also.
And then we have the larger world of recurring fees. On that front, we are having the extra support of something that actually is NII, but it’s the custody fees. We have had close to €90 million this year on custody fees and our view is that we can have something more. But clearly, on that front is — it’s a figure that is important, but the most important is that the fact that we have this strategy in place is shielding a little bit ourselves on deposit inflows.
And actually, we have a goal observation that this is the case that is preventing a clear deposit inflow. And there is an area that is important, which is payments. And on that area, we have had 2 consecutive summers that have been, let’s say, much different than normal. And for us, it’s the summer is important because part of the payment fee revenue pool is due to the use of ATMs, our ATMs, which have the largest park or of ATMs in Spain. And when, let’s say, noncash bank uses our ATMs, obviously, we have a fee and well, the summer for us is important with all foreigners using ATMs, et cetera. So hopefully, this is going to be a better summer also despite we have already been observing an increase on the traffic in terms of the use of points of sale terminals, et cetera.
Obviously, we have a better summer season. Also, this will help on that front. And at the end of the day, if lending improves, this ends up with fees also because on — mainly on the CIB wall, you have origination fees, et cetera. So this it’s also going to be providing support. So all in all, AUMs in our view, is going to keep doing well, probably with less support from the market than this year, who knows? But in terms of inflows, no less. This is our view.
And on non-life insurance, also very good momentum. And not specifically fees, but I would like to mention also our life insurance business that I displayed the chart of the quarterly evolution and it’s clearly an upward trend. And well — and this is in our view, set to continue. And as you know, gradually rolling out also the revenue synergies on that front that you know that is one of our key businesses. Hope this helps, Alvaro.
Okay. Thank you, Alvaro. Let’s move on to the next question, please.
Next question comes from the line of Carlos Cobo from Societe Generale.
I wanted to — sorry if you touched on this already, but if you could clarify a little bit more in terms of what are the one-offs related to the merger and other impact you’ve reported something around €90 million in costs. But in the other provisions, noncredit and gains and losses that seems to be another €200 million roughly from, let’s call it, unexpected losses in consensus. Could you explain a little bit more what that is and what is the breakdown?
Then a quick question in the future about the share potential buyback. Should we adjust any potential penalty from the agreement with Mapfre? And also around this insurance business, do you expect any positive impact on capital from the consolidation of Bankia EBITDA under the your own life company under the Danish Compromise, will that have any positive impact from CET1?
Thank you, Carlos. The answer is yes, it will have a positive impact in due course. And with respect to the share buyback and the penalties associated to the reorganization of the insurance, I would say there’s no relationship.
Again, share buyback, we are saying it’s going to be based on capital — excess capital at year-end bringing it down closer to our target capital. And there’s no further impact. Obviously, if we were to have a view of issues, problems, capital threats in 2022, we will take that into account.
But I am confident that that’s not the case. I said the net of — I will explain some of the details, the net of what we expect for 2022 in terms of capital generation beyond the 60% payout of 50 to 60. But as you know, we say 50 to 60, we will be accruing 60.
Beyond that, we still expect significant capital generation in 2022 all in all. And we have perfect room to accommodate if we expect unexpected surprises, if any caps. On the rest, Javier, maybe you can help me.
Well, on what you mentioned about other provisions and other one-offs. Well, on other provisions, ex M&A, M&A related, we had a prudent approach to some legal issues, mainly related to foreign exchange mortgage exposures to revolving. So we had a conservative approach towards that part.
Also we had a book on that front an early retirement scheme in Portugal. So all this adds approximately €100 million to that part. So this is, as I say, ex the M&A impact. And then I understand that probably is a little bit complex. But we have quarter-on-quarter, some moves. So some changes in other provisions, we have the release and this is related to M&A. So we have the release of approximately €130 million that is now being assigned to another P&L line, which is gains and losses by approximately €100 million and also to extra costs for the €25 million remaining.
And additionally, we have on other provisions, €68 million from, I would say, this is advancing, which is going to be the impact of branch restructuring implemented into the first quarter that has already been booked as other provisions and that in due time, will be assigned on other gains and losses.
So this is I understand probably a little bit confusing story about its accounting rules. And on that front, I would only highlight that the total amount of charges is perfectly in line with the number, the figure initially announced. Remember, approximately €2.4 billion of restructuring costs, and we are there. So if you do the math for the year, so we are there. And as I mentioned, any remaining for 2022 is going to be not material.
Okay. Thank you, Carlos. Let’s move on to the next one, please.
Thank you. It comes from the line of Fernando Gil from Barclays.
I have a question about the insurance operations and the agreements reached with several SegurCaixa Adeslas and Bancaria. Do we have — maybe you can provide clarity on how these will be accounted into the P&L? I see some kind of footnote saying that it would be accrued during 10 years. And if we can — if you can just clarify how this will enter and be continue would be great. And a follow-up question on mortgages, if I may. Can you please remind us what is the percentage back book on fixed mortgages and variable mortgages.
Javier, if you want to — let’s try and speed up because we only have 9 more minutes. And do we have more questions?
I think we have 2 more questions on the queue.
Well, on SegurCaixa Adeslas, as you say, this amount is accrued over 10 years. Part of it is going to be used also to compensate the penalty to pay to Mapfre for the non-life business, okay? So that is also a good.
So then you have a net of both things and remind that this is paid by SegurCaixa Adeslas. That actually is owned 49.9% by CaixaBank. That’s as a consequence. It also has a negative impact on the equity accounted from SegurCaixa Adeslas. As you do, the net of all those impacts actually is not that large as it is accrued over 10 years. And unfortunately, we still don’t have a final view on which is going to be the final breakdown by P&L because there are different moving pieces.
And unfortunately, we are still working on it. And I am sure we will be able to inform once we announce the first quarter results. And back to your question about the mortgage portfolio was consulting my notes. Well, I can give you the data for the overall portfolio. But we have now at the group level at fixed 35% of the loan book, and this is the loan book. And at floating, 65% of the total loan book indexed to 12 months. We have 42%. And then we have 3 months of LIBOR 12% and 6-month of LIBOR 7%. So this is approximately the breakdown. Into the mortgage portfolio, the percentage of floating to fixed is a little bit lower. It’s approximately 25% fixed and 75% floating. Thank you.
Fernando, thanks for your question. Let’s move on to the next question, please.
It comes from the line of Borja Ramirez.
I have 2 quick questions. Firstly, as a follow-up on the AUM growth. If you could kindly provide a bit more detail on the outlook of the close of AUM. Do you see an increase in the conversion of the proceeds into AUM. And then my second question would be related to CID. I saw an announcement that CaixaBank has launched ESG advisory capabilities. I would like to ask if you could provide some details on the steady opportunity for the group.
I didn’t understand the last…
The last question was on ESG advisory capability. What is the opportunity represent for the group?
Okay. Fine. I’ll start with that, Borja. Thanks. Obviously, ESG is a big, big driver. We actually did over €30 billion of ESG-related funding for clients only in 2021. It’s a moving environment, fast moving. And it’s become integral part of what corporations have to do is to fund themselves, but also show that path towards net 0 on the environmental side and obviously, a number of other considerations, both from the environment on social.
Having that dialogue is absolutely critical. And if you look at EMEA sustainable funding last year, we were #6. We’re first among the Spanish banks. We have a great DNA, a great team and lots of early wins and not so early, but lots of very significant wins.
We had, for instance, a growth of 41% in sustainable operations in 2021, vis-a-vis, 2020. So big opportunity both for us in terms of how we position ourselves. Javier made some comments about how sustainability agencies look at us, and we are almost at the top and almost from every dimension from every AMC. Lots of things to do, but plenty of opportunities indeed. AUMs and conversion of deposits, obviously, is part of the strategy. Javier, do you want to add any?
Well, not much to that. It’s — I mentioned that it’s, as you know well, it’s one of our key businesses. We have had €9 billion of inflows. I mentioned that we don’t see less than this into 2022. We think that we do it well, the proper manner. You know that this is not about pushing. It’s about the proper distribution about advice. And we have, I think, that the most advanced advisory model in Spain. And well, and at the end of the day, this is doing well. Inflows every quarter even in the worst quarters of 2020, when markets had such high volatility, we had no outflows. So this already tells you that, let’s say, that the selling process, the distribution process, the advisory process has been done well.
And just to reconfirm one more time, that is one of our key levers for revenues.
Okay. Thanks, Borja. Operator, let’s take one final question, please.
It’s from the line of Marta Sánchez Romero from Bank of America.
Marta Sánchez Romero
Just a couple of quick ones. The first one on mortgages. What level of market share in new mortgage lending would make you confident the MyHome campaign has been a success? You’re currently around 10%, 11%. And the second question is on capital. What has been the impact on core equity Tier 1 from the revaluation of your pension liabilities this quarter?
Sure. On MyHome, again, it’s not just about mortgages, Marta. So maybe we do greatly or just have greatly in mortgages, but there’s plenty of consumer associated to that and plenty of insurance. So we don’t want to define the success of my home by just the mortgage product. But it will contribute. So that’s our clear view to a higher share of new production.
We haven’t made a target now of share of new production. But I would say, I think we have to be much closer to our sort of stock market share of mortgages than we are currently. And that means a significant increase in new production, i.e., above 50% increase in new production is something that we should be expecting for this year. Time will tell. It will depend also on the market.
But yes, a significant impact. And on the other one, maybe, Javier, you can?
Yes, on pension liabilities. I was consulting my figures. But the impact of — from mark-to-market on pension liabilities has not been that large. So it’s just a few basis points. So it has not been an issue because at the end of the day, that is about assets and liabilities, and liabilities have also revalued at market levels. So this has not been an issue at all, nor the ALCO portfolio that you know that we have the major part of it accounted as hold to maturity.
So actually, the available for sale or the portfolio with impact on fair value OCI is limited because that we had the longstanding view that deals should go up or should go up at some point. Thank you, Marta.
Okay. Thanks, Marta. That’s all we have time for today. It’s been a pleasure to host you one more quarter. And thank you for watching, and goodbye.