Annual Report 2016 Annual Report 2016 Introduction Identifying Data Governing Bodies Management Report 2016 Financial Data Financial Report of the Year Distribution of Net Surplus Comments to the Financial Statements Legal Documentation Audit Report Consolidated Financial Statements Notes to the Financial Statements Consolidated Management Report Other Information Social Welfare Fund Employees, Branch and Regional Offices Annual Report 2016 Introduction Introduction Index Annual Report 2016 Introduction Identifying data Name: Caja Rural de Navarra (S. Coop. de Crédito) Registered offices: Plaza de los Fueros, 1. 31003 PAMPLONA Telephone: 948 16 81 00 Telex: 37764 CUNA E Fax: 948 24 45 57 / 948 24 08 67 Tax Identification No.: F / 31 - 021611 Caja Calificada. (legal status allowing the credit co-operative to administer government lending) Registered with the Bank of Spain: No. 3008 Registered with the Labour Ministry, General Register of Credit Co-operatives: No. 344 / s.º M. T. 2,163. Registered with the Mercantile Registry of Navarra: No. 6790, Volume 11, page 175, sheet NA183. Included in the Credit Co-operatives Guarantee Deposit Fund: Member of Banco Cooperativo Español. Member of the Spanish Association of Credit Co-Operatives Index Annual Report 2016 Introduction Governing Bodies Board of Directors Chairman: D. Ignacio Terés Los Arcos Vice-Chairman: D. José Ángel Ezcurra Ibarrola Secretary: D. Luis Miguel Serrano Cornago Board Members: D. Jesús Andrés Mauleón Arana D. José María Arizaleta Nieva D. Pedro Jesús Irisarri Valencia D. Pedro María Echarte Seviné D. Isidro Bazterrica Mutuberria D. Francisco Javier Artajo Carlos D. Melchor Miranda Azcona D. Pedro María Beorlegui Egea D. Fernando Olleta Gayarre D. Roberto Zabaleta Ciriza D. Alberto Arrondo Lahera Executive Committee Chairman: D. Ignacio Terés Los Arcos Vice-Chairman: D. José Ángel Ezcurra Ibarrola Secretary: D. Luis Miguel Serrano Cornago Board Members: D. Pedro María Echarte Seviné Board Members: D. José María Arizaleta Nieva Chief Executive Officer D. Ignacio Arrieta del Valle Index Annual Report 2016 Introduction MANAGEMENT REPORT 2016 International markets faced ongoing uncertainty and controlled tensions in 2016, affected both by the monetary policy at the world’s leading central banks and concerns about political events with powerful economic implications: Brexit – the UK’s referendum vote to leave the EU – in June was followed by Donald Trump’s election as US president in November. In parallel, there was a surge in support for populist movements across Europe as parties fed on widespread discontent with traditional politics. The populists link economic problems and terrorism to Europe’s staid politics and European immigration, offering as a solution, in many cases, exit from the euro and/ or EU. As popular support for such parties gains ground, the risk of more exit referendums grows. Italy and France are two countries currently in the sights of such movements. These political factors inevitably led to a rise in uncertainty in a year like 2017 which includes major elections in the Netherlands, France and Germany. Meanwhile, expectations of higher inflation and a rise in policy rates by the US Federal Reserve prompted a major rally in long-term interest rates during the final months of the year, impacting global markets for government and corporate debt. In contrast, equity markets responded positively in the year’s final weeks to factors such as the modest improvement in global economic outlook, a weak euro, the continuation of expansionary monetary policy in Europe and the ambitious plans for infrastructure spending tailed by the new US administration, which helped offset the economic and geopolitical risks which beset stock markets for much of 2016 and which have not disappeared. International bodies generally endorsed during the year the impression that the world economy had entered a slow-growth phase which it would find hard to break out of and which brings with it political risks. The IMF twice downgraded its global growth forecasts for 2016, to 3.1%, although the latest cut in October was only one-tenth of a point. For its part, the World Trade Organisation reported that the pace of growth in global trade would slow to less than 2%, creating a further drag on the world economy. In Europe projected GDP growth for the euro zone in 2016 was revised mildly upward in the later months of the year to a still anaemic 1.6%. In response to this weakness, the European Central Bank (ECB) once again led the charge in the single monetary area, cutting its policy rate to an unprecedented zero Index Annual Report 2016 Introduction in March and deploying a broad range of expansionary measures: extending the quantitative easing (QE) programme in time and to include investment grade corporate debt, reintroducing long-term financing for banks (TLTRO) and paying negative rates on its deposit facility. In its last meeting of the year in mid-December, it again extended the term of its debt purchases until the end of 2017 though with a scaling back of volumes to EUR 60 billion monthly from March 2017. As last year, the Spanish economy stood out internationally with GDP estimated to grow at around 3.2% in 2016, the highest of any major developed country. Despite political uncertainty arising from the need to re-run a hung election, high rates of job creation, low interest rates, still cheap energy, a weak euro and the paying down of private sector debt combined to drive excellent performances by household consumption and exports. That said, Spain still suffers from serious imbalances and threats such as high unemployment, persistently ungovernable public sector deficits, rising national debt and political and territorial uncertainty stirred by the election results. Overall, then, we are looking at a European panorama marked by political uncertainty, which may feed through to financial markets even though the economic background is not too bad. Having finally shaken off the deep crisis of a few years back the economy seems to be growing consistently, albeit at a modest pace, and rather faster in Spain which continues to generate jobs at a fast pace and enjoys still favourable financial conditions. Both these factors have continued to sustain household spending on consumer goods and services. Index Annual Report 2016 Financial Data Financial Data Index Annual Report 2016 Financial Data Financial Report of the Year Consolidated balance sheet at 31/12/16 and 31/12/15 CHANGE 31/12/2016 31/12/2015 Thousands % of euro CONSOLIDATED STATEMENT OF FINANCIAL POSITION ASSETS Cash, cash balances at central banks and other demand deposits (**) 260,286 139,420 120,866 86.69% Financial assets held for trading 8,447 17,276 -8,829 -51.11% Derivatives 5,041 15,894 -10,853 -68.28% Equity instruments 3,406 1,382 2,024 146.45% Memorandum items: lent or given in guarantee with right of sale or pledge 0 0 0 - Financial assets designated at fair value through profit or loss 0 0 0 - Memorandum items: lent or given in guarantee with right of sale or pledge 0 0 0 - Available-for-sale financial assets 2,695,021 2,565,575 129,446 5.05% Equity instruments 156,998 135,700 21,298 15.69% Debt securities 2,538,023 2,429,875 108,148 4.45% Memorandum items: lent or given in guarantee with right of sale or pledge 489,007 220,102 268,905 122.17% Loans and receivables 6,966,734 6,523,790 442,944 6.79% Debt securities 5,124 8,112 -2,988 -36.83% Loans and advances 6,961,610 6,515,678 445,932 6.84% Credit institutions 112,553 145,065 -32,512 -22.41% Customers 6,849,057 6,370,613 478,444 7.51% Memorandum items: lent or given in guarantee with right of sale or pledge 0 0 0 - Held-to-maturity investments 632,207 94,385 537,822 569.82% Memorandum items: lent or given in guarantee with right of sale or pledge 0 0 0 - Derivatives – hedge accounting 178 0 178 - Fair value changes to hedged items in portfolio hedges for interest rate risk 0 0 0 - Investments in joint ventures and associates 46,721 43,080 3,641 8.45% Jointly-controlled entities 0 0 0 - Associates 46,721 43,080 3,641 8.45% Tangible assets 209,712 184,661 25,051 13.57% Property and equipment 205,990 179,579 26,411 14.71% For own use 205,819 179,408 26,411 14.72% Assigned to social projects 171 171 0 0.00% Investment property 3,722 5,082 -1,360 -26.76% Of which: Leased out under operating lease 670 276 394 142.75% Memorandum items: Acquired under finance leases 1,507 1,513 -6 -0.40% Intangible assets 12,797 13,297 -500 -3.76% Goodwill 8,297 8,297 0 0.00% Other intangible assets 4,500 5,000 -500 -10.00% Tax assets 48,165 53,229 -5,064 -9.51% Current tax assets 3,146 3,944 -798 -20.23% Deferred tax assets 45,019 49,285 -4,266 -8.66% Other assets 125,550 127,704 -2,154 -1.69% Inventories 72,296 86,879 -14,583 -16.79% Other 53,254 40,825 12,429 30.44% Non-current assets and disposal groups held for sale 79,751 97,730 -17,979 -18.40% TOTAL ASSETS 11,085,569 9,860,147 1,225,422 12.43% Index Annual Report 2016 Financial Data CHANGE 31/12/2016 31/12/2015 Thousands % of euro L I A B I L I T I E S Financial liabilities held for trading 1,201 601 600 99.83% Derivatives 1,201 601 600 99.83% Financial liabilities designated at fair value through profit or loss 0 0 0 - Memorandum items: Subordinated liabilities 0 0 0 - Financial liabilities at amortized cost 9,818,513 8,764,695 1,053,818 12.02% Deposits 8,181,858 7,589,653 592,205 7.80% Central banks 449,914 0 449,914 - Credit institutions 677,730 1,109,239 -431,509 -38.90% Customers 7,054,214 6,480,414 573,800 8.85%