Unicaja Banco SA

MAD:UNI

Earnings Call Transcript 2020-Q1

[Jaime Hernández Marcos, Head of Investor Relations]

Good morning to everyone. We hope you all are okay and that you keep safe. Welcome to Unicaja Banco First Quarter 2020 Results Webcast. As I usually do, let me start confirming that we have published the quarterly financial report and this presentation this morning before market opens in the CNMV website. This quarter, our Chief Financial Officer, Pablo González, will explain the main trends of the quarter, and following the presentation, we will answer your questions. Pablo, whenever you want, please.

[Pablo González Martín, CFO & Director General of Finance]

Thank you, Jaime. Good morning to everyone. As Jaime said, we hope you are all right. These are the first quarterly results that we published after the COVID crisis started. The lockdown that has followed the pandemic will change behaviors, and we'll need to continue to adapt ourselves and the business to the changing environment. It is too soon to quantify how deep the situation will go, and in the first quarter 2020 results, the impact was limited. However, we have decided to book some COVID provision this quarter, as I will explain later. Also, before I start with the quarterly details, I want to thank you all for listening to us, our shareholders, investors and analysts, and especially, our employees that have been working very hard since the lockdown started to continue offering financial services and help our clients under this new and difficult environment. That said, this quarter, the presentation is splitted into 3 sections: the first one includes the main highlights of the quarter, followed by the results and the final section with the details on our asset quality, liquidity and solvency, where this quarter we have also included some additional information regarding the COVID. If we move now to Slide 4, you will find the regular summary. Starting with the business. Performing loans grew 1.7% in the first 3 months of the year, supported by public sector growth. In the private sector, we also saw the book growing, although at a slower pace. New loan production fell 10% compared with last year, affected by the COVID lockdown, but the trend until the lockdown started -- showed a 20% increase. Regarding customer funds the one -- on-balance sheet -- the on-balance sheet customer funds grew 0.6%, while off-balance sheet funds fell 7%. And this was mainly due to the lower valuation more than to the redemptions. If we move to results. Net interest income fell 1% quarter-on-quarter, while fees grew more than 3% in the same period. Total costs fell 1% year-on-year. Regarding impairments, we have anticipated EUR 25 million of provision related to potential asset quality deterioration from the COVID. Excluding such, provision impairments remained low, similar to previous years. And this led to a reported net income of EUR 46 million or EUR 63 million when excluded the COVID provision. On asset quality, liquidity and solvency. NPAs fell by 29% year-on-year, while coverage levels improved from 57% to 58% in that same period. Regarding liquidity, our provision remains very comfortable with the loan-to-deposit ratio at 72% and the liquidity coverage ratio at 335%. From a solvency point of view, I would highlight that our CET1 fully loaded remains among the highest of the sector after growing 10 basis points in the quarter to 14.1%. I will continue with the results in Slide 6 with the results and business section, where you can see the P&L details. NII fell 3% year-on-year and 1% quarter-on-quarter. As we will see later, the small decrease on the quarter was explained by the calendar effect. Net fees showed a positive trend, improving 10% compared with 2019 and 3% above the previous quarter. Dividends, as you can imagine, were below the ones of last year because part of our equity portfolio reflected more conservative dividend policies. Equity method was slightly above the previous quarter, although significantly higher than in the first quarter 2019 owing to the higher contribution from a specific affiliate that benefited from the disposal of some assets. Trading income was below the one of the previous quarter but 18% above last year following the realization of some gains from our debt portfolio. Other operating income and expenses was EUR 5 million, falling from EUR 16 million in 2019, owing to lower real estate results, among others. Total cost fell 1% year-on-year and a bit more than 2% quarter-on-quarter, in line with what we have guided in the past. Regarding provisions, we have anticipated EUR 25 million of provision for the COVID crisis. Excluding such provisions, our net income was flat year-on-year at EUR 63 million. However, the reported figure decreases to EUR 46 million when considering such provisions. If we move to customer funds in Slide 7. You can see that total customer funds fell 1.8% year-on-year and 1.6% quarter-on-quarter, following a 7% drop in off-balance sheet funds. Most of this drop was explained by the lower valuation of our asset under management balances, as you can see in the bottom right side of the slide. In Slide 8, we show the credit and loss -- and loans trends. Gross loans grew 1.5% in the first 3 months of 2020, with public sector growing 14%, NPLs decreasing by 1% and private sector growing slightly below 1%. On the right of the slide, you have the details on performing loans. As you can see, they grew 1.7% year-on-year and a bit more than 1% quarter-on-quarter, helped by public sector loans. On the other hand, private sector lending decreased 0.8% year-on-year, owing to the drop in mortgages. It is worth noting that in the bucket that we call consumer and others, not all the exposure are consumer loans. Out of the EUR 2.6 billion, there is EUR 1 billion of mortgages that, from an accounting point of view, we consider unsecured loans because it's a portfolio with relative higher LTVs. In this segment, we also include EUR 250 million of loans to employees and EUR 450 million of advances, being pure consumer loans only the remaining EUR 900 million. This is relevant because it explains part of our more conservative loan mix. In Slide 9, we show the regular information of the new loan production by segments, but this time, we also include details of the trends we had until the lockdown. Overall new production was growing 20% until the lockdown started but finished decreasing by 10% at the end of the quarter. While new loans to individuals fell 14%, corporate new loan production was 14% above the previous year. In Slide #10, we start the P&L review with the NII details. As you can see in the top right, the quarterly decrease was explained almost in full by the lower days of the quarter, something that was also reflected in the net interest margin performance, which grew a little bit from 100 basis points to 101 basis points. On the other hand, as you can see in the bottom of the slide, the customer spread of the front book continues to be above the back book 1 more quarter. In Slide 11, you have an update on our debt portfolio, where you can see that overall balances have grown slightly in the quarter, following a small increase in the fair value OCI portfolio, which is the one that we manage more actively. It is worth noting that during the quarter, we have also generated EUR 28 million of trading gains. As usually, just to highlight, that the big bulk of the exposure remains sovereign debt classified in amortized cost portfolio and that the yield was also very stable at 127 basis points this quarter compared with 128 basis points last quarter. If we move to Slide 12, you have the fee income trends that were very positive. Net fees grew a bit more than 10% year-on-year and 3% quarter-on-quarter, supported by a positive trend in nonbanking fees, partially explained by a small one-off. However, excluding such nonrecurrent fees, it was still a positive growing trend when compared with 2019. Now moving to costs. As you can see in Slide 13, operating expenses fell almost 2.5% in the quarter and 1% year-on-year. When we compare it with 2018, the drop is above 4%. This trend is consequence of all the measures that we have taken and announced in the past. As we have anticipated too, we have already booked the required provisions for further crystallized cost-cutting measures until 2022. In Slide 14, we show impairments trends. As we have explained, we decided to book in first quarter 2020 EUR 25 million of provisions for a potential deterioration of the asset quality as a result of the COVID crisis. Excluding such impairments, total provisions reached EUR 19 million, almost 20% below the EUR 23 million of 2019 and representing an underlying cost of risk of 13 basis points. However, this figure increased to 48 basis points when included the EUR 25 million of COVID provisions. If we move to asset quality in Slide 16. We have details on the evolution of our NPLs that continued to fall during the first quarter 2020, leaving the NPL ratio at 4.6% at the end of the quarter. It is also worth noting that as we show in the bottom, the NPL trends so far continue to be positive. Gross entries remain low and below cash recoveries, something that explains the quarterly drop despite not having portfolio disposals this quarter. So as you can see, the potential deterioration from the COVID was not reflected in the first quarter 2020 trends. In Slide 17, we have updated our credit risk exposure and NPL coverage details. Overall NPL coverage continued to grow to 56% in first quarter 2020 from 52% 1 year ago and 54% at the end of last year, a very prudent level when considering that 87% of the NPL balances are secured and 74% secured by finished buildings. It is also very important to take into account that the big bulk of our loans are mortgages. As you can see in the bottom of the slide, 71% of our total exposure have mortgage collateral and less than 20% of our total loans are corporate unsecured loans with very low sector concentration, as we will see in the next slide. In this slide, in Slide 18, we have included some additional details on our loan book that we understand that should be considered when looking at the risk profile of the bank. As you can see in the left-hand side of the slide, 62% or EUR 18 billion of our lending exposure are loans to individuals, of which the big bulk, EUR 17 billion or 95%, are mortgages. Those analysts and investors that follow us in more details know that a significant part of our loans classified in the -- in what we call consumer and others are mortgages that, owing to our prudent accounting policies, we treat them as unsecured loans. Also, if we look at the other main portfolio that include corporates, out of the EUR 7.7 billion exposure, EUR 2.4 billion are also mortgages, meaning that only EUR 5.3 billion are unsecured loans to corporates, of which we have included the breakdown in the right-hand side of the slide. In other words, only 18% of our loans are unsecured loans to corporates. And more important, there is not concentration in this exposure. As you can see in the right, the highest exposure is to agriculture with less than EUR 600 million, representing 2% of our loans. The remaining sectors have unsecured exposure below EUR 500 million and decreasing very sharply while you go down through the table, some of the specific sectors that are under focus such as the hospitality sector, where we have less than EUR 150 million of unsecured exposure, or others like oil and gas that do not appear in this table because we don't have any exposure at all. The objective of this slide is to share with you that Unicaja loan book and its risk exposure has a very low-risk profile as a consequence of years and years of a prudent and conservative credit risk approach. On top of this, we have other metrics that are better known as our relative higher NPA coverage, the highest CET1 ratio among Spanish-listed banks; one of the lowest, if it is not the lowest loan-to-deposit ratio of Europe at 72%; and probably the highest LCR at 335%. All these metrics are explained by the relative conservative and prudent management that we have been following in the past. The impact ahead from the COVID are probably difficult to assess and to quantify in details, but under our view, Unicaja is in a very good position to absorb the potential impact that is coming. In the next slide, Slide 19, we have included some information related to the COVID crisis. It is too soon to provide specific information and expected impacts. However, we believe that it is positive to give you some color regarding some of the relevant measures taken. As you all know, the different governments, supervisors and regulators, among others, have put in place several measures trying to mitigate or at least reduce the potential negative impact that the pandemic might have in the real economy. Among them, there are 2 specific measures that for the Spanish banks and their clients are very important: the moratorias for individuals and the guarantees from -- for corporates, SMEs and self-employed. In this slide, we share with you some information regarding these 2 measures. Starting with the guarantees, so-called ICO lines, we have already received requests for the first 2 available tranches from 8,000 clients, representing around EUR 600 million. This is in line with our market share for this type of loans. Regarding the public moratoria, we have received around 9,000 requests for a little bit more than EUR 500 million, of which 97% of balances are mortgages moratoria and only the remaining 3% are moratoria for consumer loans. We understand that both measures will help and will contribute to partially mitigate the potential negative impact from an asset quality point of view. In this sense, we believe that Unicaja is in a relative good position owing its financial strengths. In Slide 20, you have an update on the foreclosed assets. This type of assets were more stable this quarter, owing to the lack of portfolio disposals. However, on the right, you can see the provisions released and outflows details that continue to be positive as a result of our coverage levels. In Slide 21, you can see how overall NPAs have decreased during last years and quarters. Total gross NPAs fell 29% last year to EUR 2.5 billion. In net terms, this represents less than 1.8% of total assets with a coverage of 59%, one of the highest of the sector. Finally, I would only highlight that our Texas ratio continues to decrease quarter-after-quarter, reaching a level close to 46% in first quarter 2020. In Slide 22, we have a summary of our liquidity position of the bank that, as you can see, remain very comfortable. Our LTD ratio was 72%, and the liquidity ratios continue to be among the highest of the sector. In terms of wholesale maturities, we have some small costly maturities this year. And finally, we show in Slide 24 (sic) [ Slide 23 ] the solvency position of the bank in March. As you can see in the top left, the positive impact from retained earnings that is considering around 50% of first quarter 2020 net income and 2019 dividend enable us to compensate the negative impacts from the treasury stock, the increase in risk-weighted assets and the valuation adjustments while still generate close to 10 basis points in the quarter. The regulatory capital ratios remain well above the SREP requirements, with EUR 1.1 billion buffer of our total capital requirement. And I usually do, all these relative higher ratios are calculated in full under very conservative assumptions, as you can see in our credit risk density in the chart at the bottom left.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you, Pablo. We will now move to the -- to answer the questions that we have received. Starting -- there is one specific on Caser. What is the pending impact coming from the deal announced with Helvetia and Caser? And what is the use and the timing of the pending gains. Pablo?

[Pablo González Martín, CFO & Director General of Finance]

As we announced at the end of January, within the process of acquiring controlling interest in Caser by Helvetia, we confirmed 2 positive impacts. On one side, the deal has enabled us to update the valuation of our stake in Caser with a positive impact in our solvency that was already included this quarter. And on the other hand, we also reached an agreement with Helvetia, whereby -- and due to the change of control, we'll resign to our right to finish the distribution agreement with Caser in exchange of a EUR 47 million gross payment that will be accounted in our P&L once we receive all formal approvals. In other words, we will have a positive EUR 47 million impact in our P&L in the coming months, something that, as you can imagine, give us further flexibility and leaves us in a relative good position if further provisions are needed.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you, Pablo. Another one, also very specific on the high-yield deposits, if we can provide the exact dates of the high-yield deposits maturity in 2020 and 2021. Pablo?

[Pablo González Martín, CFO & Director General of Finance]

Sure. As you all know, we have more than EUR 1.2 billion of customer deposits at a cost of 4.3% maturing next months. At the end of next quarter in June, we have EUR 80 million maturing; in the third quarter, we will have almost EUR 0.5 billion; and in the fourth quarter, we have another EUR 250 million. And the remaining balances that are a bit more than EUR 400 million will mature in 2021. Considering current cost of deposits, these maturities will enable the bank to reduce its annual interest expenses by around 30%, or in other words, lower cost of funding represents almost 10% of 2019 net interest income, something quite positive considering current circumstances.

[Jaime Hernández Marcos, Head of Investor Relations]

We -- thank you, Pablo. We have some questions regarding the TLTRO III. What are the benefits compared with TLTRO II and the initial expected maturities?

[Pablo González Martín, CFO & Director General of Finance]

There are several benefits from the TLTRO III versus the TLTRO II, as you know. In the case of Unicaja, we can increase the funding from EUR 3.3 billion with TLTRO II to EUR 5 billion with this new TLTRO III. This larger funding amount and the better conditions of this new TLTRO will be positive for our NII in the coming quarters and will help us to offset coming headwinds from short-term and negative rates or the redemption of our TLTRO II bond portfolio, although it is too soon to be more specific, among others because we haven't taken the formal decision on the TLTRO III. However, we expect, in any case, that this will be positive for our NII.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you, Pablo. Related to this, we -- there's one question regarding our debt portfolio. What is the expected contribution from the debt portfolio going forward? Pablo?

[Pablo González Martín, CFO & Director General of Finance]

We expect the quarterly contribution of our debt portfolio to be higher than the EUR 15 million per quarter in the following quarters, in line with what we have had this quarter. There are no significant maturities over the rest of 2020, but as you all know, in 2021, we have the maturity of our TLTRO II bond portfolio that will initially imply a slight reduction in the debt portfolio contributions thereafter. Pending to have a better view on how much the TLTRO III proceeds will be required for the business, any excess of funding will probably be invested in the debt portfolio, increasing the contribution of this line in the NII and offsetting the impact of this redemption.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you, Pablo. Related to this, there is a question regarding our ALM strategy. If we're going to update the strategy regarding our debt portfolio and explain increase in -- the small increase of the balance this quarter.

[Pablo González Martín, CFO & Director General of Finance]

Okay. The increase in the bond portfolio size last quarter is related with the fair value OCI portfolio as it grew EUR 0.4 billion. And as we mentioned in previous results presentation, this portfolio is managed actively, trying to obtain capital gains due to the volatility in the fixed income markets. Regarding our ALM strategy, it remains very similar as in the past. The structural amortized cost portfolio has the role to invest the structural excess liquidity of the bank to obtain interest income. The portfolio, as you all know, is mainly invested in sovereign debt, around 90% of the portfolio, with a medium-term financial duration to hedge the interest rate risk coming from our stable customer funds from our whole banking book. This portfolio size was EUR 11.1 billion at the end of the quarter. But in amortized cost, we also have 2 additional portfolios: the SREP portfolio that holds the legacy SREP bonds and the TLTRO portfolio holding bonds with the maturity of the TLTRO II facility.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you, Pablo. Moving to P&L before we discuss NII trends. There is -- we have some questions regarding our trading income. It was strong, the trading income in the quarter. If we can provide some guidance or an update of what they can expect in the future.

[Pablo González Martín, CFO & Director General of Finance]

Yes. Well, this -- it's extremely complicated to provide guidance on next quarter's trading income. As you can imagine, it depends on market conditions. First quarter trading income will not be constant figures for the next quarters, although we might deliver additional gains in the year based on the fixed income portfolio management we've done -- we have been doing in the past that allowed the bank to crop out some capital gains when we consider.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you, Pablo. Moving to NII. If we can update our guidance for the short and the medium term.

[Pablo González Martín, CFO & Director General of Finance]

Yes. First of all, let me say that all our guidance are obviously under continuous review. Especially, it is very difficult to quantify the final impact of this pandemic in the economy at this moment. This means that all the guidance given in this call has to be considered under the current exceptional situation. We will share with you our views, but all this guidance will be under review, and probably until the second half of 2020, we won't have full visibility. That said, regarding NII, there are some positive and negatives, as always. On the negative side, new individual loan production will decrease with the lockdowns. However, this will be compensated by guarantees and ICO lines for corporates, SMEs and self-employed. Regarding moratoriums, one part of our -- regarding the moratoriums, one part of them could have a negative impact in interest income, the public moratorium. But on the other hand, moratoriums on current environment will help to reduce the speed of the amortization of the back book. On top of this, moratoriums requests, as I mentioned in the presentation, are not really significant so far. On the positive side, for NII, we have the TLTRO III, as I mentioned, which terms have been just improved. And the Euribor 12, which at the moment is higher than what we were expecting, and in our specific case, the maturity of the expenses -- [ expensive ] deposits during the coming months, as I mentioned. So net-net, it is too soon to quantify all the impacts, but it looks like we could mitigate the negative previously mentioned. So with current information, at this moment, we expect to maintain a pretty stable NII for 2020.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you, Pablo. Related to net interest income, if we can update also our views on the loan growth and the impact from ICO lines granted and the estate warranties and the moratorium requests. I think this was already answered in the presentation.

[Pablo González Martín, CFO & Director General of Finance]

Okay. As I said, it's too soon to have visibility on lending volumes. Individual loans, new production will decrease, but on the other hand, the corporate loans will grow. Final volumes will depend on how long the new production in individuals, especially in mortgages, will remain weak. We don't have much visibility, but probably one effect will compensate the other, leaving total loans pretty flattish or slightly decreasing in 2020. Regarding the ICO lines, as we showed in the presentation, we have access to around 1.5% of the balances in line with our market share in this segment. So for the first 2 tranches, we have around EUR 600 million guarantees available. And it is worth noting that self-employed and SME line has been already covered in full. In the case of the moratoria for individuals, it is too soon to quantify the potential final request from our clients because there are some lag effects, but we have seen reducing number of requests lately, and the amount at, I think, last Friday, was around EUR 500 million. And this looks like it will continue to grow, as I said, but probably at a lower pace. And with this, we will provide more details on the coming quarters when we have more visibility on how these measures will develop.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you, Pablo. Moving to fees, if we can provide more color on the trends and the guidance that we expect, please.

[Pablo González Martín, CFO & Director General of Finance]

Yes. On fee income, going forward, obviously, it will reflect the lower-than-initially-expected activity explained by the pandemic and the lockdowns that it brought. So as it was already some part reflected in the first quarter 2020 payments and collection fees, so we don't expect to maintain the first quarter 2020 fee income level because, as I said before, the reduction on the activity and the one-off of around EUR 3 million in nonbanking fees that we have included in the first quarter. So probably, it will be lower going forward, at least for this 2020, but it is also too soon to quantify in full the potential impact of COVID for 2020. In first quarter, the fees grew, as you have seen, 10%, year-on-year, which was partially supported by this one-off that I mentioned. So it is difficult to maintain such a level of growth going forward. So at this moment, it is too soon to quantify or to be more specific on the short to medium-term guidance.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you, Pablo. We have lots, plenty of questions regarding the cost of risk, impairment sensitivity to different macro scenarios, the COVID provisions, GDP sensitivity. So Pablo, you can elaborate a little bit further on what we expect.

[Pablo González Martín, CFO & Director General of Finance]

Okay. I think the first thing in this answer that I would like to remember is how conservative we have been in the past and some of today's relative strengths of the bank that we have after following a relative conservative approach in the past. As we explained in the presentation, 71% of our private sector exposure are mortgage-related. On top of the EUR 15 billion of individual mortgages, we have a significant portion of our corporate and other individual exposures that has mortgage guarantee. And in the -- as I mentioned in the presentation, our unsecured exposure by sector, it's quite well diversified. We don't have concentration. And the profile is quite prudent with very low exposure to the most affected sector like airlines, hospitality or oil and gas. Also, let me give you some color on our NPLs. Out of the EUR 1.3 billion of our existing NPLs, almost 40% or around -- or close to EUR 500 million continue to pay. And also, the NPL ratio of the production -- the new production for the last 3 years since 2017, it's around 10 to 15 basis points. So bear in mind also that 80% of the nonperforming loans balances were produced before 2010. This relative positive starting points is further reinforced with recent trends in gross NPL formation that, as you saw during the presentation, are historically low. And finally, our provision profit in the last 2 years represented 325 basis points of our performing loans. So with all this information, we are ready -- we think that we are ready to absorb a significant deterioration on asset quality However, considering the loan mix and the level of collateralization of our loan book, we expect that our cost of risk won't grow as much as the sector. It is very difficult to quantify the final cost of risk, as you can imagine. We were expecting it to be below 30 basis points until 2022. And obviously, this figure will increase, and our first and still very early numbers are between maybe 50 to up to 90 basis points in the -- for this year. And -- but we don't really know yet, but we can ensure that we are in a good position to absorb the NPL shock, if needed. It is also worth noting that we are waiting, as I mentioned when the -- with the Caser question, the approval for the Caser deal, something that will enable us to book around EUR 50 million additional gains that give us further flexibility this year, as you can imagine. So finally, bear in mind that some of the measures taken will help to mitigate the potential deterioration of asset quality, like the moratorium, the public and the private one that we are running with our customers and the government guarantees. And these ICO lines are very welcome because they reduce significantly the risk on the corporate and SME sector. Regarding the first quarter 2020, as we have explained in the presentation, we have included EUR 25 million of provision for the potential deterioration on asset quality from the COVID. We are currently expecting macroeconomic assumptions that are in line with the ones recently reported by the IMF. However, you should take into account that the situation could change and become more negative but also more positive. So we need to be flexible. So it is still too soon to quantify in details or in basis points with more narrow interval we have done. So however, as I said before, I'm sure the relative lower risk profile of Unicaja and our current relative higher solvency and coverage leave us in a very good position to absorb this COVID crisis.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you, Pablo. Moving to solvency. If we can please provide more details on the quarterly solvency and the mark-to-market impacts and if we can clarify -- we could reevaluate the stake in Caser this quarter.

[Pablo González Martín, CFO & Director General of Finance]

Yes. We have updated the valuation, as I said, when I answered the Caser. And this had a positive impact that helped us to compensate all the negative impacts from mark-to-market of our debt and equity portfolios and the negative impacts from the higher treasury stock from our formal buyback program that was stopped and also the higher risk-weighted assets of the quarter. So all this was more than offset and allows us to improve by 10 basis points our capital ratios. And also, we have retained the 2019 dividend.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you, Pablo. The next one is on the IRB models. If you can update the distribution regarding the IRB models.

[Pablo González Martín, CFO & Director General of Finance]

No significant news here. As we have confirmed in the past, we've been working internally with the internal models for some time now. However, we still haven't received the formal approval to apply them in terms of solvency. So we continue to use standard approach in full, meaning that we consider very conservative risk-weighted assets densities. So when the COVID lockdown started, we were working with the regulator in the process, as it was planned. And since the lockdown started, we have continued working with the supervisor in the process. In other words, the process hasn't been stopped owing to the COVID crisis and keep on performing as we were expecting in our calendar. However, owing to these circumstances, we prefer not to consider any potential benefit in our solvency plans.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you, Pablo. The next one is on dividend. If we can update our dividend policy, what can we expect or what can we clarify in terms of dividend, share buybacks, the accrual of dividend in 2020 and in this quarter?

[Pablo González Martín, CFO & Director General of Finance]

Okay. In the 7th of April, and following the recommendation from the ECB, we decided to remove from our AGM the proposal for the 2019 dividend. At the same time, we confirm that in October 2020, our Board of Directors will decide after updating and analyzing the situation, hopefully with more visibility, what we will do with our 2019 dividend and potential amortization of our current treasury stock. In the meantime, we have included back in our solvency the 2019 dividend. And it's also worth mentioning that we have included in the first quarter of 2020 solvency around 50% of the quarterly net income.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you, Pablo. A couple of more questions, more general. The first one is regarding a potential update on our targets, the targets of the business plan that we announced in the previous quarter.

[Pablo González Martín, CFO & Director General of Finance]

I think it's still very soon to update or change our targets. The situation has changed significantly in the last couple of months, and we still don't have full visibility to assess and quantify in details the final implications of this pandemic. So as our Chairman said in our AGM held last week, we will update our views and our targets once we have more visibility. We haven't decided yet when we will update the targets, however, we will keep you informed and we will provide an update whenever it's possible and it is decided.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you, Pablo. One last one. It's also a general one. If we can summarize the different measures that we have taken since the lockdown has started.

[Pablo González Martín, CFO & Director General of Finance]

Yes. Sure. The bank has taken several measures during the last couple of months. Most of our employees, those that owing to their work can do it are working from home. Out of all employees in central services, only 7% are working at the office and the remaining 93% are working from home. We are opening a significant part of our branches, although we have closed some of them, for example, in those towns where we have more than 2 branches. And we have activated contingency plans with several tax and specific committees following and monitoring very closely the situation. We have taken safety measures for employees and customers and some commercial specific offers on top of the public ones to help our customers in these difficult times. On top of the moratoria and ICO lines, we have implemented measures like advances of pensions and salaries that we understand that were needed. All these measures have been taken to support our employees, our clients and the economy in general. And for -- the last thing I am going to say, I would like to thank you, to thank our employees, especially those at the branch level, for the great job that they're doing because, as you can imagine, this time, the banks are part of the solution, and we are all working very hard to deliver and make sure that our clients has the right support and help from our side. As recent GDP data show, the economic impact will be high. The good news is that Unicaja Bank is in a very good position to continue supporting its customer base with one of the highest solvency ratios, coverage levels and excess liquidity, something that leave us in a good position to collaborate and help to change the trend, to reach the expected recovery as soon as possible.

[Jaime Hernández Marcos, Head of Investor Relations]

Thank you very much, Pablo. Before we finish, let me do a quick comment. As you can imagine, this quarter, we won't be traveling and we won't be able to meet in person with many of you. However, we are attending some virtual conferences and organizing several conference calls directly and through different analysts. Let me remind you that we are open to organize as many additional conference calls as requested and needed. So if you are interested in organizing or participating in one of these conference calls, please feel free to send us an e-mail to Maria, to me or directly to the IR inbox, that is [e-mail], or ask your research analysts to organize -- to help to organize it for us. We will be delighted in attending as many requests as we receive, for sure. In the meantime, please keep safe. We will now finish the webcast. Do not hesitate to contact the IR team for further details. Thank you very much.

[Pablo González Martín, CFO & Director General of Finance]

Thank you very much. Keep safe.

[Jaime Hernández Marcos, Head of Investor Relations]

Bye.