Contas Anuais

CaixaBank, S.A. 2023

Contas anuais e relatório de gestão que o Conselho de Administração, na sua reunião de 15 de fevereiro de 2024,

decidiu apresentar à Assembleia Geral de Acionistas.

Tradução das contas anuais emitidas originalmente em espanhol. Em caso de discrepância, prevalece a versão em espanhol.

This version of our report is a free translation of the original, which was prepared in Spanish. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

Independent auditor's report on the annual accounts

To the shareholders of CaixaBank, S.A.

Report on the annual accounts

Opinion

We have audited the annual accounts of CaixaBank, S.A. (the Company), which comprise the balance sheet as at 31 December 2023, and the income statement, total statement of changes in equity, cash flow statement and related notes for the year then ended.

In our opinion, the accompanying annual accounts present fairly, in all material respects, the equity and financial position of the Company as at 31 December 2023, as well as its financial performance and cash flows for the year then ended, in accordance with the applicable financial reporting framework (as identified in note 1 of the notes to the annual accounts), and in particular, with the accounting principles and criteria included therein.

Basis for opinion

We conducted our audit in accordance with legislation governing the audit practice in Spain. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the annual accounts section of our report.

We are independent of the Company in accordance with the ethical requirements, including those relating to independence, that are relevant to our audit of the annual accounts in Spain, in accordance with legislation governing the audit practice. In this regard, we have not rendered services other than those relating to the audit of the accounts, and situations or circumstances have not arisen that, in accordance with the provisions of the aforementioned legislation, have affected our necessary independence such that it has been compromised.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts of the current period. These matters were addressed in the context of our audit of the annual accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

PricewaterhouseCoopers Auditores, S.L., Pº de la Alameda, 35 Bis, 46023 Valencia, España

Tel.: +34 963 036 900 / +34 902 021 111, Fax: +34 963 036 901, www.pwc.es

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R. M. Madrid, Hoja M-63.988, folio 75, tomo 9.267, libro 8.054, sección 3ª Inscrita en el R.O.A.C. con el número S0242 - NIF: B-79031290

CaixaBank, S.A.

Key audit matters

How our audit addressed the key audit matters

Estimating impairment due to credit risk on

"Financial assets at amortised cost - Customer

loans and advances" - and "Foreclosed property

assets"

Estimating impairment due to credit risk on "Customer loans and advances" and "foreclosed property assets" is based on internal expected loss calculation models which entail significant complexity. This estimate is one of the most significant and complex in preparing the accompanying consolidated financial statements and requires significant management judgement and so has been considered a key audit matter.

Management's main judgements and assumptions concern the following:

  • The criteria for identifying and staging impaired assets or assets with a significant increase in risk.
  • Construction of the parameters for the internal probability of default (PD) models and loss given default (LGD) models.
  • The use of assumptions with a significant effect on the established credit risk provisions, such as the macroeconomic scenarios considered, along with the probability of occurrence, specifically, the adjustment to the internal provision models related to risk affecting "Financial assets at amortised cost - Customer loans and advances" (Post Model
    Adjustments - PMA).
  • The main assumptions employed in determining the expected loss and the recoverable value in the risks assessed on an individual basis.

We gained, with the collaboration of our internal credit risk experts, an understanding of management's process for estimating impairment of financial assets at amortised cost - "Customer loans and advances"- with respect to both provisions estimated collectively and provisions estimated individually.

With respect to the internal control system, we gained an understanding of the process for estimating impairment due to credit risk and performed tests on the appropriateness of controls in the different process phases and paid special attention to the determination and approval, considering the defined governance internal process, of the adjustments to the models (PMA) in order to adapt them with updated hypothesis not yet considered by the models.

The regular evaluation of credit risk monitoring alerts was also analysed, as well as the effective completion of the regular review of borrower files in order to monitor their classification and where warranted, recognise impairment.

In addition, we carried out the following tests of details:

  • Analysing the methodology and verifying the main internal models concerning: i) calculation and segmentation methods; ii) criteria for staging loans and discounts ; iii) methodology for estimating expected loss parameters (probability of default and realisable value of guarantees); iv) data used and main estimates employed, particularly, those relating to macroeconomic scenarios and their assumptions; and v) internal model recalibration and backtesting.

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Key audit matters

  • The realisable value of the real property guarantees associated with "Financial assets at amortised cost - Customer loans and advances" granted based on the value provided by different valuation companies or through the use of statistical methodologies in cases of reduced exposure and risk.

Estimating impairment of "Foreclosed property assets" and which through dation in payment, purchase or the courts are adjudicated to the Entity is also based on internal calculation models and following the same criteria as those used for mortgage guarantees associated with lending transactions.

See Notes 2, 3.4.1, 13, 18, 19, 38.2 and 38.3 to the accompanying financial statements concerning credit risk and foreclosed property assets and Notes 34 and 37 to the accompanying financial statements concerning the profit or loss generated during the year.

CaixaBank, S.A.

How our audit addressed the key audit matters

  • Analysing the functioning of the "calculation engine" for the internal provision estimation models, re-performing the calculation of the estimates of impairment due to credit risk for certain loan portfolios and verifying the results with those obtained by the Entity management. Additionally, we verified the reasonableness of the hypothesis applied and the calculations performed when estimating the internal post model adjustments (PMA).
  • Verifying the appropriate functioning of the
    "calculation engine" of internal models for estimating impairment of foreclosed property assets, re-performing the calculation of those provisions and verifying results with those obtained by Entity management.
  • Obtaining a sample of individual case files in order to assess their appropriate classification, the application of the loss estimation methodology and the recognition, if appropriate, of the relevant impairment.
  • Analysing the methodology used to estimate costs to sell, sales periods and reductions in the guarantee value, in order to estimate impairment of foreclosed property assets.
  • Verifying a sample of valuations in order to assess whether they conform to prevailing legislation, their reasonableness and the degree to which they are up to date.

As a result of our tests, no differences were identified, in excess of a reasonable range, in the amounts recognised in the accompanying financial statements.

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Key audit matters

Recoverability of deferred tax assets

The evaluation of the capacity to recover deferred tax assets is a complex exercise which requires a significant level of judgement and estimation and we therefore consider such estimation performed by Entity management a key audit matter.

Entity policy is to recognise DTAs, other than those qualifying for monetization, only when the Entity considers it probable that sufficient tax gains will be obtained in the future to enable their recovery.

During this process, there are specific and complex considerations that management takes into account with respect to the tax consolidated group, in order to assess both the recognition and subsequent capacity to recover the deferred tax assets recognised, based on the Group's financial projections and business plans, and supported by defined assumptions which are projected over a timeline and considering tax legislation in effect at each point in time.

Additionally, Entity management submits the deferred tax asset recoverability model to review by an independent tax expert, as well as regular back testing to assess predictability.

See Notes 2 and 23 to the accompanying financial statements.

CaixaBank, S.A.

How our audit addressed the key audit matters

With the collaboration of our tax experts, we obtained an understanding of the estimation process performed by management and the controls designed and implemented in preparing the Entity's financial projections to estimate the recoverability of the deferred tax assets and the calculation of deductible temporary differences in accordance with applicable tax and accounting regulations.

With regard to the control environment, the reports that the second line of defense prepares every six months have been verified and it has been verified that the hypotheses considered are consistent with those considered by the auditor.

Additionally, we carried out the following tests of details:

  • Evaluation of the accounting results taken into account in the financial projections and the reasonableness and accuracy of the calculations performed.
  • Analysis of the economic and financial assumptions assumed in the calculation of temporary differences, in order to assess whether they are complete, appropriate and usable by the established deadlines.
  • Analysis of the reasonableness of the amounts of deferred tax assets considered monetizable.

As a result of our tests, no differences were identified, in excess of a reasonable range, in the amounts recognised in the accompanying financial statements.

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Key audit matters

Risks associated with information technologies

The operation and continuity of the Entity's business, due to its nature, and particularly, the process for preparing financial and accounting information, rely heavily on the information systems that make up its technological structure and ensure the correct processing of information. Therefore it is a key audit matter.

Besides, as systems become increasingly complex, the risks associated with information technologies, the organisation and therefore the information processed increase. The effectiveness of the general framework of internal control of information systems is a basic aspect supporting the Entity's operation, as well as the accounting and closing process.

CaixaBank, S.A.

How our audit addressed the key audit matters

With the collaboration of our information systems specialists, our work consisted of assessing and verifying the control environment connected with the information systems that support the Entity's operation and particularly, the accounting closing process.

Within this context, procedures have been carried out on internal control along with substantive tests in order to assess aspects such as:

  1. the organisation and governance of the information systems area,
  2. software change, development and maintenance management,
  3. access control and physical and logical security of the software, operating systems and databases that underpin the Entity's relevant financial information.

Specifically, with respect to the accounting and closing process, we performed the following additional procedures:

  • Understanding and analysing the process of generating accounting entries and financial information.
  • Extracting, verifying the completeness and filtering entries included in the accounting records, as well as analysing the reasonableness of certain entries.

The results of the above procedures did not bring to light any relevant observation with respect to this matter.

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CaixaBank, S.A.

Other information: Management report

Other information comprises only the management report for the 2023 financial year, the formulation of which is the responsibility of the Company's directors and does not form an integral part of the annual accounts.

Our audit opinion on the annual accounts does not cover the management report. Our responsibility regarding the management report, in accordance with legislation governing the audit practice, is to:

  1. Verify only that the statement of non-financial information, certain information included in the Annual Corporate Governance Report and the Annual Report on Directors' Remuneration, as referred to in the Auditing Act, have been provided in the manner required by applicable legislation and, if not, we are obliged to disclose that fact.
  2. Evaluate and report on the consistency between the rest of the information included in the management report and the annual accounts as a result of our knowledge of the Company obtained during the audit of the aforementioned financial statements, as well as to evaluate and report on whether the content and presentation of this part of the management report is in accordance with applicable regulations. If, based on the work we have performed, we conclude that material misstatements exist, we are required to report that fact.

On the basis of the work performed, as described above, we have verified that the information mentioned in section a) above has been provided in the manner required by applicable legislation and that the rest of the information contained in the management report is consistent with that contained in the annual accounts for the 2023 financial year, and its content and presentation are in accordance with applicable regulations.

Responsibility of the directors and the Audit and Control Committee for the annual accounts

The directors are responsible for the preparation of the accompanying annual accounts, such that they fairly present the equity, financial position and financial performance of the Company, in accordance with the financial reporting framework applicable to the entity in Spain, and for such internal control as the aforementioned directors determine is necessary to enable the preparation of annual accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

The Audit and Control Committee is responsible for overseeing the process of preparation and presentation of the annual accounts.

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CaixaBank, S.A.

Auditor's responsibilities for the audit of the annual accounts

Our objectives are to obtain reasonable assurance about whether the annual accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with legislation governing the audit practice in Spain will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts.

As part of an audit in accordance with legislation governing the audit practice in Spain, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

  • Identify and assess the risks of material misstatement of the annual accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
  • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.
  • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
  • Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the annual accounts or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
  • Evaluate the overall presentation, structure and content of the annual accounts, including the disclosures, and whether the annual accounts represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the entity's Audit and Control Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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CaixaBank, S.A.

We also provide the entity's Audit and Control Committee with a statement that we have complied with relevant ethical requirements, including those relating to independence, and we communicate with the aforementioned those matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the entity's Audit and Control Committee, we determine those matters that were of most significance in the audit of the annual accounts of the current period and are therefore the key audit matters.

We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter.

Report on other legal and regulatory requirements

European single electronic format

We have examined the digital file of the European single electronic format (ESEF) of CaixaBank, S.A. for the 2023 financial year that comprises an XHTML file of the annual accounts for the financial year, which will form part of the annual financial report.

The directors of CaixaBank, S.A. are responsible for presenting the annual financial report for 2023 financial year in accordance with the formatting requirements established in the Delegated Regulation (EU) 2019/815 of 17 December 2018 of the European Commission (hereinafter the ESEF Regulation).

Our responsibility is to examine the digital file prepared by the Company's directors, in accordance with legislation governing the audit practice in Spain. This legislation requires that we plan and execute our audit procedures in order to verify whether the content of the annual accounts included in the aforementioned file completely agrees with that of the annual accounts that we have audited, and whether the format of these accounts has been effected, in all material respects, in accordance with the requirements established in the ESEF Regulation.

In our opinion, the digital file examined completely agrees with the audited annual accounts, and these are presented, in all material respects, in accordance with the requirements established in the ESEF Regulation.

Report to the Audit and Control Committee

The opinion expressed in this report is consistent with the content of our additional report to the Audit and Control Committee of the Company dated 14 February 2024.

Appointment period

The General Ordinary Shareholders' Meeting held on 8 April 2022 appointed us as auditors for a period of one year, for the year ended 31 December 2023.

Previously, we were appointed by resolution of the General Ordinary Shareholders' Meeting for a period of three years and we have audited the accounts continuously since the year ended 31 December 2018.

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CaixaBank, S.A.

Additionally, the General Ordinary Shareholders' Meeting held on 31 March 2023 appointed PricewaterhouseCoopers Auditores, S.L. as auditors of the Company for a period of one year, for the year ended December 31, 2024.

Services provided

Services provided to the audited entity for services other than the audit of the accounts are disclosed in note 33 to the annual accounts.

In relation to the services provided to the subsidiary companies of the Company for services other than the audit of the accounts, refer to the audit report dated 16 February 2024 on the consolidated annual accounts of CaixaBank, S.A. and its subsidiary companies, where these subsidiary companies have been consolidated.

PricewaterhouseCoopers Auditores, S.L. (S0242)

PRICEWATERHOUSECOOPERS AUDITORES, S.L.

Original in Spanish signed by

Raúl Ara Navarro (20210)

16 February 2024

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CaixaBank SA published this content on 03 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 April 2024 13:43:06 UTC.