Portuguese postal operator CTT has launched its new bank in its latest diversification move after unveiling good profits for 2015 driven by mail and financial services but with disappointing parcel results.
Banco CTT officially opened its doors to the public on Friday (March 18) with 52 branches operating out of post offices across the country along with a smartphone app.
“We want to expand our (existing) financial services with a bank. It’s a no-frills service, something that will attract a large part of the population which is used to going to post offices,” CEO Francisco de Lacerda told last week’s European Post & Parcel Services conference in Lisbon. “We believe we will gain a large part of the market,” he added confidently.
Banco CTT, aiming to cash in on the postal company’s public trust, offers basic financial services such as individual accounts, online bank transfers, a debit card and, from later this year, loans.
Earlier last week, CTT released its results for 2015, showing good underlying profits growth. Revenues were up 1.3% to €727 million while underlying operating profits improved by 7.4% to nearly 120 million. Net profits increased by 12.5% to €81.6 million.
The dominant mail business increased revenues by 1.5% to nearly €555 million as a 3% volume decline was more than offset by an average price increase of 4.1%. Its underlying EBITDA improved by 12% to nearly €103 million.
Financial services showed a 1.9% underlying revenue rise to €75 million while underlying profits were 12% higher at nearly €42 million, representing a very high margin of well over 50%.
In contrast, the small parcels unit increased revenues by 1.7% to €131 million and volumes were 3.2% higher, but this was behind a targeted double-digit increase. The unit’s low profits dropped by a third to just €4 million. Revenues in Portugal were up by 3% to €80 million on a 4.8% volume increase, driven by e-commerce growth.
But Spanish subsidiary Tourline Express saw a 1.2% revenue fall to €49.5 million despite a 2.3% rise in volumes. Describing the Spanish firm, which is undergoing a restructuring, as “a small operation”, Lacerda commented: “We’re doing our best to make it function.”
Speaking after publication of the results, Lacerda told the conference that the company’s strategy remains to leverage its assets, particularly the final-mile delivery and the post office networks. “We want to offer more services and increase revenues on a similar cost basis,” he explained. For example, 70% of CTT’s parcels are delivered by the mailmen, he noted.
Lacerda highlighted the potential for e-commerce growth in Portugal and Spain, where internet penetration remains relatively low. “We plan more products for e-retailers and more options for consumers,” he said.
