In the future financial institutions will have to be civic...if they are to survive

1. In the future, financial institutions will
have to be civic... if they are to survive
CAN ANNUAL REPORT 2008

2. In the future,
financial
institutions
will have to be
civic... if they
are to survive.
The 2008 Caja Navarra
Annual Report, with individual
and consolidated data,
is available at www.can.es.

3. [MS]
We are living in times of great uncertainty. We might say that 2008 was the year of
change; the financial sector is never going to be the same again. At CAN, in this key year,
we have attained a historic record by topping the 200-million euro mark in net profit. This
has allowed us to make voluntary provisions totaling 40 million euros for an increasingly
uncertain future. Ahead of us lie two years (2009 and 2010) when the entire financial
Miguel Sanz Sesma
system is going to be affected by never-before experienced restrictions. The impact of
PRESIDENT OF CAJA NAVARRA
delinquency and dropping margins is going to put the balances of all banking institutions
to the test and only those which have done their homework properly and have something
different to offer people will survive. At CAN, we are confident that we have them covered.
We have a healthy and well-structured balance. We are closing the year with one of the
lowest delinquency rates in the sector (1.93%). The percentage of credit granted to real
estate promoters is remarkably low (only 13% of the assets) so we have strong and
diversified assets. Additionally, we closed the year with a core capital of 8.15%, highly-
ranked among the top savings banks; and 116% coverage ratio, also one of the most
outstanding in the sector.
… We also have a unique business model, Civic Banking, which makes us even more
competitive within the current framework.
We are experiencing times of economic uncertainty in general, and uncertainty in the
financial sector in particular. However, one thing is clear, companies entering periods of
economic crisis which hold advantages over their competitors come out stronger. This is
our case.
[4] [5]

4. [EG]
In the future, financial institutions will have to be civic... if they are to survive. For this
reason, at Caja Navarra we are one step ahead and we are changing things. We blazed our
own trail: transparency and participation. Unlike at other banks, our customers know how
much we earn with their money and can decide which projects to support with 30 out of every
100 euros from this profit. Do you know of any other bank that does the same?
Enrique Goñi
Beltrán de Garizurieta At Caja Navarra we are Civic Banking pioneers and we continue to innovate today because
MANAGING DIRECTOR OF CAJA NAVARRA
our customers can also choose to whom they lend their savings. A bank for people and by
people as well as a bank for customers and by customers. This way, we are creating great
affinity networks: groups of customers with similar concerns who help each other, work
together, do business and build the community in which they live. More than a million people
form these networks today and extend their power for transformation through over 3,500
socially-good causes.
CAN is growing within its community. In Civic Banking everyone provides and everyone wins,
and that is why it works. This business model attains economic and social results, which
is what drives us. We continue to move forward and, as in the land of the Red Queen, in
“Alice Through the Looking Glass” by Lewis Carroll, we must run faster than we are able
because the market moves with us. Society no longer wants outdated economic models. We
have learnt that, all of a sudden, we can no longer just look to shareholders. From now on,
companies will look after the profits generated by all of the role players with whom they deal,
because this is the only way of guaranteeing their sustainability. All the progress we make on
this path gives us an advantage over our competitors.
We have demonstrated that Civic Banking is sustainable and profitable. Now we want to get
out there and ‘pollinate’ the world with our way of understanding financial relations. The U.S.
market will be our next stop.
[6] [7]

5. 01. What is [P. 12]
Civic Banking?
02. Sustainable [ ] P. 30
value is a
shared value.
[a business model
which works]
03. In 2009, [ ]
P. 46
we are growing.
[we are pollinating]

6. 01.What
is Civic
Banking?
[10] [11]

7. 01. What is Civic Banking?
A transparent
and participative
bank.
Only CAN tells
its customers
how much it
earns with them
[transparency]...
[12] [13]

8. 01. What is Civic Banking?
... and they decide
which good causes
will receive 30 out
of every 100 euros
of this profit
[participation].
[14] [15]

9. 01. What is Civic Banking?
It is transparent
because...
> We tell customers
how much we earn
with them and they
know how much goes
to the good causes they
choose [civic account].
> Month by month
at www.can.es.
> At the end of the year,
in a letter.
[16] [17]

10. 01. What is Civic Banking?
It is transparent
because...
> Customers know how
much goes into their
civic account from each
product they bought
[civic seal].
> This way, they can
allocate their yearly
donation, as they wish,
to the good causes of
their choice.
[18] [19]

11. 01. What is Civic Banking?
It is transparent
because...
> Social organizations
explain to customers
what they have done
with their money
[accountability].
> CAN informs them
about the loans that
have been granted using
their savings [financial
traceability].
[20] [21]

12. 01. What is Civic Banking?
It is participative > And they work with
because... them as volunteers
> Social organizations [VolCan].
present projects.
> Customers choose which
projects to support with
their profits [‘You Choose,
You Decide’].
> They get to know the
organizations they support
[Meeting Points].
[22] [23]

13. 01. What is Civic Banking?
It is participative
because...
> Non-customers
can join Civic Banking
without necessarily buying
financial products
[Civic Sampling].
> And come to the
Cancha branch offices
with customers, to get
information, learn, do
business, enjoy themselves
[24]
and share interests. [25]

14. 01. What is Civic Banking?
It is participative
because...
> Customers create
the products and
services they want
[Viálogos].
> And their
assessments
determine 30%
of CAN managers’
bonuses [Ideals
survey].
[26] [27]

15. 02.
Sustainable
value is
a shared
value.
[a business
model which works]
[28] [29]

16. 02. A business model which works. [3] CAN
acts as a catalyst
We are creating a framework for common
of relations: the Civic Banking interests. Civic
Banking community
community. We share interests with comes together at
customers and social organizations. the Meeting Points
We generate value for everyone and we and the Cancha
branch offices.
develop sustainable business.
.
Three visions: customers, social
organizations and CAN. [2] Social
organizations. [1] Customers.
In the Civic Banking More than 650,000
community, social customers know
organizations how much CAN
proactively seek earns from them,
financing for their and decide
projects. where to send
45 million euros
for charitable
organizations and
This model projects.
multiplies and
expands.
[30] [31]

17. 02. A business model which works. Three visions...
[1] Customers.
CAN
> They know how much CAN earns from
them and they choose the social project
which is to receive 30% of this profit
[590,000 customers made this choice
in 2008].
> With their choice they can help both
local people or interests and distant,
global causes.
Social > They choose their level of
organizations
commitment by becoming a volunteer
[1] Customers.
in the social organization of their
More than 650,000 choice [10,000 volunteers actively
customers know how participated in good causes in 2008].
much CAN earns with
them, and decide where > At the Cancha branch offices,
to send 45 million you can meet people with the same
euros for charitable
organizations and concerns [98,830 people attended
projects. activities organized at the offices].
[32] [33]

18. 02. A business model which works. Three visions...
CAN
[2] Social Organizations
> Seek financing in the Civic Banking
community by presenting their projects
[3,750 projects in 2008].
> Encourage customers to choose
their project.
[2] Social > Get people they know to go to CAN.
organizations. If they become customers, they can
In the Civic
Banking Customers support their social cause economically
community, social [20,000 customers came to CAN
organizations
proactively seek through their social organization].
financing for their > Use the Cancha branch offices as
projects.
their own space for their association
and meet with the customers who
support them to explain their project
[500 accountability reports in 2008].
[34] [35]

19. 02. A business model which works. Three visions...
[3] CAN
acts as a catalyst
for common [3] Here at CAN,
interests.
Civic Banking
community comes
we promote it.
together at the > We provide social organizations
Meeting Points
and the Cancha with the tools to seek financing
branch offices. among people.
> We put citizens and social
Social
organizations in contact [in
organizations 2008, we organized nine Meeting
Points, attended by 26,000
Customers people].
> We can even go where there
are no Cancha branch offices
[remote Civic Banking].
...and we all grow together.
[36] [37]

20. 02. A business model which works. Core Capital: 8.15%, among
the top 10 Spanish savings banks.
The 2008 ratios Delinquency: 1.93% [3.65% in the sector].
confirm we are Coverage: 116%, one of the top 5
[without general provisions].
doing well. We put Retail coverage on growth: 86%.
Balance sheet stability: 70% of credit
good economic investment with retail resources.
and social results ROE-ROA: the fifth-ranking savings bank.
Recurring profit: +9.17%.
together, and the [without voluntary provisions, +14.4%].
Credit investment: +9% [credits
numbers add up. totaling 3,300,000,000 euros].
Client deposits: +18%.
Rating: A.
[38] [39]

21. 02. A business model which works.
Consolidated income
statement 2008 2007 AMOUNT
VARIATION
%
Interest margin 231,675 207,136 24,539 11.85
Recurring gross margin 473,391 426,090 47,301 11.10
Operating costs 254,665 225,737 28,928 12.81
Recurring operating margin
Endowments and provisions
218,726
134,716
200,353
65,462
18,373 9.17
69,254 105.79 * }
Other results 77,935 47,362 30,573 64.55
Results before tax 161,945 182,253 -20,308 -11.14
Results after tax 161,474 175,610 -14,136 -8.05
Result attributed to the group 160,260 175,037 -14,777 -8.44
* Endowments: Voluntary provisions of the recurrent operating margin
+ other substandard voluntary provisions
[40] [41]

22. 02. A business model which works.
And the market
recognizes it...
Forética 2008: Best Spanish CSR
solutions in innovation [traceability]
and communication and reporting
[CSR reports for SMEs].
Fundación Empresa y Sociedad:
2008 Empresa y Sociedad Award.
Esade: Best Brand Repositioning
Award.
Spanish Institute of Chartered
Accountants (ICJCE): Best
Sustainability Report [April 2008].
Merco Marcas: Best Corporate
Reputation Financial Brand in
Spain 2008.
I’M AN SME AND I HAVE A CSR REPORT THANKS TO CAN
[42] [43]

23. 03.In 2009,
we are
growing.
[wearepollinating]
> While the financial sector is thinking things
over, at CAN, we are looking after
our customers.
> While the financial sector is looking for
solutions, at CAN, we are continuing
to work on our model in greater depth.
> Cancha branch offices have become
district civic centers.
> We can take Civic Banking everywhere.
[44] [45]

24. 03. In 2009, we are growing. While the financial
sector is thinking things over, at CAN, we are looking
after our customers.
We are giving out credits
and we are telling you about it.
Every month, we publish a list of
credits and loans which
we have given out to our
customers [visit www.can.es to
view this list].
We are keeping the flow of money
running: +9% [3,300,000,000
euros in loans in 2008] +18.6%
in the business sector.
In 2009, our aim is
to grow by 6%.
EMPRESA: COMPANY / PARTICULAR: PRIVATE CUSTOMER
[46] [47]

25. 03. In 2009, we are growing. While the financial
sector is thinking things over, at CAN, we are looking
after our customers.
We are creating a
line of basic needs.
A line to channel charity
projects which alleviate
needy situations caused
by the economic
downturn: for instance,
soup kitchens, school
materials and activities,
transportation and
domestic assistance
programs.
[48] [49]

26. 03. In 2009, we are growing. While the financial
sector is thinking things over, at CAN, we are looking
after our customers.
YOUR YOU We connect customers
CO-WORKER who want to help, with others
who need it.
We put people who want a
loan in contact with people
who can finance them.
People in need of a loan
can post their request at
www.can.es.
Anyone who wants to finance
them can link their deposits
to their loan.
[50] [51]

27. 03. In 2009, we are growing. While the financial sector is
looking for solutions, at CAN, we continue to work
on our model in greater depth.
Our growth is based on
social affinity networks.
In 2009, 25% of new
customers will come this
way by working with social
organizations.
We align the goals of these
organizations with our own.
They proactively encourage
their associates to support
their projects.
[52] [53]

28. 03. In 2009, we are growing. While the financial sector is
looking for solutions, at CAN, we continue to work
on our model in greater depth.
We are looking for people to
participate in Civic Banking.
Civic Sampling has become
a good way for people
who are not customers to
experience how Civic Banking
works and become part of
it by using 10 euro cards to
make a donation to a social
project [in 2008, we provided
28,000 cards and,
in 2009, this
figure will rise to
100,000].
[54] [55]

29. 03. In 2009, we are growing. While the financial sector is
looking for solutions, at CAN, we continue to work
on our model in greater depth.
We turn SMEs’ financial
costs into an asset with
social value.
In 2008, we produced
136,000 reports for 2,500
client companies, based on
their choices.
In 2009, we are going one
step further. We are signing
an agreement with Spain’s
Official Credit Institute
(OCI) to publish the CSR
Reports for 1,500 non-
customer SMEs.
[56] [57]

30. 03. In 2009, we are growing. Cancha branch offices
have become district civic centres.
Cancha branch offices
are becoming an engine
for driving social and
financial relations.
Cancha branch offices
are not traditional
offices. They are free
and transparent spaces
which are waiting to be
occupied.
[58] [59]

31. 03. In 2009, we are growing. Cancha branch offices
have become district civic centres.
At the Cancha branch offices,
anything is possible:
for instance, a Mario Kart
competition, trips with the
Minube travel website, classes
of English as a Foreign
Language, magic acts,
Bollywood dancing classes,
txalaparta musical instrument
classes, self-defense classes or
laughter therapy.
In 2008, we organized
2,640 activities which were
attended by 98,830
people.
[60] [61]

32. 03. In 2009, we are growing. Cancha branch offices
have become district civic centres.
We also inform customers
about and train them in
financial principles.
Cancha branch offices
become classrooms
where we talk about
the downturn and its
consequences, in clear
language which everyone
can understand.
[62] [63]

33. 03. In 2009, we are growing. We are taking
Civic Banking everywhere.
We are moving to the Net.
> The new CAN website
-www.can.es-, based on an
ambitious multimedia project,
will become the new stage to
demonstrate the vitality of Civic
Banking.
> With the largest online
community of projects and
social organizations and new
bank 2.0 developments, CAN
is a pioneer in the new way of
making the power of social
networks available for society.
[64] [65]

34. 03. In 2009, we are growing. We are taking
Civic Banking everywhere.
Civic Banking is going
out into the world.
We have tried it out at
home, we have grown and
now we want to ‘pollinate’
the world.
Target: The United States
of America, the most
advanced financial system
in the world, under review
after the downturn, and
with an enormous tradition
of social mobilization.
[66] [67]

35. 03. In 2009, we are growing. We are taking
Civic Banking everywhere.
We have taken our first steps
in the U.S. market.
Alliances with non-profit
organizations to present
projects to the ‘You Choose,
You Decide’ initiative.
Civic Banking has been
studied at prestigious
universities: Georgetown,
New York University, Harvard,
Wharton, George Washington,
Columbia and George Mason.
[68] [69]

36. 03. In 2009, we are growing. We are taking
Civic Banking everywhere.
Conciban was set up as the
Civic Banking consultancy
office, which transfers its
differentiating features
to the U.S. market:
transparency and
participation.
Yes, we CAN!
[70] [71]

37. The time has
come to change
the rules.
People demand
transparency,
participation and
responsibility.
For this reason, from
now on, financial
institutions will have
to be civic, if they
[72]
are to survive. [73]

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