Bankinter closed the first quarter of the year with a profit of $178.7 million (€148.3 million), 13.8% more than in the same period of 2020. The group thus surpasses the results prior to the health crisis, when it earned $175 million (€145 million) in the first quarter of 2019. The bank, moreover, beats with these earnings the market consensus forecast, which estimated a net result for the entity of between $108.5 million and $132.6 million (€90 and €110 million).
Regarding Línea Directa, which will go public next April 29th, and therefore this is the last quarter in which the bank will give results of the insurer within its balance sheet, the company earned $47 million (€39 million), compared to the $35 million (€29 million) it earned in the same period of the previous year and the $32.2 million (€26.7 million) it earned in 2019, a pre-crisis year.
The bank’s CFO, Jacobo Díaz, who led the press conference to present the results in the absence of the CEO, María Dolores Dancausa, affected by coronavirus, stressed that the entity has not made any more extraordinary provisions in the first quarter of the year to face the future risks of the pandemic. The bank already provisioned a total of 242 million in 2020. “There is no reason to provision for extraordinary risk because the macroeconomic scenarios reflect improvements for 2021, 2022, and 2023,” Diaz explained.
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Bankinter will recover the dividend of 50% of the profit “as soon as possible”
The financial group grew in all its revenue lines. Net interest income rose by 1.3%, despite low interest rates, to $375.8 million (€311.8 million). In addition, fee and commission income rose by a significant 5.6% to almost $157 million (€130 million). Gross income was up 6.6% to $560.5 million (€465 million), thanks to other income of $28 million (€23.3 million).
Operating costs also rose, in this case by 6.8% to $243.5 million (€202 million). However, the group expects costs to begin to be contained in the short term. Despite the staff cuts implemented by most of the entities, the CFO assured that they will not make any adjustments and guaranteed the stability of the workforce.
On the balance sheet, the group’s total assets exceeded $120.5 billion (€100 billion) for the first time, reaching $121.5 billion (€100.8 billion), 16.4% more than in the first quarter of 2020.
Reduction in non-performing loans
In terms of the main ratios, return on equity (ROE) increased to 11.3%, compared to 10.2% in the first quarter of 2020 and 7% at the end of 2020, which was weighed down by the impact of extraordinary provisions. The bank reflects provisions of $123.4 million (€102.4 million) in this first quarter, 4.6% lower than a year earlier.
Solvency also improved significantly, with the CET1 fully loaded capital ratio at 12.3%, compared to 11.5% a year ago. The bank has continued to reduce the NPL ratio, this time by 21 basis points to 2.37%, with coverage also improving to 62%.
In the banking business, lending grew by 5.9% to $74.8 billion (€64.6 billion) . The group highlights the good performance of mortgage activity in the first quarter of the year, with a new production of $1.12 billion (€932 million), 44% more than in the first quarter of 2020, and almost 50% more than in the first three months of 2019. “It denotes in the case of Bankinter an absolutely recovered market,” the bank stressed. Some 77% of that new mortgage production has already been at a fixed rate.
In contrast, the consumer credit business remains more contracted by the current economic crisis, which has knocked down consumer demand as families are wary of what may come and restrictions on mobility. The group’s business, which includes Spain, Portugal and Ireland, remains in similar terms to last year, at $3.5 billion (€2.9 billion), barely 1% more. However, in Ireland, where the bank operates in this business through Avant Money, the portfolio grew by 10%.
On the other hand, the group highlights a “positive” dynamic in attracting new customers through the ‘Cuenta Nómina’, with a portfolio of $16.3 billion (€13.5 billion) and a 25% increase compared to the same figure at the end of March 2020. Bankinter is one of the few institutions that still offers a return on customer account balances.
The corporate business is the one that has contributed most to the bank’s gross margin, with a growth in the loan portfolio of 8% $33.7 billion (€28 billion). “The loans guaranteed by the Official Credit Institute (ICO) continue to play a key role in this portfolio, with $7.6 billion (€6.3 billion) having been drawn down out of the $10.5 billion (€8.7 billion) formalized,” the bank emphasized. Among the main levers of the corporate business, the good performance of the investment banking activity stands out, which has increased its gross margin by 22%.
In the asset management business, off-balance-sheet funds grew by 25.9%. The pension fund portfolio increased by 22.4%, and the asset management and sicavs portfolio grew by 29.4%.
Evo Banco, the group’s 100% digital entity, multiplied by 2.3 times the new mortgage production with $215.8 million (€179 million), compared to $92.8 million (€77 million) a year earlier, while the investment portfolio is 43% higher than in the first quarter of 2020.
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First published in elEconomista.es, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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