Bankinter earns 400 million euros in profits as of September, up 34% thanks to increased lending and customer funds

As of 30 September 2016, Bankinter had reached a consolidated net profit of 400 million euros and a profit before tax of 547.8 million euros, up 33.6% and 30.7%, respectively, from the same period the previous year. In line with the previous trends, recurring business from customers continues to be the main contributor to earnings.

These results include data on Bankinter’s business in Portugal after the bank finalised its purchase of Barclays’ holdings in the country on 1 April 2016. This transaction aside, Bankinter’s net profit would amount to 335.5 million euros, 12% more than in September 2015, with a pre-tax profit of 451.9 million euros (a 7.8% increase).

Return on equity (RoE) reached 13.2% – one of the highest in the financial sector –, strengthened by the positive effect of ‘badwill’ in Portugal. Without this extraordinary effect, it would stand at 10.7%.

Meanwhile, Bankinter continues to maintain its competitive advantage in terms of asset quality and capital adequacy.

Its quality of assets remains very positive, with a 4.19% NPL ratio as of 30 September, 16 basis points down from a year ago. This ratio for the business in Spain alone is 3.67%. The NPL coverage ratio has also increased to 50.6%, compared to 42.2% from twelve months ago.

As regards capital adequacy, Bankinter has a CET1 fully-loaded capital ratio of 11.5%, ten basis points more than last quarter and well above regulatory requirements.

Bankinter has improved its financing structure, reducing its loan-to-deposit ratio to 109.9%, down from 121.5% last year. The bank’s liquidity gap has decreased to 5 billion euros, 44% less than in the third quarter of 2015.

Moreover, maturities of wholesale issues until 2019 amount to 2.6 billion euros. To manage them, Bankinter has 10.7 billion euros in liquid assets and can issue 7.1 billion euros in covered bonds.

Margin growth in spite of low interest rates.

Despite the difficulties of a low interest rate environment, Bankinter’s net interest income reached 712.8 million euros as of 30 September, a 10% increase from last year. Without the bank’s business in Portugal, this figure would be +4.4% due to increased lending and customer fund balances and an improved business mix.

Regarding gross operating income, the third quarter ended with 1,269.9 million euros, 5.9% more than twelve months ago (1.3% more, not including Portugal).

Pre-provision profit at the end of September was 615.1 million euros, only 1.9% less than last year and despite the expenses arising from integrating the business acquired in Portugal. Nonetheless, the cost-to-income ratio on banking activities with depreciation and amortisation stands at 44.6% (42.4%, not including business in Portugal).

Bankinter’s balance sheet reveals 66,293.7 million euros in total group assets (including Bankinter Portugal), 13.1% more than at 30 September 2015.

Total loans and advances to customers amount to 50,386.5 million euros, up 16.2% from last year. Customer retail funds stand at 43,502.8 million euros, a 30.8% increase. Off-balance-sheet managed funds come to 22,760.9 million euros in total assets, up 13%. This includes 15,653.8 million in managed and marketed mutual funds, a 16.8% year-on-year increase.

Still, without balances from Portugal, both customer funds and lending maintain an upward trend.

Accordingly, at the close of the third quarter, loans and advances to customers (not including Portugal) have risen 6.1% from last year to 46,002 million euros. That is to say, 2,622.4 million in organic growth this year, while lending had decreased by 3% across the sector as of August according to data from the Bank of Spain.

Furthermore, retail funds (without Portugal) have experienced a much more significant hike: a 20.2% increase from September 2015 to 39,959.3 million euros, while, according to data released by the Bank of Spain in August, retail customer fund balances only increased by 2.9% across the sector.

A business expanding its perimeter into the Portuguese market.

These results demonstrate the positive performance of the customer business in strategic segments and businesses, which have become stronger in light of Bankinter’s expansion into the Portuguese market.

Corporate banking, one of Bankinter’s strategic businesses, continues to show signs of good performance, particularly in terms of loans and receivables (once again), with a portfolio totalling 21.2 billion euros, including figures from the Portuguese market. Without Portugal, loans and receivables would amount to 20.6 billion. This reveals a purely organic increase of 8.1% on the related balance from a year ago even though data released in August by the Bank of Spain indicates lending to companies has fallen by 5%. Bankinter has also had a noteworthy presence in international trade finance, with a 25% increase in its gross operating income.

Bankinter’s private banking business continues to follow trends from previous years. Managed assets from customers in this segment amounted to 29.6 billion euros, up 10.2% from a year ago, although market impact brought on an 800 million decrease in value.

Bankinter’s consumer lending business, operated by the subsidiary, Bankinter Consumer Finance, is also significant. Total customers add up to 845,000, with a 43% year-on-year increase; and to 940 million euros in total loans, up 49% from September 2015.

In retail banking, Bankinter has performed particularly well in terms of mortgages and payroll accounts, with both products leading to increased customer engagement and more business opportunities. New residential mortgage lending continues on an upward trend from previous years, with new mortgages totalling 1,648 million euros in the first nine months this year (up from 1,318 million euros and 1,009 million euros  in new mortgages granted by the bank during the same period in 2015 and 2014, respectively).

Total payroll accounts amounted to 5,066 million euros, up 29% from last year.

Línea Directa insurance policies have increased by 7.8%, totalling 2.52 million policies. Premiums have also grown at a similar rate: an 8.6% year-on-year increase to a total 551.9 million euros. Línea Directa continues to have a highly profitable insurance business, with a 30.2% RoE and the best insurance margins in the sector.

Results presentation and financial information