By Jesus Aguado
MADRID (Reuters) – A rise in lending income, supported by higher interest rates and solid loan growth, boosted financial margins at Spain’s Bankinter in the third quarter, pushing its shares up to 4 % Thursday.
Banks across Europe are starting to benefit from higher borrowing costs which are generally a boost for retail lenders despite economic uncertainty and recession fears.
In the third quarter, net interest income (NII), income on loans less deposit costs, rose 27% year-on-year to 400 million euros, the lender said. This exceeded the 361 million euros forecast by analysts and was 16% higher than in the second quarter.
In the first nine months, NII grew 12% and Chief Financial Officer Jacobo Diaz raised the lender’s growth forecast for NII to double-digit growth from a previously mid-to-high single-digit growth forecast for 2022 thanks to the positive revaluation of its loan book.
Bankinter kicked off banking results in Spain and is seen as setting the tone for the rest of the domestic sector.
Shares of the lender led the gains on the blue chip Spanish index, rising around 4% and outperforming the index, which was up just 0.11%. At 08:09 GMT, Sabadell shares were up 4.2%, Unicaja 3.9% and Caixabank 2.2%.
Analysts praised the results and pointed to the improvement in credit income despite a 5% drop in net fees and commissions.
“This strength more than offset lower than expected net fees,” said Nuria Alvarez, an analyst at Renta 4, a Madrid-based brokerage, adding that although provisions were up 20% in the quarter, this was below expectations.
Client spreads and net interest margins increased 15 basis points and 21 basis points, respectively, from the second quarter, while the loan book grew 10.3% in the first nine months compared to the same period of 2021.
Bankinter’s net profit increased by 44% to 159 million euros compared to the same period a year ago.
Net profit was also above 135 million euros in the third quarter of 2019, before the outbreak of the COVID-19 pandemic. Analysts polled by Reuters had expected a net profit of 148 million euros.
($1 = 1.0221 euros)
(Reporting by Jesús Aguado; additional reporting by Emma Pinedo; editing by Inti Landauro and Emelia Sithole-Matarise)