Bankinter forecasts rise in lending income and loans, lifting shares

CFO does not foresee additional COVID-19 provisions

  

MADRID- Spain's Bankinter forecast higher lending income and loan growth across its markets as lower provisions meant its fourth-quarter profit fell by less than in previous quarters.

Bankinter's shares rose by more than 7% on Thursday after it said net interest income (NII), its earnings on loans minus deposit costs, would see low-single digit growth in 2021 despite the impact of negative interest rates in the first half.

Net profit at the bank fell 8.7% to 97 million euros ($118 million) on extraordinary regulatory charges of 115 million euros not related to the COVID-19 pandemic. Analysts polled by Reuters had expected a net profit of 73 million euros.

Bankinter's Chief Financial Officer, Jacobo Diaz, told analysts it expected loan growth on the back of strong activity in mortgage and consumer lending in Spain, Portugal and Ireland.

"Taking into account the context we are in, any positive guidance towards lending income and upbeat comments on overall loan growth are quite outstanding," Nuria Alvarez, analyst at Madrid-based broker Renta 4, said.

Banks across Europe are under growing pressure from rising bad debts and record-low interest rates.

COST OF RISK

Bankinter said its NII rose 3.5% year-on year in the quarter to 320 million euros thanks to the support from a state-guaranteed loan programme to the corporate sector. This was above the 316 million euros forecast by analysts.

Analysts at Jefferies also welcomed a 19% quarter-on-quarter drop in total provisions to 108 million euros, leaving the bank's stated cost of risk for 2020 as a whole at 67bp versus its guidance of between 65 to 70 basis points.

Cost of risk measures the cost of managing credit risks and potential losses for the bank.

Diaz also said he did not expect additional COVID-19 related provisions and forecast a lower cost of risk for 2021 as economies recovered.

However, COVID-19 related provisions of more than 240 million euros in 2020 brought Bankinter's return on equity (ROE) down to 7% from 13% in 2019. Excluding the impact from the extraordinary macro provisions, the ROE stood at 10.8%. ($1 = 0.8236 euros)

(Reporting by Jesus Aguado; additional reporting by Emma Pinedo; Editing by Inti Landauro, Jane Merriman and Alexander Smith) ((jesus.aguado@thomsonreuters.com; +34 91 585 8339; Reuters Messaging: Reuters Messaging: jesus.aguado.reuters.com@reuters.net))

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