Bankinter earns 261.2 million euros in half-year net profit, an 8.4% increase with growth in all of its business lines

Its gross operating income grew by 8.5% to 977.3 million euros, owing almost entirely to its customer business.

Loans and receivables have grown by 5%, bucking the sector trend; with retail customer funds advancing 7.1%, which is above the industry average.

Overall indicators of profitability (13% RoE), capital adequacy (11.55% CET1 fully-loaded) and non-performing loans (2.92%) speak to the bank’s robustness.

Bankinter Group has ended the first half of 2018 with the same profitable growth trend with which it began the year, with earnings driven by its customer business and following a diversified strategy based on five business lines, well-balanced amongst themselves.

Bankinter ended the half-year period with a net profit of 261.2 million euros and a pre-tax profit of 357.8 million, up 8.4% and 7.9%, respectively.

Its return on equity (RoE), at 13%, continues to stand out among its performance indicators. This suggests that Bankinter continues to lead the sector in profitability.

The bank’s capital adequacy also remains at levels well above regulatory requirements, with a CET1 fully-loaded capital ratio of 11.55%, a 24 basis-point increase on the figure from June of last year, and 9 basis points more than at the end of 2017.

As regards liquidity, Bankinter’s commercial gap stood at 4.1 billion euros at the end of the half-year period. In parallel, the bank’s loan-to-deposits ratio reached 106.6%.

Furthermore, maturities of wholesale debt issues expected for the coming years total 800 million euros in 2019 and another 800 million in 2020, for which the bank has liquid assets valued at 11.6 billion euros and an additional capacity to issue 7.2 billion in covered bonds.

The bank continues to be a leader in terms of quality of assets, with a non-performing loan ratio of 3.25%, down from 3.74% last year. The NPL ratio of Bankinter Spain alone was below 3% for the first time in years, standing at 2.92%, less than half the sectoral average.

Furthermore, Bankinter Group’s foreclosed property assets continued to decrease, totalling 387.1 million euros (down from the 498.2 million euros recorded a year ago), with coverage ratio of 45%.

Resilient margins

Bankinter Group’s earnings, presented in accordance with the new IFRS 9 accounting standard in force sin January, continue to bear the same potential and robustness in all account margins as at the start of year.

Its half-year net interest income amounted to 542.9 million euros, up 6.9% from a year ago.

Its half-year gross operating income grew by 8.5% to 977.3 million euros, driven by a 7.3% increase in fee income with respect to the same period last year. Currently, its fee income accounts for 23% of its gross operating income. Asset management fees performed particularly well, having increased by 12.1% in relation to the same period in 2017.

The Group’s pre-provision profit ended the half-year period at 474 million euros, growing by 10.2% despite increased costs. Still, this positive revenue performance afforded the Group an improved cost-to-income ratio on its banking operations (including amortisations), which decreased from 48.5% at the end of June 2017 to 46.1%.

Bankinter Group's total balance sheet assets closed the second quarter at 76,103.2 million euros, which is 6.9% more than at 30 June 2017.

Total loans to customers at the end of the last six months amounted to 54,666.1 million euros, up 5% on the figure from the same period last year. Once again, this is growth is noteworthy, given the 2.5% decrease in lending across the Spanish banking system.

Bankinter’s retail customer funds at the end of the period jumped 7.1% to 49,870.1 million euros, whilst the rest of the sector grew in this regard by only 1.9%, according to Banco de España figures posted in May. Furthermore, its off-balance-sheet managed funds (investment funds, pension funds and managed wealth) experienced even higher growth rate of 11%, for a total 28,000.3 million euros.

Five business lines, well-balanced amongst themselves.

These earnings attest to the ongoing growth potential of Bankinter’s customer business, which accounts for virtually all of the Group’s revenues.

Out of its various strategic business lines, its Corporate banking business contributed the most to gross operating income, at 29%. Once again, this business’s solid performance is made evident by its loan book growth, up by 7.1% from a year ago and amounting to 23.9 million euros as reported at the end of June. This is significant since the lending to companies has fallen by 6.3% across the sector, according to Banco de España reports in May.

Bankinter aims to become the bank of reference for all its corporate customers, whom it engages more and more, thus swelling revenues from increased transactional and collateral business. The performance of Corporate banking’s international business was also noteworthy, the operations of which contributed 26% to the gross margin of bank's corporate business.

Retail and commercial banking came in second place with its contribution to gross operating income of 27%. Bankinter has structured this business upon three customer segments: private banking, personal banking and individual retailing banking, which continue to perform favourably. Private banking, which serves high net-worth customers, hit 36.9 billion euro in managed wealth, up 9% year-on-year, despite a 400 million euro decrease caused by the market effect. During the half-year period, the bank attracted 2.2 billion euros in net new money from private banking customers, a 28% increase with respect to the first half of 2017.

Managed assets in personal banking increased by 8% to 21.9 billion euros, even though the market effect caused portfolios to shrink by 100 million euros. Net new money acquired amongst customers in this segment amounted to 900 million euros in the last six months.

In Retail and Commercial banking, customer deposits and lending remain steady. Payroll accounts and mortgages, the two most valued retail products offered by the bank, performed exceptionally well. At the end of the half-year period, the bank’s payroll account portfolio amounted to 7.656 billion euros, up 21% from June of last year. New mortgage lending showed signs of a strong boost at the end of the second quarter in the year, growing by 17% year-on-year to 715 million euros. 28% of new mortgages in the last six months were fixed-rate mortgages.

The third business line that contributed the most to gross operating income was Línea Directa, at 21%. By 30 June 2018, the number of risks insured by the company had reached 2.92 million, with a 7% increase in motor insurance policies and a 13% increase in home insurance policies. Total premiums amounted to 425.3 million euros, having increased by rate of 7.8% from a year ago and outperforming the rest of the sector. The insurer’s combined ratio stood at 88.5% with a 38% RoE, demonstrating the high profitability of its business.

Consumer lending in Bankinter Consumer Finance also performed well, as is now customary quarter-on-quarter.  Its customer portfolio now amounts to 1.2 million euros, up 23% year-on-year, having attracted a total 163,000 new customers in the last six months. Total consumer lending saw significant growth. At 30 June, it grew by 42% year-on-year to 1.7 million euros.

Bankinter Portugal, which now accounts for 7% of the Group’s gross operating income, ended the last six months on a very positive not, with growth in all indicators and within all its business areas. Its loan book hit 5.2 billion euros as of 30 June, a 12% increase with respect to last year, with a particular boost within its corporate banking segment.  Its customer deposits grew by 4% over the same period to 4.2 billion euros, with a noteworthy 16% increase in its off-balance-sheet managed funds. This growth dynamic speaks to the bank’s clear commitment to supporting families and businesses in Portugal whilst helping the country’s economy to grow.

Bankinter Portugal’s half-year gross operating income was 64 million euros, 19% more than a year ago, with a pre-tax profit of 31.2 million euros, up 66% year-on-year.

Commitment to digitalisation

Bankinter’s digital leadership notably streamlines the operations and favourable performance of the all bank’s business lines. Due to Bankinter’s extensive digital track record, its customers are accustomed to using the bank’s digital offering for daily financial transactions. 91.2% of customers interact with the bank using its digital channels either exclusively or in combination with its other channels. As a result, 98% of equity trades in Bankinter are conducted through digital channels, and 80% of euro-denominated deposits and consumer loans are taken out by customers digitally.

This past quarter, the bank continued to enhance some of the fully digital services it launched in recent months, which are key to the bank’s digital banking operations. This is the case of the Coinc Digital Mortgage, the first of its kind to be fully online, for which over 500 applications have been processed; and Popcoin, an automated fund management service based on customers’ profiles that includes indexed fund portfolios as a new feature.

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