Bankinter increases net profit by 31.6% to €205.1 million, with all margins improving.

The Bankinter Group posted year-to-date net profit of €205.1 million for the first three quarters of 2014, and pre-tax profit of €293 million, representing growth of 31.6% and 38.8% respectively relative to the same period of last year. At the same time, the bank ended September with an ROE of 8.3%; in other words, an improvement of 27.6% over the same period in 2013.

These solid results have been built on the revenue growth of activities with customers, which have offset the declining role of financial operations. The result is improvements to all account margins, maintaining the trend of previous quarters.

At the same time, the bank retains its asset quality at the highest level of the sector and shows enhanced solvency.

In terms of asset quality, Bankinter keeps its NPLs under 4.96%, three basis points lower than last year and well below the sector average. Meanwhile, net additions to NPLs and bad debts continue to decline, with a consequent reduced need for further provisioning.

In the same vein, this quarter Bankinter has further reduced its portfolio of foreclosed assets, the gross value of which is €593.5 million, 7.8% less than one year ago. This portfolio has a coverage of 40.4%, up by 7.6% on last year.

It is a very small portfolio compared with those of other institutions, and 42% of it is concentrated in residential properties. It is also particularly noteworthy that the pace of sales of these assets is well above their rate of entry, which demonstrates both the quality of the portfolio and Bankinter's management capacity for marketing them. Thus, the sale of assets to September 2014 was up by 31% compared with the same period of the previous year.

As regards solvency, Bankinter has reached the end of the third quarter with a capital ratio of 12.3% according to Basel III criteria. At the same time, wholesale funding requirements and reliance on the ECB are significantly lower.

The improvement in the Bank's funding structure is evidenced by a ratio of deposits to loans which stands at 80.3%, whereas one year ago it was at 71.8%. It can also be seen in the liquidity gap, which has been reduced by €2.6 billion since the end of 2013.

To this we must add the comfortable debt maturity structure: €3.8 billion until 2016, to meet which the Bank has liquid assets of €8.9 billion and the capacity to issue mortgage-backed bonds for up to €4.0 billion.

As for the reliance on the European Central Bank, this has been reduced to €2.7 billion, whereas one year ago funds taken from the ECB funds reached €7.0 billion.

Quality results based on customer business.

The positive results presented by the Bankinter group for the first three quarters of 2014 are based on improvement in all account margins.

Bankinter's interest margin continues to grow as earlier in the year, reaching €544.8 million for the nine months ended 30 September 2014, up by 17.9% on the same period of last year. This steady growth is based on improved customer margins, with the reduction in the cost of customer funds offsetting the fall in Euribor.

The gross margin came to €1,072.7 million, up by 8% on last year, largely due to the satisfactory growth in fee income, which grew by 21.8% thanks to increased customer business. This good result offset the lower contribution from institutional financial transactions, revenues from which fell by 28.5% compared with the nine months to 30 September 2013.

With regard to earnings before provisions, the third quarter closed with €532.2 million, 8% up, after absorbing an increase in expenses which reflects increased investments made to support growth opportunities.

As regards Bankinter's balance sheet, controlled resources have increased so far this year, reaching €56,333.1 million as at the end of September, representing growth of 17.1% relative to the figure one year ago. Within these resources, retail funds (sight accounts, deposits and promissory notes) grew by 14.4%, but again the increase in off-balance sheet resources is especially significant (44.7% more) and especially investment funds managed and marketed by Bankinter Asset Management, which exceed €10 billion, an increase of 41% over last year's figure.

As far as lending to customers is concerned, as at 30 September it amounted to €41,675.5 million, 1.1% more than a year ago, maintaining the encouraging, albeit moderate, growth trend seen in recent quarters. This growth is based above on Companies business, the lending portfolio of which is 6.9% higher than a year ago, reaching a total of €18.3 billion.

Strategic segments at the business' forefront

Customer business is the main generator of results for the Group. As a starting point, it is worth pointing out that the Bank has been gaining new customers during the first nine months of the year at a noticeably growing rate: 35% greater than the number of clients won during the same period of 2013 and 24% more in the case of companies.

As a result of this growth in the volume of customers and of greater customer activity, the Bank continues to increase its market share in those businesses on which it is strategically focused as regards both attracting resources and lending.

Thus, for example, the company credit portfolio is 6.9% greater than one year ago. Likewise, the mortgage marketing campaign has been on the rise ever since it was launched. In the third quarter of 2014, new mortgages came to €339m, which compares favourably with the €115m in the third quarter of 2013. These figures mean that the Bank's market share of new mortgages according to the INE's data as at July this year is 6.9%, compared with 2.7% in 2013.

As for the Private Banking business, one of the Bank's strategic pillars, the growth rate has accelerated, making Bankinter one of the most active operators in the market in recent times. Customer assets in this segment stand at €22.3 billion as at 30 September, 32.2% more than one year ago. Bankinter also maintains its privileged leadership in the SICAV ranking, managing 366 companies at the end of the third quarter, i.e. an 11.5% market share, which jumps to 31% if only new sign-ups are taken into account. This means that practically one in every three new SICAVs established so far this year is Bankinter's.

Throughout the year the positive development of the customer equities business has been notable. Thus there are 45% more stock market customers today than at 30 September 2013 and 27.4% more trades were made during the first three quarters of the year than in the same period of 2013. Consequently, net commissions from this business have increased by 39.3% relative to the previous year.

As regards Línea Directa, the number of insurance policies and the market share continue to increase. At the end of the third quarter, the total number of policies stood at 2.19 million, 6.3% more than at 30 September 2013. Among these, the growth experienced in the home policy segment has been particularly marked: 20.4% more than in the same period of 2013. Línea Directa's individual pre-tax profit for the nine months to the end of September amounted to €100.4m, 4.8% more than in the same period of 2013, with an individual ROE of 21.1%.

Lastly, the Bankinter's Board of Directors has approved the payment of a third interim dividend for 2014 in a gross amount of €0,0273254 per share (a net amount of €0,02158707), to be paid on November 1st.

(1) Excluding LDA

(2) Figures as of 31/12/2013

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Maria Dolores Dancausa Statements