Bankinter posts best results for four years, ending 2013 with net earnings of €215.4 million

The Bankinter Group posted net income of €215.4 million for 2013, 72.8% more than in 2012. This is the Bank´s best net figure for the past four years. Pre-tax profit for 2013 came to €297.6 million, 93% more than in the previous year.

These results, which are based on sustained growth in the strategic private and corporate banking business lines, confirm the positive development of margins and the solidity and profitability of the insurance activity. The containment of costs also consolidated the improvement in the cost/income ratio for the banking activity, which came to 40.5%, compared with 42.9% for the previous year.

In parallel with this, Bankinter notably improved its level of solvency, its financing structure and the quality of its assets, further increasing its lead over the rest of the sector.

As regards solvency, Bankinter continues to strengthen its capital ratios, reaching an EBA capital ratio of 12.4% at the end of the year, compared with 10.2% one year earlier, thanks mainly to the generation of recurring profits, a capital increase charged entirely to the asset revaluation reserve and a reduction in capital requirements in cover of lending to SMEs.

The Bank has continued to improve its funding structure, strengthening the ratio of deposits to loans, which stood at 75.5% at year-end, as against 66.9% at the end of 2012 and 56.6% for 2010. In 2013 the Bank also reduced its liquidity gap by €4.2 billion compared with the year before.

Furthermore, the Bank has no wholesale debt issues maturing until the fourth quarter of 2014 (€1.2 billion), with a further €1.2 billion due in 2015. The Bank has €6.9 billion of liquid assets with which to meet these maturities.

Also related to this is the fact that Bankinter has considerably reduced its reliance on the European Central Bank, as shown by its having repaid more than €6.3 billion during the year, equivalent to 66% of the lines it had one year ago.

As regards the quality of its assets, it is once again noteworthy that the Bank has kept its NPL ratio well below the market average: 4.98% as against the November sector average of over 13%, and with net new NPLs being well contained throughout the year. Similarly, the Bank's portfolio of problem assets, as well as being small, is very well covered: 42% for NPLs and 41.2% on repossessed assets.

Bankinter's portfolio of refinanced loans at year-end stood at €1,734 million, representing 3.8% of the total computable risk. Of this refinanced portfolio, 38% is in 'regular' status’, 24% in ‘sub-standard' and 38% is in arrears.

Bankinter's portfolio of repossessed assets is very small and is concentrated particularly in residential properties. The gross value of the portfolio is €627.8 million, which is even less than in the previous quarter. Moreover the cover for these assets has increased from 37.7% at year-end 2012 to 41.2% at the close of 2013. Also, during the year the Bank raised the pace at which it sold these assets, compared with previous years, with gross sales of these assets representing 93.7% of gross new additions during the year.

Margins recovering, and solid performances from strategic business lines

As regards the various margins in the income statement, Bankinter's interest margin for the year came to €635.9 million, representing a 3.7% decrease relative to 2012, due essentially to the sharp fall in one-year EURIBOR, which is still at all-time record lows. However, a quarter-by quarter analysis of changes in this margin shows that after bottoming out in the first quarter, it showed a constantly improving trend in the next three, so that the interest margin for the fourth quarter of 2013 was €174 million, 18.6% more than in the fourth quarter of 2012. All this is thanks to the substantial improvement in the customer margin, and in spite of the reduction in the bond portfolio.

As for the gross margin and the margin before provisions, they continued to grow throughout the year, which is particularly noteworthy in the current difficult environment

The gross margin for the year was €1,375.5 million, up 9.7% on last year, thanks to the good performance of net commissions, which increased by 22.2% for the period, due largely to the private banking and transactional business activities.

The margin before provisions for the year was €695.6 million, 18.1% up on 2012, enabling provisions for loans and repossessed assets to be further strengthened.

Turning to the balance sheet, Bankinter's total assets at the end of the year stood at €55,135.7 million, 5.2% less than at year-end 2012. Controlled resources increased by a noteworthy 15.1% on the previous year, reaching €51,026.1 million. Within this, the increase in resources managed off-balance sheet was especially positive, amounting to 52.4%, with investment funds up by 58.4% for the year. As a result Bankinter Asset Management was the asset manager that grew most in 2013 from among the top ten in the ranking.

As for customer lending, at year-end, the total was €41,196.4 million, just 2.1% down on 2012, which can be considered highly satisfactory in view of the context of continuing economic contraction with total lending in the financial system down by 12.6% (November 2013 vs. November 2012) or by 7.6% adjusted to SAREB (Spain's "bad bank").

As regards lending, we would highlight the 4.5% growth in corporate lending, to a total of €17.7 billion, the more so given that the system as whole showed a drop of 8.8% in lending to businesses based on November figures. In residential mortgages, the last quarter of the year showed a shift in trend in step with the launch of the Bank's mortgage campaign, which enabled it to increase new mortgage lending by 2.3 times in Q4 compared with Q3.

The year 2013 also showed the solidity and good progress of customer business of the Bank, whose strategy continues focus primarily on the corporate and private banking segments. In respect of this latter segment, we should point out that Bankinter grew by 18.9% over the course of the year in terms of the number of active clients and by 28.4% in total assets under management. With the emphasis on services with the greatest added value, such as SICAVs, the number of companies managed grew by 15.4% to reach 293.

A similar trend was shown by the insurance distribution and sale business, especially as regards Línea Directa, which posted growth of 6.1% in the total number of policies, which reached 2.1 million. By branches, the growth of home policies was particularly notable this past year - up by 27.6%, while Motor policies increased by 3%.

Lastly, we should point out the good performance of Bankinter's stock (BKT) during this period. Bankinter's stock ended the year with a gain of almost 150%, adjusted for the bonus issue, making it the second best performing stock in the Ibex 35 and the most profitable bank in the Euro Stoxx 600, Europe's most representative stock market index, which includes its 47 biggest banks.