Moody´s raises Bankinter's credit rating to investment grade

Moody´s credit rating agency today raised Bankinter's long-term and short-term credit rating from Ba1/Not Prime to Baa3/Prime3, while at the same time revising its outlook from negative to stable. In both cases the Bank's rating has reached the investment grade category.

Moody´s based its decision on the recent upgrade of the Kingdom of Spain's rating, as well as on improved growth prospects for the Spanish economy and the efforts made by the Bank to clean up its balance sheet and strengthen its capital. In this regard, the US firm takes a positive view of Bankinter's having increased its capital in 2013 by more than 200 basis points to reach an EBA capital ratio of 12.6%, making it one of Spain's most solid and solvent institutions.

In its report, Moody´s particularly stresses the solidity of Bankinter's balance sheet and the quality of its lending portfolio, with a level of arrears which, despite the crisis, continues to be contained at 4.98%, almost three times less than the system as a whole. In this respect, Moody's believes that this low level of arrears and the reduced need for further provisions going forward will have a positive effect on the Bank's earnings and balance sheet.

The agency also took into account the sustained growth of the traditional customer business lines (particularly private banking, corporate banking and insurance) which confirm the positive trend of the Bank's margins in a sectoral environment marked by adjustments to lending activity, falling revenues and historically low interest rates.

Bankinter´s net income for 2013 was up by 72.8% on the previous year, at €215.4 million, the best earnings figure of the past four fiscal years. Moody's indicates that if this trend and the Bank's ability to generate recurring profits are maintained, it could upgrade its rating again in the next few months.