Capital market division

Capital market division

A growing activity

2017 was characterised by synchronised global growth: the rate of growth gained inertia in the major developed economies, whilst the economic environment improved significantly in emerging countries, which had experienced more adverse economic conditions in the last few years.

The Capital Markets area manages the trading and distribution of cash products and the Bank's balance sheet. The environment in which it carried on its activity last was much more unstable than in 2017:

  • United States. The situation was characterised by the trade wars waged by the country's administration and the evolution of interest rates. Bond increased until the upward trend was inverted in the fourth quarter, interest rates began discounting a more flexible monetary policy and analysts warned that the economy would slow down to a certain extent.
  • Europe. The European Central Bank's maintenance of monetary policy actions and the absence of an inflationary outlook saw interest rates in the Eurozone remain at minimum levels. The budget conflict with Italy, Brexit negotiations and other international political matters contributed to very negative stock market performance.
  • Spain. The Treasury had no problems in meeting its funding needs for the year. Despite the premium ending slightly up on 2017, the improved ratings saw the 10year bond close significantly below 1.50%.

In this scenario, the trading area was active in the foreign exchange, equities and fixed income markets. Bankinter benefited from the its status as a market maker in government debt and bills of exchange and acted as a co-leader in syndicated issues of Spanish Treasuries.

The Bank's growing activity in the Private Banking segment generated notable demand for the products designed by the Distribution area. Also noteworthy was the work done in this area for access by customers to foreign exchange, interest rate hedge and fixed income markets. The specific action plans of the Distribution area, in particular in terms of currency, offered very strong results.

Balance sheet management

The Bank's balance sheet continued the sustained improvement in its liquidity position. The increase in lending was offset by an even larger growth in customer funds. It was only necessary to issue €500 million in 10-year mortgage-backed securities with a spread of 0.15%, harnessing the strong market position at the start of the year. Demand outnumbered supply by three-toone.

Wholesale funding maturities were distributed over time to minimise refinancing difficulties.

The bank's interest rate risk was also monitored and managed, and it was maintained at acceptable levels. Indeed, the positioning of the fixed income ALCO portfolio and the balance sheet hedges mitigated the adverse effect of the Euribor interest rates, to which the majority of the bank's loans are referenced.

All structural currency positions were hedged, thanks to which Bankinter's income statement was not affected by the fluctuations in major currencies.

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