What do you think about the performance of the economy in 2022?
From a global point of view, 2022 was a transitional year between the end of the pandemic and a new expansionary cycle which is being threatened by serious uncertainties, of which, in the short term, the most important are the geostrategic challenge posed by Russia's unresolved invasion of Ukraine and the worrying upturn in inflation resulting from both the post-pandemic recovery and the war itself. The transition was characterised by a price shock that was initially very difficult to gauge, but also by unexpectedly strong employment rates in almost all advanced economies. We must not only take into account the negative, but also -- and, above all -- the positive.
Unresolved uncertainties led to volatile and bearish markets around the world, although by the end of the year we were already seeing a gradual turn for the better. The decline in economic activity proved to correspond to a transitional phase, and it cannot be stated categorically that it was a recession. Even if we accept that it was a recession, or that one will materialise in the near future, it will have been or will be only of a technical nature, geographically localised and quickly overcome.
We could say that there were less concerns by the end of 2022 than there were at the beginning, and that is also positive.
What is your outlook for 2023?
We are entering a new expansionary economic cycle which, despite the uncertainties, is likely to be more comfortable and reliable than is generally perceived. That is for me the most likely scenario, although we should not forget that there are major risks, such as the war in Ukraine, with which, unfortunately, we seem to have to live for a longer period than initially thought.
In this scenario, the new cycle would be characterised by a nominal growth higher than in the last ten years, because it is compounded by higher inflation, but real GDP growth in developed economies would be similar, or somewhat higher. This need not be a bad thing, but only more complex to manage, especially from the perspective of central banks.
It seems certain that globalisation will give way to more regional trade, with the formation of new geostrategic blocs of influence. In the short term, the energy challenges will probably be solved less traumatically than is generally thought, thanks to American self-sufficiency, the progressive loss of OPEC's influence and the more rapid expansion of renewable energy sources. Taxation will increasingly be recognised as a driver or deterrent of economic activity and employment.
But the most important thing to bear in mind is that we are in the initial phase of a new expansionary cycle characterised by more resilient employment than expected, even if, I insist, the risks involved are not negligible.
How did the banking sector do last year?
The results indicate that Spanish banks continued in 2022 on the recovery path they had embarked on the previous year, leaving behind the negative effects of the health crisis. In contrast to previous periods, profitability was close to the cost of capital, which is essential to generate new capital and allow credit to grow.
This improvement was driven by the normalisation of interest rates after they had remained negative since 2016, something that had never been seen in history, and which had a very negative impact on the profitability of the banking sector. But regarding the rise in interest rates we must be aware of two things. Firstly, that, although it is raising bank revenues, it will also, in the near term, raise our funding costs. Secondly, the persistence of inflation and the consequent rise in interest rates reduces debtors' ability to pay and, therefore, will increase default in the medium term.
Addressing the latter was the reason why the banks decided to support the government's proposal to ease the situation of low and middle-income households who were finding the rise in the Euribor a difficult burden to bear. Grace periods and extended repayment terms have therefore been set up to ease their burden.
Therefore, as was the case during the pandemic with the moratoriums for individuals and businesses, banking has once again been part of the solution to a problem that seriously compromised the finances of our most vulnerable customers. This is why we find it hard to understand the kind of punishment to which the public authorities have subjected us with a new sectoral tax that we consider unjustified and unfair and that will contribute neither to recovery nor to job creation, because it will affect the credit and risk decisions taken by the institutions.
What do you think of Bankinter's financial year?
Bankinter's results for the year have been very satisfactory. We have exceeded the profit target that we had set for 2023 one year in advance. In fact, we have already surpassed the profit we obtained in 2019, the year before the pandemic, and when we still had on our balance sheet the income of Línea Directa Aseguradora, which began its independent journey in April 2021, with its IPO.
Of course, the development of interest rates, after years of negative interest rates, has been very important and has contributed to the strong growth in net interest income. But, as our CEO will explain in detail, these results would not have been possible without the Bank's strong commercial drive, which has allowed us to grow significantly and gain market share in all of our most consolidated business areas, as well as diversify our activity with other projects with potential and with new products and services that are being very well received by our customers.
All this is thanks to well-defined strategic planning and, above all, to the commitment, motivation and good work of our entire team, which is Bankinter's greatest strength.
How will this positive result affect the bank's dividend policy?
Higher profits should be passed on to shareholders via dividends. Bankinter has proven to be a profitable, solvent bank with extraordinary asset quality, as attested to by all the ratios and indicators accompanying these results, in many of which we remain at the forefront of the sector in Spain and Europe, and well above the requirements of the regulators.
Our solvency was already reflected in the excellent results of the stress tests published in July 2021, and last year we saw our creditworthiness ratified by the Standard & Poors Credit Rating Agency, which upgraded our rating from BBB+ to A-.
The positive results and our solid position allow us to maintain a pay out of 50 per cent and to this end, the board of directors will propose to the next annual general meeting a final dividend of €0.089 gross per share, in addition to the three interim dividends paid in June (€0.074), September (€0.065) and December (€0.084). In total, the Bank's shareholders will receive 280 million euro from the 2022 accounts, 28% more than in 2021.
What role does innovation play in the current situation of uncertainty?
Innovation plays an essential role in today's environment, given the uncertainty that is inherent to our times, and the speed with which change occurs in all areas of our lives. Innovation is therefore crucial in this adaptive process to which both individuals and companies are bound.
Innovation plays an essential role in today's environment, given the uncertainty that is inherent to our times, and the speed with which change occurs in all areas of our lives. Innovation is therefore crucial in this adaptive process to which both individuals and companies are bound.
In 2022 we have once again demonstrated that we continue to be pioneers in developing new services and creating financial solutions for our customers, and well adapted to the current times.
This is for instance the case of Bankinter Investment, which for more than six years has been developing an alternative investment business, through which we seek new proposals for our high net worth customers, based on the real economy and decorrelated to developments in the markets. The innovative aspect of our approach is that management is entrusted to highly qualified entrepreneurs from the various sectors, who co-invest with the bank itself and with our customers
In the same spirit, a milestone in 2022 was the creation of the new Alternative Investment Asset Manager and opening its doors to retail customers, which will take place in the first half of this year, under new legislation.
We can find further examples of innovation in Bankinter Consumer Finance with the online approval of non-customer transactions through the use of Big Data, the payment instalment service that we have called Pago Cómodo, or the Car & Roll service we have developed in collaboration with Vass and Línea Directa Aseguradora.
With regard to our corporate customers, I would like to highlight the launch of the Supply Chain Finance platform, a pioneer in Spain, which provides a comprehensive solution for the management of working capital derived from companies' international business.
EVO Banco, a wholly-owned subsidiary of Bankinter, deserves special mention. With its own brand, it targets a younger clientele through an entirely digital model. Evo has continued to innovate with its "voice assistant", which serves 85% of customer needs, and with the voice biometrics system launched in 2022 to protect the most sensitive transactions, such as immediate transfers.
Finally, I would like to mention the new property management service "Excellence Management" and the technological platform "Tucomunidad NextGen" which facilitates the financing of energy rehabilitation of residential buildings.
All these initiatives are proof of our commitment to innovation and reflect our passion for doing things that are different and create value for society.
Is innovation also the engine driving the Bankinter Foundation?
Is innovation also the engine driving the Bankinter Foundation
Seeking to transform society through innovation, our experts create knowledge, share it through education, and put it into practice in two ways: entrepreneurship and decision-making with real impact.
Seeking to transform society through innovation, our experts create knowledge, share it through education, and put it into practice in two ways: entrepreneurship and decision-making with real impact.
The Foundation, a pioneer of its kind and a reference in terms of innovation, set up an observatory in 2020 dedicated to monitoring Spanish startups. Its biannual reports reveal the dynamism of this ecosystem, immersed in a significant decentralisation process, although Barcelona and Madrid continue to concentrate the greatest activity.
Has the economic situation affected the commitment to sustainability?
Bankinter's commitment to sustainability is firm and is not subject to the fluctuations of the economic situation. It is structural, permeates each and every one of our activities and is based on a solid foundation of Corporate Governance. It has been integrated into successive strategic plans to become a sustainable transformation opportunity within the business culture, comparable to the digital transformation that we also pioneered.
In recognition of this commitment to sustainability, the Bank has been included in the main sustainability indices, a consequence of its applying strict environmental, social and governance (ESG) criteria throughout its value chain. The Bank has been part of the FTSE4Good since the index was launched, and of the global Dow Jones Sustainability Index (DJSI), where it is recognised as one of the twenty-five banks that best meet these criteria. More recently, the Bank has been included in the Bloomberg Gender Equality Index, which lists companies that show the most successful management of diversity.
Moreover, in September the Bank was ranked by Newsweek magazine the seventh most socially responsible bank in the world and the first in Spain.
All these awards are the result of having made sustainability a strategic and cross-cutting priority, based on the establishment of the Bankinter Group's Sustainability Policy and the development of the Sustainability Plan, which in 2022 reached important strategic milestones.
Regarding the environment, we have continued to make progress in the process of decarbonising the corporate portfolio and plan to include the mortgage portfolio in the same process in 2023. At the same time, sustainable activity continued to grow, with notable figures, such as the more than 1.6 billion euro in sustainable financing to companies, 470 million euro in financing for renewable energy projects, and the close to 1.1 billion euro increase in own investment funds and ESG pension plans.
In terms of Social and Governance criteria, of particular note are the digital accessibility indicators, our commitment to the creation of quality employment and full compliance with all the recommendations and best practices of good governance.
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