Risk management

    In 2024, Bankinter continued on its path of prudent growth, which seeks to balance growth, profitability and risk at all times within the principles expressed in its Risk Appetite Framework.

    Another year of prudent growth

    After a more uncertain 2023, global economic growth showed signs of stabilisation in 2024. Inflation began to decline in several major economies, improving economic prospects. Financial markets have shown resilience in the face of volatility, thanks to the strength of financial institutions and investor confidence.

    In this context, the Spanish economy experienced robust GDP growth, above the Eurozone average, thanks to the dynamic performance of domestic consumption and investment. Home prices continued their upward trend, driven by robust demand and limited supply

    For its part, Bankinter remained on its path of prudent growth in 2024, which seeks to balance growth, profitability and risk at all times within the principles expressed in its Risk Appetite Framework. Activity improved at Bankinter Spain, remained stable in Portugal and Ireland, moderated at EVO Banco and decreased at Bankinter Consumer Finance.

    The outlook for 2025 in Spain points to a slight slowdown in growth, which will be supported by domestic demand, particularly private consumption, favoured by a positive trend in disposable income, employment and household confidence. We are also expecting to see a modest growth in productive investment and a slowdown in public spending. The trends in inflation, which is expected to remain at moderate levels, is more uncertain, mainly due to the international risks of trade fragmentation and geopolitical tensions. If inflation were to resist further declines, this would lead to monetary policy tensions and a possible deterioration of the cycle, resulting in a slowdown in credit facilities granted and a reduction in the repayment capacity of the most vulnerable debtors and corporates. Bankinter is well prepared to face these scenarios.

    Moderate profile

    Bankinter maintains its risk appetite principles and levels and a prudent risk profile, the management of which is one of the central pillars of its competitive strategy. The bank has a risk management model of proven effectiveness that is in line with regulatory standards and best international practices, in proportion to the scale and complexity of its business activities.

    The Board of Directors is ultimately responsible for risk management. It approves the Bank's strategy and, in particular, defines the risk appetite framework. The risk appetite framework is an internal governance document that defines:

    • The type and levels of the risks that the Group considers reasonable to take on in performing its business strategy.
    • A set of metrics and key indicators to monitor and manage risks. These cover different variables, such as risk levels and costs, returns, loan-to-deposit ratio and capital, among other variables. For each metric, a tolerance and a limit are established, which if reached, activate corrective measures.

    The Risk Appetite Framework sets out the criteria for the Group's strategy, which remain stable over the years.

    Risk appetite statement. Bankinter carries out its activity with a moderate and prudent risk profile. The aim is to have a stable balance sheet and a recurrent and healthy income statement, to maximise the bank's long-term value.

    Risk management principles. The Group's appetite and tolerance for risk in its activities are subject to the following principles:

    • Strategies, policies, organisation and management systems are prudent and well-suited to the size, environment and complexity of the Bank’s activities, based on high-quality banking practices.
    • Respect for and conformance to established regulatory requirements, limits and restrictions, and ongoing compliance with prevailing legislation. In addition, principles of anticipation of new regulatory developments are applied to reduce their potential impact.
    • Maintenance a low or moderate credit risk exposure, in line with the values shown by the lowest NPL ratio in Spain's financial system and the lowest expected losses under stress scenarios.
    • Working with first-class financial institutions in every country, of recognised standing and solvency and the minimum rating required to limit counterparty risks.
    • Proper hedging of problem assets.
    • Suitable remuneration of invested capital. The aim is to ensure a minimal return above the risk-free rate over the cycle, to meet capital levels at all times and to operate profitably.
    • Maintenance of a low level of market risk in the trading book, so that in stress scenarios the losses generated have a significantly reduced impact on the Group’s income statement.
    • An ALCO portfolio comprising low-risk securities (mainly government bonds) and a return commensurate with the bank's RoE requirements designed to reduce the volatility of net interest margins and adjust the impact of any changes in interest rates.
    • Intense growth in the priority strategic medium-sized and large enterprise segments, characterised by higher-quality risk and its notable contribution to earnings through the generation of income, fees and other recurring income.
    • Balanced loan book, to boost profitability.
    • Reduction of dependence on retail markets, supported by stable growth of retail funds.
    • Diversification of wholesale funding sources, from a standpoint of instruments and markets, maintaining a balanced maturity profile.
    • Optimisation of retail financing costs, maintaining a balance between returns on loans and market interest rates, ensuring it stability and avoiding excessive concentration of maturities.
    • Use of a risk diversification principle to avoid excessive concentration levels that could result in difficulties for the bank.
    • Contribution to the sustainable development of society, including the preservation of environmental resources.
    • Limitation of business in sensitive sectors that could entail a risk for Bankinter's sustainability or have a negative impact on its reputation and/or honour.
    • Moderate appetite for interest rate risk..
    • Maintenance of a scaled-back structural FX position that is as close to zero as possible at all times.
    • Strengthening control of the bank's reputation (good corporate governance, systemic risks, etc.)
    • Lower exposure to the risk of pension commitments, through the most appropriate mitigation procedures (outsourcing, hedging instruments, diversification).
    • Willingness to round out the level of services Bankinter offers its Private Banking and Corporate Banking customers with limited-risk investment banking services.
    • Optimisation of the cost-to-income ratio..
    • Maximisation of shareholder value creation throughout the cycle, underpinned by a robust base of capital and loan-to-deposit ratio.
    • Diversification of lines of activity. The bank takes advantage of opportunities in companies in the financial sector that are related to or complement its main business model.
    • Maintaining a Common Equity Tier 1 (CET1) ratio within the fluctuation band set by the bank, which is stricter than the regulatory minimum, with a medium-term target of around 12%
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