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Bankinter S A : Financial Interim Report (Financial Summary 1Q25)
Bankinter S A : Financial Interim Report (Financial Summary
About this update from Bankinter Sa
1Q Financial Summary March 2025 Summary Economic and financial environment 3 Financial highlights 4 Introduction 5 Balance sheet 8 Customer funds 9 Customer lending 10 Asset quality 11 Income statements 12 Fee income 14 Accumulative yields & costs 16 Contribution by customer segment 18 Solvency 19 Shareholders' equity 20 Shareholders' value 21 People 23 Quarterly events 24 1Q Financial Summary Economic and financial environment The latest GDP data available are still from the fourth quarter of 2024 and therefore do not yet reflect the impact of Trump's measures on the economy. What they do show is a narrowing of the growth gap between the United States and Europe. The main event in the first quarter of 2025 was surely Donald Trump's return to office and his new administration. His arrival has resulted in notable shifts in the geostrategic area and on the trade front, leading to an environment of greater uncertainty The following aspects have been at the top of Trump's agenda early in his term: (i) Imposing tariffs on imports, not only from China, but also from its main trading partners (Europe, Canada, Mexico, etc.); (ii) demanding higher defence spending from other NATO members, up to the threshold of 2% of GDP, and even raising this minimum requirement to 5% of GDP; and (iii) bringing Russia and Ukraine closer together, towards a potential peace agreement. The latest GDP data available are still from the fourth quarter of 2024 and therefore do not yet reflect the impact of Trump's measures on the economy. What they do show is a narrowing of the growth gap between the United States and Europe. While the world's leading economy slowed to +2.5% growth in Q4 (YoY), down from +2.7% previously, the Eurozone's economy picked up to +1.2% in Q4 (YoY) from +1.0% previously, led mainly by Spain (+3.4% in Q4) and Portugal (+2.8%). However, leading indicators on economic activity point to an economic slowdown in the first quarter of 2025, especially in the United States. This appears to be the case with Consumer Confidence, Empire Manufacturing, Philadelphia Fed Activity Index. In fact, some indices such as the one compiled by the Atlanta Fed ( GDP Now ) point to a contraction of US GDP in 1Q 2025, largely due to the deterioration of the trade balance, due to imports being rushed into the country ahead of the possible tariff hikes. Inflation has continued to retreat on both sides of the Atlantic, falling to +2.4% in the United States (March; YoY; preliminary) from +2.9% in December; and to +2.2% in the Eurozone (March; YoY; preliminary). However, core inflation is somewhat higher and proving to be more stubborn: +2.8% in the United States and 2.4% in the Eurozone. Looking at central banks, we have seen a decoupling of monetary policies and a widening of the interest rate gap between the United States and Europe. The Fed has opted to pause its process of rate cuts, which have remained unchanged in the 4.25%/4.50% range since December, amid robust growth and still high inflation. Meanwhile, the ECB has continued to cut rates, with inflation close to the 2% target and low economic growth. It dropped them by -50 bp in the first quarter of 2025 to 2.50%/2.65% (Deposit/Credit) following its March meeting. This geographical decorrelation has also fed through to stock and bonds. While US bond yields have dipped (T-Note -33 bp to 4.21%), European bonds have rallied, led by the German Bund (+37 bp to 2.74%), in view of the expected increase in public deficit, amid higher defence spending and following the approval of a €500 billion 10-year infrastructure plan in Germany. As for the stock markets, US markets have shed 5%, following a downgrade of corporate earnings estimates for 2025 (-4% March vs. December), coupled with an environment of greater political uncertainty and higher-for-longer interest rates. Europe, however, was up 8%, thanks largely to lower perceived risk on the geopolitical front, in the hope of a peace agreement between Russia and Ukraine and following elections in Germany and France. The Spanish Ibex35 outperformed, rising 14% in the first quarter of the year, led mainly by banks. 3 1Q Financial Summary Financial highlights Var. Thousand Euros 31/03/25 31/03/24 € % BALANCE SHEET Total assets 123,851,262 112,938,254 10,913,009 9.66 Customer credit 80,763,845 77,040,977 3,722,867 4.83 Total customer funds 158,038,042 140,063,945 17,974,097 12.83 On-balance sheet 98,965,003 89,582,138 9,382,864 10.47 Retail deposits 84,469,123 78,750,001 5,719,123 7.26 Wholesale deposits 12,839,480 9,265,196 3,574,284 38.58 AUMs: Off-balance sheet managed funds 59,073,040 50,481,807 8,591,233 17.02 Equity 6,046,586 5,432,814 613,772 11.30 RESULTS Net interest income 540,714 577,686 -36,972 -6.40 Net fees & comissions 188,069 165,761 22,308 13.46 Gross operating income 731,682 658,656 73,026 11.09 Pre-provision profit 462,741 426,419 36,322 8.52 Profit before taxes 378,424 326,685 51,739 15.84 Net income 270,135 200,803 69,332 34.53 RATIOS Non-performing loans 2.16% 2.23% -0.07% -3.31 Coverage ratio 68.77% 64.11% 4.66% 7.27 Cost of risk 0.32% 0.39% -0.07% -17.95 Cost-to-income 36.76% 35.26% 1.50% 4.25 ROE 18.79% 17.36% 1.43% 8.24 ROTE 19.94% 18.42% 1.53% 8.31 RORWA 2.38% 2.28% 0.10% 4.39 ROA 0.86% 0.80% 0.06% 7.50 CET1 12.35% 12.46% -0.11% -0.89 CET1 requirement 7.94% 7.83% 0.11% 1.35 MREL (%TREA) 25.44% 23.20% 2.24% 9.67 Leverage ratio 5.07% 5.08% -0.02% -0.39 LTD 95.24% 97.12% -1.88% -1.94 LCR (12m average) 180.02% 212.46% -32.44% -15.27 HQLA's (in million of €) 18.767 19.904 -1.137 -5.71 BANKINTER SHARE Number of shares 898,866,154 898,866,154 0 0.00 Last share price (€) 10.25 6.78 3.47 51.11 EPS (€) 0.29 0.21 0.08 39.10 DPS (€) 0.12 0.11 0.01 12.27 BRANCHES & BUSINESS UNITS Branches 447 446 1 0.22 Other business units Large Corporates 25 25 0 0.00 Mid-corporate & SME 78 77 1 1.30 Private banking 48 48 0 0.00 Virtual branches 389 378 11 2.91 Independent financial agents 354 359 -5 -1.39 WORKFORCE Employees 6,674 6,562 112 1.71 4 1Q Financial Summary Introduction The cost-to-income ratio was an impressive 36.76%, among the best in the sector. The ratio, together with the NPL ratio, is a key indicator in times of uncertainty. Bankinter Group has got off to a strong start in 2025 on the back of its commercial strategy, with improvements across all its businesses and across all the countries and regions in which it operates in the first quarter, thus consolidating a steady trend of profitable and increasingly diversified growth. As a result, the Group's key indicators performed strongly during the period, including profitability, the NPL ratio and the cost-to-income ratio, where Bankinter continues to lead the sector. More precisely, Bankinter Group achieved a pre-tax profit of 378.4 million euros in the first quarter of 2025, up 15.8% on the same period of the previous year, while net profit stood at 270.1 million euros, up 34.5% year on year. In terms of the various management ratios, return on equity (ROE) improved to 18.8%, compared to 17.4% a year earlier, with ROTE of 19.9%, both ratios among the best in the sector in both Spain and Europe. The phased-in CET1 ratio stood at 12.35%, well above the ECB's minimum requirement of 7.94% for Bankinter. The NPL ratio improved by seven basis points from a year ago to reach 2.16%, below the average among Spanish and European banks. The cost-to-income ratio was an impressive 36.76%, among the best in the sector. The ratio, together with the NPL ratio, is a key indicator in times of uncertainty. Liquidity also remains at optimal levels. Meanwhile, the loan-to-deposit ratio stood at 105%. Key balance sheet figures The Group's total assets at 31 March 2025 amounted to 123,851 million euros, 9.7% more than in the same period of 2024. Customer credit amounted to 80,764 million euros, up 4.8% year on year. Total customer funds grew dynamically by 12.8% to reach 158,038 million euros. Of these, retail funds stood at 84,469 million euros (+7.3%). Off-balance sheet managed funds (own and third-party mutual funds managed and distributed by the Bank, pension funds, wealth management, and alternative investment) continued the strong upward trend seen in the previous year to reach 59,073 million euros at 31 March, 17% more than a year earlier. Key income statement figures Bankinter Group generated strong growth in revenues during the period from its business-as-usual customer activities. This is due to a diversified commercial strategy that is highly focused on value-added products and services, offering a greater return for the customer and also for the Bank through fees and commissions. This growth offset the pressure on net interest income caused by downward interest rate pressures, which, despite the growth in lending, was 6.4% lower than in the first quarter of 2024 and 1.7% lower than in the fourth quarter, at 541 million euros. This strategic focus, together with the bank's commercial drive and ongoing efforts to diversify its markets, brought gross operating income-which includes all revenues-to 732 million euros in the first quarter, up 11.1% year on year. This result was achieved thanks to a strong performance by fee and commission income earned on the various services provided by the Bank to its customers, which amounted to 234 million euros in the quarter, 9.8% more than in the same period of 2024. This notably included fees earned from Asset Management and Brokerage of 124 million euros (+15% YoY). Further highlights included the income earned from the transactional business, which amounted to 94 million euros (+1.4%). 5 1Q Financial Summary Bankinter's excellent results are down to a strategy of geographical diversification, focusing on high- value segments, and a unique commercial proposition. As a result, net fee and commission income (the difference between the income collected and that paid by the Bank to members of the Agents Network or Partner Banking) came to 188 million euros, an impressive 13.5% higher than in the same period of 2024. Pre-provision profit was 8.5% higher at 463 million euros, after absorbing operating expenses of 269 million euros, higher than those incurred a year earlier. In 2025, the aim is to have similar quarterly expenditures in absolute terms, so as to avoid heavy concentrations of expenditure in the latter half of the year, as used to happen in previous years, largely due to the weight of the variable incentives obtained owing to the excellent results achieved. Therefore, the costs for the first quarter of 2025 have been modulated accordingly and are only 2.3% above the quarterly average for 2024; a very moderate figure, albeit higher than that reported in the first quarter of 2024, and still allowing for an outstanding cost-to- income ratio of 36.76%. A strategy of sustainable and profitable growth Bankinter's excellent results are down to a strategy of geographical diversification, focusing on high-value segments, and a unique commercial proposition which, in this competitive environment, continues to attract new customers while increasing the loyalty of existing customers. All of this consolidates an ongoing trend of sustainable and profitable growth. This strategy has led to a 9% increase in customer business volumes to reach 224,000 million euros, including the loan book, retail deposits and assets under management. As part of this strategy, Spain remains by far the largest market in terms of activity for Bankinter Group. Including EVO, the Group's balance sheet in Spain features 67,000 million euros in the loan book (+5%); 77,000 million euros in retail deposits (+7%); and 127,000 million in assets under management and assets under custody (+16%). Bankinter Spain's pre-tax profit amounted to 312 million euros (+15%). The second most important geographical area for the Group is Portugal, where Bankinter continues to impress across all headings of the income statement. Looking at the balance sheet, growth was particularly strong in customer funds, climbing 19% to 9,000 million euros. Assets under management and assets under custody also reached the same level, growing 12%. Meanwhile, investment came to 10,000 million euros, up 1%. Portugal's pre-tax profit is 56 million euros, marking an increase of 19%. In Portugal, highlights include a strong performance by Universo, a project launched by the bank alongside Sonae in December 2023 and targeting the consumer credit market; a joint venture that is investing heavily in technology to enhance the customer experience, with enticing growth expected in the medium term. Similar growth prospects are forecast for the Group's business in Ireland, following its transformation from a purely consumer-focused operation into a full bank branch. The bank already manages a loan book of around 4,000 million euros in the country, 23% higher than in the first quarter of 2024, with an NPL ratio of just 0.3%. Of this portfolio, 3,000 million euros relates to mortgages (+24%), and the rest to the consumer business (+15%). Profit before tax amounted to 11 million euros in the quarter, up 18% year on year. The fact that these two countries together account for 18% of the Group's pre-tax profit is a clear indication of how well they are faring. Looking more closely at the business lines, Commercial Banking, which encompasses all activity relating to individual customers, made the biggest contribution to gross operating income. The bank's customer wealth ended the quarter at 133,000 million euros, up 11% on the same date in 2024. 6 1Q Financial Summary There was notable growth in new mortgage production in the first quarter of the year, to reach 1,650 million euros, 31% higher than in the same period of 2024. Of this total figure, 74,000 million euros related to Wealth Management clients, compared with 68,000 million euros a year earlier. This segment encompasses the Bank's high net worth business, where Bankinter maintains a distinct value proposition, designed to meet all of its customers' needs and investments in a comprehensive manner. The other segment, Retail Banking, reported 59,000 million euros in customer wealth, 12.5% more than a year ago. In Commercial Banking, the Asset Management business outperformed once again, following an already very successful 2024. Within this segment, mutual funds continued to play a prominent role. Assets in own mutual funds amounted to 16,623 million euros, up 19.1% year on year, with a further 24,758 million euros in third-party mutual funds (+16.7%). There was also notable growth of 25.7% in Wealth Management, which totalled 8,173 million euros, and 5,121 million euros was channelled into alternative investments, where the Bank happens to be one of the largest players operating in the market. Meanwhile, the volume of fixed income and equity portfolios in the Bank's custody stood at 76,566 million euros (+14.2%). The bank's stellar range of salary accounts and digital accounts also outperformed during the period. The former have been consistently outstanding in terms of the interest they pay, among other attractive terms and conditions, while the latter offer an array of highly innovative features. The number of such accounts now stands at 736,000, 7% more than a year ago. On the lending side of the business, there was notable growth in new mortgage production in the first quarter of the year, to reach 1,650 million euros, 31% higher than in the same period of 2024, and bringing Bankinter's market share to 7% in Spain, 6% in Ireland and 6% in Portugal. Bankinter Group's total mortgage portfolio at 31 March 2025 stood at 37,100 million euros, 6% higher than in March 2024. Meanwhile, Bankinter's other main area for the business and customers, namely Corporate & SME banking, continued to post consistently strong results, with a loan portfolio of 35,000 million euros, up 5% year on year, showcasing the bank's firm commitment to supporting the productive industry and business community. Looking solely at Spain, Bankinter reported 6% growth in its loan book, while the wider sector delivered a flat performance, according to Bank of Spain data as of February. Last but not least, the Bankinter share fared remarkably well during the period, having increased in value by 51.1% between 31 March 2024 and 31 March 2025. 7 1Q Financial Summary Balance sheet Var. Var. Thousand Euros 31/03/25 31/03/24 € % 31/12/2024 € % ASSETS Cash, at central banks and other demand deposits Financial assets held for trading Financial assets at fair value through other comprehensive income Non-trading financial assets mandatorily at fair value through profit or loss Assets at amortised cost Debt securities Loans & advances Credit institutions Customers Derivatives - hedge accounting Investments in subsidiaries, joint ventures and associates 11,564,316 9,881,362 1,682,954 17.03 15,417,808 -3,853,492 -24.99 4,649,826 4,680,486 -30,660 -0.66 3,372,005 1,277,822 37.90 1,012,687 1,083,458 -70,771 -6.53 918,429 94,258 10.26 272,722 179,030 93,692 52.33 281,391 -8,669 -3.08 103,765,393 94,725,974 9,039,419 9.54 99,383,287 4,382,106 4.41 14,140,470 11,302,419 2,838,051 25.11 14,226,418 -85,948 -0.60 89,624,922 83,423,555 6,201,367 7.43 85,156,869 4,468,054 5.25 11,931,431 9,133,557 2,797,874 30.63 8,096,539 3,834,892 47.36 77,693,491 74,289,998 3,403,493 4.58 77,060,329 633,162 0.82 493,335 437,535 55,801 12.75 524,645 -31,309 -5.97 254,125 241,600 12,526 5.18 244,605 9,520 3.89 Tangible assets Intangible assets Tax assets and other assets Non-current assets and disposal groups classified as held for sale 446,237 427,390 18,848 4.41 446,639 -402 -0.09 317,719 300,032 17,687 5.89 320,446 -2,728 -0.85 913,785 800,921 112,864 14.09 898,045 15,740 1.75 161,117 180,467 -19,350 -10.72 164,523 -3,406 -2.07 TOTAL ASSETS 123,851,262 112,938,254 10,913,009 9.66 121,971,823 1,879,440 1.54 LIABILITIES Financial liabilities held for trading 1,562,880 4,147,062 -2,584,182 -62.31 3,419,667 -1,856,788 -54.30 Financial liabilities at amortized costs 114,425,509 101,595,506 12,830,003 12.63 110,942,549 3,482,960 3.14 Deposits 101,935,044 91,123,095 10,811,949 11.87 99,471,397 2,463,647 2.48 Central banks 277,393 0 277,393 -- 0 277,393 - Credit institutions 11,260,649 11,052,355 208,294 1.88 13,162,693 -1,902,044 -14.45 Customers 90,397,003 80,070,741 10,326,263 12.90 86,308,705 4,088,298 4.74 Debt securities issued 9,279,878 8,033,557 1,246,321 15.51 8,975,934 303,944 3.39 Other financial liabilities 3,210,587 2,438,853 771,733 31.64 2,495,218 715,369 28.67 Derivatives - hedge accounting 263,443 468,766 -205,323 -43.80 480,654 -217,211 -45.19 Provisions 305,073 333,762 -28,688 -8.60 333,840 -28,767 -8.62 Tax liabilities and other liabilities 1,247,772 960,344 287,428 29.93 917,448 330,324 36.00 TOTAL LIABILITIES 117,804,676 107,505,440 10,299,237 9.58 116,094,158 1,710,518 1.47 Shareholders' Equity 6,057,247 5,534,034 523,214 9.45 5,908,327 148,920 2.52 Accumulated other comprehensive income -10,661 -101,219 90,558 -89.47 -30,663 20,002 -65.23 Total equity 6,046,586 5,432,814 613,772 11.30 5,877,665 168,921 2.87 TOTAL EQUITY AND LIABILITIES 123,851,262 112,938,254 10,913,009 9.66 121,971,823 1,879,440 1.54 8 1Q Financial Summary Customer funds Var. Thousand Euros 31/03/25 31/03/24 € % RETAIL FUNDS 84,469,123 78,750,001 5,719,123 7.26 Government entities 1,890,957 1,615,848 275,108 17.03 Private sector 78,793,960 74,499,403 4,294,557 5.76 Sight accounts 56,881,871 53,146,559 3,735,312 7.03 Term deposits 21,701,753 21,055,731 646,022 3.07 Valuation adjustments 210,336 297,113 -86,777 -29.21 Other sight deposits 951,998 589,359 362,639 61.53 Retail commercial paper 2,832,208 2,045,390 786,818 38.47 REPURCHASE AGREEMENTS (REPOS) 1,656,400 1,566,942 89,458 5.71 WHOLESALE FUNDING 12,839,480 9,265,196 3,574,284 38.58 Institutional deposits 6,947,826 3,958,153 2,989,673 - Securitised bonds 80,472 99,612 -19,140 -19.21 Covered bonds 1,752,430 2,743,085 -990,655 -36.11 Senior bonds 3,990,823 2,494,708 1,496,115 59.97 Valuation adjustments 67,929 -30,362 98,291 -323.73 TOTAL ON-BALANCE SHEET FUNDS 98,965,003 89,582,138 9,382,864 10.47 Var. Thousand Euros 31/03/25 31/03/24 € % AUMs: OFF-BALANCE SHEET FUNDS Mutual funds with third parties 24,758,078 21,217,466 3,540,612 16.69 Mutual funds 16,623,018 13,960,140 2,662,878 19.07 Pension funds and insurance contracts 4,397,631 4,145,010 252,621 6.09 Wealth management 8,173,017 6,500,488 1,672,529 25.73 Alternative Investment funds 5,121,296 4,658,703 462,593 9.93 TOTAL AUMS 59,073,040 50,481,807 8,591,233 17.02 Var. Thousand Euros 31/03/25 31/03/24 € % AUCs: OFF-BALANCE SHEET CUSTODY SECURITIES Equity securities 51,223,348 43,348,291 7,875,057 18.17 Fixed income securities 25,342,846 23,703,447 1,639,399 6.92 9 1Q Financial Summary Customer lending Var. Thousand Euros 31/03/25 31/03/24 € % GOVERNMENT ENTITIES 1,585,845 1,990,562 -404,717 -20.33 PRIVATE SECTOR 76,107,646 72,299,436 3,808,211 5.27 Commercial bills 3,235,278 3,169,576 65,702 2.07 Secured loans 42,838,945 40,260,457 2,578,488 6.40 Other credit facilities 25,483,142 24,354,426 1,128,716 4.63 Personal loans 17,057,107 15,807,872 1,249,235 7.90 Credit lines 8,261,057 8,397,752 -136,695 -1.63 Other term lending 164,978 148,802 16,176 10.87 Leasing 558,919 604,405 -45,486 -7.53 Non-performing loans 1,924,322 1,895,145 29,177 1.54 Loan loss allowances -707,179 -694,456 -12,723 1.83 Other credits 2,774,219 2,709,883 64,336 2.37 LOANS AND ADVANCES - CUSTOMERS 77,693,491 74,289,998 3,403,493 4.58 Other customer assets at amortised cost 3,070,353 2,750,979 319,374 11.61 TOTAL 80,763,845 77,040,977 3,722,867 4.83 OFF-BALANCE SHEET RISKS Contingent risks 8,378,992 7,865,110 513,882 6.53 Undisbursed amounts 18,360,632 16,267,085 2,093,547 12.87 TOTAL 26,739,625 24,132,196 2,607,429 10.80 10