Bankinter achieves record profit of 845 million in 2023

Bankinter was responsible for the start of the results reporting season for another quarter. Thanks to the rate increase, the company achieved a record profit of 845 million euros in 2023. As Bankinter announced, all business areas are developing at a “good pace”, which has led to further growth in market share.

“Favorable dynamics of interest rates, growth in volumes across all balance sheet items and more active management of the bank’s assets
customers brought with them significant revenue growth and improvements in profitability and efficiency,” they said in a statement.

Thus, Bankinter Group will achieve profit before tax in the amount of 1,228.8 million euros in 2023, which is 56.5% more than a year ago. In turn, net profit reached 844.8 million euros, up 50.8% on the previous year, despite the impact of the new tax on the financial sector, which for Bankinter amounted to 77 million euros.

In terms of various account ratios, return on equity, ROE, reaches a historic high for the bank: 17.1% from 12% a year ago, with an ROTE of 18.2%. The CET1 capital ratio at full capacity in turn reaches 12.3%, while the regulatory minimum required by the ECB from Bankinter, which is the lowest among listed banks in Spain, is 7.8%.

Bankinter appears to be happy with its liquidity. The bank’s deposits over loans ratio is 106%, up from 102.8% a year earlier.

The group’s total assets as at 31 December 2023 amount to EUR 113,011.6 million.

In Spain, lending grew less strongly than for the group as a whole, at 1%. The company points out that this is due to the “biggest weakness” in the Spanish property market. Spain’s financial sector portfolio, that is, as a whole, falls by 3.5% according to Bank of Spain data as of November.

There has also been a decrease in the number of residential mortgage loans. In Spain there was a slight drop of 0.1%, although the company points to some recovery in the last quarter. However, this small drop is much lower than the fall of the sector as a whole, which fell 3.3% as of November, according to Bank of Spain data. In terms of assets, the Group’s total residential mortgage loans stood at €34.9 billion at the end of the year, up 3.5% year-on-year.

As for the new mortgage production created this year, the total figures for the Group, including EVO Banco, amount to €5.8 billion, with 39% of these mortgages having a fixed rate. This is 14% less than the commissioning of new production in 2022, which turned out to be a very positive year and was associated with a drop in activity in the real estate market.

As for retail customer resources, they amount to 81,574.8 million euros, which is 8.5% more than the same figure 12 months ago. The bank’s off-balance sheet funds under management also increased significantly by 18.1% to €43.937 million, driven by both the acquisition of new business and a shift within the bank from other products.

The upward trend in interest rates, greater commercial momentum across all customer segments and in all countries resulted in margins across all accounts increasing significantly year-on-year to historical levels. Thus, the interest margin reached EUR 2,213.5 million, which is 44% more than at the end of 2022.

In terms of gross profit, which includes all Group revenues, it reaches a record level of 2,660.5 million euros, an increase of 27.7% over the year. The annual growth rate of this margin over the past 5 years has been 13%.

Income from commissions charged for the various services and valuable activities offered by the bank to its clients amounted to 817 million euros, of which 196 million came from the asset management business. Net commissions (the difference between those collected and those that the bank pays to third parties) amounted to 624.3 million, an increase of 3%.

And in terms of operating margin before provisions, the year ended at €1,667.2 million, up 43%, after covering operating expenses, which increased by 8%, taking into account higher variable remuneration for staff on achieving targets. accepting the costs associated with creating a new joint venture in Portugal, but in any case these costs are lower than income growth.

The largest contribution to the bank’s gross profit comes from the corporate business, where Bankinter offers highly specialized services, the origins of which go back to the very origins of Bankinter, which not in vain emerged as an industrial bank. The business loan portfolio, which, unlike the sector, has not stopped growing in recent years, reaches a volume of 32.8 billion euros, an increase of 4.6% over the year. For the Spanish portfolio, growth was 2.8%, compared with a 5% decline in the sector, according to Bank of Spain data as of November.

International business has become an important bastion of this activity, with the investment portfolio increasing by 11% over the year to reach €8.8 billion. Some recent ventures created within the framework of international banking, such as the so-calledSupply Chain Finance‘, increased their volume fivefold during the year – a solution for companies with overseas operations that has found excellent acceptance.

As for the commercial banking business or private individuals, the result during the year was very good both in attracting resources and in attracting clients: assets under management at the end of the year amounted to 103,000 million euros, representing an increase of 11% compared to a year ago. with the new net asset value in 2023 amounting to 6,000 million euros.

The segment that brings together clients with a higher financial and economic profile, Wealth Banking, ends a fruitful year with assets under management of 57,800 million euros, compared to 51,100 the year before. Over the past five years, starting in 2018, assets in this segment have grown by 62%. This year alone, Bankinter increased the net worth among these clients to 3.2 billion.

As for retail banking, which brings together the rest of the clients, assets under management reach 45,600 million euros, 10.1% more than the same figure at the end of 2022, and new net assets received this year amount to 2,800 million

In terms of commercial banking products, it was a good year for the development of resources managed off-balance sheet (investment funds, proprietary and third-party funds, pension funds, asset management and SICAV), which contribute more to the bank. through commissions, as well as for the client. The growth of these resources managed off-balance sheet amounted to 18% over the year, or what is the same: an increase of 6,700 million compared to the end of 2022. In terms of products, own investment funds increased by 15%; third-party funds do this at 18%; 12% more pension funds; and 30 percent growth in the asset management and SICAV business.

Regarding the evolution of the payroll account portfolio, it saw a fall in balances of EUR 13,000 million during the year compared to EUR 16,700 million in 2022, although the number of accounts increased by 4%, meaning that this category is leading the categories. the product is still able to attract new customers and accounts. The evolution of this type of account over the past five years has been very positive, with the portfolio increasing by 57% during this period.

Bankinter Investment, the bank’s investment banking subsidiary, has become increasingly prominent in the Group’s accounts, contributing to the bank’s gross profit, which this year reached €233 million after fees and interest margins. As part of its alternative investment business, where it achieves leadership in Spain, the subsidiary has already launched 23 structured companies investing in various projects in the real economy, with committed capital of $4.7 billion.

Among the various geographical regions in which the bank operates, in addition to Spain, Portugal stands out, whose contribution to the bank’s gross profit already reaches 10% and which this year has exceeded expectations with optimal results in all areas.

In terms of credit investments, Bankinter Portugal ended 2023 with a portfolio of 9.2 billion euros, up 16% from a year ago, of which 6.1 billion came from commercial banking and the rest from business banking. All this with a default of 1.3%. In turn, customer funds grew by 32% to €8,400 million, while funds under off-balance sheet management grew by 2% to €4,000 million.

Management of this balance is reflected in the good performance of all margin accounts. Thus, the interest margin increases by 85%; 61% more gross profit; and increasing the margin before reserves to 112%. All this leads to pre-tax profits of €166 million, up 114% from a year ago. The country’s efficiency ratio continued its improvement path until it reached 33.4%, up from 49.5% a year ago.

As for Ireland, where the bank operates through the Avant Money brand, the investment portfolio reaches up to 3 billion euros, with an increase of 34% compared to 2022, of which 2,200 million are in mortgages, the portfolio of which grew by 41%, and the rest in consumer financing, increasing by 19%.

All Avant Money activities are consolidated in the subsidiary Bankinter Consumer Finance, whose contribution to the bank’s gross profit this year amounted to 397 million, which is 16% more than in 2022. The subsidiary’s investment portfolio increased by 23%, adding €6.8 billion at the end of the year, of which €2.2 billion corresponded to the aforementioned Irish mortgages and the remainder in consumer finance. The most important part of consumption is consumer loans, 3.1 billion euros, or 19% more, while the rest comes from card transactions in its various forms.

Regarding the digital brand of the EVO Banco group, it has reached break even of its activities, with gross revenues of 66 million euros, an increase of 78%. The evolution of the brand’s investment portfolio continues to grow continuously and at the end of the year reached 3.393 million euros, an increase of 25% compared to 2022, with a default rate of only 0.5%. As for new mortgage production, it suffers from the weakness of the real estate sector and, despite receiving a loan volume of 873 million, this is 11% less than a year ago.

Finally, within the framework of sustainable development, full compliance with the Plan for 2021-2023, called “3D”, is highlighted, within which 20 strategic directions have been developed, distributed in 50 programs and 580 actions. With its help, Bankinter outlined milestones such as its portfolio decarbonization strategy. Bankinter is already working on a new plan for 2024-2026, recently approved, much more ambitious and structured in three areas: responsible action (based on ethics, transparency and good governance), differentiation and sustainable business.