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Bankinter made $271 million through June, up 11% year over year, despite splitting from Direct Line

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Bankinter earned 271 million euros in the first half of the year, as the National Securities Market Commission (CNMV) announced on Thursday. That’s down 76.2% from last June, when it recorded multi-million dollar capital gains from its IPO spin-off from Línea Directa (it had a profit of $1,140 million at the time). Excluding these segregation effects, the company’s profit grew by 10.8%, a respectable increase despite the fact that the insurance premium is included in the period up to the end of April.

Profit before tax of banking activity reached 374 million, 30% more than a year ago in comparable figures excluding the contribution of Línea Directa. Return on equity (ROE) increased two points to 11.6% and CET1 capital ratio fully loaded was 11.9%. Sales also picked up: the gross margin increased by 5.3% to EUR 962.8 million. “69% of this income comes from interest margin and 32% from commissions derived from operations,” explains the bank.

“All business lines and P&L margins and key indicators show growth compared to the same period in 2021, confirming Bankinter’s ability to deliver pure banking revenue from Direct Line, which separated from the bank at the end of April 2021,” raises the entity in an opinion.

The bank, managed by María Dolores Dancausa, CEO of the group, thus fills the profit gap contributed by the insurer thanks to the increase in pure banking business. A positive behavior achieved through a normalized activity in the first six months marked by strong growth after the Corona crisis. However, the clouds are returning and becoming more visible during a “period of economic uncertainty,” as defined by the entity. On the one hand, there is the Russian invasion of Ukraine: it does not affect Spanish banks directly, as their exposure to both countries is minimal. But in the long run it will hit them because the negative impact on the economy is already being felt.

Added to this is the setback caused by galloping inflation, which is also linked to the energy crisis caused by the war. In June, the price spiral in Spain even exceeded the 10% mark. In this context, the European Central Bank (ECB) will proceed with an interest rate hike this Thursday. First, she announced that the increase would be 25 points, although it is not excluded that it could be as high as 50 points due to inflationary pressures in the Union. Some increases that will help banking and give it oxygen in its profit and loss accounts, although they will not be visible until at least a year later (loans linked to the price of money, such as mortgages based on of Euribor are normally reviewed every 12 months). Naturally, this will put pressure on default, which in the case of the Dancausa-led company stood at 2.11% through June (down 0.23 points from H1 2021).

As usual, Bankinter opens the curtain for the presentation of the bank results in Spain. And this on this occasion with the sector in the eye of the hurricane, following the announcement by Prime Minister Pedro Sánchez of a new tax for the financial sector, with which he hopes to raise 3,000 million in two years. The President, during his State of the Union address, justified the toll on the banking system for the additional benefits that companies will reap from the aforementioned rate hike, although it will take time.

What this tax will consist of has not yet been determined. One of the options under consideration is to tax all interest and commissions collected from companies at a rate that could be around 5%. In this first half of the year, Bankinter closed with an interest margin of 665.7 million euros (up 4.1% on the same period last year) and net commissions of 303 million euros (an increase of 15%). On the expenses side, the company’s operating expenses are up 4.2% to $428 million.

More wealth and credit investment volume

The Group’s total assets closed the first half of the year at EUR 111,489.7 million, 8.6% more than a year ago. The volume of loan deposits to customers increased by 8.3% to 7 2,445.9 million. And the resources of retail customers reached 77,546.8 million euros, up 13%.

Bankinter highlights the good performance of its products, including Payroll, which continues to grow: “All categories of commercial banking products have performed well. This is the case of the Salary Account, one of the bank’s main sources of deposits, whose assets in June this year amounted to 16,500 million euros, 17% more than a year ago, and its growth rate accelerated despite the emergence of other types of commercial offers in the market direct competition”.

On the mortgage side, the company ended June with volume of 32,800 million euros if one includes volume under management in Ireland by its Bankinter, EVO Banco and Avant Money brands. The growth of the mortgage portfolio in Spain was 6.3% with new production of 3,400 million (15% more than the same period in 2021, according to the bank).

By geographic area, Bankinter Portugal’s indicators continue to rise: the investment portfolio grew by 10% to 7,500 million euros and client deposits increased by 19% to 6,500 million euros. “All this growth in balance translates into improvements in all of the account’s margins, starting with the interest margin, up 11% from a year ago; or gross margin, which rose 9%, with a strong commission push. All this leads to a profit before provisions of 37 million euros, 14% higher than a year ago. And with a profit before tax of 30 million euros, 16 percent more,” the banknote collects.

Source elpais.com

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