Bankinter Reports Growth and Resilience in Q3 2024
On October 25, 2024, in an earnings call led by Bankinter (BKT.MC) CEO Gloria Ortiz and CFO Jacobo Diaz, the bank demonstrated a robust financial performance for the third quarter of 2024. The bank reported significant growth in its loan portfolio and retail deposits, while off-balance-sheet products recorded a remarkable year-on-year increase of 23%. Net profit rose by 7% to €731 million, with total business volumes reaching €215 billion. Despite the impact of the weaker euro on net interest income margins, the bank maintained a strong customer margin and reported a solid return on equity of 17%.
Key Highlights
- Bankinter’s loan portfolio grew by 5%, and retail deposits increased by 4%.
- Off-balance-sheet products showed significant growth of 23% compared to the previous year.
- Net profit rose by 7% year-on-year to €731 million.
- Despite a 47-basis-point decline in the euro, the customer margin remained strong at 2.86%.
- The bank's diversified revenue model and expansion into Portugal and Ireland contributed to its solid performance.
Company Outlook
Bankinter aims for mid-single-digit growth in net interest income and low to mid-single-digit growth in fee income for the year. Management expressed confidence in the bank's ability to effectively manage its balance sheet amid growth trajectories and interest rate changes. The bank plans to grow its deposit base in Ireland to close funding gaps and enhance customer engagement.
Negative Highlights
The decline in the euro over the past 12 months impacted net interest income (NII) margins. There was no credit growth in Q3, which deviates from typical seasonal patterns, especially in Spain.
Positive Highlights
Strong fee income and solid management ratios were reported, with fee income growing by 14% year-to-date. A solid return on equity of 17%, well above the cost of capital, indicates strong shareholder returns. The bank's non-performing loans ratio of 2.2% remains significantly below industry averages, indicating strong asset quality.
Shortcomings
Although the bank reported strong financial metrics, the expected volatility from interest rate changes may pose challenges.
Q&A Highlights
Jacobo Diaz addressed the modest growth potential of the ALCO portfolio, confirming expected increases in total income for 2025. A decrease in deposit costs is anticipated as 65% of term deposits will be repriced in Q4 2023. Management emphasized the strategic management of new deposits in Portugal and the opportunity to reduce deposit costs in the future.
In summary, Bankinter’s Q3 2024 earnings call reflected a resilient growth strategy and efficient management in overcoming the challenges posed by fluctuating interest rates. The bank's strong performance in core revenues and its commitment to maintaining robust management ratios and shareholder returns position it well for the future. Management remains optimistic about the bank's ability to achieve sustainable growth and effectively manage deposit costs in the face of changing market conditions.