Bankinter beats profit forecast, sees lending income holding up

By Jesús Aguado

MADRID (Reuters) -Spain's Bankinter on Thursday stuck to its forecast for lending income to hold up this year after net profit in the first quarter beat forecasts, supported by a pick up in demand for loans in its home market.

Spanish banks are mainly retail lenders and have benefited from higher costs of loans tied mostly to variable rates. However, recent reductions in European Central Bank interest rates are now starting to squeeze margins.

In the first quarter, Bankinter's net interest income, or earnings on loans minus deposit costs, fell 6% year-on-year to 541 million euros, in line with analysts' forecasts. Against the previous quarter, NII fell 2%.

"With recent volatility and some marketing uncertainty it is very hard to predict future interest rate movement, but we're still not changing our previous flattish or slightly positive guidance on net interest income for 2025," Bankinter's Chief Financial Officer Jacobo Diaz told analysts.

At 0942 GMT, shares in Bankinter were up 1.8% compared with a decline of 0.4% in Spain's blue-chip index Ibex-35.

Diaz expected lower deposit costs and a mid-single-digit percentage increase in loans to support margins this year, adding that NII should begin to recover in the second quarter.

Bankinter's customer spreads decreased to 2.71% from 2.74% in the previous quarter, as yields on loans declined 19 basis points while deposit costs fell 16 bps.

Net profit rose 35% to 270 million euros, beating estimates of 224 million euros after the bank did not book any charges in the quarter related to a renewed banking tax. Chief Executive Officer Gloria Ortiz said that overall the bank expected the impact of the tax to be "around zero or close to zero" due to some tax deductions.

In the first quarter of 2024, Bankinter had reported a 95 million euro cost related to the levy.

Ortiz also stuck to the bank's net profit goal of around 1 billion euros for this year.

First-quarter earnings were also boosted by a 13% increase in net fees and commissions, while loans rose 5% against the same quarter of 2024.

(Reporting by Jesús Aguado. Editing by Inti Landauro and Mark Potter)