Spain's Unicaja targets 40% profit rise, investors welcome dividend policy

By Jesús Aguado

MADRID (Reuters) -Spanish bank Unicaja said on Tuesday it planned to invest around 250 million euros ($258 million) in information technology and hire 300 employees as part of a new strategy targeting a 40% profit increase over three years.

Unicaja reported a fourth quarter net profit of 122 million euros, 22% less than in the previous quarter, but cheered investors with a increased dividend policy, with its shares up by 5.2% at 1050 GMT.

Spain's sixth-largest bank by market value said it aimed to increase its profit with a push into business lending in order to offset pressure from lower interest rates. It also pointed to a more benign economic outlook in its home market.

Unicaja aimed to "progressively grow in business lending where we expect higher demand for loans from our clients", its CEO Isidro Rubiales said after the bank reported its results.

Spanish banks have benefited from higher costs of loans tied mostly to variable rates but declines in Euribor are eating into lending rates of mortgage books at banks such as Unicaja.

Unicaja aims to raise its profit by over 40% to more than 1.6 billion euros over the course of its 2025-2027 plan compared to the previous three years, increasing its market share in small and mid-sized company lending by around 50 basis points.

The bank said its net interest income, a measure of earnings on loans minus deposit costs, fell 0.8% in the fourth quarter of 2024 against the third to 381 million euros, above analysts' average forecast of 364 million euros.

NII rose 14% to 1.54 billion euros in 2024, but Unicaja said it expected NII of just over 1.4 billion euros this year.

Unicaja also announced shareholder remuneration of 344 million euros against 2024 results, after proposing a dividend of 0.134 euros per share, equivalent to a pay-out of 60%, compared to a previous pay-out policy of above 50%.

In total the remuneration rose to 444 million euros, including an already announced buyback of 100 million euros.

For 2025-2027, Unicaja said it aimed for an above 85% pay-out policy, of which 60% would correspond to its ordinary dividend policy and 25% to extraordinary remuneration, with the latter to begin from 2026.

($1 = 0.9671 euros)

(Reporting by Jesús Aguado; Editing by Inti Landauro, Mark Potter and Alexander Smith)