Unicaja's Q3 net profit rises 10% on loans; deposit costs rise

Unicaja Posts 10% Q3 Net Profit Gain Driven by Higher Loans, Deposit Costs Up

Unicaja’s Q3 2023 Financial Performance Overview

MADRID, Oct 30 (Reuters) - Spanish lender Unicaja on Friday reported a 10% rise in third-quarter net profit, beating forecasts, on the back of higher loans supported by solid economic growth in Spain.

Spanish banks have historically benefited from variable-rate lending. Higher interest rates are starting to support margins on loan books, though that is being partially offset by faster repricing in deposits paid out to clients.

Key Financial Highlights

Net Profit and Analyst Expectations

• Spain's sixth-largest lender by market value reported net profit of €182 million ($203 million) in the July-to-September period, above the €171 million forecast by analysts in a Reuters poll.

Profit Growth Outlook

• The bank expects mid-single-digit growth in net profit in 2026.

Net Interest Income (NII) and Deposit Costs

• Net interest income, a measure of earnings on loans minus deposit costs, rose 5.5% year-on-year in the quarter to €395 million, compared to forecasts of €392 million. NII rose 3.5% from the previous quarter after costs of deposits rose 6 basis points, quarter-on-quarter.

NII Growth Projections

• Unicaja expects low-to-mid-single-digit growth in NII in 2026.

Lending Activity

• Performing loans rose 4.9% year-on-year in the third quarter.

Consumer, Mortgage, and Business Lending

• New consumer lending rose around 50% year-on-year in the quarter, while new mortgage lending was up 11% in the same period. New business loans fell around 10%.

Capital Ratio and Solvency

• The bank's fully loaded core tier-1 capital ratio, the strictest measure of solvency, fell to 15.4% from 15.7% in the previous quarter as higher rates reduced the value of its sovereign bond holdings and broader debt portfolio.($1 = 0.8957 euros)

(Reporting by Jesús Aguado; Editing by David Latona)