A rise in lending income, underpinned by higher interest rates and solid loan growth, boosted financial margins at Spain's Bankinter (BKT.MC) in the third quarter, sending its shares up as much as 4% on Thursday.
Banks across Europe are beginning to benefit from higher borrowing costs that are typically a boost for retail lenders despite the economic uncertainty and fears of recession.
In the third quarter, net interest income (NII), earnings on loans minus deposit costs, rose 27% year-on-year to 400 million euros, the lender said. That beat the 361 million euros forecast by analysts and was 16% higher than in the second quarter.
For the first nine months, NII grew 12% and Chief Financial Officer Jacobo Diaz raised the lender's growth guidance for NII to double-digit growth from a previously mid-to-high single-digit growth forecast for 2022 thanks to the positive repricing of its loan book.
Bankinter kicked off banking results in Spain and is seen as setting the tone for the rest of the domestic sector.
Shares in the lender led gains on Spain's blue-chip index (.IBEX), rising around 4% and outperforming the index, which was just up 0.11%. At 0809 GMT, shares in Sabadell were up 4.2%, Unicaja (UNI.MC) rose 3.9% and Caixabank firmed 2.2%. Analysts welcomed the results and highlighted the improvement in lending income despite a 5% decline in net fees and commissions.
"This strength more than offset weaker than expected net fees," Nuria Alvarez, analyst at Madrid-based brokerage Renta 4 said, adding that though provisions rose 20% in the quarter, this was below expectations.
Customer spreads and net interest margins rose 15 basis points and 21 basis points, respectively, from the second quarter while the loan book grew 10.3% in the first nine months compared to the same period of 2021. Bankinter's net profit rose 44% to 159 million euros from the same period a year ago.
Net profit was also above the 135 million euros in the third quarter of 2019, before the outbreak of the COVID-19 pandemic. Analysts polled by Reuters expected a net profit of 148 million euros.
