By Jesús Aguado
MADRID (Reuters) – Spain’s Caixabank expects higher interest rates to boost its lending income by around 30% this year, it said on Friday after posting better than expected quarterly and annual results, sending its shares around 3% higher.
Spain’s biggest domestic bank said its net profit last year rose 29.7% on a like-for-like basis to 3.15 billion euros ($3.43 billion) from 2021, stripping out accounting gains from the acquisition of former rival Bankia.
Analysts had expected a net profit of 3.05 billion euros.
Taking into account the 4.3 billion “bad will” gain – a paper profit made when an asset is bought below its book value – from the Bankia takeover in 2021, net profit was down 39.8%.
For the fourth quarter, net profit jumped 62% to 688 million euros, beating forecasts of 620 million euros.
Earnings were boosted by stronger-than-expected net interest income (NII) and lower costs. However, the bank forecast recurring costs would rise to up to 6.4 billion euros in 2023 from 6 billion euros in 2022 in a high inflation scenario.
At 0934 GMT, Caixabank shares were up 2.8%, outperforming Spain’s blue-chip Ibex-35 index.
While talking to analysts after the results, Caixabank’s chief financial officer Javier Pano had to leave the room as he was feeling unwell.
Banks in Europe are beginning to benefit from higher interest rates, but some are setting aside more bad debt provisions due to an uncertain economic environment.
Caixabank’s cost of risk, which manages credit risks and potential losses, rose to 25 basis points from 23 basis points at end-September. The lender said it expected its cost of risk to rise to less than 40 basis points this year.
Loan loss provisions rose 26% year-on-year in the quarter.
NII, or earnings on loans minus deposit costs, rose 33% year-on-year to 2.07 billion euros in the fourth quarter, beating forecasts of 1.88 billion euros.
In 2022, lending income was 16% higher than in 2021, at 6.92 billion euros, and the bank sees it rising about 30% to 9 billion euros this year, supported by higher loan yields.
Caixabank proposed to shareholders a gross cash dividend of a 0.2306 euros per share against 2022 earnings, up 58% on 2021, and equivalent to a 55% pay-out.
It aims to maintain its 2022 dividend cash pay-out policy of 50-60% for 2023 and said it was on track to reach its target to distribute up to 9 billion euros over 2022-2024.
($1 = 0.9182 euros)
(Reporting by Jesús Aguado; additional reporting by Emma Pinedo; Editing by Inti Landauro and Mark Potter)
