By Jesús Aguado
MADRID (Reuters) -Lending income at Spain’s Bankinter fell in the third quarter compared to the previous quarter as the impact of lower interest rates began to squeeze margins.
Spanish banks have benefited from the higher cost of loans tied mostly to variable rates that have been passed onto customers, while savers have been given smaller increases.
Declines in the Euribor, the benchmark banks use to set the price for mortgage loans, are starting to feed into lending rates.
Bankinter’s net interest income (NII), earnings on loans minus deposit costs, was almost flat in the quarter compared to a year ago and reached 568 million euros ($613.21 million), slightly below the 573 million euros analysts expected. Against the previous quarter, NII fell 2%.
Against that backdrop, Bankinter’s customer spreads decreased to 2.86% from 3.01% in the previous quarter, as yields on loans declined 8 basis points while deposit costs rose 7 bps.
At 08.22 GMT, shares in Bankinter were down 0.2% after an initial fall of more than 3%, while Spain’s blue-chip index rose 0.5%.
“The print (results) confirms NII has already peaked (…) with asset margins narrowing and cost of deposits surprisingly ticking up,” Jefferies said in a note to clients.
In July, Bankinter upgraded its NII guidance for this year from stable to close to mid-single digit growth as it was expecting just two more rate cuts from the European Central Bank in the short-term but rate cuts have accelerated since then.
On Thursday, Bankinter’s Chief Financial Officer Jacobo Diaz maintained that guidance but added: “We may land close to the lower end of this target if rates keep sliding down as fast as they have done in the past days and weeks.”
Jefferies said Bankinter’s growth guidance would imply NII up 5% q/q in 4Q, which it considered unlikely.
Net profit in the third quarter fell 3% year-on-year to 258 million euros, in line with analysts’ forecasts, despite an increase of 15% in net fees and commissions as the market shifts the focus towards more sustainable profitability drivers.
($1 = 0.9269 euros)
(Reporting by Jesús Aguado; additional reporting by Emma Pinedo; editing by David Latona and Barbara Lewis)
