Bankinter Q1 2025 presentation: Net profit jumps 35% despite interest income pressure

Introduction & Market Context

Bankinter (BME:BKT) released its Q1 2025 earnings presentation on April 24, 2025, revealing a 35% increase in net profit to €270 million despite pressure on interest income. The Spanish bank’s shares rose 3.48% following the announcement, reaching €9.99, as investors responded positively to the strong results.

The bank demonstrated robust performance across key metrics, with customer volumes growing 9% year-over-year and a return on tangible equity (ROTE) of 19.9%. These results highlight Bankinter’s ability to navigate the changing interest rate environment through diversified revenue streams and operational efficiency.

As shown in the following summary of Q1 2025 highlights:

Quarterly Performance Highlights

Bankinter reported significant growth in customer volumes, with loan book up 5%, retail deposits up 7%, and assets under management (AUMs) increasing by 17% compared to Q1 2024. This volume growth was achieved while maintaining strong asset quality, with a non-performing loan (NPL) ratio of 2.16%, well below sector averages across all markets.

The bank’s efficiency continues to improve, with a cost-to-income ratio of 36.7%, placing Bankinter in the first quartile among European systemic institutions. This operational efficiency, combined with strong fee income growth of 13%, helped offset a 6% decline in net interest income (NII).

The following chart illustrates volume growth across Bankinter’s geographic markets:

Spain remains the dominant contributor to Bankinter’s business, representing 88% of customer volumes and 82% of profit before taxes. However, the bank is seeing strong growth in its international operations, with Ireland showing the most impressive year-over-year growth at 23%, albeit from a smaller base.

Detailed Financial Analysis

Bankinter’s gross operating income increased by 11% to €732 million, driven primarily by strong fee performance and the absence of the bank levy in this quarter. While "core" revenues decreased by 2%, the decline in net interest income was more than offset by the 13% increase in fee income.

The following chart details the evolution of gross income components:

Fee income has become an increasingly important revenue driver for Bankinter, with management and brokerage fees representing 53% of total fee income. The bank reported robust fee growth across all categories: Management & Brokerage fees up 15%, Transactional fees up 4%, and Insurance fees up 7%.

As illustrated in this breakdown of fee income:

Asset quality remains a key strength for Bankinter, with NPL ratios significantly below sector averages across all geographies. The bank’s focus on secured lending, with 68% of new loans backed by real guarantees, has helped maintain this strong credit profile.

The following chart highlights Bankinter’s asset quality compared to sector averages:

On the capital front, Bankinter maintains a solid position with a CET1 ratio of 12.35%, providing a comfortable buffer of 4.41% above the regulatory minimum of 7.94%. The bank’s 2025 Pillar II (P2R) Capital Requirement is 1.30%, the 4th lowest among 110 European entities, reflecting regulators’ confidence in Bankinter’s risk management.

Strategic Initiatives

Bankinter outlined three key growth catalysts that will drive future performance. In Spain, the bank is adopting a new approach to promote digital banking with the integration of EVO. In Ireland, Bankinter plans to broaden its business strategy, initially focusing on deposit gathering in 2025. In Portugal, the bank is pursuing a joint venture with Sonae (ELI:YSO) along with IT investments to foster scale and efficiencies.

The following slide details these strategic initiatives:

The bank’s long-term value creation strategy appears to be yielding results, with net income up 46% from €185 million to €270 million and tangible book value per share increasing 22% compared to Q1 2023. Return on equity has improved to 18.8%, reflecting the bank’s enhanced profitability.

Forward-Looking Statements

Bankinter provided a comprehensive summary of its Q1 2025 performance across volumes, results, and value metrics, highlighting the bank’s strong position in the market:

Management expressed confidence in the bank’s ability to continue growing across all geographies while maintaining its strong risk profile and efficiency levels. The strategic focus on digital banking in Spain, expansion in Ireland, and the joint venture in Portugal are expected to drive future growth and profitability.

Despite the challenges posed by the changing interest rate environment, Bankinter’s diversified revenue streams, strong fee income growth, and operational efficiency position the bank well for continued success in 2025 and beyond.

Full presentation:

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