Banking benefits continue to be cited as rates rise, with reference to the European Central Bank’s actions aimed at curbing inflation and industry moves to delay further payments on customer deposits as long as possible. A banker reported an impressive 684.7 million euros in earnings between January and September, up 59% from the same period last year and 22% higher than the full-year 2022 figure. Earnings this strong reflect a near six-decade history of recurring profits, and executives believe the trajectory could push results past annual records by 2023. The CEO, Maria Dolores Dancausa, expressed cautious optimism, saying that the bank expected to complete an extraordinary year with remarkable performance.
Still, the management warned of substantial uncertainty driven by ongoing regional conflicts in the Middle East. While he declined to comment on direct involvement, the executive noted that political turbulence, government instability, or potential elections could pose additional risks for Spain. He remained hopeful about the country’s long-term potential, arguing that structural weaknesses such as high public debt could worsen if the economy slows further. He also flagged potential legal uncertainties around any proposed bank tax as a new risk factor.
Bankinter’s improved profitability stems from the margin between funds collected and interest paid to customers, which widened by 53.8% to reach 1.638 billion euros compared with the prior year. The bank’s average lending rate rose from 2.14% to 4.12% over twelve months, while the deposit rate climbed from 0.05% to 1.09%. The spread now sits at two to three percentage points, a level the bank expects to maintain in upcoming quarters. In this context, Dancausa describes the bank as generally reliable in meeting client obligations, and she anticipates that deposit rates will gradually rise until the topic becomes less contentious: she believes it will not be a recurring issue in a few months.
excess capital
The executive also confirmed that Bankinter does not plan to use excess capital for international acquisitions, share buybacks, or higher dividend payouts. In periods of uncertainty, capital protection takes priority, she argued, insisting the bank would keep capital ready for potential needs. Accordingly, capital adequacy improved, rising from 11.9% to 12.48% over a year. The strong earnings growth driven by higher interest rates and better cost efficiency also supported a notable increase in capital ratios, with the core metric climbing from 11% to a striking 17.11%.
The sole area showing a modest deterioration is the default rate, which edged up from 2.1% to 2.19%. The management explained that this rise reflects consumer credit growth, as the bank expands its lending to new customers. This implies higher profitability alongside increased risk. Nevertheless, non-performing loans remain well below the sector average of 3.5%, a level the bank does not view with concern. The message from the leadership emphasized that the rise is small and controlled, and there is no expectation of material expansion in defaults beyond this gentle uptick.