Bankinter S A : sees higher 2020 risk costs as first-quarter net profit falls 10%

Spain's Bankinter said on Thursday first quarter net profit fell 10% due to higher loan loss provisions from the coronavirus outbreak which forced the lender to increase guidance on the cost of insuring its loan book.

The country's fourth largest bank by market value reported a net profit of 130.3 million euros (113.85 million pounds) in the January to March period. Analysts polled by Reuters had expected net profit of 117 million euros.

Overall provisions at Bankinter almost doubled to 107 million euros in the first quarter after it set aside 20 million euros to offset the impact of the COVID-19 disease.

In anticipation of worsening conditions, chief financial officer Jacobo Díaz said the bank's cost of risk would rise by end-2020 to between 50 and 70 basis points, compared to 43 at the end of March.

Diaz said it expected its mortgage and consumer business - which accounts for around half of Spanish banks' loan books - to "clearly" slow down in the second quarter before seeing some "kind of recovery" in the mortgage business in the second half.

Shares in Bankinter were among the biggest gainers on Spain's blue chip index Ibex-35 with an increase of 3% as analysts welcomed a 14% rise in the bank's net interest income (NII) against the same quarter a year ago.

Against the previous quarter, NII fell 0.5%, squeezed by ultra-low interest rates in the euro zone.

Though the Bankinter's chief executive officer María Dolores Dancausa told journalist during a remote press conference that any forward-looking guidance would have to be revised under the current circumstances, the lender still said it was expecting its lending income to book low- to mid-single digit growth in 2020.

Bankinter's chief financial officer told analysts in a conference call that though the bank was still planning to go ahead with the spinoff of its insurance unit, the plan could be delayed until the first quarter of next year.

"We were targeting the last quarter of this year, obviously due to (current) circumstances this may be delayed," Diaz said, adding this could take place now in "the first quarter of the following year."

Bankinter was planning to spin off and list in 2020 more than 80% of its insurance business Linea Directa Aseguradora (LDA).

By Jesús Aguado