Sabadell, Bankinter Profit Grows on Higher Lending Revenue

Jul 24, 2014 10:19 am ET

(Updates with TLTRO plan in seventh paragraph.)

July 24 (Bloomberg) -- Spanish lenders Banco Sabadell SA and Bankinter SA reported higher second-quarter earnings on improved revenue from lending. Their shares gained.

Sabadell’s second-quarter net income rose 20 percent to 86.5 million euros ($116.6 million) from a year earlier, the Sabadell, Spain-based lender said in a filing to regulators today. Bankinter’s quarterly net income rose 43 percent from a year ago to 74.4 million euros, the Madrid-based lender said.

Both lenders also reported improved net interest income, the main revenue line that reflects the difference between what banks pay for deposits and charge for loans. Spanish lenders including Sabadell and Bankinter are striving to boost higher- margin lending to small and mid-sized lenders to compensate for the low yields on mortgages that piled up on their books during Spain’s property boom of the last decade.

“The core revenue performance is good and essentially it’s down to low funding costs and keeping asset yields stable,” said Daragh Quinn, a banks analyst at Nomura International in Madrid.

Shares in Sabadell gained as much as 5.3 percent and were 4.4 percent up at 3:51 p.m. in Madrid. Bankinter climbed as much as 2.1 percent.

Sabadell’s net interest income rose to 545.9 million euros from 530 million euros in the first quarter, while Bankinter’s revenue by that measure jumped 9.2 percent to 184.6 million euros.

Both lenders said today at press conferences in Madrid they will make use of the TLTRO program, a fresh round of European Central Bank funding that starts in September.

Sabadell and Bankinter increased fee revenue as their asset management businesses attract more customer funds. Commissions revenue at Sabadell rose 16 percent to 414.5 million euros in the first half from a year ago, while Bankinter’s gained 24 percent to 144.1 million euros.

“Results are of better quality because it have come more from client business,” Bankinter Chief Executive Officer Maria Dolores Dancausa said at a press conference in Madrid today.