Bankinter's first quarter net profit falls 10% on provisions due to coronavirus

By Jesús Aguado

MADRID (Reuters) - Spain's Bankinter said on Thursday its first quarter net profit fell 10% from the same period a year earlier as provisions almost doubled to reflect the worsening economic impact the coronavirus outbreak might have on its books.

The country's fourth-largest bank by market value reported a net profit of 130.3 million euros ($141.02 million) in the January to March period. Analysts polled by Reuters had expected a net profit of 117 million euros.

Regulators have temporarily relaxed the IFRS9 accounting rules principle in light of the coronavirus emergency and analysts had said there was some confusion among lenders on how to apply it when reporting first quarter results.

With Europe's second highest death toll of almost 22,000 and the world's second most infections at more than 208,000, Spain is now gradually contemplating a broader easing of its strict coronavirus lockdown next month.

Shares in Bankinter were among the biggest gainers on Spain's blue chip index Ibex-35 with an increase of 2.4% in early trading as analysts welcomed a rise in volumes thanks to integration in this quarter of other businesses not included in the same quarter last year.

Provisions totalled 107.3 million euros in the first quarter compared to 55.1 million euros in the same period in 2019 but the lender did not give a breakdown of how much it set aside against the potential impact of the COVID-19 disease.

However, the lender said its cost of risk, which measures the price of insuring its loan book, climbed to 43 basis points from 23 basis points previously at end-December, totalling 71.5 million euros at the end of the quarter.

At end-March, Bankinter's bad loan ratio rose to 2.58% from 2.51% at end-December, while its fully loaded capital ratio finished at 11.47% compared to 11.61% at end-December.

Its net interest income (NII), a measure of earnings on loans minus deposit costs, rose 14% to 308 million euros against the same quarter a year ago and compared to a forecast of 306 million euros.

Against the previous quarter, NII was down 0.5% as lenders in Europe are struggling to earn money due to ultra low interest rates in the euro zone.

(1 = 0.9235 euros)

(Reporting By Jesús Aguado; Editing by Inti Landauro and Andrew Cawthorne)