Caixabank beats estimates, expects higher 2024 profit, loan income

By Jesús Aguado

MADRID (Reuters) -Spain's Caixabank on Wednesday beat second-quarter net profit forecasts thanks to a rise in lending income, and expects loan income and profit to exceed expectations this year amid higher interest rates.

Spanish banks are mainly retail lenders and have benefited from higher rates, charging more for loans while keeping a lid on rates paid to savers though higher deposits costs have started to squeeze margins on a quarterly basis.

Net interest income in the quarter, a measure of earnings on loans minus deposit costs, jumped 14.3% year-on-year to 2.79 billion euros ($3.02 billion), slightly beating analyst forecasts of 2.76 billion euros.

For the full year, Caixabank expects high single-digit net interest income growth, from mid-single digit growth expected previously, as interest rates are seen declining later than expected and at a slower pace.

Net interest income however slowed down and just rose 0.4% against the previous quarter after the cost of deposits rose slightly, while yields on loans fell 3 points, leading to a decline of 6 basis points in the customer spread.

Central bankers have been warning that deposit costs would gradually pick up and hit margins.

The bank reported a 30.3% year-on-year rise in net profit to 1.67 billion euros in the April to June period, above the 1.57 billion euros forecast by analysts in a poll.

Earnings at the country's biggest lender by domestic assets were supported by a 16.6% rise in net profit at its insurance business, while revenues jumped 17.7% on higher new lending in mortgages, consumer and businesses.

Higher margins helped Caixabank to improve its return on tangible equity ratio (ROTE), a measure of profitability, to 16.9% from 15.8% in the previous quarter.

This led the lender to forecast a ROTE of above 17% by year-end from just above 16% estimated previously.

Its core tier-1 fully loaded capital ratio, the strictest measure of solvency, finished at 12.22%. In March, it finished with 12.26%.

($1 = 0.9345 euros)

(Reporting by Jesús Aguado; additional reporting by Emma Pinedo; editing by Inti Landauro and Bernadette Baum)