Caixabank sees higher lending income in 2023 after beating forecasts

By Jesús Aguado

MADRID (Reuters) -Caixabank reported third-quarter net profit on Friday which beat forecasts, helped by higher lending income, which the Spanish bank said would rise more than 50% in 2023 compared to 2022.

Spanish lenders are mainly retail lenders and are benefiting from rising interest rates, with higher returns on their loans, driven mainly by floating rate credit, while keeping deposit costs under control.

In Caixabank's case, yields on loans rose 48 basis points in the quarter to 4.23% while costs of deposits climbed 16 basis points to 0.71%, widening the customer spread to 352 basis points compared to 320 bps in the second quarter.

That helped the bank offset subdued new mortgage lending, which fell 1.2% quarter-on-quarter.

The bank's net interest income, earnings on loans minus deposit costs, rose 71% year-on-year in the three-months ending Sept. 30 to 2.74 billion euros ($2.89 billion), above the 2.53 billion euros analysts expected.

Against that background, Caixabank revised its 2023 guidance for lending income to equal or above 10 billion euros from previously 9.25 billion euros, implying a rise of more than 50% against an net interest income (NII) of 6.55 billion euros in 2022.

For 2024, it expects its NII to have a stable performance from 2023.

Broker JP Morgan welcome an "impressive" NII performance and revised guidance for lending income though noted that customer deposits were down 1.3% quarter-on-quarter.

At 0721 GMT, Caixabank shares were flat after rising 2.4% in the previous session.

Its net profit rose 70% year-on-year to 1.52 billion euros, more than the 1.38 billion euros analysts forecast in a Reuters poll.

Earnings at the country's biggest lender by domestic assets were also supported by a solid performance at its insurance services business, which rose 26% year-on-year in the quarter.

This helped push its return on tangible equity ratio (ROTE), a measure of profitability, to 14.1% at the end of September from 12% in the second quarter.

In terms of solvency, Caixabank finished September with a fully loaded core tier-1 capital ratio of 12.16% from 12.42% by end of June, including the impact from the 500 million euro share buyback.

($1 = 0.9471 euros)

(Reporting by Jesús Aguado; editing by Inti Landauro & Simon Cameron-Moore)