Caixabank's quarterly net profit jumps 48%, announces 500 million euro share buy-back

By Jesús Aguado

MADRID (Reuters) - Spain's Caixabank said on Friday its net profit rose 48% in the second quarter from the same period in 2022 thanks to higher lending income and a solid performance at its insurance business.

The country's biggest lender by domestic assets reported a net profit of 1.28 billion euros ($1.41 billion), ahead of 1.16 billion euros analysts forecast in a Reuters poll.

The bank also announced a 500 million euro share buy-back programme that would begin before the end of 2023 and is aimed at distributing capital above the 12% threshold.

In June, the bank kept its fully loaded core tier-1 capital ratio, the strictest measure of solvency, stable at 12.5% compared to March.

Last year, the lender bought back 1.8 billion euros of shares.

Caixabank said earnings were also supported by a solid performance at its insurance services business, where earnings rose 20.2%, and helped push its return on tangible equity ratio (ROTE), a measure of profitability, to 12% at the end of June from 10.5% in the first quarter.

Banks across Europe, especially retail lenders, are benefiting from rising interest rates.

Caixabank's net interest income, earnings on loans minus deposit costs, rose 60.7% year-on-year in the quarter to 2.44 billion euros, above the 2.29 billion euros analysts expected.

The lender also said that recent commercial trends implied upside over its more than 30% growth guidance for net interest income in 2023.

Margins also benefited from higher returns on loans, driven by predominantly floating rate credit books, while deposit costs grew at a slower pace.

Yields on loans rose 57 basis points in the quarter to 3.75% while costs of deposits climbed just 23 basis points to 0.55%, widening the customer spread to 320 basis points compared to 286 bps in the first quarter.

($1 = 0.9105 euros)

(Reporting by Jesús Aguado; Editing by Inti Landauro and Tomasz Janowski)