By Jesús Aguado
MADRID (Reuters) -Caixabank on Friday beat first-quarter net profit forecasts, helped by higher lending income, which the Spanish bank said would rise more than 30% in 2023 after raising its guidance, even as retail deposits dipped compared with December.
Banks across Europe are benefiting from higher interest rates, and Caixabank’s net interest income (NII) rose 49% year-on-year to 2.16 billion euros, beating the 2.02 billion euros analysts expected.
Following the implementation of new accounting standards, Caixabank revised its 2023 guidance for lending income to 8.75 billion euros, implying a rise of 34% against 6.53 billion in 2022.
The previous comparable NII guidance for this year was around 8.5 billion euros.
At 0730 GMT, shares in Caixabank rose 2.8% after falling 13.7% so far this year.
JP Morgan welcomed the new lending income guidance, adding that “fees & insurance and cost guidance remain unchanged, which should drive mid-single-digit upgrades to consensus estimates.”
The bank reported a 21% rise in net profit to 855 million euros ($944.1 million) in the January to March period, despite a 373 million euro impact from a new banking levy. Analysts polled by Reuters expected a profit of 643 million euros.
Earnings at the country’s biggest lender by domestic assets were also supported by a solid performance at its insurance services business, which rose 24%.
Loan-loss provisions rose 12% year-on-year and the cost of risk, which measures the cost of managing potential losses, ticked up to 26 basis points from 25 bps in December.
For 2023, it lowered its cost of risk’s guidance to less than 30 bps from previously less than 40 bps.
By the end of March, deposits from retail clients at Caixabank fell 1.4% against December.
Deposit levels at banks have come into sharper focus after the collapse of U.S. lender Silicon Valley Bank (SVB) in March sparked jitters across the global banking sector.
At the end of March, Caixabank ended with a liquidity coverage ratio of 192%, compared to 194% at the end of December.
($1 = 0.9056 euros)
(Reporting by Jesús Aguado; additional reporting by Emma Pinedo; Editing by Inti Landauro, Varun H K and Jane Merriman)
