Caixabank announced on Wednesday that it anticipates a decrease in lending income for 2025. They expect lower interest rates to squeeze margins. However, its net profit exceeded expectations in the first quarter. This was due to a reduced impact from the renewed banking tax.
Rising interest rates previously benefited Spanish banks. They saw higher lending rates and limited deposit payouts. This advantage is now reversing as interest rates decline.
Caixabank’s net interest income (NII) fell 4.9% year-on-year to 2.78 billion euros in the first quarter. Analysts had forecast 2.67 billion euros. NII also fell 3.5% from the previous quarter.
Caixabank said for 2025, “it expected a mid-single digit decline in NII from the 11.11 billion euros booked in 2024.”
Caixabank’s shares decreased by 3% at 0703 GMT. They had increased by 33% this year prior to this.
Net profit at Spain’s largest domestic bank by assets increased 46% to 1.47 billion euros ($1.67 billion) in January-March. This was above the 1.28 billion euros analysts had predicted.
Caixabank booked a charge of approximately 148 million euros in the quarter. This was against the new banking levy, around a quarter of the annual amount of around 600 million euros.
The bank booked the entire 493 million euros annual cost in the first quarter last year.
Net profit would have risen 6.9% on a like-for-like basis, they said. This is assuming the tax in 2024 had been accounted for quarterly.
Net fees and commissions increased by 6.7% in the quarter. Insurance services revenues rose by 7.3%.
Caixabank’s core-tier 1 capital ratio, a crucial indicator of financial strength, increased to 12.46%. It was 12.19% in the previous quarter.
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