Ireland becomes a strategic market for Bankinter. Avant Money has recorded a credit investment of 3.3 billion at the end of last March. This represents a year-on-year increase of 43%, as stated in the presentation of the quarterly results, which shows the dizzying growth that this subsidiary has experienced since its arrival in the country in 2019. The favorable evolution rests mainly on the segment of mortgages, with a production of loans for housing that already concentrates 2,400 million, after skyrocketing more than 53% in the last year.
Although the pace of growth has moderated compared to the triple-digit increase in the first three months of 2023, when the European Central Bank (ECB) had not yet materialized all the interest rate increases, its future plans pass for continuing to exploit this niche given the “important potential” it presents. “I am convinced that we have a great opportunity in mortgages,” said the CEO of Bankinter, Gloria Ortiz, during her debut in her new responsibility before the press. As she has detailed, the reasons for these promising prospects lie in the lack of competition, with “little” product innovation when compared to Spain, where the commercial catalog is broader.
The former director of commercial banking of the entity has expressed her chest that the bank has given a boost to this area, “causing to start part of that price competition.” The absence of ‘players’ in the market is noticeable in the cost of taking out a mortgage in Ireland, where the fixed rate is 4%. In Spain, the average fixed rate reached 3.64% in February, according to the latest data available from the National Institute of Statistics (INE), reaching its highest level for eight years. “There is a lot of margin in price, in supply development and since we have only been around for a short time, we also have room to gain market share,” she explained.
The fact that there are still participating banks by the State in Ireland, such as Allied Irish Banks (AIB) and Permanent TSB (PTSB), represents, in Ortiz’s opinion, an additional competitive advantage for Bankinter. Although its weight in the overall balance is still small, it is expected to become increasingly important. In the first quarter of the year the interest margin amounted to 24 million, two million more than the 22 million in the same period of the previous year and contributed a gross profit to the group of nine million, 5% more, while the rate of Delinquency has reduced slightly, from 0.4% to 0.34%, in interannual terms.
These figures point to their confidence in the region, whose penetration in new mortgage production is even higher than that registered in Spain, which represents its main market. Specifically, in the first case it has been placed at 7.5%, while at the national level it has channeled 6.6%, being 8.8% in Portugal. The improvement of this portfolio in the Portuguese country has also been significant, with a rise of 20%, up to 10,000 million.
The expectation of increasing its presence in the area is favored by the forecast of greater demand for residential credit, especially starting in the second half of the year, coinciding with the first rate cuts. However, Ortiz predicts that the ECB will be prudent and will undertake a first reduction of 25 basis points, which may be accompanied by another two or three throughout the year. Precisely, he considers that this smaller-than-expected reduction, together with the reactivation of mortgage activity, will be two levers that will boost the business. After harvesting its best first quarter in history, with a net profit of almost 201 million, 9% more, once the 95 million corresponding to the extraordinary tax has been paid, it anticipates that these three months are the prelude to what they expect this year.
