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Bankinter shines brightest among Spain’s banks

Spain’s banking sector is on a steady course in its recovery, but improving profitability is the biggest challenge facing Spanish lenders. Burhan Khadbai reports.
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Spain is expected to recover the lost economic output from the pandemic by the end of 2022, with solid growth predicted in the next few years. After a contraction of 10.8% in 2020, Spain saw growth of 6.1% in 2021, with 5.5% growth expected in 2022, with support from the NextGenerationEU fund to provide a boost to the economy. Spanish banks also made use of supportive measures with lenders’ credit quality proving to be resilient during the pandemic.

The best-performing bank this year among Spain’s 10 largest lenders is Bankinter, with an overall score of 5.48. Its surge to the top, after being ranked seventh last year, can be attributed to its table-topping performance in terms of profitability and return on risk.

Bankinter is Spain’s eighth-largest bank by Tier 1 capital, but its leading position in the table shows the strong performance possible by a small fish in a big pond. In 2021, Bankinter’s lending book grew by 5.7%, helped by a 58% rise in new mortgage loans and a net profit of €1.33bn compared to €317m in 2020. Bankinter is also ranked fourth of the top five banks in Europe for return on capital.

Savings bank Unicaja Banco comes second with a score of 5.33, up from fourth last year, having secured top spot for growth and second for profitability and return on risk. In 2021, the bank saw strong growth in many areas, including in mutual funds and customer funds.

Banco Santander and BBVA are ranked third and fourth with scores of 5.08 and 5.01, respectively, with the former climbing up from ninth spot last year. CaixaBank, last year’s overall second best-performing bank, takes fifth spot, having scored well in growth and asset quality. It spent much of 2021 working through its merger with Bankia.

Elsewhere, Kutxabank, Spain’s best-performing bank in 2021, falls to eighth spot this year, having dropped from second to ninth in term of profitability and fourth to ninth for return on risk. Banco de Sabadell takes ninth spot, with Abanca Corporacion Bancaria rounding off the top 10 ranking in last place, falling from third place last year.

Banco Santander, Spain’s largest lender by Tier 1 capital, has dropped three places in the Top 1000 World Bank ranking to 20th, while BBVA dropped eight places to 43rd. However, CaixaBank has moved up nine places to 60th.

The economic recovery will provide a boost to Spain’s banks, but profitability remains a big challenge for Spanish lenders. Effective strategies of cost-cutting should help as could further consolidation in the sector and rising interest rates.

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