- Business Volumes: Improved by 2.4% year on year.
- Off-Balance Sheet Funds: Grew 3.8% quarter on quarter.
- Performing Loans: Increased by 0.3% quarter on quarter.
- Net Income: Grew 43% year on year to EUR158 million.
- Return on Tangible Equity: 11% adjusted by excess of capital.
- Cost-to-Income Ratio: Improved by 3 percentage points to 46%.
- Non-Performing Loans (NPL): Fell 5% quarter on quarter.
- Foreclosed Assets: Decreased by 7% quarter on quarter.
- Total NPAs: 22% below first quarter '24.
- Coverage Ratio: Increased from 71% to 73%.
- Cost of Risk: 27 basis points, below guidance of 30 basis points.
- CET1 Ratio: Improved by 27 basis points to 15.4%.
- Loan-to-Deposit Ratio: Remained below 70%.
- Liquidity Coverage Ratio: 270%.
- Total Customer Funds: Fell 1.2% year to date, but 4.9% above first quarter '24.
- Mutual Funds: Reached EUR14.4 billion, 7% above the previous quarter and 22% above the previous year.
- Net Interest Income: Fell 3% quarter on quarter to EUR369 million.
- Gross Margin: EUR515 million, 11.5% above the previous year.
- Pre-Provision Profit: 18% above the previous year at EUR280 million.
- Pretax Profit: EUR227 million, 40% above the previous quarter and 23% above the previous year.
- Total Taxes: EUR69 million, including EUR5 million of the new banking tax.
- Net Income Growth: 30% above last quarter and 43% above the first quarter of 2024.
- Customer Spread: Around 250 basis points.
- Net Interest Income Margin: 170 basis points.
- Personnel Expenses: Grew due to salary improvements.
- Cost of Risk: 27 basis points, below 30 basis point guidance.
- NPL Ratio: Reached a new low of 2.6%.
- Foreclosed Assets Coverage Ratio: 76%.
- NPA Ratio: 1.2% in net terms.
- MREL Ratio: 27.4%.
- NSFR: 162%.
- Fixed Income Portfolio: EUR30 billion with a 2.6% yield.
Release Date: April 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Unicaja Banco SA (UNJCF, Financial) reported a 43% year-on-year increase in net income for Q1 2025, reaching EUR158 million.
- The bank's return on tangible equity adjusted by excess capital improved to 11%, indicating enhanced profitability.
- Non-performing loans (NPL) fell by 5% quarter-on-quarter, with a significant year-on-year decline of 16%, improving the NPL ratio to 2.6%.
- The cost-to-income ratio improved by 3 percentage points year-on-year to 46%, reflecting better operational efficiency.
- CET1 fully loaded ratio increased by 27 basis points in the quarter to 15.4%, demonstrating strengthened solvency.
Negative Points
- Net interest income fell by 3% quarter-on-quarter to EUR369 million, impacted by lower day count and ongoing loan repricing.
- Total customer funds fell 1.2% year-to-date due to regular quarterly seasonality.
- Personnel expenses grew due to salary increases, contributing to a 4.5% rise in total costs.
- The bank's net interest income sensitivity to interest rate changes remains a concern, despite hedging efforts.
- The bank's guidance for flat fees in 2025 suggests limited growth potential in fee income.
Q & A Highlights
Q: Your loan book started to bottom out with strong recovery in new production. Are you doing something different, or is it better market trends? What is the outlook for the rest of the year per segment?
A: The recovery is a combination of market evolution and measures to improve commercial activity. The Spanish economy has been improving, and the deleverage process stopped last year. We expect flattish to very low single-digit growth for the loan book this year, with more growth in the following years as we improve our product offering and commercial activity. - Pablo Gonzalez Martin, CFO
Q: Bank tax was EUR5 million in the quarter, half of what consensus expected. Are you expecting to accrue only EUR5 million every quarter this year?
A: We plan to accrue around EUR5 million per quarter, depending on the evolution of metrics like NII and fee expectations. This is our best estimate if everything stays as it is today. - Pablo Gonzalez Martin, CFO
Q: How do you expect the cost of deposit and customer spread to trend for the rest of the year?
A: We see a positive trend in the cost of deposits, especially linked to Euribor evolution. Customer spread will be influenced by loan repricing and deposit costs, with expectations to maintain a stable trend. - Pablo Gonzalez Martin, CFO
Q: What is your view on the ECB deposit facility and how much liquidity do you have there as of today?
A: We have reduced our excess short-term liquidity in the ECB deposit facility by around EUR2.5 billion to EUR3 billion. Our strategy is to stabilize NII contribution in the coming quarters by investing in short-term bonds. - Pablo Gonzalez Martin, CFO
Q: Can you comment on the front book versus back book pricing dynamics in new mortgage lending?
A: New mortgage lending is trending towards fixed rates, with front book rates still higher than back book rates. The profitability of new mortgages is supported by cross-selling opportunities. - Pablo Gonzalez Martin, CFO
Q: Are you still swapping variable loans to fix to reduce NII sensitivity?
A: Yes, we continue to reduce NII sensitivity by taking swaps in the three- to five-year part of the curve, which we believe is the best strategy to manage rate sensitivity. - Pablo Gonzalez Martin, CFO
Q: What is your NII sensitivity to a steeper yield curve?
A: We have reduced our NII sensitivity to very low single digits by hedging our mortgage book and investing in fixed income portfolios. This positions us well to achieve our NII targets even with lower rates. - Pablo Gonzalez Martin, CFO
Q: Can you provide more details on your NII gearing to a steeper yield curve?
A: We have increased our fixed income portfolio duration and decreased short-term liquidity to stabilize NII. Our strategy involves hedging excess liquidity and managing fixed income investments to maintain a stable NII contribution. - Pablo Gonzalez Martin, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
