UPDATE 2-Lending growth gives Bankinter a boost

* Without LDA, bank books profit of 96.2 mlns vs 81 mlns forecast

* Q2 net interest income rises 7.5% y/y and 5% q/q

* Expects commercial activity to continue in coming quarters (Recasts to focus on underlying net profit, adds shares, NII)

MADRID, July 22 (Reuters) – Spain’s Bankinter booked better-than-expected underlying net profit in the second quarter of 96.2 million euros compared to a loss the same time last year, thanks to a rise in lending it expected to continue.

Analysts polled by Reuters had forecast underlying profit from pure banking activities of around 81 million euros, compared to a loss of 53.8 million euros in the same quarter, which was hit by 177 million euros in extraordinary COVID-19 related provisions.

For the second consecutive quarter, the bank did not set aside any specific COVID-19 related provisions.

Shares in Bankinter fell 0.4% compared with a 0.88% increase in Spain’s leading blue-chip index Ibex-35 as JP Morgan highlighted a solvency ratio miss in the quarter due to valuation adjustments and regulatory impacts. It finished with a core tier-1 capital ratio of 12.2% compared to 12.28% in March.

The lender said its commercial activity showed signs of “robust” recovery throughout the first half of the year thanks to the macroeconomic improvement and the growth trend was likely to continue.

Against this background, financial margins were boosted by solid growth in the bank’s overall loan book, specifically in mortgage lending, which brokerage house Jefferies picked out as helping boost core revenues.

Despite pressure from low interest rates, net interest income (NII), earnings on loans minus deposit costs, rose 7.5% to 327.5 million euros, above the 317 million euros forecast by analysts. NII in the second quarter was 5% higher than in the first quarter.

Overall, the country’s fourth-largest bank by market value reported a net profit of 992 million euros boosted by capital gains of 896 million euros from the market listing of its insurance unit Linea Directa Aseguradora in April.

Analysts polled by Reuters expected a 997 million euro net profit when taking into account the contribution from LDA’s listing.

LDA accounted for a fifth of the bank’s profits before the spin-off and analysts are waiting for information about how Bankinter will make up for this lost business.

It has said in the past it was optimistic about offsetting the loss of the contribution from LDA in a three-year horizon, targeting net profit of more than 550 million euros in 2023.

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