By Jesús Aguado
MADRID (Reuters) -Spain’s Caixabank said on Wednesday it expects lending income to fall in 2025 as margins are squeezed by lower interest rates, though its net profit topped forecasts in the first quarter due to a lower impact from a renewed banking tax.
As interest rates rose, Spanish banks benefited from higher lending rates and limited deposit payouts. However, this tailwind is reversing now interest rates are falling.
Caixabank’s net interest income – or earnings on loans minus deposit costs – fell 4.9% year-on-year to 2.65 billion euros in the first quarter, compared with 2.67 billion euros forecast by analysts. NII fell 3.5% from the previous quarter.
For 2025, Caixabank said it expected a mid-single digit decline in NII from the 11.11 billion euros booked in 2024.
At 0716 GMT, Caixabank’s shares were down 3.5%, having risen 33% so far this year.
Net profit at Spain’s biggest domestic bank by assets rose 46% to 1.47 billion euros ($1.67 billion) in January-March, above the 1.28 billion euros forecast by analysts.
“While the first quarter print was a welcome 14% net income beat, this was mainly driven by better other revenues and impairments, which we think the market will look through to some extent,” Jefferies said in an analyst note.
Caixabank also booked a charge in the quarter of around 148 million euros against the new banking levy – around a quarter of the annual amount of around 600 million euros.
Last year, the bank booked the entire 493 million euros annual cost in the first quarter.
Net profit would have risen 6.9% on a like-for-like basis had the tax in 2024 been accounted for quarterly, it said.
Net fees and commissions rose 6.7% in the quarter while insurance services revenues rose 7.3%.
Caixabank’s core-tier 1 capital ratio – a key measure of financial strength – rose to 12.46% from 12.19% in the previous quarter.
($1 = 0.9056 euros)
(Reporting by Jesús Aguado. Editing by Inti Landauro and Mark Potter)
