Spanish banking group Bankinter’s Irish loan book grew by 41 per cent year on year in the first half of 2024 to €3.5 billion, driven by mortgages business in its local Avant Money unit.
The figures, contained in Bankinter’s latest quarterly report on Thursday, come as it advances plans to turn its Irish unit into a fully-fledged banking branch of the Madrid group in order to be able to expand services offered in the Republic, including deposits.
Avant Money is currently a nonbank lender in Ireland, albeit funded by its parent bank, offering mortgages and consumer finance.
Bankinter executives said on a call with analysts that they expect to receive regulatory approval for an Irish bank branch in the first half of 2025 and launch in the middle of the year.
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Avant Money’s mortgage book increased by 51 per cent on the year to €2.6 billion at the end of June, while its consumer credit portfolio grew by 19 per cent to €900 million. The total loan book rose by €200 million from the end of March.
Total new Irish lending increased 90 per cent on the year to €600 million for the first half, it said.
Bankinter, the fifth-largest Spanish bank with a €118.4 billion balance sheet, entered the Republic in 2019 through the acquisition of Avantcard, a credit card and consumer finance business, from US investment group Apollo. Avantcard was subsequently renamed Avant Money, which moved into Irish mortgages in late 2020 with rates starting at 1.95 per cent for fixed-term products, undercutting the cheapest home loans available at the time in the market.
Avant Money was responsible for 9 per cent of mortgages written in the Republic in the 12 months to May, it said in a presentation, providing the only meaningful competition to the three Irish banks during the period.
More recently, however, competition has picked up in the nonbank space, as the cost of raising finance on wholesale and capital markets has eased.
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ICS Mortgages has moved in recent months to lower interest rates and ease lending restrictions, while Moco, owned by Austrian bank Bawag, is also making inroads into the market. Another start-up, Nua Mortgages, is eyeing an imminent launch.
Still, Finance Ireland, which drastically reduced its home loan offering two years ago as interest costs soared, does not see itself returning to the mortgage market until “2025 at the earliest”, its chief executive, Billy Kane, told The Irish Times this week.
Bankinter’s Irish business saw its net interest income rise by only 8 per cent in the first half to €48 million, even as total loans grew by 41 per cent. This reflects the high cost of intragroup loans to the Irish unit to fund new lending, a Bankinter executive said on a call with analysts.
Funding future loans from Irish deposits is expected to boost the local unit’s stand-alone net interest income and earnings.
Group chief executive Gloria Ortiz also highlighted on the call how the earnings margins on Irish mortgages are “much higher” than those in Spain, with its 30-year fixed-rate Irish home loans carrying a rate of 3.8 per cent, compared with 2.99 per cent in its home market.
However, she insisted the move to operate as a bank branch in Ireland was “not just about gathering deposits” but an opportunity to get into, and “cross sell”, other products.
The Irish unit’s pretax profit jumped 20 per cent to €20 million in the first half.
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