(Bloomberg) —
The bank now expects high single-digit revenue growth, from the previous mid-single digits, it said in an earnings presentation Wednesday. Net income advanced 20% from a year earlier to €3.2 billion ($3.5 billion) in the period and slightly beat estimates.
The bank’s key retail business was boosted in the quarter by
The bank rose 1.95% to €4.66 per share at 9:23 a.m. in Madrid. The shares are up 23% this year.
“We believe the positive momentum clearly will go into 2025, and that is why we have upgraded some of our targets”
The
Although the bank has been expanding its corporate banking aggressively in recent years and is also making big bets on its payments and consumer businesses, it continues to rely heavily on retail operations, which account for roughly around 50% of revenue.
Jefferies analyst Inigo Vega said in a note that revenue dynamics were “trending well, especially in fees,” and that Spain and the US were particulary strong
One area where costs pushed profits down was the corporate and investment banking, where expansion has led to higher expenses. The business posted net income of €700 million, a 1% drop from a year earlier.
The second quarter gain helped the bank improve its full year efficiency ratio target to about 42% from below 43%. It nudged up the target for return on tangible equity, a profitability metric, to over 16% from 16%.
The capital ratio increased to 12.5% during second quarter, from previous 12.3%, thanks to organic generation. This level is above the group target to reach 12% of CET1 by end of the year, after implementation of the Basel III rules.
Cost of risk remained stable at 1.2% and the non-performing ratio declined to 3.02% from previous 3.1%, while provisions had an “expected increase” in the consumer business.