Higher Loan Growth Expected as the Pandemic Lifts

Spain’s large lender company: Bankinter, which currently owns Avant Money, has published new research results. These results predict the outcome of loan growth and higher lending income across its citizens and markets as lower provisions led to its 4th-quarter profits to fall less than in previous quarters.

The lender identified possible success within its Irish market business. Especially for the reason of offering credit card, home, and mortgage loans. After releasing these research results, we saw Banklinter’s shares rise by more than 7% this past Thursday after it stated that is their net interest income would be growing in 2021 despite the negative interest rates in the first half. Net Interest Income (NII) is defined by the difference between the company’s’ earnings on loans and the costs.

Bankinter’s chief financial officer, Mr. Diaz, has spoken up and told analysts that the company is expected to show strong actives of loan growth in both mortgage and consumer lending in Ireland, Spain, and Portugal. This is shown by Net profit at the bank falling to 8.7% to €97 million compared to €115 due to the COVID pandemic, but in addition, analysts have predicted a net profit of over €70 million to be seen by Reuters.

Overall, we can expect to see economic progress following the lift of the COVID pandemic due to the sudden rush and demand of both work opportunities, mortgages, and other financial investments. With this, the market can expect an initial rush, then the demand level plateauing to levels like the market levels prior to the quarantine. Many markets are already experiencing this inflow of revenue and rejuvenation as the pandemic begins to slowly close with the vaccine slowly becoming publicly accessible. There is expected to see an especially prominent loan growth as many individuals are looking to kickstart their individual businesses or personal life. And with that investors should pay special attention to banks and how they come to handle this trend in the economy. With this, there is still a general trend of banks across Europe that are experiencing more outward pressure from record-low interest rates and rising bad debts. But even so, Mr. Diaz has also predicted that we will not see COVID-related provisions to create as large of a cost of risk in 2021 as we had expected to see as the world economy recovers.

 

Lucas Zhang was a Finance major at Ohio State University. He writes about finance, mortgages, and technology for Irish Mortgage Brokers.

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