Bankinter, a Spanish banking conglomerate, has seen a 41% annual increase in its Irish loan portfolio for the first half of 2024, reaching €3.5 billion. The increase has been largely influenced by its Avant Money unit’s mortgage operations in Ireland. The latest quarterly report from Bankinter, released this Thursday, outlines the bank’s strategy to transform its Irish unit into a complete banking branch of the Madrid-based group. This move would allow the expansion of services offered in the Republic, including possible addition of deposits.
At present, Avant Money operates as a non-banking lender in Ireland, primarily offering mortgages and consumer finance, with funding coming from its parent bank, Bankinter. High-level Bankinter executives, communicating with analysts, revealed their expectations to secure regulatory approval for a full-fledged Irish bank branch in the first half of 2025, and to officially launch mid-2025.
Avant Money’s mortgage portfolio experienced a significant annual growth of 51%, reaching €2.6 billion by the end of June. Simultaneously, its consumer credit portfolio expanded by 19% to €900 million. Overall, the total loan portfolio increased by €200 million since the end of March.
The first half of the year also saw a surge in total new lending in Ireland, with a year-on-year rise of 90% to €600 million. Bankinter, ranking as the fifth-largest Spanish bank equipped with a balance sheet of €118.4 billion, made its entrance into the Republic in 2019. The bank did this through acquiring Avantcard, a business focused on credit cards and consumer finance, previously owned by the US investment group Apollo. Subsequently, Avantcard was rebranded as Avant Money, which ventured into the mortgage business in Ireland towards the end of 2020, offering competitive rates as low as 1.95% for their fixed-term products.
In the 12-month period leading up to May, Avant Money accounted for 9% of all issued mortgages in the Republic, thus providing the sole significant competition to the three Irish banks during that time. However, recent trends show increasing competition in the non-bank sector due to lower financial raising costs on wholesale and capital markets.
Notably, ICS Mortgages has been recently reducing interest rates and easing lending policies. Meanwhile, Moco, backed by Austrian bank Bawag, is steadily gaining market share. An up-and-coming company, Nua Mortgages, is also potentially entering the market in the near future.
Finance Ireland, a company that significantly curtailed its home loan services two years ago due to elevated interest charges, does not plan on re-entering the mortgage market until at least 2025, as stated by CEO Billy Kane earlier this week.
In the first half alone, the Irish business of Bankinter experienced a moderate increase in net interest income of 8% amounting to €48 million, despite the 41% growth in total loans. This highlights the high expense associated with intragroup loans used to support new lending in the Irish branch, as explained by a Bankinter executive during an analyst call.
Looking forward, it is anticipated that future loans financed by Irish deposits will improve net interest income and profitability. In addition, there was a significant surge in the Irish branch’s pretax profit by 20% to reach €20 million in the first half.