Bankinter, S.A.

Good morning. This is Laurie Shepherd. On behalf of Investor Relations at Bankinta, it is our pleasure to welcome you all to the Bankinta Journeys Call for the third quarter of 2024. Please note that our related financial statements were posted with market authorities earlier this morning. All materials are also available on our corporate website. On today's call, we are joined by Bankinta's Chief Executive Officer, Gloria Ortiz, and Chief Financial Officer, Jacobo Diaz. At the end of the presentation, we will respond to analyst questions in a live Q&A. Also, please refer to the disclaimer in the presentation and note that this call is being recorded. I will now turn over to Gloria T. to review the highlights, after which Hauko will review in detail the financial results and the performance of our business segments across the group.

Thank you, Laurie, and good morning to everyone in the call. To start on page five, I would like to highlight that Bank Inter has continued to deliver another quarter of strong results. The key pilots that underpin these sustainable results continue to be the same. First, our strategic commitment to growing organically our business across the board. As you can see, we have grown our loan book by 5%, increased retail deposits by 4%, and continue to deliver exceptional growth in our off-balance sheet products that are up 23% year on year. Second, we continue to diversify our sources of income, both geographically and also by type, delivering increases of 5.5% in net interest income, as well as a strong 13.5 in fees. This is a clear reflection of our successful commercial activity. Third, results are supported by solid management of efficiency and asset quality ratios. By maintaining our consistent strategy with a clear focus on delivery, we achieved solid results each quarter, resulting in a 17% return on equity. Exceptional results for our shareholders that stand well above the cost of capital. Moving on to the next page, you can see how our consistent commercial activity delivers volume growth year on year. And this translates into strong increases in fee income, supporting the continued diversification of our revenue lines. On the left-hand side of the page, business volumes have grown by 44% since the end of 2019. And on the right-hand side of the page, fees have also grown by 45% in the same period. This is a clear correlation, as you can see, between business volumes and fee income growth, resulting in a solid annual compounded growth rate close to 8% for both. On the next page, you can see that business volumes both on and off balance sheet continue to grow. When summing up customer lending, retail deposits, and off balance sheet funds, total business volumes increased 17 billion euros year on year, representing 9% increase. Reaching total business volume of 2,015 billion euros at the end of the quarter. Lending has grown 3 billion or 5%. Retail funds amount to 81 billion euros, 3 billion more than in the first nine months of 2023. And we have added 10 billion euros of balance sheet, which stands at 55 billion, an impressive 23% growth rate in the last 12 months. On page 8, as you can see, we continue to grow our operating income in a sustained and diversified manner. In the graph on the left, you can see how fees now contribute to 24% of total revenue, a direct result of our focus on wealth management activities. On the right-hand side, our businesses outside Spain now represent 16% of total revenues, and both geographies, Portugal and Ireland, are performing exceptionally well with double-digit growth in their loan books. Moving on the last page of this section, I would like to mention that our continued success is based on the strong foundation of diversified organic growth in markets where we continue to expect resilient macro trends all above Eurozone averages. Before I hand over to Jacobo, I would like to emphasize that despite the slope of Euribor declines this quarter, Bank Inter is well positioned to continue to grow organically. With excellent efficiency and asset quality ratios, and to provide high returns to our shareholders on a sustainable basis, regardless of interest rate movements. Jacobo, I pass it now over to you.

Thank you, Gloria. Good morning, everybody. Let's start on page 11. On a year-to-date basis, all lines continue to perform with increased optimism for coming quarters in terms of fee growth. With a 5.5% increase in NII and close to 14% increase in net fees, we reached total gross operating income of €2,151 million, an increase of 7%. Operating expenses remain at 6%, maintaining our positive operating jobs this year. Profit before taxes reaches €1,407 million and net profit €731 million, a strong increase of 7% year-on-year. On slide 12, we have included an additional table with a comparison between quarters. In Q3, we have seen steep 12-month driver decrease of 47 basis points, considerably quarterly average, or 82 basis points on a point-to-point basis, impacting temporarily our quarterly net interest margin. where we have seen a 2% decrease on a quarter-on-quarter basis, partially offset by another consecutive quarter of fee increases, growing of 2%, where we continue to deliver exceptional results, consolidating a 15% increase versus third quarter of 2023. Typically, in this third quarter, we see a decrease in fees due to summer seasonality. However, with our strong buildup of wealth management and customer activity, we have been able to achieve good growth this quarter again. On the coming pages, I will go into additional detail for each category. On page 13, NII has shown the initial signs of softening due to deep rate movements and customer margin reflects higher volatility as we enter a transition period until we reach rate normalization. To support NII impacts in anticipation rate movements, from the end of the last From the end of last year, we have been gradually increasing the relative size of the ALCO portfolio. This size continues to be well within our risk appetite. In terms of our NAI margin, this year we continue to be above the 2% level, one of the highest in the Spanish market when comparing against peers. Our customer margin this year remains high at 2.96%, and this quarter ended at 2.86%. On the asset side, customer credit yields softened to 433 basis points in the quarter, as we have seen the steepness in Euribor movements impacting our book, in special our corporate banking book, where credit positions reprice almost immediately by 8 basis points. Deposit costs have experienced an increase of 7 bps rise in 247 basis points in the quarter. I would like to spend a few minutes to talk through some of the moving parts impacting the compression in margins. As the asset side of our balance sheet represses faster than the liability side, we will see margin compression and volatility on a quarterly basis until reaching a normalized interest rate environment between 2 and 2.5%. Over this quarter and coming quarters, our asset yields will continue to adapt to interest rates levels. However, this impact in NII trajectory will be supported over time by increased loan volumes as well as lower cost of deposits. In this quarter, we have experienced higher average deposit cost of seven bps due to the following reasons. Firstly, there is an impact as a result of the implementation of our strategic priority to expand our digital offering and diversify our deposit gathering channels in Spain. We completed a very successful digital account commercial campaign in September by combining our talent and technology across Bank Inter and Evo. The campaign, which lasted for one month, has proven that we can increase retail deposit digitally with little or no marketing expense and acquire a significant amount of new customers and new money from our client target customers. universe, with a unique product offering in areas of Spain where we have no physical presence. Secondly, Portugal has also increased their deposit gathering capacity, reducing their commercial gap this year with retail deposits. This supports our strategic goals in Portugal in strengthening their mass affluent customer base and product set as they continue to build up and grow a wealth management strategy and produce similar results seen in Spain to date. And lastly, there is an impact due to our successful commercial strategy for deposit gathering activity, that is, our source to support lending growth and to drive inflows into our wealth management business and drive higher off-balance volumes and fees. Towards the end of June, particularly in Spain, we achieved strong side deposit remunerated activity. This had minimal impact to cost of deposit in the second quarter, however, did impact average balances and cost over these past three months. of these three impacts are the result of our continued commercial activities very much in line with our strategic goals and priorities in this current quarter we have already resumed the digital banking commercial campaign and we adapted our pricing policies since october the first driving down new production prices of deposits by the similar movement all your arrival 12 months and shortening even more term deposit duration our room for client margin resilience is quite above our peers, since our starting point is around 50 bits higher compared to them. If we move into page 14, we want to share some additional detail regarding the structure of our customer deposits. On the left-hand side of the page, we outline the quarterly evolution of the distribution between site and term deposits on a 100% state bar chart basis. with the quarterly average of the URI for 12 months on the blue line. Two main points regarding this chart. First one, as you can see, the mix shift has reached a maximum level, much lower than was achieved in the past where rates were at similar level. It has been quite stable since the fourth quarter of last year with term deposits currently representing 28% of total customer retail deposits. Second, the gradual initiation of the mixed shift movement began when the arrival approached 3%. When rates were below 3%, term deposits represented around 8% of total customer retail deposits. As rates decreased, we should all suspect to see this gradual movement in customer deposits away from time deposits and back to site or into another conservative bank products offered off balance sheet. On the right-hand side of the page, we look to give higher visibility into the maturity profile of our customer retail deposits with a fixed term. 65% of these deposits with a fixed term mature in this fourth quarter and will be repriced in line with current rates. We have already reduced our front book pricing for term deposits by over 50 basis points and over coming quarters we'll continue to manage our deposit pricing downwards in line with market dynamics. In summary, the impact on the net interest income from the reduction in rates will be supported by a gradual reduction in cost of deposit, a feasible reversal in the mixed shift of deposit, as well as increased loan volumes to recover client margin levels. Regarding fees, on page 15, fee growth will continue to support future revenue growth. The results of our strong and unique commercial activity drive significant increases in fee revenue quarter on quarter, with a high degree of diversified and recurring fees within asset management, brokerage, and custody as key business lines. Each category is growing to reach an exceptional increase of 14% in net fees year to date, contributing 24% of our total income. We have continued optimism in future fee growth given our unique business model that drives strong fee generation in both a diversified and regarded manner under a strategic objective of keeping growth as main target. On page 16, our core revenues have been growing year on year, even in different rate environment. The sum of net fees and net interest income reached 2,250 million euros year to date, a 75% increase since 2020. Bank Inter has and can grow core revenues under volatile interest rate environments. During the 2020-22 period, interest rates ranged between minus 50 pips up to 220 pips, and core revenues increased by 18%. We will manage and drive revenue growth going forward as we have delivered in the past. On page 17, moving on to the other income and expenses line, we report $5 million less this year than last year today, even with an increase in the banking tax of $18 million this year. On page 18, total operating income increased to 2,151 million euros, 7% increase year-on-year. With our strategic focus on geographical diversification, Portugal and Ireland now contribute 16% of total group income year-to-date. Moving on to expenses on page 19, we continue to deliver positive operating jobs quarter on quarter with operating expense growth at plus 6% this year below operating income growth. We continue to lead the sector with an exceptional cost to income ratio of 35% year to date. On page 20, loan loss provisions total 262 million euros with cost of risk at the high end of our annual guidance at 40 basis points. In other provision, slightly below last year's level at 62 million euros. Total profit in summary on page 21, profit before taxes reaches 1,083 million euros, an 8% increase year-on-year, and total group net income total 731 million euros up to 7%. On page 22, moving into credit quality, NPL ratio remains at comfortable levels at 2.2%, with Spain at 2.6, well below industry levels of 3.4. We also continue to reinforce our coverage ratio at 69% currently. These figures reflect the excellent asset quality of our book and prudent risk management across the group. On page 23, loan-to-deposit ratio in the quarter ended close to 95%, similar levels to a year ago. Wholesale funding below $7 billion, the lowest level of many years, accompanied by a comfortable long-term maturity schedule and strong LCR ratio at 196%. On page 24, moving to solvency. Our fully loaded Z1 ratio ended the quarter at 12.56%, well above the minimum requirement of 7.86%, leaving an ample capital buffer of 470 bps, as well as adequate NREL and leverage ratios. Moving on to the review of our franchises across the group, I will first start with Spain on page 26. In Spain, loan growth continues, reaching 65 billion euro book with higher growth rates in the corporate business versus the retail book. Customer deposits increased 5% year-on-year, reaching 75 billion euros. We also continue to see strong savings reallocation to off-balance sheet funds with excellent growth rates of 25% year-on-year. In the income statement, Statement growing both NII and fees to reach 1,909 million euros in gross operating income, an increase of 7% year-on-year. Positive operating jobs delivered a controlled cost-to-income ratio at 33%. Profit before taxes up 8% at almost 1 billion, another solid quarter of growth and income contribution from our core business in Spain. Moving into Portugal, the Portugal team continues to deliver exceptional double-digit business volume growth and solid financial results across the board. Loan book increasing 11%, retail banking up 7%, and corporate and SME banking increasing 22%. Even the growth trajectory, the NPR ratio is well contained at 130 basis points, half the current industry levels of 260. As I mentioned earlier, Portugal has a strengthened deposit gathering this year, seeking commercial gap equilibrium under a rate reduction scenario, reaching now 9 billion euros, a substantial 25% increase from a year ago. With a focus to close their commercial gap, they have reduced their loan-to-deposit ratio to 107% from 119 a year ago. Our balance sheet funds also continue to grow double-digit, 11%. As for the P&L, total income grew by 14%, supported by double-digit growth, both in AI and fees. Fees shot in levels at 30%. Profit before taxes above 150 million euros, 13% increase. Page 28, Ireland. We continue to work towards the expansion of our products and services in Ireland through the opening of a branch of Bank Inter. This will not only reinforce avant monies, product offering, and expense services to client, but will also allow for local financing to support their asset growth, diversifying the deposit franchise across the group to a third country with favorable markets dynamics and macro environment. We expect to start gathering deposit by mid-25. We continue to see solid loan growth in mortgages up 41 percent and consumer credit up 18 percent. Asset quality indicators remain very low and stable. Total operating income up 6 percent and profit before taxes close to 30 million. A very successful growth year for the business and contribution to the group. In page 29, the corporate and SME loan book in the group continues to grow year on year by 5 percent with double digit growth in Portugal of 22 percent versus industry growth of 3. In Spain, we are also growing by 4% against the backdrop of a contracting market supported by our international banking segment. This international activity together with Portugal and the increased financial and pipeline from next generation EU funds will continue to drive relevant sources of growth in our corporate and SME banking business line in the future. Moving into the wealth management, on page 30, net new money from our customer of €5 billion in nine months contributes to driving a 15% increase in total customer wealth. Under management in the group year on year, we are well on the way to reach new record levels in net new money inflows and to increase the recurrent fee stream from assets under management, brokerage and custody. On slide 31, we have added this quarter in grade the volumes related to equity stocks under custody in Bank Interest Spain. Total of balance sheet volumes reached 85 billion with a highly diversified mix of proprietary and third party of balance sheet products, a result of our open architecture environment. In total, an increase of 27% year on year with double digit growth across each category. Turning to page 32, salary accounts continue to grow plus 4%. New mortgage production will continue to benefit from our strong new origination market shares in Portugal, Spain, and Ireland between 7% and 8%. Total group mortgage backbook continues to grow, surpassing €36 billion in September, 5% more than a year ago. in markets where the sector is relatively stable or slightly contracting. In summary, solid commercial activity and growth in customer volumes across all geographies and businesses. So finally, and before handing back to Gloria, I would like to review our expectations for the year. Related to loan volumes, we expect continued growth in all geographies and businesses. Portugal, in all three businesses, mortgage, corporate, and consumer loan books. Ireland continued to focus on mortgages and growth in consumer credit. And Spain, we continue to see pickup in mortgage lending and shorter-term financing in the corporate loan book. We maintain our aim to reach single-digit for lending growth this year. Given recent movements in interest rates, we temporarily expect some volatility in terms of NII over the coming quarters. We maintain our aim to reach close to mid-single digits for the year in NII growth, so the same target that we shared last quarter. But we may land close to the lower end of this target if rates keep sliding down as fast as they have done in the past days and weeks. Fee income results are going extremely well, as you have seen, consistently above our targets. So we are optimistic and upgrade our view to low to mid teens this year. So group cost guidance remains around mid single digit, probably in the higher end of the range. And finally, cost of risk we expect to remain within our annual guidance between 35 and 40%, similarly probably in the upper part of the range. I will now hand back to Gloria for any closing comments or remarks. Thank you.