Bankinter, S.A.

Good morning. This is Laurie Shepherd from the Bankinta Investor Relations team. We welcome you all to Bankinta's earnings presentation for the fourth quarter and full year of 2024. All related financial statements were posted with market authorities early this morning. And as usual, these materials can also be found on our corporate website. Today, we are joined by Bankinta's Chief Executive Officer, Gloria Ortiz, and Chief Financial Officer, Jacobo Diez. At the end of the presentation, we will be available to respond to analyst questions in a live Q&A. Please refer to the disclaimer in the presentation and note that this call is being recorded. I will now turn over to Gloria to review the highlights, after which she will review financial results and the performance of our business segments across the group before handing back to Gloria to close the presentation. Gloria, over to you, please.

Thank you, Laurie, and good morning to everyone on the call. I am very happy to be able to share with you the excellent results achieved by the Bank Intergroup in my first year as CEO. Another record year of historical results. We continue to be very consistent with our strategy to achieve superior results through diversified organic growth across all the geographies we operate in. Growing our loan book by 4%, increasing customer deposits by 5%, and assets under management up 22%. This means we have grown total customer volumes in 2024 by 9%. For the core revenue lines, we closed the year with 3% increase in net interest income, as well as an extremely strong 15% increase in fees. Also improving efficiency and asset quality ratios, reaching 36% in the cost to income ratio and 2.1% in the MPL ratio. By maintaining consistent strategy with a clear focus on increasing customer activity, we achieve a record level of 18% return on equity. Moving on to the next page, our consistently strong commercial activity has translated into increased customer volumes year on year. Business volumes have grown 68% since 2018, a compounded annual growth rate of 9%, reaching 223 billion euros at the end of 2024. up 17 billion euros. On the right side of the page, you can see the breakdown by customer volume type, where each volume category has achieved excellent annual growth rates over the six-year period, with loans up 6%, deposits 9%, and assets under management 14% each year. Moving on. The volume growth achieved year after year is quite remarkable, since we have grown in shrinking or relatively stable markets, gaining market share year after year in Spain, Portugal and Ireland. Starting on the left of the page, you have two graphs that show the evolution of loan and deposit growth rates for the sector and Bank Inter in Spain. We continue to outperform competitors in our core market, where we have grown 26 percentage points above the industry in loans, as well as in retail deposits since 2018. In the middle of the page, you can see this growth differential in Portugal, 49 percentage points above the industry in loans and 90 in retail deposits. In the case of Ireland, we launched our mortgage business in 2021, capturing market share of close to 3% in five years in a shrinking market. By focusing on our business activity and customers and avoiding any external distractions, we can achieve incredible organic growth rates. On page eight, Our core revenues comprised of net interest margin and fees have nearly doubled in six years. This represents a compounded annual growth rate of 12%. Fees contribute 24% of core revenues, a direct result of our focus on wealth management activities, and the intense commercial activity drives transactional fees. And as I've mentioned on the first page, the fee line has increased 15% in 2024, without any extraordinary events. As we close this reporting period, I wanted to highlight on this call the importance we give to adequate and targeted technology investment over time. Since 2018, on average, we have designated approximately 10% of our operating income to technology spend. This investment has allowed us not only to increase the customer volumes managed by employees, which is represented in the orange columns, but also drives the reduction in cost over business volume, the blue line on the graph. Productivity has improved 37% since 2018, where on average each employee now manages 33.5 million euros of business volumes. Cost over business volumes has decreased 13% over the same period, providing that our targeted technology investment allows us to continue to scale up and improve business efficiencies over time. To close this section of the presentation on page 10, we proudly share the excellent cost to income ratio of 36%, best in class indeed. Asset quality under control and very low with MPL ratio at 2.1%. We have also reinforced our coverage ratio through prudent provisioning to a historical high of 69%. 2024 ends with record profitability levels, resulting in an excellent return on equity of 18%. Well, Jacobo, we'll talk you through the financial results for the year now, and it's over to you, Jacobo.

Thank you very much, Gloria. Good morning, everybody. Let's start on page 12 to talk through the P&L for the year. A record net income of 953 million euros with all lines performing very well. On the following pages, I will go into the movement of each of the lines. However, I wanted to highlight that in the fourth quarter of 2024, we have initiated the accounting integration of the Evo Banco in preparation for the final merger during 2025. In the one-off column, we have separated a $28 million other asset impairment relating to the removal of intangibles, of which the majority is IT software and development. Mostly offset by your registering of a post-tax benefit of $17 million of historical carry-forward losses, which were not previously used or registered on the AVO balance sheet, and through the merger will be able to be used in Bank Intergroup. On a pro forma basis, when excluding these two one-offs adjustments relating to Evo, net income grew by 14% on 119 million euros on a net income after tax basis. Moving into slide 13, you can find a table with the quarterly results, including all activity in the fourth quarter. Net interest margin has continued to slightly reduce quarter on quarter. However, the decrease in NII is well compensated with increased fees and other revenue lines to achieve revenue growth of 1% quarter on quarter. In the other income expense line, you can see the benefit of 89 million euros on a year-on-year basis, mainly related to the removal of the single resolution board charge, as well as a material reduction in the deposit guarantee fund in Spain. We have increased cost of 5% on a year-on-year basis, ending the year within our annual guidance. On a quarter-on-quarter basis, there is some seasonality in the cost line with higher incentives. Moving down to cost of risk and other provisions, we have very similar results on a year-on-year basis, albeit with some seasonality in the fourth quarter due to the NPL sales in the consumer finance business, around 15 million of loss. a prudent approach to some additional provision for litigation processes in the future. In the other asset impairment and corporate tax lines, you can see the movements related to the preparation of the Evo balance sheet integration, which I previously mentioned, of 28 million and a positive variation of 17 million of benefit on tax impact in the quarter, with an overall net impact of 3 million in negative. However, still with a very positive year-on-year net income variation of 39 percent, 222 million euros for the last quarter of the year. Now, on page 14, net interest income finished the year with a 3% increase. Customer margins for the year remained resilient at 281 basis points on average for the year, even with the driver decreasing in the second half of the year around 120 basis points. If we move on to the next page, we can see that in the last quarter of the year, deposit cost has begun to decrease, reducing 7 bps to 140 bps. The asset yield, which reprices at a faster rate than deposit due to the repricing profile, decreased 19 basis points to 414 basis points, contributing to a softening in customer margins down to 274 basis points in the last quarter. On the next two pages, I will talk through some structural dynamics of the balance sheet, which will provide some comfort to NII levels over the coming quarters, as we expect rates to continue to gradually reduce levels around 2%. On page 16, I'm talking about the ALCO portfolio. In order to offset NII impacts driven for the variable portion of assets in our balance sheet in anticipation of rate movements, from the end of last year, we have gradually increased the size of our ALCO portfolio. This has increased 27% from 11 billion euros to close to 14 billion euros at the end of 24. This size continues to be well within our risk appetite, now representing 2.4 times total equity. The yield of the portfolio has increased to 2.5% and the duration now close to five years, which will provide some tailwinds for us in the coming quarters as rates continue to decrease gradually. For the first part of 25, we expect assets to continue to reprice slightly faster than liabilities, leading to some additional margin compression on a quarterly basis, until reaching a normalized interest rate environment around 2%. Under this scenario, we expect to maintain customer margins around 2.7%. However, it is important to understand that impacts in the NII trajectory will also be supported by increased loan volumes, as well as a decrease in our cost of deposits, where we still have a long way to go, supported by reduced duration. Let me remind you that in 2023, our cost of deposits started at 30 basis points. We continue to drive down new front book pricing in terms of intern deposits. Regarding to fees, on page 17, fee growth continues to support overall revenue growth and will be a tailwind to help offset any NII pressure in 25. Net fees have increased by 59% since 2018, resulting in a compounded annual growth rate of 8%. In 24, we closed an exceptional year with a 15% increase in fees, now contributing 24% of total gross income. Both on the right and left-hand side of the slide, we share the high level of diversification between asset management and brokerage, transactional, as well as insurance. In 24, all three lines performed very well, with notable results in the wealth management and brokerage activity growing 21 and 12% respectively. According to our commercial track record and current macro environment, we do expect to keep delivering a strong set of fees in the following quarters. Moving on to the other income and expenses lines on page 18, the main differences in 24 were reduced regulatory charges that I previously mentioned, partially offset by an increase of 18 million in the banking tax charge booked in January 2024. On page 19, total operating income increased to 2.9 billion, a 9% increase versus 23, and an 11% compounded annual growth rate when looking back to 2018. Portugal and Ireland now contribute 15% of total group income in 2024. Moving on to operating expenses, on page 20, Operating expenses grew by 6% in 2024, below revenue growth of 9%, and again leading to an exceptional cost-to-income ratio of 36%. For 24, we plan to be able to maintain these relevant efficiency gains and maintain our cost-to-income within the 35-36% range. Moving on to page 21, related to credit risk. Loan loss provisions were very similar in 24 to those to 23, with cost of risk within our guidance at 39 basis points. These figures include some additional losses in the fourth quarter relating to some NPL sales of consumer finance assets, as I did mention before. Again, with a very prudent approach that supported a new record in our coverage ratio, up to 69%. In other provisions, we continued with a prudent approach in 24, and therefore, we have increased slightly our provision for prudent purposes, expecting in the coming quarters a more accelerated decrease. On page 22, in summary, total group net income reached record levels of 953 million euros, up 13% versus 24, an excellent commercial and financial year. Let's move on to talk through credit risk, liquidity, and capital management. On page 23, non-performing loans ended the year at $1.9 billion, up just $72 million from December 23, and $53 million lower than September 24 after the year-end consumer finance NPL's portfolio sale mentioned before. The group's NPL ratio remained very stable at 2.1%, and in Spain, LPS ratio also stable at 2.4. This ratio continues to be clearly below the sector average at 3.4. As shown in the chart on the right, the NPL ratio in Spain dropped again by 20 bps to 1.5% for households and slightly up to 3.1% for corporates and SMEs. Total provision for non-performing loans closed the year at 1.3 billion, which continued to strengthen our coverage ratio up to 69% from 65% in 2023. With a longer-term view, since 2018, the total risk exposure increased by 33%, whereas our NPL growth was well contained below that level with an increase of 19% over the same period. Demonstrated the robust asset quality of our asset franchises. We do not perceive any change in our view about credit risk in the market. Moving into liquidity, the loan-to-deposit ratio in the year ended close to 95%, similar levels than a year ago, and wholesale funding below 7 billion euros, the lowest level of many years, accompanied by a comfortable long-term maturity schedule, strong LCR ratio of 188%, and an ample available issues capacity of 7 billion euros. Moving into capital, on page 25, Our fully loaded Z1 ratio ended the year within our anticipated range at 12.4%, well above the minimum requirements of 8%, leaving an ample capital buffer of 440 basis points, as well as an adequate MREL and leverage ratios. Main movements in the year related to return earnings contributing A total of 117 basis points, capital consumption of risk weight assets of 79 basis points and 20 basis points in operational on market risk. In December, the annual SREP process confirmed an improvement in our P2R requirements for 25, which have been reduced by nine basis points down to 1.30. Only 15 percent of European banks improved their minimum requirements, and we continue to benefit from the fourth lowest P2R requirements across 110 European entities. Finally, the year-end ratio of risk-weight assets for MREL was 24% ahead of the regulatory requirement for 2025. To close this section, on the back of a strong commercial activity reflected in solid customer volume growth, excellent efficiency ratios, and sound asset quality, we have been able to achieve superior return on equity levels of 17.9%, expecting to maintain very high level in the coming quarters. Let's move into a review of geographies and businesses. We'll start with Spain on page 28. In Spain, loan growth continues, reaching a 66 billion euro book with higher growth rates in the corporate business of 7% versus the retail book ending at 2% growth. Customer deposits increased 4% year on year, reaching 76 billion euros. We continue to see strong wealth management activity with reallocation to both assets under management as well as assets under custody, with an excellent combined growth rate of 20%. For the P&L, strong fee growth of 15% with gross operating income reaching 2,547 million euros, an increase of 9%. Positive operating jobs delivering a controlled cost to income ratio at 35%. Profit before tax up 10% at 1.2 billion, a great year of growth and income contribution from our core business lines in Spain. Moving into Portugal, Portugal ended the year with an exceptional business volume growth across the board and increasingly solid financial results. Loan book increased 8% in the year with similar growth rates across retail and corporate SME banking. NPL ratio stable and very low at 130 basis points, half of the current industry level up to 60. On deposit side, Portugal continued to close our commercial gap in 24 through increased deposit gathering by 14%. Both assets under management and assets under custody also continue to grow up 11% and 9% respectively this year, building out the wealth management franchise, driving a 13% increase in fees. As for the P&L, gross operating income grew by 13%, supported by double-digit growth, both in A&I and fees, both by 13%. Excellent efficiency levels, with costs growing below revenues to maintain a cost-to-income of 32%. Profit before taxes of 195 million euros, an 18% increase year to year. In Ireland, next page, we don't have... the authorization to open a branch of Bank Inter in Ireland. And we plan to complete the launch over the coming quarters and expect to start gathering deposits by mid-25. We continue to see solid loan growth in mortgages, up 31 percent, and consumer credit, mainly consumer loans, up 17% both year-on-year. Asset quality indicators remain exceptionally low and stable at 0.30%. Gross operating income up 6% with profit before tax of 41 million, 23% increase. Again, a very successful growth year for the business and exciting plans for 2025. Moving into the corporate and SME loan book in the group that continues to grow year-on-year by 6%. Growth in Portugal of 9% versus industry growth of 3%. In Spain, growing by 7% again versus flat sector and allowing for the increase of market share up to 6.4%. The corporate and SME loan book now represent 43% of the total group loan book with a solid compounded annual growth of 6%. Let's touch now a little bit in the next few pages. Let's talk about our franchise and growth potential for our investment banking division that contributed to the growth operating income of 231 million euros with a significant growth in fees and investment valuation and yields up 24%. Since 2018, the business has tripled gross income through focusing on delivering alternative products which invest in real assets to our wealth management, retail, and corporate banking customers. Bank Inter Investment is managing 28 different vehicles of alternative investment, with five new vehicles launched in 24, with 5 billion euros in committed capital raised with almost 15,000 banking customers. This is a strong, growing, and stable source of fees in the coming years. On the next page, you can see the strong diversification of the different vehicles for alternative investments across 11 sectors and in 14 countries. Moving into wealth management, page 34, we ended the year with an increase of 14 billion euros in incremental wealth, half from net new money from our customers and the other half due to market effects. Both contributed equally to driving a 12% increase in total customer wealth under management in the group year on year. These incremental deposit inflows, assets under management and assets under custody are driving force for the exceptional fee revenue growth figures that we have seen in assets under management, brokerage, and custody. On slide 35, total off-balance sheet volumes reached 58 billion euros as we continue to develop and offer a highly diversified mix of proprietary and third-party funds to our customers, a result of our open architecture environment with healthy growth level across our products, leading to an increase of 11 billion in 24. Another significant part of our wealth management business that drives your current fee growth are our assets under custody. These assets close the year with 74 billion euros in equity and fixed income securities, up 18% from the previous period. Both together grew 22 billion in 24, providing increased volumes to sustain and grow our asset management brokerage and custody fee income lines in 25. Let's turn to the last page in this section and talk through continued growth trends in our retail banking franchise. Retail commercial activity continues to perform well, with salary accounts growing 4%. New mortgage origination, high market share in Portugal, Spain, and Ireland between 6% to 7%. And total group mortgage book that continues to grow, surpassing 36 billion euros, a solid 5% year-on-year growth in markets where the sector is relatively stable or slightly contracting. Before handing back to Gloria for closing comments, I would like to review our expectation for 2025. First of all, related to loan volumes, we expect continued growth in all geographies and businesses. Portugal, in all three businesses, mortgage, corporate, and consumer loan books are expected to grow. In Ireland, continued focus on mortgages and growth in consumer credit as well as the launch in deposit gathering in the summer. For Spain, we continue to see a pickup in mortgage lending and continued growth in the corporate loan book. Overall, we aim to be able to grow our loan book in 2025 again by mid single digit. Next year, sorry, this year in 25, we believe NII will be flattish or slightly positive in 25. We aim to defend net interest income levels through customer margin more enhancement, decreasing deposit cost, and offsetting additional volume growth. We target customer margins around 2.7 percent level, as I mentioned before. And in terms of the quarterly evolution, the NII in the first two quarters may still drop comparing to last year, although we expect the recovery post-second quarter 25. We have confidence in our business model and fee income drivers and aim to achieve high single-digit growth in 25 in fees. With higher fee growth and sluggish or slightly positive NII, we aim to grow revenues in 25. We will continue to invest in our franchise and in technology, and therefore, group's costs will grow around low to mid single digit, leading to a resilient but low cost-to-income ratio between 35% and 36%. In terms of quarterly cost growth expectation, we aim to end the year with a stated low to meet single digit guidance. However, we are balancing the volume of cost over the quarters and expect a double digit increase of cost in this first quarter of the year comparing to the previous year in 2024. Finally, cost of risk with prudent provisioning and coverage ratio achieving 24, we expect to finish the year 25 in the low range of 35 and 40 basis points. In summary, we expect 25 with new record figures in gross income, efficiency, and overall net income. And now, I will hand back to Gloria for any closing comments. Thank you.