Bankinter, S.A.

Good morning. This is Laurie Shepherd from the Bankinter Investor Relations Team. Thank you all for joining us for this first quarter earnings presentation. Financial statements were posted with market authorities earlier this morning, and all materials can also be found on our corporate website. On the call today, we are joined by Bankinter's Chief Executive Officer, Gloria Ortiz, and Chief Financial Officer, Jacobo Diaz. 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 highlights for the quarter. Jacobo will then talk through the financial results and performance of our business segments across the group before handing back to Gloria to close the presentation.

Thank you, Gloria, and good morning to everyone on the call. Bank Inter initiated 2025 with significant commercial activity resulting in higher volumes across all its businesses and regions. We continue to consolidate a trend of increased profitability and strength through the diversification of revenue sources, segments and business products and services. This strength in commercial activity is reflected with solid growth of all customer volumes increasing 9 percent in total, with our loan book up 5 percent, retail deposits 7 percent, and assets under management increasing 17 percent. As our strategic focus is to deliver innovative products and services that add value to our customers, like our wealth management services, for example, We have been able to maintain high fee growth levels above 13%, partially offsetting interest rate compression, leading to the impressive achievement of an 11% increase in revenues this quarter compared to the first quarter of last year. Supporting these strong growth trends are the underlying aspects of both our risk quality and strict cost controls, both very essential to maintaining high levels of profitability through all types of economic cycles. This quarter, we reported €270 million in net income. which is 22% increase compared to the last quarter and an even higher 35% when compared to a year ago, resulting in a return on tangible equity or ROTI at an all-time high of 19.9%. Now let's look more into the details behind these results. First, with volumes on page 6. As you can see, customer volume growth is well diversified between types and geographies. Customer volumes grew 18 billion euros, or 9%, these past 12 months, reaching the current sum of 224 billion euros. Our more mature businesses have reached high single-digit growth, Spain 9% and Portugal 8%, with Ireland delivering an impressive 23% increase in volumes. On the next page, revenues increased by 73 million, up 11%, supported by strong fee income to offset net interest income pressure. Our core revenues only slightly dropped by 2%, with fees increasing 22 million euros, covering 60% of the net interest income compression. Additionally, after applying available deductions in the new tax methodology, we have been able to save 95 million euros this year versus last and do not expect to incur any additional material banking taxes this year or next. Moving on now to review the asset quality of our loan book, we wanted to share with you the distribution of the loan growth by asset classes. On the left-hand side of the page, you can see that close to 70% of our incremental loan book is backed by real warranties, the majority mortgages, and very well distributed between Spain, Portugal, and Ireland. Less than 15% of the new loans are unsecured, with a minimal amount of 2% in new credit card volumes. On the right-hand side of the page, asset quality of our book remains strong, well below sector averages in all three countries, given our disciplined approach, applying common risk criteria and underwriting policies across all three countries. On page 9, I would like to begin by sharing my views on our outstanding cost-to-income ratio, which continues to improve and has now decreased to 36.7% on a rolling 12-month basis. We rank in the top quartile among over 100 European banks, as well as significantly below the average of 48% of 30 European peers. We achieve this best-in-class efficiency level through stringent cost control of typical non-productive expenses within the organization, as well as by prioritizing essential new costs. This approach ensures that we adequately support our growth with new technologies and investments, enabling us to continue scaling and improving productivity levels. Our strategic focus on diversified organic growth, risk management and efficiency optimization has resulted in unprecedented profitability levels. achieving a ROTI of 19.9%, an ROE of 18.8%, new record highs that exceed the European average of 12.2%, and position us within the top quartile across Europe. These figures summarize quite well the debate about the sustainability of our current profitability levels. I will now hand over to Jacobo to review the financial performance, please.

Good morning. Thank you, Gloria. It is a pleasure to present our financial results for the first quarter of 2025, where we have achieved a 22 percent increase in quarterly net income compared to the previous quarter and a 35 percent increase year on year. These results reflect our continuous commitment and effort. As already mentioned, we have seen strong commercial activity driving strong fee income growth, which has partially compensated pressures in customer margins. In addition to this, the absence of the bank levy expected to the entire 2025, and of course for the past 2024, has fueled the growth of our overall income. Gross operating income reached 732 million euros, an increase of 73 million or 11% compared to the first quarter of last year. Net income was 270 million euros, indicating a strong beginning of the year and strong expectations to break the 1 billion euro ceiling of net income in 2025. Over the following pages, I will talk through each of these P&L lines. On page 12, the pace of net interest income compression seen in previous quarter has strongly slowed down despite having two fewer days than last quarter. In terms of customer margin, we remain within our target at 271 basis points, demonstrating our ability to efficiently manage margins in a challenging environment. Credit yield continues to decrease in line with interest rate movements, basically arrived over 12 months, at 395 basis points. We have seen a notable decrease in deposit costs this quarter of 16 basis points, bringing down the average cost for the quarter to 124 basis points. By continuing to decrease the duration and pricing of front-book deposits by around 50 basis points, and with more than 70% of raised sensitivity deposits maturing next quarter, we are confident in our ability to continue to manage and maintain resilient customer margins this year. Cost of deposits at the end of the quarter is, of course, below this quarterly average. We are conscious that with recent volatility and some market uncertainty, it is very hard to predict future interest rate movements, but we are still not changing our previous guidance on NII. Moving into the ALCO portfolio, additionally, to mitigate the impacts of NII from rate compression, we have also gradually increased the size of our ALCO portfolio up 22 percent to 14 billion euros, now representing 11.4% of total assets. The yield of the portfolio stands at 2.5% with a duration of five years, providing some good tailwinds in the coming quarter to support NII levels. Since most of the portfolio is classified as held to collect, approximately 95%, we have limited exposure to valuation adjustments on the fair value portion of the bond portfolio. Moving to fees, on page 14, fees increased by more than 13 percent on a year-on-year basis, reaching 188 million euros this quarter. On the right hand of the slide, strong results this quarter in the categories of fund management and brokerage, increasing 15 percent, as well as good growth in transaction and insurance services. This quarter has also been a good quarter for foreign exchange services. the strong commercial activity and the robust macro environment where the group is operating will continue to support the strong fee growth. We continue to expect fees to be a significant contributor to overall revenue growth in 2025, even if current market scenario might be volatile. On page 15, regarding the other income and expenses lines detail, In this slide, the primary change this quarter is the already mentioned absence of the bank levy, resulting in a reduction of 95 million euros. The new tax methodology includes some potential deduction related to the effective tax paid, permitting up to 25% of the total corporate tax paid to be offset by the final bank tax amount, which, in our case, is within this threshold. According to our estimates and based on current legislation, no impacts are expected from this new tax for the 2024 period and with minimal or even negligible impacts anticipated for the 2025 and 2026 tax periods. Moving into page 16 on expenses, On our year-end earnings call, we disclosed our intention to balance cost volumes over quarters. This quarter, we have initiated this cost normalization with costs totaling $269 million, which equates to a 2% increase over the average quarterly cost in 2024. In 2025, we aim to continue balancing costs over the quarters, and to the end of the year, with our target of low to mid single-digit cost growth, as well as to achieve a year-end cost to income below 36%. In this page, we provide you an overview of the distribution of cost by geography and category. The primary driver of our change of cost seasonality or normalization has been personal expenses. with a 23% increase compared to first quarter of last year, due mainly to variable remuneration normalization across the year, avoiding the peak in the fourth quarter that we saw in previous years. Since our workforce grew by less than 2% last year, most of the expenses increase is due to provisioning for potential year-end incentives. On page 18, credit risk, we have seen a notable decrease in loan loss provision this quarter, down to 79 million, or 71 million, excluding 8 million in profits from a portfolio sale in Portugal. This has resulted in a cost of risk of 32 basis points below our target range of 35 to 40 basis points. We forecast that by the end of the year, we will be, as we mentioned in the previous presentation, in the very lower end of this range. Other provisions also under control and performing well, down to seven basis points this quarter, below what we believe a normalized range around eight basis points. In summary, on page 19, we report 270 million euros in total net income, very close to a record quarter of 273 million in the second quarter of last year. This reflects an increase of 35% compared to the first quarter of 24, indeed, an excellent start to the year. Let's move to the credit quality, liquidity, and solvency ratio section. On page 20, non-performing loans ended the quarter slightly up at 1.94 billion euros, with a high and prudent coverage ratio of 5% from 64% a year ago to 69% today. During the last 12 months, credit exposures increased by 5%, with NPLs only increasing by 1.5% on the same period. resulting in a very low NPL ratio at 2.16%. On the right-hand side of the slide, we share the NPL ratios across our three geographies, all consistently low and well below average industry levels. In Spain, 2.5, in Portugal, 1.3, and in Ireland, just 30 basis points. We do not perceive any change in our view about credit risk in the markets we operate and confirm that we have limited corporate exposure to sectors potentially impacted directly or indirectly due to the U.S. tariffs. Liquidity, the loan-to-deposit ratio stable this quarter at 95%, similar levels to last quarter. LCR ratio at comfortable levels around 180%. And additionally, we have no more wholesale funding maturities in 2025. Regarding capital, the evolution during the quarter included the impact of the first application of CRR3, or Basel IV, estimated at 20 basis points. The main impact of the new capital regulation is due to the new requirements for operational risk. The impact in credit risk in portfolios under the IRB approach is somewhat positive, but it is offset by the impact of the portfolios under the standardized approach. Other movements this quarter relate to a positive increase with return earnings and organic growth, resulting in a net increase of 11 basis points. A strong start of the year in IT investment is reflected within the impact of intangible that will have a much more moderated behavior in following quarters. We closed the quarter with a set one ratio of 12.35, well above the minimum requirements of 7.94 percent, one of the lowest across Europe, and again, with a very quite ample buffer of 441 percent. So, before we move on to review the performance across individual geographies, I wanted to share a summary of the excellent volume growth and financial results across all franchises. First quarters traditionally display low seasonality in terms of volume growth. However, on the back of consistent, robust commercial activity, customer volumes grew 9% in Spain, 8% in Portugal, and an impressive 23% in Ireland during these past 12 months. In terms of financial results, all three regions achieved double-digit pre-tax profit growth of 15% in Spain, 18% in Ireland, and 19% in Portugal. So moving into Spain, on page 25, we can see the individual P&L and volume growth figures for Spain. In Spain, loan growth remains strong, increasing 5% year-on-year to 67 billion euros, with the corporate loans growing 6 percent and retail loans 5 percent. Retail deposits have steadily supported loan growth, increasing by 7 percent and totaling 77 billion euros at the end of the quarter. We continue to see extremely strong wealth management activity in assets under management as well as assets under custody, with a combined growth rate of 16 percent during the past 12 months, reaching total combined volumes of 127 billion euros. In terms of P&L, strong fee growth of 14%, with gross operating income reaching €615 million, an increase of 12%. Profit before tax up 15% to €312 million, a promising start and a strong income contribution from our core business lines in Spain. Now, moving to Portugal, on page 26, Portugal ended the quarter with a strong growth in the retail loan book, up 10%. On the corporate side, a very short-term exposure to a large government facility was reduced in the second quarter of 24, resulting in a net decrease to the loan book in that quarter. But excluding this short-term effect, there was a 9% increase in the combined loan book compared to the first quarter of 24. of 2024, and this is the figure that we will see in following quarters. On the customers' deposit side, we continue to see strong deposit gathering capabilities, up 19 percent. Both assets under management and assets under custody also contribute to growth, up 3 percent and 25 percent, respectively. as we continue to build out our wealth management franchise in Portugal. As of the P&L, income grew by 7 percent, supported by high single-digit growth, both in NII and fees, up 7 and 9 percent, respectively. Excellent efficiency levels of 33 percent this quarter, even with increased costs as we normalize the volumes across quarter, as I did mention before. Profit before taxes of 56 million euros, 19 percent increase, providing a relevant income contribution to the group. Moving into Ireland, earlier this month, we completed the conversion of Avant Money into a fully licensed legal branch of Bank Inter, permitting us now to roll out new deposit capturing capabilities later this year. We continue to see exceptional loan growth in mortgages up 24% and consumer credit up 15%, both on a year-on-year basis, reaching 4 billion of loans in the market. Despite these exceptional growth levels, asset quality indicators remain considerably low and stable at 30 bps as a result of a disciplined underwriting criteria, high quality book and customer profiles. Operating income up 9%, profit before taxes reaching 11 million euros, a strong 18% increase. The corporate and SME loan book continues to deliver strong results, up 5% in the group and 6% in Spain against the flat-tish sector backdrop. One of the businesses that promises growth prospects is still the international business with our Spanish customers. This business segment currently accounts for 32% of the corporate and SME loan portfolio in Spain and is experiencing double-digit growth with an increase of 14%. Furthermore, the international business accounts for close to 40% of new origination. We are confident that our innovative and flexible product offerings in the international segment will remain a significant growth catalyst for the corporate and SME segments, not only for Spain, but also for Portugal. Moving into our wealth management franchise on page 29. We continue to see a step up in quarterly incremental wealth with a €4 billion increase these first three months of the year. Half of this €4 billion is from net new money into the bank and half due to market effects. The growth across our private and retail banking franchises is quite similar, with a total increase of 11 percent versus March last year. On the next page, we can see how these incremental deposits flows into and to increase assets under management and assets under custody. So here in slide 30, the groups of balance sheet customer volumes reach 136 billion euros at the end of the quarter. Fifty-nine billion are classified as assets under management from our proprietary mutual funds, pension plans, and alternative investment vehicles that we manage internally or distribute from third parties. On average, we generate approximately 60 basis points per year for these products. We have included a slide in the appendix with the diversification of assets under management across asset classes. Another significant part of our wealth management business that drives the current fees come from our assets under custody. These assets reach 77 billion euros in equity and fixed income security and generate around eight basis points annual custody fees, as well as traditional brokerage and effect fees with the trading activity. So both together grew 15%, 18 billion euros compared to the first quarter of 24, providing increased volumes to sustain and grow our asset management, brokerage, and custody fee income lines in 25, as well as increased customer loyalty through a full set of diversified and innovative investment products. Moving into commercial retail banking, on the last page of this section, Retail commercial activity continues to perform well, especially from our digital network, with increased new client acquisition. through our salary and our fully digital accounts, growing 7% compared to a year ago. On April 1st, we also integrated EvoBanco in our books, although all their clients will migrate to Bank Inter's IT platform at the beginning of the third quarter. Mortgage origination remains as strong as last quarter and well above the first quarter of 2014. with consistently solid market shares in Portugal, Spain, Ireland, between 6% and 7%. The mortgage back book also continues to grow, surpassing 37 billion euros, a solid 6% increase year-on-year, well above the sector. So now I will make some closing remarks. Before handing back to Gloria, I would like to reconfirm our expectations for this year. Related to loan volumes, we expect continued growth in all geographies and businesses. Portugal, main growth will come from mortgages, corporate and consumer loans this year. In Ireland, we'll continue to deliver strong growth in mortgages as well as in consumer credit. We also expect to be able to launch deposit gathering capabilities in the summer, although we should expect relevant increases of volume by 2026. For Spain, we continue to see good trends in mortgage lending and continued growth in the corporate loan book, with the main catalyst being our international business segment. We remain on track to be able to grow our loan book in a diversified and profitable manner around mid single digit. We do not expect to increase our volume growth above this figure as our target client profile and our risk profile remains unchanged. We also understand there is significant volatility and uncertainty around interest rates assumptions. However, we continue to believe that we will be able to achieve our flattish or slightly positive NII in 25. We are maintaining net interest income levels through customer margin management by decreasing our deposit costs accordingly to rate movements, with additional income from loan growth as well as from our larger ARCO portfolio. NII in the second quarter should begin to show signs of recovery. Our current assumption is that we will end the year with 12-month arrival around 2%. For all these reasons, we remain committed to defending customer margin around 2.7%. We also remain confident and optimistic with fee income drivers and look to achieve high single-digit growth in fees this year. With higher fee growth and NIA assumptions, we aim to continue to grow revenues each quarter this year, with 25 total revenues above 24 levels. We will continue to balance cost volumes over the second and the third quarters, yet still target full-year annual costs to grow around low to mid-single-digit, leading to a resilient but low cost-to-income ratio at the end of the year between 35% and 36%. Finally, for cost of risk, as I mentioned before, we expect to end the year in the very, very low range of the 35 and 40 basis points, benefiting from a very positive first quarter. We anticipate that gross income will achieve new record results this year, with a target to exceed €1 billion of net income in 2025. Gloria, please, back to you for any closing comments.