Bankinter outlook revised to positive by S&P on potential ALAC growth

Investing.com -- S&P Global Ratings revised its outlook on Spain-based Bankinter to positive from stable on Wednesday, while affirming the bank’s ’A-/A-2’ long- and short-term issuer credit ratings.

The rating agency also affirmed its ’A/A-1’ resolution counterparty ratings and all issue-level ratings for the Spanish lender.

The outlook revision reflects S&P’s expectation that Bankinter ’s Additional Loss-Absorbing Capacity (ALAC) buffer will significantly increase over 2026-2027, potentially providing enhanced protection to senior preferred creditors in a resolution scenario.

Currently, Bankinter’s ratings include a one-notch ALAC uplift, as its bail-inable buffer of €3.3 billion (comprising tier 2 and senior nonpreferred instruments) equals 5.7% of S&P’s projected risk-weighted assets at year-end 2025. This exceeds the adjusted 3.5% threshold required for a one-notch uplift.

S&P projects that Bankinter’s ALAC could improve to 6.5%-6.7% of risk-weighted assets by 2027. While still below the 7% threshold needed for a two-notch ALAC uplift, the agency sees increased probability of the bank’s buffers exceeding its base case.

The higher buffer is supported by a change in Bankinter’s resolution strategy. In 2025, the Single Resolution Board changed the bank’s primary resolution strategy to bail-in from sale of business, increasing its minimum requirement for own funds and eligible liabilities by 200 basis points to 23.0% and its subordination requirement to 22.5%.

Bankinter’s ’bbb+’ stand-alone credit profile remains unchanged, balancing the bank’s solid profitability, strong capital base, and demonstrated flexibility despite its smaller scale compared to larger universal peers.

The bank achieved record profits at end-September 2025, with return on equity at 17.6%, supported by strong fee and commission income and growing net interest income. S&P expects profitability to remain solid over 2026-2027, with ROE at 15.5%-16.0% and cost-to-income ratios below 45%.

Sound internal capital generation is expected to result in gradual capital build-up, with the bank’s risk-adjusted capital ratio reaching 11.7%-12.2% over the next 24 months, compared with pro forma 10.6% at year-end 2024.

Despite strong growth in foreign markets, which represent 19% of its loan book, S&P anticipates Bankinter will maintain good asset quality metrics, with nonperforming loans remaining below 2.5% of total loans.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.