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Unicaja Banco reported a strong performance for the first half of 2025, with a net profit of €338 million, marking a 15% increase year-over-year. The bank’s efficiency ratio improved to 45%, and the interim dividend was increased by 10% to €0.066 per share. These results come amid strategic moves in product innovation and operational efficiency, contributing to a 1.65% rise in the stock price, closing at €2.342. According to InvestingPro analysis, the bank maintains a "GREAT" overall financial health score of 3.22 out of 5, with particularly strong marks in profitability (3.97) and price momentum (3.8).
Key Takeaways
- Net profit for H1 2025 rose 15% year-over-year to €338 million.
- Interim dividend increased by 10% to €0.066 per share.
- Business volumes increased by 4% year-over-year.
- Stock price rose by 1.65% following the earnings release.
Company Performance
Unicaja Banco demonstrated robust growth during the first half of 2025, achieving a net profit of €338 million, a 15% increase compared to the previous year. The bank’s strategic focus on product innovation and operational efficiency contributed to these positive results. Business volumes saw a 4% year-over-year increase, while mutual fund balances grew by 25%.
Financial Highlights
- Net profit: €338 million (+15% YoY)
- Efficiency ratio: 45%
- Interim dividend: €0.066 per share (+10%)
- Net interest income: +1.5% in Q2
- Fees: +2.5%, exceeding initial guidance
Outlook & Guidance
Unicaja Banco has upgraded its net interest income guidance to over €1.45 billion and improved its fees guidance to low single-digit growth. The cost of risk is expected to remain at 30 basis points, and the bank anticipates a business volume growth of 3%. The adjusted ROTE guidance has been raised to close to 11%.
Executive Commentary
CEO Isidro Rubiales emphasized the bank’s strategic execution, stating, "We have started to land and execute the plan by boosting commercial dynamics." CFO Pablo González Martín highlighted the bank’s recovery, noting, "We’ve been able to bounce back from the downward trend of the last few years." Rubiales also pointed out the bank’s focus on customer profiles in mortgage lending, saying, "Our strategy in relation to mortgages... is geared towards good selection of our customer profiles."
Risks and Challenges
- Competitive mortgage market with pricing pressure.
- Potential market share concerns in mortgage lending.
- Macroeconomic factors affecting consumer lending demand.
- Need to manage operational costs amid strategic expansions.
- Navigating regulatory changes in the financial sector.
Unicaja Banco’s strategic initiatives and strong financial performance position it well for future growth, despite challenges in the competitive mortgage market and broader economic conditions. The bank’s revenue has shown robust growth with a 15.5% increase over the last twelve months, while maintaining a healthy debt-to-capital ratio of 0.12. For deeper insights into Unicaja Banco’s financial health and growth prospects, explore the full analysis available on InvestingPro.
Full transcript - Unicaja Banco SA (UNI) Q2 2025:
Isidro Rubiales, CEO, Unicaja Banco: Good morning everyone and thank you very much for attending the second quarter 2025 results presentation. As usual this morning, before the opening of the market, we published this presentation along with the rest of the quarterly financial information with the CNMV and on our own corporate website. As is the norm with our half yearly results, we have with us for the presentation our CEO, Isidro Rubiales, and our CFO, Pablo González Martín. After the presentation, we will give way to the analysts and investors who are following us by telephone on the original line in Spanish, and then we’ll give way to the telephone line in English. Finally, if there are more questions and we have time, we will enter the questions through the Internet. Without further ado, I give the floor to Isidro. Thank you very much, Jaime.
Good morning and thank you very much also to all of you who are following this broadcast, it’s a pleasure to be able to share with all of you once again the main aspects of the entity’s results, which, as you will see, continue to be extremely positive. At the end of this week, it will be two years since the beginning of this new phase, and although it is relatively recent, it’s been a period in which many decisions have been taken and many changes have been implemented, some of which will still take time to crystallize. Others are already beginning to be reflected in the financial evolution, as we will see during the presentation.
After these two years, I would like to start my presentation by once again thanking the shareholders, directors, and employees for the support and confidence they’ve shown in the management team and reiterate that with enthusiasm and hard work, we hope to continue executing the strategic plan, which we are sure will further improve the bank’s financial position and shareholder remuneration in the future. Having said that, let me begin, as we usually do, by reviewing the main aspects of the quarter which are shown on page three. Starting with business activity, I would like to highlight how we are gradually continuing to improve business volumes, which increased by 4% in the last year.
This growth is due to a notable 6% increase in total customer funds, driven among others by mutual fund balances, which have grown by more than 25% since June last year, and with market shares of net inflows in 2Q at 10%. It’s also noteworthy how loans, which continued to fall in previous years, are beginning to stabilize, showing growth in June of 4% quarter on quarter or 2%. If the seasonal effect of advances is eliminated, a change in trend is possible thanks to the significant improvement in the new lending activity, which, as we will see later, represents an increase of 38% compared to the first half of the previous year.
As regards profitability, the results for the first half were €338 million, 15% up on the previous year, which represents a ROTE adjusted to excess capital of 12%, with an efficiency ratio or cost-to-income ratio of 45%, which is highly stable despite the increase in expenses as a result of the investments and hiring we’re carrying out for the future, as we will see later. Thirdly, I would like to highlight one of the most positive aspects not only of this quarter, but of the last two years, which is the continuous improvement in the bank’s creditworthiness. Perhaps it’s not the aspect on which there’s currently most focus, but I believe that over the last few quarters we’ve reduced problematic exposure at an astonishing pace, reaching levels that are no longer material. This was one of our main objectives.
The sum of foreclosed and non-performing assets has fallen by more than 10% in the quarter, 26% in the year, and 49% since June 2023. In other words, we have halved the balances in two years. Furthermore, the coverage of this exposure, which was 65% in June 2023, has grown to 74% in June this year. At the same time, credit risk provisions have remained relatively low at 26 basis points, an excellent evolution that I think is worth highlighting. Last but not least, the bank’s solvency and liquidity have also strengthened for another quarter. CET1 fully loaded improved by 45 basis points to 15.8%. This improvement is mainly underpinned by two aspects. On the one hand, higher profitability and therefore greater generation of solvency by results.
It’s also noteworthy that part of the solvency that we have been generating in the last quarters is explained by the significant fall in problem assets mentioned earlier. Two aspects that have enabled us to generate additional capital and therefore improve shareholder remuneration with a higher dividend, as we will see below, the Board of Directors has improved the distribution of an interim dividend, as we will see below, approved the distribution of interim dividend on the first half earnings of $0.066 per share, 10% higher than the $0.06 we paid against the first half of last year. Finally, we would like to remind you of our comfortable liquidity position with a loan to deposit ratio of 70% and a liquidity coverage ratio of 318%.
On the following page, we have included a series of initiatives that we have been implementing recently as a result of the execution of the Strategic Plan that we presented a few months ago and which we thought it would be worthwhile sharing with you. These are mainly some of the most significant advances we are carrying out in the continuous process of improvement and transformation of Unicaja Banco considered in our Strategic Plan 2027 and of which we are proud and convinced that they will help us to continue improving. As you know, part of the plan considered the possibility of reaching agreements with specialist partners in different fields that will enable us to offer a better experience and service to our customers.
In this regard, in the first half of 2025, we reached agreements with leading asset managers such as Candriam, Allianz, and BlackRock to improve our product and service offering. At Unicaja Asset Management, we’ve also recently acquired a stake in Zenon, a prestigious alternative finance firm. At the same time, we have reorganized and modernized our management and private banking brands as part of our drive to unify and strengthen our image in the area of operations. We’ve also recently reached an agreement with DXC to accelerate the improvement of our operations and customer service. In the last few months, we’ve carried out an internal simplification exercise to reduce the product catalog by 80%. In people, we are hiring and looking for new talent, as highlighted in the presentation of the Strategic Plan. In asset management, we’re increasing the weight of fees with more added value.
We also launched a new management portal that is much more complete, visual, and intuitive in means of payment. We reached an agreement with Fiserv last year, and while we’re progressing with the migration work, we’ve captured more than 7,000 merchants in the last year. In the corporate segment, we’ve accelerated customer acquisition, which is almost double that of last year, and we’ve increased the weight of working capital in our portfolio by three points, which is important in our Strategic Plan. We’ve also launched an ecosystem of companies with agreements with firms specializing in services for our clients in different areas, such as tax, legal, accounting, and security services, among others. Finally, we continue to make progress in the use of generative AI as a driver of transformation and improvement in the quality of the bank’s services and processes.
As you can see, all initiatives within the context of our Strategic Plan, which we’re convinced together with others that will come in the future, will allow us to execute the Strategic Plan successfully. Continuing on page five, as mentioned earlier, we show you how the positive evolution of our results has allowed us to improve the interim dividend for the first half year results to $0.066, 10% higher than the first dividend of the previous year. As can be seen on the left, results have improved significantly since 2023. In the first half of 2025, we achieved a net result of €338 million, 128% up on the €148 million achieved two years ago. Earnings per share have improved even more as in 2024 we redeemed owned shares, with growth increasing by 135% from June 2023 and 18% higher than the previous year.
This allows us to set aside for the first interim dividend, €169 million, which we hope to pay at the end of September. This is 10% higher than the €154 million we paid in the first half of last year. It’s important to note that this dividend will be supplemented by an additional final dividend, which we will announce once we finalize our results for the year in which we aim to pay out 60% of our results. I’d now like to hand the floor to Pablo, who as usual, will give you a more detailed account of the financial evolution of the quarter.
Pablo González Martín, CFO, Unicaja Banco: Thank you, Isidro. Now let’s move on to business activity on page number seven. As you can see, total deposits grow in June 2025 by 5.6% year to date. If you look at customer deposits, they’re up by slightly more than 3%, mainly driven by greater sight deposits, which have grown by €1.3 billion the last year. That is 2.4% off-balance sheet. As we will see in more detail later, the evolution continues to show a very positive trend, growing at 13%. As Isidro mentioned earlier on the back of mutual fund growth, greater than 25% in the last 12 months and 5.6% this quarter. On the next slide, we show you the details of our assets under management and insurance. As you can see on the left side, and as mentioned earlier, assets under management have grown by 13% since June 2024.
In the case of funds, growth is at 25% for the year and 34% for the last two years. It is particularly striking to see the great improvement we have in mutual fund net inflows over the last few quarters. As you can see towards the bottom of the slide, we are nearing a 10% market share. To the right, you can see that income from these two lines of business have improved by 12% since June 2023. At present, they account for 18% of the total income for the half of the year. Regarding lending in the first half of the year, the total performing loans are more stable than the year prior and they are basically flat vis-à-vis last year. As many of you know, in the second quarter there tends to be a bit of seasonality in consumer loans because of advances.
Excluding for that effect, the total performing loans have grown by 1.9% this quarter. This growth further confirms that the trend we anticipated in the last few quarters has been reverted. If you look at the target segments, the total loans to the private sector is slightly down by 0.8% in the last year, but it’s up by 0.6% this quarter once we exclude the impact of advances. If you look at enterprises, the quarterly growth is 1.8% and in retail it is 2.6%, which goes down to 2.2% once you remove the effect of advances. As you can see, the total lending has improved gradually over the last few quarters. We’ve been able to bounce back from the downward trend of the last few years as a result of the deleverage in this sector. We believe this trend has come to stay.
Now this improvement is due to a significant increase in new lending. As you can see on the current slide, the total loans to the private sector has grown from €3.4 billion in the first half of 2024 to €4.6 billion in the first half of the year. That is a 38% increase. The increase in new loans has been even across all segments. In enterprise in particular it is 46% greater. In consumer loans it is 37% greater and in mortgages 25%. We’ve moved from signing €1.2 billion to €1.5 billion in mortgages. On page 11 you have some relevant information regarding sustainability. We remain a key player in the green bond market. This is our fifth issuance of green bonds. In this case we issued a senior non-preferred green bond for €500 million.
There was a high demand of sustainable investors and that has made this issuance a success. It’s actually been oversubscribed by eight times the amount issued. That’s a record. Since 2022 we’ve issued €2.1 billion in green bonds and only in 2024 we avoided 81,000 tons of CO2 being emitted into the atmosphere. At the same time, we’ve made progress in decarbonization and we’ve added three new portfolios to our goals. We continue to reinforce the business which continues to grow as we expand our ESG product offering. Let’s look at the profit and loss account in the next section. First we’re going to look at the quarter. You’ll see that the NII is slightly up by 1.5% driven by the lower cost of retail and wholesale funding. If you look at the fees, they’re down by 1.7% this quarter. This is mainly due to lower banking fees.
The rest of income evolved very favorably this quarter driven by the positive seasonality of the dividends and therefore the gross margin for the quarter improves by 5.4%. Costs are up by 1% this quarter. That is seasonal. That together with similar provisions in the previous quarter leaves a pre-tax profit of 9.4% greater than in March and 13% greater after taxes. If you look at the whole six months of the first half of the year, income grew by 5.2%. The slight drop in the NII was offset by greater income in other lines and lower operating expenses. The windfall tax on banks is included in the tax line. This year, expenses grew by 5.2% in line with the guidelines and driven by wages inflation, including the effect of new hires. This is due to the fact that greater investments were made as part of the new strategic plan.
All in all, the operating margin improved this half of the year by 5.2% because there were less provisions. The pre profit tax has improved by 10.3% and the net profit has grown by an outstanding 14.6%. We’re going to look at the evolution in more detail now, starting with the NII. On this slide you can see the customer spread and the NII over average total assets, which we call the net interest margin. As you can see, compared with the first quarter of the year, the net interest margin has improved by one basis point, which reflects the growth this quarter for the total NII. It is important to highlight that a bank with our profile has much bigger balances in deposits than in lending.
This metric shows the evolution of the margin a lot more clearly because the customer spread does not take into account the excess income from retail customers, which in our case come from the structural debt portfolio. In any case, the customer spread calculated as the sum of the loan yield and the cost of deposits was down by 9 basis points this quarter because the loan yield continued to go down as loans were to lower rates. This was only partially offset by the lower cost of deposits, which was down by 13 basis points this quarter. On this slide you can see how the margin has progressed. This quarter it’s up by 1.5%.
Now, if you break it down into the different lines, you can see that the cost of deposits has dropped by $20 million this quarter and income from loans or lending are down by $17 million, basically driven by the reappreciation of variable rate loans. The volume effect gives us some tailwind this quarter. At the same time, if you add liquidity at the debt portfolio, their contribution is slightly lower. There is a positive impact this quarter because the cost of financing this quarter is lower. All in all, we could say that the slight increase this quarter is driven by the lower cost of our liabilities, which offsets the lower income from lending. If you look at the fees and commissions, there’s another bit of positive news.
As you can see, this quarter this semester evolves very positively, growing at 2.5% above our initial guidance, which was initially flat for the year. The positive evolution of non-banking fees, which grow above 12%, have enabled us to review this guidance upwards, as you will see later. In general, the trend that we mentioned a few quarters back and that is now being confirmed, as you can see on the right, is leading us to increasing our weight in non-banking fees compared with banking fees. As you can see, the fees that give us greater added value, which are the non-banking fees, are up by 12.4%, mainly driven by insurance and mutual funds, and they often offset the drop in fees from payments and accounts, meaning banking fees.
As I mentioned earlier, this positive evolution has made us review our guidance upwards for the year because we now expect a slight growth in 2025. Moving further down in the P&L, let us now look at other income in detail. This quarter and the first six months of the year show a positive evolution. In the second quarter, most income from dividends are found, and that accounts for the seasonality year to date. As you will see, all the lines improve: dividends, equity method, and net trading income. The operating expenses are lower because the windfall tax on banking is no longer included in this line, but rather further down under the tax line. If you look at the costs as explained earlier, both staff expenses and overhead are greater than last year.
Greater personnel costs are driven by the salary improvements agreed with the workers’ representatives, greater variable pay, and also the new hires. The total costs also include the impact of investments that we’re making as part of our strategic plan to enhance our product and service offering. We expect it will continue to have a positive impact in future years. Despite greater costs this year, the efficiency is stable and at a 45% cost-to-income ratio. This is driven by the good evolution in income that we’ve just explained. On the next slide, you have the provisions, which also evolved very positively this half of the year. As you can see on the right side, they are down from €126 million in the first half of 2024 and €179 million in the first half of 2023, down to the €111 million that we’ve provisioned in the first six months of 2025.
As you can see on the left side, the cost of risk remains stable through the first half of the year. It is slightly below 30 basis points, which is the guidance for the year. This slide shows a very positive evolution that we have in terms of profitability. To the left, you can see a graph with the net profit for the half of the year and the ROTE, which is very positive, as you can see. As we’ve explained before at Unicaja Banco, the return on the CET1 is a metric that shows the structural profitability of this entity without it being penalized by the excess capital. We have to face greater deductions that we have mainly due to the DTAs. As you can see, this profitability metric has evolved from 6% two years ago to 17% at present.
If we use the other profitability metric, the benchmark, the ROTE return on tangible equity, we have adjusted it on one side for excess capital and the progression is very positive. Once again, it’s at 12% in June this year. Therefore, we can say that regardless of the metric employed, the evolution of the last two years is actually very positive because the results are improving significantly. Let’s now look at the quality of our loans on page 23. As Isidro mentioned, that’s another highlight for this first half of the year. The balance in NPLs continues to go down for one more quarter. This quarter on quarter it went down by 11% and year over year by 23%. Therefore, the default ratio is at a new low of 2.2%.
I would also highlight the NPL coverage ratio continued to improve for the first two quarters of the year from 68% at the end of 2024 to 73% at present. The coverage ratio, as we often like to say, is very conservative when you take into account, as you can see on the right side, that more than half of this NPL risk is asset backed. If you look at foreclosed assets, they have evolved very well. The gross balances were down this last year by 29%, down to €765 million, which, considering a 76% coverage ratio, yields a net accounting balance of €181 million, which is not very relevant if you add the NPLs and the foreclosed assets in a metric that we called NPAs non-performing assets. You can see a drop of 26% in the last 12 months and the coverage has improved from 70% to 74%.
The net exposure is barely 1%. We’ve made an effort over the last few years, as Isidro mentioned earlier in his presentation, and we’ve come to this non-material level. Finally, let’s go over the solvency and liquidity position. Starting with solvency. In this quarter, the CET1 fully loaded ratio is up by 45 basis points to 15.8% driven by the result generation. This quarter it’s also driven by the positive impact of valuation adjustment, including our stake in EDP through Opidium. At the same time, NPAs have fallen and that continues to support capital generation because this has positive impact on risk weighted assets. On this slide we show how we comply to different requirements.
As you can see, the NREL ratio is above 29% after pre-financing at the end of June, a senior non-preferred issuance and the call of a senior preferred that we have in the fourth quarter of the year. This temporarily increases the NREL level, although after executing our call we will remain in a comfortable 27%. In any case, to the right you can see the very comfortable buffers that we have vis-à-vis our regulatory requirements. Speaking of liquidity, as you all know, because of the structure of our balance sheet, the position we’re in is very favorable. The loan to deposit ratio and the liquidity coverage ratio is among the best in Europe. Finally, you have the details of our debt portfolio here. This is actually very relevant.
In our case, you need to remember that the low loan to deposit ratio creates excess retail liquidity that we invest through this portfolio. As you can see, this quarter the portfolio has remained stable both in terms of the balance and the rate, despite drops in interest rates. The tenure has reduced slightly down to 2.6 years. This is everything I wanted to share. Isidro, please take it away.
Isidro Rubiales, CEO, Unicaja Banco: Thank you very much, Pablo. Let me continue with a brief update on the guidance for this year. Given the positive evolution in the first half of the year, we’re comfortable with improving some of the benchmarks that we offered together with the annual results. Starting with net interest income. After recent positive evolution, we slightly increased the minimum amount expected for the year as a whole from over €1.4 billion to an amount of over €1.45 billion. The same occurs in the case of fees as Pablo explained. Their positive evolution, mainly in higher value added fees, allows us to improve the guidance for the year from flat to low single digit growth, which we refer to in English as low single digit growth. For costs, we maintain our guidance of around 5% reflecting the aforementioned investments we are making.
The cost of risk is also expected to continue at very stable levels and we repeat our guidance of 30 basis points. The other provisions confirmed their decline and therefore we continue to expect them to fall below €100 million this year. We also reiterate the forecast regarding the volume of business, the sum of on-balance sheet deposits, off-balance sheet deposits, and loans growing at 3% this year above the growth achieved in 2024. Finally, as a consequence of foregoing, we also improved the adjusted ROTE guidance from a level close to 10% that we expected earlier and we’ve improved this to a level close to 11%.
As you can see, the strategy we are following with customer funds focused on off-balance growth as reflected in the 25% annual increase in mutual fund balances allows us to reduce some further the cost of deposits, improving expectations of spreads and fees, which largely explains our higher profitability forecasts. To conclude, please allow me to share some quick conclusions before turning to the Q and A. As you will see, in the first six months of 2025 we’ve continued on the path of improvement in different areas. Six months ago we presented a new strategic plan that we’ve begun to implement scrupulously. Although a few months have passed, we’ve taken numerous decisions, reaching agreements and changing many aspects.
In short, we have started to land and execute the plan by boosting commercial dynamics, something that, as we’ve explained during this presentation, is also beginning to be evident in the evolution of certain items, such as the growth in business volume underpinned by better trends in lending and a significant increase in custom funds in general and in mutual funds in particular. This improvement in business dynamics is also enabling us to improve our results, which rose 15% in the first six months of the year and which also boosted profitability by 12%. These higher results, coupled with the continued fall in non-performing assets, which declined 37% in net terms compared with June last year, also enabled us to continue improving the bank’s solvency to reach a CET1 fully loaded ratio of 15.8%.
As a consequence of all of the above, we can today announce our intention of paying an interim dividend on the first half results, which is 10% higher than last year’s first interim dividend, and we conclude our presentation here and Jaime, perhaps we can now move on to the Q and A. Thank you very much. Isidro and Pablo. We’ll now move on to questions. We’ll start with the phone line in the original version in Spanish. Please identify yourselves and try to limit yourselves to two questions each so that we can receive as many questions from as many analysts as possible. Thank you, ladies and gentlemen. We will now open the Q and A session. If you would like to ask a question, please click 5 on your telephone keypad. If you would like to change your opinion, press 5 again.
Make sure that your device is not muted locally before asking the question. Our first question comes from Ignacio Ilargi from BNP Paribas, please, your question. Hello, good morning. Hello, good morning. Thank you very much for the presentation. I would like to ask a couple of questions. The first on NII, in terms of wholesale investment or funds, I would like to know, with respect to the potential reduction in costs, how much you will have actually captured with 30 bps decline. I would like to know how much you would expect to achieve in the coming quarters. With regard to the reduction in funding, I would also like to ask if you can shed some more light on the growth in business lending, whether this is in larger companies, whether this is more medium term or in which type of capital and SMEs.
The second, I suspect regarding capital, in January, when you presented the strategic plan, you said that you were going to reserve part of the excess capital in order to look at potential opportunities for growth, opportunities for organic growth. I’d like to ask for an update in this regard and also ask what we can expect to see and where part of that capital may be allocated or assigned. Thank you. Thank you very much, Nacho. I’ll answer the question. As regards wholesale funding, as you know, wholesale funding or lending is largely swapped with a reference or benchmark cost of 10, six months, and therefore this reprices faster than the credit portfolio. It’s also important to bear in mind that we’ve also had certain redemptions this quarter of €1.5 billion, and the cost was very similar.
Therefore, part of or much of the reduction has already actually been absorbed, although there’s still certain room for maneuver in terms of reduction. We’re talking about reduction levels in terms of wholesale funding costs, which is slightly lower than those that we’ve seen before. Good morning, Ignacio. My name is Isidro. I’m going to answer your question. Answer the other questions. As regards company lending, you asked what the status was and exactly where those improvements were being achieved. In terms of performance, I think it’s well, largely distributed between SMEs and corporate. There’s a variety in terms of typology in terms of short and long term. As you know, our strategy was also incremental to increase working capital. Therefore, a large proportion in relative growth terms is also observed in working capital and in the short term.
As regards your question on capital, when we presented the strategic plan, as you know, we set a sale, say period of time to look at certain alternatives and we’re still in that scenario, we are generating capital, but as you will remember, since the end of last year, there have been certain problems of repurchase and also for increasing our value for shareholders. Six months ago, in terms of our commitment, our aim was to remunerate 85% of what will be generated by the last three years. There’s not really much more new things to add in this respect. Thank you very much. Isidro, the next question, please. Next question comes from MassMissing JB Capital. Your question, please. Hello, good morning. Thank you very much. The presentation, the opportunity to ask questions.
My first question is, is the cost of risk guidance given the conservative performance, given the evolution of NPLs, and are there any reasons that will prevent you providing guidance for 2025 in this respect? The second question concerns the mortgage book. It seems that you’re losing market share in this regard and I would like to know if that’s intentional and what you’re trying to do to stabilize your portfolio. Good morning, Mars. As regards the cost of risk, we’ve maintained our guidance in cost matters and risk factors. It’s important for us to be cautious in the first two quarters. We’re slightly below our initial guidance, but we are growing in terms of lending and therefore from now forward, I think we should also take into account the macroeconomic uncertainty and we do feel comfortable in that respect.
There’s no reason, as you were perhaps trying to insinuate, there was any reason why we were maintaining cost risks 30 basis points despite the performance in the last two quarters. As regards our lending book, in terms of lending growth, there’s been better performance in other segments such as companies and consumer credit. We’re better off at the end of last year. The market is very positive. There’s an increase in prices and we’re trying to perform a good selection of mortgages, focusing on good profiles and looking at the way in which and always take into account the way in which the market is performing. We don’t have a strategy of not growing in mortgage lending. We’re simply trying to balance growth and profitability and to try to improve the company’s, the bank’s income statement as much as possible. Isidro, thank you very much.
Pablo González Martín, CFO, Unicaja Banco: Sidra, please, the next question. Operator, the next question comes from Carlos Rissoto from Caixabank. Please go ahead with your question. Hello, good morning. I have two questions. The first on the NII and the guidance that you’ve given us. There is an upgrade, but it is still slightly lower than the first half of the year. I assume this has to do with what you explained earlier about wholesale funding, right, and how it depreciates faster than the asset. I would like to understand, what’s your expectation for 2026? Do you think it will improve a little bit in the second half of the year? What can we expect? In the strategic plan that you’ve presented, you’ve mentioned a €1.4 billion NII per year, but this year you’re already slightly over that. What’s your plan for next year?
Do you think you will be at €1.4 billion, higher or lower? What’s your expectation? Regarding the lending portfolio, I would like to understand the variation this quarter. How much of that has to do with the advance effect? I believe it’s in the public sector, right, if I’m not mistaken. What’s the evolution of risk with assets going forward? Thank you. Thank you, Carlos, this is Pablo. Let me address your question on the NII guidance. As you can very well imagine, the evolution of the NII has been better than we initially expected.
The reason for that has been basically a better performance of our retail cost, but also wholesale, and as I mentioned, the sensitivity and the tenure of wholesale and retail liabilities that are sensitive to rates, meaning wholesale funding and term deposits from retail clients, and remunerated signed deposits from retail clients are sensitive and have shorter terms than our lending investments. We’ve covered for part of that sensitivity to assets, we’ve covered for part of that risk, and we’ve reduced the term slightly. If you look at variable rate mortgages, the impact of lower rates and therefore investments, I mean, income that we get from mortgages will continue to drop over the next few quarters. It might not be such a steep drop as we’ve seen, probably towards Q4, but if you look at the volume and the new inflows, they won’t offset for that until Q1 2026.
If you bear in mind the sensitivity of the asset is linked to Euribor over 12 months and that’s repriced once a year, and the term of IPF on the liability side is lower than six months. The sensitivity and variable rate terms are also updated more frequently. Wholesale funding as well, as we’ve mentioned, are forecasted slightly lower over the next few quarters than you’ve seen this quarter. I think you were also asking about the effect of advances on lending. Right. As we mentioned, the growth, including the 4% double pays. Once you remove the effect of the double pay, the growth is at 2%. Thank you very much, Pablo and Isidro. I believe there are more questions in the English line. Operator, please, whenever you’re ready. That’s right. Next question from the English line comes from Cecilia Romero at Barclays. Please go ahead.
Thank you very much for taking my questions. My ones are on NII. Your cost of deposits is already lower than many peers. After the strong reduction this quarter and with rates potentially stabilizing, how much more room do you see to cut from here? Also, I wanted to ask, with LCR or liquidity ratios, they’re still well above peers. Do you see room to add ALCO? Just on NIM, I believe you have just kind of touched upon this topic, but it has increased one basis point this quarter. Do you see this as an inflection point? Should we expect NIM to stabilize around the current levels for the rest of the year? Thank you.
Isidro Rubiales, CEO, Unicaja Banco: Gracia. Cecilia.
Pablo González Martín, CFO, Unicaja Banco: Thank you very much, Cecilia. I will address your question on the cost of deposits. There are two sides to the cost of deposits. On one side, you need to look at the evolution at the beta and the way of remunerated deposits on total deposits. If you look at enterprise and public segment, they account for 60%. The retail accounts for slightly less, the repreciation is slightly delayed, there is a lag, and there’s still some room for upside because the average cost at June 30 is lower than the average for the quarter. However, going forward, given the interest rate stabilization that we are experiencing, it makes us think that there is not that much more room for upside. That potential drop in deposits, very much in line with what I mentioned about wholesale funding, is coming to an end.
Yes, there is still a little bit more room, but we understand, and this is the big unknown. When we estimate the NII, it will be north of €1.4 billion. It very much depends on the evolution of the positive. Up until now, we’ve been very prudent with our forecasts. In this case, given our expectation on the interest rate evolution and the latest comments made by the ECB, something major needs to happen for the interest rates to continue to go down. Therefore, what I gather from that is that the cost of deposits will stabilize from now on. Regarding your second question and the significantly higher LCR compared with our peers, will that allow us to grow our ALCO portfolio?
In our strategy to manage rates, this is what we’ve been doing since early 2024 and late 2023, which is when the ECB, when the bank changed its view to a downward trend. We’ve increased the term by 3, 4 years to stabilize the NII until the rates stabilize and there is a rebound going forward. I think our strategy is paying off. We’ve read the interest rate evolution well and thanks to that, we’ve been able to increase both the term and the size of the fair value portfolio. We’ve been doing that over the last few quarters. This quarter has been mainly flat. There’s been a bit of an increase in average balances because it had increased in previous quarters. We’re going to take tactical decisions. It will very much depend on the structural evolution rather than the LCR ratio.
The size of the portfolio right now is comfortable for us. It meets its purpose, as I’ve always mentioned. The point is to manage interest rate risk for the entire bank’s balance and managing the excess liquidity, having a loan to deposit ratio 70%. If there are opportunities, we will leverage them. We are not going to significantly grow or shrink our portfolio. We do see a certain stability in this contribution, slightly slow as it is amortized. If these trends come to happen in the way we think, then over the next few quarters as well. Regarding the net interest margin, have we seen the end of it? I think over the next few quarters the margin might still fall a little bit more. It won’t be significant, because assets have to appreciate, particularly variable rate mortgages, provided of course that the interest rate trend is confirmed.
What the market is discounting right now is that the marginal facility will stabilize at 2%. If that comes to happen, lending will continue to drop to 1H26 and both wholesale and retail funding will shrink. Eventually this will have a slightly negative impact on the net interest margin. Thank you very much, Pablo. Let’s move on to the next question. The next question comes from Ignacio Cereso from UBS. Please go ahead. Good morning and thank you for addressing my questions. I have two. One request regarding the customer spread. Could you give us an estimate? Where do you think the customer spread will stabilize? Can you give us some color on the timing for that stabilization? My second question is regarding the cost of risk. Can you quantify what part of the cost of risk that you’re booking at 25 bps is linked to the reduction in NPAs?
How does this link to the cost of risk you’re reporting on your P&L? About the customer spread. First, hello, Ignacio. The customer spread and when will it stabilize? I think this is very much in line with what I mentioned. I would think the downward trend will continue, unfortunately for at least two quarters, maybe three. We really don’t know. It will depend on the interest rate evolution and the size of the new lending, the spreads that we get, and the growth of deposits that we have. My best estimate right now would be Q4 2025, Q1 2026. How much further in this downward trend? I think we’ve seen the most of it, it’s behind us. The adjustment to the spreads have already taken place. We will continue down this downward trend because adjusting the cost of deposits will be slightly less than on the asset side.
Because we’re talking about clients, I would think that it could still go down by 20, 30, or even 40 basis points. It really depends on the evolution. I cannot give you a figure, but around those numbers. Thank you very much. Let me address your question regarding the cost of risk. In the first two quarters, the cost of risk has been maintained below the 30 basis point guidance. That has to do with the way we’ve managed things in the past two years. We’ve drained in the past two years. As I mentioned earlier, the stock of loans of NPLs vary considerably and the cost of risk therefore is much lower. We’re not jittery anymore because the NPL is non-material and the cost of risk should be at 25 to 30 basis points.
We strive to maintain the 30 basis point guidance because we need to look forward with caution and understand that there might be situations of uncertainty. That’s why we’re maintaining that guidance. To your question, a lot of that has to do with having reduced significantly the amount of NPA.
Isidro Rubiales, CEO, Unicaja Banco: Thank you very much, Pablo and Isidro. Operator, we’ve got time for one last question, so if you could give way to the next question, please. The next question comes from the line of Fernando Gil from Santivanes in Texas. Pablo, your question please. Thank you very much for the questions. I have a question regarding the excess prices from certain products. The first concerns mortgages and secondly consumer credit, consumer lending. What strategy is the bank pursuing which has seen a slight decrease in the market share in lending? What’s your strategy for growing in relation to consumer lending for the next quarter? I’ll answer the question. Evidently, I think that there’s stronger price competition in all segments in which we operate in the financing industry. It is precisely in mortgages there’s been significant growth as regards, let’s say, new product production and new lending.
This is something that’s affecting the entire sector. Our strategy in relation to mortgages, particularly in this context, the very competitive prices, is geared towards good selection of our customer profiles. We’re more competitive in prices with customers who offer a profile of higher guarantees with low risk. This pressure, or let’s say competition in mortgage pricing, is not the same. Perhaps in consumer lending we were able to achieve significant growth and maintain prices which are perhaps more profitable for the institution. Thank you, Fernando. Just one clarification. Regarding consumer lending, and particularly in the quarter, we have seen an increase because if you look at quarter to quarter growth, it’s more than 27%. You have to take into account the seasonal impact of advances in the second quarter. If we were to exclude that impact, it’s just below €700 million, which €170 million.
The growth would not be as high as it would have been evident in the quarter of 17% in that period, of 317% in that period. Having said that, thank you very much for all your questions and all of the interest that you’ve shown every quarter. We would like to wish all of you a good holiday and please contact us if you have any further questions. Thank you very much indeed.
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