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Unicaja's Q2 lending income rises on higher rates, mortgage growth

·2-min read
The logo of Unicaja bank is seen on the facade of a Unicaja bank branch in Ronda

By Jesús Aguado

MADRID (Reuters) -A rise in lending income supported by growth in mortgages and consumer loans and higher interest rates drove a recovery in financial margins at Unicaja, Spain's fifth-largest lender by assets, in the second quarter.

For years, banks across Europe have been under pressure from record low interest rates, but that is beginning to change as rising rates are expected to boost lenders' income.

Unicaja's net interest income (NII), or earnings on loans minus deposit costs, rose 0.4% year-on-year to 267 million euros($271 million) in the second quarter, above analysts' forecasts of 255 million euros, and was up 13.8% on the previous quarter.

Residential mortgages, which rose 1.8% year-on-year in the second quarter, despite some slowdown in new lending, backed margins.

For 2022, Chief Financial Officer Pablo Fernandez said the bank expected NII to grow around 3% against 2021. It had previously said it expected this financial margin to be flattish this year.

Customer spreads rose five points in the quarter compared to the previous one and the lender said it expected this to continue in coming quarters.

At 0807 GMT, Unicaja shares were up almost 3% compared to a flattish performance on Spain's blue-chip index Ibex-35.

Unicaja's net profit almost trebled in the second quarter from the same period a year ago thanks to lower loan loss provisions, a rise in fee income and cost cutting following its acquisition of rival Liberbank.

It reported a net profit of 105 million euros in the quarter, above analysts' forecasts of 91 million euros.

Unicaja said it had completed more than 50% of its 1,500 staff cuts, allowing it to reduce personnel expenses by 11.4% in the first half of 2022 from a year ago.

($1 = 0.9857 euros)

(Reporting by Jesús Aguado Additional reporting by Emma PinedoEditing by Inti Landauro)

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