Unicaja Banco’s Earnings Call: Positive Growth Amid Challenges

Unicaja Banco ((ES:UNI)) has held its Q3 earnings call. Read on for the main highlights of the call.

Unicaja Banco’s recent earnings call exuded a positive sentiment, driven by robust growth in mutual funds, profitability, and credit quality improvements. The bank’s strategic strides in sustainable finance further bolstered this upbeat outlook, despite facing challenges in net interest income, customer spreads, and specific loan segments. Overall, the highlights significantly outweighed the hurdles, painting an optimistic picture for the financial institution.

Strong Growth in Mutual Funds

Unicaja Banco reported a notable 24% growth in mutual funds, contributing to a 2% year-on-year improvement in business volumes. This achievement secured a 9% market share in net inflows, underscoring the bank’s strong position in the mutual funds sector.

Profitability and Net Income Achievement

The bank’s profitability soared with a 4% increase in gross margin and a 19% reduction in total provisions. Net profit reached EUR 503 million, marking an 11.5% rise from the first nine months of 2024 and surpassing the strategic plan target.

Improved Credit Quality and Solvency

Unicaja Banco demonstrated enhanced credit quality with a net NPAs ratio below 1% and a gross NPA ratio reduced by 115 basis points to 3.7%. The CET1 ratio also improved by 27 basis points to 16.1%, reflecting strengthened solvency.

Sustainability and Climate Transition Progress

The bank issued EUR 2.1 billion in green label bonds, contributing to significant decarbonization efforts by saving 81,000 tonnes of CO2 in 2024. These initiatives highlight Unicaja Banco’s commitment to sustainable finance.

Positive Commercial Trends in Loans

Private sector lending experienced a 39% year-on-year growth, with notable increases in business and self-employed segments (47%) and mortgages (24%). These trends indicate a robust lending environment.

Improved Guidance for 2025

Unicaja Banco upgraded its guidance for 2025, forecasting net interest income to exceed EUR 1.470 billion and cost of risk to fall below 30 basis points for the full year. These projections reflect the bank’s confidence in its financial trajectory.

Decline in Net Interest Income

Despite the positive trends, net interest income fell by 3.5% in the first nine months, attributed to challenges in repricing loans at lower rates. This remains a critical area for improvement.

Stagnant Customer Spread

The customer spread decreased by 8 basis points due to the repricing of floating loans, partially offset by lower deposit costs. This stagnation presents a challenge for the bank’s profitability.

Challenges in SME Loan Book

The SME loan book declined by approximately 8-9% year-on-year, though recent quarters show an improving trend with a smaller decline. Addressing this segment remains a priority for Unicaja Banco.

Pressure on Payment and Account Fees

Banking fees, particularly from payments and accounts, continue to face pressure, with a challenging outlook for growth in 2026. This area requires strategic focus to enhance revenue streams.

Guidance and Future Outlook

Unicaja Banco’s forward-looking guidance for 2025 indicates strong financial performance, with business volumes improving by 2% year-on-year and a 39% increase in new lending. The bank’s profitability is expected to rise, supported by a 4% increase in gross margin and a 19% reduction in total provisions. Credit quality improvements and a robust CET1 ratio further enhance the bank’s outlook, reflecting a healthy financial trajectory.

In summary, Unicaja Banco’s earnings call highlighted a positive sentiment, driven by impressive growth in mutual funds, profitability, and credit quality. While challenges in net interest income and customer spreads persist, the bank’s strategic achievements in sustainable finance and improved guidance for 2025 provide a solid foundation for future growth.