Avant Money, the Irish unit of Spanish bank Bankinter, has reported a 21 per cent rise in nine-month profit to 41 million euros while setting aside 17 million euros for problem loans, results that matter broadly because they show a foreign-owned lender growing its mortgage-led loan book 26 per cent to 5.6 billion euros, and matter specifically to accountancy professionals because provisioning on a book growing that fast rests on expected credit loss judgements that finance teams and auditors must test.

Bankinter is a Madrid-headquartered Spanish banking group whose net profit rose 11 per cent to 901 million euros in the nine months.

Avant Money is its Irish unit, formed through the 2018 acquisition of credit card firm Avantcard, which began mortgage lending in 2020, became an Irish branch of Bankinter and launched deposit accounts this year.

Niall Corbett, country manager at Bankinter Ireland, said the quarter built on the solid performance of the first half, underpinned by sustained growth in mortgages and consumer finance. Interest income rose 21 per cent to 103 million euros over the nine months.

The 17 million euro provision is the accounting focus. It equals about 0.3 per cent of the closing loan book on my calculation, against a non-performing loan ratio the group described as very low, at 0.3 per cent earlier this year.

Expected credit losses are probability-weighted estimates, and management discretion can affect their timing and quantification, while temporary overlays may be acceptable but permanent ones can show that models have not improved, according to an IMF technical note.

That judgement is most visible in staging. A significant increase in credit risk moves a loan to lifetime losses, and auditors test staging thresholds, scenario weights and post-model adjustments, so a fast-growing mortgage book needs documented, back-tested assumptions.

Funding is changing too. Bankinter expects the Irish loan book to be almost fully funded by local deposits within eight years of launching savings products, which alters the balance sheet that provisioning and disclosures describe.

For the sector, a lender growing this quickly shows why credit loss judgement and funding mix are central to how its results should be read.

Source: Irish Independent / Irish Examiner / IMF / WorkWithFD / The Irish Times