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Bankinter: An Overlooked Spanish Bank With A 4.75% Dividend Yield

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SA Focus On Europe


  • Bankinter has turned a corner and combines a strong capital position with a superior ROE (12.6%) and ROA (0.8%).
  • The 4.75% dividend yield is appealing, especially as the balance sheet is safe.
  • The CET1 capital ratio is 44% higher than the regulator's minimum requirement.
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Last week, we discussed Galp Energia (OTC:GLPEF) (OTCPK:GLPEY) in the previous edition of Focus on Europe as the vertically integrated oil and gas producer based in Portugal reported on its Q1 results.

We are staying on the Iberian peninsula for this week’s version of Focus on Europe as the spotlights are on Bankinter this week. Smaller Spanish banks are often still ignored by the market although they have turned a corner by now. Bankinter’s CET1 capital ratio is more than 40% higher than the regulator’s minimum requirement, and its dividend yield will very likely come in at 4.75% based on a currently assumed 50% payout ratio. Plenty of things to like here.

Did you want to re-read the Galp Energia article? You can do so here.

A closer look at Bankinter, a small Spanish Bank

When (potential) investors look at the Spanish financial sector, they usually focus on the bigger (multinational Banks) like Banco Santander (SAN) and BBVA (BBVA). Even 25B EUR market cap Caixabank (OTCPK:CAIXY) (OTCPK:CIXPF) often gets completely ignored by foreign investors. And that’s a pity. As I have shown in a previous article on Banco Sabadell (OTCPK:BNDSF) (OTCPK:BNDSY), even the smaller banks that predominantly focus on domestic operations (within the Iberian peninsula, so including Portugal) have done a decent job in strengthening their balance sheet after the Spanish sovereign debt crisis in 2010-2014.

Source: Yahoo Finance

And now, five years later, the Spanish banks appear to be doing fine. The balance sheets are stronger, the Non-Performing Loan ratios are falling while the coverage ratios are increasing. The loan loss provisions are decreasing, and most banks are comfortably meeting the minimum capital requirements as requested by the European regulators, paving the way for dividends.

Bankinter (OTCPK:BKNIY) (OTC:BKIMF) is a relatively small Spanish bank with a 5.7B EUR

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This article was written by

SA Focus On Europe profile picture
Focus On Europe is a newsletter published every other week that focuses on European investment opportunities and stories. Written by The Investment Doctor, the letter focuses on key macro stories as well as specific investment ideas ranging from small to large cap in Europe. This is exclusive for Seeking Alpha PRO+ subscribers who may be looking for more ideas outside of the US. Read more about SA PRO+ here - https://seekingalpha.com/proplus

Analyst’s Disclosure: I am/we are long BNDSF, BUD, CAIXY, ERNXY, EXMRF, SAN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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