Commercial Retail Banking is now the largest contributor to gross operating income
Economic slowdown, negative interest rates and geopolitical uncertainty in 2019 gave rise to a complex environment for Commercial Retail Banking, Bankinter's business line for individuals. Further, the loss of confidence by investors after the stock market slump in 2018 held the segment back early in the year, although it later gained ground in tandem with the market recovery. Another distorting factor was the entry into force in June of the new Real Estate Credit Act which significantly changed the procedures and conditions for the concession of mortgages, triggering a hiatus in activity during the summer.
In this unfavourable scenario, the Commercial Retail Banking unit reported positive revenues and profitability and by the close of the year the business line had become the main contributor to the Bankinter Group's gross operating income.
This performance owes largely to the success of the Salary Account programme, which was once again the star product, with growth of over 10,000 million euros, and its traction on the individual banking business. 40 of every 100 customers attracted by the entity are Salary Account customers, which, in contrast to other offers, has maintained its advantages since it was first launched in 2012, making it
a leading product on the market. Bankinter's aim is to become the primary bank for all its Salary Account customers, increasing their loyalty through mortgages, personal loans and credit cards, among other products.
It was also a satisfactory year for mortgages, despite the difficulties caused by the new law. New mortgage loans increased by 17%, to 2,956 million euros, with an outstanding 6.39% market share at the end of November. Another standout from the year was the growth in fixed rate mortgages, which accounted for around a third of all new transactions. In terms of stock, the mortgage portfolio grew, in contrast to the general decrease marked by the sector as a whole.
In the breakdown by type of customer, the Private Banking area (which includes people with liquid assets of over one million euros) grew at a significant pace, in terms of both new net assets (more than 2,000 million euros), assets under management (more than 40,000 million euros) and customer numbers (around 40,000). This led to a further increase in gross operating income. The good performance marked by Private Banking was due partly to the market recovery, but above all to the entity's differentiation strategy, which increased and improved its offer for this type of customer with the launch of different alternative investment vehicles. In 2019, for instance, an innovative investment fund was launched to take positions in technology companies in the Silicon Valley ecosystem. The well-known technology entrepreneur, Martín Varsavsky, is working with the fund to identify investment opportunities.
In the area of Personal Banking (customers with assets of between 75,000 and one million euros), the fall of the markets in 2018 and investors' subsequent loss of confidence was noted in early 2019. However, the good performance of the Salary Account, mortgages and consumer loans (with new loans rising by over 20% in this segment), among other transactions, led to a 9% increase in gross operating income. Looking ahead to 2020, Bankinter is working to complete the digitalisation of its commercial management, a process considered key to expanding the Personal Banking customer base.
In the Individual Retail Banking segment the growth in active customers to over 373,000 stands out, thanks mainly to the control and management of departures. In this area, special relevance is given to process efficiency and services for customers with growth potential, to cross sell to other superior segments (23% of Personal Banking customers and 10% of Private Banking customers come from the Individual Retail
Banking segment). In the Foreign customers segment, both net interest income and fees rose substantially year-on-year.
In 2019, the Commercial Retail Banking business launched "Bk", a new business line to offer a global financial service to young people, with specific savings, loan and investment proposals. The offer varies according to the different age brackets: under 18s (reserved for customers' children), university students aged between 18 and 24 and professionals under 35. The acquisition of EVO Banco, which focuses on younger customers, covering their basic financial needs and exclusively for digital transactions, is also part of the strategy to expand and diversify the entity's customer base.