UPDATE 2-Bankinter fluctuates in loss, the costs of the insurance of the loans increase

* Net loss of books of 21 million euros in the second quarter

* Provides € 177 million in COVID-19 provisions

* No further provisions for the rest of the year

* Increases the cost of risk orientation for 2020 to 60-70 bps (adds breakdowns of numbers)

By Jesús Aguado

MADRID, July 23 (Reuters) – The Spanish Bankinter fell to a second quarter loss of 21 million euros ($ 24 million) due to higher provisions as the COVID-19 pandemic devastated the economy and forced the bank to increase its guide to the cost of loan insurance in 2020.

Analysts interviewed by Reuters expected a net profit of 54 million euros, but Bankinter had recorded relatively fewer coronavirus loads in the first quarter than peers.

The lender set aside extraordinary provisions of € 177 million in the quarter to protect its balance sheet and support its customers from the fallout from the pandemic, after just € 15 million in the previous quarter.

In anticipation of much more unfavorable prospects, chief financial officer Jacobo Diaz said that the bank’s cost of risk would increase by 60 to 70 basis points by the end of 2020, from previous guidelines from 50 to 70 basis points.

Diaz said the bank will not set aside further provisions against the impact of the pandemic for the rest of the year.

“With a much better view of the consequences of the economic closure, the bank has adopted the central scenario of the Bank of Spain in all our internal models,” said Diaz, adding that the cost of risk would shift to the top of his guide. .

The Bank of Spain said that the Spanish economy could decline by 11.6% this year.

Bankinter shares rose 0.35% as solid core revenues partially offset the strong write-downs of what Goldman Sachs analysts described as a “good set” of underlying results.

Net interest income (NII), a measure of earnings on loans minus deposit costs, increased by 6% year-on-year to € 305 million.

NII benefited from a state-guaranteed lending program to the corporate sector, which also led the bank to forecast half-single growth by the end of 2020.

Compared to the previous quarter, however, the NII fell by 1%, as European lenders have difficulty earning money due to ultra low rates.

$ 1 = 0.8631 euros Reports of Jesús Aguado; additional reports by Emma Pinedo; editing by Ingrid Melander and Mark Potter

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