October 25, 2018 / 9:39 AM / 2 months ago

UPDATE 1-Bankinter's mortgage business unaffected by stamp duty ruling

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MADRID, Oct 25 (Reuters) - Bankinter’s mortgage business has not been affected by last week’s court ruling that banks, not customers, were responsible for paying stamp duty in Spain, its chief financial officer said on Thursday.

The ruling has created uncertainty about how much of the duty banks would pay and how much they can pass on to customers, and hurt Spanish banking shares in the past week.

Spain’s Supreme Court still has to make a final decision early next month on who should pay the duty.

“We continue business as usual in the new mortgage production (...) and continue to sign mortgages according to our calendar,” Gloria Hernandez told analysts.

Bankinter’s issue of new mortgages rose 11.8 percent to 1.88 billion euros in the first nine months of this year, compared to the same period of 2017.

Hernandez said the bank had taken on the payment of mortgage stamp duty since last Friday, a day after the court ruling, and hoped the measure would not be applied retroactively to before last week’s ruling.

Shares in Bankinter have fallen around 3 percent since the announcement of the first ruling last Thursday.

The back and forth over the Supreme Court’s decision has prompted the country’s banking association, AEB, to demand greater legal security and predictable rules.

Hernandez said it was too early to assess the final impact of the current ruling and said any potential cost could be shared with the customer over the life of the mortgage.

Some media reports have suggested the ruling could be applied retroactively going back as much as four years.

“Reported figures about the sector and Bankinter are not at all grounded on reality. In certain assumptions these figures are certainly lower than those that have been reported,” she said.

Investment bank Alantra had estimated potential losses for the Spanish banking sector in a worst-case scenario at up to 14.5 billion euros ($16.5 billion) and an impact on Bankinter of around 500 million euros if the move was applied to their entire back-book of mortgages.

Bankinter on Thursday reported a 5.5 percent rise in third-quarter net profit to 142.4 million euros, above analysts’ forecast of 134 million euros. ($1 = 0.8768 euros) (Reporting By Jesús Aguado; Editing by Paul Day and Susan Fenton)

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