*

Lifts NII outlook to close to mid-single digit growth for

2024

*

Q2 net interest income up 7% y/y, rises 1% q/q

*

Q2 net profit up 17% y/y to 273 mln euros vs forecasts 269

mln

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Shares in Bankinter rise over 4%

*

Shares in domestic lenders Caixabank, Unicaja up 2% to 1%

(Recasts with NII outlook)

By Jesús Aguado

MADRID, July 18 (Reuters) - Bankinter raised

its forecast for 2024 lending income on Thursday thanks to

interest rates remaining higher than initially expected, which

helped the Spanish bank beat estimates with a 17% year-on-year

increase in second-quarter net profit.

Spanish banks are mainly retail lenders and have benefited

from higher interest rates that are passed on to customers

through floating rates while they have kept a lid on the rates

they pay on deposits.

Bankinter's quarterly net interest income (NII), earnings on

loans minus deposit costs, rose 7% year-on-year to 583 million

euros ($638 million), beating the 577 million seen by analysts.

NII was up 1% versus the previous quarter.

JP Morgan said in a note that the fact NII was still rising

quarter on quarter was a "positive read across for the other

domestic Spanish banks, although this could be the last quarter

of NII growth in a while as a lower year-on-year euribor could

start to weigh on NII in the third quarter."

Euribor is a benchmark European lending rate.

At 0822 GMT, Bankinter shares were up 4.2%, while stocks of

other domestic lenders such as Caixabank and Unicaja

were up 1-2%.

With interest rates remaining higher for longer than

expected, Chief Financial Officer Jacabo Diaz upgraded

Bankinter's NII guidance for this year from stable to close to

mid-single digit growth. He expects the European Central Bank to

cut rates just two more times in the short to medium-term, once

in September and again in late 2024 or early 2025.

Bankinter's customer spreads rose to 3.01% from 2.98% in the

previous quarter as yields on loans rose 3 basis points while

deposit costs remained unchanged.

Second-quarter earnings were also boosted by a 17% increase

in net fees, an encouraging sign as the prospect of lower

interest rates shifts investor focus onto other profit drivers.

Spain's fifth-biggest bank by market value reported a net

profit of 273 million euros for April-June, just above the 269

million expected by analysts polled by Reuters.

($1 = 0.9146 euros)