BREAKING NEWS

Spain's Bankia third-quarter net profit slumps 23% on higher provisions

Spain's Bankia third-quarter net profit slumps 23% on higher provisions
People wait to enter a Bankia bank branch in Madrid, Spain, October 22, 2018. REUTERS/Susana Vera/Files -
Copyright
SUSANA VERA(Reuters)
Euronews logo
Text size Aa Aa

MADRID (Reuters) – Spain’s state-owned lender Bankia <BKIA.MC> on Monday posted a 23% drop in third-quarter net profit from a year earlier due to higher loan loss provisions, while margins remained under pressure in a low interest rate environment.

Like many other European banks, Spanish lenders are struggling to increase earnings from lending because of ultra-low interest rates.

In this context, Bankia said in July, even before the European Central Bank (ECB) cut rates deeper into negative territory in September, that it would be unable to meet its 1.3 billion euros ($1.44 billion) net profit target in 2020.

The lender’s net profit for the quarter came in at 176 million euros, slightly above an average of 173 million euros forecast by a Reuters poll.

Net interest income (NII), a measure of earnings on loans minus deposit costs, rose 1.4% to 502 million euros, in line with analysts forecasts. However, NII was down 2.7% against the previous quarter.

In an attempt to offset the impact of increasing competition on financial margins, Spanish banks are focusing on cutting costs.

Bankia is shifting its focus from a mostly mortgage loan book to a more profitable consumer and enterprise business. It expanded its net loan book by 0.4% in the first nine months.

At the end of September, Bankia’s core Tier-1 capital ratio, the strictest measure of solvency, was 13% compared to 12.91% at the end of June.

($1 = 0.9019 euros)

(Reporting By Jesús Aguado; editing by Jose Elías Rodríguez and Aditya Soni)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on euronews.com for a limited time.
Euronews is no longer accessible on Internet Explorer. This browser is not updated by Microsoft and does not support the last technical evolutions. We encourage you to use another browser, such as Edge, Safari, Google Chrome or Mozilla Firefox.