Weak lending income hits Spanish lender Bankia
MADRID: State-controlled Spanish lender Bankia reported weakerthan-expected income from loans on Monday, raising doubts over its recovery as it continues to grapple with the impact of ultra-low interest rates.
Spanish banks are struggling to improve their lending income amid little sign of a sustained increase in eurozone interest rates. Bankia, whose loan book is dominated by mortgages, has responded by trying to shift to more profitable consumer loans.
Its third-quarter net interest income (NII), a measure of earnings on loans minus deposit costs, was 495 million euros ($564 million), up 4.9 per cent from the previous year, helped by the integration of smaller lender BMN, which Bankia fully consolidated for the first time in the first quarter.
However, NII was down 5 per cent compared with the second quarter due to fierce competition for lending.
Analysts expected NII to come in at 508 million euros.
“Overall, we believe that this set of results is once again disappointing, with evidence of still significant pressure on NII and a low visibility on its recovery, despite the good signs in costs and provisions,” analysts at BBVA said in a note.
Bankia shares were down 5.3 per cent in early trading. The stock has dropped around 15 per cent since Oct. 17, the day before a court ruled that banks, not customers, were responsible for paying stamp duty in Spain. Net profit at Bankia rose 1.7 per cent to 229 million euros in the third quarter from a year earlier thanks to higher commissions. Analysts had expected a net profit of 223 million euros.