Weak lend­ing in­come hits Span­ish lender Bankia

The Gulf Today - Business - - INTERNATIONAL -

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.

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