Banesto unfazed by slowdown as earnings rise
Spanish bank said economy slowdown and credit crisis would not lead to big jump in loan defaults.10 April 2008
MADRID - Banesto, the first of the Spanish banks to report earnings for the first quarter, said yesterday it did not believe the slowdown in the domestic economy and the global credit crunch would lead to a big jump in loan defaults.
Presenting the bank's financial results, chief executive José García Cantera said the rise in Banesto's non-performing loan ratio to 0.59 percent of its total credit portfolio in the first quarter from 0.45 percent a year earlier was "in line with forecasts."
Banesto reported a 16.1-percent rise in its net profit in the first three months of the year to EUR 217.6 million, despite a slowdown in growth in lending to 15.4 percent from over 20 percent the previous three months.
García Cantera said loan delinquencies would only pick up pace if growth in the Spanish economy came in below Banesto's forecast of 2.5 percent.
The Banesto CEO predicted lending growth would slow further, ending the year at single-digit levels.
Analysts have raised concerns about the sustainability of the Spanish retail banking model due to local lenders' reliance on wholesale international credit markets, which have dried up because of the credit crunch.
However, Banesto's financial director, Juan Delibes, said the bank's liquidity had improved since December and it now had a net EUR 3.5 billion, which would more than cover maturities due this year.
[El Pais / Adrian Soto / Expatica]