Spain’s BBVA and Banco Popular profits down

28th April 2009, Comments 0 comments

Spain’s second and third largest bank report a plunge in first-quarter net profits as economic conditions continue to worsen.

MADRID – Spain's second largest bank BBVA said Tuesday its first-quarter net profit plunged 36.6 percent to EUR 1.238 billion largely due to a fall in exceptional items.

Net banking income, the margin made between the cost of taking in deposits and the price of lending them, rose 20.1 percent to EUR 3.272 billion.

Its bad loan ratio soared to 2.8 percent from 1.1 percent in the same period last year, a trend seen throughout Spain's banking sector amid the collapse of the country's property bubble in 2008. The ratio was 2.3 percent in the fourth quarter of 2008.

The bank attributed the sharp difference in profits on one-off gains in the first quarter of 2008 from the sale of its stake in the Brazilian bank Bradesco.

Without the exceptional items, net profits were down 14.2 percent year-on-year, it said.

On Monday, Banco Popular, Spain's third-largest bank, announced first-quarter net profits plummeted 30.7 percent to EUR 224.7 million.

Net banking income, the margin made between the cost of taking in deposits and the price of lending them, rose 16.4 percent from the same period last year to EUR 727.09 million.

Its bad loan ratio almost quadrupled to 3.82 percent from 0.98 percent amid the collapse of Spain's property bubble. In the fourth quarter it was 2.81 percent.

"The worsening of the economic conditions... brought great volatility and uncertainty concerning bad loans," the bank said in a statement.

The Spanish economy entered its first recession in 15 years at the end of 2008 as the global financial crisis accelerated a downturn that was already underway in its once-buoyant real estate sector.

AFP / Expatica

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