Spain's Banco Popular 2010 profits slump 23%
Banco Popular, Spain's third-largest listed bank, on Friday reported a 23 percent drop in net profits for 2010 to 590.2 million euros ($804 million) after making hefty provisions for bad loans.
The bank said in a statement that new banking regulations forced it to make provisions of 1.834 billion euros for the year.
Like other Spanish banks, Banco Popular is struggling with an economic downturn, brought about by a collapse of the country's once booming property market which has led them to increase provisioning against bad loans.
The bank said it would continue to reinforce provisioning for real estate on its books this year if the economic downturn continues.
"2011 will be a complicated year but not without opportunities," it said.
Bad loans as a proportion of total lending rose to 5.27 percent at the end of 2010 from 4.81 percent a year earlier and 5.17 percent in September.
Net banking income, the bank's main income stream, for the year fell 13.1 percent to 2.45 billion euros.
During the fourth quarter net profit fell 40.2 percent to 68.8 million euros while net banking income dropped 20.8 percent to 557.3 millions euros.
Banco Popular ended the year with a core capital ratio of 9.67 percent, up from 9.13 percent in 2009.
, well above the threshold of at least 7.0 percent required under new international "Basel III" rules agreed last year.
Last week Madrid announced new rules on the level of rock-solid core capital to allay market fears that it may need an Irish-style bailout to help shore up Spain's financial sector.
Under the new Spanish rules lenders will have to have a core capital level equal to 8.0 percent of total assets by September if they are listed, and 9.0-to-10.0 percent if they are not listed.
© 2011 AFP