Spain's Banco Popular posts lower first quarter profits

27th April 2010, Comments 0 comments

Banco Popular, Spain's third-largest bank, posted Tuesday a 9.2 percent drop in first quarter net profit as it continued to set aside more cash to cover bad loans driven by a deep recession.

Net profit fell to 204 million euros (272 million dollars) from 224.7 million euros a year earlier but beat analyst forecasts compiled by Dow Jones Newswires for earnings of 190.8 million euros.

The lender said the results were helped by the sale of real estate assets and cost cutting measures which offset the 120 million euros it set aside to cover potential loses related to is sizeable property holdings.

The results included a gain of 81 million euros from the sale of bank branches while staff costs dropped to 188.9 million euros from 192.8 million euros in the first quarter of 2009.

Its bad debt rose to 4.91 percent of total loans in the first quarter from 4.8 percent in the last quarter of 2009 and 3.82 percent a year earlier.

Spain's banking industry is struggling with a severe economic downturn, brought about by a collapse of the once booming property market at the end of 2008 that has left many developers and homeowners struggling to meet their loan payments.

The government predicts the Spanish economy, the fifth largest in Europe, will shrink by 0.3 percent this year, after contracting 3.6 percent in 2009, even as the eurozone and the United States have emerged from recession.

© 2010 AFP

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