Spain's Banco Popular profits slump 20 percent
Banco Popular, Spain's third-largest listed bank, reported a 20 percent drop in net profit during the third quarter as newly-required provisions for bad loans and a weak domestic economy hit results.
Net profit fell to 166.9 million euros (231.5 million dollars) from 208.6 million euros in third quarter 2009, mirroring declines at other Spanish lenders for the same period.
The bank booked provisions, or a precautionary reserve for loans turning sour, of 699.4 million euros during the quarter, a rise of over 50 percent over last year to meet changes in Bank of Spain regulations.
Under new provisioning rules put in place by the central bank, lenders must fully recognize losses on bad loans 12 months after they have gone past due. They previously provisioned for such loans over a period of up to six years.
Like other lenders, Banco Popular is also struggling with an economic downturn in Spain, brought about by a collapse of the country's once booming property market which has led many developers and homeowners struggling to meet their loan payments.
Bad loans as a proportion of total lending rose to 5.17 percent from 4.63 percent a year earlier.
Net interest income -- the difference between interest paid out on deposits and interest earned on lending -- fell 13 percent to 609.1 million euros.
Earlier this week Spain's two largest listed banks, Santander and BBVA, both posted double-digit drops in their net profit during the third quarter.
Santander, Spain's largest bank, said Thursday its third quarter net profit fell 26.4 percent to 1.64 billion euros a day after BBVA announced its net profit for the period dropped 17.4 percent to 1.14 billion euros.
© 2010 AFP