Spain's Banco Sabadell profits slump on provisions

27th January 2011, Comments 0 comments

Banco Sabadell, Spain's fourth-largest bank by market capitalization, reported Thursday a 26.5 percent drop in net profit during the fourth quarter due to higher provisions and a weak domestic economy.

The bank reported net profits of 39.7 million euros ($54.3 million) for the period. The results were highter than the average forecast of 32.1 million euros by ten analysts surveyed by Dow Jones Newswires.

The full-year 2010 net profit fell 27.3 percent to 380 million euros while loan loss provisions rose 15.6 percent during the year to 968.1 million euros.

Banco Sabadell, struggling like its Spanish peers to cope with the collapse of a property boom, said bad loans as a percentage of total lending rose to 5.01 percent at the end of December from 4.72 percent at the end of September.

Its core capital stood at 8.20 percent at the end of the fourth quarter, up from 7.84 percent at the end of the third quarter.

Spanish Economy Minister Elena Salgado announced Monday that all Spanish lenders will have to have a core capital level of at least 8.0 percent by September, more than the 7.0 percent required under new, international "Basel III" rules agreed last year.

The new reulgation is part of government moves to strengthen Spain's financial system and fend off market fears that the country may eventually need an Irish-style financial rescue.

© 2011 AFP

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