Help the refugees

If you move around the world by choice, consider helping those forced from their homes by conflict. Donate to the UN Refugee Agency today.

Home News Spain’s Bankia says low interest rates hit profits

Spain’s Bankia says low interest rates hit profits

Published on 29/04/2016

Spain's state-rescued lender Bankia posted on Friday a 3.3-percent fall in first-quarter net profit due in part to lower interest rates and fierce competition which hurt its margins.

The bank reported a net profit of 237 million euros ($268.7 million) during the first three months of the year, below analysts’ forecasts of 246 million euros, according to a Factset poll.

Net interest income, a measure of earnings on loans minus deposit costs, dropped 16.7 percent to 577 million euros.

“The bank remains strong in a challenging interest rate climate,” Bankia chief executive Jose Sevilla said in a statement.

“Bankia’s efficiency is very high and the low level of non-performing loans has allowed us to set aside less provisions, which result in earnings and profitability remaining stable,” he added.

Bankia’s bad debts as a percentage of total loans fell to 10.5 percent at the end of March from 10.8 percent at the end of January.

As part of a long and broad offensive to push inflation in the single currency area back up to levels that it considers to be healthy for economic growth, the European Central Bank (ECB) has slashed its key interest rates to new all-time lows.

One of its rates, the so-called deposit rate, has even entered negative territory — which means that the ECB effectively charges banks for parking their cash with it overnight.

Eurozone banks and insurers regularly complain that the current environment of extremely low interest rates makes it difficult for them to offer attractive yields to customers.

Bankia, which was bailed out in 2012 just months after its listing, posted a net profit of 1.0 billion euros last year.