By Jeannette Neumann
MADRID--Two Spanish lenders, Caixabank SA and Banco Popular
Español SA, reported fourth-quarter results on Friday that showed
an uptick in demand for loans as the country chugs toward economic
recovery.
Caixabank and Banco Popular said new loans were up in the fourth
quarter compared with a year earlier, led by demand from businesses
in particular, while mortgage lending was less vibrant. That trend
was in line with results reported on Thursday by Banco de Sabadell
SA.
Still, an increase in loan issuance wasn't enough to offset the
wave of individuals and businesses that are focused on paying down
their existing debts, rather than taking on new debt. The amount
Caixabank lent to customers in 2014 fell nearly 5% compared with
the previous year and 0.5% at Banco Popular during the same
period.
Caixabank Chief Executive Gonzalo Gortázar said new loan
production in 2015, particularly to businesses, is likely to be
strong enough to outpace the rate at which borrowers are paying off
debts. Caixabank is likely to see its total loan portfolio grow
around 7% in 2015, Mr. Gortázar said at a news conference, buoyed
by the acquisition of Barclays PLC's retail banking division in
Spain, which closed on Jan. 2.
"Credit is returning to the economy," Mr. Gortázar said. "New
loan production is accelerating each quarter."
Overall in the Spanish banking system, he said, total loan
volumes should stop declining and stabilize around zero or 1%.
Sabadell executives said Thursday they anticipated a turnaround
this year at their bank as well, with growth in the total loan book
of around 1%-2% thanks to an increase in loans to small and
medium-size businesses.
The "deleveraging" process in Spain has weakened lenders'
returns in recent quarters and makes analysts anxious about future
growth. But bank executives acknowledge that it is healthy for
individuals and businesses in Spain to slough off layers of debt
accumulated during a frenzied building boom, which went bust
starting in 2008 and sunk the country into several years of
recession.
Caixabank reported net profit of EUR154 million ($174.3 million)
in the fourth quarter of 2014. The bank said it had restated its
2013 accounts because of a contribution to Spain's deposit
guarantee fund, leading to a EUR142 million loss in the fourth
quarter of 2013.
The Barcelona-based bank said fourth-quarter net interest income
was EUR1.08 billion compared with EUR1.02 billion a year earlier.
That was in line with analysts' expectations.
Caixabank shares were down 2% in early afternoon trading in
Madrid. Credit Suisse Group AG analysts said in a research report
that the bank's results were "mixed," with weak trading income and
higher-than expected impairments, including EUR195 million of early
retirement charges.
Banco Popular, Spain's sixth largest bank by market value,
reported net profit of EUR99.4 million ($112.5 million) in the
fourth quarter of 2014, up from EUR79.6 million a year earlier. The
bank said fourth-quarter net interest income was EUR570.9 million
compared with EUR581.5 million a year earlier. Banco Popular shares
were up 0.7%.
Net interest income, a key driver of revenue for retail banks
like Caixabank, is the difference between how much a bank earns on
clients' loans and how much it pays clients for their deposits.
Separately, Bankia SA has postponed its 2014 annual results
presentation while Spain's bank-bailout fund, known as Frob, weighs
how potential litigation expenses should be divided between the
bailed-out bank and its parent company, a Bankia spokesman said
Friday.
Bankia, which Spain spent EUR22.4 billion in European Union
funds to clean up in 2012 following a real-estate bust, was set to
report earnings on Feb. 2.
Spain's bank-bailout fund Frob still owns the majority of
Bankia. The bailed-out bank, Spain's fourth-largest by market
value, is plagued by lawsuits triggered by fraud allegations
related to its 2011 initial public offering. Investors in the IPO
suffered steep losses when Bankia was later nationalized.
Executives at Bankia at the time say the share sale was above
board.
The Bankia spokesman said it is unclear when the bank's 2014
results will be rescheduled.
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