MADRID: Bankia stated on Wednesday its third-quarter web revenue fell 79% from the identical interval a yr in the past because the Spanish financial institution warned of a “sophisticated fourth quarter” because of the unsure results of the coronavirus outbreak.
Bankia put aside 155 million euros ($183.2 million) for the quarter to guard its books and assist its clients in opposition to the fallout of the COVID-19 pandemic, after offering 310 million euros for a similar motive within the first half of the yr.
The brand new provisions additionally pushed the financial institution’s return on fairness (ROE), a measure of profitability, right down to 1.9% within the quarter in opposition to 2.2% within the earlier quarter.
The state-owned lender, which has agreed to a defensive merger with its greatest rival Caixabank, reported a web revenue of 37 million euros within the quarter. Analysts polled by Reuters had anticipated a web revenue of 46 million euros.
European banks are below stress to hitch forces to take care of rising dangerous debt and low rates of interest as they battle the fallout from the pandemic.
Shares in Bankia have been down 0.7%, whereas Spain’s main index Ibex-35 was 1.8% decrease.
Bankia’s chairman Jose Ignacio Goirigolzarri warned of a “nonetheless sophisticated quarter earlier than yr finish, as a result of the pandemic’s results are unsure.”
Bankia’s value of threat – which measures the price of managing credit score dangers and potential losses and serves as a sign of future provisions – rose to 81 foundation factors within the third quarter from 73 bps in June, barely above its 70 to 80 bps steering for the yr.
Bankia’s CEO Jose Sevilla stated he anticipated to obtain the authorisations for the Caixabank deal after getting shareholder approval in early December.
Bankia stated it had met one of many milestones in its three-year strategic plan one quarter forward of time after producing 2.5 billion euros of extra capital – above 12% of its core Tier 1 ratio – by 2020.
Bankia’s web curiosity earnings, a measure of earnings on loans minus deposit prices, fell 2.6% from the identical quarter a yr in the past to 489 million euros, pressured by the low rate of interest setting. Analysts had anticipated a NII of 483 million euros.
However in comparison with the earlier quarter, web curiosity earnings rose 5.3% because the financial institution benefited from low cost European Central Financial institution funding traces and a restoration in banking exercise, each in shopper and mortgage lending.
($1 = 0.8461 euros)
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