The banks’ non-performing loans ratio continues to show signs of recovery amid the ongoing deleveraging process on the part of households and companies. The balance of impaired loans fell by 18.3% in May to 121.865 billion euros, while lending to the private sector dropped 5.2% to 1.231 trillion euros in the same month.
Against this backdrop, Banco Sabadell and Bankia were the first banks to present their first half results’ report. And the Spanish stock market reacted in a completely different way to each report.
The Catalan bank’s results did not go down well with investors: the share price fell 7.5% to 1.19 euros. Sabadell posted net profit of 425 million euros, up 20.7% from a year earlier. But excluding the contribution from the UK bank TSB, profits fell 20.6% to 280 million euros. Furthermore, Sabadell warned that its full-year net profit would be slightly below 800 million euros compared to a target of 1 billion in its 2014-2016 strategic plan.
Yet the NPL ratio (6.83%) was at its lowest level since the beginning of 2012.
The complete opposite happened with Bankia’s results. The state-owned bank posted a 13.4% year-on-year decline in profits to 481 million euros, due to the deconsolidation of City National Bank (CNB) of Florida following its sale in 2015, the depreciation of Sareb bonds and the drop in interest rates. But the bank led the Ibex 35 gainers on the day of its results’ presentation, up 3.07% at 0.703 euros.
If we exclude the contribution from CNB from last year’s profit figure, this would have fallen 8.7%. But if we make a quarter-on-quarter comparison, second quarter 2016 profit stands at 245 million euros, up 3.5% versus the first quarter, contradicting market consensus estimates.