Spain Banks Earn €10 BN To September, Up 4.4%

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Spain’s seven big banks registered net profit of 10.2 billion euros in the nine months to September, up 4.4% from a year earlier. Against a backdrop of low interest rates, corporate transactions have distored the banks’ global earnings.

This has been the case of BBVA, which saw a 64.3% rise in net profit to 2.7 billion euros due to the absence of negative one-off items. In the third quarter of 2015, the bank led by Francisco González recorded a negative accounting impact to the tune of 1.8 billion euros. This was the result of putting a reasonable value on its 25.01% stake in Turkey’s Garanti Bank. Excluding the effect of corporate operations, BBVA’s profit would have dropped 0.6%.

For its part, Banco Santander saw profits fall 22.5% because of the impact of various non-recurrent items in the second quarter of this year and in the same period in 2015. That said, the bank headed up by Ana Botín was once again in the top position, with earnings of 4.6 billion euros. It is forecasting ordinary profit for the full-year of nearly 6 billion euros.

Banco Sabadell and Bankinter also once again managed to post an increase in profits. The Catalan lender posted an 11.6% rise in net profit to 646,9 million euros, while Bankinter boosted its profits by 100 million euros to 400 million, thanks to growth in lending and resources.

Banco Popular is the bank which has seen the biggest decline in profits in the nine months to September as a result of its restructuring plan. The bank will cut its workforce by 2,592 people and close 302 branches as way of dealing with the problem of generating revenues in a difficult environment for the financial sector. Popular’s profits fell 66% to 94 million euros.

Also affected by corporate transactions, Caixabank’s profits fell 2.6% (970 million euros) due to one-off items related to the integration of Barclays Bank SAU, while Bankia saw its profits drop 14.5% (731 million euros) due to the deconsolidation of Florida’s City National Bank (CNB), which it sold in October last year.

The FROB’s announcement that it will study a merger between Bankia and BMN, both 65%-controlled by the government, has annoyed Spain’s leading bankers. Bankinter, Banco Santander and BBVA have all advocated auctioning BMN to maximise the state-aid the bank has received. “In order to minimise the disortion for the competition,” BBVA CEO Carlos Torres said.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.