Spain’s CaixaBank Reports 27% Drop in First-Quarter Profit

CaixaBank, the lender created from restructuring Spanish savings bank La Caixa, posted a 27 percent drop in first-quarter profit as lending revenue declined.

Net income fell to 300 million euros ($445 million) from 410 million euros a year earlier, Criteria CaixaCorp SA (CRI), the La Caixa group’s listed holding company, said today in a filing.

La Caixa is being folded into Criteria to allow the bank to meet Spain’s new capital requirements and expand by acquiring other lenders. Criteria, which will change its name to CaixaBank when the restructuring is complete, gained 29 percent in Madrid trading this year, making it the best-performer on the 48- company Bloomberg Europe Banks and Financial Services Index.

“The strategic coherence we have maintained and the good reception granted to the CaixaBank project, have meant that Criteria’s shares have had an excellent performance,” Isidro Faine, chairman of Criteria and La Caixa, said in a statement.

CaixaBank’s bad loans as a proportion of total lending rose to 3.95 percent from 3.65 percent in December, the bank said.

The company has a core capital ratio, a measure of financial strength, of 9.3 percent compared with 8.9 percent in December. Net interest income fell 17 percent from 801 million euros a year ago.

CaixaBank includes La Caixa’s insurance business, 10.1 percent of Austria’s Erste Group Bank AG (EBS) and a 20 percent holding in Grupo Financiero Inbursa SAB, the financial services firm controlled by Mexican billionaire Carlos Slim.

Restructuring Target

The restructuring agreement means that La Caixa’s stakes in real estate companies won’t be passed to Criteria. Criteria will transfer some of its holdings including Gas Natural SDG SA and Abertis Infraestructuras SA to La Caixa while Criteria will keep its stakes in Telefonica SA and Repsol YPF SA.

The general assembly of La Caixa approved the restructuring at a meeting yesterday. Criteria, which aims to complete the reorganization by August, will sell 1.5 billion euros of bonds that automatically convert into shares to enable it to meet new capital requirements.

To contact the reporter for this story: Charles Penty in Madrid at cpenty@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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