Sabadell May Miss Targets for Credit Growth as Demand Slumps

Banco Sabadell SA, a Spanish retail bank, will probably miss its targets for credit growth as demand slumps in a sluggish economy, Chief Executive Officer Jaime Guardiola said.

“We are not able to fulfill our objectives for credit,” Guardiola said on a webcast for reporters today to discuss second-quarter earnings, which slumped 36 percent from a year earlier. “Credit is not going to grow in this country for the next few years and that is very clear.”

Spain’s banks are seeing shrinking demand for loans as the economy sputters, at the same time that doubts about the finances of Europe’s debt-ridden nations drives up funding costs. Sabadell announced targets in January, including adding 1 million new retail and 160,000 corporate clients through 2013, and boosting average annual lending growth by 5 percent.

Second-quarter net income fell to 81.05 million euros from 126.44 million euros a year ago, the bank said in a filing to regulators today. Earnings compared with the 73 million-euro average estimate in a Bloomberg survey of six analyst forecasts.

Net interest income fell 1.4 percent to 385.4 million euros, Sabadell said. Bad loans as a proportion of total loans climbed to 5.55 percent from 4.38 percent a year before, the lender said.

Costs for covering bad loans fell 59 percent from a year ago to 215.5 million euros, the bank said. Personnel costs climbed 8.3 percent from a year ago to 178.7 million euros, the bank said.

To contact the reporters on 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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