CaixaBank Quarterly Profit Jumps on Lower Bad Loan Charges

CaixaBank SA (CABK), Spain’s third-biggest bank, said second-quarter profit more than doubled on higher revenue and lower charges for covering bad loans.

Net income rose to 153 million euros ($206.1 million) from 73 million euros a year earlier, the Barcelona-based lender said in a filing to regulators today. Shares rose as much as 4.7 percent as earnings beat the 110.8 million-euro average estimate in a survey of 10 analysts.

Banks including CaixaBank are rebuilding profits after Spain’s six-year slump by making higher-margin loans to companies and generating fees from services such as asset management, as charges for covering asset losses subside. Bad loans as a proportion of total lending at CaixaBank fell for a second quarter, dropping to 10.8 percent from 11.4 percent at the end of March, the bank said.

“I would say that we have the company in very good shape to be able to take advantage of the recovery,” said Chief Executive Officer Gonzalo Gortazar in a webcast news conference in Barcelona.

CaixaBank rose for a fourth day, climbing 3.62 percent to 4.55 euros at 12:57 p.m. in Madrid. That valued the company at 25.5 billion euros.

Net interest income, or revenue generated from the difference between what banks charge for loans and pay for funding, rose to 1.02 billion euros from 993 million euros in the first quarter and 967 million euros a year earlier.

Acquisition Opportunities

Today’s earnings mark the first presented by Gortazar who took over as CEO from Juan Maria Nin at the end of June. The bank’s balance sheet was strong enough to allow it to look at acquisition opportunities, Gortazar said.

Charges for impaired assets dropped to 664 million euros from 925 million euros a year earlier, the bank said. Net fee revenue rose to 476 million euros from 444 million euros.

CaixaBank’s income from equity investments fell 64 percent in the quarter to 122 million euros as the bank recognized the impact of lower profit at Austria’s Erste Group Bank AG, the bank said. CaixaBank owns 9.1 percent of Erste, which has said it will have a record loss from writedowns at its Romanian unit and set aside provisions for loan losses in Romania and Hungary.

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

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net Cindy Roberts, Steve Bailey

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