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CaixaBank Quarterly Profit Falls 84% on Real-Estate Cleanup

CaixaBank SA, Spain’s fourth-biggest lender, said first-quarter profit fell 84 percent as it complied with a government order to recognize real-estate losses.

Net income dropped to 48 million euros ($63 million), from 300 million euros a year earlier, the Barcelona-based bank said in a filing to regulators today. That missed the 162 million-euro average estimate of four analysts surveyed by Bloomberg.

Spain’s government is pushing CaixaBank and other Spanish lenders to recognize more real-estate losses accumulated during the country’s property crash as part of efforts to restructure the financial industry. CaixaBank said it covered the entire 2.44 billion euros in charges related to the government’s February order to speed the recognition of property losses.

“We have decided to apply the decree entirely against our earnings and from now on it’s business as usual,” Chief Executive Officer Juan Maria Nin told reporters in Barcelona. “From a management point of view, it has the enormous advantage that we don’t drag anything behind us.”

CaixaBank, which last month said it would buy Banca Civica SA as the banking overhaul gathers pace, fell 1 percent to 2.58 euros at 9:12 a.m. in Madrid trading. That extended the stock’s decline this year to 32 percent.

Provisioning Buffer

CaixaBank said in February that it had an extra provisioning buffer of 1.84 billion euros that would allow it to “comfortably absorb” the provisions. Profit before impairments rose 25 percent to 889 million euros, the lender said today.

Bad loans as a proportion of total lending rose to 5.25 percent from 4.9 percent in December, CaixaBank said. Charges for covering impairments of assets jumped to 960 million euros from 373 million euros a year ago because of the real-estate losses, the lender said.

Net interest income rose 10 percent to 883 million euros from a year ago as revenue from fees and commissions climbed 7.8 percent, the bank said. Gross lending fell 1.2 percent.

CaixaBank said it took a combined 18.5 billion euros from the European Central Bank’s three-year lending operations, including 6.1 billion euros in the latest operation.

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