Bankia SA, the bailed-out Spanish lender that posted a record 19 billion-euro ($24.7 billion) loss in 2012, swung to a profit in the first quarter after the group cleansed its balance sheet of soured property loans.
Net income was 74 million euros in the three months to March, Bankia said in a statement from Madrid today, without giving a year-ago figure. The BFA-Bankia group, which also includes the parent company, posted net income of 177 million euros.
The group, which got about half of the 41 billion euros in European aid sought by Spain last year, is seeking to increase annual profit to 1.2 billion euros by 2015 as it restructures its business, free from the burden of real estate losses that drove it into government ownership last year. The lender, Spain’s fourth-largest, will create conditions for the government to start selling its stake as soon as 2014, Chairman Jose Ignacio Goirigolzarri said last month.
“It’s probably still too soon for investors to be looking seriously at Bankia -- there’s still a long way for them to go,” Juan Pablo Lopez, a banking analyst at Espirito Santo Investment Bank in Madrid, said in a phone interview today.
Goirigolzarri is targeting 800 million euros of profit this year after transferring 22 billion euros in assets to the government’s “bad bank” and shrinking operations to cut costs. The return to profit and the reduction in risk-weighted assets under its restructuring process helped generate 598 million euros of capital, boosting its core tier 1 capital ratio to 9.97 percent and to 10.06 percent for its listed Bankia unit, Bankia said.
The group is taking “its first step on the path towards the generation of value that will allow the state to recoup the money invested,” Bankia said today.
Shareholders have seen their investments all but wiped out by the conditions of the bailout, which include a recapitalization plan for the bank in which some of its debt will be converted into equity. The shares have lost 97 percent of their value since an initial public offering in 2011.
Bankia’s net interest income fell to 512 million euros in the first quarter from 844 million euros a year earlier as the loan book shrank 2.3 percent since December. Low interest rates hurt margins after average benchmark 12-month Euribor interest rates fell to 0.57 percent from 1.67 percent a year earlier, the lender said.
Bad loans were 13.1 percent of total loans in March compared with 13 percent at the end of last year, the lender said. Following the real estate clean-up, loans to real estate developers make up only 3.4 percent of its loan book. Administrative costs fell 14 percent from a year earlier, the bank said.
The 74 million-euro profit at the listed Bankia unit beat the average 46.3 million-euro estimate in a Bloomberg survey of four analysts.