CaixaBank SA, Spain’s third-largest lender, said first-quarter profit jumped after booking a one-time gain of 1.77 billion euros ($2.3 billion) from the purchase of nationalized Banco de Valencia SA.
Net income climbed to 335 million euros from 48 million euros a year ago, the Barcelona-based bank said in a filing to regulators today. The profit beat the 220 million-euro average estimate in a Bloomberg survey of eight analysts.
“The capital gain from Banco de Valencia is higher than initially expected by investors,” Juan Pablo Lopez, analyst at Banco Espirito Santo SA in Madrid, who recommends buying the stock, said by telephone. “Recurrent business and margins remain depressed.”
Spanish banks are anticipating profits this year after carrying out the bulk of a real estate cleanup that required recognizing 84 billion euros of losses on assets that soured during the country’s property crash. Still, firms including CaixaBank still face rising defaults on loans in a weak Spanish economy that is sapping credit demand.
CaixaBank fell 0.5 percent to 2.785 euros at 3:32 p.m. in Madrid, valuing the company at 12.9 billion euros. It has gained 5.6 percent this year, outpacing a rise of 3.4 percent for the Bloomberg Europe Banks & Financial Services Index.
The bank posted a total of 2.22 billion euros of capital gains in the first quarter, including the negative goodwill for Banco de Valencia, which it agreed to buy for 1 euro from Spain’s bailout fund in November. Negative goodwill is a gain occurring when the price paid for an asset is less than the stated fair value.
The bailout fund, known as Frob, said it would provide a capital injection of 4.5 billion euros to back the sale. Banco de Valencia reported a loss of 3.59 billion euros in 2012.
Loan-loss provisioning rose to 16.8 billion euros from 12.1 billion euros at the end of 2012 and tripled from 6.2 billion euros a year earlier, CaixaBank said. Bad loans as a proportion of total loans at the bank’s 6,400 branches rose to 9.4 percent from 8.6 percent in December as loans to real estate developers deteriorated, it said.
The core Tier 1 capital ratio, a key measure of financial strength, fell to 10.6 percent from 11 percent a year ago. The ratio of loans to deposits dropped to 126 percent from 129 percent, CaixaBank said.
Net interest income, revenue from interest after subtracting interest paid, rose 12.3 percent in the first quarter from a year ago to 992 million euros after the bank purchased Banco de Valencia and Banca Civica SA.
Five of 23 analysts recommend buying CaixaBank, according to data compiled by Bloomberg. The average 12-month price estimate for the stock is 2.81 euros, 0.9 percent more than the current share price, the data showed.