Bankia SA, the Spanish lender whose real estate losses pushed Spain to seek a bailout for its banking industry last year, posted nine-month profit of 362 million euros ($500 million) on lower impairment charges.
That compares with a loss of 7.1 billion euros in the year-earlier period, which was hurt by more than 10 billion euros of impairment charges, Valencia, Spain-based Bankia said in a filing to regulators today.
The Bankia group tapped about half of the 41 billion euros of European funds sought by Spain last year to support its banking industry as losses linked to real estate threatened to contaminate government finances. The group including its parent BFA, led by Chairman Jose Ignacio Goirigolzarri, plans to post an annual profit of 1.2 billion euros by 2015.
“The results were positive and a timid recovery is underway,” said Fernando Pascual, an analyst at Espirito Santo Investment Bank in Madrid, with a sell rating on the shares.
Bankia shares fell 4.5 percent to 1.08 euros at 2:58 p.m. in Madrid. They have dropped 77 percent this year.
Bankia’s adjusted pretax profit excluding the impact of a subordinated loan rose to 229 million euros in the third quarter from 213 million euros in the second quarter as net interest income rose 1.6 percent to 643 million euros. Bad loans as a proportion of bad loans rose to 13.6 percent from 13 percent in December as net lending fell 9.2 percent.
Administrative costs fell 15 percent to 1.31 billion euros in the first nine months from a year ago. Bankia, which has reduced its branch network by 21 percent since the end of last year to 2,462 as it shrinks its business under the terms of its European bailout, said it plans to complete the restructuring ahead of schedule in the first quarter of 2014.
The Bankia group is on track to reach a return on equity above 10 percent in 2015, Director General Jose Sevilla said at a briefing in Madrid. He said the group was sticking to its estimate of 800 million euros in earnings for this year.
Bankia and its parent BFA earned after-tax profit of 648 million euros in the first nine months of the year compared with a 7.8 billion-euro loss a year ago. Bankia is in talks with Spanish authorities about removing the banking license from BFA to simplify its structure, Sevilla said.
Bankia expects to sell a further 2,000 properties in the final quarter, taking the total for the year up to 4,000 as it finds buyers for the real estate it passed to Spain’s bad bank, known as Sareb, according to Sevilla.