April 28 (Bloomberg) -- Bankia SA, the nationalized lender that the government began selling back to investors in February in a sign of Spain’s recovery, said profit more than doubled as it cut costs and bad loans fell.
Net income increased to 187 million euros ($258.5 million) in the first quarter from 74 million euros a year earlier, the Valencia, Spain-based lender said in a filing to regulators today. Earnings compared with the 201.8 million-euro average estimate in a Bloomberg survey of five analysts.
Real-estate losses at the Bankia group pushed Spain into requesting a 41 billion-euro bailout from the European Union in 2012 as investor concern mounted that the burden of salvaging the lender would swamp government finances. Spain sold a 7.5 percent stake in Spain’s fourth-biggest bank to investors including billionaire George Soros in February as the process of recovering public aid got under way.
Chairman Jose Ignacio Goirigolzarri is focused on higher-yielding loans and cost reductions to meet 2015 profitability targets. The bank shrank its workforce and closed branches to comply with the terms of European aid.
“These results confirm that the company is on the right track,” Goirigolzarri said in a statement.
Shares fell 2.3 percent to 1.44 euros at 3.37 p.m. in Madrid, paring this year’s gain to 16 percent.
Net interest income rose to 698 million euros from 512 million euros a year ago, the bank said. Administrative costs fell 9.8 percent from a year ago to 403 million euros and staffing costs fell 17 percent to 256 million euros.
Bad loans as a proportion of total loans dropped to 14.3 percent from 14.7 percent at the end of 2013 as the stock of defaults dropped to 19.2 billion euros from 20 billion euros, the bank said.
The decline in the bad loans ratio will continue this year, Jose Sevilla, the bank’s director general, said at a news conference in Madrid today.
Contacts with investment banks over the timing for the sale of a further stake in Bankia by the government will probably continue after May, Sevilla said. BFA, Bankia’s state-owned parent, has a commitment not to sell a further stake until three months have elapsed since the first transaction at the end of February, Sevilla said.
Bankia hasn’t taken any further decisions on its dividend payment, Sevilla said. Goirigolzarri told shareholders last month the bank was working hard to begin distributing dividends again and any decision to make a payment against 2014 earnings would be taken at the 2015 annual general meeting.
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