CaixaBank Quarterly Profit Misses Estimates; Shares Decline

  • Net interest income decreases by 8.3% quarter on quarter
  • Shares among worst performers on benchmark banking index

CaixaBank SA, Spain’s third-largest lender, reported third-quarter profit that missed estimates as low interest rates and weak credit demand put pressure on its lending business. The shares fell as much as 4 percent.

Net income fell 13.5 percent to 288 million euros ($320 million) from 333 million euros in the previous quarter, the Barcelona-based lender said in a filing Friday. That compares with 298.4 million euros, the average of five analyst estimates compiled by Bloomberg. CaixaBank at the beginning of this year incorporated the earnings of a Barclays Plc Spanish unit that it agreed to buy in 2014.

CaixaBank Chief Executive Officer Gonzalo Gortazar plans to quadruple profitability by 2017 by increasing revenue, reducing costs and lowering provisions. The lender is considering what to do with its stake in Portugal’s Banco BPI SA after withdrawing an offer to buy the 56 percent of the business it didn’t already own in June.

“The results are below our estimates and the market consensus in all main lines,” Nuria Alvarez, a bank analyst at Renta 4 Banco in Madrid, said in a note to clients. The decline of net interest income and net fees are the main weaknesses, she said.

Net interest income, the difference between what a bank charges for loans and pays for funding, fell 8.3 percent in the quarter after the lender trimmed its bond holdings and started removing “floors” to its mortgage contracts. A floor sets a minimum rate for a loan that won’t fall even when market rates are lower. The bank in July lowered its net interest income growth estimate for 2015 to a range of 4 percent to 6 percent.

CaixaBank was down 0.2 percent at 3.70 euros in Madrid trading as of 9:46 a.m. The shares have dropped by 15 percent this year, making the Spanish lender one of the worst performers on the STOXX Europe 600 Banks Index.

Bad loans as a proportion of total lending at CaixaBank dropped to 8.7 percent from 9 percent at the end of June, the bank said.

Banco de Sabadell SA, a smaller Spanish lender, reported a 37 percent increase in pro-forma net income to 188 million euros. The stock climbed as much as 2.9 percent.

(An earlier version of this story corrected Gonzalo Gortazar’s title.)

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