CaixaBank Quarterly Loss $199 Million After Repsol Writedown

  • Lender booked provisions for potential legal challenges
  • CEO says oil-company stake is a long-term investment

CaixaBank SA reported a fourth-quarter loss after Spain’s third-largest bank wrote down its stake in oil producer Repsol SA.

The net loss was 182 million euros ($199 million) compared with net income of 288 million euros in the third quarter, the Barcelona-based lender said in a filing on Friday. Analysts predicted a profit of 101.5 million euros, the average of eight estimates compiled by Bloomberg.

CaixaBank plans to quadruple profitability by 2017 amid a reorganization of its equity holdings. The lender wrote down its 12.14 percent stake in Repsol in the fourth quarter and booked provisions for potential legal challenges over mortgages. Repsol said Wednesday it will book an impairment charge of about 2.9 billion euros as a provision after crude prices collapsed.

The bank’s equity investments reduced revenue by 342 million euros in the fourth quarter, Chief Executive Officer Gonzalo Gortazar said at a press conference in Barcelona. CaixaBank considers the Repsol stake a long-term investment and is confident that its value will recover, Gortazar said. Repsol has declined by 39 percent in the last 12 months.

“Overall, a mixed set of results, where the main minus is the provisions for legal risks,” Fabio Mostacci, an analyst at Mirabaud Securities, said in a note to clients. “On the other hand, net interest income was a positive surprise. The doubts about the value of the stake in Repsol are still there.”

Mortgage Floors

The lender restated its 2014 earnings to include a charge related to a Spanish guarantee fund payment and incorporated the earnings of a Barclays Plc Spanish unit at the beginning of 2015. In December of last year, the bank sold its stakes in Grupo Financiero Inbursa SAB and Bank of East Asia Ltd. to its parent company Criteria Caixa SA. Full-year net income rose 31.3 percent to 814 million euros, the bank said on Friday.

CaixaBank climbed as much as 5.7 percent in Madrid trading and was up 2.9 percent at 2.75 euros as of 11:30 a.m. That cuts this year’s decline to 14 percent, giving the company a market value of about 16 billion euros.

Net interest income, the difference between what a bank charges for loans and pays for funding, rose to 1.045 billion euros from 1.038 billion euros in the third quarter. The figure fell from a year earlier after the lender removed “floors” on its mortgage contracts. A floor sets a minimum rate for a loan that won’t fall even when market rates are lower.

The bank forecast a decline of 4 percent to 6 percent in net interest income this year due to interest rates and the mortgage floors, it said in a presentation. CaixaBank booked an undisclosed charge related to legal risks from mortgage floors.

Bad loans as a proportion of total lending dropped to 7.9 percent from 8.7 percent at the end of September, the bank said.

Banco Popular Espanol SA, Spain’s seventh-largest bank by market value, jumped the most in two years on Friday after announcing plans to improve its balance sheet by selling assets. The lender reported a net loss of 172.6 million euros in the fourth quarter as it made a one-time provision for legal risks linked to the possible elimination of mortgage “floors.”

Banco Popular shares were up 6 percent to 2.45 euros at 11:30 a.m. in Madrid, cutting the decline for this year to 19.5 percent.

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