Bankia Habitat Returns To Profitability Thanks To A Tax Credit

26 January 2015 – Expansión

Bankia has cleaned up its real estate subsidiary with a fund contribution and a tax credit. The application of deductions for deferred taxes allowed Bankia Habitat to emerge in 2013 (the latest data published by the entity) from the losses it had recorded in previous years.

The real estate company recorded losses before tax of €86 million, which were offset by the application of deferred taxes amounting to €383 million, taking the net profit of the company to €297 million, compared with a loss of €1,347 million in 2012. This result offset losses recorded in previous years. Furthermore, Bankia Habitat reversed certain asset impairment losses amounting to €68 million, to take the total cumulative profit for the year to €350 million.

In parallel, Bankia restored the equity balance of its subsidiary by completing two debt-relief transactions, whereby injecting €700 million and €606 million of its own funds into the real estate subsidiary. This inflow of €1,306 million allowed the group to rebalance the company’s equity. Its own funds amounted to €995 million at the end of 2013, compared with a negative figure of €607 million a year earlier.

Bankia Habitat has accounted for a credit amounting to €596 million, demandable by the Public Administration, for deferred tax assets arising from losses, according to its audit report for 2013. Bankia Habitat’s total deductions pending offset amount to €221 million at the individual level and €2,451 million at the consolidated level.

Valuations

These amounts have been generated since 2004, although the bulk was recorded between 2008 and 2012. The timetable for realising the outstanding deductions finishes in 2013 and is conditional upon the company generating profits.

Bankia Habitat was the focus of many of Bank’s solvency problems. The solution began with the transfer of some of its assets to Sareb at the end of 2012, for a consideration of €1,250 million. The bank signed an agreement with Haya to manage the marketing of the Group’s properties.

Original story: Expansión (by E. del Pozo)

Translation: Carmel Drake

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