The provisions, a financial cushion deducted from the possible profit in order to restructure the real estate risk, have affected the results of Spanish banks in 2012.
This Friday, three institutions have shown how these resources have affected their balance sheets. Banco Popular has suffered the most, with losses of 2461 million Euros after injecting 9600 million Euros.
The institution presided over by Angel Ron, who this week appointed his number two, declared that without these provisions, the profit would have been of 520 million Euros.
With this restructuring process, the institution, which recorded a generic provision of 3679 million Euros, has increased the ratio of global hedge of defaulters up to 65%, while the ratio of hedge for troubled loans reaches 74%.
“Popular has shown once again its capacity of anticipation, becoming the new reference in the financial sector in establishing provisions on its less profitable assets, with a coverage of the total risk of 16%, one of the highest in Europe”, the institution declared. Plus, the coverage for non real estate small companies reaches 15%.
In reference to margins, all of them grew more than 24%. The interest one, which registers the income resulting of the strictly banking activity, grew more than 30% reaching 2719 million Euros, based mainly on the evolution of the investment in asset margins and the containment of the customer resources costs.
Commissions increased by 15,8%, favoring the growth of the gross margin by 26,1%, up to 3778 million Euros, while the operating margin grew by 24%, reaching 2016 million Euros.
The default of the group reached 8,98% in 2012, opposite to the 5,99% of the previous year, although the coverage improved to 73,65% opposite to the 55,75% in 2011.
The second Spanish banking group, BBVA, has announced that it obtained a net profit of 1676 million Euros in 2012, 44,2% less than the 3004 million Euros earned in 2011, after carrying out “all provisions in the real estate sector in Spain”.
The institution explains that without taking into account those charges nor the “positive impact” generated by the acquisition of Unnim, the profit would have been of 4406 million Euros, 2,2% less than in 2011, according to a statement made to the National Share Market Commission.
The institution presided over by Francisco González closed 2012 with a default rate of 5,1%, one percentage point over the 4% of 2011, opposite to the average 6% of its competitors. If we only take the business in Spain into consideration, the default rate reaches 6,9%.
The president of BBVA, Francisco Gonzalez, has pointed out that these results confirm the “strength” of the institution after its diversification and its management model in a very complex year. “We have solved the difficulties, offering positive results quarter after quarter”, he declared.
In Spain, the area result was negative (-1267 million Euros) after absorbing the restructuring processes related to the deterioration of the real estate assets. Without taking into account these processes, Spain earned 1211 million Euros.
Caixabank has presented a profit of 230 million Euros, 78,2% less than in 2011, after assigning 10299 million Euros to provisions to restructure the real estate risk, multiplying by four the previous year´s assignments.
After completing the merger through absorption of Banca Cívica and signing an agreement to acquire Banco de Valencia, CaixaBank has become in 2012 the leading institution in the Spanish market, with assets worth 349.294 million Euros, 29% more and a business volume of 512.017 million Euros, nearly 20% more than in 2011.
The default rate of the bank has reached 8,62%, opposite to the 4,9% in 2011, maintaining the coverage ratio at 60%.
At the end of January 2013, Caixabank used 9000 million Euros from its liquidity surplus to reduce its dependence from the ECB. 4500 million Euros were destined to return part of the funds requested by the institution in the long term liquidity bids, and another 4500 million Euros to provide the financing of the Banco de Valencia, so as to reduce its appeal to the ECB. The amount from the ECB has therefore been reduced by more than 25%, up to 24780 million Euros. The institution has announced that for the sixth year in a row, it will continue to maintain its budget of 500 million Euros for social programs.
The biggest banking group in Spain, Banco Santander, presented its results on Thursday showing a net profit of 2205 million Euros in 2012, 58,8% less than the previous year, due to the provision of 18800 million Euros.
Had it not been for these provisions, the profit before taxes would have grown 2% in 2012 reaching 23559 million Euros.
Its subsidiary Banesto, now in an integration process, had losses of 955 million Euros after carrying out provisions for 2343 million Euros.
Source: El Mundo