☰

Seleccion eE

Quarterly earnings fall 20% for Spanish banks


    Spanish banks started publishing their quarterly earnings reports today. Banesto will kick off an earnings report season that is starting to look complicated for Spain's banks, because they have to make more deposits in order to clean up their risky real estate assets. Experts anticipate that the sector, without taking Bankia and Banca Cívica's earnings predictions into account, will show 3.24 billion euros in quarterly earnings. This is a 20% drop compared to the same period last year.

    "The reduction in earnings was expected because brokerage margins have thinned and commissions are smaller now that business has cooled," said sources from OnetoOne Capital Partners. As it deals with its weak economy, the Spanish banking sector is saving its business by cashing in on the money that it obtained from the European Central Bank (BCE) in the unlimited debt issues that occurred in February and December 2011. In the meantime, they are trying to come up with the 50 billion euros in provisions that Minister of the Economy Luis de Guindos is requiring them to source in order to back risky real estate assets. Despite flagging deal activity, analysts believe that the Spanish banks could still turn a profit this quarter, but estimations indicate that only Sabadell, Bankinter and Caixabank will be able to do so.

    April surprises and fears

    Most banks will publicize their earnings reports in April. Exactly six banks will unveil their results from January, February and March: Banesto, CaixaBank, Santander, Sabadell, BBVA and Bankinter. Banesto will unveil their report today, and analysts are most fearful of what they will present.

    The market consensus, according to FactSet, estimates 45 million euros in profits from Bankinter, which marks a 73% decline compared to Q1 2011. Popular, which has merged with Pastor, could also put up dismal figures. Experts predict that in May the bank will announce 77 million euros in profits, which is less than half of the 186 million euros that the bank recorded in Q1 2011.