Bloomberg News

CaixaBank Quarterly Profit Plunges on Defaults, Erste Writedown

November 07, 2011

Nov. 4 (Bloomberg) -- CaixaBank SA said third-quarter profit slumped as Spain’s fourth-biggest lender set aside money to cover bad loans and reported a writedown on its stake in Erste Group Bank AG.

Net income fell to 12 million euros ($16.6 million) from 264 million euros in the year-earlier period, the Barcelona- based lender said in a filing to regulators today.

Spanish lenders including CaixaBank, formed from the reorganization of La Caixa savings bank group, are being hurt by mounting loan losses and weaker demand for credit as Spain’s economy slows. The writedown related to its 10.1 percent stake in Erste, Austria’s largest lender, was 159 million euros.

Bad loans as a proportion of total lending climbed to 4.65 percent from 3.65 percent in December, said CaixaBank, which has assets of 268 billion euros. Loans newly classed as in default were 1.55 billion euros compared with 1.79 billion euros in the second quarter and 1 billion euros a year earlier.

The default ratio on the 23.7 billion euros the bank has lent to property developers climbed to almost 23 percent from 20 percent in June and 13.5 percent a year ago. Costs for covering impaired assets reached 353 million euros from 356 million euros a year earlier.

Erste Group posted a 1.49 billion-euro third-quarter loss on writedowns and charges. The lender expects the 1.6 billion euros of bad-loan charges, credit-default-swap losses and writedowns on its Hungarian and Romanian units will lead to a full-year loss of as much as 800 million euros.

Net interest income rose to 777 million euros from 772 million euros a year earlier as CaixaBank’s gross lending increased an annual 3.1 percent, the bank said.

--Editors: Dylan Griffiths, Stephen Taylor.

To contact the reporter on this story: Charles Penty in Madrid at cpenty@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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