SPANISH bank Caixa yesterday reported an 84 per cent drop in net income to €48m (£39.3m) as the impact of new requirements linked to risky property loans weighed heavily on its quarterly results.
The lender said it has absorbed a €2.44bn provision under new rules governing Spanish property loans, the “huge effort” of which has all but wiped out its profits for the three months to the end of March.
The bank said it cut its exposure to real estate loans by 3.3 per cent to €21.7bn in the quarter. However, it said its portion of non-performing loans had risen to 5.25 per cent, from 4.9 per cent at the end of December, and the bulk of these risky loans are with property developers.
But Caixa said net fees rose by 7.8 per cent over the period to €413m, with investment and business banking faring particularly well.
It added that its core capital stood at 12.4 per cent under the Basel II criteria, and that it will “comfortably” comply with new Basel III rules.
Caixa is working towards a takeover of Banca Civica, as banks across Spain look for safety in numbers after Mariano Rajoy’s government set out the latest loan rules. The bank did not include Civica’s results in its figures.