Spain’s biggest bank in state hands Bankia has reported a €200m profit for the first half of the year – up from a record loss of €19.2bn in 2012.
Last year’s loss was the biggest of any bank in the world, and sparked fears that the eurozone’s fourth largest economy could need an international bailout. The Spanish government has used just over €41bn of the €100bn credit line it requested of the European Union to bail out Bankia.
Bankia has embarked on a ruthless cost cutting programme, closing around 16 per cent (487) of its branches in the first half of 2013 and reducing headcount by nearly ten per cent.
Meanwhile, two mid-sized Spanish banks, Banco Sabadell and Bankinter, also reported higher profits. Sabadell reported a 37 per cent rise in first half profits to €123.42m, while Bankinter said its profits rose over 450 per cent to €102.3m.
Spanish bank earnings are generally improving this year as less is being set aside to cover loans that turned foul. However, the good results mask a rise in bad loans, making up 10.6 per cent of Sabadell’s total outstanding lending from 3.95 per cent a year earlier, from 7.82 per cent, and Bankinter’s rising to 4.6 per cent from 3.95 per cent. Bankia’s bad loans made up 13.4 per cent of its outstanding lending.