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Banco Popular earnings up but doubtful loans jump 50%,
Banco Popular, Spain's third-largest bank reported a 12.1 percent increase in its net profit in the first quarter to EUR 322.5 million but loan defaults rose by 50 percent as the economy slowed.
Earnings came below analysts forecasts for the period, which Popular said was "marked by an international financial crisis and a slowdown in the Spanish economy and housing market."
Popular's share price closed down 2.84 percent on Wednesday, while the blue-chip Ibex 35 of which Popular forms part was up 0.51 percent. The banking sector was down 0.66 percent.
Popular now has doubtful loans on its books of over EUR 1 billion out of a total loan portfolio of EUR 89.370 billion. As a result, its non-performing loan ratio climbed to 0.98 percent at the end of March.
"We don't doubt non-performing loans will continue to increase, but we can't say by how much because we don't know how sharp the slowdown in the economy is going to be," chief executive
José María Lucía told reporters at a presentation of the bank's results.
"Although we've had to increase provisions by 40 percent, we are maintaining our forecast of a 13-percent increase in earnings in 2008," Lucía added.
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