Caixabank’s Q4 profit hit by lower credit income

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A woman uses an ATM at the Caixabank branch displaying Caixabank and Bankia bank logos in Madrid, Spain, November 10, 2021. REUTERS/Susana Vera

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  • 2021 net income almost quadrupled thanks to an accounting gain
  • Ends with a recurring net profit of 337 million euros in Q4
  • Q4 NII down 10.9% y/y, costs up 10.8% y/y
  • Increases payout policy to between 50-60% of 2022 earnings
  • Intends to implement share buybacks in fiscal 2022

MADRID, Jan 28 (Reuters) – Lower lending revenue contributed to a 52% drop in recurring net profit at Spain’s Caixabank (CABK.MC) in the fourth quarter, as well as the impact of lower one-time gains.

Spain’s largest domestic lender, which completed a €4.3 billion defensive acquisition of Bankia last year, reported underlying profit, excluding extraordinary items, of €337 million ($376 million). dollars) from October to December.

This compares to a profit of 705 million euros a year ago, combining Bankia’s activities on a pro forma basis.

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European banks are under increasing pressure to cut costs, either on their own or through tie-ups, as they face rock-bottom interest rates and the impact of the COVID-19 pandemic.

Caixabank’s 2021 net profit amounted to 5.23 billion euros thanks to some 4.3 billion euros of “ill will” – a paper profit made when an asset is purchased below its book value – on Bankia purchases and expenses of 1.4 billion euros which were mainly related to redundancy costs.

Analysts had forecast a net profit of 5.25 billion euros.

In the fourth quarter of 2020, Caixabank recorded more than €400 million in capital gains on the sale of a minority stake in a payment unit.

Net accounting profit for the quarter fell 35% to 425 million euros against 433 million euros expected by analysts polled by Reuters. The net profit for the same quarter of last year, without Bankia, amounted to 655 million euros.

Caixabank shares fell 2% against a 0.2% decline in Spain’s blue-chip Ibex-35 index (.IBEX), with Jefferies pointing to lower lending revenue, which was partially compensated by a solid commission performance.

“The focus will likely be on another weaker quarter of NII, although revenue was actually up 5% on higher fees and trading revenue,” Jefferies said in a note to clients.

In an ultra-low interest rate environment, net interest income, or lending income less deposit costs, fell 10.9% in the fourth quarter on a pro forma basis to $1.56 billion. euros, in line with analysts’ estimates.

To offset this impact, banks are looking for other sources of growth such as commissions or insurance income. At Caixabank, net commissions for the quarter increased by 10.8% year-on-year.

The bank also said it is aiming for a policy of paying out cash dividends of between 50 and 60% of 2022 consolidated profits.

In 2021, Caixabank’s payout amounted to 50%, allowing it to return more than 1.1 billion euros to shareholders.

It also declared its intention to implement an open market share buyback program in fiscal year 2022.

($1 = 0.8967 euros)

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Reporting by Jesús Aguado; Editing by Inti Landauro and Alexander Smith

Our standards: The Thomson Reuters Trust Principles.

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