Banesto, the first Spanish bank to report
third quarter results, posted a 52% drop in third quarter net
profit to €68.9m ($95.6m) from €144.1m in the same period of 2009
mostly due to high provisions against bad loans.
The bank, majority owned by Santander, said
its bad loan ratio as a proportion of assets rose to 3.8% in the
first nine months of 2009, from 3.48% at the end of June.
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This is still better than the 5.37% level of
the Spanish banking sector as a whole, which is struggling to grow
in the aftermath of the eurozone sovereign debt crisis.
“The year 2010 is unfolding in an unfavourable
climate for banking,” Banesto said. “Production remains weak, loan
defaults in the system are still on the rise and interest rates
continue at low levels.”
The higher provisions included a net deduction
of €128m arising from stricter provisioning rules imposed by the
Bank of Spain.
The Bank of Spain announced plans in May to
tighten its rules for banks’ provisioning against bad loans, which
it said at the time is expected to cut banks’ pre-tax domestic
profits by an average of 10%.
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By GlobalDataBanesto put aside a total of €418m against bad
debts in the first nine months of the year.
In terms of retail banking, the bank said
customer deposits stood at €59.6bn for the nine months to
September, 7.5% up on the year-ago period, while customer loans
rose 1.3% to
€74.5bn.
The bank said customer retention and
cross-selling has been a priority in 2010, a year in which the
customer base has grown “significantly”.
