Banesto net profit down 88%

Banesto
Banesto announce 88% fall in profits

As the Spanish banks announce their Q1 results Banesto have started the ball rolling with an 88% fall in profit.

The bank, controlled by Santander, reported a fall of 88% to 20.2 million euros in the first quarter of 2012, compared to 170 million in the same period last year.

Banesto said the results could be attributed to extra provisions set aside to cover bad property loans, provisions that were demanded by Mariano Rajoy’s new centre-right government, which took power last year, as part of efforts to clean up the banks’ balance sheets.

Banesto say they have 475 million euros set aside in the first quarter, which amounts to almost 50% of the amount needed to cover the whole year.

The bank have made some 365 million euros partly from the sale of shareholdings and loan assets. Without this the bank would have recorded a loss. A 4 million euro tax credit applied to the banks net profit also helped to prevent a loss.

Spanish banks have been curbing their lending of late and Banesto say their total lending fell 8.3% in Q1, as well as customer deposits which dropped 10%, the bank reported.

“The Spanish economy needs to de-leverage and the de-leveraging needs to be seen in the Spanish banks’ balance sheets,” chief executive José Antonio Garcia Cantera said, adding “We think that is going to continue for quite a while.”

Mr Cantera said the bank had sold more than 1,500 homes in March “… at an average discount that was less than the provisioning rate of 45 per cent applied to the assets.”

“That demonstrates that at a certain price there is significant demand for housing in Spain.”

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Banesto release 4,600 properties

Banesto casaktua.com
Banesto's property portal

Spanish bank Banesto has placed over 4,000 properties for sale “with prices of 20 years ago”, they said in a statement.

In total, 4,600 properties, which can be found on their property portal, Casaktua.com, are being promoted with an average price per square metre of 638€, “the same as the average cost per square metre in our country in 1992, according to figures from the Ministry of Development.”

These prices are “less than a third of the average price per square metre during the highest peak in prices in the first quarter of 2008, when data published by the said ministry put the figure at 2,101 euros.”

The properties average a price of 56,700 euros, with up to 80% discount, and an average area of 90 square metres and three bedrooms, El Mundo reported.

Many of the properties have been reduced by over 50%. 1,887 have been reduced by between 50% and 70% with more than 1,155 properties reduced by more than 70%.

Banesto pointed out that “all these properties have, in addition, very favourable financing conditions permitting you to acquire the properties with finance of 100% of the price of the property and with a mortgage of up to 40 years.”

A few examples of property available through the portal include a three bedroom house in Jerez de la Frontera, built to 95 square metres, available for 33,000 euros, which includes a discount of the initial prices of 76%.

A flat in Alicante, built to 67 square metres, also with three bedrooms, is available for only 27,600 euros, which includes a 72% reduction.

In the region of Murcia a 65% discount applied to a duplex apartment, built to 136 square metres, with three bedrooms, two bathrooms and a terrace, means the property can be purchased for 93,000 euros.

In Gran Canaria, you can see a house built to 80 square metres, with three bedrooms and a bathroom, available for 66,700 euros, a discount of 62%.

In the region of Madrid you can purchase an apartment, built to 61 square metres, with three bedrooms, for 101,000 euros, following a discount of 47%.

Banesto’s Q3 figures released

Banesto, part of the Santander group, has accounced results for Q3 today revealing a huge drop in profits due to what the bank is calling a “diffilcult year for the banking business”.

Banesto’s net profit fell in the third-quarter to €298.4m compared to €450.6m for the same period last year, a drop of 33.8%. Analysts predicted a 23.4% average fall in net income over the first nine months of the year.

Banesto added that this was a result of the continuing ecenomic crisis hitting banks across Europe, along with the ever rising cost of financing. Banesto is the first Spanish bank to release it’s figures each quarter.

Like other Spanish banks Banesto’s “bad loans” have affected their bottom line. Across the industry the bad-loan-ratio was 6.69% in July. Although it is still below the average Banesto’s ratio rose to 4.65% at the end of September, a slight increase from 4.39% in June.

The bank reduced private sector credit by 8% compared to the first nine months of 2010. This was due to the banks attempt to reduce the dependance on outside funding. Other banks in Spain have also been attempting to reduce private sector credit.

Banesto’s net interest income fell to €1.13bn, a drop of 12%, during the first three quarters of the year. This increased to 14% (€361,7m) during September.

The banks said their core capital ratio had reached 9 percent in September which would allow the bank to meet its target for the year.

On release of the figures Banesto shares fell 1.3 percent to €4.50 in Madrid, incresing the decline for the year to 28 percent.