MADRID: Caixabank's underlying net profit jumped almost six-fold in the first quarter, a shot in the arm as it starts integrating the purchase of Bankia that made it Spain's biggest domestic lender.

Net profit reached 514 million euros ($617 million) in January-March, beating analysts' average forecast of 342 million euros, after the bank did not set aside any provisions against the COVID-19 pandemic.

In the same quarter last year, Caixabank booked 400 million euros in coronavirus-related provisions.

Including 4.3 billion euros of "badwill" - a paper profit that occurs when an asset is bought below its book value - made on the Bankia acquisition, Caixabank's net profit was 4.79 billion euros.

That was below a forecast of 7.27 billion euros, after the bank did not recognise a 2 billion euros tax-loss on deferred tax assets on the acquisition.

The overall accounting gain was generated from Bankia's equity of 13.1 billion euros minus various fair value adjustments of 3.47 billion euros, leaving an adjusted book value of 9.6 billion euros compared with a purchase price of 5.31 billion euros.

Banks across Europe are struggling to cope with record low interest rates, and the economic downturn sparked by the pandemic has forced a focus on further cost cuts, including through tie-ups.

When Caixabank and Bankia announced their deal in September, they said they would aim to generate annual recurring cost savings of 770 million euros by 2023. They also said they expected restructuring costs to be 2.2 billion euros.

Net interest income (NII), or earnings on loans minus deposit costs, fell 0.7% in the first quarter from the same quarter a year ago to 1.19 billion euros, due to pressure from ultra low interest rates.

Analysts expected NII to come in at 1.2 billion euros.

Caixabank's income statement for the first quarter did not include the earnings generated by Bankia during the period, since the merger was completed at the end of March, though its balance sheet integrated Bankia's assets and liabilities.