Falling bad debt charges enabled Spain's bailed-out Bankia to post a near 40 percent rise in net profit for 2015, although a legal bill linked to its troubled flotation is clouding its outlook. Bankia bounced back quickly from huge losses in the wake of a property crisis, turning a profit in the year after its 2012 rescue. The bank was cleansed of toxic assets, cut costs and has also been working on increasing lending to businesses.
It is now entering a key phase for its return to private hands as Madrid, which owns around 64 percent of the bank, vowed to sell off Bankia by the end of 2017. Bankia said on February 01 its net profit for 2015 came in at 1.04 billion euros ($1.13 billion) compared to 747 million euros a year earlier, as the economy in Spain improved and it set aside less in charges against problem loans.
The bank booked extra provisions against potential legal claims from small investors who lost money in its stock market flotation from mid-2011.
The bank had to be bailed out less than a year later, and many shareholders argue they were misled.
Those provisions - at 424 million euros for 2015 and which it registered partly against its profit and partly against capital - pushed down return on equity (ROE) to 9 percent in the fourth quarter.
Bankia had aimed to lift this measure of profitability to around 10 percent by the end of 2015. The bank said that without the provisions, ROE would have been 10.6 percent.
Like Spanish peers, low interest rates and fierce competition to lend are also hindering Bankia's ability to ramp up revenues. In 2015 net interest income, or earnings on loans minus deposit costs, was down 6.4 percent on the year, though that was slightly better than expected.
Some domestic rivals such as Caixabank, Sabadell or Popular showed progress on this front in the fourth quarter, but Bankia said NII fell 3.3 percent in the October to December period from the previous three months.