Spain's state-owned lender Bankia posted a 10.8 percent drop in first-quarter net profit on Monday due to lower trading income though it slightly increased its loan book thanks to a shift towards consumer and corporate lending.
Net profit for the quarter was 205 million euros ($228 million), slightly above an average in a Reuters poll of 196 million euros thanks to lower provisions and costs, while trading income fell 73 percent. Analysts will be watching for any comments Bankia's management make at a news conference a day after the Socialists won the elections without a majority.
The Socialists' most likely ally in government is left-wing party Podemos, which has lobbied for Bankia to offer services based on social as well as market considerations. It has also been advocating for a supplementary tax on banks' earnings.
Spain has been trying to sell its 61.4 percent stake after pumping 22.4 billion euros into a rescue package for Bankia in 2012 at the height of the financial crisis. Any influence Podemos might have on the new government could prove a step backwards towards privatising the lender.
The state has until 2021 to offload the stake. As other European banks, Spanish lenders are struggling to lift earnings from loans as rates hold at ultra-low levels. Net interest income (NII), a measure of earnings on loans minus deposit costs, was 502 million euros, down 4.7 percent from a year earlier and 1 percent lower against the previous quarter, when it was also hit by fierce competition for lending at home. Analysts had expected NII to be 501 million euros.
Bankia increased its loan book by 0.2 percent in the quarter as it sought to shift away from a predominant mortgage book towards more profitable consumer and corporate activity. At the end of March, Bankia's core Tier-1 fully loaded capital ratio, the strictest measure of solvency, was 12.61 percent compared to 12.39 percent at end-December. Bankia reduced its non-performing assets in the quarter by 450 million euros to 10.4 billion euros against the previous quarter, while non-performing loans fell to 6.2 percent from 6.5 percent.