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Europe, Forex

Spain’s Bankia Q2 profit plunges on lower income from trading, lending

(Adds breakdown on Q2 results)

MADRID, July 29 (Reuters) – Spain’s state-owned lender Bankia on Monday posted a 31.6% fall in its second-quarter net profit from a year earlier due to lower trading income and ongoing pressure on lending income.

Net profit for the quarter came in at 195 million euros ($217 million), above an average in a Reuters poll of 185 million euros.

Though net interest income remained under pressure against the same quarter last year, it showed some improvement against the previous quarter, the bank said.

Net interest income was 516 million euros, down 1% from a year earlier but 2.9% higher than the previous quarter. Analysts had forecast a net interest income of 512 million euros.

As with other European banks, Spanish lenders are struggling to lift earnings from loans as rates hold at ultra-low levels.

To offset the negative effect from increasing competition on financial margins, Bankia is shifting its focus from its mostly-mortgage-loan book towards a more profitable consumer and enterprise business.

Shares in Bankia fell 4.7% on Friday ahead of the results, after Caixabank and Sabadell fell more than 6.5% each following their downwards revision in income forecasts for 2019.

So far this year, Bankia stock has fallen close to 28%, making further divestments by the Spanish state more complicated.

The state has until 2021 to offload the 61% stake it holds in Bankia after pumping 22.4 billion euros ($25 billion) into a rescue package in 2012 at the height of the financial crisis. ($1 = 0.8987 euros) (Reporting By Jesús Aguado; Editing by Jose Elías Rodríguez and Gopakumar Warrier)

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