Banco Popular profits hit by stricter debt provisioning
BBC
Spain's third largest bank, Banco Popular, has joined Santander in reporting 2010 profits hurt by new stricter rules on bad debt provisioning.
The bank said net income fell 23% from 2009, to 590m euros ($804m, £498m).
It comes after the bank set aside 1.8bn euros to cover possible losses on bad loans in order to meet new standards laid down by the Bank of Spain.
Fourth quarter profits were hardest hit, down 40% versus a year earlier.
Spain's banks are suffering in the wake of a property market meltdown and a painful recession that has seen the unemployment rate rise to 20%.
Robustness
Banco Popular's non-performing loans increased to 5.2% of its assets at the end of 2010, up from 4.8% a year earlier.
"2010 was a year of severe economic and financial crisis, worsened by a profound deterioration of the sovereign risk of many of the euro area countries," observed the bank in its financial report.
"This situation caused capital markets to remain virtually closed for many Spanish financial institutions throughout the year."
The bank pointed out that it had taken action to increase its robustness to any further flare-up of the eurozone government debt crisis.
Its core capital ratio - a measure of how much losses the lender can absorb without becoming insolvent - rose from 8.6% to 9.4% of its assets, and the bank claimed it was well positioned to meet new, stricter international capital requirements.
The bank also said it had reduced its dependence on short-term funding from the international wholesale markets, making it less vulnerable to a loss of confidence in the banking sector.
The results were anticipated by markets, with Banco Popular's share price largely unchanged at the open of trading in Madrid.
The bank's shares remain 72% below their peak level of early 2007, but are currently about 33% above the low reached during the 2008 financial crisis.