Sabadell full-year profit falls 39%

Madrid: Spanish bank Sabadell reported 2011 net profit down 39 per cent on the year after taking €1 billion (Dh4.77 billion) in provisions against deteriorating property assets.

Sabadell, which bought troubled savings bank CAM in December, said net profit was €232 million, slightly lower than analysts' forecasts.

More loans fell into arrears as Spaniards, battling high unemployment and lacklustre economic growth, struggled to keep up with payments. Bad loans as a percentage of total lending rose to 5.95 per cent against 5.72 per cent at end-September.

New plan

Spanish banks are putting aside capital to counter losses from years of reckless lending to real estate developers during a property boom which ended four years ago, leaving lenders with billions of euros of toxic assets on their balance sheets. Banks are waiting for the new government to present a detailed plan for the sector in the next few weeks, likely to include demands for lenders to set aside around €50 billion in provisions.

Sabadell booked around €110 million in extraordinary trading gains, derived from the sale of fixed income instruments, with the bank using some of those gains to increase provisions.