Bankia, the Spanish lender that came to embody the country’s crisis, reported a rise in profits in the fourth quarter despite charges to compensate investors for its ill-fated 2011 initial public offering.
Net profits were €268m in the fourth quarter, up from €150m over the same period a year earlier. The Spanish bank announced on Friday that it would pay its first cash dividend, distributing a total of €202m.
Net interest income — a closely-observed metric showing the difference between the interest a retail bank pays on deposits and the interest it gains through loans — rose to €765m in the fourth quarter, up from €690m a year earlier.
The Spanish bank, originally formed through an amalgamation of regional lenders, floated in 2011 but received a €22bn bailout in 2012 as a result of its exposure to Spain’s floundering real estate sector.
The bank, which is still majority owned by the state, returned to profitability in 2013 after earlier recording the biggest loss in Spain’s corporate history. While the announcement of a dividend payment marks a further step in its rehabilitation process, Bankia continues to be haunted by the legacy of its €3bn IPO, which relied heavily on retail investors in Spain.
The bank’s rising profitability in the fourth quarter was offset in part by a €312m hit to cover potential compensation to shareholders for its 2011 IPO — with any remaining compensation to be covered by BFA, its parent company. Many retail investors were effectively wiped out when the bank was nationalised.
The question of compensation had lingered for several months and delayed the bank’s results, which were originally set to be released at the beginning of February. In December last year, a court released a report suggesting Bankia’s IPO prospectus was riddled with errors. In mid-February, the bank was ordered to set aside €800m for possible claims arising from its IPO and subsequent turmoil.
Despite continued legal and financial reminders of its darkest days, the bank said its performance continued to provide evidence of its turnround.
“Throughout the year, Bankia has succeeded in making each quarter better than the last,” said José Ignacio Goirigolzarri, president of BFA and Bankia, in a statement on Saturday.
“All the people who make up the group are committed to working every day to make a more profitable entity that creates value for all shareholders and moves forward in the repayment of the aid it has received,” he added.
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