July 26, 2019 / 5:12 AM / a year ago

Sabadell reports second-quarter profit of €273 million

MADRID (Reuters) - Spain’s Banco Sabadell (SABE.MC) on Friday reported a net profit of 273 million euros (£244 million) for the second quarter compared with a loss it posted last year when an IT outage hit its British unit TSB.

Analysts had expected a net profit of 278 million euros, according to a Reuters poll.

Its bottom line was also helped by lower loan loss impairments in the quarter.

However a continued tough environment for lending due to ultra low interest rates kept the bank’s financial margins under pressure and prompted the lender to say it now expects its net interest income (NII) to be between 0 and 1% lower in 2019 compared to 2018.

It had previously forecast NII growth of 1%-2% for 2019.

NII — a measure of earnings on loans minus deposit costs - rose to 905 millions in the second quarter. Analysts had forecast a NII of 909 million euros.

Like other European banks, Spanish lenders are struggling to earn money form loans as interest rates are hovering at historic lows.

To offset pressure at home, Spanish banks have been expanding abroad in search of higher revenues but Sabadell’s acquisition of the British bank in 2015 backfired when the glitches sent TSB’s costs spiralling and last year it racked up losses of 240 million euros.

The Spanish lender seems to have put costly IT troubles at TSB behind it in the first quarter when TSB booked a 7 million euros net profit though in the second quarter it suffered a loss of 5 million euros.

(This story was refiled to add word missing from first paragraph, spells out net interest income)

Reporting By Jesús Aguado; Editing by Jose Elías Rodriguez & Uttaresh.V

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