MADRID (Reuters) - Spain’s Caixabank (CABK.MC) said on Thursday its first-quarter net profit shrunk more than 80% after the lender booked provisions worth 400 million euros ($434.20 million) to deal with the economic impact of the coronavirus outbreak.
Caixabank, the country’s third-largest bank in terms of total assets, reported a net profit of 90 million euros in the January-March quarter, down from 533 million euros last year.
Spain, one of the worst-hit countries by the pandemic with more than 24,000 fatalities recorded so far, has been under one of the strictest lockdown since mid-March.
The country’s government is now planning to gradually phase out the restrictions starting next week, but the economic paralysis is expected to take the country into a severe recession.
Caixabank’s bottom line was also hit by one-off charges worth 109 million euros related to an early retirement plan in the quarter.
Besides the provision and the impairments, Caixbank profit was also hit by rock-bottom interest rates in the region. Its net interest income, a measure of earnings on loans minus deposit costs, fell 3% in the period to 1.2 billion euros.
The bank’s cost of risk, which measures the price of insuring its loan book, climbed to 31 basis points from 15 basis points a year earlier.
Caixabank’s core equity tier-one ratio, an indicator of the a bank’s solvency, remained at 12%.
Reporting By Jesús Aguado, Editing by Inti Landauro and Sherry Jacob-Phillips