MADRID (Reuters) - Spain’s Banco Sabadell (SABE.MC) said on Thursday its first quarter net profit shrunk by almost two-thirds after it braced for coronavirus-led defaults and suspended its guidance for the full year.
The country’s fifth-largest bank by assets reported a net profit of 94 million euros in the January to March period after a hike in provisions and impairments to 454 million euros from 190 million a year ago. Analysts polled by Reuters expected a net profit of 116 million euros.
As part of its plans to support the economy, the bank cancelled its dividend policy for 2020 while senior executives agreed to waive their bonuses.
The bank suspended its guidance for 2020 as a result of the current crisis.
Net interest income (NII), a measure of earnings on loans minus deposit costs, fell 1.8% from a year earlier to 884 million euros and was 2.8% down against the prior quarter due to pressure from low interest in the euro zone.
Analysts had expected NII to come it at 888 million euros.
TSB, the British unit Sabadell bought in 2015 in search of higher revenues but marred by major technology glitches, booked a loss of 7 million euros in the quarter after a 40 million loss in the previous quarter.
As part of TSB’s turnaround announced in November, Sabadell’s British unit said it would shut 82 branches in 2020, or 15% of its network, in a bid to save a total of 100 million pounds ($128 million) by 2022.
At the end of March, Sabadell’s core tier-1 capital ratio stood at 11.6% compared to 11.7% at end-December.
Taking into account other disposals, such as the asset management unit sold to Amundi (AMUN.PA) in January and its depositary unit to BNP Paribas (BNPP.PA) in March, Sabadell said its pro-forma core-tier 1 capital ratio was 12.1%.
Reporting By Jesús Aguado; editing by Inti Landauro and Carmel Crimmins