By Jesús Aguado
MADRID (Reuters) – Spain’s Caixabank has adequate provisions to face potential future losses given the current market uncertainty, the bank’s Chief Executive Officer Gonzalo Gortazar said on Friday.
A day earlier, the Bank of Spain told lenders to monitor credit risks of customers most exposed to the impact of Russia’s invasion of Ukraine and urged banks not to release provisions, which were boosted during the pandemic, given the current uncertainty.
“At the end of 2021, the unallocated amount of the pandemic-related provision is more than 1.4 billion euros, so we are comfortable with the existing cushion to absorb any losses that might happen,” Gortazar told shareholders during the bank’s annual meeting.
Caixabank’s pandemic-related provisions fell by around a fifth in 2021 compared to the previous year, boosting the lender’s recurrent net profit by more than 70%.
The Bank of Spain is monitoring the evolution of state-backed loans granted in the pandemic as repayment freezes are lifted and indirect impacts from the Ukraine war show up in credit portfolios.
The central bank’s Director General for Supervision Mercedes Olano said on Thursday that she expected an increase in bad loans but that should be manageable as Spanish banks’ exposure to Russia was limited.
Gortazar told investors that Caixabank was confident that credit quality this year would remain at “very adequate” levels.
At the end of December, the bank’s non-performing loans accounted for 3.6% of total lending, in line with the previous quarter.
Shareholders are expected to approve a gross cash dividend of 0.1463 euros per share against 2021 earnings, representing a 50% pay-out.
Caixabank aims for a dividend cash pay-out policy of between 50-60% of 2022 consolidated earnings.
Investors will also be asked to approve a reduction of the group’s outstanding share capital of up to 10%.
($1 = 0.9199 euros)
(Reporting by Jesús Aguado; additional reporting by Emma Pinedo; editing by Inti Landauro, Kirsten Donovan)