Unicaja reports loss as higher provisions overshadow lending boost

Jesús Aguado
Updated ·2 min read
FILE PHOTO: A worker pulls carts outside of a Unicaja bank branch in Ronda

By Jesús Aguado

MADRID (Reuters) -Unicaja on Tuesday reported a 1 million euros ($1.08 million) net loss in the fourth quarter as the Spanish bank boosted loan loss provisions to prepare for potential economic weakness, taking the shine off a rise in margins and hitting its shares.

Analysts polled by Reuters had expected a net profit of 35 million euros.

Banks in Europe are beginning to benefit from higher interest rates, but some are setting aside higher bad debt provisions due to the economic uncertainty created by high inflation.

Unicaja, which booked 50 million euros of extraordinary provisions to cope with that scenario, reported a rise of more than 50% in loan loss provisions against the same quarter last year.

The bank's total cost of risk, which manages credit risks and potential losses and also takes into account macroeconomic scenarios, rose to 62 basis points from 29 basis at end-September.

Unicaja's shares fell 8.1% by 0857 GMT compared with a 0.5% decline in Spain's leading blue-chip index Ibex-35. Shares in Unicaja have risen more than 20% so far this year.

The bank, the country's fifth-biggest lender by assets, reported a rise in net interest income (NII), or earnings on loans minus deposit costs, of 24.6% year-on-year to 293 million euros in the quarter, below the 298 million expected by analysts polled by Reuters.

For the whole of 2022, NII rose 2.9% to 1.06 billion euros, in line with forecasts, but below a 4% growth it had expected for last year.

For 2023, Unicaja said the bank expected NII to achieve a high-teens percentage growth, the equivalent to between 15% and 20%.

In 2022, Unicaja's net profit rose 89% to 260 million euros helped by lower costs following a restructuring. Analysts expected a net profit of 295 million euros.

($1 = 0.9927 euros)

(Reporting by Jesús Aguado; editing by Jane Merriman)

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