Spanish real estate provisions hit Sabadell profits
By Steve Binge

Spanish real estate provisions hit Sabadell profits

Spain's fifth-largest lender Sabadell announced a hefty drop in first half profits as a result of the provisions it has set aside to cover potential losses from toxic Spanish real estate assets.

Reuters revealed the financial institution has put €1.89 billion (£1.47 billion) into a fund to protect itself from the bad loans on its books.

As a result of the move to bolster its provisions, Sabadell reported a net profit of €90 million - down on the €113 million analysts had been anticipating.

The news provider also pointed out that the percentage of bad loans on the bank's balance sheet has climbed from 6.02 per cent in March to 7.82 per cent in June, which has been attributed to the acquisition of failing savings bank CAM in December last year.

Sabadell is not the only Spanish lender to see profits hit as a result of the moves to set aside money to cover potential property loan losses, with Bankinter reporting last week that it had boosted its provisions to €275.2 million, which led to profits for the first half of 2012 falling by 77 per cent, Reuters stated.
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