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Bankinter Q1 net profit slips on funding costs

Source: Reuters - Thu 14th Apr 2011

Spanish retail bank Bankinter said on Thursday its net profit fell 26% in the first quarter from a year ago, hit by higher funding costs.

Bankinter's earnings report comes just ahead of the Bank of Spain's review of banks' and savings banks' plans to raise capital to meet tough new recapitalisation rules. The report is due after market close on Thursday.

Spain has carried out a wide-ranging restructuring of its banking system to reassure markets on the health of its economy and alleviate concerns it could seek a European Union bailout like Greece, Ireland and Portugal.

Net profit fell to 48.6 million euros in the first quarter compared with a forecast of 33.1 million euros in a Reuters poll of analysts.

Net interest income, broadly what a bank earns on loans minus what it pays for deposits, dropped 28.5% to 115.02 million euros but was also just ahead of forecasts for 111.2 million euros.

Spanish banks have been suffering from rising unpaid loans in an ailing economy, and margins have been further squeezed by a deposit price war aimed at securing funds from retail accounts.

Bad loans crept up slightly to 2.97% of total lending from 2.87% at the end of December.

Bankinter said its core capital ratio stood at 8.38% at end-March, above the government minimum of 8% for listed banks, after launching a 406 million euro convertible bond issue last month.

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