Spanish Bank Profits Will Fall 6.5% In The First Half Of This Year

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Public traded companies in the Spanish stock market are waiting patiently on their profit figures. The anticipation stems from the attention on the Spanish financial sector after Moodys downgraded Portugal, exacerbated the peripheral debt crisis and perpetuated the rumour that upcoming downgrades would hit Spain and Italy. Some firms within the Spanish banking system (i.e., Popular or Baninter) are also dealing with downgrades.Experts predict that Spanish banks profits will fall 6.5% in the first half of this year as compared to the same period last year. Santander is the sole exception.

These are not good times for the banking sector. This week, in addition to finding out about Banesto┬┤s results, on July 15 the results from stress tests conducted by the European Bank will be published and show the bank?s aversion to taking on losses. The outlook for Spain is not bright. Afterward, there will be a new methodology that prescribes Core Tier 1, a new and more demanding ratio for computing capital ratios.

We will still have to wait on results from Banesto. At the expense of knowing concrete figures, the market consensus estimates that this public entity will post net profits of 258 million euros in the first quarter of 2011 as compared to 382 million earned during the first six months of last year. This is a 32% drop.

If we look ahead one week, there are several other firms with pending profits figures: Sabadell, Bankinter and Banco Popular. The Catalonian firm will be reviewed on July 21 and analysts predict that they will post some of the worst profit estimations.

In total, they are predicted to show a 48% drop in profits in the first half of this year. This percentage corresponds to profits of 38 million euros, which is 21% less than what they earned in the second quarter of last year.

Bankinter’s results will be posted on July 22. Last Thursday, Fitch lowered the firm’s rating by two levels to BBB+, leaving them just two steps above junk bond status. Most analysts agree that Bankinter will earn 76 million euros in the first six months of 2011, or 28% less than they did in the first half of 2010.

This post originally appeared on El Economista.

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