The CEO of Bankia, José Sevilla, he has ruled out that the entity could enter losses this year due to the crisis caused by the coronavirus, despite the fact that its profit for the first quarter has plummeted by 54%. Likewise, it trusts in a recovery in its price, which in March marked a record low of 0.78 euros, because the market is going to fix more on capital than on results. What it does foresee is a sharp drop in the hiring of new mortgages, around 30% this year.
"We do not plan to suffer losses in 2020. Our estimates lead us to close the year in benefits, which will not be huge, it is true, but positive ", said Seville in the presentation of the first quarter results. This resistance to the results will derive from two factors: the maintenance of the 'core' result and a provisioning that does not take profits forward.
Regarding the first point, Bankia rules out credit growth in the year, but neither does it expect it to collapse because the rise in loans to companies will offset the fall in loans to families. Thus, their expectations are for a drop of around 30% of new mortgages in the whole of 2020 (in April they have fallen by 60%), but that credit to companies will grow by 15%.
Then there is the question of provisions for late payments arising from the crisis. Although Seville did not want to give forecasts on default, it did give them on the cost of risk (the total provisions divided by the entity's loans), which it expects will not go much beyond 59 basis points (0.59 points percentage) of the first quarter. That is to say, does not expect to have to allocate much more provisions in the coming quarters than in the current one due to the coronavirus (125 million); As reported by Bolsamanía, the ECB has accepted the request of the Spanish bank not to provision so much as to enter losses.
On the other hand, the Bankia management team is confident that the share will go up on the stock market because "the stock market little by little will be looking more at capital than profit from banks. It will be key in this environment. "And that's where Bankia takes its chest, with its capital ratio of 12.92% (CET1), traditionally the highest of the large Spanish entities; in fact, it planned to distribute the excess among its Shareholders in the form of a mega dividend of 2.5 billion, but have left the operation on hold.
"THE STOCK EXCHANGE WILL FIX MORE IN CAPITAL THAN PROFIT"
Regarding the recent rebound in value, you don't think it has to do with the prohibition of bearish positions: "The evolution of all European banking has been similar to that of Spain." Now, Seville considers that these levels prevent thinking about a sale of the State's participation: "The timing for any operation is bad due to the fall in the markets and the banking sector. For price and valuation, it is not the best time, nor do I think that the sale of Bankia is now anyone's priority."
In this regard, Bankia's managers have somewhat moderated its traditional position opposed to public bankingTherefore, they asked that the State re-privatize the entity as soon as possible. The reason for this moderation are the ICO endorsements for freelancers and companies, which show that there is indeed a place for public banking: "You know our opinion on the role of public banking, which is that of the ICO, how important its role is right now".
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