UPDATE 2-Spain’s Unicaja, Liberbank book provisions in pre-merger clean up
* Unicaja Q1 net profit falls 7% to 43 mlns euros, above forecasts
* Liberbank’s Q1 net rises 17% to 23 mlns, beats forecast
* Lenders set aside 53 mlns euros in COVID-related provisions
* Shares at Unicaja and Liberbank rise more than 2% (Adds comment from Unicaja’s CFO, shares, and breakdown)
MADRID, May 5 (Reuters) - Unicaja and Liberbank , which have agreed to create Spain’s fifth-largest bank by assets, made further provisions against COVID-19 in the first quarter in a move to clean up their books, which was welcomed by the market.
Shares in Unicaja and Liberbank were both up more than 2% at 0928 GMT, after the two lenders reported better-than-expected earnings and set out their provisions against the impact of the pandemic.
Banks across Europe are struggling to cope with record low interest rates, and the economic downturn sparked by the pandemic has forced a focus on further cost cuts, including through tie-ups.
Unicaja’s net profit fell 7% to 43 million euros ($51.6 million) in the January-March quarter after it booked 25 million euros in provisions, the same amount it booked a year earlier.
Liberbank posted a 17% rise in net profit to 23 million euros after booking 28 million in pandemic charges, up five million from a year earlier.
As part of their clean-up exercise, the banks managed to reduce both their volume of non-performing assets on their books as well as their overall bad loan ratios.
Both beat forecasts, helped by higher revenues from fees and commissions. Analysts polled by Reuters had expected a net profit of 35 million euros at Unicaja and 18.8 million at Liberbank.
Unicaja, which expects to close the merger deal at the end of the second quarter or beginning of the third, aims to lift profitability and save 192 million euros on gross costs by 2023.
The bank has not disclosed potential job cuts and Unicaja’s chief financial officer Pablo Gonzalez said on Wednesday it would provide details in due time.
Net interest income, or earnings on loans minus deposit cost, rose 3.6% at Unicaja to 145 million euros thanks to lower funding costs but fell 4% against the previous quarter.
At Liberbank, NII fell 8.8% year-on-year in the quarter to 125 million euros.
Analysts expected Unicaja and Liberbank to report an NII of 147 million euros and 125 million euros respectively.
$1 = 0.8341 euros Reporting by Jesús Aguado; additional reporting by Emma Pinedo; editing by Andrei Khalip and Louise Heavens
