By Jesús Aguado
MADRID (Reuters) - Spanish bank Unicaja reported on Tuesday a bigger than expected fourth-quarter loss on higher provisions following the sale of non-performing assets, but cheered investors by cleaning up its books and announcing a share buyback.
Spain's sixth-largest lender by total assets said additional provisions rose in the fourth quarter more than five times against the previous quarter, allowing for a 15% reduction in non-performing assets in the quarter.
That led to a 19 million euro ($20.43 million) loss for October-December, compared to a net profit of six million euros in the same quarter a year earlier. Analysts polled by Reuters had expected the bank to report a loss of 11 million euros.
Chief Financial Officer Pablo Gonzalez told analysts that the bank did not expect additional material provisions going forward, and shares in Unicaja were up 5.7% by 0923 GMT after falling 13% in the last three months.
Fourth quarter revenue rose 27.4% from a year earlier to 442 million euros, above analysts' expectations of 418 million euros.
Unicaja, which recently completed a management reshuffle that included the appointment last July of Isidro Rubiales as CEO, benefited from higher interest rates. Net interest income rose 28% in the fourth quarter to 380 million euros, slightly more than the 368 million euros expected by analysts.
"We expect a positive share price reaction on the back of stronger than expected revenues, the recovery of new production and the announcement of the share buyback programme," Nuria Alvarez, analyst at Madrid-based brokerage Renta 4, said.
For the whole of 2023, Unicaja's net profit fell 4% to 267 million euros, below the 274 million euros expected by analysts, but net interest income rose 26.1% in 2023 to 1.35 billion euros, in line with analysts' expectations and slightly above the bank's guided growth of close to 25%.
For 2024, the lender said it expected NII to grow at a low single digit.
The bank announced a cash dividend worth of 132 million euros in total and a share buyback programme worth 100 million euros.
Some Spanish lenders are repackaging loans to recover cash that could turn sour following the economic downturn and setting aside cash to increase their coverage ratios.
At Unicaja, foreclosed assets fell 21.5% in October-December against the previous quarter after net sales of over 300 million euros in the period. This allowed for an increase in its coverage ratio to 74% from 67% at end of September.
($1 = 0.9301 euros)