MADRID, Feb 2 (Reuters) - Unicaja and Liberbank , which at the end of 2020 agreed to create Spain’s fifth largest bank by assets, on Tuesday announced higher provisions in the fourth quarter to cover potential fallout from the COVID-19 pandemic.
A 34 million euro ($41 million) provision in the last quarter of 2020 almost entirely wiped out Unicaja’s profits, while Liberbank booked a loss of 18 million euros after extraordinary charges of 54 million euros.
Analysts polled by Reuters had expected a net profit of 9 million euros at Unicaja and a 3 million profit at Liberbank.
Banks across Europe are struggling to cope with record low interest rates, and the economic downturn sparked by the coronavirus pandemic is forcing a focus on further cost cuts, including through tie-ups.
The combined entity aims to achieve gross cost-savings of 192 million euros by 2023 as part of their merger plan.
Net interest income, or earnings on loans minus deposit cost, rose at both lenders thanks to lower funding costs and an increase in corporate lending boosted by state-backed credit lines. ($1 = 0.8288 euros) (Reporting by Jesús Aguado; Editing by Kirsten Donovan)