Banco Popular Net Profit Gain Beats Expectations, Internet Banking Continues To Record Solid Growth

By Robert S Duncan and Nancy Nackaerts

20 October 2000

The Wall Street Journal Europe

A strong growth in its client base helped Banco Popular Espanol SA to post slightly better-than-expected earnings.

The Spanish banking group posted net profit of 366 million euros in the first nine months of the year, up 13% from the same period a year earlier. Analysts had forecast net profit of 358.9 million euros.

"They are strong results which show a positive trend," said Javier Bernat, banking analyst at Caja Madrid in Madrid. "Nothing spectacular, but reflecting solid fundamentals of the company," he added.

At the end of September Popular posted around 40 billion euros in sales, up 15% from the previous year. Popular said the rise in earnings was a result of the "strong growth" in clients, the improvement of operating margins and the continued implementation of cost-cutting measures. "Gaining a solid client base is a basic fundamental of business," the bank said.

As of Sept. 30, Popular had 3,845,000 clients, up 9.1% from the same period a year earlier, and up 6.6% from the end of 1999.

"Banco Popular defended very well its spread of clients," said Jose Antonio Montero, banking analyst at Ahorro Corp. in Madrid. "We see a favorable increase in their financial margins."

Popular posted net interest income of 832.02 million euros, up 12% from the previous year, and an operating profit of 695.57 euros, up 21% from the first nine months of 1999.

It noted its bad debt ratio of 0.80% is at historic lows, and the bank has reserved 19.6 million euros for the new insolvency fund, as requested by the Bank of Spain for all Spanish banks.

Popular said Internet banking continues to see strong growth and now has over 213,000 users, compared with 98,000 at the end of last year.

Popular's Internet bank, Bancopopular-e.com began operations at the end of July.