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Provisions drag Banco Popular to €3.49B loss in FY'16

Banco Popular Español SA reported a fourth-quarter 2016 loss attributed to the controlling company of €3.58 billion, compared to a €172.6 million loss in the same period in 2015.

Net interest income for the period came in at €516.6 million, down from €565.1 million a year earlier, while net fees and commissions also decreased on a yearly basis to €134.5 million from €149.5 million.

Financial asset impairment and provisioning amounted to €169.1 million in the fourth quarter of 2016, compared to year-ago reversals of €2.9 million. Impairment on financial assets not measured at fair value widened on a yearly basis to €3.07 billion from €646.8 million.

The bank's main business reported a loss of €1.12 billion, compared to a profit of €46.3 million in the fourth quarter of 2015. The loss from its real estate and related business widened on a yearly basis to €2.46 billion from €218.9 million.

For full year 2016, the bank reported a loss attributable to the controlling entity of €3.49 billion, compared to a year-ago profit of €105.4 million. This result was due to €5.69 billion in provisions that included, among others, nonrecurring provisions for nonperforming loans and REOs, mortgage floors and unit Targobank SA's goodwill impairment.

Without the one-off charges, Banco Popular said its full-year 2016 result would have been an income of €185 million, with the core business recording a €998 million profit and the real estate business an €813 million loss.

The nonperforming loan ratio ratio stood at 14.61% as of Dec. 31, 2016, up from 12.86% a year ago, while the NPL coverage ratio rose to 46.24% from 39.42%. Excluding write-offs, the coverage ratio reached 52.26% at 2016-end, compared to 42.50% a year ago.

At 2016-end, the bank's common equity Tier 1 ratio was 12.12% on a phased-in basis, compared to 13.14% a year ago. The fully loaded CET1 ratio stood at 8.17% as of Dec. 31, 2016. The phased-in leverage ratio under Basel III dropped to 5.31% at the end of 2016 from 6.23% a year ago.