Small Spanish lenders show strains of recession as margins flag
MADRID Aug 30 (Reuters) - Six small Spanish banks, including some which have been rescued by the state, posted lower lending income in the first half of the year as the domestic-focused lenders struggled to recover after two years of recession.
Margins at the banks were hurt and some cut their mortgage books, they reported on Thursday and Friday, in a sign that even bailed-out lenders were still fighting to grow despite receiving billions of euros in public aid.
NCG Banco, Banco Mare Nostrum and Banco CEISS all received cash from a 41.2-billion-euro ($54.33-billion) European aid package last year aimed at the Spanish lenders worst hit by a five-year-long property sector crash.
Those banks, along with Ibercaja, Kutxabank and Caja 3, which have avoided asking for aid, reported sliding lending income while low interest rates also ate into margins.
Spain's smaller banks have been unable to rely on overseas revenues to counter woes at home like bigger peers BBVA and Santander and have been more vulnerable to tumbling domestic spending and soaring unemployment.
All the six smaller banks did turn a profit in the first half after some had reported losses last year, but improvements were mainly down to lower provisions against potential property loan losses after massive writedowns in 2012.
"The economic scenario has been stabilising throughout the year, although conditions are still tough for banking activity," industry lobby group AEB said on Friday.
At the end of June, credit in Spain was down 7.3 percent compared with a year before, AEB said, and while the country is expected to emerge from the recession in the second half of 2013, potential borrowers will remain cautious in the face of a long period of economic stagnation. ($1 = 0.7584 euros) (Reporting by Sarah White and Jesus Aguado; Editing by Paul Day and Pravin Char)