By Jesús Aguado

MADRID, Reuters -Unicaja Spain’s fourth-quarter loss was due to lower lending income and unpaid charges. This is despite an increase of fees.

Unicaja purchased rival Liberbank in a deal that was closed at the close of July. This acquisition allowed Unicaja to restrain itself from ultra-low interest rates and the effects of the COVID-19 pandemic.

The combined merger items were not included in the final line. Unicaja suffered a 17-million euro loss in the second quarter 2020 when Liberbank’s businesses were combined on a pro forma basis.

In the fourth quarter, net interest income or earnings on loans, less deposits costs, declined 17.8% annually to 235 millions euros. Analysts had expected it would be at least 240 million euro.

Unicaja made a profit of 1.1billion euros for 2021 after taking into account bad will gains (which is a profit from an asset being bought at a lower price than its book value) in the third quarter.

Except for extraordinary costs incurred due to the merger in which case net profit rose 47%, to 137 millions euros in 2021. Partially boosted by an increase of fees

Unicaja shares dropped 0.5% in morning trades, while Spain’s blue-chip Ibex-35 was down 0.4%.

Caixabank broker said that the loss resulted from lower NIIs and higher provisions. However, fees and trading exceeded expectations.

Europe’s banks are facing increasing pressure due to rising defaults and record-low interest rates. This is forcing lenders to seek other avenues of growth such as private banking commissions.

Unicaja’s total fees increased 19.5% in 2021, compared with 2020, and by 20.7% in the fourth quarter – a 20% increase year-on-year.

In order to achieve profitability, the lender has announced a three-year strategic plan. This includes cost savings, fees income, and push for consumer lending.

($1 = 0.8855 euros)