By Jesús Aguado

MADRID, (Reuters) – The bank’s chief executive officer Gonzalo Gortazar stated that Spain’s Caixabank had sufficient provisions to cover future losses due to market uncertainties.

One day before, the Bank of Spain advised banks that credit risk of Russian invasion of Ukraine was being monitored by lenders. They also asked them to refrain from releasing provisions (which were enhanced during the pandemic) due to current uncertainty.

Gortazar informed shareholders at the annual bank meeting that “at the end of 2021 the unallocated sum of the pandemic related provision exceeds 1.4 million euros,” and added, “So we are comfortable to take any losses that may happen with the existing cushion.”

Caixabank saw its pandemic-related provisions drop by about a fifth in 2021, as compared with the prior year. This helped to boost the bank’s recurring net profit by over 70%.

As repayment freezes and indirect effects from the Ukraine war are lifted, the Bank of Spain monitors the development of state-backed loans given in response to the pandemic.

Mercedes Olano, the Director General of Supervision at the central bank, stated that while she expects an increase in bad debts, it should not be too severe as Spanish banks are less exposed to Russia.

Gortazar informed investors that Caixabank is confident that the credit quality for this year will remain “very adequate”.

According to the prior quarter, 3.6% of all total bank lending was made by non-performing loans at December’s end.

A gross cash dividend equal to 0.1463 euro per share is expected from shareholders. It will be 50% of 2021 earnings.

Caixabank targets a payout policy for dividends and cash of 50-60% from 2022’s consolidated earnings.

Investors may also be asked to agree to a 10% reduction in the outstanding capital.

($1 = 0.9199 euros)