Spain's Sabadell reaps rewards of TSB buy with 44 pct profit rise

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By Jesús Aguado and Angus Berwick

BARCELONA/MADRID, April 22 (Reuters) - Banco Sabadell's purchase of British bank TSB helped the Spanish lender post a first-quarter net profit increase of 44 percent from the same period in 2015, beating analysts' forecasts.

Spain's fifth-biggest lender move into Britain came as Spanish banks are trying to increase revenues from international operations, against a backdrop of record low interest rates and increased competition for lending at home.

The Catalonia-based bank reported net profit of 252 million euros ($285 million), beating a Reuters forecast of 215 million euros, while net interest income, or profit from loans minus funding costs, rose 51 percent to 974 million euros.

Excluding TSB, which it bought last year and has been consolidated in Sabadell's earnings since the third quarter, net profit and net interest income would have risen 9 percent and 8.2 percent respectively.

As one (Other OTC: IUSDF - news) of the most acquisitive banks during the financial crisis, Sabadell has also benefited from a sharp rebound in the country's real estate market which has enabled it to set aside less money to cover for bad loans and boosted earnings at its property business.

Sabadell sold 805 million euros of real estate assets compared to 329 million euros for the same period a year ago, while provisions were down 52 percent year-on-year to 435 million euros.

Its bad loan ratio fell to 7.5 percent in March from 7.8 percent as of December, below the average for Spanish banks. (Reporting by Jesus Aguado and Angus Berwick; Editing by Julien Toyer and Alexander Smith)