Spanish bank Unicaja hit by new tax, weak mortgage lending in first quarter

By Jesús Aguado

MADRID (Reuters) -Spanish bank Unicaja reported a 43% drop in first-quarter profit on Friday, hit by a new banking tax and a significant decline in new mortgage signings.

Shares in Spain's sixth biggest lender by assets tumbled 9.7% after the results, which showed lower loan volumes and higher provisions.

The bank said its net profit for January-March totalled 34 million euros ($37.36 million) after booking a cost of 64 million euros from a new banking tax, which came into effect this year and includes a charge on net interest income and net commissions above a threshold of 800 million euros.

Analysts polled by Reuters had expected a first-quarter net profit of 50 million euros.

Unicaja said provisions rose 30.5% in the first quarter against the same quarter last year to 51 million euros, slightly above analysts' expectations.

Banks across Europe are benefiting from higher interest rates and Unicaja's net interest income in the quarter rose 25% year-on-year to 293 million euros.

However, lending income was slightly below the 300 million euros analysts expected and net interest income was unchanged from the previous quarter.

Unicaja's total performing loan book shrank 3.6% year-on-year in the quarter and 2.5% against the previous quarter.

New residential mortgages, the bulk of its loan book, fell around 47% against the same quarter last year and was down 38% compared to the previous quarter.

A sharp reduction in new mortgage signings is "certainly not good news for Unicaja," Nuria Alvarez, an analyst at Madrid-based brokerage Renta 4 said.

Overall deposits at Unicaja rose 0.4% in March from the end of last year despite the turmoil in global banking triggered by last month's failure of U.S.-based Silicon Valley Bank.

Unicaja ended March with a liquidity coverage ratio of 298%compared to 284% at the end of December.

($1 = 0.9102 euros)

(Reporting by Jesús Aguado; editing by Inti Landauro and Susan Fenton)