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Demand still 'very weak' for bank loans: Bankia CFO

Monday, 28 Oct 2013 | 1:44 PM ET
Bankia CFO: The hard work has been done
Leopoldo Alvear, CFO of Bankia, talks about the group's results, how it has continued to reduce the level of its non-performing loans and how it's "fighting hard" despite "weak demand".

Troubled Spanish bank Bankia posted better-than-expected results on Monday, but its chief financial officer told CNBC that demand for new bank loans was still hamstrung by the weak economic climate.

"Volumes are still quite low and that reflects the fact that demand in Spain is quite low," said CFO Leopoldo Alvear in an exclusive interview with CNBC.

The Bank of Spain reported this month that the Spanish economy grew by 0.1 percent between July and September, marking its first quarter of growth after two years of recession.

But despite growing optimism among investors, Alvear said that demand for new loans remained limited to Spain's compartively vibrant export sector.

"We are suffering like the rest of the sector with regards to new originations of loans… We are fighting very strongly to be able to originate, but demand is still very weak," he said.

(Watch: 'Fundamental' for Spain to have stress test: Santander's Botin)

Bankia became emblematic of Spain's financial crisis and property market collapse when it posted a record 19.1 billion euro ($26.3 billion) loss last year, and offloaded its toxic real estate loans into a Spanish "bad bank", set up to purchase banks' non-performing assets.

Bankia subsequently returned to profit in the first quarter of 2013. On Monday it reported post-tax profit of 362 million euros for the first three quarters of 2013, beating the 311 million euros forecast by analysts in a Reuters poll.

—By CNBC's Katy Barnato. Follow CNBC on Twitter: @CNBCWorld

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