Bankia Ready for Turnaround After Record 2012 Loss

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Spain's rescued lender Bankia said on Thursday it was in a solid position to return to profit, after writedowns on rotten property assets led it to post Spain's biggest ever corporate loss for 2012.

Bankia has been the focal point of Spain's banking crisis since requesting a massive state bailout in mid-2012. That forced the country to ask Europe for just over 40 billion euros ($52.4 billion) in funds to help clean up its troubled financial sector, hit by a property market crash.

Though expected, Bankia's loss of 19.2 billion euros loss for last year was the result of nearly 24 billion euros in provisions mainly related to rotten property assets.

The bank is now hoping to lead the recovery of Spain's banking sector, after it cleaned up its books by parking over 22 billion euros of soured loans to developers and real estate in the country's so-called bad bank.

It has already forecast it will return to profit in 2013, and Bankia said on Thursday it was targeting a return on equity of over 10 percent by 2015.

"Our challenge now is to make Bankia a profitable entity that can return to society the support it has given us," Chief Executive Jose Ignacio Goirigolzarri said in a statement.

The bank said that deposits had improved in the fourth quarter of 2012. Its bad loan ratio dropped to 13 percent at the end of the year compared to 13.3 percent at the end of September, though it is still well above the sector average of 10.4 percent registered in December.

Bankia and its parent group BFA, which holds the firm's stakes in various Spanish companies, had requested 18 billion euros in European aid, though the recapitalization of Bankia is yet to be fully completed.

The Bankia-BFA group as a whole posted losses of 21.2 billion euros in 2012. The group said that figure would drop to 19.4 billion euros if trading gains from a pending exchange of hybrid securities were taken into account.