People kept their money in Spanish lenders Caixabank and Banco Sabadell in the last three months of 2017, despite intense uncertainty over Catalonia’s independence bid.

But while deposit levels were stable, income remained under pressure at the two banks, which both moved their headquarters out of the northeastern Spanish region in October after regional leaders pursued a secession campaign.

Although the banks said they suffered deposit outflows in the days after the October 1 referendum, which was ruled illegal by Spain’s constitutional court, these were quickly reversed.

Sabadell, Spain’s fifth-biggest bank, said last week its deposits grew one per cent in the fourth quarter over the previous one, while Caixabank, the country’s third-largest, said its had fallen by 0.2 per cent.

Caixabank shares were down 4.3 per cent on the weak quarterly results. The bank’s shares had risen by more than 12 per cent since the beginning of the year.

Sabadell’s shares fell 3.5 per cent. Its stock had gained around 15 per cent since January.

Caixabank’s net profit more than doubled for the period to €196 million but it missed the €352 million forecast in a Reuters poll of analysts, falling 70 per cent from the third quarter due to a devaluation in Portuguese unit BPI’s Angolan business BFA.

Net profit at Sabadell also more than doubled in the fourth quarter to €147.7 million, in line with analysts’ forecasts, after the sale of some its units.

Spanish banks are struggling to lift earnings from loans, as interest rates hover at historic lows and increasing competition erodes margins. To offset pressure at home, Spanish banks have been expanding abroad in search of higher revenues.

Sabadell’s net interest income, profit from loans minus funding costs, was down around 1.7 per cent on the previous quarter, while Caixabank’s fell 0.4 per cent due to BPI.

Caixabank said it expected NII to rise by up to three per cent in 2018.

Both managed to reduce their non-performing loans at a time when the European Central Bank is working on new guidelines for lenders to reduce bad loans.

Sabadell cut its bad loan ratio to 5.1 per cent from 5.4 per cent in the previous quarter, while Caixabank ended December with a non-performing loan ratio of six per cent, compared to 6.4 per cent at-end September.

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