Spain's state-rescued lender Bankia has posted a forecast-beating 12.8 percent rise in first-quarter net profit. As Sonia Legg reports, the results were released as Prime Minister Mariano Rajoy predicted the economy will grow by almost 3 percent this year - 1 percent more than previous forecasts.
It's long been a symbol of Spain's economic problems. And it seems Bankia's turnaround is being mirrored by the broader economy. The state-rescued lender has posted a forecast beating rise in first quarter profit of 12.8 percent. Like Caixabank and Sabadell which reported results last week, it's seeing clear signs of a recovery. Revenues and net interest income are stabilising while bad debt is beginning to fall. With elections later this year - that's welcome news for the government. Prime Minister Mariano Rajoy has also raised his growth forecast. (SOUNDBITE) (Spanish) SPANISH PRIME MINISTER, MARIANO RAJOY, SAYING: "This year, the Spanish economy will grow by 2.9 percent and next year, the figure will be at the same level. Spain is the economy in the euro zone that is growing the most, amongst the biggest ones, and considerably above the average. Who'd have believed that two years ago?" Rajoy is hoping an accelerating economic recovery will win him a second term. But the election is seen as the most uncertain in more than 30 years. The rise of new parties is shaking up the political order in much the same way as it did in Greece. And Rajoy knows a Greek earthquake could have tremors across the euro zone. SOUNDBITE: Spanish Prime Minister, Mariano Rajoy, saying (Spanish): "I am absolutely convinced that the best thing for the Greeks, Europeans, and Spain, for everyone, is that Greece continues to follow its current path, that it meets its obligations." A pick up in domestic consumer spending, combined with low oil prices and the European Central Bank's monetary expansion are largely behind the pick-up. And Jeremy Batstone-Carr from Charles Stanley says investors are pretty confident the recovery's here to stay. SOUNDBITE: Charles Stanley chief economist, Jeremy Batstone-Carr, saying (English): "The nation's improvement in the construction industry might wither but at the moment we are feeling a little more optimistic about Spain than we have up until this point." The euro zone's fourth largest economy still has plenty of problems. One in four people are unemployed, salaries are being pressured down and inequality is on the rise. But with opinion polls showing voters favouring a change in government, it might not be Rajoy's problem for too much longer.