BBVA 9-mth net in line, revenue growth muted

 

Nine-month net profit at BBVA, Spain's second largest bank, broadly matched forecasts on Wednesday with revenue growth muted due to low interest rates and higher funding costs.

Net interest income - what a bank earns on loans minus what it pays on deposits - fell 1.1 percent to 10.182 bilion euros ($14.21 billion), missing forecasts for 10.352 billion euros.

"Net interest income is slightly weaker than expected, which shows the continued pressure on Spanish banks margins at home, but BBVA is still able to weather this situation better than most of its domestic peers, with the exception of Santander," said a local brokerage analyst.

BBVA's Spain and Portugal retail bank business accounts for about a third of group revenues, while at arch rival Santander, the eurozone's biggest bank, it accounts for about 17 percent.

Bad loans at BBVA continued their downward trend begun in the second quarter, falling to 4.1 percent end-September from 4.2 percent at end-June.

In Spain and Portugal, bad loans remained steady at 5 percent of total lending.

A deterioration in asset quality as a decade-long housing boom turned to bust has forced Spanish banks to set aside hefty provisions which have depressed bottom line growth for several quarters.

BBVA said it earmarked 223 million euros in capital gains from the sale and leaseback of offices in Spain to boost provisions against future loan losses.

Net profit fell to 3.668 billion euros, broadly in line with forecasts for 3.673 billion euros in a Reuters poll, with the banks LatAm and Mexican business putting in strong performances.

Core capital increased slightly to 8.2 percent at end-September from 8.1 percent end-June.

Last week, BBVA said it was in talks to buy a stake in Turkish peer Garanti Bank but analysts said BBVA must gain a controlling stake. A minority stake would hurt BBVA's capital under new Basel III banking rules.