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BBVA Joins Other Spanish Banks in Reporting Profits

Source: Reuters - Fri 25th Oct 2013
BBVA Joins Other Spanish Banks in Reporting Profits

BBVA, Spain's 2nd-biggest bank, said on Friday it was cutting its 2013 dividend and capping payouts as of next year to a maximum of 40% of profits paid solely in cash.

The bank, which also reported an 86% rise in 9-month profit, is like other European banks bolstering its capital ahead of a Europe-wide asset quality review.

Spanish banks are recovering from a real estate crash and a deep economic crisis which ate into earnings in the last few years, with steep provisions against property deals last year gutting profits.

BBVA is the first lender to implement a major change in its dividend policy after the Bank of Spain said earlier this year that banks should cap dividend payouts in cash to no more than 25% of profits.

Most banks stood by their dividend policies throughout the crisis, which pushed up the amount of profits paid out to shareholders to well over 100% in some cases.

BBVA profits fell over 44% in 2012 and payouts as a percentage of profits reached 136%, paid in cash as well as in shares.

BBVA will cancel out a payment due in January and will slightly increase the last 2013 dividend payment due in April, but the changes will effectively spell a cut from a handout of €0.42 per share to €0.37 for the year.

"The Bank of Spain has issued a series of recommendations on dividends and we have to comply with them," a BBVA spokesman said.

The bank had been paying a €0.42 per share dividend since 2009, when its payout ratio had been around 37.4%, according to Reuters calculations based on BBVA figures.

That payout ratio leapt to 68.5% in 2011 and later to 136% as the crisis bit. The bank said on Thursday it was aiming to hand out between 35 - 40%of profits to shareholders annually.

The change will be phased in as of next year.

BBVA's 2013 9-month profit jumped to €3.1 Bln, nearly double what it made in the same period a year ago but below analysts' expectations.

Like other Spanish lenders, BBVA has set less money aside to counter soured debts than in 2012, and a series of Latin American disposals earlier this year have also helped profits. Nine-month net interest income fell 3.2% from a year ago to €10.85 Bln, in line with forecasts.

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