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BBVA first-half profit beats expectations

Source: Reuters - Thu 28th Jul 2011

Spanish bank BBVA's profits shrank in the first half on sluggish loan growth and higher funding costs in its home market.

A strong performance abroad limited the damage and allowed it to beat forecasts. Net profit fell to 2.34 billion euros at the country's second biggest bank from 2.53 billion a year ago, but against a 2.226 billion euros polled forecast.

Net interest income - what a bank earns on loans minus what it pays out on deposits - fell to 6.39 billion euros, slightly below forecasts for 6.41 billion euros, reflecting the impact of higher funding costs.

The euro zone debt crisis has made access to international money markets difficult and expensive for Spanish banks, increasing pressure on margins.

Bad loans as a percentage of total lending fell to 4.0% at end-June, compared with the 3.78% recorded by bigger local rival Santander on Wednesday, but down from 4.1% at end-March.

BBVA emerged as one of the most solvent banks in Europe in region-wide stress tests earlier this month. Its core capital ratio stood at 9.0% at end-June.

Earlier on Thursday, Swiss banking giant Credit Suisse missed forecasts with first half net profit of 768 million euros against average analysts forecasts for 1 billion euros.

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