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BBVA First-Quarter Profit May Decline on Slump

Source: Bloomberg - Tue 24th Apr 2012
BBVA First-Quarter Profit May Decline on Slump

Spain's second-biggest bank, will probably report a drop in first-quarter profit as earnings slumped in its home country and provisions for bad loans increased.

BBVA may say net income fell to €921 million from €1.15 billion in the year-earlier period, according to the average estimate in a Bloomberg survey of 6 analysts. The Bilbao, Spain-based bank is due to report earnings tomorrow before the stock market opens in Madrid.

Banks including BBVA, which has about 60 percent of its loan book in Spain, are being forced by the government to recognize more losses on the real estate assets held on their balance sheets. BBVA says the revenue-generating potential of units in Mexico and Asia means it can weather the challenges in Spain, where the economy is sliding back into recession.

"Spain is under pressure because of the economy but Mexico and Latin America should be pretty strong," Daragh Quinn, an analyst at Nomura International in Madrid, said in a phone interview.

BBVA shares have declined 24 percent this year, valuing the lender at €25.8 billion. Larger rival Banco Santander, which has dropped 17%, will report earnings on April 26.

Earnings from Spain may slump 28 percent, according to analysts at Banco BPI SA in Porto, Portugal. BBVA said in February that the final impact on 2012 earnings of the real estate cleanup ordered by the Spanish government would be €1.36 billion.

Profit from Mexico, the biggest contributor to BBVA earnings, may have risen 8.6%, according to estimates by Nomura Equity Research. Earnings from Eurasia, a division that pools BBVA's business in Turkey and China and its operations in Europe outside Spain, may have climbed 22%, Nomura said.

Net loan loss provisions may have increased 9.5% to €1.12 billion, according to Nomura. Net interest income may have gained 12% to €3.55 billion, according to BPI.

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