By Jeannette Neumann
MADRID-- Banco Bilbao Vizcaya Argentaria SA said net profit more
than doubled in the first quarter of the year on improved lending
income and stronger profit in Mexico, countering weaker returns in
South America due to currency turmoil in Venezuela.
BBVA said first-quarter net profit was EUR1.54 billion ($1.67
billion), up from EUR624 million a year earlier and above analysts'
expectations.
Spain's No. 2 lender by market value said net interest income
was EUR3.66 billion compared with EUR3.4 billion the year before,
but still below analysts' expectations.
Net interest income, a key driver of profit for retail banks
such as BBVA, is the difference between what lenders pay clients
for deposits and charge for loans.
BBVA shares were down 1.8% in late morning trading in
Madrid.
Net profit was also boosted by EUR583 million in capital gains
from the January sale of part of BBVA's stake in China Citic Bank
Corp. BBVA has been selling off assets in China in recent months,
seeking to shore up its finances as European regulators toughen
postcrisis capital requirements for lenders. It said Wednesday that
net profit would have increased even without the sale, but by a
more modest 54% to EUR953 million.
In BBVA's Mexico unit, the largest single contributor to the
bank's total net profit, lending income was up 14%. Net profit rose
15% to EUR524 million.
The lender's Venezuelan unit saw net profit plummet to EUR15
million in the first quarter compared with EUR57 million in the
same period a year ago, amid ongoing currency fluctuations.
The EUR15 million net profit generated this quarter "is pretty
much the number that we should expect for the year," BBVA Chief
Financial Officer Jaime Sáenz de Tejada told analysts Wednesday.
"Quarter-on-quarter contribution will be pretty much
negligible."
Last quarter, the bank used an exchange rate of 12 Venezuelan
bolivars to the dollar. The exchange rate BBVA has used this
quarter, following changes in the government's currency controls,
is 195 bolivars to the dollar, a 93% devaluation. "The bank remains
strong locally," Mr. Sáenz de Tejada said.
Net profit at BBVA's Spain banking unit declined 9.6% to EUR347
million in the first quarter compared with a year earlier.
BBVA and other Spanish banks are facing weak loan growth in
Spain amid historically low interest rates. The country's economy
is growing again after emerging from a deep recession in late 2013,
but many borrowers are still focused on paying down existing debts,
rather than taking out new loans.
BBVA expects total loan volumes in Spain to grow between 1% to
2% in 2015, Mr. Sáenz de Tejada said, while net interest income
should remain in the "low single digits."
New loans to businesses have been a bright spot in an otherwise
dull lending landscape, but Spanish banks are battling each other
for a share of that business, driving down returns. The greatest
drag, however, on what BBVA earns from issuing loans in Spain, has
been the decline in the euro interbank offered rate, or Euribor,
Mr. Sáenz de Tejada said.
In countries such as Spain and Portugal, Euribor is the base
interest rate used for many loans, especially mortgages. The rate
is based on how much it costs European banks to borrow from each
other.
BBVA said its capital ratio under Basel III "fully loaded"
criteria was 10.8% at the end of the quarter.
Write to Jeannette Neumann at jeannette.neumann@wsj.com
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