BBVA First-Quarter Net Profit Slides
April 28 2016 - 3:20AM
Dow Jones News
MADRID—Banco Bilbao Vizcaya Argentaria SA on Thursday reported a
54% drop in first-quarter net profit to €709 million ($802.8
million) compared with the same period a year earlier, dragged down
by currency turmoil, weaker trading income and higher costs.
Analysts had anticipated that BBVA, Spain's second-biggest bank
by market value, would report net profit of €840 million in the
first quarter, according to a poll by data provider FactSet.
First-quarter results in 2015 had also been boosted by the
partial sale of BBVA's stake in a Chinese lender. Higher costs, the
bank said, were driven by the incorporation of bailed-out Spanish
lender Catalunya Banc in April of last year, as well as inflation
in some countries where the bank operates.
The bank, led by Executive Chairman Francisco Gonzá lez, said
net interest income was €4.15 billion compared with €3.66 billion
in the first quarter of 2015.
Net interest income, a key driver of revenue for retail banks
such as BBVA, is the difference between what lenders pay clients
for deposits and charge for loans. That figure was also below
analysts' estimates.
Analysts had estimated BBVA would report a net interest income
of €4.3 billion in the first quarter, according FactSet.
BBVA has units from Mexico to Turkey. A depreciation in
currencies against the euro hit BBVA's first-quarter earnings,
which are reported in euros.
On Wednesday, Spanish peer Banco Santander SA reported a 5%
decline in first-quarter profit on weaker lending and fee income as
currency turmoil from the U.K. to recession-hit Brazil squeezed
profits. Analysts had expected weaker results and Santander's
shares closed up 1.6% on Wednesday in Madrid.
BBVA's bank in Mexico—called Bancomer—is the biggest driver of
profit. The unit saw a decline in net profit to €489 million in the
first quarter of this year compared with €525 million in the same
period a year earlier.
A decline in oil prices hit the Mexican peso hard in the first
quarter. Mexico relies on oil revenue to finance a large portion of
its annual budget.
BBVA's results in South America were weakened by currency
upheaval, too.
In Argentina, the peso has fallen sharply since December, when
newly-elected President Mauricio Macri unshackled the currency from
government controls to attract investors. Also, the Venezuelan
currency fell 72% in the first quarter of this year compared a year
earlier.
BBVA's Spanish banking unit saw a decline in net profit to €234
million from €307 million. Costs were up 18% due to the
incorporation of Catalunya Banc. Trading income plummeted, which
the bank attributed to a "very complex quarter" in the markets.
The bank's U.S. unit saw a plunge in net profit in the first
quarter as BBVA hiked loan-loss provisions as the decline in oil
prices has hit energy as well as metals and mining companies.
BBVA reported a slight increase in its capital ratio to 10.54%
as of March 31, under international regulations known as "fully
loaded" Basel III criteria.
Write to Jeannette Neumann at jeannette.neumann@wsj.com
(END) Dow Jones Newswires
April 28, 2016 03:05 ET (07:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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