BBVA May Post Lower First-Quarter Profit, Hurt by Spain Decline

Banco Bilbao Vizcaya Argentaria SA (BBVA), Spain’s second-largest bank, may say first-quarter profit fell as lower earnings in its home market offset gains in Mexico.

Net income probably declined to 1.08 billion euros ($1.6 billion) from 1.24 billion euros a year earlier, according to the average estimate in a Bloomberg survey of six analysts. The Bilbao, Spain-based lender is scheduled to report first-quarter results tomorrow before the stock market opens in Spain.

Spanish banks have been hurt by weakening credit demand and souring loans in a domestic economy that’s still struggling to emerge from recession. BBVA, led by Chairman Francisco Gonzalez, completed its $5.8 billion purchase of a 24.9 percent stake in Turkiye Garanti Bankasi AS (GARAN) in March as it expands outside Spain, adding Turkey to other emerging markets such as Mexico.

“The news from Spain won’t be good, but there probably won’t be nasty surprises while Mexico is showing interesting growth,” said Pablo Garcia, head of equities at Oddo Sociedad de Valores in Madrid. “All the big Spanish companies, and that includes BBVA, are at pains now to show that Spain is a diminishing part of their business.”

BBVA shares have gained 14 percent this year, compared with a 2.9 percent advance in the 48-member Bloomberg Europe Banks and Financial Services Index. Banco Santander SA (SAN), Spain’s largest bank, which on April 28 reported a 5 percent drop in first-quarter profit, has risen 5.3 percent in 2011.

Mexican Gains

Profit from BBVA’s Spain-dominated Iberian business may have dropped 33 percent from a year earlier to 394 million euros, according to estimates by Banco BPI SA (BPI) analyst Carlos Joaquim Peixoto. Spain and Portugal together accounted for 45 percent of group profit in 2010.

Earnings from Mexico, which contributed 37 percent of earnings last year, probably rose 23 percent to 428 million euros, Peixoto estimated. The Mexican economy may grow 4.37 percent this year, according to a monthly central bank survey of economists.

BBVA will consolidate 10 days of earnings from Turkiye Garanti in first-quarter earnings under a new division that will include Turkish and Chinese investments and its European business outside Spain, the bank said last month.

To contact the reporter for this story: Charles Penty in Madrid at cpenty@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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