BBVA May Report Profit Slump on Spanish Property Cleanup Costs

Banco Bilbao Vizcaya Argentaria SA (BBVA), Spain’s second-biggest bank, may say third-quarter profit slumped on the cost of cleaning up its real estate holdings.

BBVA may say net income dropped to 331.8 million euros ($430 million) from 804 million euros a year earlier, according to the average estimate in a Bloomberg survey of eight analysts. The Bilbao, Spain-based lender is due to report earnings tomorrow before the market opens in Madrid.

BBVA, with about 60 percent of its lending in Spain, is still booking costs to comply with government orders to banks to purge real estate that built up on their balance sheets as the country’s property boom turned to bust. Higher earnings from Mexico and South America will help offset losses in its domestic market, according to estimates from Banco BPI SA.

“They still have a big chunk of the real estate cleanup that needs to go through the earnings statement,” Andrea Filtri, an analyst at Mediobanca SpA in London, said in a phone interview.

BBVA has dropped 5.9 percent this year in Madrid trading compared with a 16 percent gain for the 38-member Bloomberg Europe Banks and Financial Services Index and a 3.1 percent drop for Banco Santander SA. Santander, Spain’s biggest bank, on Oct. 25 reported a 94 percent decline in third-quarter profit on charges for cleaning up its real estate and a slump in U.K. profit.

BBVA’s Spanish unit may have posted a third-quarter loss of 227 million euros compared with a profit of 265 million euros a year earlier, according to Nomura International estimates. The lender said in July it had booked 1.43 billion euros of the 4.6 billion euros ordered by the government to purge real estate.

Earnings from Mexico, where BBVA runs the biggest bank, may have climbed 20 percent to 468 million euros on surging loan revenue, according to estimates from BPI. Profit from South America may have jumped 59 percent to 358 million euros, BPI said.

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

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

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