BBVA Profit Jumps as One-Time Gains Offset Property Loss

Banco Bilbao Vizcaya Argentaria SA (BBVA), Spain’s second-biggest bank, said first-quarter profit jumped as one-time gains offset a drop in Spanish loan revenue and bigger losses from real estate.

Net income rose to 1.73 billion euros ($2.25 billion) from 1.01 billion euros in the same period a year earlier, the Bilbao, Spain-based lender said in a filing to regulators today. The earnings compared with the 1.76 billion-euro average estimate in a Bloomberg survey of 10 analysts.

BBVA and Banco Santander SA (SAN), Spain’s biggest bank, are predicting a surge in profits as they put the task of cleaning up losses from Spanish real estate behind them. The weak economy in Spain, where unemployment rose to 27 percent in the first quarter, still poses risks for BBVA even as asset sales and profit from emerging markets such as Mexico buoy earnings.

“The Spanish situation is difficult but the story is easier for them because they are in these high-growth markets,” John Raymond, an analyst at CreditSights in London, said before the earnings were published.

BBVA said earnings were bolstered by one-time gains during the quarter after selling a Mexican pensions business and booking profits from a reinsurance agreement.

Net interest income rose 0.8 percent in the first quarter from a year ago to 3.62 billion euros as gross loans increased 4 percent, BBVA said. Bad loans as a proportion of total lending expanded to 5.3 percent from 5.1 percent in December.

Shares Outperform

BBVA’s shares have advanced 4.9 percent this year compared with a 4.2 percent gain for the 40-member Bloomberg Europe Banks and Financials Services Index. Shares in Banco Santander, which yesterday reported a 26 percent drop in quarterly earnings that missed analysts’ estimates, fell 10 percent.

Profit from BBVA’s Spanish unit, where losses from real estate were omitted from earnings for the first time, rose 54 percent in the first quarter from a year earlier to 569 million euros. Net interest income dropped 8.8 percent to 1.07 billion euros. Real estate losses climbed to 346 million euros from 300 million euros a year earlier.

Earnings in Mexico rose to 435 million euros from 430 million euros a year ago, BBVA 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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