BBVA Profit Seen Falling on South American Earnings

Banco Bilbao (BBVA) Vizcaya Argentaria SA, Spain’s second-biggest bank, may say second-quarter profit fell as weaker currencies hit earnings from South America and gains from asset sales a year earlier weren’t repeated.

BBVA will probably say earnings fell to 704.4 million euros ($946.4 million) from 1.15 billion euros a year ago, when the lender sold pension businesses in Latin America, according to the average estimate in a Bloomberg survey of nine analysts. The bank, based in Bilbao, Spain, is due to report earnings tomorrow before the stock market opens in Madrid.

BBVA, led by Chairman Francisco Gonzalez, is investing in technology and betting on Spain’s recovery. Last week it made the winning 1.19 billion-euro bid to buy nationalized lender Catalunya Banc SA with its 773 branches. Even so, weaker currencies in countries including Venezuela continue to drag on earnings, while losses at its real-estate unit mean its Spanish business is barely breaking even, said Daragh Quinn, an analyst at Nomura International PLC in Madrid.

“The year-on-year comparison in Latin America is tough because of the weaker currencies,” Quinn, who rates BBVA “reduce,” said by phone. “There are positive trends in Spanish earnings but they’re still losing money from real estate.”

Profit a year earlier was boosted by 471 million euros of gains from the sale of pension businesses in Colombia and Peru. BBVA shares have gained 5.3 percent this year, compared with a 17 percent gain for Banco Santander SA, Spain’s biggest bank, which reports earnings on July 31.

Quinn estimates BBVA earned 262 million euros from its Spanish banking business, up 51 percent from a year ago. The real estate business may have lost 200 million euros in the quarter, the Nomura analyst said.

Earnings from South America may have dropped 16 percent from a year earlier to 214 million euros, according to estimates by Banco BPI SA. BBVA expects the profit contribution from Venezuela to fall by about a third this year and Argentina’s by a fifth, Jaime Saenz de Tejada, the bank’s head of strategy and finance, said in April.

Nomura sees profit from Mexico, where BBVA owns the biggest bank, dropping 3.1 percent from a year earlier to 432 million euros.

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

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net Cindy Roberts, Jon Menon

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