BBVA Seen Posting Quarterly Loss on Spain Property Costs

Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, may report a loss in the fourth quarter as it completes a government-ordered clean-up of failed real estate investments.

The bank may post a net loss of 80.3 million euros ($108.9 million) in the three months to December when it publishes earnings in Madrid tomorrow, according to the average estimate in a Bloomberg survey of 12 analysts. The forecast compares with a loss of 139 million euros a year earlier, when BBVA took a 1 billion-euro charge for goodwill at its U.S. division.

BBVA, based in Bilbao, Spain, is required to book charges of about 1.6 billion euros in the fourth quarter to meet a government order for Spanish banks to recognize losses on real estate. It has counted on earnings from units in Mexico and South America to cushion losses from its Spanish business, which Banco BPI SA estimates may have reached 1.2 billion euros in 2012 as provisioning costs mounted.

“The quarter is going to be weak, basically because of the provisioning effort, which will continue to be intense,” Juan Pablo Lopez, an analyst at Espirito Santo Investment Bank in Madrid, said in a phone interview. “It’s still hard to say the page has turned in Spain because of what’s happening in the economy.”

Shares in BBVA have climbed 6.2 percent this year, lagging behind gains of 7.7 percent for the 38-member Bloomberg Europe Banks and Financial Services Index. Banco Santander SA, Spain’s biggest lender which today reported a quarterly profit of 401 million euros that missed estimates, advanced 2.3 percent in the period.

Spain Losses

BBVA may say losses at its Spanish bank were 664 million euros compared with profit of 203 million euros in the fourth quarter of 2011, according to the BPI estimates. The bank has completed two-thirds of the real estate clean-up decreed by the government last year and said in October it would pay the final amount in the fourth quarter.

Profit from operations in Mexico, the biggest contributor to BBVA’s earnings, may fall 3 percent annually to 445 million euros in the three months to December, as an increase in provisioning costs offsets growth in net interest income, according to BPI. Earnings from units in South America probably climbed an annual 44 percent to 364 million euros in the period, estimates from Bank of America Corp. showed.

BBVA took a charge against goodwill at its U.S. business, in the final quarter of 2011 to account for the deteriorating outlook for growth and regulation in the country. Goodwill is the amount exceeding fair net book value paid at the time of an acquisition.

The company paid $9 billion for Compass Bancshares Inc. in 2007. BBVA may report a 122 million-euro fourth-quarter profit from its U.S. operations, according to Bank of America.

Before it's here, it's on the Bloomberg Terminal.