BBVA Profit May Climb as One-Time Gains Offset Decline in Spain

Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, may say first-quarter profit jumped as one-time gains offset bad-loan costs and weak margins in its home market.

BBVA may say net income climbed 52 percent to 1.52 billion euros ($2 billion) from 1 billion euros a year earlier, according to the average estimate in a Bloomberg survey of 11 analysts. The Bilbao, Spain-based lender will report earnings tomorrow before the stock market opens in Madrid.

BBVA and other Spanish banks say their prospects are improving after complying with government orders last year to recognize losses on soured real estate assets. While earnings from Mexico and one-time gains will buoy profit, the uncertain outlook for a Spanish economy that has contracted for seven straight quarters still poses risks for the bank, said Daragh Quinn, an analyst at Nomura International.

“For the Spanish banks including BBVA, it’s still hard to have visibility into 2014 on how the economic situation in Spain will continue to affect them,” Madrid-based Quinn, who rates BBVA buy, said in a phone interview.

The sale of BBVA’s Mexican pensions business yielded a net gain of 800 million euros in the first quarter, while a reinsurance agreement signed in March earned the lender a gross gain of 630 million euros, according to company filings.

Spanish Decline

BBVA shares increased 4.1 percent this year compared with a 3.1 percent gain for the 40-member Bloomberg Europe Banks and Financial Services Index. Banco Santander SA, Spain’s biggest bank, which today posted a 26 percent drop in first-quarter earnings, has declined 11 percent his year.

Earnings from Spain may have dropped 51 percent to 112 million euros from a year ago as provisioning costs climbed by almost two-thirds, according to estimates from Banco BPI SA.

Profit from Mexico, where BBVA owns the biggest bank, may have slipped 7 percent to 400 million euros, according to estimates in an April 19 report from Nick Anderson, an analyst at Berenberg Bank in London.

Earnings from South America may have declined 7 percent to 346 million euros, according to BPI.