BBVA May Say Profit Surged as Spanish Real Estate Costs Decline

Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, may say quarterly profit jumped on lower costs for covering Spanish real estate losses and one-time gains from South American asset sales.

Net income probably rose to 1.14 billion euros ($1.51 billion) in the three months through June, from 505 million euros a year earlier, when it reports earnings tomorrow before the market opens in Madrid, according to the average estimate in a Bloomberg survey of nine analysts.

BBVA, led by Chairman Francisco Gonzalez, is trying to rebuild earnings after the Spanish government forced lenders last year to take one-time charges to speed up their recognition of losses on real estate. The bank has said it will book gains of almost 500 million euros from the sale of pension fund assets in Colombia and Peru.

“I’m still waiting for more evidence of an inflection point or real change of trend in Spain,” Neil Smith, an analyst at Bankhaus Lampe in Bielefeld, Germany, who recommends selling BBVA shares, said in a phone interview. “There are still too many uncertainties.”

BBVA shares have climbed 1.8 percent this year compared with a 7.8 percent gain for the 44-company Bloomberg Europe Banks and Financial Services Index and an 11 percent decline for Spain’s biggest bank, Banco Santander SA.

Spain Squeezed

Santander today said second-quarter net income jumped to 1.05 billion euros from 123 million euros a year ago as lower provisioning costs offset declining profit in Brazil and Spain.

BBVA’s profit from Spain may fall to 169 million euros from 413 million euros a year earlier as losses at the bank’s Spanish real estate unit drop to 283 million euros from 1.13 billion euros, Nomura International analysts Daragh Quinn and Jaime Hernandez said in a July 19 report.

The bank said in June that earnings from Spain would be hit by a court ruling that means it would have to stop applying “floors,” or clauses setting minimum interest rates, on mortgages.

Earnings from Mexico, the unit that contributes the most to BBVA’s earnings, may have risen 3 percent to 447 million euros from a year ago, according to estimates from Carlos Joaquim Peixoto, an analyst at Banco BPI SA in Porto, Portugal.

Profit from the bank’s business in South America may fall 13 percent to 292 million euros from a year earlier, according to Peixoto. Profit from Eurasia, a division that pools BBVA’s businesses in Turkey and China and operations in Europe outside Spain, may have dipped 2 percent to 279 million euros, while U.S. earnings fell 14 percent, he said.

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