BBVA Profit Seen Jumping on Lower Spanish Real Estate Charges

Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank by assets, will probably say third-quarter profit jumped on lower provisioning for losses on real estate.

Net income will rise to 613.3 million euros ($845 million) from 146 million euros in the year-earlier period, according to the average estimate in a Bloomberg survey of four analysts. The Bilbao, Spain-based lender will publish earnings tomorrow before the market opens in Madrid.

BBVA Chairman Francisco Gonzalez is selling assets to shore up capital at the lender and rebuilding earnings after the Spanish government forced banks last year to speed up the recognition of losses on their holdings of real estate. The company said last week it would take a 2.3 billion-euro charge against 2013 earnings for reducing its stake in China Citic Bank Corp. as it maneuvers to bolster capital.

“BBVA has a lot of exposure to Spain and it still seems premature to be calling any sort of turning point for the Spanish economy,” said Neil Smith, an analyst at Bankhaus Lampe KG in Bielefeld, Germany, who rates the lender a sell.

The shares have climbed 29 percent this year. That compares with a 6.9 percent gain this year for Banco Santander SA, Spain’s biggest bank, which today said third-quarter earnings rose more than eightfold on lower costs for absorbing losses on real estate.

Bad Loans

BBVA’s net loan loss provisions probably fell to 1.33 billion euros from 2.04 billion euros, Keefe, Bruyette & Woods analysts Antonio Ramirez and Marta Sanchez estimated in an Oct. 22 report.

The lender may say earnings from its Spanish banking business fell to 117 million euros from 250 million euros, KBW said. Consolidated net interest income, a measure of revenue from loans minus the cost of deposits, may drop 8 percent to 3.57 billion euros, hurt in part by the removal of “floors,” or minimum interest rates, on Spanish mortgages, KBW said.

Earnings from Mexico, the country that contributes most to BBVA’s profit, may rise 8 percent to 466 million euros, according to estimates from Banco BPI SA. Profit from South America may decline 16 percent from a year ago to 266 million euros, KBW said.

BBVA’s Chief Operating Officer Angel Cano said in July that the bank would keep paying two dividends in cash and two mostly in shares each year for the time-being and will review the practice toward the end of 2013. The Bank of Spain told lenders in June that distributions this year should be limited.

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