BBVA Net Falls 39% After Year-Earlier Gains From Sales

Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, said second-quarter profit fell 39 percent on real-estate losses and as year-earlier gains from asset sales weren’t repeated.

Net income fell to 704 million euros ($943.8 million) from 1.15 billion euros a year before, when the bank booked 471 million euros of gains from selling pension businesses in Colombia and Peru. Earnings compare with the 697.2 million-euro average estimate in a Bloomberg survey of 13 analysts.

BBVA, based in Bilbao, is counting on efficiency gains from investments in technology, its U.S. banking franchise and an economic rebound in Spain to increase earnings over the medium term. For now, losses from real estate and the impact of currency declines in markets including Venezuela have weighed on profit, even as Chairman Francisco Gonzalez is betting on a Spanish recovery with the 1.19 billion-euro purchase of nationalized Catalunya Banc SA, announced last week.

“By making a sizeable acquisition in Spain, they are making a statement about recovery, and I’d like to know more about how they see those prospects,” Neil Smith, an analyst at Bankhaus Lampe in Dusseldorf, Germany, who rates BBVA sell, said before the release.

BBVA shares climbed 1.1 percent to 9.52 euros by 9:35 a.m. in Madrid trading, bringing the gain this year to 6.3 percent. That compares with a 18 percent advance for Banco Santander SA, Spain’s biggest lender, which reports earnings tomorrow.

Bad Loans

Net interest income, or the difference between what a bank charges for loans and pays for its funding, fell to 3.65 billion euros from 3.68 billion euros a year earlier, BBVA said. It exceeded the 3.48 billion-euro estimate in a survey of seven analysts.

Bad loans as a proportion of total lending fell to 6.4 percent from 6.6 percent in March. Gross lending decreased 2.9 percent from a year earlier, the bank said.

Profit from BBVA’s Spanish banking business rose to 222 million euros from 178 million euros a year earlier as the bad-loan ratio dropped to 6.3 percent from 6.4 percent in March.

BBVA’s Spanish real estate business posted a first-half loss of 446 million euros compared with a 628 million-euro loss a year earlier as net exposure to assets including foreclosed properties and developer loans dropped to 13.8 billion euros from 14.2 billion euros in March.

Earnings from BBVA’s unit in Mexico, where it owns the country’s biggest bank, rose 10 percent from a year earlier to 443 million euros, in constant currency terms.

First-half profit from South America fell 12 percent to 483 million euros, hurt by weaker currencies in Argentina and Venezuela.

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