BBVA Quarterly Profit Beats Estimates as Spain, Mexico Gain

Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, swung to a fourth-quarter profit, beating estimates on higher returns in its home market and Mexico.

BBVA’s quarterly net income of 689 million euros ($790 million) compares with an 849 million-euro loss in the same period a year ago when the bank took a charge for reducing its investment in China, the lender said in a filing to regulators Wednesday. Profit in the period beat the 588 million-euro average estimate in a Bloomberg survey of 13 analysts.

BBVA, based in Bilbao, Spain, relied on the recovery of its domestic market to help improve its profit as it reorganized its international business. In the fourth quarter, the bank lead by Chairman Francisco Gonzalez, boosted its stake in Turkish lender Turkiye Garanti Bankasi AS to further diversify its earnings beyond its core Spanish and Latin American markets.

“It has been a difficult year but a good one,” Gonzalez said in a statement. The bank is now in an “optimal situation to face the new circle of growth and transformation of the business.”

The bank aims to pay its dividend entirely in cash by the end of 2017, Chief Operating Officer Angel Cano said on an analyst webcast. BBVA will seek approval from its shareholders at the annual general meeting to pay this year’s dividend half in cash and half in scrip, Cano said.

Mexico, China

BBVA shares gained as much as 4.7 percent and were up 3.2 percent as of 12:12 p.m. in Madrid, valuing the bank at about 51 billion euros. The shares are up 4 percent this year, more than the 2.2 percent gain in the benchmark STOXX Europe 600 Banks Price Index.

“These have been good results for BBVA, with good performance in particular from Mexico,” Daragh Quinn, an analyst with Nomura International in Madrid, said by phone on Wednesday. “Net income was lower than expected because of additional restructuring charges in Spain.” He has a buy recommendation on BBVA.

The bank announced in October it would take a charge of up to 290 million euros to invest in online banking.

Bad loans as a proportion of total loans fell to 5.8 percent at the end of December from 6.1 percent in September, the bank said.

Operating income at the banking business of the Spanish unit jumped to 1.03 billion euros in the quarter compared with 629 million euros a year ago, while losses at the real-estate unit in Spain fell. Cano told analysts losses at the unit will shrink this year and to be almost zero by 2017.

Net profit in Mexico, the second-largest market for the lender, increased by 9 percent in the quarter to 558 million euros in constant exchange rate.

Net interest income, or revenue generated from the difference between what banks charge for loans and pay for funding, rose to 4.25 billion euros from 3.76 billion euros a year ago.

Last month the bank agreed to sell 4.9 percent of China Citic Bank Corp. for about 1.46 billion euros to replenish capital. In December it sold a 29.7 percent stake of Citic International Financial Holdings to China Citic for about 845 million euros.

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