BBVA, CaixaBank Drop as First-Quarter Profit Miss Estimates

  • BBVA hit by lower trading revenue and currency effects
  • Low interest rates squeeze CaixaBank revenue from lending

Banco Bilbao Vizcaya Argentaria SA and CaixaBank SA fell after reporting first-quarter profit that missed estimates, as market turmoil deprived the banks of revenue they have used to offset low interest rates.

BBVA’s shares dropped as much as 9 percent, the most in 10 months, and were down 7.5 percent to 6.23 euros at 3:45 p.m. in Madrid. CaixaBank was down 2.9 percent after falling as much as 6.3 percent.

BBVA, Spain’s second-largest lender, said net income fell 54 percent to 709 million euros ($804 million) from a year ago when the bank booked a gain from selling a stake in a Chinese lender. Earnings were hit by lower trading revenue and currency fluctuations. Five analysts surveyed by Bloomberg had estimated 885 million euros.

The “results were weaker than expected driven by lower revenues, which could put consensus earnings expectations under pressure,” Daragh Quinn, an analyst at Keefe Bruyette & Woods, said in a note to clients Thursday. Banco BPI SA downgraded Bilbao- based BBVA to neutral from buy on Thursday.

Spanish lenders have counted on fees and lower provisions to help offset the European Central Bank’s record-low interest rates, which have squeezed income from lending. They are also looking to grow abroad to diversify from the weakness of their home market. CaixaBank has offered about 900 million euros for the 56 percent of Portugal’s Banco BPI SA that it doesn’t own.

CaixaBank said net income fell 27 percent percent to 273 million euros as low interest rates and weak demand for credit squeezed lending margins and reduced fees. Analysts had estimated 297 million euros.

Net fees at the Barcelona-based lender dropped 9 percent from a year earlier as market volatility during the quarter drove a reduction in fees from products such as mutual funds, the lender said in a statement.

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