BBVA reports drop in quarterly profit as provisions weigh
BBVA, Spain's second-biggest bank, reported on Wednesday a 17.4-percent drop in quarterly net profit as provisions for bad loans weighed on results.
Net profits in the July-September third quarter reached 1.14 billion euros (1.58 billion dollars) compared to 1.38 billion euros at the same time last year, it said in a regulatory filing.
Analysts polled by Dow Jones Newswires had forecast net income of 1.16 billion euros.
During the first nine months of the year BBVA posted a net profit of 3.67 billion euros, a 12.2-percent drop over the outcome at the same time last year.
"There are certain uncertainties regarding the durability of the economic recover but we have a business model which allows us to resist this environment," BBVA CEO Angel Cano said during a conference call with analysts.
The bank booked provisions, or a precautionary reserve for loans turning sour, during the third quarter of 233 million euros, although this was less than 260 million euros in the previous quarter.
Bad loans as a proportion of total lending dipped to 4.1 percent in the third quarter from 4.2 percent in the previous quarter and 4.3 percent during the first three months of the year.
BBVA is struggling with an economic downturn in Spain, brought about by a collapse of the country's once booming property market which has led many developers and homeowners struggling to meet their loan payments.
The bank's profit from Spain and Portugal fell to 501 million euros in the quarter from 586 million euros 12 months ago while its earnings from Mexico, BBVA's second-biggest market after Spain, rose to 451 million euros from 429 million euros.
Earnings from South America, where BBVA owns banks from Colombia to Argentina, climbed to 239 million euros from 207 million euros a year earlier.
Net interest income fell 5.5 percent to 3.25 billion euros as low interest rates and weak loan demand hurt bank earnings in its home market.
The International Monetary Fund forecasts that the Spanish economy, the fifth biggest in Europe, will contracted by 0.3 percent this year and grow by just 0.7 percent in 2011.
© 2010 AFP