Spain's BBVA bank reports lower profits

28th July 2011, Comments 0 comments

Spain's second-biggest bank BBVA reported on Thursday that second-quarter profits were down 7.6 percent from the equivalent figure last year at 1.189 billion euros ($1.707 billion).

Over the six-month period, profits were off 7.5 percent at 2.339 billion euros from last year, but were up 12.5 percent from the previous half, showing a "clear tendency toward change," the bank said.

Net interest income -- the difference between interest paid out on deposits and interest earned on lending -- was 3.215 billion euros, down 9.5 percent from the same period in 2010.

Over the first half, the figure was also down, 7.9 percent at 6.389 billion euros.

Like its chief rival Santander, BBVA continues to grow in Latin America, where its net profits were up 19 percent at 529 million euros.

Santander, the eurozone largest bank by market capitalization, on Wednesday reported a 21.2 percent slump in first-half net profits to 3.501 billion due partly to a special 620-million-euro fund it set to handle insurance claims in Britain.

BBVA said overall, growth in emerging markets largely offset the decline in contributions from developed markets, "where the bank is strengthening its franchises."

The non-performing assets ratio decreased to 4.0 percent compared with 4.1 percent in March and 4.2 percent a year earlier.

Spanish banks, particularly its regional savings banks, have been struggling with an economic downturn, brought about by a collapse of the country's once booming property market in 2008.

Five Spanish banks -- four of thjem regional savings banks -- were among the eight European lenders which failed the European Banking Authority's tests this month to see if they can survive a theoretical slide in stock, bond and property prices during a two-year recession.

Twenty other Spanish banks however passed the tests, which required rock solid core Tier One capital ratio of 5.0 percent of total assets.

"The EBA tests show that in the most adverse scenario for 2012, BBVA would increase its core Tier 1 capital ratio to 9.2 percent," BBVA said. "This level was unmatched by any of BBVAs big European rivals."

Angel Cano, BBVAs Chief Operating Officer, said "the European stress tests demonstrated the undeniable strength and resilience of our business model. BBVAs commitment to diversification and prudent risk management will continue to drive Group earnings."

© 2011 AFP

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