Spain's BBVA bank sees profits slump

26th October 2011, Comments 0 comments

Spain's second biggest bank, BBVA, reported third-quarter net profits of 804 million euros Wednesday, down 29.5 percent from the same period last year, blaming market turmoil.

The result, equivalent to $1.12 billion, was below the consensus forecast of 840 million euros from analysts polled by Dow Jones Newswires.

The bank said net interest income, the difference between loan income and what the bank pays out on deposits, beat market expectations, rising 1.3 percent to 3.286 billion euros against a forecast of 3.218 billion euros.

Over the first nine months of 2011, profits were down 14.3 percent compared to the same period a year earlier, at 3.143 billion euros.

"Stress levels in liquidity and sovereign risk reached a high in the third quarter of 2011, particularly in the euro area," forcing lenders to borrow from central banks for liquidity, BBVA said in an earnings statement.

BBVA insisted it was well capitalised, at a time when leaders are planning to make banks strengthen their balance sheets to increase financial stability in the eurozone.

According to its figures, its ratio of risky "non-performing assets", including mortgages in Spain's housing sector that saw a bubble burst in 2008, was stable at 4.1 percent at the end of the third quarter.

Its core capital ratio, a key measure of solvency, stood at 9.1 percent, stronger than the 8.2 percent recorded a year before.

But in international banking overall in the third quarter "there were significant falls in the equity and public and private debt markets and a low level of business activity," it said.

In Spain, the central bank has warned that the country's economy showed anaemic growth in the third quarter. Unemployment is at more than 20 percent, a record among industrialised countries.

BBVA shares fell 0.46 percent on the Madrid stock market after the announcement.

The Ibex 35 stock index was stable overall with a fall of 0.06 percent in morning trade, in line with other European markets which were waiting to see how European leaders would act at a summit to tackle the eurozone debt crisis.

© 2011 AFP

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