BBVA Anticipates Growth in Lending Income in Spain and Mexico

BBVA's Financial Outlook for 2025

By Jesús Aguado

Performance in Main Markets

MADRID (Reuters) -Spain's BBVA on Thursday said it expected its lending income to keep growing in 2025 in Mexico and Spain after solid underlying results in the third quarter were somewhat overshadowed by a lower contribution from its Mexican unit.

Impact of Currency Fluctuations

The second-biggest lender in the euro zone after surpassing on Wednesday 100 billion euros ($117 billion) in market value reported a 4% year-on-year decline in net profit to 2.53 billion euros in the July to September period, compared with the 2.57 billion euros expected by analysts polled by Reuters.

Shareholder Plans and Capital Ratios

BBVA and rival Santander have relied on Latin American markets to offset pressure from lower interest rates in the euro zone but currency depreciations in emerging markets have sometimes impacted results.

Net interest income - the difference between earnings on loans minus deposit costs - rose 13% year-on-year in the quarter to 6.64 billion euros, above forecasts of 6.43 billion euros thanks to solid underlying loan growth dynamics.

At 10.52 GMT, shares in BBVA were down 2.7% after having risen 83% so far this year. Barclays highlighted that a solid NII was not enough to offset higher costs and provisions.

Depreciation in the Mexican peso drove net profit in its main market down 2.8%  though in constant euros it was up 1%. Lending income rose. BBVA maintained its outlook for high-single digit growth in NII in Mexico in 2025.

Net profit in Argentina fell 63% following the decline in the peso, which remains one of the biggest risk factors.

Though net profit in Spain fell 7% on lower trading gains, net interest income rose 4%. BBVA raised its NII outlook for this country to a low-single digit growth from a previously slightly positive outlook backed by loan growth.

Following the collapse of its bid for Sabadell, BBVA is focusing on its four-year plan, which also envisages shareholder distribution of 36 billion euros.

BBVA said it would resume pending shareholder remuneration of 993 million euros from October 31 and would launch a "significant" additional share buyback later.

Net profit in Turkey rose almost three-fold backed by higher lending income and the bank stuck to its previous guidance of reaching net profit below 1 billion euros in 2025.

BBVA's fully-loaded core-tier 1 capital ratio, the strictest measure of solvency, rose to 13.42% as of end-September from 13.34% as of end-June.

($1 = 0.8575 euros)

(Reporting by Jesús Aguado; Editing by David Latona, Tomasz Janowski and Chizu Nomiyama )