BBVA's Q1 profit boosted by Mexico and Spain, provisions rise
BBVA Reports Strong First-Quarter Results Amid Rising Provisions
By Jesús Aguado
Q1 Net Profit Surpasses Expectations
MADRID, April 30 (Reuters) - Spanish bank BBVA beat forecasts on Thursday with a 10.8% year-on-year increase in first-quarter net profit, as a strong performance in Mexico and Spain offset higher provisions.
The euro zone's second-biggest lender by market value posted a net profit of 2.99 billion euros ($3.49 billion) for January to March, above the 2.79 billion euros expected by analysts polled by Reuters.
Share Buyback Programme and Strategic Distributions
BBVA also said it would launch a 1.46 billion euro share buyback early next week, the final tranche of its 4 billion euros programme under a four-year strategy that envisages distributions of 36 billion euros.
Regional Performance Highlights
Latin American Markets and Currency Impact
The bank has previously relied on Latin American markets to offset pressure from lower interest rates in the euro zone, though currency depreciations in emerging markets have sometimes weighed on results. This quarter, however, appreciation of the Mexican peso supported earnings.
Net Interest Income Growth
Net interest income, the difference between interest earned on loans and deposit costs, rose 17.8% year-on-year to 7.54 billion euros, driven by solid loan growth and above analysts' forecast of 7.23 billion euros.
Mexico: Strong Profit and NII Growth
In Mexico, net profit rose 9.3% with NII up 13%.
Spain: Profit Increase Despite Higher Costs
Net profit in Spain increased 8.1% year-on-year, supported by solid economic growth in its home market, which offset a 9.7% rise in costs related to voluntary layoffs.
Provisions and Profitability Metrics
Loan Loss Provisions and Cost of Risk
Loan loss provisions rose 31.4% year-on-year to 1.82 billion euros, above analysts' forecast of 1.73 billion euros. Cost of risk, a gauge of managing potential losses, rose 15 basis points to 1.54%.
Revenue Growth and ROTE Improvement
A 14% increase in revenue helped lift BBVA's return-on-tangible equity ratio (ROTE), a key measure of profitability, to 21.7% from 19.3% at the end of December. ($1 = 0.8578 euros)
(Reporting by Jesús Aguado. Editing by Joan Faus and Mark Potter)
