BBVA's third-quarter net profit rises 19% thanks to Mexico, higher lending income

BBVA Reports 19% Rise in Third-Quarter Net Profit on Mexico, Lending Gains

BBVA's Third-Quarter Financial Performance Overview

By Jesús Aguado

Strong Performance in Mexico Drives Profit Growth

MADRID, Oct 29 (Reuters) - Spain's BBVA on Thursday said its third-quarter net profit rose 19% year-on-year, driven by a solid performance in Mexico, its main market, and overall higher lending income offsetting a rise in provisions and lower profits in Spain.

Net Profit and Analyst Expectations

The second-biggest bank in the euro zone by market value booked a net profit of €3.02 billion ($3.37 billion) in the July-to-September period, roughly in line with the €3.01 billion expected by analysts polled by Reuters.

Latin American Markets and Currency Impact

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

Mexican Peso Strength Supports Earnings

This time, however, the strengthening of the Mexican peso against the euro compared with the same quarter last year supported earnings in that market.

Regional Profit Breakdown and Lending Trends

Net profit rose 19% year-on-year in the third quarter there, supported by a similar rise in lending income, while in Spain, BBVA's second-biggest market, net profit fell 5.5% as trading income fell 94%.

Loan-Loss Provisions and Risk Metrics

Overall, loan-loss provisions rose 24% year-on-year in the quarter to €1.95 billion compared with analysts' forecasts of €1.86 billion, following a rise in customer loans.

The cost of risk, which measures loan-loss provisions as a share of total loans, rose 1 basis point in the quarter to 1.44%.

Net Interest Income Growth

Net interest income, the difference between earnings on loans and deposit costs, rose 22% year-on-year in the quarter to €8.08 billion, above analysts' forecasts of €7.88 billion, driven by solid underlying loan growth.

($1 = 0.8959 euros)

(Reporting by Jesús Aguado; additional reporting by Emma Pinedo; Editing by David Latona and Tomasz Janowski)