By Jesús Aguado
MADRID (Reuters) – Spain’s BBVA on Tuesday posted a 13% rise in third-quarter net profit rose 13% buoyed by higher lending income in its main markets, Spain and Mexico.
The third-biggest euro zone lender by market value booked a net profit of 2.08 billion euros ($2.20 billion) for the July to September period.
The bottom line was slightly better than the 2 billion euros forecast by analysts polled by Reuters despite a 29% increase in loan loss provisions, which came in a bit above expectations.
In an uncertain economic environment, the bank’s cost of risk, which measures the credit risks and potential losses for the bank, rose to 111 basis points (bpd) from 104 bps at the end of June, higher than guidance of around 100 bps for the year.
The bank has relied on Mexico in the past to cope with tough conditions in Europe, but is now also benefiting – like European rivals – from higher interest rates in its home market.
At a group level, BBVA’s net interest income (NII), or earnings on loans minus deposit costs, rose 22.5% year on year to 6.4 billion euros, topping the 6.05 billion expected by analysts.
In Mexico, the bank’s net profit rose 21% while NII climbed 30% supported by higher lending activity despite higher funding costs.
In Spain, net profit rose 75%, while NII was up 62%.
Margins in its home market were helped by higher customer spreads as yields on loans rose 37 basis points (bps) to 4.01%, while rates on deposits climbed just 15 bps to 0.68%.
In terms of solvency, BBVA finished September with a core Tier 1 fully loaded capital ratio, the strictest measure of solvency, of 12.73%, down from 12.99% in June following a 1 billion euro share buyback announced in July.
($1 = 0.9438 euros)
(Reporting by Jesús Aguado; editing by Inti Landauro and Jason Neely)
