By Jesús Aguado
MADRID (Reuters) -Spain’s BBVA on Thursday said its third-quarter net profit fell 3.7% year-on-year due to the decline of the peso in Mexico and lower trading gains in Spain in an otherwise solid set of underlying results thanks to higher lending income.
The second-biggest lender in the euro zone after surpassing on Wednesday 100 billion euros ($117 billion) in market value booked a net profit of 2.53 billion euros in the July to September period, compared with the 2.57 billion euros expected by analysts polled by Reuters.
However, net interest income – the difference between earnings on loans minus deposit costs – rose 13.2% year-on-year in the quarter to 6.64 billion euros, above analysts’ forecasts of 6.43 billion euros thanks to solid underlying loan growth dynamics.
BBVA and rival Santander have relied in the past on Latin American markets to offset pressure from lower interest rates in the euro zone.
However, currency depreciations in Latin American markets, including the Mexican peso, drove net profit down 2.8% in its main market. In constant euros, net profit was up 1%. Lending income in Mexico was up both in current and constant euros.
Though net profit in Spain fell 7.3%, net interest income rose 4%.
Earlier this month, BBVA failed in its almost 18-month takeover battle for Sabadell in what became one of the country’s most contentious deals in recent years.
Following the collapse of the bid, BBVA said it would focus on its four-year plan, which targets accumulated profits of 48 billion euros and shareholder distribution of 36 billion euros without Sabadell, backed by loan growth in Mexico and Spain.
On Thursday, BBVA reiterated it would resume pending shareholder remuneration worth 993 million euros starting from October 31. It said that as soon as it received authorisation from the European Central Bank, it would launch a “significant” additional share buyback program.
($1 = 0.8575 euros)
(Reporting by Jesús Aguado; Editing by David Latona and Tomasz Janowski)
