BBVA posts fourth-quarter profit

Banco Bilbao Vizcaya Argentaria, Spain's second-biggest bank, swung to a fourth-quarter profit, beating estimates on higher returns in its home market and Mexico.

BBVA’s quarterly net income of €689 million compares with an €849 million loss in the same period a year ago when the bank took a charge for reducing its investment in China, the lender said in a filing to regulators on Wednesday.

Profit in the period beat the €588 million average estimate of 13 analysts.

BBVA, based in Bilbao, Spain, relied on the recovery of its domestic market to help improve its profit as it reorganised its international business.

In the fourth quarter, the bank led by chairman Francisco Gonzalez, boosted its stake in Turkish lender Turkiye Garanti Bankasi to further diversify its earnings beyond its core Spanish and Latin American markets.

“It has been a difficult year but a good one,” Mr Gonzalez said in a statement. The bank is now in an “optimal situation to face the new circle of growth and transformation of the business.”

The bank aims to pay its dividend entirely in cash by the end of 2017, chief operating officer Angel Cano said .

BBVA will seek approval from its shareholders at the annual general meeting to pay this year’s dividend half in cash and half in scrip, Mr Cano said.

BBVA shares gained as much as 4.7 per cent and were up 3.2 per cent as of noon in Madrid, valuing the bank at about €51 billion .

Share rise

The shares are up 4 per cent this year, more than the 2.2 per cent gain in the benchmark STOXX Europe 600 Banks Price Index.

"These have been good results for BBVA, with good performance in particular from Mexico," Daragh Quinn, an analyst with Nomura International in Madrid, said.

“Net income was lower than expected because of additional restructuring charges in Spain.”

He has a buy recommendation on BBVA. The bank announced in October it would take a charge of up to €290 million euros to invest in online banking. Bad loans as a proportion of total loans fell to 5.8 per cent at the end of December from 6.1 per cent in September, the bank said.

Operating income at the banking business of the Spanish unit jumped to €1.03 billion in the quarter compared with €629 million euros a year ago, while losses at the real-estate unit in Spain fell.

Mr Cano told analysts losses at the unit will shrink this year and to be almost zero by 2017. Net profit in Mexico, the second-largest market for the lender, increased by 9 per cent in the quarter to €558 million euros in constant exchange rate. Net interest income, or revenue generated from the difference between what banks charge for loans and pay for funding, rose to €4.25 billion.

- Bloomberg