BBVA’s earnings fall 47 percent due to real estate asset provisions

BBVA, Spain’s second-biggest bank, suffered a fall of 47.3 percent in its earnings in the first nine months of the year to 1.656 billion euros as it upped provisions by 2.869 billion to cover possible losses from its exposure to the ailing real estate sector.

The bank said Thursday that it had made a loss in its Spanish operations of 532 million euros. However, factoring out the increased provisions required by the government, it would have made a profit of 848 million euros, down 32.1 percent from a year earlier. That was slightly more than the contribution from its Eurasia operations, which were given a push by Turkey, and well below the 1.3 billion Mexico brought in.

The bank’s non-performing loan ratio in Spain rose to 6.5 percent as of the end of September, in part due to the acquisition of troubled lender Unnim, which pushed the figure up by 0.8 percentage points. The ratio for the group as a whole rose to 4.8 percent from 4.1 percent a year earlier. Total loan defaults amounted to 20.1 billion euros, 3.6 billion more than at the end of June, with Unnim accounting for three billion.

BBVA has now covered about two-thirds of the provisions imposed by the government in two decrees approved earlier this year and will have to set aside a further 1.568 billion euros in the last quarter of the year.

Net interest income in the nine months was up 16 percent from a year earlier at 11.220 billion euros. Loans were up seven percent at 377.383 billion euros, while deposits rose 2.4 percent to 288.709 billion euros.