Spanish financial services firm Banco Bilbao Vizcaya Argentaria SA (BBVA: Quote) reported Tuesday a sharp decline in second-quarter profit, reflecting provisions as required under new Spanish regulation.
BBVA said it has set aside 1.43 billion euros for provisions included in the financial reform, which is nearly one-third of the total 4.64 billion euros. The Spanish financial reform affects mainly real estate assets and portfolios.
Ángel Cano, president and COO of the company said, "Despite the complex environment and some extraordinary regulatory requirements, BBVA's revenues continue to grow in robust manner, generating profit."
Quarterly net interest income increased to 3.74 billion euros from 3.21 billion euros a year earlier. Retail deposits including promissory notes rose 3.2 percent during the quarter.
BBVA noted that in Spain, it offset weak banking business and adverse market environment with adequate price management.
In the second quarter, net attributable profit declined to 505 million euros from 1.19 billion euros in the previous year. On an adjusted basis, net attributable profit was 1.25 billion euros, compared to 1.27 billion euros in the prior year.
However, operating income improved to 3.27 billion euros from 2.68 billion euros in the preceding year. Recurring operating income for the quarter, excluding net trading income and dividend income, grew 19.7 percent from last year.
In the first half, the company's net attributable profit declined 35.4 percent to 1.51 billion euros from 2.34 billion euros in the previous year, mainly due to impact of the Spanish financial reform. Net attributable profit per share, as adjusted, was 0.45 euros, lower than 0.52 euros per share last year.
Excluding provisions, net attributable profit for the half-year was 2.37 billion euros, 5.1 percent lower than the year-ago period. Operating income increased 9.8 percent to 6.13 billion euros.
Net interest income grew 14.9 percent year-over-year to 7.34 billion euros, reflecting balanced diversification between emerging markets and developed markets, the company stated. Emerging markets comprised 56 percent of the Group's net interest income and developed markets 44 percent. .
Net fee and commission income increased 6.6 percent, while net trading income dropped 23.8 percent from a year ago.
At the end of June, Tier 1 capital ratio was 10.8 percent, compared to 9.8 percent in the same period last year.
In Madrid, BBVA is currently trading at 5.41 euros, up 0.8 percent, on a volume of 12.3 million shares. In US, BBVA closed Monday's regular trading session at $6.56.
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by RTT Staff Writer
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