Spanish financial services firm Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) Friday reported a profit in its fourth quarter, benefited by strong performance in gross income. The company also agreed to sell its Chilean 's private pension fund AFP Provida S.A. (PVD: Quote) to insurer MetLife, Inc. (MET: Quote) for about $2 billion.
BBVA's latest sale is part of its previously announced plans of selling pension businesses in Mexico, Chile, Colombia, and Peru in order to raise capital and to focus on its consumer banking business. In December, BBVA agreed to sell its stake in Colombian pension fund for $530 million, and earlier to that, it had agreed to sell its stake in Mexico's Administradora de Fondos para el Retiro Bancomer S.A. De C.V. for $1.6 billion.
In a statement, MetLife said it agreed to buy BBVA's 64.3 percent stake in Provida, the largest private pension fund administrator in Chile, under a public cash tender offer for all Provida shares.
The deal also includes a small asset management business in Ecuador, while it excludes Provida's minority stakes in other businesses in Mexico and Peru.
The insurer expects the deal to significantly contribute to its emerging market strategy of capitalizing on growth opportunities, and to transform business in Chile. The acquisition would provide operating earnings accretion of approximately $0.05 per share in 2013 and $0.15 per share in 2014. The transaction is anticipated to close in the third quarter of 2013.
MetLife also expects the acquisition to boost its operating earnings from emerging markets to approximately 17 percent from the current 14 percent. Provida had $45.3 billion in assets under management and 1.8 million contributors as of September 30.
MetLife Chairman, President and Chief Executive Officer Steven Kandarian said, "With this acquisition, MetLife is delivering on a key component of our strategy - expanding our presence in emerging markets. The acquisition also supports our focus on shifting our business mix to less capital intensive products. We expect it to be immediately accretive to earnings."
BBVA, in its recently concluded fourth quarter, reported net attributable profit of 20 million euros, as against a 139 million euros loss last year. Basic earnings per share were 0.01 euros, versus a loss of 0.03 euros in 2011.
The latest quarter results included 1.04 billion euros in charges, comprising impairment of assets related to the real-estate sector in Spain and the badwill generated by the Unnim operation, compared to prior-year's charge of 1.17 billion euros.
BBVA noted that high generation of recurrent revenue and a large contribution from net trading income has enabled the firm to absorb a significant increase in provisions in Spain to cover the gradual impairment in portfolios and real estate assets.
Adjusted net attributable profit, which excluded items, edged up to 1.06 billion euros from prior-year's 1.03 billion euros, while adjusted earnings per share dropped to 0.19 euros from 0.20 euros a year before.
In the quarter, gross income was 5.86 billion euros and net interest income was 3.91 billion euros, both higher than last year.
According to the company, positive performance in income from fees and commissions was underpinned by expanding activity in emerging economies and also the incorporation of Garanti. BBVA added that it continued to generate sound earnings despite the difficult environment.
On the NYSE, MetLife shares closed Thursday's trading at $37.34, up 0.24 percent, while BBVA declined 3.61 percent to settle at $9.88.
AFP Provida shares declined 0.97 percent to close at $109.90 on Thursday.
by RTT Staff Writer
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