Spain's BBVA Q1 net profit beats forecasts on Mexico performance

1 month ago 31
  • Net profit rises 39% to 1.85 bln euros, above forecasts
  • NII jumps 43% to 5.6 bln in line with analysts' expectations
  • Deposits stable at BBVA, slightly down at Sabadell
  • Net profit at Sabadell falls 4% but beats market forecast
  • Shares rise more than 2% at BBVA and Sabadell

MADRID, April 27 (Reuters) - Spain's BBVA (BBVA.MC) on Thursday posted a 39% rise in first-quarter net profit that beat forecasts due to a solid performance in its main market Mexico, and reported stable customer deposits despite banking sector turmoil.

BBVA's profit of 1.85 billion euros ($2.04 billion) for the January to March period was above the 1.66 billion euros forecast by analysts polled by Reuters, even though it paid a 225 million euros Spanish banking levy.

The result came as Spanish competitor Sabadell (SABE.MC) reported a 4% fall in net profit to 205 million euros, which was well above the 138 million euros expected.

Shares in BBVA and Sabadell rose around 2% at 0752 GMT.

As with other European banks, both benefited from a rise in lending income thanks to higher interest rates.

At BBVA, net interest income (NII), or earnings on loans minus deposit costs, rose 43% year-on-year to 5.6 billion euros in the quarter, while NII at Sabadell rose 28% to 1.1 billion euros. Both were in line with forecasts.

The focus has recently shifted towards cash ratios at lenders after the last month's collapse of Silicon Valley Bank and shotgun merger between UBS and Credit Suisse, the biggest turmoil to hit the sector since 2008.

At BBVA, customer deposits rose 0.4% compared to the end of the previous year, but were down 1.5% at Sabadell.

BBVA finished March with a liquidity coverage ratio (LCR) of 184% compared to 159% at the end of December, while Sabadell's was at 220%, down from 234%.

Like larger rival Santander (SAN.MC), BBVA has been expanding in emerging economies to boost income.

In Mexico, BBVA's net profit rose 65%, while income from lending increased by 48%. NII rose 38% in Spain.

In Turkey, where BBVA shifted to hyperinflation accounting in 2022, the lender booked profit of 277 million euros compared to a loss of 76 million euros in the same quarter last year due to positive business dynamics and lower taxes.

However, net interest income in Turkey fell 3.7% in the quarter following new regulations that weighed on banks' books.

($1 = 0.9048 euros)

Reporting by Jesús Aguado, editing by Inti Landauro

Our Standards: The Thomson Reuters Trust Principles.

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