MADRID Feb 1 BBVA, Spain's
second-biggest lender, is expected to report sharply lower
earnings on Friday as growing income from emerging markets will
not be enough to offset losses from soured property assets at
And smaller Spanish banks reporting results on Friday will
fall into the red or see 2012 earnings practically wiped out on
provisions for real estate losses.
Profit for 2012 at BBVA is set fall 44 percent to 1.67
billion euros ($2.3 billion), according to a Reuters poll of 10
Along with bigger peer Santander, BBVA has been able to
better weather Spain's economic turmoil and real estate crash
than many other local lenders, helped by stronger overseas
businesses, in the likes of Mexico and Turkey.
The bank derives 30 percent of its gross income from Spain
and Europe, while South America and Mexico make up 50 percent.
BBVA's big exposure to Mexico, in particular, where it runs
BBVA Bancomer, the country's biggest bank, should help income.
Bad loans in Mexico have not risen as much as in other parts of
Latin America, such as Brazil, where the economy is cooling.
Rising non-performing loans in Brazil have weighed on
Santander, whose 2012 profits more than halved after a spike in
BBVA will not escape problems at home, however, and it still
has 1.6 billion euros of losses to absorb in the fourth quarter
from provisions against Spanish real estate assets, which are
likely to virtually wipe out quarterly profits, analysts said.
Yearly profits at its domestic business will also suffer.
"In Spain, we expect losses of around 700 million euros
because of the big rise in writedowns on bad loans," analysts at
Keefe, Bruyette & Woods said.
Spain's government enforced a clean-up of its banks last
year after a property bubble burst in 2008, though deep
provisions against rotten assets forced weaker lenders to seek
state aid. Four nationalised banks, meanwhile, took 40 billion
euros in European rescue funds.
Spain's economy is mired in recession and unemployment is
rising, with 26 percent of the population now out of work.
Banks whose business is concentrated in Spain will feel the
pain more. Banco Popular, Spain's sixth-biggest lender,
is expected to post a record loss on Friday, while
Barcelona-based Caixabank could see profits fall 74
percent, analysts predicted.
($1 = 0.7367 euros)
(Additional reporting by Jesus Aguado and Robert Hetz; Editing
by Leslie Adler)