* BBVA Q1 revenue 5 bln eur vs forecast 5.3 bln eur
* Q1 profit down 64 pct to 624 mln euros
* Earnings hit by weaker Latam currencies
* Banco Popular Q1 profit falls 40 pct
(Adds Popular earnings, analyst quotes)
By Sarah White and Jesús Aguado
MADRID, April 30 Depreciating South American
currencies cast a shadow over Spanish bank BBVA's
first-quarter results on Wednesday, taking a heavy toll on
revenues despite improving income from Mexico and its home
Spain's second-largest bank, like bigger rival Santander
, relies on Latin America for much of its profit, which
helped to offset losses in its domestic business through the
But foreign exchange volatility is now hitting income from
some emerging markets when converted into euros.
BBVA posted a bigger than expected revenue fall to 5 billion
euros ($6.9 billion), down 7 percent on the first three months
of last year, adding that revenue would have risen 5 percent
without currency fluctuations.
Income declines in South America - including countries such
as politically and economically volatile Venezuela - were
particular drags on the group.
"The main weakness was from Latin America ... as foreign
exchange rates start to catch up with BBVA," Nomura banking
anlayst Daragh Quinn said.
In BBVA's Mexican business, its biggest earnings driver,
profit and revenue did grow from a year ago, but the bank still
missed first-quarter net income expectations at group level.
Profit dropped 64 percent from a year ago to 624 million
euros, though last year's earnings had been boosted by gains
from asset sales.
BBVA shares, which are up nearly 2 percent this year, were
down 1.4 percent to 8.82 euros by 1246 GMT.
Spain's banks are recovering from a six-year property market
slump, which gutted earnings for BBVA and its peers in 2012
because of writedowns on soured real estate loans. Some other
lenders were pushed into bailouts.
BBVA's yearly profit rebounded in 2013 as charges on soured
loans fell, and like Santander it is now looking for an economic
turnaround in it home market to help it to build on that.
The group's bad debts as a percentage of total credit
dropped from quarter on quarter for the first time since 2011,
to 6.6 percent.
Spain's gross domestic product rose at its fastest quarterly
pace in six years in the first three months of the year, data on
Analysts said there were signs of some progress at BBVA, and
its Spanish profit - the second-biggest contributor to group
earnings behind Mexico - grew nearly threefold to 386 million
euros, excluding one-off gains from disposals.
"Though heavily boosted by (bond) trading income this
quarter, Spain is starting to contribute more positively for
BBVA," researchers at Credit Suisse said in a note.
Growing bond trading income at a group level could also help
to offset further South American pain, analysts said.
A full Spanish turnaround may take time, however.
BBVA and smaller local peer Banco Popular, which
also reported results on Wednesday, said their first quarter net
interest income in the country, or earnings from loans minus
funding costs, had fallen versus a year ago.
"The weakness of the net interest income is still the area
to watch," Nuria Alvarez, banking analyst at Spanish brokerage
Renta 4, said of Popular.
Shares in Popular, the country's fifth-biggest bank by
market value, were down 3.5 percent at 5.30 euros. Its
first-quarter net profit fell 40 percent year on year to 63
million euros, beating forecasts thanks to lower than expected
provisions against losses.
BBVA was also hit by a Spanish court ruling that forced it
to remove mortgage clauses that limited interest rate falls. The
bank said that had cost it around 150 million euros in net
interest income for the period.
($1 = 0.7237 euros)
(Editing by David Goodman)