UPDATE 3-Spain's BBVA Q2 profit beats forecasts on lower provisions

* BBVA books Q2 net profit of 701 mlns vs consensus of 361 mlns

* CEO expects activity to continue benefiting from better economy

* Caixabank report loss of 605 mlns in Q2 on restructuring charges

* BBVA and Caixabank set new dividend policy (Adds results from Caixabank)

MADRID, July 30 (Reuters) - Spain’s BBVA posted a 10% rise in second-quarter net profit on lower provisions as the global economy recovers from the pandemic while rival Caixabank booked a loss due to restructuring charges.

BBVA reported a net profit of 701 million euros ($832.65 million) in the quarter. Analysts polled by Reuters had expected the bank to book a net profit of 361 million euros.

Total impairments fell to 656 million euros compared to 1.4 billion euros in the same period a year ago.

“While we are still in a period with some uncertainty, I’m optimistic activity and risk indicators will continue to benefit from the economic improvement in virtually all of our markets,” BBVA’s Chief Executive Officer Onur Genc said in a video posted on the bank’s website.

BBVA results also were boosted by the sale of its U.S. unit, which made a positive contribution of 103 million euros ($122.3 million) during the quarter, and a solid performance in Mexico, its main market, where net profit more than doubled compared to the second quarter a year ago.

In Turkey, net profit rose 41% year-on-year in the second quarter.

Overall, BBVA’s cost of risk, which measures the premium of managing credit risks and serves as an indicator for potential future losses, fell to 100 basis points from 117 points in the previous quarter. It now expects cost of risk to end the year at 110 basis points from 155 points at end-2020.

At Caixabank, restructuring charges related to its Bankia acquisition led to a loss of 605 million euro in the quarter.

Caixabank revised its annual cost savings upwards to 940 million euros from 770 million euros initially.

Shares at BBVA were flat and fell 2% at Caixabank, on a day, however, when European stocks slipped on concerns about the fast-spreading Delta variant.

Broker Jefferies welcomed a solid set of results from Mexico at BBVA. JB Capital highlighted higher synergies at Caixabank but also weaker lending income.


After the ECB announced a lifting of restrictions starting on Sept. 30, BBVA now intends to resume its dividend policy in 2021, with a cash payout of 35-40% of profit.

Caixabank said it would distribute a cash dividend of 50% of consolidated net profit against 2021 results.

To cope with the pandemic, BBVA last year sold its U.S. business, generating more than 8 billion euros to focus on cost cutting measures in Spain and potentially buy back as much as 10% of its outstanding shares.

Genc said in the video that the bank had “already initiated the necessary steps to launch a share buy-back program of up to 10% starting in the fourth quarter of this year.”

In June, BBVA finished with a fully loaded core tier-1 capital ratio of 14.17%, taking into account the positive impact from the sale of its U.S. unit, compared with 11.88% as of end-March. Taking into consideration the share buy-back, BBVA’s proforma capital ratio as of June stood at 12.89%.

Overall, net interest income, a measure of earnings on loans minus deposit costs, fell slightly at both lenders in the second quarter against the same quarter last year but was in line with forecasts from analysts. Caixabank’s figure was down on a proforma basis taking into account Bankia in the second quarter of 2020.

$1 = 0.8419 euros Reporting by Jesús Aguado; additional reporting by Emma Pinedo; editing by Inti Landauro, Kim Coghill and Joe Bavier