January 31, 2014 / 12:10 AM / 5 years ago

BBVA, Spanish peers post 2013 earnings recovery

MADRID/BARCELONA - (Reuters) - Spain’s second-biggest bank BBVA (BBVA.MC) and smaller rival Caixabank (CABK.MC) on Friday posted jumps in 2013 profits, as provisions against soured property loans fell and income from lending began to improve at the end of the year.

A woman and her dog walk out of a BBVA bank branch in Madrid July 31, 2013. REUTERS/Susana Vera

BBVA’s results echoed Santander’s (SAN.MC) on Thursday which showed encouraging signs that Spanish banks’ core lending businesses are on the mend, even though they still face challenges and bad debts continued to rise in the fourth quarter of 2013.

Spain’s economy grew for a second straight quarter in the final three months of 2013, data on Thursday showed, and that recovery should start feeding through to the country’s banks even though unemployment remains high.

“The outlook for 2014 has improved significantly,” BBVA Chairman Francisco Gonzalez said in a statement, adding that the bank saw credit demand rising.

A drop in deposit rates throughout 2013 is also beginning to help banks’ net interest income (NII), which tracks earnings from loans minus funding costs.

BBVA, which makes the bulk of its profit abroad, said NII grew nearly 6 percent to 3.7 billion euros in the October-December period from the previous three months, slightly more than analysts had expected.

It made a 849 million euro loss in the fourth quarter, however, after it took charges from the sale of a 5 percent stake in China’s CITIC Bank Corp (601998.SS).

For the whole of 2013, BBVA’s net profit was 2.2 billion euros, up by a third on 2012 levels. In Mexico, one of its key markets, net profit rose 7 percent to 1.8 billion euros.

Barcelona-based Caixabank also posted improving net interest income in the fourth quarter compared to the third, and its 2013 profit more than doubled to 503 million euros.

Additional reporting by Sonya Dowsett in Madrid and Andres Gonzalez in Barcelona. Editing by Jane Merriman

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