BBVA 4Q Net Profit Jumps On Lower Provisions; Boosts Capital

Banco Bilbao Vizcaya Argentaria SA (BBVA) Wednesday said net profit jumped in the fourth quarter as it recovered from the hefty write-downs it took a year earlier, helped by robust growth in Mexico and South America, which offset weaker numbers in Spain.

The bank, Spain's second-biggest by assets behind Banco Santander SA (STD), said net profit was EUR939 million in the quarter, up from EUR31 million in the fourth quarter a year earlier. At the end of 2009, BBVA cleaned up its books by front-loading charges on part of the loan book that it deemed problematic, even if it was still performing.

That move allowed the bank to report a decline in bad loans at the end of the year. Its non-performing loans equalled 4.1% of total loans, down from 4.3% a year earlier.

However, like other Spanish banks, lending margins came under pressure due to higher funding costs and still sluggish demand for loans in Spain.

Net interest income in the quarter fell 13% to EUR3.14 billion, the bank said.

A Dow Jones Newswires survey of 10 analyst on average estimated net profit at EUR934 million, and net interest income at EUR3.15 billion.

For the full year, BBVA said net profit was EUR4.61 billion, up from EUR4.21 billion in 2009.

BBVA also boosted its buffer for potential losses significantly, raising core capital to 9.6% from 8% a year earlier. The lender in the fourth quarter issued new shares to pay for a 24.9% stake in Turkish bank Turkiye Garanti Bankasi AS (GARAN.IS). Once that transaction is completed, BBVA's capital ratios would fall back to 8.6%, it said.

BBVA's shares rose 3.8% Tuesday to close at EUR9.31. The stock is up 23% since the beginning of January. Fears that Spain would have to be bailed out by stronger European Union countries have abated in recent weeks, pushing down the yields on Spanish sovereign debt and sparking a rally in the banking sector.

-By Christopher Bjork, Dow Jones Newswires; +34913958123; christopher.bjork@dowjones.com

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