Spain's number two bank BBVA posted an 11.6 percent rise in first-half net profit on Monday, in line with forecasts, as Latin America and wholesale banking softened the impact of a sharp slowdown at home. BBVA said recurrent net profit totalled 2.93 billion euros ($4.6 billion), slightly ahead of a forecast of 2.91 billion in a Reuters poll of 10 analysts.
A sharp economic slowdown in Spain, and particularly in the debt-heavy construction sector, has punished domestic banks' results although BBVA's size and global reach means it is seen less as a Spanish victim than a possible buyer of other banks.
BBVA Chief Executive Jose Ignacio Goirigolzarri brushed off take-over talk that did the rounds last week, saying the bank was "focused on generating organic results". He added that BBVA's global reach was paying dividends as more US and European companies turned to its wholesale banking unit to help fund business in Latin America where the bank has a wide retail presence.
BBVA stock was down 0.9 percent at 0928 GMT at 11.89 euros while the DJ Stoxx index of European bank stocks was down 1.2 percent. As one of the few banks to have no subprime exposure, BBVA stock has outperformed European rivals by 3 percent this year but it trades at a discount at about 6.5 times forecast 2009 results against an average of 7.3 percent on worries about the economies of its main markets.
BBVA said its group non-performing loan rate rose to 1.15 percent in June from 0.86 percent a year ago but at its Spanish and Portuguese arm, bad loans rose to 1.22 percent, towards the higher end of levels booked by smaller rivals last week.
Chief Financial Officer Manuel Cid said consumer finance was seeing the biggest jump in defaults, up 3.5 percent, while its mortgage default rate was 0.96 percent. While BBVA's overall loan book rose 16 percent, its Spanish retail network cut loan growth back to 4.4 percent, another sign of the slowdown and banks' growing reluctance to lend. Despite those debt issues, net profit at BBVA's Spanish and Portuguese arm rose 15.5 percent to 1.34 billion euros.
In Mexico net profit rose 20.1 percent and in the rest of Latin America it climbed 17.6 percent although the dollar's drop squeezed growth to about 7.5 percent at both units in euro terms. Together they made up 44 percent of group net profit. BBVA has recently turned its expansion plans towards new markets, buying four banks in the United States and a stake in China's CITIC Bank.