Slight return

3 February 2016 By Fiona Maharg-Bravo

The Spanish bank ended 2015 on a decent note thanks to shrinking provisions, with net profit up in the fourth quarter. Bad loans should continue to fall. The catch: returns are still too low, capital looks light and GDP growth is slowing in Mexico and Spain.

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BBVA on Feb. 3 reported a 36.5 percent rise in net profit to 940 million euros in the fourth quarter against the same period a year earlier, beating analyst expectations as provisions for bad loans fell. For the year, Spain’s second-largest bank posted a 0.9 percent increase in net profit to 2.6 billion euros. In Spain, net profit rose 21.9 percent in the year to 1.05 billion euros in 2015, excluding the impact of its real-estate arm.

BBVA said net interest income increased 3.9 percent year-on-year in the three months to December to reach 4.4 billion euros, though it was down from the previous quarter. The ratio of non-performing loans fell 20 basis points from the previous quarter to 5.4 percent.

Spain’s second-largest bank said the fully loaded core Tier 1 capital ratio was 10.3 percent at the end of 2015, up 57 basis points in the three months to December.

At 1000 GMT on Feb. 3, BBVA shares were trading down 2.3 percent at 5.5 euros a share, against a 2.6 percent average fall for European banks.

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