Clean sweep

27 January 2010 By Fiona Maharg-Bravo

The Spanish bank’s Q4 profits dived after a spike in provisions and a big goodwill writeoff. BBVA’s realism is welcome, and strong underlying profit generation has cushioned the blow. But the prospect of further deterioration in its home market means more pain may yet lie ahead.

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BBVA said net income in the fourth quarter fell to 31 million euros from 519 million euros a year earlier, nearly 1 billion euros less than consensus estimates. The result was hit by a 704 million goodwill writeoff in the Spanish bank's U.S. franchise.

The lender set aside 1.79 billion euros to cover mounting loan losses, including 200 million euros for properties in Spain, 164 million euros for consumer loans in Spain and Portugal and 73 million euros for credit cards in Mexico.

Nonperforming loans rose to 4.3 percent of total lending in December, up from 3.4 percent in September and 2.3 percent a year earlier.

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