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MADRID — Spanish bank BBVA said Thursday its first-quarter profits dropped 7.3 percent as a poor business climate in its home market offset a marked improvement in Mexico.
The profit figure for Spain's second-largest bank was euro1.15 billion ($1.71 billion), compared to euro1.24 billion in the first quarter of 2010. Despite the profit fall, the bank said the first quarter performance was the best in the last three quarters.
BBVA said the main reason behind the year-on-year decline was a 33.3 percent slide in Spanish profits to euro477 million. Some comfort was provided by the rise in Mexican profits to euro436 this year from euro347 million.
Alongside Mexico, South America and Asia also helped boost the group's gross income in the quarter to euro5.26 billion — again that was the highest in the last three quarters. However, net interest income, which is the difference between interest paid out and interest received, was down 6.2 percent to euro3.18 billion.
"The resilience of our earnings is based on an adequate diversification and on a successful business model," BBVA's President Angel Cano said in a statement. "Emerging markets will continue to play a growing role in the group's earnings."
The bank also said its core capital ratio fell to 8.9 percent from 9.6 percent for the quarter in 2010, after completing the purchase of a 25 percent stake in Turkish bank Garanti in March.
The bank said bad loans as a proportion of the bank's overall lending had dipped to 4.1 from 4.3 percent last year, adding that it was the fifth quarter in a row in which the non-performing assets ratio remained in check.
Spain is battling to emerge from nearly two years of recession that has left the country with more than 21 percent unemployment and a bloated deficit. The country's banks in turn have been hit by lower demand for credit and increasing bad loans.
BBVA's share price was down 1.5 percent at euro8.4 in midmorning trading in Madrid.
