BBVA First-Quarter Net Profit Rises -- Update

Banco Bilbao Vizcaya Argentaria SA (BBVA) said Thursday that net profit rose in the first quarter versus a year earlier as the bank also inched up its capital ratio.

BBVA said net profit was 1.2 billion euros ($1.31 billion) in the first quarter of this year compared with EUR709 million a year earlier, when the bank had a particularly weak quarter because of currency turmoil, weaker trading income and higher costs.

That beat analysts' estimates that BBVA would report a net profit of EUR1.08 billion in the first quarter, according to a poll by data provider FactSet.

The Spanish lender said net interest income in the first quarter was EUR4.32 billion compared to EUR4.15 billion a year earlier.

Net interest income, a key profit driver for retail banks, is the difference between what lenders earn from loans and pay for deposits. That figure came in slightly below analysts' estimates for BBVA's first-quarter net interest income of EUR4.35 billion, according to FactSet.

BBVA's fees and commissions were up both year-on-year and quarter-on-quarter. The lender attributed that increase to a recovery in its wholesale banking activity. Net trading income also improved in the first quarter from a year earlier.

Net profit in Mexico rose in the first quarter to EUR536 million from EUR489 million in the previous quarter. BBVA owns Bancomer, one of the largest banks in Mexico.

The Spanish lender's earnings in the Latin American country have been hit by the drop in the Mexican peso, which fell sharply last year as talk of a potential trade-war between the U.S. and Mexico heated up following the election of President Donald Trump.

"The significant depreciation of the Mexican peso in 2016 has reversed since mid-January 2017, thanks to moderation from the United States with respect to future trade policy and, to a lesser degree, the hedging program implemented" by Mexico's central bank, BBVA said in its earnings report.

Separately, BBVA said it booked EUR177 million in restructuring in the first quarter, mainly in its Spanish banking unit, where BBVA closed 130 bank branches in February as it seeks to cut costs and boost efficiency.

BBVA's capital ratio was 11% in March 2017 compared with 10.9% in December under international regulations known as "fully loaded" Basel III criteria. BBVA, as well as Spanish peer Banco Santander SA (SAN), have among the lowest ratios of major European banks and investors are closely watching how the banks build capital.

BBVA's capital ratio inched up despite the negative impact from its sale of a 1.7% stake in Chinese lender Citic Bank. Also, BBVA increased its stake in one of Turkey's largest lenders, Turkiye Garanti Bankasi, AS, by 9.95% to 49.85%.

Write to Jeannette Neumann to jeannette.neumann@wsj.com

(END) Dow Jones Newswires

April 27, 2017 03:10 ET (07:10 GMT)