BBVA Profit Falls Slightly on Lower Trading Income -- Update

Banco Bilbao Vizcaya Argentaria SA said its Mexican unit had posted strong growth in the second quarter, weathering concerns that protectionist policies from U.S. President Donald Trump would hurt the Latin American country's economy.

BBVA on Thursday said net profit overall at the Spanish bank in the second quarter fell slightly to 1.1 billion euros ($1.3 billion), compared with 1.2 billion euros a year earlier in part because of a decline in trading income.

The Spanish lender said net interest income rose in the second quarter to 4.48 billion euros, compared with 4.2 billion euros a year earlier.

BBVA's capital ratio was 11.1% in June, compared with 11.01% in March under international regulations known as "fully loaded" Basel III criteria. BBVA, as well as Spanish peer Banco Santander SA, have among the lowest ratios of major European banks and investors are watching how it builds its capital.

More favorable currency tailwinds this quarter compared with previous quarters helped BBVA in Mexico, where it owns the country's largest bank. Net profit rose in the second quarter to 544 milllion euros, compared with 479 million euros a year earlier. Net interest income was also up. Bancomer, as its Mexican bank is called, is BBVA's biggest profit driver.

The election of Mr. Trump as U.S. president had battered the Mexican currency and hit BBVA's earnings when translated from pesos into euros.

Mr. Trump said he planned to build a wall at the U.S.-Mexican border and pull the U.S. out of the North American Free Trade Agreement. But investors' initial fears those policies would be swiftly enacted and would hurt the Mexican economy haven't panned out, and the peso has strengthened.

The "Trump effect," said BBVA CEO Carlos Torres on Thursday, hasn't been as positive for the U.S. economy as the most optimistic investors had expected and it also hasn't been as negative for Mexico as the most pessimistic analysts had anticipated.

BBVA expects Mexico's economy to grow by 1.6% this year compared with last, above the estimates they had at the beginning of the year, he said.

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

(END) Dow Jones Newswires

July 27, 2017 15:23 ET (19:23 GMT)