Spanish banks beat forecasts despite lending challenges

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Spanish banks BBVA and Caixabank today bettered first-quarter net profit forecasts helped by overseas markets which offset a squeeze on lending income at home.

BBVA reported a 12% rise in net profit to €1.34 billion thanks to Mexico, its main market, where it makes 35% of its profits, and a solid performance in the US.

That topped the €1.19 billion expected by analysts.

Caixabank, which bought Portugal’s second-biggest lender BPI in February 2017, posted a net profit of €704m, exceeding the €560m expected by analysts.

BBVA managed to increase its net profit in Mexico by 5.5%, by 17% in Spain and by 51% in the US, where its makes 12% of its profit.

State-controlled Bankia posted a 24.5% fall in net profit to €229m on lower trading earnings, though that topped the €223m expected by analysts in a Reuters poll.

Lender are struggling to lift earnings on loans in Spain as interest rates remain at historic lows.

At BBVA net interest income, or earnings on loans minus deposit costs, fell 6% on a quartererly basis to €4.29 billion, short of the €4.34 billion expected by analysts.

Caixabank’s lending net income rose 0.6% quarter on quarter to €1.2 billion, in line with analysts’ forecasts.

Bankia also saw higher lending income, buoyed by the integration of smaller state-lender BMN.

The three lenders also managed to keep their non-performing loans under control and reduce provisioning against soured property loans.

Spain’s economic recovery and a property rebound has allowed most of banks to tackle toxic balance sheets faster than rivals in Italy.

BBVA struck a deal in November to sell 80% of its real estate business to US fund Cerberus for a net value of €4 billion.