CHINA TOPIX

11/02/2024 05:34:12 pm

Make CT Your Homepage

Weak South American Currency Hits BBVA Profit

Banco Bilbao Vizcaya Argentaria (BBVA) President Francisco Gonzalez

(Photo : REUTERS/Andrea Comas)

Spain's second biggest bank, Banco Bilbao Vizcaya Argentaria, reported a 39 percent decrease in its second quarter net profit on Wednesday. This decline was reportedly caused by the weak exchange rates in South America.

The earnings of BBVA fell from US$1.54 billion in 2013 to US$946.4 million. The bank is expected to report its earnings before the stock market opens in Madrid on Thursday.

Like Us on Facebook

Net interest income of BBVA for its second quarter was US$4.8 billion compared with their 2013 income of US$4.96 billion.

The banks second-quarter trading income also suffered, falling to $US571 million or 32 percent compared to 2013.

Francisco Gonzalez, chairman of BBVA, will invest in technology companies in Spain to help the country recover from its losses.

Gonzales bought the lending company, Catalunya Banc SA, including all its 773 branches in a US$1.60 billion deal.

Even with the banks investment, however, Spain's economy is still hurt by the weakening exchange rates in Spain. This resulted in the decline of earnings.

Dara Quinn, an analyst at Nomura International PLC in Madrid, said its difficult to make a "year-on-year" comparison in Latin America because of the highly fluctuating rate of currencies.

Quinn added that although there is an upward trend in the earnings in Spain, the weaker currency is causing the real estate to lose money.

Latin America's profit in 2013 increased by US$631 million because of sales of businesses in Peru and Cambodia. In 2014, Banco Santander SA, the largest bank in Spain, reported a 17 percent gain in earnings while BBVA shares have increased by 5.3 percent.

It is estimated that the total earnings of BBVA in 2014 will be US$35 million, 51 percent higher than in 2013.

Analysts are keeping an eye on BBVA Argentina because it represents nearly 9 percent of the bank's 2013 net profit.

In a statement released by BBVA executives on Wednesday, it said that their branches in the United States, China and Turkey and strongly performing and can counter balance the effect of the weak currency in their regions.

Real Time Analytics