By Jesús Aguado
MADRID (Reuters) -Spain’s BBVA on Tuesday said its first-quarter net profit rose 23% and beat forecasts thanks to a solid performance in Spain, where it aims to buy smaller rival Sabadell, to reduce its reliance on Mexico, its main market.
BBVA, which shocked Spain last May when it turned hostile in its pursuit of Sabadell with a more than 12 billion euros ($12.84 billion) bid at the time, wants to create a bank with over 1 trillion euros in total assets.
Spain’s competition watchdog CNMC is set to approve BBVA’s proposed acquisition Sabadell as early as this week.
The proposed bid comes as Spanish banks have been looking for ways to increase revenue as a boost from high rates begins to fade.
“The integration project with Banco Sabadell represents a great opportunity to build a stronger, more competitive and more profitable bank,” BBVA’s CEO Onur Genç said in a statement.
The fifth-biggest euro zone lender by market value booked a net profit of 2.7 billion euros ($3.08 billion) in the January to March period, above the 2.42 billion euros expected by analysts polled by Reuters.
At 0731 GMT, shares in BBVA were 1.2% higher compared to a flattish performance at Spain’s blue-chip index Ibex-35.
In Mexico net profit in fell 7.6% partly due to the depreciation of the Mexican peso at a moment when the country braces for a radical shift in U.S. tariff trade policies.
Higher earnings and revenue helped BBVA lift its return-on-tangible equity ratio (ROTE), a measure of profitability, to 20.2% in the quarter from 19.7% at end-December and the bank maintained its forecast to achieve profitability levels similar to those of 2024.
Overall net interest income, the difference between earnings on loans minus deposit costs, fell 1.7% year-on-year in the quarter, due to pressure from lower rates though revenues grew 13.5% on the back of loan growth.
In Spain net profit rose 43.8% underpinned by a solid macroeconomic growth and lower impact from the renewed banking tax.
In the quarter, BBVA booked 85 million euros against the levy after it adjusted the impact on a linear quarterly basis, in contrast to the previous year when the entire 285 million euros were booked in the first quarter.
In Turkey, net profit rose 9.7% to 158 million euros but fell short of expectations of meeting the bank’s target of a net profit of 1 billion euros by the end of 2025, said Nuria Alvarez, an analyst at Madrid-based brokerage Renta 4.
BBVA’s CFO said it expects its Turkish unit Garanti to close with a net profit of “somewhat” below 1 billion euros in 2025.
In terms of solvency, BBVA managed to lift its core tier-1 capital ratio to 13.09% at end-March from 12.88% at end-December.
($1 = 0.8784 euros)
(Reporting by Jesús Aguado; additional reporting by Emma Pinedo; editing by Inti Landauro and David Evans)
