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MADRID (Reuters) -Spain’s BBVA (BME:BBVA) first-quarter net profit beat forecasts due to strong lending income and performance in Mexico, its main market, while customer deposits remained stable.
The lender reported a 39% year-on-year rise in profit at 1.85 billion euros ($2.04 billion) for the January to March period, above the 1.66 billion euros forecast by analysts polled by Reuters and despite a 225 million euros banking levy.
Banks across Europe are also benefiting from higher interest rates despite fear of recession.
Net interest income (NII), or earnings on loans minus deposit costs, rose 43% year-on-year to 5.6 billion euros in the quarter, in line with expectations.
The focus has recently shifted towards cash ratios at lenders in the aftermath of the biggest turmoil to hit the banking sector since 2008, following the failure of Silicon Valley Bank.
At BBVA, customer deposits rose 0.4% compared to the end of the previous year, with a reduction in demand deposits in Spain, offset by an increase in time deposits in Turkey and South America.
BBVA finished March with a liquidity coverage ratio (LCR) of 184% compared to 159% at the end of December.
Like larger rival Santander (BME:SAN), BBVA has been expanding in emerging economies to boost income.
In Mexico, net profit rose 65%, while income from lending increased by 48%. In Spain net profit fell 9.5% due to the levy though NII rose 38%.
In Turkey, where BBVA shifted to hyperinflation accounting in 2022, the lender booked profit of 277 million euros compared to a loss of 76 million euros in the same quarter last year due to positive business dynamics and lower taxes.
However, net interest income in Turkey fell 3.7% year-on-year in the quarter following new regulations which have weighed on banks’ books.
($1 = 0.9048 euros)
