MercoPress. South Atlantic News Agency

Spain’s second biggest bank boosted by strong Latin American profits

“Adequate geographical diversification”, recommends BBVA CEO Angel Cano

BBVA, Spain's second-biggest bank, reported on Wednesday a full year 9.4% net profit increase in 2010 as solid results from Latin America offset continued weakness in its domestic market.

The bank posted a net profit of 4.61 billion Euros for the year compared to 4.21 billion euros in 2009.

“The group achieved this result supported by its adequate geographic diversification,” BBVA said in a statement.

Like other Spanish banks, BBVA is struggling with an economic downturn in Spain, brought about by a collapse of the country's once booming property market which has led them to increase provisions against bad loans.

The bank's net profits in Spain and Portugal fell by 9.0% to 2.07 billion Euros but this was offset by an 11.9% jump in net profit in Mexico to 1.71 billion Euros. In South America the bank recorded a net profit of 889 million Euros, 16.5% increase over 2009.

Analysts at Caja Madrid Bolsa estimate that this year between 60 and 65% of BBVA's profit and loan account will be generated outside of Spain.

“Nearly 50% of our revenues come from emerging markets,” said Angel Cano, BBVA chief executive.

In a clear bid to further diversify away from its troubled home market, BBVA in November announced it would buy a 24.9% stake in Turkeye Garanti Bankasi, one of Turkey's biggest banks.

Non-performing loans as a percentage of the total fell to 4.1% at the end of 2010, down from 4.3% at the end of 2009 while its core capital ratio was 9.6%, up from 8%at the end of 2009

During the final quarter of 2010, BBVA posted a net profit of 939 million Euros compared to 31 million Euros during the same period the previous year when its results were hurt by hefty write-downs.