BBVA aiming to speed up sale of real estate assets

BBVA, Spain’s second-largest bank, said Tuesday it plans to accelerate the sale of property on its books acquired through foreclosures and foreclosures in lieu in order to clear such assets from its books by the start of 2014.

“The period we estimate for selling \[these assets\] is between 18 and 21 months,” BBVA Chief Operating Officer Ángel Cano said at a presentation of the bank’s earnings for the first six months of the year. Cano said the bank had sold 2,500 property units in the first half of this year, an increase of 40 percent over the same period a year earlier.

“We are going to continue adjusting prices month by month to speed up sales and leave the balance \[on our books\] at zero as soon as possible,” Cano said.

BBVA said its net attributable income in the first half of the year declined 35.4 percent from a year earlier to 1.510 billion euros as it put aside 1.434 billion in provisions to cover potential losses from its exposure to the real estate sector as required under two decrees approved by the government in February and May. The bank needs to make provisions of another 3.2 billion euros to meet the new requirements, and Cano said BBVA aims to do so before the end of this year.

Without the provisions, net profit in the first half would have been down only 5.1 percent at 2.374 billion euros. Cano highlighted the fact that the bank’s revenues continue to grow despite the complex operating environment and new regulatory requirements. Net interest income in the period was up 14.9 percent at 7.340 billion euros, while gross income was up 9.8 percent at 11.41 billion.

BBVA said its non-performing loan ratio at the end of June was steady at 4 percent. Its core capital ratio stood at 10.8 percent. The bank said that even in the most adverse scenario contemplated by independent consultants Oliver Wyman and Roland Berger it would not need additional capital.

“There is a timing issue with the real estate provisioning in Spain but they will get it done,” Bloomberg quoted Daragh Quinn, an analyst at Nomura International in Madrid, as saying. “When you take out the effect of provisioning, the results look pretty good with a strong revenue performance and stable asset quality.”

BBVA’s share price closed down 0.86 percent at 5.324 euros.

BBVA said it booked a net attributable loss from its business in Spain in the first half of 221 million euros as a result of the provisions for the real estate sector and as the domestic economy slipped back into recession. Without the provisions, the bank would have made a net profit of 576 million euros.

In its Eurasian operations, contributions from its affiliate Garanti Bank in Turkey and China Citic Bank boosted net attributable profit by 576 million euros, an increase of 28.9 percent over a year earlier.

Its Mexican unit BBVA Bancomer boosted net income by 865 million euros, an increase of 2.5 percent over a year earlier. Lending was up 10.7 percent as Bancomer added two million customers last year.