BBVA earnings dip as it starts to write off bad housing loans

 
Tim Wallace
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SPANISH bank BBVA surprised analysts by reporting a 35 per cent fall in net profits in the first half of the year – a lower drop than analysts had expected.

Although the bank is one of the three believed to be strong enough to survive without Spanish government help, it still had to write off €1.43bn (£1.1bn) in provisions against losses on bad housing loans, bringing profits in the six-month period down to €1.51bn.

Those provisions make up roughly one-third of the total it will be obliged to set aside.

Unusually for the troubled sector, headcount at BBVA increased, rising 2.7 per cent on the year to 112,605, largely driven by an expansion in the Americas.

Latin American profits rose sharply, up 34 per cent from €774m in the first half of 2011 to €1.024bn, partly offsetting losses elsewhere.

Wage and salary expenditure rose nine per cent on the year to €2.161bn, taking average compensation per worker to €19,191 for the six-month period.

The bank also reported it is on track for its Basel III core tier one capital ratio to be in excess of nine per cent by December 2013.