The bank also gained market share in mortgages, increasing its exposure to the country’s troubled property market.
Group pre-tax profits dropped by 21.2 per cent to €4.15bn (£3.61bn), while in Spain pre-tax earnings lost a whopping 38.4 per cent to hit €1.63bn.
The cost of impairments on BBVA’s financial assets in Spain jumped 36 per cent to €1.25bn.
The results are a troubling sign for European retail banks: thus far, the retail side of large integrated lenders had been holding up better than their wholesale sides, but BBVA is predominantly a consumer-led bank.
S&P Equity Research’s Jawahar Hingorani downgraded the bank from “hold” to “sell” after the results, saying: “Spanish exposure (60 per cent of total lending) remains a concern, after an 11.4 per cent decline in net interest income year on year through the third quarter led to net attributable profit declining 38 per cent. [We are] expecting weaker Mexico and US growth as well.”
Net interest income declined five per cent to €9.68bn at the group level.
The bank’s funding position improved on a year ago, however, with its funding gap dropping by €20bn since September 2010.