Spain’s BBVA confident bad loans are out

City A.M. Reporter
Spain’s second-largest bank BBVA stabilised bad debts in the first quarter and yesterday said it was confident these have peaked ahead of its rivals, adding weight to the recovery for Spain’s property-hit lenders.

BBVA also reassured investors it had little exposure to Greece and Portugal, following credit rating agency Standard & Poor’s downgrade of Greek and Portuguese debt on Tuesday. The ever growing Greek debt crisis has pressured Spanish banks, rekindling fears Spain’s sovereign debt rating could be cut.

The results confirmed the bank’s surprise decision to set aside hefty provisions at the end of 2009 for potential property-related bad loans had paid off, its chief executive told analysts yesterday.

“We anticipated for potential doubtful assets with hefty provisions, which has meant our bad loans peaked at that point compared with other banks which are forecasting the peak in the second or third quarters,” Angel Cano said.

Spain’s third largest bank Popular said on Tuesday it expects bad loans to peak below 5.5 per cent by mid-year. “The bank’s message to the market about its credit quality is beginning to gain foundation,” Banesto Bolsa analysts said. The improvement in net new bad loans was particularly noticeable in those markets which have suffered the most in the financial crisis, namely Spain and the US.