Spanish bank BBVA said it had reached the European Banking Authority’s required level of capital strength three months ahead of schedule, despite the difficulties of the Spanish economy.
The bank, which now makes half its profit in Latin America, has increased principal capital as defined by the EBA to 9 per cent of assets from 8.7 per cent at the end of last year, saying that it did so without any strategic asset sales, public aid or dividend cuts.
Under existing Basel II rules, core tier one capital reached 10.7 per cent, compared with 8.9 per cent a year earlier.
Reporting first-quarter results on Wednesday, the bank said net profit fell 12.6 per cent from the same period in 2011 to €1bn. Net interest income was up 13.3 per cent to €3.6bn.
BBVA – which recently bought Unnim, a collection of three former savings banks, or cajas, to strengthen its presence in Catalonia – still needs to boost its provisions for bad Spanish property loans before the end of the year by an amount it estimates at €1.5bn net of tax.
Some other Spanish banks have sought to “front-load” the Spanish provisioning needs in the first quarter.
Caixabank, the Barcelona-based banking business of La Caixa, said it had absorbed in the first three months the entire impact of the new requirements for bad property loans, part of a €54bn nationwide balance sheet clean-up imposed by the centre-right government at the start of the year.
Caixabank had to provide an extra €2.44bn, which it did with profits and the use of its existing €1.83bn generic provisioning fund.
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