Magazine article American Banker

2Q Earnings: BBVA U.S. Unit Boosts Parent

Magazine article American Banker

2Q Earnings: BBVA U.S. Unit Boosts Parent

Article excerpt

Byline: Paul Davis

Banco Bilbao Vizcaya Argentaria SA's U.S. unit experienced deteriorating credit quality during the second quarter, but its contribution to the bottom line at the Spanish banking company has grown since the end of 2007.

BBVA USA's profit fell 1.2% from the first quarter, though it was up 19.1% from Dec. 31, to $128 million. (BBVA did not compare results to a year earlier, since its purchase of Compass Bank in Birmingham, Ala., which created BBVA USA, did not close until last September.)

BBVA said $197.5 million of losses on financial assets and provisions for loan losses contributed to the lower sequential earnings. The $797.8 billion-asset Madrid company said its ratio of defaults to U.S. loans rose 40 basis points from the first quarter and 35 basis points from a year earlier, to 2.37%.

JosAA[c] Ignacio Goirigolzarri, BBVA's president and chief operating officer, said in a conference call that worsening credit in the Jacksonville, Fla., market drove U.S. credit deterioration. Excluding that market, the second-quarter default ratio would have been 1.36%. "We don't think there will be any big increases in our loan-loss provisions in the second half of 2008," he said.

BBVA has maintained "proactive credit management" in the United States, he said, where the average FICO score in its loan book rose 26 points from Dec. 31, to 738. Meanwhile, the company is ahead of schedule on revenue improvements it projected from the integration of its U.S. operations, achieving by midyear 55.3% of the $100 million targeted for this year. …

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