Banco Bilbao First-Quarter Profit Seen Falling 12%: Outlook

By Todd White

Madrid, April 29 (<a href=quote.bloomberg.com>Bloomberg) -- The following summarizes first-quarter earnings expectations for Banco Bilbao Vizcaya Argentaria SA, Spain's second-biggest lender and the owner of Mexico's largest bank.

Expected Earnings:

The Bilbao-based bank probably will say first-quarter profit declined 12 percent to 515 million euros ($566 million), or 16 cents a share, from 587 million euros, or 18 cents a share, in the year-ago quarter, according to the median forecast of seven analyst estimates collected by Bloomberg News.

Profit was reduced by the Mexican peso's slide against the euro and lower investment income. Those more than offset higher Spanish consumer bank profit and savings from cutting expenses, analysts said.

Personnel and administrative costs probably fell about 11 percent to 1.4 billion euros, after the bank shed 5,500 jobs worldwide in 2002.

Time

The Bilbao-based bank plans to report earnings Wednesday, sometime in the afternoon Madrid time.

Behind the Numbers:

Banco Bilbao and domestic rivals all had to lower rates charged on loans to track falling benchmark interest rates. That eroded gains from higher mortgage lending and leasing, Bilbao's fastest-growing loan categories in 2002.

Euribor 12-month interest rates fell to about 2.4 percent on March 31 from 4 percent one year earlier.

The bank sold more than 650 million euros of stakes in profitable companies last year, including Metrovacesa SA and Acerinox SA, reducing investment income in the first quarter.

Earnings from its Grupo Financiero BBVA-Bancomer SA unit, Mexico's No. 1 bank, were undercut when translated into euros by the Mexican peso's 31 percent slide from the year-ago quarter.

That held profit in Mexico, before financing and other charges, to a gain of 16 percent to 116 million euros, Jose Luis de Mora, a Merrill Lynch & Co. analyst in London estimated.

Profit from Colombia and other Latin American countries fell about 37 percent to 38 million euros, he estimated. BBVA owns the second-largest bank in Venezuela, where the bolivar fell 58 percent against the euro from the year-earlier quarter.

The currency declines also hurt asset management income, as Banco Bilbao is Latin America's largest pension manager based outside the continent, analysts said.

Chairman Francisco Gonzalez has said he's looking to make acquisitions. Target candidates are most likely in Portugal or the U.S., analysts said.

What the Experts Say:

``Mexico's results will be impacted by good volume coming from economic growth,'' Merrill Lynch's de Mora said in a report.

Bancomer is benefitting from a rebounding economy in which new mortgage lending by local banks likely will triple this year, officials at the unit have estimated.

Bancomer expects to maintain its 25 percent share of the Mexican mortgage-lending market, helped by government subsidies for low-income housing and more powers to repossess defaulted properties.

The Mexican government recently predicted the nation's $600 billion economy will expand by 3 percent this year, or triple last year's pace.

``There was a negative effect from repricing'' that reduced interest earned on loans more than what the bank paid on deposits, said Vicente Gonzalez, an analyst at Ibersecurities in Madrid.

Previous Market Reaction:

Banco Bilbao shares rose 1.7 percent, below the 2.7 percent gain of the Bloomberg Europe Banks and Financial Services Index, on Jan. 30 when it reported an 88 percent decline in fourth- quarter profit on Latin American write-offs.

The shares have climbed 4.6 percent this year.