Spanish bank BBVA sees profits rise on cost-cutting

Spain's second-biggest bank BBVA on Wednesday said that solid revenues and a cost-cutting drive helped lift profits by more than 30 percent last year.

Spanish bank BBVA sees profits rise on cost-cutting

Hit by a severe crisis several years ago, Spain's banking sector has recovered but at a cost as thousands are laid off and it struggles to get rid of toxic assets.

BBVA said net profit jumped by 31.5 percent to €3.47 billion ($4.0 billion) last year, beating analysts' expectations.

“Solid performance of recurring revenues, moderation in operating expenses, and a drop in impairment losses on financial assets are the key drivers of this growth,” the bank said in a statement.

BBVA said that the number of customers using its online banking services rose by 20 percent to 18.4 million.   

At the same time, BBVA cut the number of high street branches by more than five percent with the number of employees falling by two percent.   

In the fourth quarter alone, however, net profit shrank by nearly a third to €678 million, as the bank set aside €404 million in provisions to cover reimbursements in so-called mortgage “floor clauses.”

In December, the European Court of Justice ruled Spanish banks must reimburse clients who signed mortgage contracts that prevented them benefiting from a steady drop in interest rates.

The so-called mortgage “floor clauses” imposed a limit on how far mortgage interest rates could fall in line with a benchmark rate, but were ruled unfair as consumers had not been properly informed of the consequences.   

Around 1.5 million Spaniards are believed to be affected.    

BBVA said it was also hit by exchange rate developments last year and that net interest income, which rose by 3.9 percent, would have expanded by as much as 14.9 percent without those effects.

Net interest income slightly beat expectations to come in at €17 billion.

Gross income grew by 4.1 percent to €24.6 billion.

BBVA said it had managed to reduce the ratio of non-performaing or risky loans to 4.9 percent from 5.4 percent.   

Since the crisis, Spanish banks have sought to bolster their liquidity and capital to face any potential problems down the road.   

As such, in the last resistance tests done by European authorities, Spain's large banks fared well.

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Spain’s BBVA bank poised to axe 3,800 jobs and close 530 branches

Spain's second-largest bank BBVA is looking to shed 3,800 jobs, affecting 16 percent of its staff, a union said Thursday while denouncing the plans as "scandalous".

Spain's BBVA bank poised to axe 3,800 jobs and close 530 branches
Photo: Dani Pozo/AFP

The move came just two days after another hefty cut in banking jobs was announced by rival CaixaBank, which said it was planning to axe 8,300 staff.

“BBVA wants to lay off 3,800 people. These redundancies would affect 16 percent of the workforce, 3,000 in the branch network and another 800 in the bank’s central services,” the CCOO Workers’ Union said in a statement.

It said the bank was planning to shut down 530 of its branches, denouncing the dismissal plan as “indefensible and scandalous” and warning it would stage a protest.

It was the latest bank to announce layoff plans as the sector struggles to cope with record-low interest rates and an economic downturn sparked by the coronavirus pandemic, along with a surge in popularity of online banking services.

In mid-November, BBVA announced it was locked in talks about a possible merger with smaller rival Banco Sabadell in a tie-up that would have created a top player within Spain’s banking sector.

But just weeks later the plans were scrapped.

There has been a wave of consolidation within the sector which has been encouraged by Spain’s central bank, with Caixabank completing a massive merger with its smaller rival Bankia last month.

On Tuesday, Caixabank confirmed it would shed nearly one in five jobs, affecting 8,291 staff, in cutbacks which were necessary as a result of the “overlaps and synergies derived from the merger and the current market circumstances,” it said.