Eurocomparisons: BBVA profits fell by 34.8%; Deutsche Bank’s by 76%

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By Tania Suárez, in Madrid | BBVA earned 34.8% less compared to last year, not such a significant figure when compared to Deutsche Bank’s (the largest bank in Germany) decrease of 76%. Despite this reduction, Sabadell and Banesto analysts recognise that the Spanish bank’s 4Q’11 results are better than expected.

The only downside is the PAT, which was below the market consensus estimates (PAT:-139mn euros vs.938.53mn euros in 4Q’10 and vs.-71mn euros expected by the consensus). Sabadell analysts believe that

“the better development of the revenue estimates justifies the difference.”

As far as Deutsche Bank is concerned, it reached a PAT of 186mn euros, that is to say, -69.2% as opposed to the -25.2% calculated by the consensus.

BBVA in 2011 obtained a recurrent attributable profit of 4,015mn euros (12.8% less than the previous year) before making an accounting adjustment to the goodwill of its U.S. franchise. At Bankinter they suggest that if the 4Q’11 is viewed in isolation, BBVA would have started going in the red for the first time (-139mn euros, that become a net -1,011mn euros without exceptional operations). But they qualify this by explaining that:

“even so, we feel it is due to the reorganisation effort, so it is probably something temporary.”

In this sense, it can be observed that BBVA in general terms obtained an interest margin of +11% (3,485nb euros), a gross margin of +12% (5,515mn euros) and a net margin of +9% (2,863mn euros).

Bankinter analysts argue that

“it gives the impression that a remarkable consolidation effort there has taken place and that less effort in this regard may be required in the coming quarters.” They add that the recurring activities “seem to show a high resistance to the difficult environment in which they are framed.”

Finally, the subject of special provisions to improve the coverage of the real estate balance should be mentioned. BBVA has made no extraordinary provisions because, in the opinion of the CEO Ángel Cano,

“they served no purpose other than to create confusion.”

Even so, the Spanish bank has 3,218mn euros in general provisions since this year it did not use any part of this cushion and it even managed to improve its size again. This amount places it in a stable and robust situation that will allow it to weather the storm. As Bankinter analysts point out,

“the consolidation of the 4Q could be the turning point in numbers and quote.”

Main figures: Interest Margin 13,160mn euros, Gross Margin 20,566mn euros, Net Margin 10,615mn euros.

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