MADRID (Reuters) - BBVA (MC:BBVA) on Wednesday posted a lower than expected drop in second-quarter revenue from a year ago even as unfavourable exchange rates in South America dragged down earnings.
BBVA, Spain's second-biggest bank by market value, beat analysts' expectations with revenue of 5.32 billion euros (4.2 billion pounds) in the April-June period.
Its net interest income, a closely-watched measure of earnings on loans minus deposit costs, also fell less than expected in a Reuters poll, and was down just under 1 percent from a year ago at 3.65 billion euros. It rose 7.5 percent compared to the first three months of the year.
Most Spanish banks are becoming more profitable again after emerging from a financial crisis as lenders took huge writedowns on soured property loans, while the economy is out of recession after a six-year economic downturn which also ate into earnings.
BVA and larger rival Santander (MC:SAN) have benefited from that pick-up too, and BBVA said on Wednesday its bad loans in Spain as a percentage of total credit had fallen slightly.
BBVA recently made a show of confidence in its home market by buying bailed-out local peer Catalunya Banc from the state.
But the two banks, which previously offset weakness at home with profits overseas, particularly in Latin America, have been hit in recent quarters by volatile emerging market currencies, which have dragged on income when converted into euros.
BBVA, which is exposed to a major currency devaluation in Venezuela, said its group profit in the first six months of 2014 would have fallen 49 percent from a year ago at constant exchange rates rather than the 54 percent drop to 1.328 billion euros.
(Reporting by Sarah White, Editing by Julien Toyer and Louise Heavens)