Garanti profit high, but BBVA loses big

ISTANBUL - Hürriyet Daily News

‘We continued to strengthen our sound capital structure with organic resources,’ Turkish lender Garanti’s chief executive Ergün Özen says.

Turkey’s Garanti Bank, a joint venture of local Doğuş Group and Spanish bank BBVA, posted an impressive 52 percent third-quarter net-profit increase yesterday from the same period last year.

The 733.2 million Turkish Liras in profits, above market forecasts, was a shining figure for the BBVA. Spain’s second-largest bank reported a 47 percent drop in nine-month net profits the same day, after it wrote off billions of euros of losses on bad real estate investments, Reuters reported.

In the first nine months of 2012, Garanti posted a consolidated net profit of 2.6 billion liras, its consolidated total assets reaching 173.7 billion liras.

“We continued to strengthen our sound capital structure with organic resources by way of a healthy and sustainable growth strategy and dynamic balance sheet management. Shareholders’ equity, year-to-date, increased by 15.3 percent and reached 20.6 billion liras,” Garanti President and Chief Executive Ergün Özen said in a press release yesterday.

“Business models based on Internet and mobile technologies and a next generation of consumers force the current banking dynamics to be reshaped.”

BBVA’s nine-month net profits came in at 1.7 billion euros, down 47 percent on the year.
BBVA wrote off 1.6 billion euros of losses on soured real estate assets in the third quarter, with the write-downs dwarfing profits – 146 million euros – in that period. It said it had now written off two-thirds of losses under Spanish law.

The Spanish government is forcing banks to clean up their balance sheets in the hope of restoring faith in the system and getting credit flowing once more to families and businesses in a worsening recession.

BBVA, along with rival Santander, easily passed an independent “stress test” in September, showing that the bank would have a substantial capital surplus in an extreme economic downturn.

Outside of Spain, profits in Mexico rose 4 percent during the nine-month period to 1.3 billion euros, and the bank’s Eurasian unit, which includes Turkey, saw net profits rise 13 percent.