BBVA Peru's Q4 profit plunges 74.4% on increase in provisions

Banco BBVA Perú SA's net income for the fourth quarter of 2020 went down 74.4% year over year as the lender continued to hike its loan loss provisions.

The subsidiary of Spain's Banco Bilbao Vizcaya Argentaria SA posted 97 million soles in fourth-quarter net profits, down from 379 million soles in the year-ago period.

BBVA Perú noted that "interest rates close to zero" had led the bank's annual gross interest margin to slip to 3.20 billion soles throughout 2020, a 5% decrease from 2019.

"Net income shows a larger contraction due to the constitution of voluntary and specific provisions, with the objective of anticipating possible loan portfolio deterioration as result of the crisis," the bank said in its earnings release.

Total reserves rose to 4.36 billion soles during the quarter, a 51.9% increase on the year-ago period. Direct credit provisions for the period, for their part, clocked in at 577 million soles, up 202.1% from the fourth quarter of 2019.

BBVA Perú's total loan book expanded to 70.81 billion soles during the quarter, up 19.9% from a year earlier but down 0.5% from the third quarter. The lender's delinquency ratio rose to 3.22%, up from 3.00% in the linked quarter and from 2.94% in the year-ago period.

On the revenue side, administrative expenses ticked slightly lower to 439 million soles during the quarter from 445 million soles a year ago. Meanwhile, operating expenses increased 2.98% to 1.87 billion soles throughout 2020.

Return on equity and return on assets declined by 1,174 basis points and 132 basis points to 7.04% and 0.68%, respectively, from the final quarter of 2019.

BBVA Perú posted net income of 655 million soles for the whole year, 59.31% less than in 2019.

As of Jan. 28, US$1 was equivalent to 3.62 Peruvian soles.