BBVA forecasts better core revenues in second half of 2020

By Jesús Aguado

MADRID (Reuters) - Spain's BBVA on Wednesday forecast an improvement of core revenues in the second half of 2020 thanks to a recovery in new retail loans and lower cost of insuring its loan book for the year.

BBVA lowered its estimate for insuring its cost of risk for the full year to between 150 and 160 basis points from earlier 150-180 basis point range, citing better than expected performance of loan deferrals in Mexico, its main market.

Shares in BBVA led the gainers in the blue chip index Ibex-35 <.IBEX> with a rise of more than 4%.

At the end of July, Spain's second-biggest bank reported a 50% slump in second-quarter net profit on one-off charges related to the COVID-19 pandemic and a weak performance of its business in Mexico.

On Wednesday, BBVA said it expected its cost of risk in Mexico to be significantly lower than the 495 basis point estimate from June.

The lender also said it expected its capital buffer to exceed by 225 to 275 basis points the tier-1 capital ratio fully loaded requirement, the strictest measure of solvency.

BBVA planned to resume returning capital to shareholders once COVID-19 uncertainties dissipated and supervisory recommendation to suspend dividend payments was lifted, it said in a presentation to the Spanish supervisor.

The bank reiterated on Wednesday that both dividend and share buybacks would be considered.

In July, the bank's chief executive Onur Genç said rather than resuming scrip dividends payable in new shares, BBVA would pay dividends in cash.

(Reporting by Jesús Aguado; Editing by Ingrid Melander and Tomasz Janowski)