By Jesús Aguado
BBVA's diversification overseas, especially in Mexico, has helped the bank cope with tough conditions in Europe in the years since the financial crisis.
However, a $1.5 billion writedown on the goodwill value of its U.S. unit overshadowed solid earnings growth in the bank's Latin American businesses.
A decline in interest rates and an economic slowdown in the United States, which accounts for nearly 10% of the bank's earnings, triggered a negative adjustment of $1.5 billion to the value of the unit's goodwill.
The quarterly loss was better than the 326 million euro loss expected by analysts, but the impairment dragged full-year net profit down 35% to 3.5 billion euros, against expectations for a 3.3 billion euro profit.
The second largest Spanish bank, like its larger domestic rival Santander, makes most of its profit overseas, in particular in Mexico. The country accounts for more than 40% of net profit and earnings there rose 38%.
UBS welcomed a "good set of numbers", noting a good performance in Mexico and Turkey, where it said investors remained more uncertain, and an increase in capital. It added that the U.S. was the only negative.
Shares in BBVA were down 0.6% by 0925 GMT.
BBVA said it ended December with a core Tier 1 capital ratio, a key measure of solvency, of 11.74% compared with 11.56% at the end of September. That was higher than main competitor, Santander, which reported an increase in comparable core-tier 1 capital ratio to 11.42% on Wednesday.
In the fourth quarter, net interest income (NII) - a measure of earnings on loans minus deposit costs - edged up 0.7% to 4.73 billion euros from the year-ago period. Analysts polled by Reuters had forecast an NII of 4.56 billion euros.
However, in Spain, which accounts for almost a quarter of BBVA's earnings, NII was almost unchanged and pressure from rock-bottom interest rates also weighed on lending income at other Spanish banks.
Sabadell late on Thursday said NII fell 2.4%, while Caixabank's was down 0.4%, it said on Friday.
Caixabank said it expected its core revenues to grow around 1% in 2020 thanks to stable revenue from insurance and fees. Net profit more than doubled in the quarter due to lower impairments, driving shares up 3.5%.
Spain's Sabadell posted a fourth-quarter loss on higher-than-expected provisions, sending its shares sliding more than 10% to 0.846 euros on Friday.
(Reporting By Jesús Aguado; additional reporting by Inti Landauro and Clara-Laeila Laudette; Editing by Kirsten Donovan)
By JesÃºs Aguado