Spain's second-biggest bank BBVA on Wednesday posted a strong rise in its 2014 net profit, boosted by a recovery in the Spanish economy which it predicts will continue on 2015.
The Bilbao-based bank made a higher-than-expected net profit of 2.62 billion euros ($2.98 billion) last year, a 25.7 percent increase over the previous year, it said in a statement.
During the fourth quarter BBVA swung back into the black with a net profit of 689 million euros, compared to a loss of 849 million euros during the same year-ago period.
Like its main rival Santander, BBVA saw its performance improve in its domestic market as Spain's economy grew moderately as the economy emerged from a recession that left nearly a quarter of the workforce unemployed.
"Spain in particular was the main contributor to the growth in results," BBVA director general Angel Cano told a news conference.
BBVA's net attributable profit for its banking business in Spain was 1.03 billion euros in 2014, more than double that of 2013.
Losses in its real estate business in the country narrowed by 30 percent to 876 million euros due to a recovery in real estate prices and demand.
The Spanish economy, the eurozone's fourth-largest, grew by 1.4 percent in 2014 after contracting by 1.2 percent in 2013.
It was the first full-year economic growth in Spain since 2008 when a property bubble burst, putting millions of people out of work and pushing the country to the brink of a bail out.
- Optimistic for 2015 -
"For 2015 we are much more optimistic," added Cano, who predicted the Spanish economy could expand by over 2.5 percent in 2015.
Like other Spanish lenders BBVA reduced the ratio of bad loan debts weighing on its balance sheet -- a hangover from the 2008 real estate collapse that plunged Spain into economic crisis -- to 5.8 percent in December, down from 6.8 percent in the same year-ago period.
The figure is far below the average for the sector in Spain which stood at 12.75 percent in November, according to the Bank of Spain.
BBVA has recently sought to strengthen its position in Spain. In July it bought Catalunya Banc, which was born in 2010 out of the merger of three troubled regional lenders in Catalonia in northeastern Spain.
Spain nationalised Catalunya Banc in 2011 to prevent it from going bankrupt.
"It has been a difficult but good year, shaped by growing income, controlled costs and improved risk indicators," said BBVA president Francisco Gonzalez.
The bank's Mexican unit posted a net profit of 1.915 billion euros, a 10.7 percent increase on a constant currency basis over the previous year.
In South America BBVA posted a profit of one billion euros, a 6.3 percent increase over 2013.
"South America was once again the most dynamic region in terms of business activity, with growth of over 20 percent in both lending and customer funds," the statement said.
Shares in BBVA closed up 2.84 percent at 8.16 euros, outperforming Spain Ibex-35 index of most-traded shares which closed down 0.19 percent at 10,577.80 points.
Spain's biggest bank, Santander, on Tuesday said its net profit rose by 39.3 percent in 2014 to 5.82 billion euros led by its activity in Britain and Brazil.