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Facing a deep recession at home, Spanish banks’ surprising resilience throughout the downturn has generated as many doubts as congratulations. After releasing its fourth-quarter results, Spain’s second-largest lender, BBVA, provided fuel for the sceptics’ fire.

A bad miss on quarterly earnings due to “extraordinary anticipatory provisioning” spooked the markets, which punished BBVA’s shares as well as those of its domestic peers. A re-evaluation of loan quality in BBVA’s Spanish, Mexican and American portfolios was to blame for the unexpectedly poor results, although company executives emphasised steady growth in net interest income as proof of a healthy core business.

Even if Spanish banks’ longer-term future is bright, the spectre of large loan losses stemming from the recent domestic credit bubble will loom over the sector for some time.

Read more at Financial Services Briefing: “Down to earth” (January 27th)