* Q4 net profit falls 90 pct, above forecasts
* Group net interest income up at group level
* Board looking at succession plan for Chairman Francisco Gonzalez
* Shares are down 0.2 pct at 1305 GMT (Adds chairman retirement comments, updates shares)
By Jesús Aguado
MADRID, Feb 1 (Reuters) - Spanish bank BBVA’s solid fourth quarter results were overshadowed by a 1.1 billion euro ($1.4 billion) writedown on the value of its Telefonica stake on Thursday.
Chairman Francisco Gonzalez, who is due to retire in October 2019 after 17 years running Spain’s second-largest bank, moved to reassure investors that a succession plan was in the works as he reported a strong performance in Mexico and Turkey.
BBVA’s share were down 0.2 percent at 1305 GMT after it said its net profit fell by 90 percent to 70 million euros ($87 million) in the three months to the end of 2018.
This was not as bad as the forecast of a 139 million euro loss in a Reuters poll and analysts highlighted strong underlying results in terms of higher revenue and cost controls.
“BBVA reported strong fourth quarter earnings with revenues four percent ahead of company consensus, costs broadly in line and lower loan losses,” JP Morgan said in a note to clients.
Revenues rose 2.5 percent to a record 25.3 billion euros for the full year and Gonzalez said in a statement that 2018 would be even better thanks to BBVA’s digital transformation drive, which he has been focused on in recent years.
Excluding the Telefonica writedown, which BBVA is taking due to a fall in the value of its 5 percent stake in the telecoms group, the bank’s net profit rose by 10 percent in the last quarter to 1.2 billion euros, exceeding a 957 million forecast.
Gonzalez said during a briefing on the earnings that he had no plans to step down before required to do so in October next year when he turns 75, adding that BBVA’s board was already working on his replacement.
The chairman’s post is widely expected to be filled by CEO Carlos Torres, but Gonzalez would not speculate on who would take his place, adding: “There won’t be any surprises”.
Net interest income (NII), a measure of earnings on loans minus deposit costs, was 4.6 billion euros in the fourth quarter, up 3.9 percent from a year earlier and beating analyst forecasts of 4.4 billion euros.
In Spain, where banks are struggling to raise earnings from loans, as interest rates remain at historic lows and increasing competition erodes margins, BBVA’s NII fell by 2.7 percent.
Spanish banks have been expanding abroad as a result and BBVA’s Mexican unit, which accounts for around 40 percent of group profit, reported net profit increased 6 percent in the quarter at constant exchange rates. It rose 1.3 percent when taking into account fluctuations in the Mexican peso.
In Turkey, which represents 15 percent of the group’s earnings, net profit almost doubled in the last quarter.
BBVA ended 2018 with a fully-loaded core capital target ratio of 11.08 percent versus 11.2 percent at the end of September. It trimmed its non-performing loan ratio to 4.4 percent from 4.5 percent at end-September after cutting 400 million euros of doubtful loans.
A rebound in Spanish property has allowed banks to tackle toxic balance sheets faster than rivals in Italy, with lenders in Europe are under pressure from the European Central Bank to reduce soured loans.
BBVA also proposed a final 2017 cash dividend gross payment of 0.15 euros to be paid in April. ($1 = 0.8030 euros) (Reporting by Jesús Aguado; editing by Paul Day/Jason Neely/Alexander Smith)