Higher funding costs cut into BBVA's (BBVA.MC) income last year as erratic wholesale markets and a Spanish deposit price war overshadowed a robust performance by Spain's second-biggest bank in Latin America. Spanish banks have suffered the knock-on effects of an ailing economy and unemployment of more than 20 percent. This has led to higher bad loan provisions and banks competing with high interest rates for retail deposits to secure funding. BBVA said its net interest income -- broadly what a bank earns on loans minus what it pays for deposits -- slipped 4 percent year-on-year to 3.14 billion euros ($4.4 billion) in the fourth quarter of 2010, from 3.25 billion euros in the third.
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