* Lowers group’s cost of risk guidance to 150 bps to 160 bps
* Genç says is open to analyse M&A opportunities in Spain
* Expects core capital ratio to be above its target by year-end
* Plans dividend payments once COVID-19 uncertainties dissipates
* Would also consider share buybacks (Adds quotes from BBVA CEO Onur Genç)
MADRID, Sept 23 (Reuters) - Spain’s BBVA on Wednesday forecast an improvement of core revenue in the second half of 2020 citing a recovery in new retail loans and a better-than-expected performance in loan deferrals in Mexico, its main market.
It also lowered its top estimate for the cost of insuring its loan book for the year to 150-160 from 150-180 basis points.
BBVA shares led gainers in the blue chip index Ibex-35 with a rise of more than 4.7% at 1114 GMT.
Almost a week after Caixabank agreed to buy Bankia, BBVA CEO Onur Genç told analysts that the bank remained open to potential deals in Spain and other markets but said there was nothing new to report.
“In Spain there might be opportunities, there might be synergies that you have to keep in mind,” Genç told a webinar hosted by Bank of America.
“If we can (...) create value, we would do a deal, if we cannot, we are extremely comfortable where we are.”
European banks are under growing pressure to join forces to deal with rising bad debts and record low interest rates.
Italy’s Intesa Sanpaolo is taking over Unione di Banche Italiane, and Spain’s Sabadell has also held informal talks about a possible tie-up, including with BBVA and Santander .
Santander Chairman Ana Botin told employees on Tuesday that the third-biggest bank in the euro zone in terms of market value was not interested in acquisitions in Spain, a source close to the bank said.
At the end of July, BBVA, Spain’s second-biggest bank, reported a 50% slump in second-quarter net profit on one-off charges related to the COVID-19 pandemic and a weak performance of its business in Mexico, while total revenue fell 5.7%.
On Wednesday, BBVA said it expected its cost of risk in Mexico to be significantly lower than its June estimate of 495 basis points.
In Turkey, its second biggest market and where it is suffering from the depreciation of the Turkish lira, Genç said the bank was aware of its vulnerabilities and needed to be cautious in the short-term though in the long-term he remained positive.
Genç forecast a significantly lower cost of risk in Turkey for 2020 compared to a first-half cost of 271 basis points.
The lender said it expected its capital buffer to exceed the tier-1 capital ratio fully loaded requirement by 225 to 275 basis points.
The bank reiterated on Wednesday that both dividend and share buybacks would be considered once COVID-19 uncertainties dissipate and supervisory recommendations to suspend dividend payments are lifted. (Reporting by Jesús Aguado; additional reporting by Emma Pinedo; Editing by)