Updates story with further comment on potential deal with Sabadell in paragraphs 2 to 7

By Jesús Aguado

MADRID, July 31 (Reuters) - BBVA BBVA.MC aims for higher profits and capital distribution over the next four years based on underlying loan growth in its main markets Mexico and Spain, without taking into account the proposed Sabadell SABE.MC takeover deal, it said on Thursday.

BBVA wants to reduce its reliance on emerging markets with its over 15 billion euros ($17.12 billion) hostile bid for Sabadell, which 15 months after its announcement, enters a decisive stage.

To demonstrate the strength of its balance sheet even without Sabadell, the bank presented its 2025-2028 outlook on a standalone basis as the Chief Executive Officer Onur Genc said there was "no guarantee the deal would go through".

"We do think it is a good deal for shareholders (of both banks). But if the deal doesn't happen, it doesn't happen. We move on," Genc said.

At 1320 GMT shares in BBVA were up 8.3%, while Spain's blue-chip index was up by 0.4%.

Genc added that the bank was entitled to withdraw its offer if Sabadell shareholders approve the sale of its British unit TSB to Santander SAN.MC and an extraordinary 2.5 billion euro cash dividend on August 6.

Should the deal go ahead, Genc said BBVA would explain further details in September, which is when the bank has said the acceptance period would start after the Spanish stock market supervisor approves the prospectus.

BBVA would then follow with a formal offer and Sabadell shareholders would have 30 to 70 days to tender their shares.

The government's condition to block a full merger for at least three years meant the timetable for the expected synergies, initially estimated at 850 million euros, would be delayed, Genc said.

OUTLOOK FORSEES HIGHER CIB CONTRIBUTION

BBVA, the fifth-biggest euro zone lender by market value, reported a 2% decline in second quarter profit to 2.75 billion euros, above the 2.37 billion euros expected by analysts polled by Reuters, with lending income falling 4% year-on-year in the quarter.

BBVA finished June with a return-on-tangible equity ratio, or ROTE, a measure of profitability, of 20.4% and the bank said it expected levels of 20% in 2025 and 22% over four years.

The goals are supported by higher profitability in its main countries and a significant increase in the contribution to earnings from corporate and investment banking.

For the 2025-2028 period, it said it aimed to earn an accumulated net attributable profit of around 48 billion euros.

It also planned to distribute 36 billion euros in capital to shareholders through 2028 either in cash dividends or share buybacks, of which 24 billion euros would be ordinary distributions and 12 billion euros in excess capital above the capital threshold of 12%.

In the short term, it said it will have 13 billion euros available for distribution to its shareholders.

Quarterly net profit in Mexico fell 12% due to currency depreciation. For 2025, BBVA expects a 10% increase in lending and net interest income to grow at a high single-digit rate.

Net profit in Spain rose 6% in the quarter, with lending expected to grow above 5% and net interest income slightly positive this year.

In terms of solvency, BBVA's fully-loaded core-tier 1 capital ratio, the strictest measure, rose to 13.34% as of end-June from 13.09% as of end-March.

($1 = 0.8739 euros)

(Reporting by Jesús Aguado; additional reporting by Emma Pinedo; editing by Inti Landauro and Louise Heavens)

((jesus.aguado@thomsonreuters.com; +34 91 835 68 32; Reuters Messaging: Reuters Messaging: jesus.aguado.reuters.com@reuters.net))