Adds higher provisions in paragraph 1, higher expenses in 12, credit costs in 13

By Jesús Aguado

MADRID, April 29 (Reuters) - BBVA BBVA.MC on Monday raised its net attributable profit growth guidance for 2024 after beating first-quarter earnings forecasts, as higher lending income in Mexico and Spain offset provisions in some emerging markets.

The Spanish bank sees lending income improving further in its home country this year thanks to fewer interest rate cuts in the euro zone than expected earlier this year and to a contained rise in deposit costs.

Like larger Spanish rival Santander SAN.MC, BBVA expanded in emerging economies as it struggled to boost income in more mature markets, but a tightening monetary cycle in Europe since July 2022 has also supported its lending income.

Chief financial officer Luisa Gomez-Bravo told analysts in a call the bank expected a double-digit percentage rise in lending income in Spain this year, compared with previous guidance for mid-single digit growth.

BBVA added that would help the bank achieve double-digit growth in group net attributable profit this year, and CEO Onur Genc said it expected further profit growth in 2025.

Previously, BBVA said only it expected net attributable profit to grow this year.

Jefferies said in a note to clients that the quarter confirmed solid dynamics across most geographies, with beats coming from both Spain and Mexico.

"The 2024 outlook for revenues is (also) improving on the back of better NII dynamics in Spain," they said.

In Spain, net profit rose 36.5%, while net interest income (NII), or earnings on loans minus deposit costs, was up 35.2% year-on-year, as well as up 2% on the previous quarter.

BBVA also said it had raised its group core revenue outlook, without giving any details.

At 1132 GMT, BBVA shares were down 2.6% following a rise of more than 33% so far this year as of Friday.

Results were somewhat overshadowed by a 12% increase in operating expenses in the quarter, affected by high inflation rates in South America, and higher credit risk.

The cost of risk, which measures potential losses, rose to 139 basis points (bps) from 115 bps at end-December due to some uncertainties, mainly in Argentina, but also in Colombia and Peru.

In South America, net profit fell 34%, with profit in Argentina down 33%, hit by a hyperinflation adjustment.

Net profit in Mexico, BBVA's main market, rose 12.6% year-on-year while NII was up 15.8%. The bank stuck to its high single-digit NII growth guidance for Mexico in 2024.

At a group level, BBVA's NII rose 15% year-on-year to 6.51 billion euros ($6.97 billion), above analysts' average forecast of 6.42 billion euros. Against the previous quarter, NII rose 24%.

Overall, net profit at the fourth-biggest euro zone lender by market value rose 19% to 2.2 billion euros in January-March, above the 2.06 billion expected by analysts polled by Reuters.

Profits rose despite a 41% rise in provisions and a windfall tax hit of 285 million euros.

Higher financial margins helped BBVA lift its return-on-tangible equity ratio (ROTE), a measure of profitability, to 17.7% in the quarter from 17% at the end of 2023. The lender is aiming for a ROTE of 17-20% in 2024.

In Turkey, where BBVA shifted to hyperinflation accounting in 2022, profit fell 48% in the quarter, while NII slumped by more than 55%.

($1 = 0.9322 euros)

(Reporting by Jesús Aguado; Editing by Louise Heavens; Michael Perry and Mark Potter)

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