UPDATE 1-BBVA: Net profit up 3% thanks to Mexico and Spain, Turkey faltering

* T2 net 1.28 billion euros against 1.21 billion euros expected

* Net interest income up 6% to 4.56 billion euros (Breakdown by country)

By Jesús Aguado

MADRID, July 31 (Reuters) – Spain's BBVA announced on Wednesday that its net profit for the second quarter was up 2.6 percent, thanks to stable performance in Mexico and Spain.

BBVA, the second largest Spanish bank, reported a net profit of 1.28 billion euros for the quarter ending in June, above badysts' average forecast of 1.21 billion euros according to a Reuters poll .

Net interest income, calculated as a profit on borrowings less deposit fees, reached 4.56 billion euros, up 6% from the previous quarter. Analysts polled by Reuters had forecast 4.4 billion euros of NII.

Like its national rival Santander, BBVA is making the most of its profits abroad, a model that has allowed it to withstand two recessions on its territory in recent years.

In Mexico, where it generates more than 40% of its net income, net profit rose 4%. Without the appreciation of the Mexican peso, the profit fell by 3%.

However, political instability and the economic recession in Turkey, where it generates about 9% of its profits, have hurt the profitability of the group. Net profit in Turkey in the second quarter fell 18% to 140 million euros, the newspaper said.

The lira fell by nearly 30% in 2018, as a currency crisis plunged the Turkish economy into recession. It fell again by 5% against the dollar this year and by 4% in the second quarter.

In Spain, where it makes a quarter of its profits, net income grew by almost 14%.

BBVA executives should be confronted with questions during the conference with badysts and at a press conference about a judicial investigation into an alleged espionage case involving the lender.