UPDATE 2-Spanish banks' falling core business overshadows capital improvement
* Interest income down at BBVA and Caixabank from prior quarter
* Mirrors trend set by larger bank Santander
* Lenders face pressure to cut costs, change business model (Adds new details on business trends)
By Angus Berwick and Jesús Aguado
BARCELONA/MADRID, April 28 (Reuters) - Spanish lenders BBVA and Caixabank reported a fall in net interest income in the first three months of the year which overshadowed capital improvements and sent their shares down on Thursday.
BBVA and Caixabank have contrasting business models, with BBVA drawing the majority of its revenue from abroad and Caixabank chiefly focused on Spain. But they face a similar challenge in raising earnings from loans as interest rates remain at historic lows.
Net interest income at BBVA, Spain's second biggest bank, fell 6 percent versus the fourth quarter of last year to 4.15 billion euros. This was, however, up 13.3 percent from a year earlier.
For Barcelona-based Caixabank, the most acquisitive lender during Spain's financial crisis, lending income fell 2.4 percent quarter on quarter and 10.4 percent year on year to 1.02 billion euros.
This mirrored a similar trend at Spain's biggest bank Santander, which on Wednesday reported a 3.3 percent fall in first-quarter net interest income from the three previous months. Continuación...