* BBVA Q1 revenue 5 bln eur vs forecast 5.3 bln eur
* Q1 profit down 64 pct to 624 mln euros
* Earnings hit by weaker Latam currencies
* Banco Popular Q1 profit falls 40 pct (Adds Popular earnings, analyst quotes)
By Sarah White and Jesús Aguado
MADRID, April 30 (Reuters) - Depreciating South American currencies cast a shadow over Spanish bank BBVA's first-quarter results on Wednesday, taking a heavy toll on revenues despite improving income from Mexico and its home market.
Spain's second-largest bank, like bigger rival Santander , relies on Latin America for much of its profit, which helped to offset losses in its domestic business through the economic downturn.
But foreign exchange volatility is now hitting income from some emerging markets when converted into euros.
BBVA posted a bigger than expected revenue fall to 5 billion euros ($6.9 billion), down 7 percent on the first three months of last year, adding that revenue would have risen 5 percent without currency fluctuations.
Income declines in South America - including countries such as politically and economically volatile Venezuela - were particular drags on the group.
"The main weakness was from Latin America ... as foreign exchange rates start to catch up with BBVA," Nomura banking anlayst Daragh Quinn said.
In BBVA's Mexican business, its biggest earnings driver, profit and revenue did grow from a year ago, but the bank still missed first-quarter net income expectations at group level.
Profit dropped 64 percent from a year ago to 624 million euros, though last year's earnings had been boosted by gains from asset sales.
BBVA shares, which are up nearly 2 percent this year, were down 1.4 percent to 8.82 euros by 1246 GMT.
Spain's banks are recovering from a six-year property market slump, which gutted earnings for BBVA and its peers in 2012 because of writedowns on soured real estate loans. Some other lenders were pushed into bailouts.
BBVA's yearly profit rebounded in 2013 as charges on soured loans fell, and like Santander it is now looking for an economic turnaround in it home market to help it to build on that.
The group's bad debts as a percentage of total credit dropped from quarter on quarter for the first time since 2011, to 6.6 percent.
Spain's gross domestic product rose at its fastest quarterly pace in six years in the first three months of the year, data on Wednesday showed.
Analysts said there were signs of some progress at BBVA, and its Spanish profit - the second-biggest contributor to group earnings behind Mexico - grew nearly threefold to 386 million euros, excluding one-off gains from disposals.
"Though heavily boosted by (bond) trading income this quarter, Spain is starting to contribute more positively for BBVA," researchers at Credit Suisse said in a note.
Growing bond trading income at a group level could also help to offset further South American pain, analysts said.
A full Spanish turnaround may take time, however.
BBVA and smaller local peer Banco Popular, which also reported results on Wednesday, said their first quarter net interest income in the country, or earnings from loans minus funding costs, had fallen versus a year ago.
"The weakness of the net interest income is still the area to watch," Nuria Alvarez, banking analyst at Spanish brokerage Renta 4, said of Popular.
Shares in Popular, the country's fifth-biggest bank by market value, were down 3.5 percent at 5.30 euros. Its first-quarter net profit fell 40 percent year on year to 63 million euros, beating forecasts thanks to lower than expected provisions against losses.
BBVA was also hit by a Spanish court ruling that forced it to remove mortgage clauses that limited interest rate falls. The bank said that had cost it around 150 million euros in net interest income for the period. ($1 = 0.7237 euros) (Editing by David Goodman)