By Xavier Fontdegloria and Cristina Roca

Shares in Banco Bilbao Vizcaya Argentaria SA traded higher Friday after the lender reported a rise in third-quarter profit and said it received the go-ahead to launch a buyback program.

The Spanish bank will buy back up to 3.5 billion euros ($4.09 billion) worth of its shares. Its quarterly net profit rose 23% to EUR1.4 billion, beating analysts' consensus expectations of EUR1.08 billion.

At 1205 GMT, BBVA shares traded 6.8% higher at EUR6.02.

Although BBVA had already signaled its intention to repurchase up to 10% of its capital, there had been some doubt on whether the European Central Bank would approve the buyback, so Friday's news likely cheered investors, UBS analysts said in a note.

The buyback program will run for a maximum of 12 months from its effective start on Nov. 18, BBVA said.

The bank's net interest income--the difference between what lenders earn from loans and pay for deposits, a key profit driver for retail banks--fell to EUR3.75 billion in the third quarter compared with EUR4.11 billion in the same period a year earlier.

The closely-watched metric was still 4% higher than consensus forecasts, Citi analysts said in a note, qualifying the bank's results as all-around better than expected.

Gross income was down 5.8% to EUR5.33 billion, the lender said.

Impairments on financial assets and provisions dropped to EUR622 million in the period from EUR928 million in 2020's third quarter.

Write to Cristina Roca at cristina.roca@wsj.com and Xavier Fontdegloria at xavier.fontdegloria@wsj.com