(Adds details of BBVA's business in Chile)
MADRID, Aug 31 (Reuters) - BBVA said on Thursday it was looking at the possible sale of its retail bank in Chile after Canada's Bank of Nova Scotia expressed an interest in buying up to 100 percent.
On Wednesday BBVA Chile had a market value of 1.2 billion euros ($1.4 billion).
Spain's second-biggest lender said it could not say if the negotiations would lead to an agreement or what the terms of such an agreement would be if it was finally reached.
A spokesman at BBVA said that the Spanish bank was not considering exiting Chile altogether, where it also has a consumer finance unit.
BBVA has a 68 percent stake in BBVA Chile, while 29 percent belongs to the Chilean family Said and the rest of the shares are in free float.
A weak first-half performance for BBVA in Spain showed margins were still under pressure from record low interest rates and it has been relying on its strong performance in Mexico to boost earnings.
Mexico accounts for around 40 percent of group profits.
In South America, which accounts for around 15 percent of the group profits, earnings fell 3 percent to 404 million euros in the first six months of 2017. In Chile it booked a net profit of 96 million euros in the first half.
BBVA's shares were up 1.85 percent at 7.475 euros at 0923 GMT, when Spain's blue-chip Ibex index was up nearly 0.7 percent.
Several brokers, including Alantra Equities and Jefferies, said such a deal could be positive for BBVA, helping to simplify its structure and providing a boost of up to 0.9 percentage points to BBVA's capital adequacy ratio. ($1 = 0.8403 euros) (Reporting By Jesús Aguado; Editing by Greg Mahlich)