Banco Bilbao Viscaya Argentaria ((BBVA)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Banco Bilbao Viscaya Argentaria (BBVA) showcased a robust financial performance, marked by significant profit and loan growth, enhanced capital ratios, and a well-defined strategic plan for future expansion. Despite these positive developments, the bank faces challenges, including adverse effects from currency hedges and economic conditions in Turkey.
Strong Profit Growth
BBVA reported a remarkable net attributable profit of EUR 2.749 billion in the second quarter, marking a 9.1% increase compared to the previous year. For the first half of 2025, the total net profit reached EUR 5.447 billion, underscoring the bank’s strong financial footing.
Improved Capital Ratios
The bank’s CET1 capital ratio saw an improvement of 25 basis points during the quarter, reaching 13.34%. This enhancement reflects BBVA’s commitment to maintaining a solid capital base, which is crucial for sustaining growth and absorbing potential market shocks.
Loan Growth
BBVA experienced impressive loan growth at the group level, with a 16% increase year-over-year. Notably, Spain and Mexico contributed significantly to this growth, with loan expansions of 6.3% and 11.7%, respectively, highlighting the bank’s strong market presence in these regions.
Efficiency Ratio Improvement
The bank’s efficiency ratio improved to 37.6%, demonstrating enhanced operational efficiency. Even when excluding VAT impacts, the ratio stands at a commendable 38.6%, indicating effective cost management strategies.
Strategic Plan with Ambitious Goals
BBVA unveiled an ambitious strategic plan aiming for a 22% average return on tangible equity (ROTE) and a mid-teens compound annual growth rate (CAGR) for tangible book value. The plan also targets a cumulative net attributable profit of EUR 48 billion for the period 2025-2028, showcasing the bank’s long-term growth aspirations.
Negative Impact from U.S. Dollar Hedges
The depreciation of the U.S. dollar against the euro resulted in a negative net trading income (NTI) impact, reducing the net attributable profit by approximately EUR 100 million. This highlights the challenges BBVA faces in managing currency risks.
Challenges in Turkey
BBVA’s operations in Turkey, particularly through Garanti BBVA, reported a net profit of EUR 412 million. However, increased impairments and a higher-than-expected cost of risk at 164 basis points pose challenges to the bank’s performance in this market.
Pressure on Net Interest Income
Despite robust activity growth, BBVA faces pressure on its net interest income due to falling interest rates and macroeconomic challenges. This underscores the need for strategic adjustments to sustain income levels.
Forward-Looking Guidance
BBVA’s forward-looking guidance remains optimistic, with a notable increase in tangible book value per share plus dividends, rising by 14.6% year-over-year. The return on tangible equity reached 20.4%, and the bank aims for a 22% average ROTE from 2025 to 2028. The guidance emphasizes strong activity growth and improved profitability across core markets, aligning with the bank’s strategic goals.
In summary, BBVA’s earnings call reflected a positive sentiment with strong financial performance and strategic growth plans. The bank’s robust profit and loan growth, improved capital ratios, and efficiency gains are noteworthy. However, challenges such as currency hedges and economic conditions in Turkey require careful navigation. Overall, BBVA’s forward-looking guidance suggests a promising outlook, driven by strategic initiatives and market expansion.