Business Context and Reporting Period
This Form 6-K filing covers the first quarter of 2025 (ended March 31, 2025) for Banco Bilbao Vizcaya Argentaria, S.A. (BBVA). The report details consolidated financial results, balance sheet evolution, and operational highlights across key business areas including Spain, Mexico, Turkey, and South America. The filing also addresses significant corporate developments, including a voluntary tender offer for Banco Sabadell and updated sustainability targets.
Key Financial Metrics
| Metric | Q1 2025 | Q1 2024 | YoY Change |
|---|---|---|---|
| Net Attributable Profit | €2,698 million | €2,200 million | +22.7% |
| Gross Income | €9,324 million | €8,218 million | +13.5% |
| Operating Income | €5,762 million | €4,835 million | +19.2% |
| Net Interest Income | €6,398 million | €6,512 million | -1.7% |
| Net Trading Income | €948 million | €772 million | +22.7% |
| Operating Expenses | €3,562 million | €3,383 million | +5.3% |
| Total Assets | €772,863 million | €801,690 million | -3.6% |
| Loans to Customers (Gross) | €428,673 million | €400,457 million | +7.0% |
| Customer Deposits | €455,708 million | €436,763 million | +4.3% |
| Total Equity | €59,264 million | €55,778 million | +6.2% |
Profitability and Efficiency Ratios
- ROE (Return on Equity): 19.3% (vs. 16.9% in Q1 2024)
- ROTE (Return on Tangible Equity): 20.2% (vs. 17.7% in Q1 2024)
- Efficiency Ratio: 38.2% (Improved by 469 bps vs. Q1 2024 at constant exchange rates)
- Cost of Risk: 1.30% (vs. 1.39% in Q1 2024)
- NPL Ratio: 2.9% (vs. 3.4% in Q1 2024)
- NPL Coverage Ratio: 82% (vs. 76% in Q1 2024)
- CET1 Ratio: 13.09% (vs. 12.82% in Q1 2024)
- Earnings Per Share (EPS): €0.45 (vs. €0.36 in Q1 2024)
Material Changes vs. Prior Period
- Profit Growth: Net attributable profit rose 22.7% year-over-year, driven by strong recurring banking revenues and Net Trading Income (NTI). Excluding currency fluctuations, profit growth was 46.3%.
- Revenue Mix: While Net Interest Income declined slightly (-1.7%) due to interest rate environments in key markets, Net Fees and Commissions grew 9.2% and NTI surged 22.7%.
- Expense Management: Operating expenses increased 5.3% (14.2% at constant exchange rates), primarily due to inflation in operating countries and workforce growth. However, this was outpaced by gross income growth (+28.2% at constant rates), significantly improving the efficiency ratio.
- Asset Quality: Non-performing loans (NPLs) decreased by 3.7% in the quarter, lowering the NPL ratio to 2.9%. Provisions for impairment increased 11.9% year-over-year due to loan growth, but the cost of risk improved.
- Balance Sheet: Loans to customers grew 7.0% year-over-year, led by the wholesale segment. Customer funds increased 6.1% year-over-year.
Guidance, Outlook, and Material Events
Management Commentary and Outlook
Management highlights a solid performance supported by recurring revenues and a lower negative impact from hyperinflation adjustments (particularly in Argentina). The macroeconomic outlook notes uncertainty due to US administration policies and potential trade protectionism, which may impact global growth and inflation. BBVA anticipates the Federal Reserve may postpone rate cuts to 2026, while the ECB may continue cutting rates.
Corporate Developments
- Banco Sabadell Tender Offer: BBVA announced a voluntary tender offer for Banco Sabadell. The consideration was adjusted multiple times due to dividends paid by both entities. The final adjusted offer is 1 new BBVA share and €0.70 in cash for every 5.3456 Sabadell shares. The offer is subject to regulatory approvals (CNMV, Spanish antitrust authorities) and shareholder approval for capital increase.
- Shareholder Remuneration: A final dividend of €0.41 per share was paid on April 10, 2025, bringing total 2024 distributions to €0.70 per share. A share repurchase program of €993 million announced in January 2025 remains pending execution.
- Sustainability Targets: BBVA set a new target to channel €700 billion in sustainable business for 2025-2029, more than double the previous target. In Q1 2025, €28.8 billion was channeled, a 55% increase year-over-year.
Risks and Contingencies
- Geopolitical and Macroeconomic Risk: Uncertainty regarding US tariffs, trade protectionism, and geopolitical challenges could impact economic growth and inflation in key markets (Spain, Mexico, Turkey).
- Currency Risk: Significant depreciation of the Turkish Lira (-10.5% in the quarter) and Argentine Peso (-7.6%) impacted reported figures, though results at constant exchange rates show stronger underlying performance.
- Regulatory Risk: The Banco Sabadell acquisition is subject to multiple regulatory conditions, including antitrust clearance and banking license approvals.
Investor Verification Checklist
- Constant Exchange Rate Performance: Verify the 46.3% profit growth at constant exchange rates to understand organic performance excluding currency headwinds in Turkey and Argentina.
- Banco Sabadell Offer Status: Monitor the progress of regulatory approvals (CNMV, CNMC) and the final acceptance rate of the tender offer.
- Hyperinflation Adjustments: Review the specific impact of hyperinflation accounting in Argentina and Turkey on the "Other operating income and expenses" line to assess recurring profitability.
- Capital Ratios: Confirm the CET1 ratio of 13.09% remains well above the regulatory requirement of 9.13% and the management target range of 11.5%-12.0%.
- Share Repurchase Execution: Track the execution of the €993 million share buyback program announced in January 2025.