Business Context and Reporting Period
Company: BANCO BILBAO VIZCAYA ARGENTARIA, S.A. (BBVA)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: First Quarter 2026 (January 1, 2026 – March 31, 2026)
Context: BBVA reported strong execution of its 2025-2029 Strategic Plan, driven by recurring banking revenues and innovation. The period was marked by geopolitical tensions (specifically the conflict in Iran) and high inflation in key markets like Turkey and Argentina, which impacted exchange rates and provisioning.
Key Financial Metrics
| Metric (Millions of Euros) | Q1 2026 | Q1 2025 | YoY Change |
|---|---|---|---|
| Net Interest Income | 7,537 | 6,398 | +17.8% |
| Gross Income | 10,652 | 9,324 | +14.2% |
| Operating Income | 6,604 | 5,762 | +14.6% |
| Net Attributable Profit | 2,989 | 2,698 | +10.8% |
| Impairment on Financial Assets | (1,820) | (1,385) | +31.4% |
Balance Sheet and Capital
- Total Assets: €894,267 million (up 15.7% YoY).
- Loans to Customers (Gross): €491,614 million (up 14.7% YoY).
- Deposits from Customers: €505,059 million (up 10.8% YoY).
- CET1 Ratio: 12.83% (above the target range of 11.5% - 12.0%).
- Total Capital Ratio: 17.30%.
- Liquidity Coverage Ratio (LCR): 141% (consolidated).
Profitability and Efficiency
- ROE (Return on Equity): 20.7%.
- ROTE (Return on Tangible Equity): 21.7%.
- Efficiency Ratio: 38.0% (improved by 24 basis points YoY).
- Cost of Risk: 1.54% (up from 1.30% in Q1 2025).
- NPL Ratio: 2.6% (improved from 2.9% in Q1 2025).
- NPL Coverage Ratio: 86%.
Material Changes vs. Prior Period
- Profit Growth: Net attributable profit rose 10.8% to €2,989 million. Excluding exchange rate effects, growth was 14.1%, driven by a 18.3% increase in gross income (constant rates).
- Expense Pressure: Operating expenses increased 13.7% (17.5% at constant rates), primarily due to higher technology costs and personnel expenses (including voluntary redundancies).
- Provisions: Impairment on financial assets increased 35.0% at constant exchange rates, reflecting a generalized increase across all business areas due to lending growth and macroeconomic uncertainty.
- Asset Quality: While the NPL ratio improved to 2.6%, the absolute balance of non-performing loans increased by 4.6% in the quarter.
- Shareholder Returns: The share price increased 45.4% to €18.25. A final dividend of €0.60 per share for 2025 was approved, bringing total 2025 distributions to €0.92 per share.
Guidance, Outlook, and Risks
Management Commentary and Outlook
- Strategic Plan: BBVA continues to execute its 2025-2029 plan, aiming to channel €700 billion into sustainable business by 2029. €36 billion was channeled in Q1 2026.
- Macroeconomic Forecast: BBVA Research forecasts global GDP growth of 3.2% in 2026. The Eurozone is expected to decelerate to 1.1% growth. Inflation in the US is expected to remain around 3%, limiting Fed rate cuts.
- Capital Management: The Group maintains a CET1 ratio well above requirements. A share buyback program of up to €3,960 million was authorized; €2,500 million has been executed in two tranches as of April 2026.
Risks and Contingencies
- Geopolitical Risk: The conflict in Iran has increased uncertainty, driving up energy prices and creating volatility in financial markets. BBVA made a €98 million adjustment to expected losses due to this uncertainty.
- Hyperinflation: Significant adjustments were recorded in Turkey and Argentina due to hyperinflation accounting, impacting the "Other operating income and expenses" line.
- Disposal of Romanian Subsidiaries: BBVA agreed to sell 100% of Garanti BBVA's subsidiaries in Romania to Raiffeisen Bank SA. These assets are now classified as "held for sale." Closing is expected in Q4 2026.
- Regulatory Changes: New MREL requirements were communicated by the Bank of Spain in April 2026, increasing the RWA requirement to 23.94%.
Key Facts for Investor Verification
- Constant Exchange Rate Performance: Verify the 14.1% profit growth and 18.3% gross income growth at constant exchange rates to isolate operational performance from currency fluctuations (notably the Turkish Lira and Argentine Peso).
- Provisioning Trends: Monitor the 35% increase in loan-loss provisions to ensure it aligns with the growth in the loan book and does not signal a broader deterioration in asset quality beyond the macroeconomic adjustments.
- Romanian Sale Impact: Confirm the timeline and financial impact of the Romania subsidiary sale, including the reclassification of assets and potential gains/losses upon closing in Q4 2026.
- Capital Buffers: Verify the CET1 ratio of 12.83% against the new MREL requirements (23.94% in RWA) communicated in April 2026 to ensure continued compliance.
- Share Buyback Execution: Track the execution of the remaining tranche of the €3,960 million buyback program and its impact on earnings per share.