Business Context and Reporting Period
Company: BANCO BILBAO VIZCAYA ARGENTARIA, S.A. (BBVA)
Filing Type: Form 6-K (Report of Foreign Issuer)
Reporting Period: Third Quarter 2024 (ended September 30, 2024)
Filing Date: October 31, 2024
BBVA reported a strong third quarter characterized by robust revenue growth, improved efficiency, and a solid capital position. The bank highlighted activity growth in Spain and Mexico as key drivers of resilience, alongside continued progress in digital customer acquisition and sustainable business channeling.
Key Financial Metrics
| Metric | 3Q24 (Current €M) | 9M24 (Current €M) | YoY Change (3Q24) |
|---|---|---|---|
| Net Interest Income | 5,868 | 18,861 | +4% (Current) / +3.5% (Constant) |
| Net Fees and Commissions | 1,912 | 5,754 | +28% (Current) / +13% (Constant) |
| Gross Income | 8,716 | 26,161 | +28% (Current) / +10% (Constant) |
| Operating Income | 5,386 | 15,972 | +40% (Current) / +16% (Constant) |
| Net Attributable Profit | 2,627 | 7,622 | +57% (Current) / +26% (Constant) |
| Earnings Per Share (EPS) | €0.44 | N/A | +33% vs 3Q23 (€0.33) |
| Efficiency Ratio | 38.9% (9M24) | N/A | -429 bps vs 9M23 |
| CET1 Ratio | 12.84% | N/A | +9 bps vs 2Q24 |
| Cost of Risk (YTD) | 1.42% | N/A | Within expectations |
Material Changes vs. Prior Period
- Profitability Surge: Net Attributable Profit rose 57% year-over-year on a current basis (26% on a constant basis), driven by a 40% increase in Operating Income.
- Revenue Growth: Net Interest Income grew 3.5% on a constant basis, driven by activity and customer spreads, excluding Argentina. Net Fees and Commissions surged 28% (current) due to growth in payments and asset management.
- Efficiency Improvement: The Efficiency Ratio improved significantly to 38.9% for the first nine months of 2024, a 429 basis point improvement year-over-year, reflecting "positive jaws" where revenue growth outpaced expense growth.
- Capital Strength: The CET1 ratio increased to 12.84%, remaining well above the bank's target range of 11.5%-12.0% and the SREP requirement of 9.13%.
- Asset Quality: Asset quality remained stable with a Cost of Risk of 1.42% YTD. Non-Performing Loan (NPL) coverage ratios remained robust.
Guidance, Outlook, and Risks
Outlook and Strategy: Management expressed optimism, stating the bank will "clearly outperform" its 2021-2024 goals. Key strategic pillars include healthy loan growth, managed structural risks, and proactive hedging policies. The bank aims to maintain industry-leading profitability metrics and continue digital transformation, with 67% of new customer acquisition occurring through digital channels.
Dividends: An interim dividend of €0.29 per share was paid in October 2024, representing an 81% increase compared to October 2023.
Risks and Contingencies:
- Macroeconomic Factors: Risks include market conditions, inflation, interest rates, and exchange rate fluctuations.
- Hyperinflationary Economies: Results in Turkey and Argentina are subject to significant volatility due to hyperinflation adjustments and Net Monetary Position (NMP) losses, though inflation rates in these regions showed signs of slowing.
- Regulatory and ESG: The bank faces ongoing regulatory oversight and must meet ESG performance targets, which depend partly on third-party actions.
- Geopolitical: Risks include military conflicts and natural disasters impacting operations.
Investor Verification Checklist
- Constant vs. Current Currency: Verify the distinction between "current" and "constant" euro figures, as FX impacts (particularly in Turkey and Argentina) significantly distort current currency growth rates.
- Hyperinflation Adjustments: Review the specific impact of Net Monetary Position (NMP) losses in Turkey and Argentina on the reported P&L, as these are non-cash accounting adjustments.
- Efficiency Ratio Sustainability: Confirm if the 429 bps improvement in the efficiency ratio is sustainable or driven by one-off factors.
- Loan Growth Quality: Assess the composition of the +1.5% total loan growth (constant) to ensure it aligns with the bank's strategic focus on consumer and mid-sized companies.
- Capital Buffer: Monitor the CET1 ratio trajectory relative to the 11.5%-12.0% target range to gauge future dividend capacity and buyback potential.