Business Context and Reporting Period
This Form 6-K filing by Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) reports consolidated financial results for the period ended June 30, 2024. The report covers the first half of 2024 (1H24) and includes a breakdown of performance across key business areas: Spain, Mexico, Turkey, South America, Rest of Business, and the Corporate Center. The filing also details a significant strategic development: a voluntary tender offer for the acquisition of Banco Sabadell, S.A.
Key Financial Metrics
| Metric | 1H 2024 | 1H 2023 | YoY Change |
|---|---|---|---|
| Net Attributable Profit (€ millions) | 4,994 | 3,878 | +28.8% |
| Gross Income (€ millions) | 17,446 | 14,148 | +23.3% |
| Net Interest Income (€ millions) | 12,993 | 11,410 | +13.9% |
| Operating Expenses (€ millions) | (6,859) | (5,938) | +15.5% |
| Efficiency Ratio | 39.3% | 42.0% | -270 bps |
| Cost of Risk | 1.42% | 1.04% | +38 bps |
| NPL Ratio | 3.3% | 3.4% | -10 bps |
| CET1 Ratio (Fully-Loaded) | 12.75% | 12.99% | -24 bps |
| Return on Equity (ROE) | 19.1% | 16.2% | +290 bps |
| Earnings Per Share (EPS) (€) | 0.83 | 0.62 | +33.9% |
Balance Sheet Highlights: Total assets stood at €759.5 billion. Loans and advances to customers (gross) increased 6.3% year-over-year to €405.0 billion. Total customer funds grew 9.7% to €612.0 billion.
Material Changes vs. Prior Period
- Profitability Surge: Net attributable profit rose 28.8% year-over-year, driven by a 23.3% increase in gross income. This growth outpaced the 15.5% rise in operating expenses, improving the efficiency ratio by 270 basis points.
- Revenue Drivers: Net interest income grew 13.9% due to higher benchmark rates and loan volume. Net fees and commissions surged 32.1%, supported by payment systems and asset management. Net trading income (NTI) increased 144.2%, largely due to favorable foreign exchange hedging results in the Corporate Center.
- Expense and Provisioning: Operating expenses increased 19.5% at constant exchange rates, attributed to inflation, workforce growth, and strategic investments. Provisions for impairment on financial assets rose 42.8%, linked to the expansion of profitable retail loan portfolios.
- One-Time Tax Impact: Results include a €285 million charge for the temporary tax on credit institutions in Spain, recorded in the first quarter.
Guidance, Outlook, and Strategic Developments
Acquisition of Banco Sabadell
BBVA announced a voluntary tender offer to acquire 100% of Banco Sabadell, S.A. The offer was launched after an initial merger proposal was rejected by Sabadell's board.
- Consideration: 1 new BBVA share for every 4.83 Sabadell shares.
- Capital Increase: On July 5, 2024, shareholders approved a capital increase of up to €551.9 million to fund the offer.
- Timeline: Closing is expected within 6 to 8 months, subject to regulatory approvals (CNMV, ECB, Antitrust, UK PRA) and acceptance by at least 50.01% of Sabadell shareholders.
Macroeconomic Outlook
BBVA Research forecasts global GDP growth to moderate to 3.1% in 2024. Inflation is expected to slow, with the ECB cutting rates in June and the Fed expected to begin easing later in the year. However, geopolitical risks (Ukraine, Middle East) and protectionist policies remain sources of uncertainty.
Sustainability
BBVA has channeled approximately €252 billion in sustainable business between 2018 and June 2024, progressing toward its €300 billion 2025 target. In 1H24 alone, €46 billion was channeled, a 37% increase year-over-year.
Investor Verification Checklist
- Acquisition Progress: Monitor the acceptance rate of the Banco Sabadell tender offer and the status of regulatory clearances (CNMV, ECB, UK PRA).
- Cost of Risk Trajectory: Verify if the 1.42% cost of risk stabilizes as retail loan growth continues, particularly in Mexico and South America where provisions increased.
- FX Sensitivity: Assess the impact of currency fluctuations (specifically the Mexican peso and Turkish lira) on future earnings, as NTI and results are sensitive to these rates.
- Capital Management: Confirm the CET1 ratio remains above the 11.5% - 12.0% target range following the capital increase for the Sabadell acquisition.
- Spain Tax Impact: Track the execution of the temporary tax on credit institutions and its effect on future quarterly results in the Spanish business area.