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: Three months ended March 31, 2026
Business Overview: BBVA is a global financial services group with operations in Spain, Mexico, Turkey, South America, and other regions. The Group focuses on retail banking, asset management, and wholesale banking with a strong digital proposition. As of March 31, 2026, the Group operates through five main segments: Spain, Mexico, Turkey, South America, and Rest of Business, plus a Corporate Center.
Key Financial Metrics
| Metric (in Millions of Euros) | Q1 2026 | Q1 2025 |
|---|---|---|
| Net Interest Income | 7,537 | 6,398 |
| Gross Income | 10,652 | 9,324 |
| Operating Profit Before Tax | 4,722 | 4,348 |
| Profit Attributable to Parent Company | 2,989 | 2,698 |
| Impairment on Financial Assets | (1,820) | (1,385) |
| Total Assets | 894,267 | 859,576 |
| Loans and Advances to Customers | 478,949 | 460,401 |
| CET1 Capital Ratio | 12.83% | 12.70% |
| Total Capital Ratio | 17.30% | 17.21% |
Cash Flow: Net cash used in operating activities was €9,760 million for Q1 2026, compared to a net cash inflow of €157 million in Q1 2025. This outflow was driven by increases in financial assets and liabilities held for trading and amortized cost.
Material Changes vs. Prior Period
- Profitability: Profit attributable to the parent company increased by 10.8% to €2,989 million, driven by higher net interest income (+17.8%) and fee income (+12.7%).
- Net Interest Income: The increase was primarily due to higher volumes of Turkish lira-denominated loans, increased SME and consumer loans in Mexico, and lower funding costs in Argentina. At constant exchange rates, net interest income rose by 20.2%.
- Impairment Costs: Credit impairment expenses increased by 31.4% to €1,820 million. This was driven by higher requirements in Mexico (credit cards, consumer, wholesale), Turkey (consumer/credit cards), and Argentina (mortgages), reflecting uncertain macroeconomic scenarios.
- Segment Performance:
- Turkey: Profit attributable to parent surged 66.1% to €263 million, despite lira depreciation, due to higher loan volumes and spreads.
- Mexico: Profit rose 9.3% to €1,453 million, supported by loan growth and peso appreciation.
- Spain: Profit increased 8.1% to €1,095 million, aided by trading gains and lower funding costs.
- South America: Profit grew 16.3% to €249 million, though exchange rate depreciation in Argentina and Peru had a negative impact on reported euro figures.
- Capital: CET1 ratio improved by 13 basis points to 12.83%, exceeding the ECB requirement of 8.98%. Risk-weighted assets increased by approximately €12 billion.
Guidance, Outlook, Risks, and Unusual Items
- Share Buyback Program: BBVA completed the first tranche (€1,500 million) and the second tranche (€1,000 million) of a €3,960 million framework share buyback program. The first tranche shares were cancelled in March 2026; the second tranche shares are pending amortization.
- Dividends: A final dividend of €0.60 per share for the 2025 financial year was approved and paid in April 2026, totaling approximately €3,357 million.
- Divestiture: On March 28, 2026, Garanti BBVA agreed to sell its Romanian subsidiaries to Raiffeisen Bank SA. The transaction is expected to close in Q4 2026. Assets and liabilities are classified as "held for sale."
- Risks and Outlook:
- Geopolitical: High uncertainty due to conflicts in Ukraine and the Middle East (Iran), and U.S. administration policies (tariffs, fiscal deficits) which could increase global volatility and inflation.
- Macroeconomic: Risks include stagflation, exchange rate volatility (particularly Turkish lira, Argentine peso), and potential recession scenarios. High interest rates in most regions may impact default rates.
- Hyperinflation: Turkey, Argentina, and Venezuela remain hyperinflationary economies, requiring specific accounting adjustments (IAS 29) that impact reported results.
- Regulatory: Changes in U.S. policies and potential interventions in Latin America pose risks. In Spain, political and regulatory uncertainty persists.
Key Facts for Investor Verification
- Capital Adequacy: Verify that the CET1 ratio of 12.83% and Total Capital ratio of 17.30% remain sufficient against the ECB's SREP requirements (CET1 8.98%, Total 13.13%) and the updated MREL requirements effective April 14, 2026.
- Credit Quality: Monitor the rising impairment charges (€1.82 billion) and non-performing loan ratios, particularly in Turkey (4.1%) and South America (4.2%), against the backdrop of high inflation and geopolitical instability.
- Shareholder Returns: Confirm the execution and accounting treatment of the €2.5 billion share buyback completed in Q1/Q2 2026 and the impact of the €3.357 billion dividend payout on retained earnings.
- Foreign Exchange Impact: Assess the sensitivity of reported earnings to currency fluctuations, specifically the depreciation of the Turkish lira and Argentine peso, which significantly impacted the translation of local results into euros.
- Romanian Divestiture: Track the progress of the sale of Garanti BBVA's Romanian subsidiaries, expected to close in Q4 2026, and its impact on the Turkey segment's future earnings.