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FINANCIALS: BBVA: Big Revenue Beat But Spreads Capped By Bid For Now

FINANCIALS

BBVA (BBVASM: Baa2 develop/BBB+/BBB+) results show a rather mixed set of credit figures but, in fairness, any misses are marginal. More important for equity holders is the large (8%) revenue beat driving a 21% pre-tax beat, we feel. Spreads do not have much expectation built in; the Sabadell bid weighing. In other circumstances, these results would be supportive, but the bid may continue to limit tightening in the near term, we feel.

  • Credit stats: loan losses ticked up (to c.1.45%, from 1.39% in 1Q24, cons: c.1.42%) but NPLs are 20bp better than consensus (at 3.3%, -10bp q/q), driven by improvements in Spain. Mexico and Turkey seem less positive, so negative laterals for Scotiabank (27-Aug report) and EmiratesNBD and QNB. CET1 is 15bp below consensus (at 12.75%, miss looks like hyperinflationary related). So, a more mixed set of credit figures.
  • Revenues, however, are 8% above consensus (relatively large for a bank!) driven by Turkey and South America, costs broadly in line, driving a 21% pre-tax beat. At least part of the beat is trading income, seen as a lower quality revenue stream.
  • Guidance isn’t formally upgraded but the slides do include the term “clearly outperform” relating to FY24 goals. There is an updated timeline on the Sabadell bid which indicates to us a shareholder vote won’t happen in 4Q24 and Spanish competition approval is still needed.

Conf call is 0830 (London time) at: https://streamstudio.world-television.com/gaia/bbva/20240731/en/index.html

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