FINANCIALS: BBVA Conf Call Positive On Two Fronts. Supportive To Spreads.

BBVA (BBVASM: Baa2 develop/BBB+/BBB+) conf call was characterised by two key elements: a bullish message on current trends, underpinning that improved guidance but also a pause on the share buyback which has spooked the equity market. We view both as positive.

• Overall trading messages were positive, talking about Mexican upgrades, the potential for a post-election bump alongside good activity more widely in the group, including Turkey. Our sense is that management would be upgrading guidance but, with a bid underway, such a move would leave them open to serious consequences if there was any failure. Perhaps the regulatory risk of such a move in this situation is much higher than non-bid periods.
• Share buyback: mgmt indicated that this is suspended due to the offer period. We aren’t sure this had been made explicit before but is not unusual, in our view. This does mean that CET1 levels will climb from here but also explains why the equity market has taken today’s upgraded guidance and above-consensus figures so badly.