FINANCIALS: BBVA Results 31-Jul: Sabadell Bid Update Possible, Laterals Positive

BBVA (BBVASM: Baa2 develop/BBB+/BBB+) results are 31-Jul. Much as the bid for Sabadell will feature, actual results are not unimportant. Laterals from Sabadell’s results were good but the politics around the deal will also feature, we fear.

• Results last time looked positive with a good upgrades to guidance and earnings driven by better revenues. Credit metrics were more mixed with slightly disappointing loan losses partly offset by CET1 slightly (15bp) above expectations, we feel.
• The bid for Sabadell, which was rebuffed, will likely dominate and, much as Sabadell published strong results last week, we see something similar happening here. The ECB appears open to the deal, local Spanish politicians in Sabadell’s home area (Catalonia), less so. Spain is raising the CCyB over the next year, so that should be some underpinning to spreads, we feel.
• Spreads have done pretty well, outperforming €IG banks by a few basis points since results and over the last month. The equity has done rather less well, down 9% (vs. SX7P +5%) but has clawed back 5pp relative in the last month.
• Revenue estimates have been lifted 4% in the last quarter, pushing earnings 7-8% higher.

Results are due pre-market with a conf call at 0830 (London time) at: https://streamstudio.world-television.com/gaia/bbva/20240731/en/index.html