In a presentation delivered to the CNMV at an event with investors on Wednesday, BBVA highlights the bank’s track record of creating shareholder value and its competitive advantage, focused on profitable growth. This allows BBVA to present a positive outlook with recent improvements in its forecasts for loan growth and net interest income in markets such as Spain and Mexico. The document that the CEO of BBVA, Onur Genç, will present at the conference organized by Bank of America emphasizes that “BBVA is an engine of profitable growth”.
At the start of the presentation, BBVA reviews its Track registration and ability to grow profitably and create assess for his shareholders. First of all, the bank emphasizes its leadership profitability within the banking sector over the years, with a the net margin on risk-weighted assets of 3.9%, compared to 2.8% for its peer group in Europe. Profitability measured by SPIN was 14.3%, higher than 8.7% of its peers.
The document also highlights BBVA’s unique story in digital transformationwhich also serves as a catalyst for Efficiency and growth. The proof is that BBVA had registration high customer’s purchase in the first half of the year, with 5.3 million new customers, more than double the number five years ago. 55% of them joined the bank digitally, compared to only 6% in 2017. In addition, nearly 77% of the Group’s sales are made through digital channels.
Other indicators that show BBVA’s powerful capacity for growth and shareholder value creation are the trends in its revenue, earnings per share and tangible book value per share plus dividends. In the period from early 2019 to June 30, 2022, the bank’s gross income grew 3.2% (compound annual growth rate or CAGR), well outpacing its European peers at 1.9%. As a result, earnings per share growth outpaced that of its competitors (+83% vs. +74%). To finish, tangible value per share plus dividends (in compound annual growth rate or CAGR) increased by 9.2%, compared to 5.4% for the same peer group.
As it concerns value creation, BBVA recalls that the bank’s strategic decisions are always aligned with the objective of creating value for shareholders. In this respect, he compares the evolution of BBVA total shareholder return (including dividends and equity performance), which is up 27% from 2019 to date, compared to an average decline of 9% among peers in Spain over the same period.
The presentation also highlights how BBVA’s main strengths: digitization, innovation and sustainability— are a source of sustainable competitive advantage over time. BBVA has first franchise in all the countries where it operates, both in terms of market share and profitability. In addition, BBVA market share in the business segments with higher added value is either exceeding its total lending share in each country or growing, further proving its successful commitment to profitable growth.
Bank highlights digital capabilities that sets it apart, and its use of its global reach as benefits to improve efficiency through global products and platforms. Coupled with investment in innovation, with internal projects such as the launch of the digital bank in Italy or direct investments in startups (Atom, Solaris, Neon) and through venture capital funds—Propel Venture Partners, Sinnovation—allows the bank to develop new capabilities.
BBVA is also a leading bank in its commitment to sustainable development. In 2021, the bank doubled its target of channeling sustainable finance between 2018 and 2025 to €200 billion, of which it has already channeled €112 billion (as of June 30, 2022).
Overall, the bank underlined its good prospects for the future, and strongly believes that the market will recognize this potential.
The bank reiterates the improvement business outlook for BBVA in 2022 in two of its key markets: Mexico and Spain. BBVA is waiting ready in Spain to grow in low single digits for the full year and net interest income increase by about 5%. In Mexico, loan portfolio growth is expected in 2022 in double digits, while net interest income will increase by around 20%.
He also predicts good performance of credit quality indicatorswith a cost of risk in 2022 for the BBVA Group expected to be below 100 basis points, in line with the previous year, despite the complex environment.
BBVA would therefore be ready to face the new economic cycle and other challengessuch as competition from new players and fintechs. The quality and resilience of the bank’s capital helps to face future challenges, with a fully loaded CET1 ratio as of June 30, 2022 of 12.45%. This is well within the bank’s target range of 11.5% to 12%, and well above the regulatory SREP requirement of 8.60% set by the European Central Bank.
Globally, BBVA is in a strong position to achieve the objectives set for 2024 during its Investor Day.
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