Banco Bilbao Vizcaya Argentaria SA

MAD:BBVA

Earnings Call Analysis

Bank's Profit Rises 24% with Strategic Growth

In the first 9 months of 2023, the bank reported a net profit of EUR 5.96 billion, marking a 24% increase from the previous year. This surge is attributed to robust recurring revenue growth, particularly in Mexico and Spain. Loan portfolio expanded by 8%, and 8.3 million new customers were added, along with EUR 49 billion directed towards sustainable business, elevating return on tangible equity to 17%. The bank remains a top-tier entity in Europe based on efficiency and profitability. It sustains a balanced distribution of pretax profit, with one-third each allocated to taxes, lending, and rewarding its 800,000 shareholders.

Remarkable Profit Growth and Value Creation

Onur Genç, an executive, highlighted the exceptional performance in the first nine months of 2023, revealing a net attributable profit of EUR 5.96 billion, which marks a significant uptick of 24% compared to the prior year. This surge is largely attributed to robust recurring revenue increases, particularly in Mexico and Spain, demonstrating the effective execution of the bank's profitable growth strategy.

Expanding Loan Portfolio and Customer Base

The bank is experiencing dynamic growth, expanding its loan portfolio by 8% over the past year, and successfully attracting 8.3 million new customers. Additionally, the bank is making significant strides in sustainable business, channeling EUR 49 billion from January to September, which underscores its commitment to profitability and sustainability. The Return on Tangible Equity (ROTE) standing at 17% in the last quarter testifies to the institution's position as one of the most efficient and profitable banks in Europe.

Contribution to Stakeholders and Society

The bank's earnings distribution reflects a balanced approach to value allocation. One-third of its pretax profit is set aside for taxes, supporting societal infrastructure. Another third fuels economic growth by facilitating loans to customers. The final third rewards nearly 800,000 shareholders, many of whom are individual savers, underscoring the bank's emphasis on inclusivity and equitable stakeholder value creation. The executive emphasized that these results enable significant contributions to societal well-being, aligning with the bank's core commitment.

Earnings Call Transcript 2023-Q3

[Onur Genç, executive]

We achieved excellent results in the first 9 months of 2023, reaching a net attributable profit of EUR 5.96 billion. This represents a 24% increase versus last year, thanks to the very positive evolution of recurring revenue, particularly in Mexico and Spain. We are clearly delivering on our strategy of profitable growth.

On growth, the greater level of activity allowed us to increase our loan portfolio by 8% over the past year. Furthermore, we acquired 8.3 million new customers and channeled EUR 49 billion of sustainable business between January and September. We are growing, and we are growing in a profitable manner with a return on tangible equity reaching 17% in the last quarter. With this, we are clearly one of the most efficient and profitable banks in Europe.

These earnings also allow us to create value for all of our stakeholders and contribute to the well-being of the society as a whole. We allocate approximately 1/3 of our pretax profit, first to taxes, another 1/3 to future economic growth in the form of lending to our customers. And we dedicate the remaining 1/3 to compensating our nearly 800,000 shareholders, many of whom are small individual savers.

The results we are presenting today are what make our contribution to society possible, a cause that which we are firmly committed.