BBVA Achieves Record Revenues In Q1 With €1.651Bn And Profitability / RoTE Close To 16%

BBVA Holvi

Bankinter : Main Q1 2022 figures compared to Bloomberg consensus expectations: Net Interest Income: €4.158bn (+20.5% vs €3.920bn e); Gross Margin: €5.939bn (+15.2% vs €5.418bn e); Net Margin: €3.525bn (+23.7% vs €2.983bn e); Ordinary NAB: €1.651bn (+59.8%); Published NAB: €1.651bn (+36.4% vs €1.235bn e).

Analyst’s view: We expect a positive share price reaction to the results which surprise positively in the most important metrics (activity, revenues and cost of risk/CoR) in all geographies (Mexico, Spain, Turkey and South America). The highlights of the results are: (1) the management team’s guidance for 2022 is positive and revises upwards net interest income forecasts for Spain & Mexico, (2) the efficiency ratio (costs/revenues) is amongst the best in Europe (BBVA: 40.7% vs 45.2% in 2021 vs >60.0% sector average) and (3) credit quality ratios evolve positively (NPLs ~3.9% vs 4.1% in Q4 2021) hence Cost of Risk/CoR is at historically low levels (0.82% vs 0.93% in Q4 2021) and (4) profitability/Ordinary ROE close to 16.0% (15.9% vs 12.0% in 2021) with a comfortable CET1 FL capital ratio (12.70% vs 12.75% in Q4 2021 vs 11.5/12.0% target).

By geographic areas (Q1 2022 NAB in constant terms): Mexico remains the main source of earnings (NAB: €771m; +59.0% vs €671m e). Customer spread widened, commercial activity accelerated (+8.9% in lending) and the NPL ratio declined to 2.96% (vs 3.17% in Q4 2021). In Spain (NPLs: €601m; +62.3% vs €435m e), the rebound in fee income, cost efficiency and the normalisation of CoR (-89.5% in provisions) explain the strong rise in the lower part of P&L account. Turkey (NPLs: €249m; +129.6% vs €159m e) surprised positively because the rise in revenues (+116.4%) offset inflationary pressures (+52.3% in expenses) and NPLs slackened to 6.70% (vs. 7.09% in Q4 2021). South America (NAB: €158m; +68.2% vs €129m e) maintained a good pace of activity (+11.0% in lending) with a low CoR.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.