Market analysts reacted positively to the results disclosed by BBVA, which in many cases outperformed their forecasts. Reports cite both the bank’s solid set of results and strong capital generation capacity as the factors that have allowed it to achieve its 11% fully loaded CET1 ratio goal ahead of its proposed 2017 date.
BBVA’s Q3 results outperformed analyst forecasts for core business lines and across virtually all geographies. Thus, some analysts still rated BBVA as their favorite stock within the Spanish financial sector, and some even anticipated and upward revision of the bank’s results estimates. An analyst dubbed BBVA “one of the most appealing growth stories we cover.” Despite solid performance of the Group’s stocks in recent weeks, most analysts expected markets to react positively to the disclosure of the results. Indeed, the bank's shares jumped 2.80% after the announcement, outperforming Spanish peer stocks and banking index Stoxx Banks, which increased by 1.18%.
According to analysts, BBVA’s Q3 results highlights were the following:
Regarding the Group as a whole:
- Positive surprise in capital: Not only did the 29 b.p. of capital generated by the company beat all expectations, but they allowed BBVA to deliver on its goal of achieving a fully loaded CET1 ratio of 11%, and to do so earlier than expected (2017), despite assuming the impact of Turkey’s rating downgrade.
- Solid performance in revenues. However, the fact that the Net Trading Income heading was the main driver of quarterly growth, was seen by some analysts in a not-so-positive light, as these are somewhat less sustainable revenues.
- Once again, the Group’s diversification was seen as a key pillar for the results’ strength.
- Despite the efforts made, cost containment figures remained in line or slightly above estimates.
On a business area basis:
- Spain earned more positive comments than in preceding quarters. One of the best-rated developments was the drop in loan-loss provisioning, which helped the bank offset - partially– the decline in revenues.
- As for the U.S., analysts noted the solid behavior of the net interest income and commissions headings. Loan-loss provisions were in line with forecasts, considering the allocations made during the first quarter of the year in connection with the oil & gas portfolio.
- In Turkey, analysts underscored the strength of its recurring revenue account (net interest income plus commissions), more so taking into account the weakness of the Turkish lira. However, costs and provisions performed worse than expected.
- Mexico’s figures were in line with forecasts. Analysts noted that interest rate trends through the end of the year could have a positive impact on the account. Positive reports also focused on Mexico’s resilience despite the peso’s weakness.
- The area of South America posted a slightly lower result than expected by analysts.