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Banking Updated: 01 Aug 2016

What are analysts saying about BBVA’s Q2 2016 results?

Analysts see BBVA’s Q2 results in a positive light. Most highlighted the solid underlying trends and singled out income growth and credit quality as key drivers of the bank’s earnings. The increase of the capital ratio was another one of the most highly-valued elements. Bank shares are expected to react positively, although no significant shifts were anticipated in terms of recommendations or target price.

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The elements that analysts viewed in a more positive light were:

Regarding BBVA Group as a whole:

  • The net attributable profit for the quarter (€1.12 billion) beat consensus estimates by almost 20%. Also, the quarter’s gross income came at an all-time high (€6.45 million). The NTI posted for the quarter was also particularly high, with capital gains not likely to be repeated in subsequent quarters.
  • Analysts also endorsed the banks’ successful cost-containment efforts.
  • Provisions were lower than expected, helping profits to exceed consensus forecasts.
  • The consolidation in the recovery of asset quality was another one of the quarter’s highlights. The NPL ratio improved in June to levels not seen since December 2012.
  • Solid progress in the level of capital adequacy. Some analysts see the capital ratio improvement as the bank’s greatest achievement during the quarter. The fully-loaded CET1 ended at 10.71% (+17 basis points in the quarter). Some analysts also believe that BBVA will be able to reach the 11% target earlier than expected.

On a business area basis:

Spain’s results were rated as surprisingly positive. Some analysts underscored NII growth and the cost-containment push as the quarter’s highlights. Another heading that was seen in a positive light was provision allocations, with a drop that reflected the significant improvement in asset quality in the country.

In the U.S., lower provisions were also seen as a standout element.

Analysts stressed strong activity and cost control as the most noteworthy elements in Turkey. This geography posted the highest growth rate in terms of net attributable profit. Some analysts underscored the fact that recent events - the failed coup attempt – have not had a material impact, for the time being, in the geography’s financial statements.

Mexico's numbers and its relative weight in the consolidated statements were seen as positive, despite net interest income growth being lower than estimated.

South America gain beat analysts’ expectations thanks to strong activity and assetquality stability.