BBVA earnings: eight key takeaways to understand the bank’s 2019 accounts
Recurring revenues (net interest income and net fees and commissions) continue growing robustly, reaching a record high in 2019. According to BBVA Group executive chairman Carlos Torres Vila, the bank obtained outstanding results despite a macroeconomic environment that was more complex than expected. “Looking toward the future, at BBVA, our goal will be to dig deeper into our strategy, integrating the interests of customers, employees, shareholders and society as a whole, balancing economic, social and environmental perspectives in everything we do,” he indicated.
Excluding one-time items, the BBVA Group posted a profit of €4.83 billion in 2019 — 2.7 percent more than in 2018 and the highest since 2009. When the impacts of the goodwill adjustment in the U.S. in 4Q19 and capital gains from the sale of Chile are included, the net attributable profit was €3.51 billion, 35 percent less.
Recurring revenue. Income that is more recurrent in nature (net interest income plus net fees and commissions) rose 4.6 percent yoy (5.3 percent at constant rates) to €23.24 billion — a record high for the bank.
Transformation. BBVA has made significant progress in terms of transformation, which has allowed the bank to expand its customer base, as well as their satisfaction and level of engagement with the bank. At the end of 2019, BBVA had 32.1 million digital customers (57 percent of all customers), and 29.0 million mobile customers, which now exceed half of all customers, meeting the bank’s target for the year. Digital sales now represent 59 percent of all units sold and 45 percent in terms of value (PRV).
Sustainability. BBVA has already mobilized €30 billion to contribute to sustainable development — nearly one third of the €100 billion in its Pledge 2025. The bank also announced that starting in 2020, it is setting an internal price for its CO2 emissions, thus incorporating it into its decision-making processes in order to be neutral in direct CO2 emissions.
Efficiency. Operating cost containment efforts and positive recurring revenue trends allowed the Group to deliver ‘positive jaws’ and improved the efficiency ratio to 48.5 percent at the end of the year — significantly lower than the end of 2018 (-92bps at constant exchange rates).
Solvency. BBVA maintains a solid capital position. The fully loaded CET1 ratio stood at 11.74 percent at the end of 2019 – within the Group’s target range of 11.5 to 12 percent. BBVA generated 40 basis points of organic capital, after absorbing 25 basis points from regulatory impacts.
Risk management. Asset quality indicators remained stable with NPL ratio standing at 3.8 percent (the lowest of the past ten years) and a coverage ratio of 77 percent.
Profitability. Excluding the impact of the goodwill adjustment in the U.S., BBVA posted profitability metrics that nearly reached double digits, with ROE of 9.9 percent (compared to a 5.9 percent average for comparable European banks as of September 2019) and ROTE of 11.9 percent (compared to a 7.0 percent average for this group of European peers).
Creating value for shareholders. The tangible book value per share plus dividends reached €6.53 in 2019, an 11.5 percent increase compared to the same period in the previous year. In addition, the bank plans to propose to the competent governing bodies a gross cash dividend of €0.16 per share to be paid in April 2020, maintaining the same amount as the year before.
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