BBVA underscores value creation to London investors amid its new strategic plan and the Sabadell deal
At Bank of America's investor conference in London, BBVA CEO Onur Genç reaffirmed the attractiveness of his bank's offer for Banco Sabadell. Genç argued that BBVA's track record and future prospects position it as the ideal partner for Sabadell, telling investors that those who accept the offer will join the European bank with the highest growth and profitability levels. He emphasized that BBVA's geographic diversification and leading franchises would enhance value creation for new shareholders. Genç stressed that the bank stands strongly positioned to generate value: “We have announced €36 billion¹ available for distribution throughout 2025-2028”.
Onur Genç argued that technology is fundamentally reshaping banking, making the pursuit of scale through mergers increasingly compelling. As banks digitize their operations, deploy artificial intelligence, and comply with regulations like DORA, they face mounting technological costs, many of them fixed. BBVA alone spends roughly €1.1 billion annually on technology in Spain. "Why would two banks in the same market develop separate systems and applications?" he asked. "It defies logic." For Genç, the strategic rationale for the deal is unambiguous.
Speaking to investors, BBVA's CEO emphasized how attractive the offer should prove to shareholders. The bank is offering a substantial premium: 30 percent above Sabadell's share price on April 29, 2024, before merger talks became public, and 42 percent above the weighted average over the preceding month. These premiums significantly exceed those of other successful European bank takeovers. "These numbers speak for themselves," he said.
BBVA expects the merger to generate annual pre-tax synergies of €900 million, representing 13.5 percent of the combined Spanish operations' cost base, excluding Sabadell's British subsidiary TSB. The bank anticipates capturing these synergies fully by 2029, the year following the expected completion of the merger.
Onur Genç positioned BBVA as Sabadell's ideal partner, citing the bank's proven performance and growth trajectory. He put the spotlight on BBVA's target of achieving 22% average return on tangible equity between 2025 and 2028, a figure that would lead European banking. He also pointed to another crucial metric: growth in tangible book value including dividends, which directly measures value creation for shareholders. BBVA projects this will compound at double-digit rates annually through 2028. Looking back, Genç noted that BBVA has outperformed both European and Spanish rivals in creating shareholder value (as measured by tangible value per share plus dividends) over the past five, ten, and fifteen years.
Regarding shareholder remuneration policy, BBVA's CEO has indicated that the key factor is the ability to generate sustainable results that support future dividends. “BBVA's unique combination of growth and profitability, together with the expected synergies from the transaction, puts us in a very strong position to create value and distribute dividends,” he said.
BBVA remains firmly committed to pursuing a clear, predictable and sustainable policy of paying out between 40 and 50 percent of profit each year. Meanwhile, the bank will continue to generate capital, reinvesting in profitable growth and paying out any surplus above a CET1 ratio of 12 percent. Notably, BBVA plans to deliver €36 billion to its shareholders between 2025 and 2028.²
The CEO also highlighted that BBVA’s growth profile, coupled with the synergies bound to flow from the union, will have an exceptionally positive impact on earnings per share (EPS). More precisely, the bank estimates that, following the merger, the deal will entail a 25 percent increase³ in EPS for Banco Sabadell shareholders compared with a ‘go-it-alone’ scenario.
BBVA, firmly committed to achieving its targets through 2028
Onur Genç expressed optimism over the targets announced by BBVA on July 31. In his view, BBVA offers outstanding growth and profitability, as one of the most profitable, efficient and value-creating banks in Europe. This performance is predicated on three structural strengths: (1) BBVA is a diversified bank operating in countries with low levels of leverage; (2) it has leading franchises; and (3) it commands a clear competitive edge in digitalization.
“We have set ourselves some very ambitious targets for the next four years, as we aim for €48 billion in attributable profit,” remarked the bank’s CEO.
He also noted that over the next four years BBVA expects to generate €49 billion of capital and he then outlined BBVA’s capital allocation priorities: first, profitable growth (€13 billion); and second, payouts to BBVA shareholders, including share buybacks.
Positive outlook across its main markets
BBVA is looking forward to the coming years with excellent prospects in its main markets, supported by strong macroeconomic conditions and a diversified business model. In Mexico, the economy is performing better than expected and stands to benefit from the trade dispute raging between the United States and certain other countries. Against this backdrop, BBVA is confident of cementing its leadership within the Mexican banking industry over the next four years, on the back of a differential market positioning in what is a highly dynamic market and with a clear digital edge over its competitors.
In Spain, where economic growth has consistently outpaced that of the wider euro area in recent years, BBVA expects to continue growing in lending, while focusing on the most profitable segments—consumer finance and SMEs—and expanding its customer base.
Turning his attention to Türkiye, Onur Genç remarked that Garanti BBVA is in better stead than its competitors, being the most profitable bank in the country and supported by the strength of its franchise. Notably, BBVA’s CEO anticipates that Türkiye’s contribution to the Group’s results will continue to increase as the economy stabilizes.