In the presentation of its results to the media, BBVA’s CEO Carlos Torres Vila emphasized the bank’s “strong push to business digitization not only drives sales but is fundamental to cost control.” This “digital push” is driving total revenues while keeping costs down. As a whole, this allows efficiency to continue to improve. In fact, the efficiency ratio stood at 49.2 percent as of June, 82 basis points below the figure for 2017 at constant exchange rates.
Carlos Torres Vila underscored that “efficiency is a priority for the management team as a whole.” “I’m proud of our cost containment efforts and, at the same time, revenue growth, with open jaws over the course of many quarters,” he stressed. The jaws graphically represent a greater advance in revenues than costs. All this “in an environment of high-inflation across many countries.”
I’m proud of our cost containment efforts and, at the same time, revenue growth
A recent initiative that has contributed to efficiency is the global mobile banking platform through which bank developments in one country can be reused by any other country. “This has helped us slash costs by 40% and time-to-market by half.” Specifically, the CEO mentioned the launch in record time of the mobile banking app in Uruguay, built using parts developed globally.
Carlos Torres Vila underscored the “quality of the results backed by growth in recurring revenues and lower impairment losses.” BBVA’s CEO emphasized BBVA’s excellent start to the year "despite what's happening in the markets," thanks to the Group’s commitment to digitalization and diversification.
BBVA’s CEO Carlos Torres Vila - BBVA
He pointed to strong growth in recurring revenues in the first half of 10 percent in constant euro terms, while costs grew only 3 percent. Also, he made reference to the improvement in profitability, with ROE of 11.7 percent and ROTE – Return on Tangible Equity - of 14.7 percent. He also stressed the increase in tangible value per share, which attests to BBVA’s focus on “shareholder value creation.”
He underscored two figures of the BBVA Group: the solid capital ratio, with a pro forma fully-loaded CET1 capital ratio of 11.4 percent (including the sale of BBVA Chile and the agreement with Cerberus) and loan quality with a non-performing loan ratio of 4.4 percent.
Asked about BBVA’s stance regarding the eventuality of a bank tax in Spain, Carlos Torres Vila insisted that it is too early to comment given there is nothing concrete yet on this. He did say that, in his and BBVA Research’s opinion, “taxes must never penalize growth or job creation.”
Customers and digital sales
Interactions through digital channels are increasing as is the digital customer base. As of the end of June, digital customers stood at 25.1 million, up 26 percent, while mobile customers amounted to 20.7 million customers, up 43 percent year-on-year. “In other words, this semester we're seeing growth rates of above 40 percent” in customers who opt for the mobile phone as their main channel, the CEO said.
This semester we're seeing growth rates of above 40 percent” in customers who opt for the mobile phone as their main channel
Units sold by BBVA through digital channels have tripled in two years and now account for 29 percent of the total on a value-weighted basis, or 38.6 percent on an unweighted basis. In other words, when measured on the basis of the estimated value of each transaction. This is the new metric that BBVA has included in its earnings presentation to paint a clearer picture of the economic value of digital transactions compared to total sales. As BBVA CEO Carlos Torres Vila said today: “One third of what we sell is digital, in terms of value.”
One third of what we sell is digital, in terms of value
To achieve this, the bank is “focusing on several things,” said Carlos Torres Vila. Firstly, by promoting ‘do it yourself’ services. Secondly, increasing sales in the open market, i.e. selling products to non-customers. Thirdly, BBVA is delivering value-added customer solutions every quarter.