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BBVA Results 27 Apr 2018

Carlos Torres Vila: “Digitization improves efficiency and drives profit growth”

BBVA’s strategy to bolster digitization translates into more digital sales, which are the main driver of total sales thanks to their impact on customer satisfaction and efficiency. These were some of the key insights shared by BBVA CEO Carlos Torres Vila during the bank’s Q1-18 conference call: “Digitization helps us improve efficiency while driving profit growth,” he said.

BBVA had, according to the CEO, a very solid start of 2018, confirming some of the trends initiated in previous quarters. Carlos Torres underscored that the expansion of the Group’s digital and mobile customer bases, to 24 and 19,3 million respectively, had fueled growth in digital sales, which already account for 37percent of the total. A the same time, the efficiency ratio improved to 48.9percent.

The highest quarterly profit in 3 years

BBVA’s CEO said the bank has had an excellent start of the year,  confirming the positive trends from previous quarters. He added that digital sales now account for 37 percent of total units, and the efficiency ratio continues to improve, standing at 48.9 percent at the end of March. Carlos Torres Vila also highlighted the Bank’s digital customer base, which now stands at 24 million, with 19.3 million banking through mobile devices.

Best quarter in three years

BBVA’s CEO underscored the bank’s excellent quarterly financials that had been underpinned by recurring revenues, which grew by more than 9 percent. In fact, the profit in Q1-18 (€1.34 billion, +12 percent yoy) was the highest reported since the first quarter of 2015, noted Carlos Torres Vila.

Additionally, BBVA’s capital position remained solid in the quarter, with a pro forma fully-loaded CET1 ratio of 11.47 percent. The ratio includes two corporate transactions which should be concluded later this year: The sale of BBVA Chile and the agreement with Cerberus to sell the non core real estate business in Spain. “This quarter we also saw notable improvements in risk indicators,” he said. Specifically, the NPL ratio dropped to 4.4 percent, while the coverage ratio improved to 73 percent.

BBVA CEO Carlos Torres Vila.

Spain generated 25 percent of the Group’s earnings

BBVA’s CEO also mentioned the solid performance of its franchises in Spain and the U.S., two developed markets, which both posted double-digit profitability. Spain’s attributable profit, taking into account both the banking activity and the non-core real estate area, was €410 million.

“We’re satisfied and hope that Spain will continue improving and increasing its contribution to the Group’s earnings

This helped raise Spain’s contribution to the results of the Group’s business areas to 25.1 percent, its highest since 2011. “We’re satisfied and hope that Spain will continue improving and increasing its contribution to the Group’s earnings,” said Carlos Torres Vila.

Creating shareholder value

Regarding shareholder value creation, Carlos Torres drew attention to the Group’s solid profitability metrics in the first quarter of the year, with a ROE of 11.9 percent, and a ROTE of 14.6 percent.

These trends will continue and we will keep improving in terms of efficiency, profitability and shareholder returns. This is, after all, what we are expected to do

In short, this has been a very good quarter, with growth in all metrics related to profitability. Carlos Torres Vila also stressed the “notable improvement in efficiency for yet another quarter.”

To wrap up his presentation, Carlos Torres Vila underscored the bank’s capital adequacy situation and the potential of the ongoing transformation project, which is yielding exponential growth rates in terms of both digital sales and digital customers. “These trends will continue and we will keep improving in terms of efficiency, profitability and shareholder returns. This is, ultimately, what we have to focus on.”

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