Carlos Torres Vila, BBVA Group executive chairman and Onur Genç, BBVA CEO, presented the results for the first quarter of 2020 at an online press conference from their homes. Carlos Torres Vila stressed that now, “The most important thing is to look ahead and return to activity” to foster the economic recovery. This reopening should prioritize health, but “reactivate our productive network and employment.” In this sense, “everyone’s collaboration - governments, the private sector and society in general - will be fundamental to overcoming this crisis.” A recession that he predicts will last “for a limited time”.
In this environment marked by the COVID-19 crisis, Carlos Torres Vila feels that banking is part of the solution. “It’s time to step up to make a difference,” and “at BBVA, we are going to do everything in our power” to help defeat this crisis, he stressed.
On the one hand, BBVA’s Group executive chairman recalled that: “Since the beginning, we wanted to contributed to what was most urgent,” which was helping healthcare services to save lives. For this reason, BBVA acquired critical healthcare materials, helped organizations serve more vulnerable groups, and contributed to scientific research on the disease in the countries where the group has a presence.
Carlos Torres Vila: A lesson that this crisis has taught us is that our commitment to digitization has allowed us to do many things remotely and this reaffirms our strategy and priorities
Second, since the start of the health crisis, BBVA has protected the health and wellbeing of employees, customers and suppliers. Carlos Torres Vila indicated that: “The bank is doing everything possible to protect the jobs of everyone who is part of BBVA.” In addition, the bank has fostered teleworking, and more than 86,000 people in the entire Group are working from home. However, the bank also continues serving customers from branches, as banks are considered an essential service in many of the countries where it operates. The chairman offered words of appreciation for “our colleagues who continue providing service at the branches.”
In terms of the continuity of the business, BBVA’s digital capacities “have made it possible for customers to access practically all of our services on remote channels,” he explained. Proof of this is the fact that BBVA has significantly increased its digital sales since March, which represented 63.4 percent of all sales. Without a doubt, “a lesson that this crisis has taught us is that our commitment to digitization has allowed us to do many things remotely,” and this “reaffirms our strategy and priorities.”
Carlos Torres Vila, BBVA Group executive chairman - BBVA
47,000 ICO operations in Spain
Carlos Torres Vila said that banks “are trying to limit the impact of the crisis on the productive network and make the recovery as strong and swift as possible.” And this includes financing for SMEs, large corporations and the self-employed, now, when they need it most.” Around the world, the BBVA Group increased financing to companies by €10 billion between January and March, even prior to the launch of the public credit guarantee lines.
“We are collaborating with the programs put in place by the governments in most of the countries where we operate,” added Carlos Torres Vila. In Spain, “we are tremendously active” in terms of granting loans from the Official Credit Institute (ICO) lines, backed by the government. “We have used 100 percent of the first portion; we have used practically all of the second portion, and we have signed more than 47,000 operations since the beginning.” From his point of view, it is a “good financing tool” to support SMEs and the self-employed especially, which is “the group that has the most urgent need for liquidity.”
“We are facing an unprecedented macroeconomic situation”
BBVA’s Group executive chairman explained that is too soon to know how COVID-19 will impact the economy. In his opinion, it will greatly depend on lifting restrictions and monetary and fiscal policies. Despite a strong contraction in economic activity in the first half of the year, he is expecting an “incomplete V” shaped recovery. In this regard, he indicated that he expects a “deep crisis for a limited time, and a quick recovery that is less intense than the decline.”
“At BBVA, we started from a strong position to support the recovery,” in the chairman’s words. This is due to several factors, such as the bank’s recurring net margin, efficiency, strong capital and liquidity positions, diversified business model and digital capacities.
In the first quarter of the year, the operating income reached €3.57 billion, 14 percent more than the same period in 2019. Net attributable profit was impacted by two exceptional elements that cannot be extrapolated to the rest of the year. On the one hand, a €2.08 billion goodwill impairment in the U.S.; and €1.43 billion in provisions due to the impact of COVID-19. “We have been more conservative than other competitors,” he said, and stressed that “we expect to have profit” in the year as a whole.
Onur Genç, BBVA CEO - BBVA
BBVA’s strength during times of crisis
Meanwhile, Onur Genç reviewed the evolution of the main metrics from the first quarter of the year, pointing to “solid growth in recurring revenue” and “excellent performance” for the net margin, as well as improvements in efficiency.
Although the capital ratio was impacted by the evolution of the markets and provisions for COVID-19 this quarter, it remains well above regulatory requirements and within the bank’s target range. Furthermore, he added that: “In 2020, we do not plan to pay dividends until the uncertainty disappears, following the recommendation from the European Central Bank.”
The epidemic also had a negative effect on value creation for shareholders and profitability. However, the underlying return on tangible equity (ROTE) - in other words, excluding impairments for COVID-19 and the goodwill deterioration in the U.S. - would be 12.1 percent.
In short, in the CEO’s opinion, the figures from the first quarter demonstrate once again “BBVA’s great strength to face periods of crisis.” In this context, he stressed, “Our priorities are clear”: first, and above all, protecting the health of employees, customers and all of society; and second, “supporting our customers to overcome this crisis.”