BBVA´s CEO presented this year´s third quarter results on Friday, October 30. At the press conference, Onur Genç affirmed that BBVA's leadership in transformation has a "true competitive advantage" and reiterated the institution´s focus on organic growth. In the first nine months of 2020, "we have attracted 350,000 clients in Spain", something that is especially relevant in the current context marked by the COVID-19 crisis. "We have shown that we can grow using digital channels in Spain," he said.
“COVID-19 containment measures accelerated digital trends and the adoption of new technologies," said Onur Genç. And this is where BBVA has noted how its digital capabilities have a competitive advantage. "We excel in the digital world, because we have connected our infrastructure with APIs," he said. And it is because of this competitive advantage that Google has reached an agreement with BBVA in the United States to offer digital accounts, he explained. Another example of the digital leadership mentioned in the press conference is the number of interactions BBVA customers have through their mobile application, which is now five times higher than a year ago. Another relevant indicator is digital sales, which represent 63.6% of the total if measured by the number of operations and 48% in terms of value, significantly above the figures for the end of 2019.
When asked about the consolidation of the Spanish financial sector and the role that BBVA could play in this process, Genç explained that the institution´s focus is "organic growth, thanks to our digital capabilities." That said, he clarified that the bank "evaluates all opportunities" that may arise, provided they create value for the shareholder.
Onur Genç wanted to focus on "the promising data for this quarter, especially in such a difficult economic climate." BBVA's CEO pointed to certain signs of recovery in retail activity in countries where the bank operates, after the sharp drop in April and May due to containment measures. Since then, "a gradual recovery has been observed along with a return to levels of a year ago, even higher in certain countries". While this data must be considered within the context of our current uncertainty, they indicate that from a purely economic point of view, "spending has returned to normal levels."
In his opinion, the crisis we are going through "is very different from the one we had, for example, in 2008". "In general, this time around, banks are a part of the solution instead of being part of the problem", he assured. In this regard, institutions are facing this crisis from a more solid financial position. Citizens and companies are also coping with this crisis with lower levels of indebtedness than they had in the previous crisis.
Despite the current climate BBVA expects to grow in revenue in 2021
Looking ahead to 2021, Onur Genç commented on some of the trends that the institution foresees based on current macro scenarios and considering the high degree of uncertainty. Firstly, Genç anticipates that BBVA's recurring revenue will continue to grow in constant euros over the coming year. Next, controlling expenses will continue to be a management priority. Finally, it expects the cost of risk to be below 2020 levels.
Regarding the restriction on the payment of dividends by European banks, Genç commented that it should be a temporary recommendation in order not to penalize the financial sector. This is a measure that increases the cost of capital for banks, which hinders their ability to deploy capital and prevents them from channeling capital to other productive areas of the economy to boost growth through credit, he explained. "Our expectation is that the restriction will be lifted and to pay dividends again in 2021," he stressed.
He also referred to the volatility of the Turkish lira and the institution's exposure to Turkey. "From my point of view, BBVA has taken the appropriate steps to handle this situation", with measures such as reducing this market´s volume of credit in dollars in half from 2015 until now, and with the hedging policy to protect its capital and profits against currency depreciations. In addition, he pointed out that "the numbers show that we have the best bank in the country", both for its profitability and for its profits before provisions or net margin.