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Economic results 31 Jul 2019

Eight keys to understanding BBVA’s 2019 first half results

BBVA has reported its second quarter results for 2019, revealing positive dynamics in the business, as explained by the Group’s CEO. Onur Genç stressed the bank’s continued progress in its transformation process, which is having a “clear impact on the growth of the customer base, customer loyalty, efficiency, and the customer experience.”

Between April and June 2019, BBVA earned €1.3 billion, up 9.8 percent compared to the first quarter of the year, in current exchange rates, and up 6 percent from the same period last year, excluding financials from the BBVA Chile business. BBVA Chile was a subsidiary of the Group until it was sold last July. For the first half of the year, the bank’s net attributable profit reached €2.4 billion. Below are eight keys to understanding BBVA’s January through June figures.

  1. Recurring Revenues. The total net interest income and net commissions, which make up the Group’s recurring revenues, grew 6 percent in the second half compared to the same period in 2018 (+8.3 at constant exchange rates).
  2. Transformation. BBVA continues to be at the forefront of digital transformation, with positive impacts on the growth of the customer base, customer loyalty, efficiency, and the customer experience. The percentage of digital customers grew 17 percent, reaching 29.7 million, which represents 54 percent of total customers. The number of customers who use their smartphones to interact with the bank is fast-approaching the 50 percent threshold: in June 2019 there were 26.1 million, 48 percent of the customer base. In addition, the number of units sold online now represents 58 percent of the total..
  3. Efficiency. Positive gross margin performance coupled with the containment of operating expenses has improved the efficiency ratio, which on June 30 stood at 40 percent, 41 basis points below the 2018 figure, at constant euros. Net margin reached €6.1 billion during the first half, representing a 5.2 percent year-on-year increase (8.2 percent in constant euros).
  4. Risk Management. Credit quality metrics continued to improve during the second quarter. The coverage ratio stood at 75 percent in June, compared to 74 percent the previous quarter. Meanwhile, the NPL ratio fell to 3.8 percent from 3.9 percent in March.
  5. Solvency. BBVA also hit its fully loaded CET capital target ratio of between 11.5 percent and 12 percent. At the close of June, the ratio stood at 11.52% after absorbing regulatory impacts, thanks to the Group’s organic generation capacity.
  6. Profitability. At the end of June 2019, the bank’s return on equity (ROE) – an indicator used to measure a bank’s profitability – stood at 10.2 percent. With this figure, BBVA is the most profitable bank among it comparable European peers.
  7. Shareholder value. The tangible book value per share – which is equivalent to a company’s balance sheet value or tangible assets divided by the total number of shares outstanding – plus dividends paid out reached 6.36 euros in the first half, representing a 12.6 percent increase compared to the June 2018 figure.
  8. Sustainability. Under the framework of its Pledge 2025, in the first half of 2019 BBVA secured more than €10 billion in green and social financing for sustainable infrastructure, agribusiness, social entrepreneurship, and financial inclusion projects. Pledge 2025 is the bank’s climate change and sustainable development strategy to contribute to the fulfillment of the United Nations sustainable development goals (SDGs) and the Paris Agreement on climate change. The bank has set a goal of raising a total of €100 billion over the course of seven years – by 2025. In just a year and a half, it has achieved close to €22 billion.

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