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Trading account 31 Oct 2019

Onur Genç: "Our ambition for Spain is to have continued growth"

The bank’s chief executive officer, Onur Genç, wants Spain’s contribution to BBVA Group profit to continue to grow. “Our ambition for Spain is to have continued growth,” he stated in the 2019 Q3 results press conference.

BBVA’s Spain unit earned €1.06 billion between January and September, representing something more than 23 percent of the Group’s profit, excluding the corporate center. “We would like to ensure this contribution — more than 20 percent — is maintained and even improved,” BBVA’s CEO responded to the first question at the press conference. With respect to the new government expected after Spanish elections on November 10, he expressed his desire for Spain “to have a stable government to avoid economic policy uncertainty” thus preserving the positive GDP growth differential Spain has had over the European average.

He also commented on the bank’s international markets: “Our biggest strength is our diversification. If you look at BBVA, what differentiates us from other European banks is our international footprint. We have truly unique banks, as the numbers attest,” he stated in reference to the bank’s return on equity (ROE), which beats the average of its European competitors. Staying on the topic of BBVA’s international presence, he reiterated that the bank is “focused on growing organically, supported by our digital transformation” as well as driving the growth of the business by “serving our customers well, creating new products.”

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Furthermore, he clarified that, in a negative interest rate environment such as the eurozone, the bank is charging large businesses and institutions — but not retail customers — for cash deposits. With regard to the European Central Bank’s new “tiered” deposit system, he indicated that the new system applies to a limited base of deposits, €10.8 billion in the case of BBVA. “As you can imagine, this amount is limited compared to BBVA’s overall balance sheet,” he said. “These measures will only marginally mitigate the overall impact of negative interest rates,” he added.

When asked about his views on Turkey, he responded that “we are seeing some clear improvements on the fundamentals of its economy” and this is “a positive signal.” He also expressed his satisfaction with the Turkish unit’s performance this year, which came in above expectations. He reiterated, “We are comfortable with our share in Garanti,” representing a 49.85 percent stake. Regarding Mexico, he noted the bank’s “solid results” in this market in the third quarter, the highest on record.

Latin America as a whole “is a core market for BBVA,” he stated. “We maintain our long-term commitment to the market,” a region where the bank has had a presence for many years.

In addition to the financial results, BBVA’s CEO also commented on the judicial investigation into the Cenyt case. “We reiterate our firm commitment to clarifying the facts, and obviously complying with the law.” He stressed that “BBVA has been sharing information about the case with the judicial authorities from the beginning.” The publication of the public statements about the case on the bank’s corporate web site demonstrates “We have tried to be as transparent as possible,” he explained.
On the other hand, the bank’s CEO emphasized that “the case has had no direct impact on our business, on investor sentiment — I’m meeting with investors around the world — nor on the stock performance.” Finally, asked about the bank’s reputation, Onur Genç explained that because it is an intangible asset, reputation is not as easy to measure as the evolution of stock prices, or business performance. That said, based on the RepTrak methodology the sector uses, in 2019 the bank’s reputation has remained stable compared to the previous year.

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