Banco Bilbao Vizcaya Argentaria (NYSE:BBVA) FY Conference September 09, 2025 02:00 PM ET Company ParticipantsOnur Genç - CEO & DirectorConference Call ParticipantsNone - AnalystNoneSo good afternoon, everyone. Good afternoon. It's my pleasure to welcome Onur Geng, EVA CEO. Good afternoon, Anur.Onur GençGood afternoon.NoneThank you very much for taking the time. We're delighted to host you today. So thanks thanks very much. So the agenda for today, we have about twenty five minutes set aside to discuss the i ...

Group 1 - Ripple has entered into an agreement with BBVA to provide institutional-grade digital asset custody technology to support the bank's crypto operations [1][2] - BBVA will utilize Ripple Custody to manage Bitcoin (BTC) and Ether (ETH) holdings for retail customers in Spain, following the bank's earlier launch of a digital asset trading and custody service [2][8] - The partnership builds on previous collaborations between Ripple and BBVA in Switzerland and Turkey, focusing on real-time cross-border payments [3][8] Group 2 - The establishment of the EU's Markets in Crypto-Assets regulation (MiCA) has encouraged banks in Europe, including BBVA, to expand their digital asset offerings [4][6] - Other banks in Europe, such as Deutsche Bank and Standard Chartered, are also advancing their crypto custody services, indicating a broader trend in the region [5] - Ripple's expanded role with BBVA highlights the integration of crypto services by regulated financial institutions, emphasizing the need for compliance and scalability in a post-MiCA environment [6]

The chief executive officer of Sabadell Cesar Gonzalez-Bueno on Tuesday said he expected BBVA to submit a revised offer for his bank. ...

Group 1 - The audio webcast is focused on BBVA's offer to Sabadell shareholders, with key executives present to discuss the transaction [1] - The transaction update follows the recent approval of the prospectus by the CNMV, indicating regulatory progress [2]

Group 1 - The investment group European Small Cap Ideas focuses on high-quality small-cap investment opportunities in Europe, emphasizing capital gains and dividend income for continuous cash flow [1] - The group offers two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1] - An active chat room is available for discussions on the latest developments of the portfolio holdings [1] Group 2 - A plan to reduce position size by 40-50% is being considered, potentially through writing a combination of in-the-money and out-of-the-money put options [2]

Summary of BBVA's M&A Announcement Conference Call Company and Industry - **Company**: Banco Bilbao Vizcaya Argentaria (BBVA) - **Industry**: Banking and Financial Services Core Points and Arguments 1. **M&A Approval**: The Spanish securities regulator CNMV has approved BBVA's offer to acquire Banco Sabadell, allowing shareholders to accept the offer starting Monday [2][25] 2. **Strategic Rationale**: The merger is presented as a strategic opportunity for both banks, emphasizing the complementary nature of their businesses, with BBVA focusing on retail and large corporations, while Sabadell has a strong presence in SMEs [3][4] 3. **Value Creation**: The transaction is expected to create significant value through synergies, with an estimated annual synergy of €900 million post-merger, which is an increase from previous estimates [12][13] 4. **Financial Impact**: The merger is projected to increase earnings per share (EPS) by 5% for BBVA shareholders and by 25% for Sabadell shareholders [24] 5. **Market Positioning**: The merger aims to create a stronger entity better positioned to face future challenges, particularly in the context of increasing technological disruption and regulatory requirements [4][5] 6. **Global Reach**: BBVA's global operations, with over €2 billion in cross-border business revenues, will enhance the product offerings and geographical reach for Sabadell's clients [5] 7. **Commitment to Credit Volume**: BBVA guarantees the total credit volume for Sabadell's SMEs and self-employed clients for five years, which is expected to inject €5.4 billion annually into the economy [6][7] 8. **Employee Opportunities**: The merger is expected to create new professional opportunities within a leading global entity, promoting meritocracy and preserving the cultures of both banks [7] 9. **Cost Synergies Breakdown**: The €900 million in synergies includes €835 million from cost synergies, with €510 million from general cost savings and €325 million from personnel cost savings [13] 10. **Restructuring Costs**: Estimated restructuring costs are projected at €1.45 billion before taxes, primarily incurred before the merger [14][15] 11. **Offer Details**: The offer consists of one BBVA share plus €0.70 for every 5.5483 shares of Banco Sabadell, contingent on receiving more than 50% of voting rights [16][17] 12. **Market Valuation**: The current value of the offer is €17.4 billion, reflecting a 43% increase since the initial announcement, which is the highest valuation for Sabadell in over a decade [18][19] 13. **Comparison with Competitors**: BBVA's stock performance has significantly outpaced that of its competitors, with a 397% increase since January 2019 compared to 199% for Spanish banks and 221% for European banks [10][11] 14. **Future Financial Goals**: BBVA has set ambitious financial targets for sustained value creation in the coming years, focusing on profitability and efficiency [12] Other Important but Possibly Overlooked Content 1. **Regulatory Alignment**: The inclusion of a 30% acceptance threshold in the offer was a response to regulatory requests to align timelines between U.S. and European processes [29][30] 2. **Impact of Government Intervention**: The government’s intervention has caused a slight delay in the merger process, but BBVA remains confident in the attractiveness of the offer despite these challenges [61][62] 3. **Dividend Policy**: There are no immediate plans to change Sabadell's dividend policy post-merger, although BBVA will review various aspects of the business [38][45] 4. **Employee Adjustments**: Specific figures regarding potential job cuts have not been disclosed, but personnel costs are expected to contribute to the overall cost synergies [40][43][77] 5. **Market Sentiment**: Analysts have mixed views on the optimism of BBVA's synergy calculations, with some suggesting they may be conservative rather than overly optimistic [69][77]

Summary of Banco Bilbao Vizcaya Argentaria (BBVA) M&A Conference Call Company and Industry - **Company**: Banco Bilbao Vizcaya Argentaria (BBVA) - **Industry**: European Banking Sector Key Points and Arguments M&A Transaction Overview - BBVA announced a merger with Banco Sabadell, emphasizing the complementary strengths of both banks, particularly in the SME and retail segments [2][3] - The merger is expected to create a stronger entity with a balanced portfolio and enhanced offerings for clients [3] Financial Implications - BBVA's technology expenses in Spain have increased by 11% from 2023 to 2024, exceeding €1.1 billion, indicating high fixed costs that can be optimized post-merger [2] - The merger is projected to generate total pre-tax synergies of €900 million annually, an increase of €50 million from the original estimate [10] - Cost synergies are expected to be €835 million, with €510 million from operational savings and €325 million from personnel cost reductions [10][11] Stakeholder Benefits - The merger is anticipated to enhance lending capacity by an additional €5.4 billion, benefiting clients and society [4] - BBVA aims to provide a better offer for clients and create opportunities for employees within a leading global bank [4] Shareholder Value - BBVA's return on tangible equity was 20% in 2024, significantly higher than competitors, indicating strong profitability [7] - The merger is expected to result in a 25% increase in earnings per share (EPS) for Banco Sabadell shareholders if they accept the offer [20] - BBVA's share price has appreciated by 397% since 2019, outperforming both Banco Sabadell and the broader European banking sector [8] Offer Details - The current offer stands at one BBVA share and €0.07 for every 5.5483 shares of Banco Sabadell, reflecting a 43% increase in value since the initial announcement [15] - The offer includes a 30% premium relative to the undisturbed price and a 42% premium compared to the average closing price prior to the announcement [16] Market Dynamics - Analysts forecast an 8% upside for BBVA's share price, while Banco Sabadell's target price is below current levels, indicating potential downward pressure on Sabadell's shares [18] - The merger is seen as a unique opportunity given the current high valuations of both banks [36] Regulatory and Strategic Considerations - BBVA is seeking to align regulatory timelines between the U.S. SEC and Spanish authorities to facilitate the merger process [28] - The merger is positioned as a strategic consolidation within the market, with a focus on creating value for both banks' shareholders [65] Future Outlook - BBVA's strategic plan aims for a return on tangible equity of 22% by 2028, reinforcing its leadership in the European banking sector [9] - The timeline for realizing full synergies has been adjusted, with expectations for significant cost savings to materialize in the years following the merger [12][13] Additional Important Content - BBVA's commitment to maintaining its headquarters in key territories and supporting local communities through social initiatives [5] - The merger is framed as a "textbook transaction" that aligns with BBVA's long-term growth strategy [65] - The potential for share buybacks and capital returns to shareholders is highlighted, with excess capital expected from the TSB sale [78][80]

Summary of Banco Bilbao Vizcaya Argentaria (BBVA) M&A Announcement Company and Industry - **Company**: Banco Bilbao Vizcaya Argentaria (BBVA) - **Industry**: Banking and Financial Services Key Points and Arguments M&A Transaction Overview - BBVA is acquiring Banco Sabadell, aiming to create a stronger entity by combining complementary strengths in the SME and retail segments [2][3] - The merger is expected to enhance BBVA's global reach, providing a full product suite across a wider geographical network, which will benefit Banco Sabadell's clients [2] Financial Implications - The merger is projected to generate total pre-tax synergies of €900 million annually, an increase of €50 million from the original plan [8] - Cost synergies are expected to be €835 million, with €510 million from operational savings and €325 million from personnel cost savings [8] - The cost synergies represent 13.5% of the combined cost base of BBVA Spain and Banco Sabadell [9] Stakeholder Benefits - The transaction is designed to benefit all key stakeholders: clients will receive better offers, society will see an increase in lending capacity by €5.4 billion, and employees will have opportunities in a leading global bank [3] - BBVA's return on tangible equity was 20% in 2024, significantly higher than competitors, indicating strong profitability [5] Shareholder Value - BBVA's offer to Banco Sabadell shareholders is highly attractive, with a significant premium of 30% relative to the undisturbed price and 42% compared to the average closing price prior to the offer [14][15] - The expected EPS growth post-merger is 5% for BBVA shareholders and 25% for Sabadell shareholders, enhancing intrinsic value [18] Market Position and Performance - BBVA's shares appreciated by 397% since 2019, outperforming both Banco Sabadell and the broader European banking sector [6] - The merger is seen as a unique opportunity, with both banks at their highest valuations in over a decade [34] Regulatory and Operational Considerations - The merger is subject to regulatory approvals, and BBVA has committed to maintaining key operations in regions where Banco Sabadell has a strong presence [4] - The timeline for realizing full synergies has been adjusted, with expectations for some synergies to be realized before the legal merger [10] Strategic Rationale - BBVA emphasizes the strategic rationale behind the merger, highlighting the inefficiencies of operating two separate banks in the same market and the potential for significant cost savings [33] - The management team views the merger as a "textbook transaction" that consolidates the market effectively [61] Future Outlook - BBVA has set ambitious goals for 2025 to 2028, aiming for continued leadership in the European banking sector [7] - The company remains committed to delivering on its standalone strategic plan, regardless of the merger's outcome [62] Additional Important Content - The merger discussions have led to increased share price correlation between BBVA and Banco Sabadell, indicating market interest in the transaction [16] - Analysts forecast an upside for BBVA's share price, while Sabadell's target prices are below current levels, suggesting potential downward pressure on Sabadell's shares if the merger does not proceed [16][17] This summary encapsulates the critical aspects of the BBVA and Banco Sabadell merger announcement, focusing on financial implications, stakeholder benefits, market performance, and strategic rationale.

Offer Summary - BBVA offers Banco Sabadell shareholders a unique opportunity to be captured now [1] - The offer has been authorized by the Spanish Securities Market Commission [3] - The offer consideration includes both BBVA shares and cash [39] - The offer is subject to acceptance of >50% of voting rights [39] Strategic Rationale and Synergies - The strategic rationale is even more convincing since the announcement, driven by European focus on investment, need for larger banks, and technological disruption [14, 16] - Increased annual synergies post-merger are estimated at €1.45 billion pre-tax [34] - Cost synergies account for €900 million, including €510 million in opex savings and €325 million in personnel cost savings [34] - Funding synergies are projected at €65 million [34] Financial Impact and Valuation - The current equivalent value of the offer is €17.4 billion [39] - The offer represents a premium of 30% over the undisturbed price [39] - BBVA shareholders are expected to see a +5% EPS accretion post-merger [61] - Sabadell shareholders are expected to see a +25% EPS accretion post-merger [61]

Group 1 - Broader equity markets reached all-time highs, driven by NVIDIA's strong quarterly performance and a healthy economy, with NVIDIA reporting a 56% revenue growth [1] - The U.S. GDP grew at an annualized rate of 3.3% for the April-to-June period, surpassing expectations and indicating robust economic strength [1] Group 2 - The core personal consumption expenditures price index for July was recorded at 2.9%, slightly higher than June, but not expected to hinder potential interest rate cuts by the Federal Reserve [2] Group 3 - Investors are advised to focus on "cash cow" stocks with high returns, emphasizing the importance of return on equity (ROE) as a key metric for identifying financially healthy companies [3][4] - High ROE indicates effective reinvestment of cash at high returns, helping to distinguish between profit-generating companies and those that are not [5] Group 4 - Screening parameters for identifying cash-rich stocks include cash flow greater than $1 billion, ROE above industry average, price/cash flow ratio lower than industry, return on assets (ROA) greater than industry, and strong historical EPS growth [6][7] - Stocks that qualified based on these criteria include NVIDIA, Arista Networks, TE Connectivity, Corning, Banco Bilbao, and AppLovin [8] Group 5 - Arista Networks specializes in cloud networking solutions and has a long-term earnings growth expectation of 16.6% with a trailing four-quarter earnings surprise of 12.8% [9][10] - TE Connectivity focuses on connectivity and sensor solutions across various industries, with a long-term earnings growth expectation of 9.8% and a trailing four-quarter earnings surprise of 4.9% [11][12] - Corning, known for its advanced glass technologies, has a long-term earnings growth expectation of 18.2% and a trailing four-quarter earnings surprise of 4.7% [12][13] - Banco Bilbao provides a range of banking services and has a long-term earnings growth expectation of 6.9% with a trailing four-quarter earnings surprise of 7.4% [13][14] - AppLovin offers software solutions for advertisers and has a long-term earnings growth expectation of 20% with a trailing four-quarter earnings surprise of 22.4% [14][15]