BBVA(BBVA)2024-08-03 12:32Financial Data and Key Metrics Changes - The net attributable profit for Q2 2024 reached EUR2,794 million, a 38% increase year-over-year and a 27% increase quarter-over-quarter [5] - Earnings per share grew to EUR0.47, reflecting a 28% quarter-over-quarter and 42% year-over-year growth [5] - The CET1 capital ratio decreased by 7 basis points to 12.75%, still above target ranges and regulatory requirements [6] - Return on tangible equity reached 20%, marking a significant milestone for the company [6][7] Business Line Data and Key Metrics Changes - Net interest income increased by 17% year-over-year and 1% quarter-over-quarter, driven by strong activity growth [10] - Net fees and commissions rose by 35% year-over-year and 4.4% quarter-over-quarter, primarily from payments and asset management [10] - The efficiency ratio improved to 39.3%, breaking the 40% barrier, indicating enhanced operational efficiency [14] Market Data and Key Metrics Changes - Gross income grew by 29% in Spain, 14% in Mexico, 47% in Turkey, and 16% in South America year-over-year [11] - Loan growth at the group level increased by 10.7% year-over-year, with notable growth in Spain (2.4%) and Mexico (12.6%) [12] - The cost of risk slightly increased to 142 basis points, influenced by growth in high-risk retail segments and emerging markets [15] Company Strategy and Development Direction - The company aims to grow its customer base, having acquired 5.6 million new customers in the first half of 2024, with 67% from digital channels [17] - Sustainability remains a key focus, with EUR46 billion channeled into sustainable business in the first half of 2024 [18] - The company is pursuing a takeover bid for Banco Sabadell, emphasizing synergies and value creation for both entities [33][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining profitability despite market challenges, with expectations for continued loan growth and stable revenues [12][24] - The outlook for NII growth in Spain has been revised to low-teens, reflecting strong activity and higher-than-expected rates [23] - Management remains optimistic about the competitive landscape, particularly in Mexico, where they continue to lead in market share [54] Other Important Information - The company reported a slight increase in the cost of risk, primarily due to growth in high-risk segments and expected normalization in Turkey [15][28] - The company has set decarbonization targets for 2030 in new sectors, reinforcing its commitment to sustainability [18] Q&A Session Summary Question: Decline in deposit costs in Spain - Management explained that the decline is due to a decrease in the curve affecting large corporate clients, leading to a reduction in the weighted average cost of deposits [41] Question: NII trajectory in Mexico - Management indicated that while NII was flat due to reliance on wholesale funding, they expect profitability to remain strong, with a focus on managing the funding gap [44][46] Question: Outlook for NII growth in Spain - Management expects NII to perform positively in 2025, compensating for spread declines through activity growth and improved asset quality [50] Question: Lending and deposit growth in Mexico - Management noted a small decline in deposit costs and expressed confidence in maintaining a competitive edge in both lending and deposits [52][54]