BBVA(BBVA) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The tangible book value per share plus dividends increased by 17% year over year and 4.5% quarter over quarter [3] - The net attributable profit exceeded €2.5 billion, although it decreased compared to the previous quarter due to higher inflation in Turkey and one-off positive impacts in the second quarter [4] - The CET1 capital ratio improved by 8 basis points to 13.42%, providing capacity for increased shareholder remuneration [5] - Cumulative profits for the first nine months reached almost €8 billion, a 4.7% increase year over year [5] Business Line Data and Key Metrics Changes - Core revenues showed strong growth, with net interest income and fees growing 18% and 15% year over year, respectively [6] - In Spain, net interest income grew by 3.2% quarter on quarter, driven by strong loan growth in profitable segments [18] - In Mexico, net interest income grew by 3.3% quarter on quarter, supported by robust lending activity [21] - Turkey's net attributable profit increased by nearly 50% year over year, driven by higher core revenues [23] Market Data and Key Metrics Changes - Loan growth in Spain accelerated to 7.8% year over year, while Mexico's loan growth was 9.8% year over year [9] - The cost of risk in Mexico improved, with expectations to remain below 340 basis points [23] - The cumulative cost of risk in South America stood at 243 basis points, in line with full-year guidance [26] Company Strategy and Development Direction - The company aims to resume shareholder remuneration programs, including a nearly €1 billion share buyback program and a record interim dividend of €0.32 per share [15] - The strategic focus includes acquiring new customers, with 8.7 million new customers acquired in the first nine months of 2025, 66% through digital channels [16] - The company plans to double its Corporate & Investment Banking (CIB) business over the next four years, targeting a revenue growth of around 20% [70] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future revenue and profit growth, citing stability in customer spreads and strong loan growth [12] - The company expects interest rates to stabilize, with limited room for further cuts, which will support core revenue growth [11] - The management highlighted the resilience of the Mexican economy, with an upward revision of GDP growth forecast to 0.7% for 2025 [21] Other Important Information - The company reported a solid efficiency ratio of 38.2%, improving from the previous year [12] - The asset quality metrics showed improvement, with the cost of risk standing at 135 basis points, better than guidance [13] Q&A Session Summary Question: Loan book growth in Spain and cost of risk in Mexico - Management noted that corporate loan growth in Spain is strong, particularly in mid-sized companies, while mortgage growth is below average due to pricing concerns [34] - The cost of risk in Mexico is expected to improve, with positive macro adjustments influencing guidance [37] Question: Sabadell transaction and capital distribution outlook - Management closed the chapter on the Sabadell transaction, viewing it as a missed opportunity but focusing on future growth [44] - The capital target is set at 11.5% to 12%, with plans to distribute excess capital back to shareholders [46] Question: Margins in Spain and Mexico - Management indicated that customer spreads in Spain are stabilizing, with expectations for continued resilience in Mexico despite falling interest rates [53][56] Question: Group costs and CIB ambitions - Management emphasized a focus on cost-to-income ratios and aims to double the CIB business over the next four years [66][70] Question: Competitive landscape in Mexico - Management acknowledged increased competition but highlighted BBVA's strengths, including strong customer relationships and market positioning [74]