BBVA’s strategy for Spain is focused on profitable growth

BBVA’s CFO in Spain began his presentation by looking at the challenging context for banks across the globe and BBVA’s strengths in this environment: a diversified retail banking business model, a strong solvency position and a leading transformation strategy.

First, he explained that BBVA has a geographically diversified business. This is an advantage that offers higher growth prospects than the European average. For example, the regions where the bank has a presence are expected to grow an average of 2.6% in 2017, compared to 1.3% in the euro zone and U.K. He also reported that less than 30% of BBVA’s gross income is exposed to negative interest rates.

He then maintained that BBVA enjoys a leading position in its core markets. BBVA is the top bank in Mexico and South America, second in Spain and Turkey and fourth in the U.S. Sunbelt Region in terms of market share and ranking by loans.

Ángel Reglero pointed to BBVA’s resilience and low volatility in earnings, illustrated by the bank’s profit generation throughout the crisis. This strength allowed BBVA to be the only bank in its European Peer Group to generate positive results in the three year period analyzed in the adverse scenario of the EBA 2016 stress test.

In the second half of his presentation, the CFO focused on Spain, maintaining that “In Spain, the bank’s strategy is focused on profitable growth” based on four components:

• Excellent price management in a low interest rate environment through active price policies across all customer segments. The cost of time deposits is also expected to continue improving.

• Revenue diversification with a growing contribution from other sources of revenue, such as fees and commissions, and insurance results.

• Efficiency, thanks to on-going cost control efforts. A clear example of this is reaching €200 million savings in cost synergies from the integration of Catalunya Banc in 2017.

• Prudent risk management means lower provisions and therefore higher profit.

Finally, Ángel Reglero revealed that the bank is moving ahead in the transformation of its distribution model in Spain in order to adapt to the new environment for the financial industry. The bank’s transformation is based on four pillars: distribution model evolution, new customer experience, digital sales and superior quality of service.