Onur Genç: “At BBVA we are optimistic about the future”

Onur Genç explained the reasons supporting this promising outlook. First, sustainable loan growth across BBVA’s main markets in recent months. More precisely, BBVA’s loan portfolio in Mexico has increased by 12.3 percent in the last year, with figures at the end of September 2024 gaining 51 basis points to reach a 25 percent market share. In Spain, loans are up 1.5 percent year on year. BBVA has gained 35 basis points of market share in this country in the past 12 months, to reach close to 14 percent.

Second, and turning to structural risk management, the bank has succeeded in shielding its net interest margin from possible future interest rate declines by progressing from a sensitivity of over 10 percent in Spain in the fourth quarter of 2022 to 4 percent at present. In Mexico, the sensitivity of net interest income to lower interest rates has fallen to 2.5 percent in September 2024, compared with 3.7 percent at the end of 2022. This allows BBVA to protect its financial margin in the event of a possible scenario of lower interest rates and to sustain its profitability.

Meanwhile, BBVA maintains currency hedges in a range of 60 to 70 percent for its expected earnings over the coming 12 months and at around 65 percent for capital, as a measure to protect against exchange rate fluctuations.

Third, the Group’s credit quality indicators have remained stable over the last three months and have broadly mirrored the bank’s expectations: the cumulative cost of risk through September stood at 1.42 percent, while the NPL ratio and coverage ratio ended the period at 3.3 percent and 75 percent, respectively.

The last reason given by the CEO is the bright outlook for the bank’s subsidiary in Turkey. Notably, the expected decline in inflation in Turkey (from 65 percent in 2023 to 25 percent estimated in 2025) will support this business unit’s contribution to the Group’s total earnings, due to the lower hyperinflation adjustment, coupled with the boost to net interest income.

Full confidence that the combination with Sabadell will go ahead

Regarding BBVA’s combination with Banco Sabadell, the CEO remarked that “it is a positive transaction for BBVA, for the shareholders, customers and employees of both banks and for Spain.” Indeed, BBVA has always insisted that the combination with Sabadell will allow it to “lend more” in this country, an aspect considered essential in strengthening the Spanish economy amid the current context.

Onur Genç expressed his confidence that the takeover bid for Banco Sabadell “will go ahead”, adding that “we do not foresee any competition issues affecting this process.” The CEO offered further assurance by saying that he expects the Spanish National Markets and Competition Commission (CNMC) to approve the transaction in line with previous similar transactions and subject to “reasonable terms and conditions.”

BBVA’s CEO explained that pushing back the deadlines “benefits no-one” and he was adamant that “we must not stand in the way of the shareholders,” as he defended the right of Sabadell’s owners to make an informed decision on the transaction. “We want to move forward with this transaction because it creates value for everyone,” he proclaimed.

BBVA in Mexico, a hard model to replicate

Meanwhile, the Group’s CFO highlighted the strength and competitiveness of the franchising model in Mexico, making it hard to replicate. “Our position in Mexico is genuinely hard to replicate elsewhere. It is the product of more than a decade of investment in our digital banking strategy, which has allowed us to leverage an immense physical infrastructure of almost 15,000 ATMs and around 1,700 branches, together with the best digital banking proposition,” explained Luisa Gómez Bravo. She remarked that BBVA Mexico is the leading provider of digital services in the country, competing successfully against the neobanks and attracting more than 3.6 million customers this year, 83 percent of whom happen to be digital customers.