Onur Genç: “Sabadell shareholders will find a better ‘home’ at BBVA”
Speaking at the Morgan Stanley European Financials Conference held in London on Tuesday, BBVA’s CEO explained that BBVA’s long-term profitability outlook is predicated on diversification, leading franchises and the successful pursuit of the bank’s strategy built around digitization and sustainability. Onur Genç also pointed to the geopolitical landscape: “Europe is at a turning point and will need further investment to become self-sufficient on various fronts. To finance this investment, he doubled down on the “need for larger, more profitable and efficient banks.” In this context, BBVA’s CEO underscored the importance of the combination with Banco Sabadell: “We expect to receive the CNMC’s decision within a matter of weeks. Once issued, the government will be able to review the combination, ultimately allowing the shareholders to make a decision.” For Onur Genç, “there is no doubt that Banco Sabadell shareholders will find a better ‘home’ at BBVA.”
When quizzed about the BBVA Group’s outlook, Onur Genç explained that the bank’s value creation and profitability metrics had improved in 2024, with growth of 17.2 percent in tangible book value per share plus dividends and a ROTE of 19.7 percent: “Once again this year, we clearly remain one of the most value-creating, profitable and efficient banks among the 15 largest European banks,” he affirmed. This positive performance is down to BBVA’s status as a diversified global bank operating through leading franchises in attractive markets, with low debt levels and significant growth opportunities. Lastly, he pointed to the competitive edge offered by sustainability and digitization, which BBVA embraced before its competitors did so, and moreover with higher levels of investment.
Positive outlook for Mexico
Onur Genç noted that the long-term outlook for Mexico is extremely positive, despite some near-term volatility. This positive outlook has a lot to do with the opportunities that nearshoring offers the country, seeing as though Mexico has a clear competitive edge when it comes to production costs compared to the United States (on average one seventh of that of the United States).
BBVA believes that while credit growth will slow in Mexico in 2025, it will still rumble along at close to 10 percent. Despite the expected economic slowdown, Mexico is a market with low banking penetration and low indebtedness, meaning it has immense potential. Indeed, demand for credit has got off to a strong start this year, following on from the last quarter of 2024, especially in the retail segment and in companies’ working capital.
Spain: high profitability in the coming years
In Spain, BBVA’s CEO expects the loan portfolio to grow in the low to mid single-digit range throughout 2025. This growth be supported by three factors: a positive macroeconomic environment and higher growth than the euro area (2.8 percent growth expected in Spain in 2025 compared to just 0.8 percent for the euro area, according to BBVA Research); the significant deleveraging of the economy that has taken place since the financial crisis; and the bank’s strategy of building its presence in higher value segments, such as companies and consumer credit. With interest rates expected to come down, the bank expects some narrowing of its net interest income. However, this impact will be partially offset by credit growth, disciplined price management and a bigger contribution from the sovereign bond portfolio (ALCO): “We are confident that we will maintain our profitability levels in the coming years.”
Turning his attention to the combination with Banco Sabadell, Onur Genç said he expects the National Markets and Competition Commission (CNMC) to approve the deal in a matter of weeks, following the unprecedented set of commitments presented by BBVA. “We understand and appreciate all the concerns raised by the government and the authorities in general. That’s why in our view the solutions we have proposed are genuinely effective,” explained Genç. He stressed that this is a highly attractive offer for Banco Sabadell’s shareholders and he believes they will come to appreciate the benefits and the extraordinary growth potential of the proposed combination. In his view, the shareholders should have the ultimate say: “There is no doubt that Sabadell shareholders will find a better ‘home’ at BBVA, in both economic and value terms.”
The BBVA’s CEO explained that Europe is at a critical juncture, as it needs more growth and greater autonomy on various fronts (energy, defense, technology, etc.), all of which call for heavy investment. More precisely, the European Commission estimates that the region will need between €750 and €800 billion per year to modernize its infrastructure, boost the technological transformation and make further progress towards the energy transition. To make this happen, “larger, more profitable and efficient banks are needed, capable of financing these investment needs,” especially in Europe where 75 percent of investment funding still comes from the financial sector, seeing as though the Banking and Capital Markets Unions are not yet complete.
Türkiye to contribute more to the Group’s earnings
According to Onur Genç, Türkiye is an economy with immense potential that is beginning to show promising signs. For instance, inflation is expected to retreat further and interest rates are also likely to come down. This improvement will enable the country to contribute more to BBVA’s total earnings over the next two to three years. For 2025, the bank expects to post an attributable profit of around €1 billion. He also noted that Argentina is “getting back on track”.
Capital allocation
On the subject of capital, the bank’s CEO concluded his presentation by reiterating BBVA’s commitment to the organic generation of capital year after year and either reinvesting it or setting it aside for shareholder remuneration. He also reaffirmed the bank’s target of maintaining a fully-loaded CET1 capital ratio of between 11.5 and 12 percent. "As long as we have surplus capital, we will pay it out among our shareholders,” he said.