Six keys to understanding BBVA’s quarterly results

Between January and March 2019, BBVA earned €1.16 billion, a 16.2 percent increase from the preceding quarter, although a 9.8 percent decrease from a year ago (at current exchange rates).  Beyond the headline figures, here are the keys to understanding BBVA’s numbers from the start of the year.

1. Transformation. BBVA continues to make progress with its digital transformation, which has clearly had a positive impact on the customer experience, the growth of the bank’s customer base, its productivity, and efficiency. Two data points illustrate this trend: First, the number of customers who interact with the bank via digital channels has reached 28.4 million, representing 53 percent of the total. In addition, the number of customers who use their smartphones to interact with BBVA grew last year by 25 percent, reaching 24.4 million or 45 percent of the total. Second, as of the end of March 2019, the number of units sold online represents 57 percent of the total, double what it was only two years ago.
2. Efficiency. Closely related to transformation is efficiency. Excluding BBVA Chile from the analysis, the bank’s positive above-the-line performance, together with a steady focus on cost control, produced double-digit growth for the bank: 10.2 percent growth (at constant exchange rates) in its operating income in the last 12 months (to €3.15 billion). This, in turn, has led to an improvement in the efficiency ratio, which fell 118 basis points to 48.1 percent during the same period.
3. Risk Management. BBVA's credit rating metrics held stable from the previous quarter. Specifically, according to March 2019 data, the NPL ratio stood firm at December 2018 levels (3.9 percent),  which represents an improvement from the 4.4 percent levels of the same period last year. Finally, the coverage rate saw an improvement, up to 74 percent from 73 percent in the previous quarter.
4. Solvency. BBVA maintains a strong capital position, exceeding regulatory requirements. The fully loaded CET 1 ratio – the benchmark ratio used to measure an entity’s solvency – stood at 11.35 percent at the close of Q1 2019. This indicator is approaching the goal established by the Group of between 11.5 and 12 percent for the end of 2019.
5. Profitability. Traditionally, a bank's profitability can be calculated by taking its net income divided by shareholders equity. This ratio is called ROE (return on equity). BBVA compares favorably in its peer group, maintaining its leadership position in terms of profitability. BBVA’s ROE stood at 9.9 percent at the close of March 2019
6. Creating value for shareholders. The tangible book value per share —which is equivalent to a company’s balance sheet value or tangible assets divided by the total number of shares outstanding— plus dividends from December of last year totaled €6.20 per share, an 11 percent year-on-year increase.