BBVA obtained an attributable result of 3,311 million euros at the end of September, which contrasts with the 15 million euros of losses in the same period last year, in the midst of the pandemic.
Excluding non-recurring impacts, the group’s net profit stood at 3,727 million euros, which represents an 84.9% increase compared to the same period last year, as the company reported this Friday. In addition, the entity has confirmed that it will carry out the share buyback program for a maximum of 3,500 million euros (10% of the capital) and that it will start with a first tranche as of November 18, after the conclusion of your Investor Day .
The non-recurring impacts that have been discounted from the net profit are 280 million euros, which correspond to the profit obtained by BBVA USA and the rest of the companies included in the sale agreement to PNC until the closing of the operation on June 1, 2021, as well as 696 million euros of net costs associated with the restructuring process.
By business areas, “in all of them the provisions for impairment of financial assets decrease compared to those made in 2020 due to the outbreak of the pandemic,” the entity states in the press release.
Thus, the group’s profit in Spain was 1,223 million euros between January and September 2021, 160.9% higher than last year. Mexico contributed 43.5% of the entity’s total profit, most of it, with 1,811 million euros between January and September, 47.4% more than in the same period of 2020. The rest of the regions where it is present, Turkey obtained net profits of 583 million euros (48.4% higher) at constant exchange rates and South America generated an accumulated attributable profit of 339 million euros (35.6% more).
The core part of the business, the interest margin, increased by 2.5% at constant exchange rates, to 10,708 million euros , although it fell by 3.7% if the impact of the currency is taken into account -in 2020 it stood at 11,115 million euros – due “to the good performance of South America and Mexico, which offset the worse performance in Turkey, Spain and the rest of the businesses.” Net commissions increased 19.2%, to 3,518 million euros.
The Group’s fully-loaded CET 1 ratio stood at 14.48% as of September 30, 2021, which represents a strong generation of capital in the quarter (31 basis points) and a large buffer , more than covering the requirements of capital demanded by Brussels, “even after the buyback of shares”.
Operating expenses increased 6.5 in all areas, except for Spain and Rest of Businesses. This growth is part of an environment of recovery in activity and high inflation, especially in Mexico and Turkey, as indicated by the entity. The efficiency ratio stood at 44.7% as of September 30, 2021, in line with that achieved in the same period of the previous year (44.4%), with an improvement of 83 basis points with respect to the ratio. at the end of December 2020.
The impairment of financial assets not valued at fair value through profit or loss (impairment of financial assets) closed September 2021 with a negative balance of 2,202 million euros, significantly below the previous year (-46.2%) and with a decrease in all geographic areas, mainly due to the negative impact of the provisions for Covid-19 in 2020.
As of September 30, 2021 , the provisions item accumulated a negative balance of 224 million euros, 61.6% below the figure accumulated in the same period of the previous year, mainly due to provisions to face potential claims in Spain and, in Turkey, due to higher provisions for special funds and for contingent risks and commitments, made in both cases in 2020.
The net costs associated with the BBVA restructuring process in Spain amounted to 696 million euros, of which, before taxes, 754 million euros correspond to the collective dismissal and another 240 million euros to the closure of offices.
The group’s profitability consolidated levels above 10%, with a ROTE (return on tangible capital, in its acronym in English) of 11.7% and an ROE of 11.1%, which represents, in both cases, almost double the levels reached at the end of 2020, above 6%.
The loans and advances to customers registered growth of 1.5% with respect to the end of December 2020, much favored by the evolution of the individuals (+ 2.5%), with increases in most areas, except of Rest of Businesses, and highlighting the growth of consumer loans and credit cards in Turkey, Spain and Mexico. The business loans also increased slightly (+ 0.6% YoY), thanks to positive developments in Mexico and Spain.
The NPL ratio stood at 4.0% as of September 30, 2021 (4.2% in June 2021), 21 basis points below the figure recorded in December 2020. The coverage rate closed at 80 %, 149 basis points less compared to the end of 2020. On the other hand, the cost of risk accumulated as of September 30, 2021 was 0.92% (64 basis points below the end of 2020 and 9 basis points compared to June 2021).
On October 26, BBVA received authorization from the European Central Bank (ECB) to carry out the repurchase of shares that it had previously announced under the terms it confirmed this Friday.
The entity will allocate 3,500 million euros at most to buy 10% of the capital in a buyback program that will be extended over the next twelve months. It will begin after November 18, when the entity plans to celebrate its Investor Day, from the development of a first tranche, for 1,500 million euros and a period of 5 months. Check here the schedule of upcoming dividends for the stock market
This is in addition to the remuneration already committed by BBVA to distribute between 35% and 40% of its net profit to shareholders. The first interim dividend took place on October 12 for an amount of 0.08 euros gross per share.
The consensus expects a second payment of 0.131 euros gross on April 5, 2022, which would imply the total payment of 0.211 euros, which rents 3.8% at current prices to which would have to be added the 10% profitability that it supposes the buyback of shares.