Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong loan growth, disciplined cost management, and robust shareholder returns, including a significant buyback program. Despite some macroeconomic challenges in Turkey, the bank shows resilience with strategic measures in place. Positive indicators like stable NII, asset quality, and deposit growth in key regions further support a positive outlook. The Q&A highlights no significant credit pressures and optimistic guidance for Mexico and Spain. Collectively, these factors suggest a positive stock price movement over the next two weeks.
Key Financial Performance
Tangible Book Value Per Share Plus Dividends Grew 5% in the quarter and 14.7% year-on-year. Excluding the impact of share buyback programs, the year-on-year growth would have been 18.1%. The share buybacks, executed at a premium to book value, created value for shareholders but negatively impacted tangible book value per share.
Return on Tangible Equity (ROTE) Improved to 21.7%, an industry-leading figure.
Return on Equity (ROE) Improved to 20.7%.
Net Attributable Profit Reached almost EUR 3 billion, representing a 10.8% increase year-on-year and 18% growth versus the previous quarter. Growth was supported by strong business activity and share buyback programs.
Earnings Per Share (EPS) Increased to EUR 0.51, a 12.5% year-over-year increase, higher than the growth of net attributable profit due to share buyback programs.
CET1 Capital Ratio Improved by 13 basis points during the quarter, reaching 12.83%, well above the target range and regulatory requirements.
Net Interest Income (NII) Grew by 20.2% year-over-year, driven by strong business activity and 17% loan growth.
Net Fees and Commissions Increased by 15.5% year-over-year, driven by payments, asset management, insurance, and CIB contributions.
Efficiency Ratio Improved to 38%, a 24 basis point improvement year-over-year. Excluding the voluntary redundancy program, the ratio would have been 36.8%.
Cost of Risk Stood at 154 basis points, showing relative stability. Excluding a post-model adjustment of EUR 100 million, it would have been 147 basis points.
Gross Income Grew by 18.3% year-over-year in constant euros and 14.2% in current euros, supported by strong NII and fees growth.
Operating Expenses Increased by 17.5% year-over-year, impacted by a one-off restructuring charge of EUR 125 million due to voluntary redundancies. Excluding this, cost growth would have been 13.9%.
Loan Growth (Spain) Grew by 6.3% year-over-year, supporting NII growth of 3.6% year-over-year.
Loan Growth (Mexico) Grew by 8.4% year-over-year, supporting NII growth of 8.3% year-over-year.
Net Profit (Spain) Exceeded EUR 1 billion, supported by 5.4% year-over-year gross income growth and stable customer spreads.
Net Profit (Mexico) Reached EUR 1.45 billion, up 4.5% year-over-year in constant euros, driven by 10.3% gross income growth.
Net Profit (Turkey) Reached EUR 263 million, supported by selective loan growth and wider TL customer spreads.
Net Profit (South America) Close to EUR 250 million, up 16% year-over-year in current euros, driven by 14% quarter-on-quarter NII growth and customer spread expansion.
Net Profit (Rest of Business) Reached EUR 236 million, driven by strong revenue growth and robust corporate lending activity.
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Operating Highlights
AI-driven transformation: BBVA is focusing on AI as a critical lever for differentiation, with 8 tangible initiatives such as personal advisers for clients and AI for bankers. The bank is revamping its operating system to scale AI across the organization, showing early promising results.
Market expansion in Mexico: BBVA Mexico delivered strong results with net profit of EUR 1.45 billion, driven by 10% loan growth and resilient margins despite a declining rate environment. The bank sees an upward bias to loan growth supported by strong activity in retail and wholesale segments.
South America growth: The region delivered a net profit of EUR 250 million, up 16% year-on-year, driven by solid core revenue growth, particularly in Argentina and Peru. Loan growth and customer spread expansion were key contributors.
Efficiency improvements: The efficiency ratio improved to 38%, with operating expenses growing at a slower rate than gross income. Excluding one-off restructuring charges, the efficiency ratio would have been 36.8%.
Cost of risk management: Cost of risk stood at 154 basis points, showing stability. Adjustments for macroeconomic uncertainty were made, particularly in Spain and Turkey, to maintain prudent risk management.
Share buyback programs: BBVA executed a EUR 993 million share buyback in Q4 2025 and is currently executing a nearly EUR 4 billion program, with EUR 2.5 billion completed. These programs aim to create shareholder value despite a negative impact on tangible book value per share.
Capital position: The CET1 capital ratio improved by 13 basis points to 12.83%, well above the target range. The bank continues to reinvest capital into profitable growth while maintaining a strong capital position.
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Risk or Challenges
Macroeconomic Uncertainty: The company has applied a post-model adjustment (PMA) of around EUR 100 million due to macroeconomic uncertainty, primarily affecting Spain and Turkey. This reflects elevated provisioning needs and potential risks in these regions.
Turkey Market Conditions: The uncertain environment in Turkey has led to a downward bias in guidance. The Central Bank's tight monetary policy and macroeconomic instability could result in more gradual net interest margin (NIM) improvement than anticipated.
Argentina Retail Portfolios: High provisioning needs in Argentina's retail portfolios are expected to persist, with gradual improvement only anticipated in the second half of 2026. This poses a risk to asset quality in the region.
Voluntary Redundancies in Spain: The company incurred a one-off restructuring charge of approximately EUR 125 million due to voluntary redundancies in Spain, impacting cost growth and efficiency ratios.
Seasonality Effects: Seasonality in the first quarter has impacted net interest income (NII) and fees in Spain and Mexico, potentially affecting quarterly financial performance.
Hyperinflation in Turkey: Higher inflation metrics in Turkey have increased hyperinflation adjustments, adding pressure to financial results.
Cost of Risk in South America: Elevated cost of risk in South America, particularly in Argentina, due to high provisioning needs in retail portfolios, could impact profitability.
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Guidance & Outlook
Net Interest Income (NII) Growth: Looking forward, the company expects continued NII growth supported by stabilizing interest rates and sustained activity levels in Spain and Mexico. Rates are expected to have reached their bottom in both countries.
Efficiency Ratio: The efficiency ratio is expected to improve further, with the current ratio at 38%. Excluding the voluntary redundancy program, the ratio would have been 36.8%, better than the guidance for the year.
Cost of Risk: The cost of risk guidance for Spain remains in the low 30s, while for South America, it is expected to remain below 250 basis points for the full year. Turkey's cost of risk is expected to converge over the year despite a higher first-half figure.
Loan Growth: Loan growth in Mexico is expected to have an upward bias, supported by strong momentum in both retail and wholesale segments. Rest of Business loan growth guidance has been upgraded to above 30% year-on-year.
Revenue Growth: Gross revenue growth guidance for Rest of Business has been upgraded to above 30% year-on-year. South America is expected to maintain strong activity and revenue growth.
Capital and Shareholder Remuneration: The company plans to execute the remaining EUR 1.5 billion of its EUR 4 billion share buyback program starting early May 2026. Excess capital above the CET1 target range will continue to be distributed.
Turkey Outlook: The Central Bank in Turkey is expected to remain tight until conditions allow for a gradual resumption of the easing cycle, presumably in the second half of the year. NIM improvement in Turkey could be more gradual than previously anticipated.
AI and Digital Transformation: BBVA is focusing on scaling AI across the group, with initiatives like personal advisers for clients and AI-driven operations. Early results are promising, and the company aims to transform into an AI-driven bank.
2026 Group Outlook: The group has upgraded its 2026 outlook for return on tangible equity and expects improved performance in Mexico while remaining cautious in Turkey due to macroeconomic uncertainties.
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Shareholder Return Plan
Tangible book value per share plus dividends: Grew 5% in the quarter and 14.7% year-on-year, driven by excellent results.
Dividend accrual: Deducted 40 basis points from CET1 capital ratio.
Share buyback program (2025): Executed EUR 993 million share buyback program in Q4 2025.
Current share buyback program (2026): Nearly EUR 4 billion program announced in December 2025, with EUR 2.5 billion already completed across 2 tranches. Remaining EUR 1.5 billion to start execution on May 6, 2026.
Impact of share buybacks: Buybacks carried out at a premium to book value, creating shareholder value but negatively impacting tangible book value per share.
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Key Q&A
Q:What are the asset quality trends in the credit card business in Mexico and the overall cost of risk guidance for the year?
A:The cost of risk guidance is at 3.40%, with the current quarter at 3.45%. There was a EUR 98 million post-model adjustment affecting Spain, Turkey, and slightly Mexico. Credit card asset quality shows no deterioration.
Q:What is the revenue guidance for Mexico, considering NII growth and cost of deposits?
A:NII is growing in line with loan growth, which was 8.4% year-over-year and 2.6% quarterly. The cost of deposits increased slightly due to a mix shift towards enterprise lending. The Central Bank rate is expected to stabilize at 6.5%, supporting spreads.
Q:What are the expectations for loan growth in Spain for 2026 and demand evolution per segment?
A:Loan growth is expected to be mid-single-digit for 2026. Growth is focused on consumer, credit cards, midsized companies, corporates, and public sector. Mortgage market share has declined due to selective growth strategies.
Q:What is the outlook for Turkey in 2026 and 2028 targets given the macro context?
A:Turkey's 2026 guidance is EUR 1 billion, based on assumptions of 25% inflation, 32% interest rate, and 19% lira depreciation. Inflation expectations have increased to 28.5%, leading to a negative bias but no major downgrade.
Q:What is the impact of the macro outlook in Turkey on net interest margins, cost of risk, and costs?
A:Cost of risk is guided at 200 basis points for 2026, with higher levels in the first half. NII will be negatively impacted by rising interest rates, but the bank is activating cost efficiency measures to mitigate this.
Q:What is the update on capital distribution and CET1 ratio?
A:The third tranche of the EUR 4 billion buyback program (EUR 1.5 billion) will start on May 6 and last until June-July. Excess capital above 12% CET1 will be returned to shareholders.
Q:What are the expectations for the USMCA renegotiation and its impact on Mexico?
A:The USMCA is expected to either extend or continue with annual reviews. Mexico's exports to the U.S. are growing, and the agreement has strong support from U.S. businesses. No negative impact is expected on Mexico's business plan.
Q:Are there any early signs of credit pressure amid geopolitical uncertainty?
A:No signs of credit pressure have been observed. The bank has strengthened risk analysis and monitoring for vulnerable clients in exposed sectors like energy and transportation.
Q:What is driving the deposit yield increase in Mexico despite lower interest rates?
A:The increase is due to a 26% year-over-year growth in time deposits, particularly from the corporate segment, as the bank shifted funding strategies in a lower interest rate environment.
Q:What is the status of the voluntary redundancy plan and its impact on costs?
A:The plan affected 750 employees, with charges mainly in Corporate Center and Spain. The payback period is around 3 years, and the costs were included in the full-year guidance.
Q:What is the breakdown of cost growth versus inflation in Q1, and how does it affect jaws?
A:Group cost growth was 14% year-on-year, above the 9% inflation footprint. Positive jaws were maintained across geographies, reflecting a disciplined approach to cost management.
Q:What is the update on capital allocation and potential disposals?
A:The bank continuously evaluates its footprint. The disposal of Garanti Romania reflects a focus on exiting subscale markets. No specific capital release targets were disclosed.
Q:What is driving deposit growth in Spain, and what is the outlook for NII?
A:Deposit growth is driven by customer acquisition and increased time deposits in the wholesale segment. NII is expected to remain stable, with potential upside if Euribor levels stay high.
Q:What is the performance of the digital banks in Italy and Germany?
A:Italy has 900,000 customers, and Germany has over 100,000 customers within 9 months of launch. Both are performing better than business plans but are still posting losses.
Q:What is the hedging strategy for Mexico and Turkey?
A:In Turkey, 43% of capital and 33% of P&L are hedged. In Mexico, 44% of capital and 37% of P&L are hedged. Hedging costs have been optimized with option structures.
Q:What is driving the strong trading income in Q1?
A:Trading income is driven by global markets, particularly FX trading, and ALCO portfolio adjustments due to steepening yield curves.
Q:What is the outlook for cost growth and efficiency in Mexico?
A:Cost growth is aligned with maintaining an efficiency ratio of low 30s. Investments are ongoing, with paybacks expected in the short to medium term.
Q:Review of Unclear Management Responses
A:Management avoided providing a clear answer on the potential disposal of Atom Bank and other non-public transactions, citing an ongoing evaluation process.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
EUR euro
EUR share
Fees
PMA
Page
Peru
TL
ability
activity segment
approach
bias
bottom page
buyback program
column
contribution insurance
cycle
day count
dynamic income
fee trading
hour
income loan
momentum
payment asset
point provisioning
program EUR
progress
provisioning need
quality cost
ratio basis
ratio page
redundancy restructuring
restructuring charge
seasonality
share buyback
side slide
start confidence
strength
trading income
tranche
transformation
uncertainty
BBVA Transcript
Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) Presents at Goldman Sachs 30th Annual European Financials Conference 2026 Transcript
Neutral6-8
Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) Q1 2026 Earnings Call Transcript
Positive4-30
The earnings call reveals strong loan growth, disciplined cost management, and robust shareholder returns, including a significant buyback program. Despite some macroeconomic challenges in Turkey, the bank shows resilience with strategic measures in place. Positive indicators like stable NII, asset quality, and deposit growth in key regions further support a positive outlook. The Q&A highlights no significant credit pressures and optimistic guidance for Mexico and Spain. Collectively, these factors suggest a positive stock price movement over the next two weeks.
Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) Presents at European Financials Conference 2026 Transcript
Neutral3-17
Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) Q4 2025 Earnings Call Transcript
Positive2-5
The earnings call summary indicates strong loan growth in key markets and improved net profits across regions. The company's strategic plans include significant shareholder returns and sustainability efforts, which are positive signals. The Q&A reveals some concerns about competition and cost growth, but overall guidance remains optimistic. The company's solid capital position and planned share buybacks further support a positive sentiment. Given these factors, the prediction is a positive stock price movement of 2% to 8% over the next two weeks.
BBVA Report
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