Monday, August 8

BBVA’s results work the chimera of annual highs


BBVA shares rose about 5 percent and led the IBEX 35 gains on Friday after results that won market applause.

The bank earned 3,311 million euros through September and set a date for the expected share buyback. It beat the expectations of analysts, who expect an upward revision by the consensus, according to sources consulted by finanzas.com.

Contrary to what happened with Banco Santander, where there was a strong division, and with Repsol, investors read the group’s figures with optimism and turned to the value and the share buyback, which will begin on November 18.

BBVA securities discounted these prospects with rises to 5.93 euros. Now, the highs of the year at 6.04 euros, much questioned after the collapse of the Turkish lira, are once again within reach.

BBVA beats market expectations

The positive evolution of the net interest income in all geographies, the lower provisions for write-offs and the increase in commissions, were some of the catalysts, explained the analysts of RBC.

“They beat expectations in the most important items, income, costs and provisions,” he said. Rafael Alonso, Bankinter analyst.

The figures “have been above our estimates and those of consensus”, with a “reading of recurring income and lower provisions for credit provisions,” he added. Nuria Alvarez, Renta 4 Banco analyst.

Buybacks boost BBVA

In addition, the imminent announcement of the share buyback also encouraged analysts. “The approval provides support for the action,” they said in UBS.

There were some doubts regarding the possibility that the ECB did not give the green light to the operation, so investors “are probably encouraged by the news,” added the Swiss entity.

With these numbers, the economists of Citi they expect the consensus of analysts raise their estimates for net interest income, which will go from a low range to a medium range but still in the single digits.

The shadows on BBVA’s horizon due to inflation

On the other hand, analysts detected some shadows derived from the greater inflationary pressures in Turkey.

The Turkish division has performed well, with a sharp rise in local currency credit and an interest margin that grew 4.9 percent. But a good part of this expansionary effect of the margin is due to inflation, which is at 19 percent in the country.

And inflation means assuming more costs. In fact, Alvarez stressed on the negative side the “strong growth in operating costs”, which increased 19 percent in Turkey.

More room for dividends and corporate operations

Regarding solvency metrics, the fully loaded CET1 capital ratio stood at 14.48 percent, compared to the 14.26 percent expected by the consensus of analysts.

The sources consulted considered that the market removed much of its skepticism with this variable after the sale of the subsidiary in the United States. This caused the shift towards capital distribution, where the bank has a lot of room for maneuver.

The ordinary dividend policy of 35-40 percent of the pay out and the repurchase of up to 3,500 million euros leave room for mergers and acquisitions, for more special dividends or for both, highlighted in Bloomberg Intelligence to finanzas.com.

With the rebound on Friday, the price of BBVA already has the maximums of the year in sight, although above, the levels of 6.08 euros and 6.30 euros (this last bullish channel ceiling), continue to be the closest resistances to conquer to continue accelerating the upward trend.



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