BBVA achieved a profit of 3,878 million euros during the first six months of the year, which represents an increase of 31% compared to the previous year. This figure would exceed 4,100 million euros if the temporary tax paid to the State in the first quarter in full and which amounted to 225 million for the business in Spain is not deducted from it.. From April to June alone, profits amounted to 2,032 million euros, with an interest margin of 5,768 million, 25% higher than a year ago and 100 million more than the quarter of the year.
Group revenue reached 14,148 million euros, with growth close to 24%. Specifically, the interest margin (which is the difference between what the bank charges for the money lent and what it pays to its customers for deposits) shot up 33.6%, up to 11,410 million euros, in line with what has been seen in the rest of the entities that have been presenting their accounts over the last week. The commissions in his case grew by 9.4%, reaching 2,909 million euros.
On the other hand, operating expenses increased at a group level at a rate of 21.6% largely due to the inflation rates observed in the countries where the group is present, such as Turkey (where it is close to 40% ) or Argentina (at 116% at the end of June). Likewise, BBVA has carried out salary increases “to compensate for the loss of purchasing power of the workforce”.
SPAIN AND MEXICO
During the first half of the year, the entity chaired by Carlos Torres managed to grow in its main markets, thanks to the impact of the rise in interest rates on its business in Spain and the increase in spreads in Mexico, which remain at levels of 11.25%. since the last rise carried out by the Central Bank of the country last March, and which are the highest since the financial crisis. Here in the Eurozone, the European Central Bank (ECB) increased the reference rates again this Thursday to 4.25%.
Against this backdrop, BBVA's banking business in Spain increased its profit by 53.6% to 1,231 million euros, and represents a quarter of the group's total result, with an interest margin that was almost 45%. higher despite a slight drop in commissions. Mexico continues to be its first market, with 53% of the profit. From January to June, he earned 30.1% there, up to earning 2,614 million euros.
As regards the national business, the loan portfolio remained stable at the end of 2022 and closed June at 173,944 million euros and there was a 3% drop in customer deposits, to 214,276 million. euro. The default rate rises slightly in the semester to 4%. The entity considers that the fall in the mortgage portfolio, of 1.1%, and in loans to large companies, which also fell by 3%, has been offset by credit to the public sector and to consumption, in addition to the greater demand for financing from medium-sized companies.
In the case of Mexico, the entity registered an increase in the interest margin of 26.6% from January to June thanks to the “dynamism”, according to its report, of the country. Net commissions increased by 21% due to the higher volume of customer transactions, mainly due to the use of credit cards and the management of investment funds.
Turkey, where BBVA owns 86% of the capital of Garanti, generated an attributable result of 525 million euros during the first half of 2023 within a specific accounting for hyperinflation that has been dragging on for several semesters.
The entity once again increased its profitability in the semester as it took its ROTE (return on tangible capital, for its acronym in English) to levels of 16.9%, while the ROE also climbed another 180 basis points on the closing of 2022 up to 16.2%.
Non-performing loans increased by 7 basis points, up to levels of 3.4% at the end of June. At the group level, the bank recognizes a 3.9% increase in the doubtful balance between April and June 2023, due to greater delinquencies in individual portfolios.
The Tier 1 capital ratio, known in the sector as CET1 fully loaded, was close to 13% at the end of the semester, above the target set by the entity for a range of 11.5% to 12%..
1,000 million to buy shares
BBVA has become the clearest example of the national banking sector in terms of shareholder remuneration. The entity not only distributes half of its profits among investors in a dividend entirely in cash (unlike Banco Santander, which only gives 25% in cash) but also has set a new share repurchase as its objective, the third in three years and that would bring the total amount allocated to own shares to over 4,500 million euros, at the head of the big Europeans.
Previously, BBVA had completed a share buyback program for 3,160 million euros and last year announced a timid program of 422 million more.
The entity has requested authorization from the European Central Bank (ECB) to carry out this new buyback as extraordinary shareholder remuneration.