BBVA Raises 2024 Profit Forecast After Strong Q1 Earnings

BBVA, a major Spanish bank, reported a 19% increase in its first-quarter net profit compared to the same period in 2023. The bank's net profit reached 2.2 billion euros, surpassing the 2.06 billion euros anticipated by analysts. The robust performance was propelled by strong results in BBVA's primary markets of Mexico and Spain.

In Mexico, BBVA's net profit climbed 12.6% year-on-year, while in Spain it grew by 36.5%. At the group level, BBVA's net interest income, which represents the earnings on loans minus deposit costs, increased by 15% year-on-year to 6.51 billion euros, exceeding the analysts' average projection of 6.42 billion euros. The bank also reported a 24% rise in net interest income compared to the previous quarter, as interest rates have persisted at higher levels for longer than anticipated in the euro zone.

Why this matters: BBVA's strong first-quarter results and elevated profit forecast for 2024 demonstrate the bank's resilience and ability to leverage favorable market conditions. The bank's performance also underscores the ongoing recovery and growth potential in key markets such as Mexico and Spain.

BBVA has lifted its profit target for 2024 after its first-quarter net profit and earnings surpassed consensus expectations. The bank now anticipates posting double-digit growth in full-year net profit, up from its previous expectations of single-digit growth. This enhanced performance was driven by higher lending income in Mexico and Spain, and BBVA expects further improvement in Spain this year.

BBVA's fully-loaded common equity Tier 1 ratio, a measure of financial strength, stood at 12.82% at the end of the quarter, up from 12.7% as of December 31. The bank also announced a share buyback program valued at €781 million, reflecting its robust capital position and commitment to enhancing shareholder value. BBVA's shares have experienced a 34% increase so far this year, outperforming the Stoxx 600 Banks Index.

Analysts at Jefferies noted that the quarter confirmed solid dynamics across most geographies, with beats coming from both Spain and Mexico. BBVA's diverse range of banking and financial services, including retail and investment banking, asset management, and insurance, cater to a wide spectrum of clients and position it well to capitalize on opportunities and navigate challenges in the evolving financial landscape.

Key Takeaways

• BBVA's Q1 net profit rose 19% YoY to €2.2B, exceeding analyst estimates.
• Strong performance driven by Mexico (up 12.6%) and Spain (up 36.5%).
• Net interest income increased 15% YoY to €6.51B, beating projections.
• BBVA raised its 2024 profit target to double-digit growth, up from single-digit.
• BBVA's CET1 ratio rose to 12.82% and announced a €781M share buyback.