BBVA achieved a record-breaking performance in the first half of the year, posting a profit of 4.994 billion euros, marking a 29% increase compared to the same period last year. The bank attributes this growth to an improvement in credit and has raised its profitability to 20% amid its ongoing takeover bid for Banco Sabadell.
The bank reports that the merger process is “progressing positively” and expects it to be completed “within approximately 6 to 8 months from the date of the announcement,” according to the report submitted to the National Securities Market Commission (CNMV) on Wednesday.
Regarding synergies, which Banco Sabadell has questioned based on the details presented so far, BBVA’s report breaks down the anticipated 850 million euros in synergies into 450 million euros in technology savings, 300 million euros in personnel savings, and 100 million euros in financial savings. Additionally, BBVA plans to close 300 offices (out of 870 located within 500 meters).
On the results front, BBVA highlights a 10.7% year-on-year increase in client credit in constant euros, driven by loans to businesses. By June, the bank had financed over 340,000 small and medium-sized enterprises (SMEs) and self-employed individuals, and more than 75,000 families had obtained mortgages from the bank.
The bank also notes an improvement in profitability, which reached 20% at the end of June, surpassing the averages of European (13.3%) and Spanish (12.9%) competitors. During this period, the return on equity (ROE) was 19.1%, and the bank gained 5.6 million new customers, 67% of them through digital channels.
Net interest income grew by 13.9% in the first half of the year to 12.993 billion euros, mainly driven by credit activity. Net fees and commissions rose 35% year-on-year to 3.842 billion euros, thanks to strong performance in payment methods and, to a lesser extent, asset management. Recurring income (net interest margin plus net fees) grew 23% year-on-year to 16.835 billion euros.
The gross margin reached 17.446 billion euros in the semester, a 31% increase compared to the same period last year, while operating expenses rose 20% to 6.859 billion euros. The efficiency ratio improved by 362 basis points to 39.3%, its best historical mark.
Financial asset impairment amounted to 2.839 billion euros from January to June, a 43% increase compared to the previous year, due to higher provisions associated with growth in the most profitable segments. Nevertheless, risk indicators remained within expectations: the cumulative cost of risk was 1.42%, while the coverage ratio and the non-performing loan (NPL) ratio stood at 75% and 3.3%, respectively, at the end of June.
In Spain, credit investment grew by 2.4% year-on-year, driven by the consumer, credit card, and medium-sized business segments, as well as by new mortgage production.
Client resources grew by 3.5%, thanks to term deposits and off-balance sheet resources.
The gross margin increased by 27% year-on-year. The growth in expenses, slightly below 6% and significantly lower than that of income, allowed for a 719 basis point improvement in the efficiency ratio, which stood at 35.4% at the end of June.
Attributable profit reached 1.790 billion euros from January to June, a 47.8% year-on-year increase. In the second quarter alone, profits surpassed 1 billion euros, a historic milestone. Risk indicators evolved as expected: the cumulative cost of risk remained stable at 0.38%, while the coverage and NPL ratios decreased to 54% and 3.93%, respectively.
