BBVA (BBVA) Q3 2026 Earnings Call Transcript

BBVA reported €9.07 billion in net attributable profit for the first nine months, up 13.6% year over year, and quarterly profit above €3 billion, up 19.1%; nine-month ROTE was 22%, and management raised full-year ROTE guidance to above 21%. Third-quarter net interest income rose 16.5% year over year, while Mexico and Spain loan growth reached 12% and 7.3%, respectively. Management reiterated €36 billion of shareholder distributions and excess capital for 2025–2028, but cautioned that Turkey and South America credit costs may exceed prior guidance; CET1 was 12.21% at Sept. 30, down from 12.41% pro forma in June.

Analysis

BBVA’s key tension is that growth is creating earnings power while consuming the capital that supports distributions. The 3Q CET1 decline is therefore not just a seasonal datapoint: if loan growth stays capital-intensive and SRT execution disappoints, the promised distribution envelope becomes less certain even with strong reported profits. Conversely, successful SRTs and the pending securitization-rule changes could improve capital efficiency disproportionately, given management’s stated higher RWA density than peers; treat that benefit as conditional until transactions close and CET1 stabilizes.

Rate exposure is asymmetric by business line. Higher European yields may gradually help Spanish loan repricing, but can also pressure deposit costs quickly and generate securities-related volatility before asset yields reset. This creates a near-term earnings-quality question, not a simple “higher rates are good” trade. Mexico remains the principal growth engine, but model-driven provision releases flatter the reported risk picture; Turkey and Argentina add credit and currency tail risk that can overwhelm incremental NII if prolonged high rates weaken borrowers.

Near term (days), avoid chasing headline growth. Over 1–3 months, watch Q4 SRT completion, CET1 and Spanish NII/spreads. Over 6–18 months, the thesis depends on converting enterprise/CIB growth into returns without a meaningful rise in credit losses. AI productivity claims are not yet a material earnings catalyst absent quantified expense savings.

Key Decisions for Investors

• Prefer a measured relative-value long BBVA versus a diversified European-bank basket, entered on weakness rather than after the earnings reaction; the edge is sustained growth and profitability, while the hedge reduces broad sector/rate exposure. Do not size it as a pure high-yield or buyback trade.
• Make Q4 capital delivery the gating item: add only if SRTs close near management’s stated plan and CET1 stabilizes; reduce or exit if the ratio falls below the bank’s 11.5% management-range floor or distributions are qualified.
• Track Mexico’s underlying credit trend separately from reported provisions, and monitor Turkey/Argentina cost of risk against guidance. A persistent deterioration alongside weaker NII would falsify the growth-with-resilient-credit thesis.
• Watch Spain’s loan repricing versus wholesale deposit costs and securities-related income. If spread improvement fails to emerge over the next few quarters, reconsider whether loan growth is translating into durable earnings rather than merely absorbing capital.