The improvement in income resulting from the recovery in activity and the rise in interest rates is compensating for the weaker performance of its activities in Turkey
The improvement in income thanks to the rise in interest rates and the revival of activity have offset the negative impact Turkey has had on BBVA’s accounts this year. The banking giant earned 46.2% more between January and September, to 4,842 million euros. A figure indicating that the entity could close the year with historical results.
Taking into account the third quarter, BBVA earned 1,841 million euros, an increase of 34.1% compared to a year earlier (+31.4% at current rates).
Investors were especially alert to the evolution of activities in Turkey, given the runaway inflation that has forced the application of special accounting (the country is forecast to end 2022 with an inflation rate of 60%) which, as indicated by BBVA Even at the beginning of the year, it would subtract about $324 million from the second-quarter benefit. In total, Garanti recorded a decrease in profit of more than 42%, limiting its contribution to the group to 336 million euros, from 583 million a year earlier.
Nevertheless, BBVA emphasizes the dynamism of its business, with strong double-digit growth in its loan portfolio, which grew by 15% between January and September, and in recurring revenues, which grew by almost 29%.
In total, the interest margin amounted to 13,811 million euros in the first nine months of the year, an increase of 32.6% year-on-year. Similarly, the gross margin reached EUR 18,366 million between January and September, representing an annualized increase of 21.2%.
“In the first nine months of the year we have had some very good and high quality results. We hope the coming quarters will be positive for BBVA and, as always, we will support businesses, families and society as a whole in an environment of great economic uncertainty,” said the entity’s CEO, Onur Genç.
Mexico was again one of the big drivers of its income statement – it already accounts for about 60% of the total – with EUR 2,964 million between January and September, 47.5% more.
Spain becomes the second most important region for the group with a profit of 1,514 million euros in the first nine months of the year, 27% more. Behind these numbers is the improvement in income, with credit growth in both business and consumption, in addition to cost-cutting plans the entity has undertaken.
The result excludes the net impact of -201 million euros from the Merlin office purchase, recorded in the second quarter of the year. If included, the profit would amount to 1,312 million euros, 10.2% more.
As other banks have pointed out in the closing days of the earnings round, BBVA also does not appear to be registering a greater risk of default given the difficult economic environment for Spanish households. The default rate actually declined by 13 basis points to 3.9% in the quarter, with the coverage ratio improving compared to June to 64%.
For the group as a whole, and in line with the rest of the sector, the backlog decreased to 3.5% (-20 basis points), while the coverage ratio increased from 78% to 83%.
Source: La Verdad
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