BBVA increases its profit in the first quarter by 19.1%, despite the special bank tax

BBVA achieved an attributable net profit of 2.2 billion euros for the entire first quarter of 2024, which represents an increase of 19.1% compared to the same period last year, the bank reported on Monday when publishing its quarterly accounts.

The increase in profits takes place despite the fact that in this first quarter the bank has recorded at accounting level the total of the special bank tax, which amounts to 285 million euros, which is 26.6% more than the amount paid last year.

The bank’s total revenues (gross margin) amounted to EUR 8,218 million at the end of the quarter, an increase of 18.1%.

Given these results, BBVA CEO Onur Gen¿ wanted to highlight the “excellent evolution of recurring revenues, which increased by 27% in constant euros, driven by the growth of activity.” He also added that they are making “strong” progress in attracting new customers: “2.8 million in the first three months.”

The improvement in earnings expectations for this year is largely supported by the better outlook for recurring revenues, despite better-than-expected interest margin dynamics in Spain.

Specifically, Genç explained that BBVA has so far estimated single-digit growth in Spain’s mid-market interest margin, while it now expects the increase to reach double digits.

Although the foreseeable interest rate cut will impact the profit and loss account, Genç has highlighted that this effect will be offset by other growth measures. He even illustrated that BBVA’s current sensitivity is that every 100 basis points interest rate cut implies a 5% decline in interest margin.

As in previous quarters, the manager has also indicated that the bank will continue to buy back shares as long as there is a surplus of capital and as long as it trades below the intrinsic value of the shares. “Share buybacks are a great opportunity to create value for our shareholders,” he said.