In a bold move, BBVA's CFO, Luisa Gómez Bravo, unveiled the bank's impressive financial goals and current success to investors in London. But is this optimism justified? Let's dive in and explore the bank's strategy.
BBVA aims high with its financial targets for the coming years, targeting a staggering €48 billion in net profit by 2028, an average RoTE of 22%, and a 15% compound annual growth rate in tangible book value per share. And the bank is already proving its mettle, achieving a record-breaking €8 billion profit in just nine months, with a RoTE of 19.7%.
Here's where BBVA's secret sauce comes into play:
- Geographic Diversity: BBVA's presence in multiple attractive markets with low leverage and high growth potential gives it a unique edge.
- Market Leadership: Holding top positions in key markets allows BBVA to outperform competitors in profitability.
- Digital Advantage: BBVA's early and aggressive investment in digital transformation is now bearing fruit, attracting millions of new customers annually.
Gómez Bravo highlighted Spain as a prime example of BBVA's success. With its efficient operations and digital prowess, BBVA Spain has become the country's most profitable bank. The bank's ability to engage new customers through its digital experience is remarkable, with over 100,000 SMEs joining in 2023 alone.
The bank's growth strategy is twofold: expanding its loan book by 5% annually, focusing on corporate and consumer lending, and increasing its customer base. In Mexico, BBVA foresees high single-digit loan growth, driven by a resilient economy and low leverage. Meanwhile, in Türkiye, the bank's outlook is positive, with Garanti BBVA poised to benefit from lower interest rates and easing inflationary pressures.
But here's where it gets interesting: BBVA's capital position. With a CET1 capital ratio of 13.42% as of September, the bank aims to distribute capital above 12%, returning a substantial €36 billion to shareholders by 2028. This ambitious plan showcases BBVA's confidence in its financial strength and growth prospects.
And this is the part most people miss: BBVA's robust capital position compared to its European peers. Gómez Bravo emphasized that BBVA has one of the largest buffers above regulatory capital requirements, indicating a strong financial foundation.
So, is BBVA's optimism warranted? The numbers and strategies seem to support it, but what do you think? Are these financial targets achievable, and is BBVA's growth story as solid as it seems? Share your thoughts in the comments below!
