The BBVA share
In the first quarter of 2019, global growth moderated due to manufacturing and trade weaknesses. However, the service sector and employment remain robust. The cyclical slowdown in the United States and China's moderation trend have been accompanied by an unexpected slowdown in Europe, affected by global trade tensions and idiosyncratic factors (such as regulatory changes in the automobile sector, protests in France and, mainly, Brexit).
In light of greater cyclical weakness and in the absence of inflationary pressures, main central banks have reacted with more accommodative monetary policies. The United States Federal Reserve (Fed), after raising benchmark interest rates to 2.50% in December, has signaled a pause that is likely to continue until the end of 2019, and will put an end to the reduction in its balance earlier than expected. The European Central Bank, after completing the asset purchase program in December and in the face of weak economic activity, has announced a new round of liquidity auctions, delaying the interest rates increase, which is not longer expected until mid-2020 at the earliest. Furthermore, the Chinese authorities have been adopting fiscal and monetary stimuli following recent signs of weakening activity. Thus, interest rates will remain low for longer in the developed economies, allowing emerging countries to gain room for maneuver. These stimuli are a factor supporting growth, but a moderation on growth rates is expected for the coming quarters.
The major stock market indices improved during the first quarter of 2019. In Europe, the Stoxx 50 and Euro Stoxx 50 rose 12.9% and 11.7%, respectively, while in Spain the Ibex 35 index rose 8.2%. Over the same period in the US, the S&P 500 index rose 13.1%, marking the largest quarterly increase since the third quarter of 2009.
Banking sector performance in particular was also positive in the quarter, although to a lesser extent than the general market indices. Furthermore, the Stoxx European Banks index, which includes the United Kingdom, rose 4.5%, while the Euro Stoxx Banks index for the eurozone rose 7.1%. In the US, the S&P Regional Banks Select Industry Index grew 9.6% in comparison to the close of the 2018.
In this context, the BBVA share performed slightly better than those of the European banking sector and Ibex 35 during the first quarter of 2019, with the share price increasing 9.9% to €5.09 at the close of the quarter.
BBVA share evolution
Compared with European indices (Base indice 100=31-03-2018)
Regarding shareholder remuneration, on April 10, 2019 BBVA paid in cash a gross amount of €0.16 per share as a final dividend for the 2018 fiscal year, which represents a 7% increase compared to April 2018. Thus, the total dividend for the 2018 fiscal year amount to €0.26 gross per share, with a payout of 37% of net attributable profit, excluding the gains of BBVA Chile. BBVA will continue to pay out between 35% and 40% of its yearly earnings in dividends, with 100% cash remuneration.
Shareholder remuneration
(Euros-gross/share)
Cash
Group information
- In the first quarter of 2019, the overall growth of recurring income was maintained, with a positive evolution in terms of net interest income in most business areas.
- The trend of containing operating expenses and improving the efficiency ratio compared to the same period of the previous year continues.
- Higher impairment on financial assets (up 24.4% year-on-year), mainly as a result of the higher reserve requirements due to the impairment of specific portfolios and the updating of the macroeconomic scenarios in the United States and Turkey, were not offset by the lower needs in Spain. Nevertheless, the impairment on financial assets decreased by 24.3% compared to the last quarter of 2018.
- As a result, the net attributed profit was €1,164 million, 9.8% less than in the same period the previous year.
Net attributable profit (Millions of Euros)
Net attributable profit breakdown (1) (Percentage. 1Q19)
(1) Excludes the Corporate Center.
- As of March 31, 2019, the number of loans and advances to customers (gross) recorded 1.8% growth with respect to December 31, 2018, with improved levels of activity in all areas of business.
- Within off-balance-sheet funds, good development of investment funds and pension funds in the quarter.
- Capital position above regulatory requirements, with a fully loaded CET1 ratio at 11.3%, similar to the level at the end of December 2018, which absorbs the 11 basis points impact as a result of the implementation of IFRS 16 on January 1, 2019.
Capital and leverage ratios (Percentage as of 31-03-2019)
- Although the Non-performing loans showed a slight rebound in the quarter (up 1.2%), the indicators of the main credit-risk metrics remain solid: As of March 31, 2019, the NPL stood at 3.9%, coverage at 74% and the accumulated cost of risk at 1.06%
NPL and NPL coverage ratios (Percentage)
- IFRS 16 came into effect on January 1, 2019, a standard on leases that introduces a single lessee accounting model and will require lessees to recognize assets and liabilities of all lease contracts. The main impacts on the Group are the recognition of assets by right-of-use and liabilities per lease, amounting to 3,419 and 3,472 million euros, respectively, and the above stated impact in terms of capital, both as of the effective date.
- In 2019, the balance sheets, income statements and ratios of the first three quarters of 2018 have been reexpressed for the Group and the business area of South America to reflect the impacts derived from the hyperinflation in Argentina as a result of the application of IAS 29 on the income and expenses as well as the assets and liabilities, in order to make the financial information of 2019 comparable to the one of 2018. This has been necessary as this impact was registered for the first time in the third quarter 2018, with accounting effects as from January 1, 2018.
Business areas
Spain
Millions of euros and year-on-year changes
Highlights
- Positive trend of activity, especially in high profitable segments.
- Net Interest income affected by lower ALCO contribution and the impact of IFRS 16.
- Significant reduction in operating expenses.
- Continues improvement in Credit risk indicators.
Results
Net interest income
882Gross income
1,497Operating income
683Net attributable profit
345Activity (2)
Performing loans and advances to customers under mangement
+1.8%Customers funds under management
+4.3%
Risks
NPL coverage ratio
NPL ratio
Cost of risk
(1) Year on year changes.
(2) Excluding repos.
The United States
Millions of euros and year-on-year changes at constant exchange rate
Highlights
- Good performance in consumer and commercial segments activity.
- Net interest income increase, main lever of results and of customer spreads.
- Operating expenses growth below the inflation rate, efficiency improvement.
- Net Attributable profit affected by impairment on financial assets associated to the macroeconomic environment, to specific customers and to write-offs in consumer.
Results
Net interest income
615Gross income
804Operating income
331Net attributable profit
127Activity (2)
Performing loans and advances to customers under mangement
+6.6%Customers funds under management
+1.5%
Risks
NPL coverage ratio
NPL ratio
Cost of risk
(1) Year on year changes at constant exchange rate.
(2) Excluding repos.
Mexico
Millions of euros and year-on-year changes at constant exchange rate
Highlights
- Lending growth, supported by commercial, consumer and mortgages.
- Positive trend of net interest income in line with activity.
- Operating expenses influenced by the increase of the contribution to the BBVA Bancomer Foundation.
- Good asset quality indicators
Results
Net interest income
1,500Gross income
1,902Operating income
1,268Net attributable profit
627Activity (2)
Performing loans and advances to customers under mangement
+10.4%Customers funds under management
+7.3%
Risks
NPL coverage ratio
NPL ratio
Cost of risk
(1) Year on year changes at constant exchange rate.
(2) Excluding repos.
Turkey
Millions of euros and year-on-year changes at constant exchange rate
Highlights
- Positive trend in lending.
- Good performance of net interest income, as a result of the inflation-linked bonds performance.
- Operating expenses growth below the inflation rate.
- Net Attributable profit affected by the impairment on financial assets associated to the macroeconomic environment.
Results
Net interest income
695Gross income
884Operating income
571Net attributable profit
142Activity (2)
Performing loans and advances to customers under mangement
+8.5%Customers funds under management
+21.0%
Risks
NPL coverage ratio
NPL ratio
Cost of risk
(1) Year on year changes at constant exchange rate.
(2) Excluding repos.
South America
Millions of euros and year-on-year changes at constant exchange rates
Highlights
- Activity continues to grow at a good pace.
- Good performance of net interest income.
- Net Attributable profit impacted by Argentina's hyperinflation adjustment.
- Positive trend in net attributable profit of the main countries in the region: Argentina, Colombia and Peru.
Results
Net interest income
760Gross income
985Operating income
606Net attributable profit
193Activity (2) (3)
Performing loans and advances to customers under mangement
+7.5%Customers funds under management
+12.2%
Risks
NPL coverage ratio
NPL ratio
Cost of risk
(1) Year on year changes at constant exchange rates.
(2) Excluding repos.
(3) Excluding BBVA Chile as of March 31, 2018.
Rest of Eurasia
Millions of euros and year-on-year changes
Highlights
- Good performance in lending activity.
- Positive trend of operating expenses.
- Net Attributable profit affected by the decline in income in an environment of negative interest rates.
- Improvement in risk indicators.
Results
Net interest income
39Gross income
103Operating income
34Net attributable profit
16Activity (2)
Performing loans and advances to customers under mangement
+20.3%Customers funds under management
-6.5%
Risks
NPL coverage ratio
NPL ratio
Cost of risk
(1) Year on year changes.
(2) Excluding repos.
(1) Gross income. Year-on-year change.
(2) Gross income. Year-on-year change at constant exchange rate.
(3) Gross income. Year-on-year change at constant exchange rates.
Business Areas
Spain (1)
€1,497 Mill
-5.7%
Millions of euros and year-on-year changes
Highlights
- Positive trend of activity, especially in high profitable segments.
- Net Interest income affected by lower ALCO contribution and the impact of IFRS 16.
- Significant reduction in operating expenses.
- Continues improvement in Credit risk indicators.
Results
Net interest income
882Gross income
1,497Operating income
683Net attributable profit
345Activity (2)
Performing loans and advances to customers under mangement
+1.8%Customers funds under management
+4.3%
Risks
NPL coverage ratio
NPL ratio
Cost of risk
(1) Year on year changes.
(2) Excluding repos.
The United States (2)
€804 Mill
+6.3%
Millions of euros and year-on-year changes at constant exchange rate
Highlights
- Good performance in consumer and commercial segments activity.
- Net interest income increase, main lever of results and of customer spreads.
- Operating expenses growth below the inflation rate, efficiency improvement.
- Net Attributable profit affected by impairment on financial assets associated to the macroeconomic environment, to specific customers and to write-offs in consumer.
Results
Net interest income
615Gross income
804Operating income
331Net attributable profit
127Activity (2)
Performing loans and advances to customers under mangement
+6.6%Customers funds under management
+1.5%
Risks
NPL coverage ratio
NPL ratio
Cost of risk
(1) Year on year changes at constant exchange rate.
(2) Excluding repos.
Mexico (2)
€1,902 Mill
+5.3%
Millions of euros and year-on-year changes at constant exchange rate
Highlights
- Lending growth, supported by commercial, consumer and mortgages.
- Positive trend of net interest income in line with activity.
- Operating expenses influenced by the increase of the contribution to the BBVA Bancomer Foundation.
- Good asset quality indicators
Results
Net interest income
1,500Gross income
1,902Operating income
1,268Net attributable profit
627Activity (2)
Performing loans and advances to customers under mangement
+10.4%Customers funds under management
+7.3%
Risks
NPL coverage ratio
NPL ratio
Cost of risk
(1) Year on year changes at constant exchange rate.
(2) Excluding repos.
Turkey (2)
€884 Mill
+15.5%
Millions of euros and year-on-year changes at constant exchange rate
Highlights
- Positive trend in lending.
- Good performance of net interest income, as a result of the inflation-linked bonds performance.
- Operating expenses growth below the inflation rate.
- Net Attributable profit affected by the impairment on financial assets associated to the macroeconomic environment.
Results
Net interest income
695Gross income
884Operating income
571Net attributable profit
142Activity (2)
Performing loans and advances to customers under mangement
+8.5%Customers funds under management
+21.0%
Risks
NPL coverage ratio
NPL ratio
Cost of risk
(1) Year on year changes at constant exchange rate.
(2) Excluding repos.
South America (3)
€985 Mill
+12.4%
Millions of euros and year-on-year changes at constant exchange rates
Highlights
- Activity continues to grow at a good pace.
- Good performance of net interest income.
- Net Attributable profit impacted by Argentina's hyperinflation adjustment.
- Positive trend in net attributable profit of the main countries in the region: Argentina, Colombia and Peru.
Results
Net interest income
760Gross income
985Operating income
606Net attributable profit
193Activity (2) (3)
Performing loans and advances to customers under mangement
+7.5%Customers funds under management
+12.2%
Risks
NPL coverage ratio
NPL ratio
Cost of risk
(1) Year on year changes at constant exchange rates.
(2) Excluding repos.
(3) Excluding BBVA Chile as of March 31, 2018.
Rest of Eurasia (1)
€103 Mill
-17.8%
Millions of euros and year-on-year changes
Highlights
- Good performance in lending activity.
- Positive trend of operating expenses.
- Net Attributable profit affected by the decline in income in an environment of negative interest rates.
- Improvement in risk indicators.
Results
Net interest income
39Gross income
103Operating income
34Net attributable profit
16Activity (2)
Performing loans and advances to customers under mangement
+20.3%Customers funds under management
-6.5%
Risks
NPL coverage ratio
NPL ratio
Cost of risk
(1) Year on year changes.
(2) Excluding repos.
(1) Gross income. Year-on-year change.
(2) Gross income. Year-on-year change at constant exchange rate.
(3) Gross income. Year-on-year change at constant exchange rates.
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