Banco Bilbao Viscaya Argentaria Q2 Earnings Call Highlights

Key Points

• Record profitability: BBVA’s Q2 net attributable profit rose 11.4% year over year to €3.062 billion, supported by loan growth, higher net interest income and fees. First-half return on tangible equity reached 22.2%.
• Shareholder distributions expanded: The bank announced a new €2 billion extraordinary share repurchase program after completing its existing €4 billion buyback, while its CET1 ratio increased to 12.90%.
• Outlook improved overall: BBVA raised its 2026 return-on-tangible-equity target to about 21% and upgraded Mexico and South America forecasts, though it raised Turkey’s cost-of-risk guidance and maintained a cautious outlook for the country.

Banco Bilbao Viscaya Argentaria NYSE: BBVA reported record second-quarter earnings, supported by loan growth, higher core revenues and improved capital generation, while announcing a new €2 billion extraordinary share repurchase program.

Net attributable profit reached €3.062 billion in the second quarter, up 11.4% from a year earlier and 2.4% from the prior quarter. First-half profit totaled €6.051 billion. CEO Onur Genç said the results reflected the strength of the bank’s business model across its major markets, citing growth, profitability and capital generation.

“We have delivered record earnings, industry-leading profitability, strong activity growth, exceptional activity growth, and capital generation,” Genç said during BBVA’s second-quarter earnings webcast.

Tangible book value per share plus dividends increased 17.3% year over year and 5.4% during the quarter. Excluding the effect of share buybacks, the year-over-year increase was 21.8%, according to the bank. BBVA reported a first-half return on tangible equity of 22.2% and return on equity of 21.1%.

Revenue Growth Led by Lending and Fees

Net interest income rose 17.8% year over year and 2.1% sequentially, supported by loan growth. Net fees and commissions increased 16.2% from the prior-year quarter, driven by payments, asset management and corporate and investment banking activity. Net trading income rose 13% year over year, though it declined from the first quarter as global-markets activity normalized following a particularly strong first quarter.

Gross income increased 15.7% year over year and was broadly unchanged from the previous quarter. BBVA said its loan portfolio grew 17.7% year over year at constant exchange rates, or about 20% in current euros.

In Spain, loans increased 7.4% year over year, while lending in Mexico remained near 10%. Genç said lending growth was concentrated in consumer loans, credit cards and private enterprises, segments that the bank considers profitable. He added that BBVA uses loan-by-loan return-on-capital metrics across its markets to maintain profitability discipline as it expands.

BBVA also cited market-share gains. Since the end of 2020, its total lending market share in Spain has increased by 84 basis points, including gains of 276 basis points in consumer lending and 249 basis points in enterprises. In Mexico, its total loan market share rose by 272 basis points to 26.17%.

Capital, Buybacks and Updated Outlook

BBVA’s CET1 capital ratio rose 7 basis points during the quarter to 12.90%. Strong earnings and significant risk-transfer transactions offset the impact of loan growth and shareholder distributions. The bank said several securitization-related risk transfer transactions added 6 basis points to CET1 during the quarter.

The company expects to complete its previously announced €4 billion share buyback program by Aug. 3. It then plans to begin the first €1 billion tranche of a newly announced €2 billion extraordinary repurchase program on Aug. 5.

Genç reiterated that BBVA targets a CET1 ratio of 11.5% to 12%, with 12% serving as the key reference point. He said the bank intends to distribute capital generated above that level to shareholders. The new €2 billion buyback would leave the CET1 ratio at about 12.41% on a pro forma basis, he said.

For 2026, BBVA raised its group return-on-tangible-equity outlook to around 21%. Genç said the bank is performing ahead of original expectations under the strategic plan launched in January 2025, though he did not revise the plan’s broader targets during the call.

Spain and Mexico Remain Core Contributors

Spain generated second-quarter net profit of €1.1 billion, bringing first-half earnings to €2.2 billion, up 2.3% year over year. Net interest income rose 4.1% from a year earlier, while loan growth reached 7.4%. The Spanish unit’s nonperforming loan ratio fell to a record low of 2.86%, helped by the sale of a mortgage portfolio, and its cost of risk was 31 basis points for the first half.

BBVA’s Spanish efficiency ratio was 33.6%. CFO Luisa Gómez Bravo said underlying expenses, excluding one-time impacts, rose 5% year over year in the first half. The bank maintained guidance for mid- to high-single-digit expense growth and an efficiency ratio below 35%.

Mexico reported first-half net attributable profit of €3 billion, up 8.2% year over year in constant euros. Net interest income increased 2.7% sequentially, supported by retail and wholesale loan growth and a higher contribution from the asset-liability management portfolio. The Mexican unit’s efficiency ratio was 30.8%.

BBVA upgraded its Mexican outlook, forecasting loan growth of around 10%, high-single-digit net interest income growth and a year-end cost of risk below 335 basis points. Gómez Bravo said the bank expects stronger wholesale activity and continues to see opportunities in small and medium-sized businesses, consumer loans and credit cards.

Genç said BBVA sees potential for increased investment activity in Mexico, pointing to renewable-energy tenders and broader government investment plans. He also said the bank expects customer spreads to improve as rates approach what management views as their low point.

Turkey Guidance Reduced; South America Outlook Improved

Garanti BBVA in Turkey earned €269 million in the second quarter and €532 million in the first half. BBVA said Turkish lira customer spreads were constrained by elevated funding costs and high interest rates. Cost of risk was 236 basis points year to date, reflecting continued provisioning needs in retail portfolios.

The bank raised its full-year Turkey cost-of-risk outlook to around 220 basis points from its prior guidance of 200 basis points. Genç maintained the bank’s estimate of around €1 billion in Turkish annual profit, with a downward bias, and said the timing of interest-rate reductions would be important for margins.

South America earned €308 million in the second quarter and €556 million in the first half, a 33.6% year-over-year increase in current euros. BBVA upgraded its regional full-year gross-revenue outlook to high-teens growth, citing lending activity in Peru and Colombia, higher spreads and improving asset-quality trends.

The bank’s rest-of-business segment, which includes a substantial portion of its corporate and investment banking activity, reported €271 million in second-quarter profit. Genç said the corporate and investment banking business remains focused on serving existing clients and cross-border activity, rather than proprietary trading. He said direct exposure to software and IT services was approximately €700 million to €800 million and consisted of “top-quality names.”

BBVA also said it is advancing its artificial-intelligence strategy. More than 100,000 employees are actively using AI tools, and the bank has established a framework for deploying and governing AI agents at scale. Genç said BBVA would provide further details at its strategic talks event scheduled for Oct. 6, while noting it is too early to quantify AI’s potential effect on workforce levels.

Gómez Bravo’s presentation was her final earnings call as BBVA’s CFO. Genç said she would remain connected to the bank through board roles at some of its key subsidiaries.

About Banco Bilbao Viscaya Argentaria (NYSE:BBVA)

Banco Bilbao Vizcaya Argentaria NYSE: BBVA is a Spanish multinational financial services group headquartered in Bilbao, Spain. The bank traces its roots to several historic regional banks and was formed through a series of mergers that consolidated its position as one of Spain's largest banking groups. BBVA operates as a universal bank offering a broad range of financial services to retail, corporate and institutional clients.

BBVA's core businesses include retail and commercial banking, corporate and investment banking, private banking and wealth management, asset management, and insurance.

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