BBVA CEO Sees Sustainable Growth and Returns as Mexico Powers Ahead

Key Points

• BBVA expects sustainable growth and shareholder returns, citing a 22.2% first-half return on tangible equity and 62% loan growth since early 2021—well above the 13% average for 15 major European banks.
• Mexico remains the main growth engine, supported by rising exports to the U.S., low banking leverage, planned infrastructure and energy investment, and BBVA’s strong market shares despite increasing fintech competition.
• Turkey is the key near-term risk: BBVA raised its inflation and interest-rate forecasts, expects downward pressure on its roughly €1 billion profit outlook, and no longer anticipates exiting hyperinflation accounting in 2028.

Banco Bilbao Viscaya Argentaria NYSE: BBVA CEO Onur Genç said the bank expects its combination of profitability, loan growth and shareholder distributions to remain sustainable, pointing to its presence in relatively low-leverage markets, leading local franchises, technology investments and capital discipline.

Genç said BBVA generated a 22.2% return on tangible equity in the first half of the year and has grown its lending book 62% since the beginning of 2021. By comparison, he said the average growth rate among the other 15 largest European banks was 13% over that period.

“Our perspective is yes, and a clear yes,” Genç said when asked whether the performance could be sustained. He said BBVA’s operating markets offer room for further credit growth, citing banking debt equal to 35% of GDP in Mexico and Spain’s prolonged deleveraging following the financial crisis.

Genç also rejected the idea that profitable growth conflicts with returns of capital to shareholders. He said that, if newly deployed capital earns returns above the cost of equity, growth can generate additional capital for shareholder distributions. BBVA paid a dividend of €0.31 from its 2021 results and €0.92 last year, he said.

Mexico outlook remains constructive

Mexico remains BBVA’s largest profit contributor, and Genç said the bank sees the country as a beneficiary of its trade relationship with the United States despite uncertainty surrounding tariffs and the U.S.-Mexico-Canada Agreement, or USMCA.

He said Mexican exports to the U.S. rose 16% in the first seven months of the year from the comparable prior-year period, while Mexico’s share of U.S. imports increased to 17.2% from 15.6%. Genç also said the average tariff on Mexican products entering the U.S. was about 4%.

He cited Mexico’s labor-cost advantage and integrated supply chains with the U.S. as reasons the country remains strategically important. BBVA also sees potential support from President Claudia Sheinbaum’s Plan Mexico, which Genç described as envisioning $70 billion to $80 billion in annual investment over the next five years in infrastructure and energy. He said 37 energy-sector tenders worth $9 billion had been finalized in the second quarter as part of the plan.

On competition, Genç said fintech companies have become more active in Mexico but that BBVA has continued to gain share, including in credit cards. He said BBVA has a 26% market share in the country, more than 40% share in payroll and 35% in acquiring.

BBVA added 4.7 million customers in Mexico last year, according to Genç, with 84% acquired through purely digital channels. He said the bank closely tracks clients that also use fintech credit cards and responds to signs that customer spending is moving away from BBVA.

Spain growth targeted toward higher-return areas

In Spain, Genç said BBVA expects the economy to grow 2.4% this year, with a possible upward revision after stronger-than-expected data. He attributed the country’s performance to immigration, the strength of services and tourism, and investment supported in part by NextGenerationEU funding.

BBVA’s Spanish loan book grew 7% in the first half, he said. The bank has selectively pursued areas where it sees attractive returns, gaining 250 basis points of enterprise-loan market share and 260 basis points in consumer loans over the past five years. Its mortgage market share declined, however, as Genç described mortgages as the most price-sensitive and competitive product category.

“In the areas where there is no return, we stay back,” Genç said, adding that BBVA’s Spain business continues to generate more than a 20% return on equity.

Turkey expectations revised lower

Genç said Turkey is the near-term weak point in BBVA’s outlook. The bank no longer expects the country to exit hyperinflation accounting in 2028, an assumption included in its medium-term plan.

BBVA had initially expected Turkish inflation of 25% this year and a central-bank policy rate of 32%. It now expects 30% inflation and a 36% policy rate. Genç said each additional percentage point of inflation or currency depreciation has a €15 million to €20 million negative effect on BBVA profits, while each percentage-point increase in interest rates has an estimated €40 million impact on the bottom line.

The bank had guided for roughly €1 billion in Turkey profit this year, though Genç said that outlook now carries a downward bias. Still, he said BBVA remains positive on Turkey over the longer term if policymakers maintain an orthodox approach. He said the bank could generate more than €2 billion in Turkish profit if inflation falls into the teens.

Technology and client-led international banking

Genç said BBVA spends €4.5 billion annually in cash outlays on technology and plans to apply a similar focus to artificial intelligence. He said AI could improve employee productivity, automate the bank’s thousands of processes and reshape its customer interface.

He also addressed growth in BBVA’s “rest of business” segment, which increased by more than 50% year over year from a low base. Genç said the growth reflects an effort to serve existing clients across borders, including Spanish and Mexican businesses operating in other regions.

According to Genç, BBVA’s corporate and investment banking business is client-led rather than driven by proprietary trading. He said 40% of the segment’s profits come from digital transaction banking and cross-border client activity, while its return on capital, excluding Turkey, was 23.4%.

About Banco Bilbao Viscaya Argentaria (NYSE:BBVA)

Banco Bilbao Vizcaya Argentaria, SA NYSE: BBVA is a global financial services group headquartered in Bilbao, Spain. The bank provides retail and commercial banking, corporate and investment banking, asset management, private banking, payments and insurance-related services to individuals, businesses, institutions and public-sector customers.

BBVA traces its origins to Banco de Bilbao, founded in 1857. The modern group was formed through the merger of Banco Bilbao Vizcaya and Argentaria in 1999.

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