BBVA’s net profit rises 23% on Mexico, launches 3.5 billion euro buyback

BBVA reported a 22.7 percent increase in third-quarter net profit compared to the same period a year ago, owing to fewer loan-loss provisions and a solid performance in its biggest market, Mexico.

In the three months from July to September, the Spanish bank posted a net profit of 1.4 billion euros ($1.63 billion).

Polled analysts, who predicted a net profit of 1.06 billion euros. BBVA (MC: BBVA) also said that its board of directors has agreed to carry out a share buy-back programme of up to 10% of its stock for up to 3.5 billion euros, which it aims to complete in 12 months.

The first tranche of 1.5 billion euros will be distributed following the bank’s investor day on November 18 and is expected to be executed within three to four months, according to the bank.

BBVA shares jumped 3.2 percent following the buyback and as analysts such as Jefferies (NYSE: JEF) welcomed a positive set of Mexican results. BBVA’s results exceeded its 1.23 billion euro net profit in the third quarter of 2019, before the pandemic, when it booked impairments of 622 million euros in the third quarter, up from 706 million euros in the same period the previous year.

BBVA’s cost of risk, which gauges the premium associated with managing credit risks and acts as a signal of potential future losses, declined to 92 basis points in July from 100 bps in June.

To deal with the pandemic and ultra-low interest rates, BBVA sold its U.S. business last year, earning more than 8 billion euros, allowing it to focus on cost-cutting measures in Spain and increasing shareholder returns.

BBVA concluded September with a fully loaded core tier-1 capital ratio of 14.48 percent. With the share repurchase, BBVA’s proforma capital ratio as of September was 13.18 percent, up from 12.89 percent in the previous quarter.

Story by : Norvisi Mawunyegah