Connect with us

Hi, what are you looking for?


BBVA raises 2024 profitability target as investors fret on emerging markets

Stock Markets12 minutes ago (Nov 18, 2021 10:16AM ET)

(C) Reuters. FILE PHOTO: A woman scans through her phone outside a BBVA bank building in Madrid, Spain, November 15, 2021. REUTERS/Juan Medina/File Photo

By Jesus Aguado and Emma Pinedo

MADRID (Reuters) -Spain’s BBVA (MC:BBVA) raised key profitability and cost targets and said it would add 10 million customers by 2024, betting on growth in countries such as Mexico and Turkey, yet its shares fell as investors fretted about exposure to emerging currencies.

The bank outlined the 2022-2024 plans at its investor day on Thursday, just a few days after it offered to buy the rest of Turkish bank Garanti for up to 2.25 billion euros ($2.6 billion), taking advantage of a slide in the lira.

BBVA said it expected its return on tangible equity (ROTE) to rise to 14% by the end of 2024 from the current 11.7%, and its cost-to-income ratio to fall to 42% from 44.7% even while keeping up investments in digital banking.

Its shares were down 5.9% percent at 1400 GMT, against a 1.1% fall on the European STOXX banking index.

Credit Suisse (SIX:CSGN) analysts said that, while they welcomed the ROTE target hike, they saw potential headwinds looming as a result of the bank’s exposures to emerging-market currencies, particularly in Mexico and Turkey.

“We remain cautious on the new strategy’s increased dependency on Turkey where we see continuing uncertainty over FX fluctuations and a less supportive rate outlook,” the Swiss broker said in a note to clients.


BBVA, like rival Santander (MC:SAN), is struggling to earn money from more mature markets in Europe and has been expanding in emerging markets, where it sees greater growth opportunities.

Assuming a 100% take-up in Garanti, the weight of BBVA business in emerging markets will increase to around 70% from around 65.6% currently.

To cope with the pandemic and ultra-low interest rates, the lender sold its U.S. business last year, generating more than 8 billion euros in excess capital to focus on cost-cutting in Spain and strengthening shareholder returns.

On Thursday, in a presentation to the Spanish supervisor, BBVA also unveiled a new annual dividend distribution policy of between 40% and 50% of consolidated ordinary profit, compared to the previous policy of distributing between 35% and 40%.

BBVA said this policy would be implemented with the possibility of combining cash distributions and share buy-backs.

The lender’s board recently approved a 3.5 billion euro share buy-back programme, with the first 1.5 billion euro tranche expected to start early next week after the investor day, BBVA’s Chairman Carlos Torres told investors.

BBVA raises 2024 profitability target as investors fret on emerging markets

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

World News

Insomnia is the most common sleep disorder in the global population. Therefore, it is a problem that many people suffer or have suffered...

World News

George Soros and Bill Gates are part of a consortium acquiring a British developer of rapid-testing technology, including for Covid-19 and tropical diseases,...


If you parked your car in one of the thousands of parking spots across Calgary, there’s a good chance you paid the Calgary Parking...


ForexMay 27, 2021 02:04AM ET (C) Reuters. By Peter Nurse — The dollar edged higher in early European trade Thursday, finding support from...

Disclaimer: it's managers and its employees (collectively "The Company") do not make any guarantee or warranty about what is advertised or above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. Copyright © 2021 Your Morning Voice. All Rights Reserved