Banco Bilbao Vizcaya Argentaria SA ADR
Financials · Diversified Banks
Structural: BBVA is a European-listed bank with an emerging-market earnings engine. Mexico contributes roughly 55% of group net attributable profit, Turkey ~15-20%, South America ~10-15%, Spain ~15-20%. Net interest margins in Mexico (~12-13%) and Turkey (post-hyperinflation accounting reset) structurally dwarf Spanish and core-European NIMs (~2-3%), giving BBVA a return-on-tangible-equity profile (~18-20%) that prints closer to a US regional than a Eurozone universal bank.
The Sabadell tender offer (announced May 2024) would create Spain's #2 domestic bank and is the swing variable on the European leg.
- Mexico franchise is the crown jewel: #1 bank by assets, ~25% market share in deposits, structural NIM tailwind from formal-economy banking penetration
- Garanti BBVA Turkey: post-2022 mandatory tender, BBVA owns ~86%; Turkish lira-hedged earnings + post-disinflation rate-cut cycle drives 2026-27 EPS
- Capital return: ~70% payout via dividends + buybacks; CET1 ~12.7% gives buffer for Sabadell deal and ongoing buybacks
- Digital franchise: BBVA Mexico mobile app penetration leads LatAm peers, lowering cost-to-serve
- Sabadell synergies (if deal closes): EUR ~850M cost synergies, ~20% EPS accretion by year 3 per management guidance
- Mexico concentration cuts both ways: peso devaluation (Sheinbaum government fiscal slippage, USMCA renegotiation risk under Trump 2.0) flows directly into group EPS
- Sabadell deal hostile + Spanish-government-opposed: CNMV/government conditions could force divestitures or block the merger entirely, leaving BBVA with sunk costs
- European banking is structurally low-growth: Spain ~15% of profit but ~30% of regulatory cost
- Argentina/Venezuela: small but unpredictable; periodic FX-translation hits and hyperinflation adjustments
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