BBVA Earnings: Another Excellent Result, but Momentum Is Slowing Down

Wider net interest margins as a result of higher interest rates continue to drive healthy earnings growth for narrow-moat BBVA. The firm reported net income of EUR 2 billion for second-quarter 2023, which was 10% higher than what it reported a year earlier and also 10% ahead of company-compiled consensus. BBVA is on track to achieve our net income estimate of EUR 8 billion for fiscal 2023. Management now expects BBVA to generate a return on tangible equity in the midteens for 2024; previous guidance was 14%. However, earnings momentum is clearly slowing down as the tailwind from higher interest rates is now largely in the base. While net interest income increased by 26% year on year it was only 2% higher than what BBVA booked in first-quarter 2023. BBVA also announced a EUR 1 billion share buyback program, equal to around 2% of BBVA’s current market value.