Onur Genç, CEO of BBVA, admits that they are open to purchases in new countries

The CEO of BBVA, Onur Gençhas admitted in a presentation to investors that the entity is open to new acquisitions in countries where it is not present. Likewise, he has defended that he is in a “good position” to achieve the objectives set for 2024 on his Investor Day.

During a conference organized by Bank of Americahas set as the only condition that these purchases be from banks large with a high market share in their countries, since BBVA’s business model is based on the scale in the geographies in which it is already present, as reported by Expansion.

Genç has emphasized the “extraordinary” prospects for BBVA in the future and has shown his confidence that the market will recognize BBVA’s potential, although he has acknowledged that the entity is frequently penalized by the situation in Turkey, something that ensures you understand and respect. In this sense, he has reiterated the long-term potential of the Turkish subsidiary to create value.

Likewise, the manager has reiterated the improvement in business prospects in 2022 for Spain Y Mexico, two of its main markets. Specifically, BBVA expects credit to grow at a low single-digit rate for the year as a whole and the interest margin to increase by around 5% in Spain, while in Mexico the expected growth of the loan portfolio in 2022 is double digit and for the interest margin is around 20%. The CEO also foresees a good performance of the credit quality indicators, with a forecast of the cost of risk in 2022 for the group below 100 basis points, in line with the previous year, despite the complexity of the environment.

Genç highlighted that BBVA has presented a cost effectiveness superior to its competitors over the years, has registered a customer acquisition record during the first half (with 5.3 million new customers, more than double the number five years ago) and has raised a 3.2 % gross margin since the beginning of 2019 (compared to 1.9% of its European competition), which has translated into an increase in earnings per share higher than its peers (+93% vs. +74%).

The manager has valued the quality and resilience of the capital of the entity to face future challenges, with a ‘fully-loaded’ CET1 ratio of 12.45% as of June 30, 2022, within the bank’s objective of placing it in the range between 11.5 and 12% . In this way, the CEO has defended that BBVA is prepared to face the new economic cycle and other challenges, such as competition from new players and fintechs.

Good prospects

During his speech, Genç highlighted the good prospects in terms of shareholder value creation, with a dividend yield of 6.3% (as of September 16) above the 5.4% average of European competitors and 4.1% of Spaniards. Regarding the possibility of increasing shareholder remuneration, Genç has pointed out that the current dividend policy is very clear and seeks to be “consistent and sustainable”, with the annual distribution of between 40% and 50% of the consolidated ordinary profit, although the board of directors will be the one to decide.

Tangible value per share plus dividends (in compound annual growth rate) has increased 9.2% since the beginning of 2019, compared to 5.4% for these same competitors.

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