All evidence suggests that BBVA is a leading light in the recovery of Spain’s financial sector. With the property crash and worst of the sector-wide restructuring behind it, the country’s lenders are free to embrace the early signs of Spain’s improving growth outlook.
BBVA is ahead of the curve. It has increased pre-tax profits year-on-year since 2013, recording a 34.5% rise in 2016. All the while, it has maintained a solid capital adequacy ratio of between 14.9% and 15.1%, and lowered its non-performing loans to 4.9% (down from 6.8% in 2013).
What is most impressive is its return on equity (RoE). This ratio, being pre-tax profits divided by total equity, is the yardstick of bank profitability. Historically, a 10% RoE was the rough benchmark for sizeable banks, but over the past few years only a handful in Europe have exceeded 9%.
In 2016 BBVA’s RoE hit a whopping 11.53%, up from a respectable 8.3% the year prior. The year its profit ratios turned around was 2014, when it recorded a 7.71% RoE after dipping to 2.59% in 2013.
BBVA is at the forefront of digitisation and technical advancements in the global banking industry, which bodes well for its future profitability going forward. It has announced plans to close 8% of its Spanish branches during 2017 in pursuit of its goal to become a digital lender, and recently joined the Hyperledger initiative which aims to expand the use of blockchain in different economic and corporate sectors.
In March it appointed David Puente to a newly-created position of head of data. Mr Puente is charged with accelerating BBVA’s transformation into a data-driven organisation and will report directly into the CEO.
All data sourced from www.thebankerdatabase.com
