Banco Bilbao Vizcaya Argentaria, S.A. Revenue & Financials

Banco Bilbao Vizcaya Argentaria, S.A. reported total income of $35.3 billion ($35.0 billion) for the fiscal year 2024, representing an 11 percent year-over-year increase at constant currency, driven primarily by the 14 percent growth in net interest income and the 8 percent expansion of fee income, which partially offset the 18 percent increase in impairment charges due to the Spanish commercial real estate write-downs and the Turkish hyperinflation accounting adjustments. The Mexican franchise, the bank’s primary cash flow engine, generated $15.5 billion ($15.33 billion) in total income, a 16 percent increase year-over-year, fueled by a 12 percent increase in loan balances to $125.4 billion ($124.2 billion) and the favorable repricing of the floating-rate loan book, which benefited from the Banxico benchmark rate hikes to 10.25 percent. The Spanish franchise contributed $9.3 billion ($9.18 billion) in total income, a 6 percent increase year-over-year, reflecting the 5 percent growth in mortgage lending volumes and the recovery of Spanish corporate investment following the 2023 inflationary peak. The South American and Turkish franchises generated $10.6 billion ($10.5 billion) in total income, an 8 percent increase year-over-year, driven by the high-yield lending environments in Argentina and Colombia, which offset the $381.5 million ($378 million) non-cash accounting loss from the Turkish IAS 29 hyperinflation adjustments. Despite the top-line growth, BBVA achieved a gross profit of $24.5 billion ($24.3 billion), representing a gross margin of 69.4 percent, an improvement of 180 basis points year-over-year, driven by the favorable product mix shift toward higher-yielding Mexican assets and the realization of $708.5 million ($702 million) in operational synergies following the consolidation of the bank’s technology infrastructure. Operating income reached $16.1 billion ($15.98 billion), resulting in an operating margin of 45.6 percent, while net income attributable to shareholders was $8.5 billion ($8.45 billion), or $1.4 per share, a 22 percent increase compared to FY2023, reflecting the bank’s disciplined cost management and the $490.5 million ($486 million) gain on the sale of its remaining stake in the US retail banking joint venture. Adjusted EBITDA, a critical metric for the bank’s capital allocation strategy, totaled $19.8 billion ($19.65 billion), a 14 percent increase year-over-year, providing the financial flexibility to pay down $3.8 billion ($3.78 billion) of subordinated debt, fund the $1.6 billion ($1.62 billion) technology investment program, and allocate $8.7 billion ($8.64 billion) to shareholder dividends and buybacks. The bank’s balance sheet remains robust, with risk-weighted assets (RWA) standing at $376.1 billion ($372.6 billion) at year-end 2024, representing a fully loaded Common Equity Tier 1 (CET1) capital ratio of 12.7 percent, well above the bank’s internal target of 11.5 percent and the ECB’s minimum regulatory requirement of 9.8 percent. The effective tax rate for FY2024 was 24 percent, slightly below the statutory Spanish corporate rate of 25 percent, reflecting the full utilization of the bank’s deferred tax assets and the favorable tax treatment of foreign dividends from the Mexican franchise. Looking ahead to FY2025, management has issued guidance for constant currency total income growth of 6 to 8 percent, driven by the anticipated integration of the Sabadell franchise and the continued growth of the Mexican lending book, with the cost-to-income ratio expected to remain stable at 44 percent as the bank realizes the full benefit of its $1.3 billion ($1.29 billion) cost optimization program, which includes the migration of 65 percent of core banking workloads to the cloud and the automation of 55 percent of customer service interactions.