BBVA unveils its 2024 plan and defends its offer for the Turkish bank; Fall in shares

By Cristina Roca

Banco Bilbao Vizcaya Argentaria SA shares traded lower on Thursday afternoon after the bank set targets under its new 2021-24 plan and defended its intention to increase its exposure to a volatile market .

The Spanish lender has said it will aim for a tangible return on equity – a key indicator of profitability – of 14% in 2024. The cost-to-income ratio is expected to improve to 42% in 2024. It has also improved its policy of distribution at 40% – 50% of its annual consolidated ordinary profit, excluding exceptional items, compared to 35 to 40% previously.

The 2024 targets were broadly in line with what the market expected, Citi analysts said in a note.

Moreover, on Thursday, Turkey’s central bank, under pressure from the country’s president, lowered its key rate to 15% despite an acceleration in the rate of inflation. Economists saw the move as reckless. The Turkish lira fell after the announcement.

BBVA has said it wants to continue to be the best bank in Turkey, one of its main markets, as part of its plan. He already signaled an appetite to double the stake in the country earlier this week, when he launched an offer to buy back the 50.15% stake in Turkish bank Turkiye Garanti Bankasi AS which he did not already own.

BBVA management defended the decision on Thursday during its investor day, saying Garanti’s business is resilient. The company’s shares tend to overreact to bad news, President Carlos Torres Vila said, adding that Thursday’s Turkish rate cut was widely expected.

At 3:04 p.m. GMT, BBVA stock was down 6% to € 5.41.

BBVA Managing Director Onur Genç, who was previously Deputy Managing Director of Garanti, said earlier this week that Turkey’s growth potential is too good to be ignored despite the higher risk it entails to make any mistakes there. business.

BBVA, Spain’s second-largest bank in terms of assets, said it will drive customer acquisition with the aim of becoming bigger and more profitable. It plans to add 10 million target customers – defined as valuable customers that the bank wants to develop and retain – until 2024.

The bank supported its goal of maintaining a fully loaded Class 1 common stock ratio between 11.5% and 12%.

In its domestic market of Spain, BBVA will favor the most profitable products, namely consumer credit, small and medium-sized enterprises and commercial banking.

BBVA has stated that its distribution policy will be implemented via an interim and final dividend each year, with the possibility of redemptions. The 3.5 billion euros ($ 3.96 billion) buyback program that the bank announced a few weeks ago is considered extraordinary, and is therefore excluded from the policy. A first tranche of € 1.5 billion of the buyback will begin shortly after Investor Day, BBVA said.

Write to Cristina Roca at [email protected]

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