BBVA's 2025 Q2 Earnings Call: Unpacking Key Contradictions in Capital Generation, NII Guidance, and Loan Growth

Capital generation and cost optimization, interest rate sensitivity and NII guidance, loan growth expectations, capital distribution and share buybacks, and cost of risk and loan growth expectations are the key contradictions discussed in Banco Bilbao Vizcaya Argentaria, S.A.'s latest 2025Q2 earnings call.



Profitability and Capital Growth:
- BBVA reported a strong net attributable profit of EUR 2.749 billion for the second quarter, despite declining interest rates, which improved profitability with a return on tangible equity of 20.4% and a return on equity of 19.5%.
- The growth was driven by robust core revenues, strong lending activity, and effective cost management.

Regulatory and Capital Simplification:
- BBVA improved its CET1 capital ratio by 25 basis points to 13.34%, supported by capital generation and risk transfer transactions.
- The improvement was partly due to regulatory clarifications around Basel IV implementation and the simplification of its IRB model landscape.

Loan Growth and Diversification:
- BBVA achieved a 16% year-over-year increase in loan growth at the group level, with Mexico recording 11.7% and Spain 6.3%.
- Growth was driven by strong demand in consumer and SME lending segments, along with disciplined pricing strategies and favorable deposit trends.

Strategic Objectives and Shareholder Returns:
- The company expects an average return on tangible equity of 22% for the 2025-2028 period and anticipates distributing EUR 36 billion in excess capital over the next four years.
- This strategic outlook aims to combine strong growth with exceptional profitability and significant shareholder distributions.