BBVA: Still A Buy After An Impressive Share Price Performance

BBVA’s recent financial performance and strategic repositioning have solidified its status as a compelling long-term investment, even after a robust share price rally. The Spanish banking giant reported a 9.1% year-over-year increase in net attributable profit to €2.75 billion in Q2 2025, driven by a 11.7% rise in core revenues and a record return on tangible equity (RoTE) of 20.4% for the first half of the year [1]. This outperforms European peers, many of which are still grappling with low-interest-rate environments and regulatory headwinds. However, investors must weigh these gains against regional challenges, such as BBVA Argentina’s 31.1% quarterly decline in net income, driven by inflation-adjusted pressures and a rising non-performing loan (NPL) ratio [2].

Strategic Expansion and Operational Efficiency

BBVA’s long-term growth hinges on its aggressive expansion in high-potential markets and operational discipline. The bank’s Corporate & Investment Banking (CIB) division, recognized as Europe’s best for large corporates in 2025, reported record first-half revenues of €3.194 billion, a 28% year-over-year surge [3]. This success stems from cross-border expertise, specialization in sectors like renewable energy, and a focus on advanced financial solutions such as asset securitization. Meanwhile, the Global Transaction Banking (GTB) segment is expanding its footprint in Brazil, the U.S., and Mexico, with a strategy centered on specialization, innovation, and cost optimization. The efficiency ratio improved to 37.6% in Q2 2025, reflecting disciplined cost management and higher gross income growth [1].

ESG Leadership and Regulatory Alignment

European banking dynamics are increasingly shaped by sustainability mandates, and BBVA has positioned itself as a leader in this space. The bank mobilized €63 billion in sustainable financing during H1 2025 alone, with over 50% allocated to climate mitigation and adaptation projects [4]. This aligns with the EU’s Corporate Sustainability Reporting Directive (CSRD) and reinforces BBVA’s role as a green finance pioneer. By 2029, the bank aims to channel €700 billion in sustainable business, a target that triples its previous goal and spans three pillars: climate action, natural capital preservation, and social development [5]. These initiatives are not just ethical imperatives but strategic advantages, as regulators and clients increasingly prioritize ESG compliance.

Risks and Mitigation

While BBVA’s trajectory is promising, risks persist. Argentina’s NPL ratio rose to 2.28% in Q2 2025, signaling asset quality concerns in retail loans [2]. Additionally, foreign exchange volatility and interest rate normalization could pressure margins in emerging markets. However, BBVA’s diversified revenue streams—spanning fee-based businesses like asset management and insurance—and its capital strength (CET1 ratio at 13.34%) provide buffers [1]. The bank’s 2025–2028 plan, which includes €48 billion in cumulative profit and €36 billion in capital distributions, further underscores its confidence in navigating macroeconomic uncertainties [3].

Conclusion: A Buy for the Long Term

BBVA’s combination of robust financials, strategic agility, and ESG leadership positions it to outperform in a transforming European banking sector. While near-term risks exist, the bank’s proactive approach to regulatory shifts, geographic expansion, and sustainable finance creates a durable competitive edge. For investors seeking exposure to a bank that balances profitability with purpose, BBVA remains a compelling buy—provided they maintain a long-term horizon.

Source:
[1] BANCO BILBAO VIZCAYA ARGENTARIA (BBVA.MC) Q2 2025 Earnings Call, [https://finance.yahoo.com/quote/BBVA.MC/earnings/BBVA.MC-Q2-2025-earnings_call-312057.html/]
[2] BBVA Argentina Q2 2025 Earnings Report, [https://finance.yahoo.com/quote/BBAR.BA/earnings/BBAR.BA-Q2-2025-earnings_call-318469.html/]
[3] BBVA CIB First-Half 2025 Performance, [https://www.bbva.com/en/economy-and-finance/bbva-cib-posts-record-revenues-of-e3-194-billion-in-the-first-half-of-2025/]
[4] Weekly ESG Update 31/2025, [https://sustainablefinancedaily.com/esg-news/weekly-esg-update-31-2025-28-07-03-08/]
[5] BBVA’s 2025–2029 Sustainable Finance Strategy, [https://www.bbva.com/en/sustainability/sustainability-bbvas-commitment-to-a-greener-and-more-inclusive-world/]