BBVA’s Strategic Expansion and Profitability Momentum in Q2 2025

BBVA’s Q2 2025 results underscore its resilience amid macroeconomic headwinds, particularly falling interest rates, through a combination of capital discipline, strategic diversification, and operational efficiency. The bank reported a 9.1% year-over-year (YoY) increase in net attributable profit to €2.75 billion, with a return on tangible equity (RoTE) of 20.4% for the quarter and an average of 19.5% for the first half of 2025 [1]. This performance, coupled with a CET1 capital ratio of 13.34%—up 25 basis points from Q1 2025—demonstrates robust capital strength, even as global markets grapple with tightening monetary policies [1].

Capital Strength and Strategic Distributions

BBVA’s capital resilience is further reinforced by its 2025–2028 strategic plan, which targets cumulative profits of €48 billion and capital distributions of €36 billion to shareholders [1]. The bank’s CET1 capital generation is projected to reach €49 billion over the next four years, with €13 billion allocated for growth and the remainder for dividends and buybacks [4]. This approach not only prioritizes shareholder returns but also positions BBVA to weather potential downturns. For instance, its CIB division reported record first-half 2025 revenues of €3.194 billion—a 28% YoY increase—driven by strong performance in investment banking and finance (up 32% YoY) [2]. Such diversification into fee-based income streams mitigates reliance on net interest margins (NIMs), a critical factor as central banks globally signal rate cuts.

Revenue Resilience Amid Falling Rates

Falling interest rates typically compress NIMs, but BBVA’s strategic focus on non-interest income and cost optimization has cushioned this impact. Core revenues grew by 11.7% YoY in Q2 2025, despite foreign exchange and rate pressures [1]. The bank’s efficiency ratio is targeted to improve to 35% by 2028, supported by AI-driven productivity gains in engineering and operations [2]. In Argentina—a market where BBVA faces unique challenges—NIMs remained stable at 19.1% in Q2 2025, with local currency NIMs at 21.7% and U.S. dollar NIMs improving to 5.4% [3]. While non-interest income in Argentina saw a 11.1% quarter-over-quarter decline in net fee income, the bank’s efficiency ratio of 56.5% and reduced operating expenses (down 7.5% QoQ) highlight its operational discipline [3].

Strategic Growth and Regional Outlook

BBVA’s long-term strategy hinges on normalizing macroeconomic conditions, particularly in Argentina, where the exit from hyperinflation accounting in 2028 is expected to boost profitability [1]. The bank anticipates an average cost of risk of 230 basis points between 2025 and 2028, translating to a RoRWA of ~3% by 2028 [1]. Regionally, South America is projected to see high single-digit revenue growth in current euros, supported by lower inflation and an efficiency ratio below 40% by 2028 [1]. These metrics align with the group’s broader goal of achieving a 22% average RoTE through 2028 [4].

Conclusion

BBVA’s Q2 2025 results reflect a bank adept at navigating a challenging interest rate environment through strategic foresight and operational agility. While regional pockets like Argentina face near-term hurdles—such as the Q2 2025 EPS miss and a 5.22% stock price drop—its capital strength, diversified revenue streams, and ambitious efficiency targets position it for sustained growth [3]. For investors, BBVA’s 2025–2028 plan offers a compelling narrative of resilience, with €36 billion in shareholder distributions and a CET1 buffer of 13.34% providing a safety net against macroeconomic volatility [1].

Source:
[1] BANCO BILBAO VIZCAYA ARGENTARIA (BBVA.MC) Q2 Earnings Call [https://finance.yahoo.com/quote/BBVA.MC/earnings/BBVA.MC-Q2-2025-earnings_call-312057.html/]
[2] BBVA CIB Posts Record Revenues of €3.194 Billion in the First Half of 2025 [https://www.bbva.com/en/economy-and-finance/bbva-cib-posts-record-revenues-of-e3-194-billion-in-the-first-half-of-2025/]
[3] Earnings Call Transcript: BBVA Argentina Misses Q2 2025 EPS Forecasts [https://www.investing.com/news/transcripts/earnings-call-transcript-bbva-argentina-misses-q2-2025-eps-forecasts-93CH-4205188]
[4] BBVA earns €5.45 billion through June, expects accumulated profit of €48 billion for 2025-2028 [https://www.publicnow.com/view/08C6113F7EFC9CD48B8BFFB611E5A76A7BEC481E?1753940886]