BBVA's CEO, Onur Genç, stated at the presentation of the first-quarter results that the bank has an improved outlook for Spain and Mexico in 2022 "due to better-than-expected business fundamentals." He stated that business dynamics are "very good" across all geographies.
According to Onur Genç, BBVA in Spain enjoyed "great revenue performance and a considerable improvement in cost-to-income and provisions" in 2022. The CEO highlighted that BBVA's expansion would be concentrated on the company's most profitable segments: corporate, consumer, and credit card lending.
Even in the face of a low-interest-rate environment and the uncertainty in the Spanish economy caused by the invasion of Ukraine, the bank's expectations for net interest income performance for the year have improved as a result of these positive business dynamics and the expected rise in interest rates.
In Mexico, Onur Genç said that net interest income increased by more than 20% compared to the same time in 2021, "led by stronger business volume, wider spreads, and a considerable improvement in cost-to-income." Based on its success at the start of the year, the bank has raised its lending forecast upward, from approximately 5% to slightly under 10%. BBVA also anticipates double-digit growth in net interest income. "This results in more activity and net interest income," Genç explained.
According to the CEO of BBVA, the hike in interest rates is likely to have a favourable effect on both geographies for the rest of the year. The bank anticipates two ECB rate rises in 2022, "perhaps in September and another at the end of the year," and four more hikes in 2023. Mexico consists of "This year has already witnessed a 100 basis point rise. In 2022, we anticipate an increase of 175 basis points, "The CEO elaborated.
"The milestone of the quarter, in my opinion, is that we achieved really strong results in all categories and in all countries," Genç said. "In Mexico and Spain, we have seen tremendous additional growth."
In Spain, lending is resuming
The CEO underlined that the Group's loan stock increased by 10.6 percent in the first quarter during his statement. In Spain, fresh loan production increased by 27% in all areas except government entities compared to the first quarter of 2021.
Onur Genç also mentioned the 3.4 percent increase in Spain's loan stock in the first quarter. "We haven't seen anything like this in a long time," he remarked. Furthermore, the most significant growth in activity was noted in the most profitable areas, such as the corporate portfolio, which increased by 13.9 percent year on year, and consumer loans and credit cards, which increased by 9.6 percent. "Business is rebounding well in Spain, and we are gaining market share," the CEO emphasised.
In terms of asset quality, Rafael Salinas, Chief Financial Officer of BBVA, stated that as of now, macroeconomic estimates coming from the Ukraine crisis are negative "do not always signal a worsening of non-performing loans. In reality, "we are observing that the robust pace of activity is making the impaired portfolio weigh less in all portfolios as a whole, while the NPL ratio at the Group level is obviously improving."
In response to the issue of whether the bank has made further preparations to deal with the potential future repercussions of the Ukrainian situation, the CEO indicated that BBVA had put aside about €200 million for the Group for this purpose, of which €97 million was dedicated to Spain.