BBVA's Q2 Earnings Beat Driven by Lower-Than-Expected Loan-Loss Provisions

Narrow-moat Banco Bilbao Vizcaya Argentaria reported net attributable profit of EUR 701 million for the second quarter of 2021 compared with EUR 603 million a year ago for the same period and 85% ahead of the EUR 379 million that the consensus of analysts polled by BBVA’s investor relations expected for the quarter. If one excludes nonrecurring items--the EUR 696 million charge for the restructuring of BBVA’s Spanish operations and the final capital gain of EUR 103 million related to the disposal of BBVA’s U.S. operations--attributable profit came in at EUR 1.3 billion, 35% more than the comparable number expected by consensus. Loan-loss provisions coming in lower than expected explains most of the earnings beat. All the operating divisions exceeded consensus expectations, but the performance from the Spanish and Turkish businesses were materially better than expected. We maintain our narrow moat rating and EUR 5.90 fair value estimate.