BBVA Earnings: Strong Performance Yet to Be Reflected in Undervalued Shares

Banco Bilbao Vizcaya Argentaria is in a strong position, benefiting from a solid customer spread as interest rates remain high, while lending activity shows signs of a recovery. Spanish consumer and midsize companies demonstrated healthy activity, driving 1.5% loan growth in Spain compared with negative numbers last year and resulting in a 23% year-over-year increase in net attributable income for Spain in constant currency (euros). In Mexico, net attributable income accounted for 55% of total income this quarter, with a 10% year-over-year increase in constant currency (euros), driven by 12% loan growth and a low cost/income ratio of 30%. Together, Mexico and Spain generated approximately 90% of net attributable income over the past three quarters and BBVA maintains an optimistic outlook for both regions with favorable growth prospects. Third-quarter results exceeded most of consensus estimates compiled by the company and we maintain our fair value estimate of EUR 11.50 per share, viewing shares as undervalued.