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Banco Bilbao Vizcaya Argentaria SA BBVA

Morningstar Rating
€10.05 −0.07 (0.69%)
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Company Report

Narrow-Moat Banco Bilbao an Emerging-Market Champion

We believe that Banco Bilbao Vizcaya Argentaria will generate higher midcycle profitability than its peers, supported by its market-leading positions in attractive banking jurisdictions, notably Mexico. Due to its significant emerging market presence, investors often perceive BBVA as riskier than other European banks. There are, however, several mitigating factors for any higher country risk. First, BBVA tends to hold a dominant position in the countries it operates in, with significant market shares in low-cost demand deposits, supporting profitability. Secondly, BBVA is a retail and commercial bank with limited exposure to volatile investment banking activities. Thirdly, diversification across different geographies reduces earnings volatility and BBVA's earnings have historically been more stable than most other European banks we cover. We also highlight that BBVA's decentralised funding model limits its exposure to the equity investment in each subsidiary.

Price vs Fair Value

BBVA is trading at a 6% discount.
Price
€10.05
Fair Value
€64.80
Uncertainty
Medium
1-Star Price
€42.52
5-Star Price
€4.21
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Being the market leader in the attractive, oligopolistic Mexican banking market supports a high midcycle level of profitability.

Bears

Cross-border synergies have proved to be elusive for most banks to extract in retail and commercial banking

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News

Trading Information

Previous Close Price
€10.12
Day Range
€9.9210.14
52-Week Range
€6.0611.28
Bid/Ask
/
Market Cap
€57.92 Bil
Volume/Avg
12.2 Mil / 14.4 Mil

Key Statistics

Price/Earnings (Normalized)
10.02
Price/Sales
1.86
Dividend Yield (Trailing)
5.28%
Dividend Yield (Forward)
5.28%
Total Yield
7.70%

Company Profile

Despite its Spanish origins, BBVA generates only around a quarter of its profits in Spain. We expect that on a normalised basis, BBVA's market-leading Mexican bank should contribute half of its earnings, while its Turkish operation should account for another 15%. The balance of BBVA's earnings comes from smaller operations in South America. BBVA is overwhelmingly a retail and commercial bank, with corporate and investment banking forming a minor part of the overall business. BBVA also offers insurance and investment products through its banking networks.
Sector
Financial Services
Industry
Banks - Diversified
Stock Style Box
Large Value
Total Number of Employees
121,486

Competitors

Valuation

Metric
BBVA
C
SAN
Price/Earnings (Normalized)
10.0211.766.92
Price/Book Value
1.180.610.75
Price/Sales
1.861.501.23
Price/Cash Flow
4.084.532.18
Price/Earnings
BBVA
C
SAN

Financial Strength

Metric
BBVA
C
SAN
Quick Ratio
Current Ratio
Interest Coverage
Quick Ratio
No chart available

Profitability

Metric
BBVA
C
SAN
Return on Assets (Normalized)
1.07%0.41%0.69%
Return on Equity (Normalized)
16.35%5.31%13.29%
Return on Invested Capital (Normalized)
Return on Assets
BBVA
C
SAN
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Name
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Capital Allocation
Economic Moat
Market Cap
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C
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TD
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SAN
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