BBVA earned $3,001 million in the first half, up 57.1% from the same period in 2021, the company reported to the National Securities Market Commission this Friday. The strong recovery is explained by the double-digit increase in margins amid an industry storm due to the new bank tax. The increase could have been greater if not for the adjustment that the company had to make at its subsidiary Garanti: it applied hyperinflation accounting in Turkey, representing a decrease of 324 million in the profit already booked in the first quarter .
Despite Garanti’s lack of dynamism, the semester marks remarkable progress. And this is thanks to the “growth in activity (+12.6%), the containment of expenditure and lower provisions”, the group points out. Also included in the first six months of the year is an office purchase in Spain by Merlin for 201 million. Without this expense, the profit would have been 37.6% higher than in the same period of the previous year.
“These results enable us to accelerate shareholder value creation and to be the most efficient bank and one of the most profitable in European banking. We have accompanied our customers with a credit increase in all regions, which has increased from less to more in the last year until it reached double digit rates,” assures BBVA CEO Onur Genç in a statement from the group.
The shadow of the figures presented by the company this Friday lies in Turkey. Since January 1, its subsidiary’s figures have been included in hyperinflation accounting, which has had a negative impact on profit generation. This largely explains why the bank ended June with a negative result of 787 million euros in other income and operating expenses, according to the company. Garanti, in which BBVA now holds a total of 85.97% after the takeover bid ended in mid-May, generated earnings of 62 million between January and June, which is significantly less than in previous years.
Regarding the banking business, the strong growth of the interest margin stands out: it reached 8,511 million in the first half of the year, an increase of 22.9%. By market, the bank highlights that this indicator has remained stable in Spain. In other words, it hasn’t grown, which is relevant in the midst of a storm due to the new extraordinary banking tax for the next two years (it will tax interest margin and net commissions at 4.8%) given the forecast that these earnings will be taxed will grow strongly due to interest rate increases. According to BBVA, the registered growth can be explained by the positive development in Mexico, Turkey and South America. Net fee and commission income grew by 17.8% to 2,650 million.
Gross margin reached 11,509 million (+12.2%). Expense also increased by 12%, although BBVA emphasizes that this increase was below inflation, which has averaged 13.1% in the countries where the bank operates. With those numbers, the company’s net margin was $6,456 million, up 15% from the same period last year.
And about the CET1 capital ratio fully loaded, BBVA ended the half year at a level of 12.45%, ahead of its target. This already includes the impact of the takeover bid for Garanti and the purchase of 662 offices in Spain from Merlin, which has deducted 30 basis points from the ratio. In terms of return on equity (ROE), the company closed June at 14.1%.