Lender BBVA plans $1bn share buyback as net profit beats forecasts

Madrid — Spain’s BBVA plans to pay out just over €5bn to shareholders, including via a new share buyback, after posting higher than expected fourth-quarter net profit on solid performance at its Spanish business.

The fifth-largest eurozone lender by market value said it would buy back shares worth €993m after the Spanish market supervisor lifted restrictions on new repurchase plans after BBVA announced a takeover bid for smaller rival Sabadell.

To reduce its reliance on Mexico, its main market where net profit fell in the quarter, BBVA announced in May a hostile takeover bid of Sabadell valuing it then at more than €12bn, after Sabadell’s board rejected an initial offer.

The deal is under longer phase 2 antitrust review in a deal opposed by the government.

BBVA recorded net profit of €2.43bn in the quarter, above the €2.23bn expected by analysts. It forecast a return-on-tangible-equity ratio (ROTE), a measure of profitability, in the high teens for 2025, similar to the 19.7% level at end-2024.

Overall, net profit jumped 25% to a record €10.05bn last year, buoyed by higher interest rates, especially in the first half of the year.

After the solid results, BBVA said in total, it would distribute €5.03bn against 2024 earnings to shareholders, which represents a €0.87 per share and a payout of 50%.

Its shares rose as much as 3% in early trading. Sabadell shares were up 2%.

Analysts at brokers KBW and Barclays described the results as solid, especially in Spain, and said they expected investors to view the profitability guidance and share buyback plan positively. The buyback is subject to regulatory and company board approval.

As interest rates rose, Spanish banks benefited from higher lending rates and limited deposit payouts.

However, this tailwind is beginning to reverse as interest rates start to decline. BBVA’s rival Caixabank forecast on Thursday a decline in net interest income (NII) in 2025, as did BBVA for its Spanish market.

In Mexico, net profit fell 7% due to the depreciation of the peso while the country is braced for possible US tariffs that could worsen its economic outlook.

Lending income in the quarter fell 3% in this market with the bank forecasting a slight growth below activity levels for 2025. In Spain, net profit rose 44% while NII was up 2.4% year on year though it fell 1% against the previous quarter.

Overall, lending income grew 22% in the quarter to €6.4bn thanks to lower inflation rates applied in its hyperinflation accounting in South America, especially Argentina, and Turkey, where net profit rose 10% while lending almost doubled.

For Turkey, it forecast a net profit of almost €1bn in 2025.

Reuters