BBVA has made a profit of 3,512 million in 2019, which is 35% less than the previous year. The reason is that it has had to reduce the accounting value of its subsidiary in the United States “due to the unfavorable evolution of interest rates and the slowdown in the economy,” which has placed a burden on the result of 1,318 million. In the comparison of results it has also influenced that this time it has not had extraordinary capital gains, as happened in 2018, when the Chilean subsidiary was sold.
This decision, announced by the bank last December, has been applied in the fourth quarter of last year, in which the entity has suffered losses of 155 million. However, the entity plans to distribute a dividend of 0.16 euros per share in April 2020, the same amount as the previous year.
In a press release sent to the CNMV, BBVA notes that “without taking into account the extraordinary ones, the benefit would be 4,830 million in 2019, 2.7% more than in the previous year, the highest since 2009”. The income statement highlights the rise in all business margins, despite the adverse situation of interest rates, as well as the increase in provisions to strengthen the balance sheet.
Carlos Torres, president of BBVA, emphasizes in the press release “record recurring revenues and exemplary management of costs”, as well as “the default rate stood at 3.8%, the lowest of the last decade, and the capital ratio at 11.74%, with a very significant increase in the year. ”
Mexico wins the same as three divisions together
Going down to the breakdown by country, Mexico’s influence on the group’s result is striking, since it contributes 44.8% of the total after winning 2,699 million, 14% more. Spain, the second country, achieves 1,386 million, 1% less, and weighs 23% on the result, while South America obtains 721 million, 40% more (regardless of Chile’s contribution, sold in 2018 ), with 12% of the total, the United States 590 million, a drop of 24%, represents 9.8% of the total and Turkey is 8.4% with 506 million profit, a 10.7% fall.
With these results, Mexico earns the same as Spain, South America and the United States together, which accentuates BBVA’s dependence on this country. The loss of the corporate center, the unit that serves the rest of the group, amounting to 2,517 million in 2019, including the 1,318 million for the United States, must be subtracted from the results figures by countries, which means multiplying the numbers by seven Reds of 2018 in this unit.
These results have led to a drop in profitability on own resources (ROE) from 10.2% to 9.9% in 2019. Profit per share also decreases from 0.64 euros to 0.66 last year, year in that the BBVA’s stock price rose 7.5%, and closed with a stock market value of 33,226 million.
In the banking business, the bank has improved its interest margin by 3.5%, despite the negative rates, up to 18,202 million euros. In the fourth quarter (4,727 million) it has improved both with respect to last year and with respect to the third, being above the analysts, whose forecast was around 4,500 million. Gross margin, which includes commissions and results of operations in the market, grows 3.3%. Expenses grew at a slower pace, so the net margin grew 4.9% in the year (6.1% without the effect of exchange rates).
Impairments of financial assets increase by 6%; While they believe in the American divisions (United States, Argentina, Peru and, to a lesser extent, Mexico), in Spain the endowments for new sanitation are down 43.6% thanks to the sale of portfolios of toxic assets. In total, the bank has impaired assets of 4,151 million. The provisions section, meanwhile, grows by 66.7% to 617 million due to the higher endowments in Turkey and Argentina.
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