BBVA is Spain’s second largest bank after Santander and therefore, perhaps, a good barometer of the state of Spain’s property market.
The bank reported its H1 results on Monday which, by the headline numbers, have been spun to look relatively stable:
Net profit is up 11.6% to €2.93bn
Core revenues up 17.3%
Tier-1 capital at 7.7%
Bear in mind too, that BBVA is upping its stake in China’s CITIC bank from 5 per cent to 10 per cent and CITIC international financial holdings from 15 per cent to 30 per cent.
BBVA, however, is precariously positioned. Three markets facing serious slowdowns – Spain, the US and Mexico – account for 80 per cent of the bank’s profits. Indeed, look specifically at Spain and specifically in the second quarter, and the numbers for BBVA are not very healthy at all. Q2 profit for BBVA is actually down 19 per cent. Loan defaults in Spain have risen sharply.
All eyes then on Santander: BBVA’s bigger rival reports its own first half results tomorrow, and of course, is heavily exposed to the Spanish consumer market too.
BBVA though, has generally been regarded as the weaker of the two. While BBVA – down 28 per cent this year – has seen its share price decline roughly in line with Europe’s bank average, Santander – down only 18 per cent – has so far outperformed.
Related links
The retail downturn facing Europe’s banks – FT Alphaville