Madrid, Spain - BBVA has announced a record profit of 4.994 billion euros for the first half of the year, marking a 29% increase compared to the previous year. The bank's return on tangible equity (ROTE) has reached 20%, highlighting its strong financial performance despite the backdrop of a hostile takeover bid for Banco Sabadell.

Financial Results and Performance

The bank's commercial activity has remained resilient, enabling it to navigate the initial phase of interest rate reductions by the European Central Bank (ECB). BBVA's net interest income rose by 13.9%, totaling 12.993 billion euros, while the gross margin increased by 23.3% to 17.446 billion euros.

In Spain, BBVA reported a notable 47.8% increase in net profit, reaching 1.790 billion euros. This growth was driven by a 2.4% increase in lending, particularly in consumer loans, credit cards, and loans to medium-sized enterprises. Additionally, customer deposits grew by 3.5%, fueled by time deposits and off-balance sheet resources.

Details on the Hostile Takeover Bid for Banco Sabadell

BBVA used the financial results presentation to update stakeholders on the expected synergies if the acquisition of Banco Sabadell proceeds. The bank plans to close 300 branches, out of a total of 870 branches located within a 500-meter radius of each other. BBVA anticipates combined synergies of 850 million euros, with 450 million euros in technology savings, 300 million euros in personnel savings, and 100 million euros in financial savings.

The bank emphasized the attractiveness of its offer to Sabadell shareholders, projecting a 27% increase in earnings per share as a result of the acquisition. BBVA's management reaffirmed that they do not intend to improve their offer.

The takeover bid's progress is contingent on approvals from the ECB, Spain's National Securities Market Commission (CNMV), and the competition authorities. The acceptance period for the offer could extend up to 70 days. BBVA CEO Onur Genç expressed confidence that the deal would ultimately receive government approval, emphasizing the strategic focus on supporting small and medium-sized enterprises (SMEs) in Spain, rather than merely cutting costs.

Commercial Activity and Business Expansion

Despite the ongoing takeover process, BBVA has continued to expand its commercial operations. In the second quarter alone, the bank's net profit increased by 38%, reaching 2.794 billion euros. The growth was primarily driven by a 6.3% increase in client lending, particularly in loans to businesses. During the first half of the year, BBVA provided financing to over 340,000 SMEs and self-employed individuals, as well as 75,000 families for home purchases.

The total volume of loans and advances to customers grew by 4.3% compared to the end of December 2023. This growth was led by a 5.1% increase in corporate loans and a 4.9% increase in consumer loans and credit cards. Customer deposits also rose by 4.2%, supported by the strong performance of time deposits across various business segments, notably in Turkey and other regions.

BBVA also reported a significant digital acquisition of 5.6 million new customers, with 67% joining through digital channels. The bank mobilized approximately 46 billion euros in sustainable business initiatives during the first half of the year, bringing the total since 2018 to around 252 billion euros, in line with its goal of reaching 300 billion euros by 2025.

Regional Performance

BBVA's operations in Mexico continued to be a major contributor, with a profit of over 2.858 billion euros, representing a 3.3% increase. In contrast, the bank's performance in Turkey was negatively impacted by hyperinflation, resulting in a 33% decline in profit to 351 million euros. In South America, BBVA reported a 12% decrease in profit, totaling 317 million euros.

BBVA's robust financial results and strategic focus on growth and digital transformation underscore its resilience in a challenging economic environment, even as it navigates the complexities of a potential merger with Banco Sabadell.